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Excess Returns
The Only Two Things That Matter | Adam Parker on Growth, Rates, and What Comes Next
00:58:48
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- [00:00]
A
What matters to equity investing, period is changes to perception about growth and changes to perceptions about rates. Those are like the two things over the last 25 years of studying the market and I'm pretty sure matter. My sense is that the market's going to trade or oscillate at much higher multiples in the future than in the past because the constitution of the market is just so much higher gross margin than it used to be. I know that if you buy stocks with a low penny and sell stocks with a high pea, you don't make any money. So I'd say like the quant signal, it demonstrately doesn't work. I think the bigger near term risk is actually that the hyperscalers take their capital spending higher because they think the return is really strong and so you could get less free cash or negative from a Microsoft or something just because they think the return is so good. I think for most people they think they can do things they can't. So trying to make one month market calls over your career won't destroy value.
- [00:59]
B
Adam, welcome to Excess Returns.
- [01:01]
A
Thanks for having me.
- [01:03]
B
You are founder and CEO of Trivariate Research and Trivector Research where we've followed you for a long time. Your appearances on CNBC and other places including conferences and panels. And what we kind of appreciate is, you know, your combination of fundamental quantitative and macro analysis to help I think investors try to make sense of the market and, and specifically what you do with your business, trying to help your clients navigate where the, where the risks are and sort of, you know, trying to navigate the markets with clarity and discipline. I think you've been one of the more pragmatic and thoughtful voices on why the US Economy has held up well over the past few years. And you know, today what we want to talk to you about is your approach to investing, how you combine various things together in looking at markets and a bunch of other topics including AI, sort of credit risk, market structure and what maybe it might take to break the market or maybe where some of the risks might be that investors aren't maybe paying attention to. But before we get into all that, you know, you can learn more and Adam, feel free to chime in here, but you can learn more if you're an individual investor@trivectorresearch.com, that's where you have various ETF screening tools and a grading system. And then also on the institutional side, Trivarit Research is more so for institutional investors. And we'll put links to both those sites in the show Notes but you know, that's kind of what you do in your day job and then, you know, from time to time you spend time like this with us and helping educate our audience on the market. So we really appreciate that.
- [02:43]
A
Yeah, no, thrilled, thrilled that you included me and looking forward to the conversation.
- [02:47]
B
So one of the things I think that you are known for in your research approach is this combination of combining fundamental quantitative and macro analysis in bringing things together when you're looking at the market. So why do you think all three of those matter? And why do you think most investors focus really just on one?
- [03:11]
A
You know, maybe it's just on the old, you know, I did a PhD in statistics, so I think at that point you just can't hide from the fact you're going to be called quantitative. And you know, I got hired at a boutique firm called Sanford Bernstein to do equity research. In those days, in the late 90s it looked cool to be a fundamental analyst. Those guys seemed like they were making a lot of money. And so I thought, you know, I want to be a fundamental analyst, right? And you know, a little bit through luck and you know, being a pain in the ass, I got an opportunity and I covered large cap semiconductors. So I spent several years as a fundamental semiconductor analyst. And in some ways I really feel like that was the most formative part of my, my job, right? My career, just to tear apart the PNLs of companies, meet the management teams, et cetera. And then I went to Morgan Stanley and I was a US Equity strategist there. And that's just more of a macro job, right? You're, you know, hosting a weekly forum with all the strategists, economists in every asset class. You know, you're sitting. I sat on a seven person SNL key allocation committee in those days. I think there was 2 trillion under management and 17,000 financial advisors. It's probably much bigger now, but you know, say body trade, some other stuff. But so I just got more macro in terms of thinking about, you know, China, Europe, economy rates, etc. So I, I have experience, I, I would say in all three disciplines. And I feel like sometimes macro explains a lot of returns and sometimes it doesn't. Sometimes factors are explaining a lot, sometimes they're not. And obviously fundamentals for a group of stocks, 30, 40% of them are going to matter. So I, I try to combine my background and, and market that, that, that's helpful, you know, so some of it's age, you know.
- [04:51]
B
Yeah, no, that's great because we talked to A whole host of different investors on this podcast and I think the people that can blend sort of these different types of approaches, it's like almost like a consensus approach rather than like a, you know, one, one track. So certainly appreciate that. What are you, I mean, I think you've been mostly positive on the markets and bullish and we never want to talk about what's going to happen in the next month or two because who kind of knows on that? But you know, one of the things that you've I think made the case for is sort of this long term bullish case for the market looking out, you know, over the next few years. So can you just maybe outline how you're thinking about stocks, us stocks specifically, you know, over the next, let's say three to five years?
- [05:36]
A
Yeah, sure. I mean, I guess I would caveat this by saying like, look, if you're going to try to make two, three, five year market calls and you're going to really do it on over your life and you don't want to be pigeonhole, that's always bullish or always bearish. And there are, I'm sure you both know people well who are kind of perma bulls and perma bears. If you're going to change your mind, then I think you have to just upfront say, look, there's two, there's a two by two grid, bullish, bearish, right and wrong. And you're going to live in all four quadrants for some, for some months, you know, in, in your life. So obviously the market isn't going to go up in a straight line until 2030 or whatever. But what we wrote a couple years ago was we thought there was a decent chance that the S P would get to 10,000 by, by 2030. And really it was just kind of, you know, taking the long term earnings growth of the S P, which is depending on what year you start and you know, something like 9% per year earnings growth. And just saying, look, I think it's probably going to be a little bit higher over the next couple years just because from 27 through 20 and 29 there's going to be some productivity access because of AI for a lot of businesses. And so if earnings are 10% instead of 9 and I look and I pay something like low 20s multiples, if I grow earnings from here to 2030, I could probably get something like 10,000. And so it was a bit of a logic on earnings growth and multiples. The biggest pushback I get on that, Justin, is about the multiple because There's a group of investors that would say, well you know, I don't want to peak multiples on peak earnings and you know, 22 times is what's required to get the 10,000 under your 10% per year earnings assumption. And that seems crazy to me. The long term average is lower. And so part of the debate comes down to like what's the correct multiple to pay. And my sense is that the market's going to trade or oscillate at much higher multiples in the future than in the past because the constitution of the market, it's just so much higher gross margin than it used to be. It doesn't mean we won't have cycles or you know, changes to perception about growth and rates. But basically low 20s times 10% growth gets you to something like 10,000 by the end of the decade.
- [07:48]
B
And is a higher gross margin a result of like just better businesses in the, you know, the companies that we know about, the Googles, Nvidia's and you know, the top stocks in the market?
- [08:02]
A
I'm going to say yes in that if you took the percentage of market cap that has above 60% gross margin as a proxy for a high margin business over time, it's basically at an all time high because the big companies have high margins. And then if you kind of say okay, well what's the whole point of AI? Well maybe the point of AI is to get humans to live longer, be more productive while they're alive. But from the stock perspective, it's probably, you know, can I predict my employee and my customer behaviors and drive up costs or grow my revenue without net hiring, things like that. And I think that means probably margins are going higher because I mean if you think about gross margins, there's really three things, right? Depreciation, labor and materials. So that labor part is probably something you can impact going forward. So I think that the, the skew toward higher margin is probably structural.
- [08:55]
B
Is there anything that worries you? I mean you're making a bullet, you know, more bullish case here. But like what would, what would cause concern here and get you thinking, okay, there's like some cracks in the system. I mean maybe some of this lending, private credit stuff that's going on is, you know, the canary in the coal mine? I don't know. But is there anything that does worry you or would worry you? Let's say wood, Desert Wood?
- [09:19]
A
Definitely. I mean the way you set that up, like is there anything that could bother you? Like of course, I mean I, and, and, and then you Always wear, I always wear a say something that ages incredibly poorly. So I'll, I'll, I'll kind of go with the three. I'm going to give you a slightly longer answer but interrupt me if you if it's too long. I say there's three be cases that are out there that I worry about that if you ask me are you at all worried about this it would be hard for me to say no one is hyper return on hyperscaler Capex. We've seen massive capital spending from these companies and ultimately we're going to get to the point that there'll be diminishing returns on that and you know the math would say you spend a lot of Capex your depreciation burden on your cogs goes up, your gross margins go down lower. EBITDA forecasted sales like that's the risk. How to time that? I you know I spent a lot of time trying to think about it and talk with really smart investors on a time I think it's challenging. I think the bigger near term risk is actually that the hyperscalers take their capital spending higher because they think the return is really strong and so you could get less free cash or negative from a Microsoft or something just because they think the return is so good. But I think definitely one risk, big risk is the timing when there'll be diminishing returns on hyperscale or Capex for sure. The reason I'll just give a give a 0.1 a on my 3 or 1 b is is the reason I think that really matters is because the S and P is basically an AI index at this point. I mean the main stocks in every sector whether it's power with Nvidia I'm sorry in semis with Video Broadcom or power with Constellation G for Nova Vistra whether it's or Electrification Industrial, the E Corporation or even alternate asset managers. If you look at like you know KKR Apollo and Blackstone they're all like 0.85 correlated to each other. So I think the challenge is just that stocks are all trading like even if they're not in the same sector because they're all like a, like a, like AI, you know correlated complex. So I, I think one is the hyperscaler Capex is if you find out that that's diminishing or less effective by 2027 that people want a lot of stocks are going to go down a lot. So that's one big risk the second and I'll be faster with points two or three are if somebody says to me like on tva Adam, are you at all worried about government deficit? And then you say no, you sort of feel like a jerk. Right? Like we're running at wartime deficit. If we end up not doing that, it's going to be trickle down. That's going to impact some of the businesses for sure. I think the pushback I give to that is look, I could have worried about that every year for the last 15 years and timing when it should matter and how to position the portfolio for it is more the debate than whether you're at all worried about it. And then the third point is a little bit like farther down the line which is if you buy that AI is going to have some productivity benefits, you're basically saying you know, white collar unemployment is going to rise and know how does that impact consumption? Like you get the other side of AI productivity and there I think it's a trickier balance. I'm not as worried about it right now because you know something like 2% of the employees are 40% of the s and P market cap. You know so all the big companies are a very small percent of employees. You could have a disconnect between the top 100 US equities in their performance in the economy for sure. But those are the three I'd say bigger issues. Hyperscaler, capex, you know running at a deficit and you know, kind of the ultimate employment environment from AI. One of the bigger issues, the short term one is probably just sentiments bullish as heck and people, most people think the market keeps rallying and people who are bearish are now bullish net that feels a little bit worrying worrisome and again like how forward all the stocks. Those are probably structural and tactical.
- [12:48]
B
Yeah, I sort of, I sort of feel like too long of an answer. No, no, no, that was great. Don't worry about it. That was, that was not. But I sort of feel like for.
- [12:57]
A
A sell signal this is a. Is a dangerous behavior plan.
- [13:00]
B
Yeah, no, no. But I almost feel like with the return on the capex spend it's like I think it's going to be. Remember it was the Barron's article like back in 2000 it was like burn rate and it showed how quickly companies were going those unprofitable companies were going to like run out of cash. It's almost going to be. And that was kind of like what started that 2000, you know, bear market mostly in the NASDAQ. I almost feel like it might be something like that. Like there might be some something that comes out that says, you know, we need to get this type of return on this money that's almost going to look like impossible. I don't know, I'm just thinking like, you know, it sort of reminds me of that environment.
- [13:41]
A
I didn't really put what you said as one of my concerns. Not because it doesn't come up, meaning the cockroaches. From Jamie Dimon's comment about some of the lending issues with First Brand or Zion bank or maybe, maybe even more what you alluded to a little bit for a second there, which is the circular lending which you kind of have, you know, Nvidia and OpenAI and intel and AMD and the government and all that stuff does feel a little bit worrisome. But I think it's different than say, the tech bubble, if that's what people are comparing it to, because the core businesses for, you know, cash flow generation is so high that most of this they're funding organically, we or a lot of it. And I think my, my summary would cause the end of the tech cycle. You know, I was a semiconductor and then was just lack of access to borrow more money. And I don't think we're anywhere near that part. The part that's similar is if you look at some of the stock moves the last three or four weeks, like the number of stocks that are up 100% the last six months is really high. And a lot of them are the dreamiest, the dreamy, you know, quantum and other things that aren't going to be fundamentally supported in the next 24 months for sure. So that, that part's similar, but I think the funding dynamics are different.
- [14:53]
C
Since you mentioned. I just want to ask more about the comparison to the, like the late 90s, 2000, because it seems like everybody, when you see an obvious comparison like that, everybody goes back to it and they're like, we're running through the same cycle. This time it's going to be exactly the same. And, and I think there's probably a lot of similarities and differences. So how would you sort of compare and contrast those two periods?
- [15:09]
A
I mean, human behavior is the same, right? Like fear and greed cycles. Like obviously that's the same. You know, I think what causes. And Justin, his question alluded to half of this. I feel like a little bit, I feel like what causes the top every time is a combination of hubris and debt, right? Like you take on debt, you start borrowing money to fund things. He gets super arrogant and then stuff goes wrong. That cocktail is present at Almost every, you know, peak. No, I, I mean, Wall street hubris is high relative to human, but you have to normalize it for Wall street hubris. I don't think we're at the excesses yet. I still think there's a lot of compelling cases where we're, you know, predicting your employee customer behavior could drive up costs. I mean, there's a lot of things we do at Trivariate where we're really efficient, you know, data extraction with AI tools. There's a bunch of things. So I'm pretty bullish about the chance that productivity could go up for companies and drive margins up a little bit. So I think, you know, that part is, is real and the speculative stuff is just some of the trading behavior in profit with stocks and that kind of stuff that's, that's human behavior is the same.
- [16:24]
C
So do you think a lot of we have like a technological breakthrough like this? Do you think about, do you think it's valuable to compare it to other ones? Like you'll have people saying, well, this is bigger than the Internet or this is the equivalent of electricity. Like how do you think about AI? Do you think that's like a valuable thing to look at?
- [16:39]
A
So I think like when you look at like adoption curves, there's a value like how fast people buy things or how fast people embed it. But I think this one's a little bit different because it's more driven by institutional and consumer out of the gate. I mean, we're all using various apps. ChatGPT I assume is pretty ubiquitous, although the stats I read are, is nowhere near as ubiquitous as, you know, you know, Google search or other things. And it's a little bit behind on that curve of adoption from it, from the Internet. So I think it depends. Look, human beings are lazy. We want to go back and figure out the exact period that this is like and then we can just measure the playbook that unfolded ex post after that and say that's how I position the portfolio. But it's always a little bit different each time because there's different dynamics. I think that's one of the things I struggle with. I mean, whenever you have a quantitative background, you're trying to use data and say, let me analyze the crap out of that and hope that the, the go forward regime is like that period I analyzed. But you know, how far do you want to go back? Right? We didn't have GOP ones. We didn't have a, I mean Nvidia's first up, its sales revision was May of 23. So like I don't know how much relevance a lot of pre 23 periods have for analyzing this stuff. So we try to get at it using actual image processing. So we'll, we'll go into areas called transcripts or website and we'll look for certain things that we hope cluster, you know. So the way you mind history has changed a lot. So I would say some's relevant and some isn't. And that's the magic, what we're all trying to do. Yeah.
- [18:08]
C
I wonder, what do you think about the economy as a whole right now? It seems like it's been a weird period because ever since the Fed raised rates, you've had people like not you, but you've had people calling for recession pretty consistently through the whole period. It's never, you know, you got the yield curve inversion and other things people rely on to say it's coming, you know, the SOM rule or whatever these things trigger. Nothing happens. The economy still seems to trudge along. Like do you have any thoughts on that? Or like where, where the economy is right now?
- [18:33]
A
Okay, so I think I'll give a short, really short answer, which I think it's in decent shape but slightly eroding, but. Okay, so if you want to show my work, I can. I just, I feel like I answered too long your question. No, no. Yeah.
- [18:49]
C
One of the things we find in this podcast, interestingly is the less words Justin and I say, the better it does, so. Oh, you want.
- [18:56]
A
Yeah, I guess so. So I feel like if I said go analyze the US consumer and you, you downloaded a million things about jobs and wages and spending and access and all that credit card delinquencies, you know, all the things that the bolus of things that people look at, I think it's a pretty good absolute term, slightly eroded. I think that's the answer.
- [19:12]
B
But.
- [19:13]
A
And same with industrial activity and economic activity. Now if I, if I talk a little bit more about this topic in the economy, like look, I think Covid structurally changed a lot of things where the periodicity and amplitude of cycles changed. So some businesses had massive upcycles and down and then others it couldn't get access. So the cycle was much longer but less of a peak. So it's not crazy to say the chance previous cycles things were more synchronized policies on, on, on. On the Fed or ECB or jf they were more synchronized on monetary policy globally and things were more synchronized housing, auto industrial and so you could get kind of more correlated cycles across multiple industries. I think Covid kind of fouled that up a little bit where now all these things are cycling at different times. The example that always comes to my head, the most perverse example is the barbecue grills. So both Weber and Traeger IPO, I think in August or July of 2021 in that two, two month period. Why? Because everyone in the world bought a new barbecue after Covid because it was like the one thing that was cool to do. You guys live in Connecticut, I assume you have a barbecue, it's a good barbecuing state, right? So you probably upgraded your game sometime 2020 because you're like, I can't go to restaurants and there's Covid, but I can be in my backyard. So what happened is Both these companies IPO'd and then stocks went down 95% because you know what you don't do? Buy a new thousand dollar trigger every year. Massive amplitude, short periodicity cycle. Right? Other businesses that they make big industrial products, it took them two years to get the silicon. So their cycle went, you know, it was like a six year upcycle instead of like a two year one, but a much lower amplitude. So I think that, that, that sort of summarizes how, how things aren't synchronized. I think is part of the reason. I think a second reason is the, the US equity market has less perishable inventory than it used to. So by that I mean like it used to be 20, 30 years ago, make too much oil. And here the biggest 10 companies are more energy in the 80s, you know, prices go down and your margins go down. Or like I used to come for semiconductors, right? So a lot of the US companies years ago used to make the stuff. So what happens is you build a new factory and then demand slows down and then you know, that's bad. You got all this fixed cost from depreciation of the tools you bought and your revenue goes down, your margins get killed, your inventory is super perishable, you can always sell it. You cut pricing a lot like dram, what Micron does, right? But if you think about it now, most of the US equity market doesn't sell perishable inventory. So let me give you an example. There's a Texas Instruments, probably the most well known analog semiconductor company. There's another one called Analog Devices. I think Texas Instruments is the most household name because people remember the calculators from when they were young. Okay, so, so Texan txn. Texan is the, is the biggest analog semiconductor company. Let's say they make a $2 converter that goes in the cockpit of a Caterpillar dump truck. And let's say there's $32 converters in there, $60 worth of silicon, and they're designed in. And once they're designed in, they're going to be in that dump truck for the next 25 or 30 years. When a dump truck gets ordered, if they cut the converter price from $2 to $1.90, it doesn't stimulate more dump truck demand. Right. So if they make too many to stick in the factory, it's still going to be two bucks whenever that comes back. There's a lot more businesses like that now where it used to be, they had to cut the pricing to a dollar to stimulate it. So my point is a lot of the manufacturing businesses have less margin downside in the bear market than they used to. So not only is the market median company's gross margins off, but the collapse, the amount of collapses in a downturn is less. And I think that is an equity market is another reason why, why the market could, could be better than the economy. So I, I, I kind of ripped in the wrong direction a little there, but I just hear more about the stocks in the economy and I think it's, it's the cyclicality, it's how correlated they are and it's, it's, it's how synchronized they are that, that make, make things different this cycle.
- [23:15]
C
Yeah, I was thinking about when you're talking about grills, I was thinking about swimming pools because I live in Connecticut and like in Covid, like swimming pools just went off the charts. Like you couldn't get a swimming pool.
- [23:23]
A
Like you some stocks that made the chemicals for the pools, P L is one of them where they went through the roof and they got killed. Totally. But what I think is even crazier is the IPO. Right. That's why I picked. Right, yeah. Actual IPOs. And if you think about it like, I mean, you know, you're like, all right, this could be two or three years, I'm going to get like a thousand dollar grill. But you look at that like a ten year thing, not a one year thing. You know what I mean? So yeah, yeah.
- [23:49]
C
How, how about inflation? Is that something still concerns you? I mean we kind of just be, we seem to be sitting like a little bit above the Fed's target, but it's not really spiking. Is that kind of where you think we stay here going forward? Do you have any views on that?
- [24:00]
A
So the lazy answer I'd have to that Question is, look, we ran below 2% for 10 years and they kind of convinced us that they'd eventually get the two and we were cool. So if they can run a little bit above 2% for 10 years, they kind of convince us that it's not going to get a control, they'll get back to two. I guess we could be cool too, right? I mean that's the lazy answer. I think the specifics are I've been a little surprised about the lack of tariff impact on the sort of brawn, sort of basket of US Equities. We search every area, it's called transcript carefully for everything we think of related to tariffs and it's impacted some companies but just not that much on the corporate earnings. And I'm a little surprised. I mean if you look back six, nine months ago, I would have thought more companies would have been talking about it. There's definitely been some consumer, you saw the semiconductor capital equipment companies talking about it. But people just generally think that we're not going to be in a sustained situation. Even you get a one day sell off a couple of Fridays ago because of the comments the President made about China. But like generally I think all that matters is China and all that matters is do tariffs cause sustained inflation? I think the answer is so far less than people thought and maybe only in certain pockets. And so I'm less worried about it than I was six to nine months ago.
- [25:08]
C
Do you think that tariff thing is a lagging effect to some degree? You think we haven't seen the impact yet or you think we have seen the impact and it's just not going to be as big a deal as people thought?
- [25:15]
A
I'm going to say yes. Meaning like it's less than I thought. We haven't seen some of it yet, but it's also less than I thought originally.
- [25:25]
C
And how about the Fed? It seems like it puts them in a, it's sort of a complicated situation here in terms of, I mean they don't seem to be too concerned with inflation above their target. I mean I think they're maybe shifting in their concerns in other directions now. But they did cut once here. Like where do you think about their situation? Maybe what they should be doing here.
- [25:42]
A
Think that what matters to equity investing period is changes to perception about growth and changes to perceptions about rates. Those like the two things over the last 25 years of studying the market that I'm pretty sure matter. And so the reason the market's been strong is because there's a perception that growth with Implementation is going to be good and this perception that the Fed's going to be skewed more to the Dutch and those two things have catalyzed a microstructure where lower coin securities have worked and where small caps worked in Q3 and other stuff. So that's what matters to the market outlook and the microstructure. I think the answer to your question is people think that the Fed's going to skew dovish. I don't really know how they can wrap their arms around the inflation data so I personally think they're going to spend more time focused on the unemployment data and I think that's something that they can kind of it's lagging but they can at least use some LinkedIn data or other real time data and get a better clue what's happening with the jobs environment. I think it's going to be harder for them to get in front of any inflation or that forms right. And you know when I worked at Morgan Stanley all say is that the firm was wrong every single year I worked there on their interest rate outlook there were zero years they were correct. And I'm not saying I can do it. I'm just saying these are really smart, hardworking people with access to the treasury and the Fed and all this and like they still couldn't get it right. So like I don't think that I can and I think positioning a portfolio for this inevitable backup in the long end has been a widowmaker trade like that's been a terrible idea for 15 years. So I don't want to preposition for the whole financial system breaks bond vigilante long end backs up and I think in more sense to think that like we're probably going to have a dumbest Fed at least for most of this presidency. So I don't if you want to be bullish in equities you just have to say AI and the Fed's dovish. And then every single thing you've said to me after that wouldn't have mattered, that could change but so far that's been the pillars of the bull case that bit hard for you to you know, knock over. Yeah.
- [27:49]
C
To your point if I, if I look back at this Fed cycle and every year at the beginning of the year I looked at like the number of hikes or the number of cuts that were priced in and then what actually happened it's been wrong pretty much every single time.
- [27:57]
A
There's a button on Bloomberg called W I R P warp and you'll see some people Write it about work or whatever. And it's, it's a, it's a weighted probably rates probability and it'll say, you know, what percentage do you think they cut at each meeting over the next year or two? And like it is way worse than randomly. It is, I mean, you know, you know how it's like just as hard to get all the NFL games wrong as it is to get them all right? You know? Yeah, it's, it's, it, it gets all the NFL games wrong. So I, I think you're right and I'm not. Again, I'm not saying I could do it. I can't do it either. I don't want anyone to be like wow, this guy. No, I can't do it. I know I can't do it. I'm not disillusioned. I just don't think pre positioning a portfolio for some outlook. Here's one thing I do know. If the Fed starts expanding the balance sheet, you get way more bullish because when you study on every Wednesday, they report in a little, I haven't checked but I think with the government shutdown, they're not doing it yet. But like every Wednesday, week over week, they give you the Fed balance sheet, okay? And so if you look at the week of week change in the S&P 500 to the week of week change in the Fed balance sheet, it's statistically significant and correlated. So remember when they're doing all the mortgage backed securities, buy a bunch of MBs, of course the market went up. So you know, if that happens again, like you, you go from like pretty bullish to like, you know, you know, the train, you know, could go crazy. But I think they're less likely to do the balance sheet expansion right now.
- [29:23]
C
I want to go back to one of your three points you mentioned at the beginning and talk about the deficit really quick because that's an interesting one because you, on one side of the thing you've got people like Ray Dalio or Tall calling for like a debt, debt crisis. And then on the other you have people who say it's not that big of a deal. You know, we might have some higher inflation, some higher rates because of it, but it's, you know, we can sustain it for a long period of time. I'm just wondering how do you think about that?
- [29:47]
A
Whenever something demonstrably doesn't pick subsequent stock performance, I start to de. Emphasize it in my thinking. And I remember when I was at Morgan Stanley, there's a lot of smart people there and they work in every asset class in every region of the world. And we'd have these meetings every week and this email address where people say, oh, I met this smart guy Jack and he said this, you know what I mean? Or whenever. And he, you know, I remember I just, you know, I was bullish on equities issues, you know, 2013, 14, whatever. And people would be like, oh, there's some Cyprus is doing something. And I'd be like, oh, that's these words. And finally I just emailed back like disable me from all this. Like unsubscribe. Like Apple was bigger than Cypress. Stop talking to me. Like I, I just stop giving me stuff that doesn't matter to the next 12 month. I want for equities. And, and, and so I, you know, Milan Vanc. There was just stuff that like what am I like unsubscribe, right? So I think part of the challenge is like we've seen 15 times in a row that that didn't work. And then if I positioned the portfolio for it, I did I hurt my, my clients with that advice. So I think the answer is I'm gonna be, I can't proactively do anything about it. Once it rolls over and I ex post think it, then I'll have to react to it. But positioning to the inevitability has, has not been helpful. And I'm not saying as a human being I'm not worried about it, but as an equity investor between now and the next six months, like should I position for that now? That'd be crazy. It's, it's like the bond yield every I do cross asset idea dinners, we get all these, you know, really smart CIOs and all these huge businesses, 10 of dinners. And if there's a fixed income back from a guy, they usually say, well I'm worried about government deficit and I'm worried about a backup in the bond yields because you know, supply is coming online, it won't be met by demand. And I think to myself, well that's why we were wrong every year at Morgan Stanley on rates because QE1, QE2, QE3, twist, torque, European quests. Every time the thesis was tons of bond supplies coming online won't be bent by demand, bond yields will back up. Guess what happened every single time the 10 year yield went lower. Why? Because when people are free, they buy the 10 year yield. So I think that's the answer until proven otherwise. But I'm, but I don't pretend I know I'm Just reacting to what's happened, which is, you know, people afraid to buy. The 10 year yield on this idea.
- [31:59]
C
Of people saying the same thing over and over again and it not really impacting anything. This is one I got to call myself out on because I've kind of been a small guy and I know you've been the opposite of that because I, I saw a conference last year where you were, you were arguing the other side of this. But I'm just wondering like how, how do you think about that? I mean we've had a market dominated by large companies, but we've also had fundamentals dominated by the large companies which is probably why they're d dominating the market. So how do you think about that idea of like these big companies dominating the market?
- [32:24]
A
So I think that there's a just as big of a chance they get even bigger than they get smaller, probably slightly higher. They get bigger and in the next couple years and it gets more. But let's talk about the small cap value thing and I could take this in a few different directions. There was this question I was getting a lot a couple years ago about people liking small caps more and the reason is because they were cheaper, right? They were cheaper. Now I'm going to take this in two directions and I'll let you ask the follow ups here you want. But one is I don't think valuation is helpful for picking stocks. I imagine you'll want to talk about that if you're a small cap value guy. And two, I think you have to look at the context of large versus small and say okay, well the S and P these are round numbers is something like 15 or 16 times as big as the Russell 2000. Okay, so if what you're saying is for every $17 million of US equities I'm managing, if the pro rata rate 16:1 just for Easy Matt, you want to be 14 and three, I'll say, okay man, you probably could generate enough alpha in the smaller cap universe to offset the fact it's inferior. I'm cool with that. I'll pay higher fees for that. If you're saying you want to own more small cap than large cap in absolute terms, then I'm going to get foamed up. I think that's crazy. Okay, so you have to give me the context of what do you mean? If you're saying there's more alpha available because there are less picked over securities with. Okay, I agree with that. And so I always start with that. Now if you kind of adjust the Small cap universe for style. Large cap growth and small cap growth are both pretty expensive versus the normal history around 80th percentile. And in absolute terms the median small cap company is actually slightly more expensive on price of a than mega large as it usually is. If you compare large cap value to small cap value, that's where you're right. Small cap value is way cheaper versus its own history than large cap value. So you could say, well, the valuation is in small cap value. That's the opportunity. The problem is that the large cap value universe has increasingly got higher quality over time and the small cap value universe has increasingly gotten less quality over time. So why is it cheaper? In part because it's worse. It's, it's, you know, it's like you saying, you know, the Motel 6 has a lower price than the Four Seasons. I mean it's because it's worse. I mean, I'm not saying, you know, so, so I, I think you have to, just for style and substance before you make that comment and you have to constitute, you know, look at the constitution of it when you do it. I lastly would say, like, look, small cap value tends to work in a recession recovery three to six months before the recession recovery when people are optimistic about margin expansion in earnings resulting from policy or economic recovery. And so what's been odd this time is you've seen some perform well despite the fact we are in recession and we're not getting necessarily, you know, that, you know, we're not getting earnings on top of it. So I don't think the timing is perfect on top of the fact I think it's structurally worse, but that's, but too long. Ask me a follow up question.
- [35:15]
C
Yeah, I got plenty of them. Do you, do you think something's changed with the market? I mean, do you think technology has changed things to maybe favor larger companies? And do you think something's changed in terms of the relationship between small cap and large cap that makes just large cap a more attractive place to invest?
- [35:31]
A
Yeah, I mean, I think it's a combination of, there's just a lot of cost having a business, you know, and so it's harder, you know, if you look at like the median gross margin for a small cap company and compare it to media for a large cap median so you're not skewed by the big seven or eight. It's just way lower. I mean, so you know, either they don't have the amount of pricing power, they don't have the technology mode, mode of sustainability, they don't have you know, the ability to amortize the cost that you know, come from running a business and regulation, all that stuff at the rate. So I think it's a combination. And then I'd also say like well go ahead, you were going to ask another question I think.
- [36:09]
C
No, no. Yeah, I was thinking about AI and how that changes this. Like does that, I'm wondering, I debate myself. Does like does AI help the Mag 7 like against the rest of the market because you know they are spending all the money, they've got a huge lead or you know people talk about this idea that like AI enables like the two person company to be a huge company. Like does it eventually hurt them?
- [36:28]
A
It's probably, it's probably bimodal. Like in other words I think the big guys are going to keep winning, right? They can buy technologies, keeping away but I do think small companies can catch up to mid sized ones and maybe the mid sized ones are bigger than you think. Like we've been thinking that Target TGT has been a short idea for three years. We've written about this for a long time. Even though it's 100 billion in revenue it's subscale because it can't compete with Walmart, Amazon, even Kroger which are way bigger. It has to do a lot of capex margins go down to drive traffic to get the comps to go up. So I think it'll be bimodal where some companies will appear out of nowhere and the stuff you and I and just have never heard of, that's going to be 100 billion market cap in a couple of years. You know OpenAI could be Jensen said multi trillion market cap company sided in public. Right. So there could be some, some, some bimodal stuff where small guys can really compete and the big guys win and then maybe there's just kind of the middle guys that get gun it out a little bit over time. So that, that's, that's I think what makes sense in terms of access technology to technology helping you know, small companies form.
- [37:26]
C
I definitely have to dig into the. Valuation is a useful thing because so that, that's on an individual company level, right? You don't think valuation is very useful.
- [37:35]
A
Right? Yeah, I mean you know, meaning like I, I could. Well like you don't think the PE.
- [37:41]
C
Ratio is telling you too much basically.
- [37:43]
A
Well, I know, I know that if you buy stocks with a low PE and sell stocks with a high penny, you don't make any money. So I'd say like the quant signal it demonstrate doesn't work. But if we take a step back and say like, and I think, I think not everyone listening will know this. So first of all we, we argue that you don't want to own the stocks in the cheapest decile price earnings. They're an inferior asset class. So stocks that trade below 6 or 7, we wrote a note a couple years ago called 14 times earnings is cheaper than 6 times earnings. Because stocks that are 6 times, it's not like I might say hey Justin, did you know that American Airlines is cheap? He's not going to say holy, let me go buy a lot. Like it's awesome, right? It's cheap for a reason that's obvious. It's going to go bankrupt the next down cycle or whatever. Like it's, it's an impaired business that's capital intensive and competitive. And so all the stocks have a low multiple. There isn't a single mega large mid cap company in it. If I showed you that it was low, you'd be like wow, that's super surprising. You're, you know why 17 trades at six times? You know it's Medicare and Medicaid. You know why General Motors does, you know why United Airlines sounds like none. So we don't want the bottom decile. I'm not saying as a trade, I'm just saying they underperform. And then there is some evidence, although it hasn't worked recently, but there's definitely some evidence that the highest and most expensive you say ev to forecasted sales because they, a lot of them don't make money yet that also underperforms. So our argument was valuation doesn't help between the second and ninth decile. Just to be clear, he kind of cameoed that. Now why is that? I think there's sort of at the current moment four kinds of stocks. Okay, there's those that benefit on the revenue line from AI, Nvidia, Arista, whatever. Like the software infrastructure, power and semi semiconductors are so associated with the compute requirements for AI. Okay, there's a second bucket which we don't know but we want to tag. But we try to get at who are the productivity beneficiaries from AI? Obviously we search every earnings call transcript we've told it's kind of 20, 27 and beyond. But I think we can logically say let's start with businesses that have lots of revenue dollars, lots of employees and low margins and just say hey, we'd like to like predict their employee customer behavior. We'd like to drive up costs and so that attracted us to drug distributors, McKenzie, Carmel, Syncora, maybe Quest Diagnostics, you could try to get at that. We'll know over the next couple of years as we, as we track it. We've only seen a few companies talk about it, but that's on the computer. The third bucket is maybe they're impregnable to AI, meaning, you know, toilet paper, water aggregates, waste management, WI fi. There's things that we're pretty sure the revenue achievability in 2030 is the same. Right. And then there's a fourth bucket which is potentially disrupted. Right. So if I think about it, stocks that are getting more expensive are just beneficiaries from AI or impregnable and stocks that are getting cheaper are just disrupted. So if I use valuation in a mean reverting fashion, I. All I'm doing is buying stocks that have a higher probability of being disrupted and selling stocks are shorting, they have a higher probability of benefiting. And that just feels dumb to me for now. I think when we get three or four years from now or on the other side of the cycle, we'll have a different view. I think it's also just technology. Like everybody in the world knows what the valuation is. So the idea that you see a valuation that nobody else does is almost like arrogant at this point. Like everyone sees it, it's all about whether it can change. So I, and then I'd say structurally, like so much money now is running, you know, quantitatively with 3 hour to 2 day horizon grossed up like crazy and it's valuation neutral. So they're long and short stocks across the entire spectrum or the retail investor which on average is less valuation sensitive. So I mean some structural dynamics that make it where it could last for a while also. So anyway, sorry, I got a little ladder up.
- [41:12]
C
No, that's great.
- [41:13]
A
I don't think it works.
- [41:14]
C
Yeah, I just, I just had one more before I hand it back to Justin. Can you talk about the quant factors you think are important? I mean if you think valuation is not that important in terms of stocks, I mean I read something, and I may have read this wrong that maybe you do use valuation, but relative to the company's own history, maybe more or like momentum or earnings revisions or like can you talk about some of those things that you think are important in terms of identifying stocks?
- [41:34]
A
Sure, yeah. Again, I feel like I should, I have to think for a second and give a one minute answer because I feel like some go on as much as you want. Well, no, but like you asked me something that I think feel like I could teach a semester's course forcefully at college because I mean that's what I do for a living is write research and analyze factors that make return for equity. So I think it's, I think it's maybe more interesting to talk about blow up avoidance. Okay, so things that result in underperformance. If you're in the bottom decile, free cash flow conversion and it's declining, that's an inferior asset class. Right. So if you can't convert your earnings to free cash flow and it's declining, bottom decile underperforms. It isn't true that the top decile outperforms average. So if you have also pre cash flow conversion versus average, you don't have any subsequent excess return relative to the market. It's only if you're in the bottom, that's all. So we pay attention to free cash flow conversion and the rate of it. It's a generic concept called accruals. Big increases in capital intensity, big increases in inventory, big increases in intangibles are the biggest three. So companies underperform if, if they have high capital spending, the sales, increases in inventory of the sales and, and, and intangible accruals. So they have bad deals. Those are all bad areas. And then the last one is bad momentum. So like stocks that like trying to, trying to short a Stock At a 252 week high is a dump. Like the best signal for underperformance is that they already underperformed previously. So those are, those are things that I pay attention to momentum capital spending, the sales inventory to sales intangibles, free cash flow conversion level and change, extreme valuation like Tom bomb decile. I mean there's more but I'd say those are the ones that like I would watch out for, for the blow up avoidance.
- [43:31]
B
And, and what about on the ETF side? Like before we were talking about the grading of you know, ETFs with the research service. So how do you, how do you guys that.
- [43:41]
A
So we have a custom risk management system that we built when I was running my own hedge fund and we've seen a lot of ETFs don't provide the factors portion that you think you do. So one that we're pretty critical of was called is momentum etf mtum. So mtum barely beat the S&P 500 when the underlying factor was incredibly effective. So if you put money in there because you wanted to bet on momentum factor, you expect it to massively outperform momentum works. When I say momentum works, I mean buying the stocks that were just up a lot, shorting the stocks that were just down a lot, you should generate massive excess return. Momentum works. And that thing barely beat the S&P 500 long only. So we gave that like a D because we didn't think it had very good. It wasn't giving me, like when I buy an etf, I want to give me the exposure I want. I'm the allocator and I put the money in the different buckets. The one I put it in, should it be a closet AI play if it's not an AI one, how does that ETF know? I might have plenty of other exposure in AI the rest of my book, and I don't want that exposure. So in the utilities, we compared a couple of the utilities ETFs, and one was basically a closet AI play, and I didn't like that. I gave it a. It's outperformed the other one, but I didn't like that. I want, if I want a utilities one, I want a utilities one. I don't want Constellation and Vista G Renova because that's, that's an AI play. So I think it's all like one exposure you're getting. Obviously we have millions of ways of looking at it from very complex technical things, cover specific risk, reputability, the beta, the correlation that, you know, all kinds of custom baskets and the like. But, you know, a lot of times there's a lot of shorted, heavily shorted stocks in there or stuff like that. And I, I don't think you want that. I think you can almost always improve an ETF with a custom basket.
- [45:15]
B
Yeah, well, that's one of the things with ETFs, you can always like, look under the hood or use research, you know, look at the actual holdings or use services like that that are actually, you know, assessing those factor exposures.
- [45:24]
A
We have tons of people in the trifecta, you know, subscribers that say, hey, do you mind looking at this one? And we almost always eventually get the ones they ask us about and we're surprised. Some of them are really kind of, you know, give you the exposures that you want and you think and, and you, it's good. And then others, you're like this thing like, like, you know, some of the, even some of the sector ones, like, they're not exactly like, you know, I mean, the ones I think I've been most critical of have been like, definitely mtum, as I mentioned, but like, you know, ARC I think ARC is not great. The quality factor one qual. There's a ton of stocks that we tag quantitatively. It's not as high quality as they're in there. So you know, I, I think it just depends on. I didn't think the XLF was particularly great. So I mean we go through them all. Xlp, the staples one has a bunch of stuff that aren't stables. So you know, if you want that bet, you should be getting what the thing markets it is. And that's kind of what we analyze.
- [46:26]
B
Yeah, like up until a few years ago the 6040 was like an incredible performing and very simple strategy. And what is your view on sort of the 6040 but I guess more specifically like additional asset classes, things like gold, which is having maybe one of its best years ever. Like how do you think about, you know, effective asset allocation when building sort of a long term investment strategy in today's market?
- [46:56]
A
Really depends on how rich you are. Okay, I hate to say that but like it diversification is a concept from the rich. You know what I mean? You know, so most people are just trying to, you know, save a few bucks for their kid to go to college and you know, for them when they retire and like, and there I think you just, you can always want to be a little bit more conservative. But if you're rich, like you want to take risk, you know, and you can afford to get beaten up and still it doesn't date your lifestyle. So I think it's a function of age and, and how rich you are. I mean, so caveat with that. In my experience, obviously talking to very successful advisors and very many wealthy people through my life, like most people don't think enough about taxes and fees. And so I would spend a lot of time thinking about tax implications of your decision making and the fees you pay. And most people as they accumulate wealth don't optimize their charitable contributions through how they think about that because you're worried you're not going to be rich enough to give to charity later. And so you don't, you know, think about that enough when you're younger. I think most people should start retirement accounts when they're much younger than they do. Like when they're born would be a good time to do it. So there's stuff like that where I think, you know, those are bigger decisions than you know, how much excess alpha you can generate in Jack's small cap value fund versus the small caps. Like those things are going to probably for most people add less value than thinking through all the things I just said. But that being said now I'll get to your question asked. And the reason I say it that way is like look, if you're super rich, like why would you care? Why do you own any bonds? 0% bonds is correct. If you have 500 million bucks, you take wild ass risk. If things go wrong, you have 300 million. I don't know if it matters, I'm just saying. So I think it's, I think it just depends. But the recall exposed has been to own non US value and US growth and if you did that you probably couldn't screw that up too much. So I'm not saying. I think that probably in equity allocation globally I want a ton of U.S. growth and some non U.S. value, you know, European banks, whatever it is. And I think that's probably still a pretty good allocation and I like a lot more equities than average. I could see owning. You know I'm not a big products guy so the reason I started with the fees and taxes is I think most individuals putting their money into like individual private equity products has been bad. It's illiquid. They lie about that. They make up these terms like a MOAC and complete BS on how they evaluate it. At the end of the day what's in your checking computer in the 15 years is not what, what they tell you. So I'm not a big private equity, private credit, individual product guy and I probably would be less psyched but I might just be not the target audience for that because I'm, you know, I get pitched all the time by my advisor for 13% private credit UNWE and I'm like who the hell is lending to me at 13%? I mean how many nail salons in Westport or wherever you guys live do I need and why they barge me at 13? So like I, I don't believe in those products personally. So I think I want to own a lot of low fee large cap US equities and low fee and large cap non US value. And I could see only 5 or 5 or 10% of your portfolio with some dollar hedges. Whether it's a combination of gold or bitcoin or whatever. I think those are, you know, probably here to stay and legitimate and but you know, I don't think I'd make that a huge percentage. And I assume you're talking X real estate. You like real estate? Should be a pretty.
- [50:20]
B
Yeah, yeah, ex real estate. Real estate's kind of a separate bucket.
- [50:23]
A
Yeah, I think real estate should Be chunky. And then you know, I'd rather, I'd rather invest in businesses directly than I would in product. So like I would rather put some money in it, in a, in a small cap business, A small business and let the person run it, not be involved because I don't have the time. Like that makes more sense to me than giving it to some public private equity firm that's going to put in some high C tax insensitive product that is really levered call on rates.
- [50:58]
B
One of the things that you've explicitly disagreed with is sort of this idea of the end of American exceptionalism. Sort of the logic behind that. And I think one of the quotes that I found that you said that was pretty funny is Europe is great for vacation but not for stocks. Although Europe's having stocks some of those.
- [51:17]
C
Yeah, yeah.
- [51:18]
B
This year. But you know, over the last 15 years. No. So but I'm just, you know if you were to try to sum up like the structural advantages that you think our country has for over other countries like how would you sort of summarize that?
- [51:29]
A
It's funny, when I originally said that I think it was like 2013 or something.
- [51:33]
B
Oh back.
- [51:34]
A
Yeah. And I got in trouble. I worked at Morgan Stanley and I think I said it on TV like Bloomberg TV or something. Actually I know I did because the reporter jobs in general reminded me of it. He's like I was mad when you said it. He's British but he's like. He gave me credence like five years later. I was like actually that guy was right. Basically what happened is we you know, in a business once I had a business in Europe and I the management didn't like that. I was crapping on that. But my main point was like the companies tend to have less margin expansion capability. Tech I think is 4% of the index there. So it's just less innovation. And the whole argument I gave you about you know, higher gross margin and all that stuff, it just doesn't exist there at the same level. So I think part of it was just if you, if you believe, if I say to you Justin, what seems are going above global GDP for the next 10 years, you know most of those themes, the US equities, how they're currently constitute over index to the growth compute, power infrastructure, software, how efficient our science is, electrician, whatever. So his businesses are going to grow more that you know, tell some home higher team sports there. There's a combination of things I think you get more challenging. I think the truth is it's gotten less fishing vacation. I think that's meaning, I don't know. So I, I think what I changed my mind on is, you know, most of the businesses I'd rather vacation in the US And I think the US is better for both now. You know, it used to be cheaper to fly business class to Europe. Now it's like unaffordable and I want to be exhausted when I land. You know, the hotels have gotten crazy expensive because all the same people go to the same one. So I kind of prefer Florida. Yeah, so you have the US on both now, but it's really just because of the technology and healthcare and innovation part. That's the answer question, the regulation part. I mean, look at the median gross margin over time for European stock. I remember this was probably 2015 or 16. I was giving a speech at the Western Hotel in Paris and I had this whole thing about how I like the US Quality stocks over, over, over European. This guy came up to me. I don't know if this is still true, so somebody fact checked this, but at least 10 years ago it was true that all of the CAC Volume 40, which are the biggest 40 companies in France, had been, had been incorporated in 1968 or. And, and so I got up there, I said, well, I was born in 1969 and like in the US we created some cool since I was born. You know, I mean like that's sort of part of the answer. Your question is like they're all like old school industrial quest, you know, glass making and cement and whatever. And if you think about all the awesome companies in the U.S. it was just for innovation. I was, you know, I was kind of being, it was at nighttime, people were drinking. I was being tongue in cheek a little bit. But I mean, in a way it was a microcosm for like. I think the answer to your question is like we just had way more innovation. All the companies that are the Mag seven were, were developed and you know, there wasn't, there wasn't a. My, my oldest daughter asked me about this. She was surprised. She didn't know that. She was like, she asked me something about an app store and I was like, there wasn't even an app store to 2008 and I was like 39 years old when it was an app store. Like what are you talking about? I think like people in their early 20s that like, you know, so all the innovation is the answer you're getting.
- [54:57]
B
So we have two standard closing questions we like to ask all of our guests. And the first is based on your experience in the markets. If you could teach one lesson to your average investor, what would that be?
- [55:12]
A
I think for most people and they think they can do things they can't. So trying to make one month market calls over your career won't destroy value. So I think you take a pocket of your money and you put in a low fee long only product and you don't touch it and make that your North Star because you know over five, 10 or 15 or 20 years, it depends how old you are, you know how rich you are. The like that money accrues. I've heard a lot of people on Wall street say I don't even travel my 401k, it's a diminimous part of my compensation. That's dumb. Like you want to think about saving things in 5, 10 like thinking long term and staying fully invested are probably the two things that I think people don't totally appreciate.
- [56:04]
B
And then lastly, what is one thing you believe about investing that most of your peers would disagree with you on?
- [56:13]
A
Look, I mean I spent most of my career worried that I was a fraud and that thousand to get exposed, okay. And I would argue that if you don't sometimes worry about that yourself, you're probably a bit of a psycho, okay? So if you start from that, that, that, that is like okay, if you don't have some level of insecurity, you know, equity investment isn't for you. Okay? Like I mean that like you might get lucky. You might, you know, you might buy Amazon because you like to kindle and be right for the wrong reason. But that doesn't mean you're an equity investor, you know what I mean? So like I think I'm always worried about like obsolescence of me as a relevant person and just generally. And so I spent a lot of time thinking about like where's the like which stocks have high company specific risk which starts stocks are hard being replicated in a hedge basket. And then spend my time on those things. Like if I can have a differentiated opinion from consensus on those names all differentiate the index more. And we give a lot of advice to our institutional clients on what we call available alpha. Like if I have alpha generating work widgets working for me, where should I deploy those people to separate from the index? So I, I spent a lot of time motivated by like generating performance versus the index because I feel like that's where I can add value still as a human and I hope that lasts. But that didn't directly answer your question. I'd say, the most out of consensus view I have is that I think the market's telling me that the health care sector will be 0% chance is the best performing sector in the next five years in the equity market. And I think it's like 30 to 40% chance. And so I'm trying to find more health care stocks to own because I feel like they're the primary AI beneficiary on the productivity side because they're so unproductive today. And so it's anything that's been out of consensus has just been wrong. Those are synonyms. But I feel like that's the area that we could look back five years now and say, wow, there was a lot of, of innovation and a lot of stocks work here.
- [58:03]
B
It's great. Adam, thank you very much for joining us. We really appreciate it.
- [58:06]
A
Yeah, thanks. Time flew by. Appreciate, appreciate it. And sign up@troyvectorresearch.com that's the the best hundred bucks a month you'll spend. It's we give a lot of content and I'd love to see you guys as subscribers. Thank you.
- [58:21]
B
Thank you for tuning into this episode. If you found this discussion interesting and valuable, please subscribe on your favorite audio platform or on YouTube. You can also follow all the podcasts in the Excess returns network@excessreturnspod.com if you have any feedback or questions, you can contact us@xsreturnspodmail.com no information on this podcast.
- [58:42]
C
Should be construed as investment advice.
- [58:44]
B
Securities discussed in the podcast may be.
- [58:46]
A
Holdings of the firms of the hosts or their clients.