This Is Your Last Chance to Get Rich, Mag 7 Earnings Week

27:56And the money has to come from somewhere. So, I mean, who's doing that? Is that like TAMPs and big wealth management, CIOs, model portfolios? All right. You know what? You're probably right. I would buy that. All right. More stuff on this. All right. Equity sector flows cumulatively since the beginning of 2025. Dude, look at technology. It's the light blue line and it's flat. Flows are flat. It's like unbelievable. And number one and two, it's industrials and utilities. What? well i think because it's off of a base so the baseline is that zero line in january of last year these are cumulative flows to january of last year that's correct right so i just feel like the base is so low that like any additional sector flows look like really aggressive whereas with tech flows have never been a shortage i think it's just a low base like how many people were how many people at the start of 25 were like allocating to utilities and industrials now obviously things have changed and people have recognized that these are part of the ai trade but what's interesting these are these are absolute billions it's there's no percentage here like it's billions okay so it's just in dollars it's just straight dollars homie so then that okay so then the baseline doesn't actually matter it's like it's wild all right one more actually two more on this.

29:20So this is from daily chart book. And, uh, what can I say? One thing, what a gift blog is. Yeah. God people, people think that these utility thing is like, Oh, well it's just about the data centers. And then whenever that runs its course, those stocks will normalize back to 10 times earnings. I don't think so. I think it's a secular bull market and electricity. It's not about the utility companies, the demand for electricity is in hyperdrive. And I don't care if they stop building data centers tomorrow, the ones that they did build will be in heavy use forever. And just the elect, the, we've had a wake up call about electricity generation and distribution in this country.

30:07And those assets, the equity shares of those businesses have gone through a once in a century re-rate, and that's not coming back off. Those are more valuable than we have systematically given them credit for. Those assets, the electricity generation, the pipelines, the transmission mechanism where they can get it from the plant to the grid to your home, all of those assets have been systematically undervalued and that is now what's at an end and I would not be fading this utility thing as like, oh, that was a 25 story. I think it's like a forever story and we're going to stop systematically undervaluing those companies.

30:53I think you're right. I think you got to be paying attention to these names. I know they went up. Get over it. So the last chart that we looked at, those were sector flows. So I believe that was like flows, not like, not, all right, let's add up all of the industrial stock buying. Like I think that was flows into sector ETFs, okay? That's my understanding. This next chart is showing retail cumulative purchases of the Max 7 and Palantir, okay? And this goes back to July 2025. And it's hilarious that really the only game in town, relatively speaking, or the king just dominated was NVIDIA. It was really NVIDIA and then a massive, massive, massive gap and then Tesla.

31:38And then everything is sort of bunched together. Meta, Amazon, Google. The purple line is NVIDIA. Yeah, so that's billions of dollars. And then, interestingly, just as interesting, on the other side of the table, persistent outflows from retail investors out of Apple. Like, big league. Does Warren Buffett count as a retail investor? I mean, they sold like two-thirds of their stock over this time horizon that we're looking at. That's very funny. Okay, one more on the retail stuff. This is awesome. So this chart from Goldman shows the 15-day rolling flow in billions, okay? In billions of dollars of the MAG-7, and this is retail.

32:20And only now for the first time since the beginning of 2024. So two full years. We've never seen what we just saw over the last 15 days, which is more retail buying out of the MAG-7 than inside the MAG-7. First time that it's been this meaningful. in a long time. I think that's so cool. And one of the things is like, I mean, we saw on the chart, they're obviously buying industrials. They're obviously buying material stocks. They're buying gold. We know that. We know that they're interested in the utility trade because those stocks look great. And Sean and I have been writing them up like every month.

33:04We do at least one column that touches on that trade. so we know they're buying those stocks but like the general thing is that uh the mag 7 are just not as sexy as they used to be we used to talk about how cool it was that they were like asset light they're asset heavy and it's okay that's where they see the world going they have to they have to chase their future uh cash flows that they think they can earn but like they're just different stocks than they used to be and the apathy on the part of investors and the desire to look for new trades, new ideas is perfectly normal. I think it's great.

33:41I love it too. And I, there's a voice in the back of my head where like the listener might be like, dude, this isn't investing. What are you talking about to what I'm about to say? And what I'm about to say is that, um, and fine, let's call them traders. Let's just, let's call it what it is. I think traders are getting better because when you're trading, the goal is to make money. And the way that you make money by trading is by buying stocks that you think are going to go up. And the stocks that are going to go up are the stocks that are already going up. An object in motion stays in motion. This is how the stock market works.

34:14And when you're trading, you want to be on the right side of stocks. You don't want to be in losers. You want to be in winners. And so they are jumping from things that aren't working into things that are working. Now, the voice in the back of my head that I was just referencing is, well, they're just chasing. They're just donkeys. I reject that. I'm sorry. If you're trading, you should be in the winners and that's what they're doing. Well, you know how I feel on that topic. I don't encourage everybody to go out and start trading their account. But if you're going to. Right. The point that I make is if you're going to trade, it's like, I'm going to go fishing.

34:47Great. Which pond are you going to fish in? The pond with the fish or the pond with the floating boot on the surface? You know what I'm saying? Like, what are we trying to accomplish? We're looking for trading gains on the long side of stocks, well, let's buy some stocks that are going up for God's sake. Right. I can't believe I still have to explain that. Although maybe I don't, maybe I don't because people seem to be doing it. Let's skip this last chart because we're two topics in with 35 minutes and we've got like 90 more things to go. So let's skip this one. Keep going. Well, look, this is you.

35:25SPX versus R2K. No, see what I said was. We're skipping it. We're out of respect to the Michael will AI make money worthless no no okay did you see this piece of the journal I don't even see it I read it how about that I hate skimmed it so no I read it let me just pull out this we're now at the point and maybe it was we were always headed here we're now at the point of extreme paranoia about job loss and not like a few people getting laid off, but tens of millions of people because their entire role in society is just replaced by some combination of AI and robotics. And so now we're talking about social safety nets.

36:14UBI is back, universal basic income, civil unrest. And the heart of this paranoia, you'd think it'd be in Washington DC or New York with Wall Street, but it's not. It's in San Francisco. And I find that troubling because these are the actual people that are building the things. And as they're building them, they're sort of saying like, this is so fucked up what we're doing, like over and over and over again. And there was, before we get to the journal piece, yesterday, the CEO of Anthropic, Dario Amadei, basically wrote a 38-page essay, which we're not going to dive into today. but he said, quote, I believe we are entering a rite of passage, both turbulent and inevitable, which will test who we are as a species.

37:04As a species? Like humanity is under threat because of anthropic? Quote, humanity is about to be handed almost unimaginable power, and it is deeply unclear whether our social, political, and technological systems possess ask the maturity to wield it. Oh, no, no, no. It's not unclear. We don't. I'll tell you right. I'll tell you right now. We're not ready for this. So I don't know. Do I want to read 38 pages of AI related doom porn on my with my free time? I probably not going to read it, but that's like one of the most important figures in all of AI. And he has a lot to gain by not saying this.

37:46So the fact that he felt compelled to write 40 pages in that vein, I don't know, does it bother you? Yes. There's two schools of thought here. One, the techno people, this guy aside, look at the history of technology. It is nothing but up and to the right, advancing civilization. Yes, there have been periods of time where there is job displacement, of course, but thinking not at the human level, just thinking about society as a whole, those jobs are ultimately replaced with better jobs. And yes, it is lumpy in real time, but ultimately progress. That's one school of thought. The other school is - That's the Pollyanna school of thought.

38:27The other school is like, okay, fine. I understand history too. This is different. This is not the computer. This is not the railroad. This is society altering type stuff. and I'm not in the middle. I'm not on either extreme. Like I don't think the world's going to end, but I'm definitely closer to the, this is like seriously scary stuff. I'm center slash end of humanity. So I'm center slash end of humanity too, because, all right, so today, for example, and today doesn't really matter, but you talk about the paranoia and I can only speak to the world that I live in. I see the train is fully full.

39:12The train station is full. You get there past 803. I can't park there. But I'm also seeing, so the labor market is okay. Employment is good. Unemployment is relatively low. There's not a lot of layoffs. However, there's definitely not a lot of hiring and there's definitely not a lot of open jobs. So if you have a job right now, you're okay right now. But the labor market, especially for younger people, I don't know how this like – why would it open up? Why would companies start hiring young people all of a sudden when they might not need to? And that is some really terrifying shit. Here's Tim Higgins at the Journal.

39:52Silicon Valley is filled with all sorts of dreams, but one of those wild-eyed ideas long debated on subreddits and in hacker houses is becoming a real-life nightmare. Will the AI boom be the last chance to get rich before artificial intelligence makes money essentially worthless? Okay. The argument is that tech companies and their leaders will become a class unto their own with infinite wealth. No one else will have the means to generate money for themselves because AI will have taken their jobs and opportunities. In other words, the bridge is about to be raised for those chasing the American dream, and everyone is worried about being left on the wrong side.

40:30Yeah. I wrote just on the damn robots in 2017. That was a great call. And I, way before we were talking about AI, I just have always thought that way. And I know history says I'm wrong. I can't help but feel that this is something entirely different. And we're relying a little bit too heavily on, oh, the, what's it called? The automobile made all the people that were dealing with horses go find another job. That's a non sequitur. I agree. The internet was never built to replace your job. Literally, these solutions, these machines are being built to make us more efficient, the people that use it, and everybody else who's replaced, yeah, go f*** yourself.

41:11That's what it's doing. And so is this article maybe hyperbolic? Whatever. Who cares? There's more than a kernel of truth in here. Right. The article is not being hyperbolic for this. They're just quoting people. Here's an Elon Musk quote. The transition will be, he said this on Joe Rogan, I think. The transition will be bumpy, we'll have radical change, social unrest, and immense prosperity. Like in what order? And how do we survive the first two? Okay. One more, Sam Altman. I used to be really excited about UBI, but I think people really need agency. They need to feel like they have a voice in governing the future and deciding where things go.

41:52How about a reason to get up in the morning? Yeah. If you just say, okay, AI is going to do everything and then everybody gets a dividend from that, it's not going to feel good. And I don't think it actually would be good for people. So Sam and I completely agree. We need purpose. You need to grow as a human being. And if you have nothing to do but get government money and sit on your ass, that's not healthy. Here's another quote that I pulled out from Elon. I mean this is wild. If you don't – this is Elon. If you don't have a scarcity of resources, it's not clear what purpose money has. More recently, Musk suggested people shouldn't even worry about saving for retirement, predicting AI will provide health care in retirement.

42:32Quote, it won't matter, he said, of retirement savings. OK, sure. It won't matter because you – So much. Because we have health care and entertainment and – Sorry. Yes. It will matter because other people will have more money than you do and that will – and their spending. will affect the standard of living that you yourself are able to afford. Like wealthy people set the tone and the prices in any society and there will always be wealthy people. Unless you tell me Elon is gonna say, I am actually gonna give away all the shares of AI to the government or to some philanthropic cause and like everyone will own it.

43:14Bullshit. There's gonna be winners and losers and you have to be a winner. I don't believe that. obviously none of us knows how this plays out, including the CEOs and founders of all these companies. Well, for starters, stop selling stocks every time the market drops 10%. How about that? Because that's your only way out of this. Invest or die. I sold on Greenland fears. You know what I'm saying? Yeah. You want to be on the right side of history? You want to be on the right side of history? Step one, stop selling every time you get nervous because some man on TV says something. Stop doing that shit immediately.

43:49On the one hand, I'm terrified. But on the other hand, I'm optimistic that we're not just going to let this burn down civilization.

43:59Anyway, on that note, I don't know where to end this. So let's talk about the other side of the coin. Let's talk about the other side of the coin. Let's talk about SaaS companies. All right. Our boy, Todd Sohn, look at this. Tech sector ETF flows by exposure. And the only place you need to point your eyes is software. This is cumulative since chat GPT release. And software flows since November 2022 are negative. And man, look at semis. That's the green line. You know, it's unbelievable. It's unbelievable. But there were probably people that very correctly said, okay, I get it. the LLMs and chatbots are going to enable people to code their own software, which will introduce a new risk for software stocks.

44:54I want out of those and I want to reallocate that money into the semis, which there's just not enough of in the world and we can't make them fast enough for all of these LLMs to function. That was the trade. And I assume some people got that really, really right three years ago when the LLMs first came out. Did you listen to Joe and Tracy did a podcast recently about like all the Claude stuff? People going nuts for that? What, Claudebot? Yeah. No, not Claudebot. Claude Code. Oh, regular Claude. Oh, how Claude is helping people code? Yeah. Yeah, well, the tech people are looking at that. Like normally in order to do what I just did, I would need like six people around me.

45:36But like having this co-pilot that's AI, I just eliminate all that teamwork and I could just do it myself. So one of the things that, like I said, was they were talking about Salesforce and he's like, Salesforce turns unstructured data into clean data that's usable. But like 95, I'm making this up, 95 % of the functionality of Salesforce, people don't even use. People aren't even entering the thing into the software. We know this to even get productivity out of there. And if I could just like literally make my own. Anyway, not a hot take. This is obviously in the performance of the stock. So there was a report last week by a company called Avenir.

46:18And I just wanted to pull some charts and go through it. First one, this is awesome. Just a pretty visual to set the stage. It's like the medieval times. On the one hand, you've got all of the software companies, Workday and Slack and Zoom and whatever, Salesforce against OpenAI and Perplexity and Anthropic. and uh well very well very pointedly they they have the work days and the hub spots and like the publicly traded software giants as knights in armor and they are in a defensive posture um basically like defending the castle and then they have all the startup people like dressed like basically peasants that have shields i don't know uh like like it's it's a great visual representation of what everyone's worried about.

47:09And that chart you showed before of what the software stocks have done since the advent of, like at a certain point, you'll see though, one of these companies, one of these peasant folk that are storming the castle, they're going to switch sides. They're going to be on that enterprise side and they're going to be selling an enterprise product. They already are. and like, you know, at a certain point, like that's the thing about AI is that the disruptors are infinitely disruptable too. So I just think it's important like to, it's a great illustration, but like things could change really fast. Like what are we saying that open AI's most important thing is not selling subscriptions like an enterprise software business?

47:56Because it is. They're just not public yet and they're not losing share, But they will one day join the banners amongst the knights in shining armor. As soon as they go public, I would estimate. All right. So we've got like seven charts here. So let's just run through them quickly. Public SaaS revenue growth has stabilized over the past two years. So this goes back for, I don't know, since pre-COVID times. And of course, the growth rate has come down because it was totally off the charts. But still, the median revenue growth in their basket, and I can't even see what's in here. It's my bad. But the point is it's down but stabilized, okay?

48:32And the next chart, their net retention shows the same thing. Median net dollar retention in their software basket, down but stabilized. That's like churn, the measuring? Yeah. Okay. So they show, all right, revenue growth, flattish, but rule of 40, still there. All right, so their growth and their profitability is still there, but put a pin in that because we'll come back to that in a second. They break it up by a horizontal index versus a vertical index. And I could imagine what's in the horizontal. So I should have – I don't have to guess. What does that say? I can't even read this shit in my freaking eyes.

49:11One segment of the market has performed a hell of a lot worse than the other. Yeah. All right. Next chart. 2021-2022 was a total anomaly. What we're looking at here is the – I think horizontal SaaS is like Salesforce. It's like they serve every vertical under the sun, whether you're a company that makes food or makes medical supplies or a company that – whatever it is. It's all the names that we know. It's Workday. It's Adobe. It's Salesforce. It's probably Salesforce now. So I'm like actively making bets in the vertical SaaS because I think it's just less disruptible. There's too much knowledge.

49:54There's too much vertical-specific knowledge for something really broad to just step in and disrupt. So Shopify is vertical. Toast is an example of vertical software. Toast, Service Titan, which I pitched you the other day. I think that those stocks are really interesting to me. CrowdStrike is horizontal. It's cybersecurity. Well, no. They're labeled in vertical. So these are companies that serve one thing versus like, right? Like Toast does what it does for the restaurant industry. They serve the restaurant industry. Versus Salesforce who serves everybody. So the companies that serve everybody.

50:32Versus Block, which does payments, but not just for restaurants, but for every industry. So those companies that are not specialized, that service everybody, those are the ones that are like, dude, sorry, it's over. Game over. All right. All right. The median top quartile and bottom quartile multiples have normalized in a big way. Last chart, please. Nope. I'm sorry. My bad. There we go. There we go. All right. So listen, we're coming out of silly season. So starting multiples are an important part of the story, totally out of control and at a more healthy, normal level here. Well, right. Expectations have come down.

51:13All the way down. All right. It's not 2020 anymore. So even though the rule of 40 is intact, if you look at the median SaaS company, the gap EBIT margin is freaking break even. Like not good. Not good. So I guess a large portion of this is stock-based comp. Like it's gnarly. Yeah. And they're big spenders, these companies. Like they're, you know, they, because from their perspective, you talk about businesses like with 40%, 50 % profit margins and 20 % growth year in, year out. They're not like grinding down their cost structure until the Wall Street forces them by losing interest in the stock.

52:06Like that's the situation that they've been in for a long time. So almost done. It's important though that these are not, even though these are in the same basket, a lot of these names, Adobe and Salesforce and Snowflake and ServiceNow, they're not all the same businesses, obviously, even though we group them together. So they did a survey and they asked people, is AI going to help these companies or is it going to destroy them? And the spread is all over the place. Oh my God, look at this. So like, look at Salesforce, 40 % of respondents, net respondents, so that AI is actually going to help them.

52:41And I would say that's probably more true than not if I had to guess. I think that Salesforce, these are deeply embedded companies. They're really hard to unwind. If you don't own your data, you can't just pick up and leave.

52:56What are you looking at? I'm trying to understand confluent. Why do the net percentage respondents saying AI helps is negative 30%. So this means that 30 % of people on a net basis saying it's going to hurt. No, I know. What the hell is that business? I don't know who Confluent is. It's an IT, like an IT outsourced IT. So chatbots should be able to - Okay, done. Yeah, done. Right, done. I agree. All right, so where does this leave us? Data streaming platform for real-time data integration and processing. Oh, is that like data entry? Get the f*** out of here. Done. Zero. No way. Finished. John, let's do the last chart and then the second to last chart.

53:41Let's go to the prime book. All right. Hedge fund flows. Selling in tech was driven mostly by short sales and led again by software stocks. So this goes back to January 2025. And look at this gigantic spread of software versus semis and semi-equipment. It's unbelievable. I mean, it really is. at some point this has to reverse, right? Okay, so last chart. So this is, again, duality research. We're looking at a ratio of software versus the S &P at key, key, key, key, key, key, critical potential support levels. And on the one hand, I think that it's very easy to hear us and see the trends and say that, yeah, software's in trouble.

54:31Everybody knows it's a trouble. It's not as bad as everybody else thinks. Bye. And maybe that works this time. I just feel like in recent history, that sort of thinking has just been a money loser. Dude, I hope that we're contrary indicators and these stocks are all screaming lies. Wait, I have no opinion. Oh, I have an opinion. Like, well, I don't own the stock. So I guess by de facto, I'm not buying them. I'm sure these stocks bounce, but they're just, they're not. it's going to be a while it's going to be a while before they can convince anyone of what the previous chart was showing like whether or not people believe that they're going to use ai to actually make more money i think it's going to be like years and some of them never will but they're going to have they're going to have to like they're going to have to demonstrate not just say it like Benioff can run around saying, oh, we're agent force now and we're like all about agents and AI.

55:29But the market doesn't believe it. And he might end up being right and being able to demonstrate that. I would rather wait. I just don't trust. I just don't trust that these companies are going to figure it out that fast. It's really hard. Listen, there will be bounces because these These are still giant businesses. Adobe is still reporting record numbers. So there will be 20 % bounces along the way. Of course there will be. But like to what end? Are these businesses just – are they in secular decline? Like is it a melting ice cube? And right now that's how investors believe. Maybe they're wrong, but I'm not getting in front of this train.

56:06Not again. Been there, done that. It's not my – I don't love ratio trades like ratio chart-based trades anyway because I think in a lot of cases, when things get this extreme, it really could get so much worse. It doesn't get this extreme because the bears are totally wrong. Correct. All right? So I don't like that kind of ratio rationale for, I can't believe how oversold such and such industry group is relative to the S &P. That's not my – Yeah, if you want to buy it for a trade, 11 % upside, 3 % downside, all right. I'm not doing that. We're going to blaze through the last two. I want to get to this Adam Parker thing.

56:48And we don't have a ton of time to spend on it, but he put out a great note about why buying stocks that just got cheap is actually a trap. He looked at the top 900 stocks by market cap, divided them into deciles based on forward PEs, and excluded all companies with no profits. And what he found was that there's a relationship between trailing growth and valuation. I think we all intuitively understand that. Only stocks in the cheapest decile that just saw a quarterly decline in their forward PE have less than 50 % of the companies growing year-over-year earnings per share growth. So in other words, a higher percentage of more expensive stocks actually grow their earnings year-over-year versus cheap stocks.

57:34Right. That's how they get cheap. That's how they get expensive. So for the knee-jerk contrarians, sort of think twice, because there's an inner logic to why stocks do what they do. He says, buying a cheap stock that just got cheaper is a bad idea. We assess the percentage of stocks that have positive three-month forward earnings revisions by how much their price to forward earnings changes over the three months prior to the report. And this is a losing battle. You're up against the odds. They're not great. Companies that are cheap are much less likely to beat earnings estimates than companies that are expensive.

58:18If you didn't know that, you should know that. Now you do. Companies that get more expensive, no matter what their starting valuation level, are far more likely to get upward revisions than companies that just saw lower multiples over the last quarter. So last thing, 74 % of stocks in the second most expensive decile on a forward PE basis with price to earnings multiple expansion over the prior quarter then had upward revisions. So the companies with the upward earnings revisions are the ones that are growing more expensive in advance. Yeah, the market gets it right usually. I think this is such a key concept.

59:02We don't have more time for it, but shout to Adam and Trivariate. I think he just answers such interesting questions every time he publishes. Okay. Are hedge funds back, Michael? So says the Wall Street Journal. Everybody's saying it. Bloomberg, the Wall Street Journal, it must be true. I think they sort of are back. Good. This is the same thing. It's the same. It's a MAG7 story. That was the only thing working, and it's boring. It's enough already. All right. Hedge fund investors posted gains of 12.6 % last year. Okay. We know the S &P did 17, but fine. That is the best year of returns for the sector since 2009, according to HFRI.

59:49Hedge funds run by industry giants like D.E. Shaw and Millennium posted double digit returns. Bridgewater's Pure Alpha 2 did a 34 % gain. I'm sorry, not to be super duper annoying, but this is not a sector. I mean, all these hedge funds are doing, a lot of them are doing very different things. Correct. But those pod shops are doing everything. Fine. I think Barry said this way. D.E. Shaw and Millennium have every strategy under one roof. Hedge funds are not an asset class. It's a legal structure. I agree with that. But many of them are doing better. And there's a new story in town. Hedge funds secured net inflows of$71 billion during the first three quarters of last year, a major reversal after a decade of outflows.

1:00:35So people are looking back. We have a chart of the best performing strategies, the best performing hedge funds last year along with the category that they're in. I know like maybe half of these. Melcart opportunities, event driven up 45%. Okay. Bridgewater Asia, congratulations. applications bridgewater bridgewater's got a few funds in here they have a china fund de shaw oculus aqr has a fund in here aqr adaptive um bridgewater all weather up 20 that's risk parity old school wow all right and then the wall street journal wrote an article today hedge funds are back on top after a long alpha winter and here are just some of the data points that i'll share with you and then i want to get your feedback equity long short strategy was the best of all the categories, up 17 % last year.

1:01:25Event-driven, up 11%. So that's activist, merger arbitrage, special sitch. Global macro, only 7%, mostly benefiting from commodities, FX, and rates. Okay. There was a lot of volatility in commodities, FX, and rates last year. Relative value gained 7 % to 8%, driven by fixed income and arbitrage. That's like a lower risk type of hedge fund. Discretionary global macro managers outperformed systematic. Convertible ARB was one of the top relative. Great. So I think it's, I think this is going to have momentum and the media is going to start writing about hedge funds again and like famous hedge fund managers.

1:02:12The only stories we get these days are about the pod shops or if there's an activist 13D filing. We really don't – like nobody cares anymore. You know why I love this? And I think that will change this year. I think because the poor hedge fund managers that have just not been making enough money. Now, here's why I love it for real. Most – I think people think like, oh, this is only for the rich. Guess what? Most – I'm making this up. A lot of money in these hedge funds are pension funds and foundations and like literally like policemen and firefighters. Like, it's public money in here. So I want these pools of capital to go up.

1:02:54This is a benefit for society. Right. The end investor is not Montgomery Burns in his mansion with his fingers tented. Now, Montgomery's in there too, but so are a lot of normal people. Depends on the fund, but like Bridgewater is a great example. It's in Connecticut. You think they don't have the police? The teachers, the firefighters, the teachers. I'm with you on that. I'm with you on that. All right. It's great. Okay. Anything else, Rush? Just shout out hedge funds. Congrats. Shout out to the hedge funds. It's awesome. It's good. All our friends in the hedge fund community, salute. It's good.

1:03:35Better than good. All right. I'm going to make the case for the rest of the world. And maybe this is a flash in the pan of 15 years of - You're really going out on a limb here. Which? Which part? You're really going out on a limb here. You're making the case for global stocks? Yeah. Okay. I think you're in the majority. Everybody agrees. Go ahead. Tell us the story. Everybody agrees. You just showed me a chart that showed money coming out of US large caps going into international. That was one week. All right. Pitch me. Get me bullish on this. It's not just price change. There is a reason for the price change.

1:04:16and a lot of that has to do with what's going on here and as a result, what's going on overseas. So for example, this yesterday, we heard, this is from the Wall Street Journal, India and the European Union have reached a free trade agreement that will open a new market for European cars and other products, showing how the world's middle powers are expanding alliances in response to President Trump's tariffs. The deal announced Tuesday is set to link almost 2 billion consumers across the two economies, making it the biggest free trade agreement by population that the EU has concluded. It is the mother of all deals, said President Ursula von der Leyen.

1:04:55So, all right, it's all happening. I want to take you through some charts. This is from our friends at All Star Charts. And what we're looking at on top is all world ex-US versus US. And this is bumping up against the declining 200-week moving average. And listen, there have been plenty of false starts along the way. It hasn't been just a straight up US outperforms in one direction. There have been moments of time where it looked like this was happening only for it to roll over again. But what we're looking at on the bottom is the rolling 50-week rate of change. And it's happening in a material way of US stocks underperforming international stocks.

1:05:38We haven't seen this level of underperformance since basically pre-GFC or GFC. Right. It's happening. All right. Global breadth. This is from Rob Anderson at Ned Davis Research. So the global breadth measured by the percentage of ACWI markets within 5 % of a one-year high hit a new cycle high of 92%. That's the highest reading for the indicator since 2007. Chart off for a sec. By the way, my make the case, I'm not suggesting that you abandon our incredible capitalist society, obviously, but it also goes to the point that we were making earlier about like the knee-jerk reaction to call everything at the top.

1:06:18It's not just a bull market in the United States. It's a global bull market. That's a great point. It is happening everywhere, including here, obviously. All right, so investors are starting to notice. Look at this, record flows into emerging markets. This is a monthly, like not even close. And if you think that you missed the trade because, John, skip to the Exhibit A one, please, the cycles of international versus US. So you're looking at like, all right, come on, dude. International hasn't outperformed by this much. By the way, shout out to Exhibit A for the advisors. You can have this in your own brand.

1:06:58This is a great chart. So what we're looking at is the cycles of international versus US, only on a one-year basis. and international stocks haven't outperformed by this much since right after the GFC. This could be a five-year run. No problem. So you're like, oh, I missed this? Oh, really? All right, next chart, emerging markets versus S &P 500. So if you look back, so it outperformed in 2025 by a lot, but underperformed in 24, underperformed in 23, in 22, in 21, oh my God, don't even look at that, in 20, in 19, in 18. And if you look at the three-year, the five-year, the 10-year, monster, monster, monster, monster underperformance.

1:07:39And this brings me to my last chart of my Make the Case. Look at this ratio, Josh. This is emerging markets versus the US. And I don't know, man. This looks like a long bottoming base. And it looks like we're breaking out. So I do think that this is early. So you really just need China and India to go. I really think. to continue because that's where all the market cap is in emerging markets. Maybe this is another fake out, but maybe it's not. All right. I like India. I like it right here. It's down from its high. Doesn't look as good technically as China. I love the story. I think INDY is the nifty 50 index.

1:08:21So it's like the Dow Jones of India. It's very concentrated. and it's got big industrial and financial weighting, right? Like the big metal and car companies. And it's got the big, there's like five giant Indian banks. They're all in it. The other one is INDA, which gives you hundreds, I think, of - And EPI is the other one. I don't know. Well, that is the Wisdom Tree India earnings product where they sort of are weighting it by earnings. I think INDA is, INDA and INDY are both iShares. All right, nobody cares. They're both very cheap. And I like that trade. Here's what I know. The fundamentals and the technicals are lining up.

1:09:07The chase is on and people are under allocated. That is a nice setup. Yeah, I agree. That's a great make the case. I'm with you 100%. I love it. Here's my mystery chart and then we'll get out of here. Put it up. We were talking earlier about - Oh, I know. This is Zoom. look at you you're so good i didn't even give you a hint guys round of applause in the chat make some noise for michael that was uh you might have just broken a record why all right so so zoom uh on sean and i's list the best stocks in the market we pitched it on this show to you guys probably multiple times um i've traded it here it is making a huge move today.

1:09:50Shares of Zoom popped on Monday after analysts at Baird estimated that the company's investment in the AI startup Anthropic could be worth billions. Anthropic announced a partnership with Zoom and revealed that Zoom Ventures invested in the company way back in May of 2023. Whoa. Baird's analysts estimate all or at least the vast majority of Zoom's 51 million in strategic investments went to Anthropic in that quarter. That's where they get the$2 billion to$4 billion assumption, which is meaningful at Zoom's market cap. You know, Anthropic is being more valued at$350 billion. So Zoom could be up 78x on that investment.

1:10:35Think about that. Imagine that. Anyway, shout out to Zoom. And for all of you Zoom shareholders in the chat who've been watching our show, salute. Good job, guys. All right, that's it for us today.

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