Why Valuations Don't Matter

24:48The CIO is the founder. The portfolio manager is the founder's adult, young adult son. They don't, like, there's a lot of firms that need help. And I'll tell you, you said there's 20 ,000. There's actually 400 ,000 individual advisors. Come on, I mean like actual firms. Well, actual compared to your standards, like 20. But I'm saying compared to like, you know, so that's what you're saying exactly right. because Trivera, the institutional business, has every day for the biggest 3 ,000 equities, we download or compute hundreds of pieces of information. So we can kind of give them dashboards for data they don't have access to.

25:20And I do a monthly webcast where, I mean, you guys have these massively successful roadshows where people want to see you. And so for us, like people can dial in and ask me questions. And I'd say they like that. It's almost like they don't even want me to say anything. They just want to ask me like, what do you think of this or that? Don't give away too much though. For a hundred bucks, don't give them - A hundred bucks a month, yeah. Don't give them, don't give away too much. You'll never be able to raise the price. Yeah, you know, it's, thanks, you know, but it's been, it's been great. And we're at, we're five, you know, in our fifth year now at Trey Baron.

25:43And so it's, it's good. Like we're investing in new opportunities and bolting on some stuff and, and I'm working a ton, but loving it. So it's, it's good. But thanks, thanks for this plug. I forgot about that because I just sat down and talked to you guys. I haven't seen it while. I'm happy to see you. We usually don't go 22 minutes into the show before we introduce the guest. I'm cool with that. I actually, it's funny. I forgot too. I was just enjoying being with you guys. So Adam, how do you think about like. We'll play some golf now that you're doing that. This might be too short-term for you, but I'm just curious.

26:06So we have Microsoft up 4 % today. Yeah. Meta is up 11%. Yeah. And the market is flat. RSP may be looking like a double top. Who knows? Like, do you get caught up in, like, the short-term nature of these moves? Or are you like, dude, it's just a day? What are you talking about? I try not to, but it's unavoidable. I'd like to answer your question this way, which is, you know, I try to think about what new news changes my mind. And if you said to me, like, look, Adam, you've got this optimistic view on equities, but what are you worried about? I can give you a couple of data points I'm worried about, and you just hit on one.

26:36One is ASML said when they reported that there were some tariff issues. Okay? And I'll call ASML a very real company. They basically have a monopoly and a key portion of producing semiconductors. Okay? So they missed a couple quarters ago. Everyone thought it's China, it's Samsung. It was kind of idiosyncratic. But Taiwan Semi reported the same day ASML did, beat and raised, made a tariff comp, but nobody noticed. The correlation between semis and the market are so high that I'm really focused on other semi companies talking about tariff stuff because i just think that the market you mentioned when we're chatting maybe the market acted great when unh did it but the market won't act great if semis don't okay and so i got to sort of understand the contagion on tariffs the second point is your question you asked me which is i thought the banks had great earnings provisioned less good trading like multiple business series and the stocks didn't go up very much and you always hate it when there's like a beat that doesn't go up very much they had gone up a lot they had up prior Totally.

27:29But you know, you know, you know, the best thing is when they miss and it doesn't go down and you're like, all right, it's a sickle goal that I'll clear signal. So on that opposite logic, I'm a little bit worried about your question of like, I would have thought the market be up a little bit more today with, you know, when I was sitting there last night going like, whoa, look at Microsoft and Meta's numbers and look at eBay's numbers. And like, you know, this is this is like, you know, on like Donkey Kong and like the market didn't. I thought we're up 1 % on the S &P. one and a half. That's what I'm saying.

27:55If you asked me at 5.30 p.m. last night, I thought we were going to be up big today. Same. So I'm a little bit, you know, sensitive to the fact that we're like going to digest the good news. What's great for Microsoft and Meta doesn't necessarily translate to the next 98 companies in the NASDAQ 100. On the other hand, we've gone straight up since the April lows. Right. You get back 5%, whatever. I mean, kind of who cares? You know, I just think that what's been really hard for most institutional investors who are benchmarked against the S &P is that since the president said it's time to buy stocks, which was probably the best quant signal of the year, just the president said - When was that?

28:29April 9th at 10 a.m. or whatever. I mean, he said it's a pretty, it's a good time. He was right. You know, what's worked has really been low quality, what we call like hyper growth junk stocks. So, you know, most institutional investors, they raise money from serious people. And so they have to kind of say, I buy top half quality businesses. They've lagged. And so I've been sort of thinking at some point, maybe good fundamentals would result in a bit of rotation out of i don't know what you call your junk proxy a lot of people would say arc we call it the dj down non-profitable yeah non-profitable goldman's losing list arc yeah which is like a hyper growth junk kind of asset we made a we made a dow jones out of the most degenerate stocks just not etfs and not crypto just it was ripping and i think it's sean knows the number but it absolutely dominated q2 it dominated so that's hard because you want to like participate when things are on.

29:19Usually the junk stocks work when you're close to the bottom of a recession and you expect a recovery in margins and earnings, or you think there's going to be a lot of fiscal stimulus or monetary policy that juices that. What's unusual, we had, and we saw that around the election, great, red sweep, regulatory release, M &A. So you saw it last November and December, it kind of made sense. Okay, there's a bit of a risk on rally. Small caps worked for a couple of weeks around the election too. But then for it to work in April when people generally think the economy is decent but slowly eroding, and we don't think there's going to be a massive fiscal stimulus because that's kind of anti-doji or whatever.

29:51We're already running at a wartime deficit anyway. It's just a little bit unusual to bet on a four month period like we've had of the junk running. So I think that's been harder. This is a good segue into the conversation we're about to have with earnings last night. What we have on screen is the MAG7 names since the low. Chartkin Matt knew that Adam was going to be on and he had to step up his game and he did. So the best Elite. Yeah, absolutely. The best performing stock since the bottom is Broadcom, which I know is not in the Mag 7. Right. But it's Broadcom and NVIDIA and then there's a gigantic gap.

30:24Gigantic gap. Apple's at the bottom. Meta, Microsoft are two and three and then Tesla, Amazon, Google are sort of in the middle. Yeah. But look at those returns. 91 % for Broadcom, 88%. The point being there was no need to gorge yourself on junk because look at the returns you got with the AI trade. Microsoft, you know what I mean? It's a$4 trillion market cap. No, totally. And I mean, anecdotally, I sort of think Broadcom is even more crowded than NVIDIA just because I feel like everyone, you know, everyone's there and Hocktent's done a great job and he's on Meta's board. He's kind of like moving himself into the inner circle.

30:58What is the quant stuff that you look at say in terms of crowded trades? So... What was the chart on the right of that? It was just a bar chart. Oh, okay. Yeah. Yeah, I feel like the word crowding is kind of a weird word. Like we used to think of it 10 years ago as like, we don't want crowding. Now you want crowding. I think, yeah. Depending on the market cap. I think I did a dinner with eight chief risk officers of big funds this past week. And a legitimate huge fund said that they now have a strategy where they get long the meme stocks. So they see open door. They see Kohl's. It's got a lot more options activity, a lot of short interest, a lot more options than equity activity.

31:36It's got a lot of short interest. And they see it squeeze from$50 to$1. They buy it from$1 to$2. So you're seeing behavior that's totally different because they can measure that and make money. So the earlier point that you were making that it's weird to see the low-quality junk stocks rallying. Yeah, they just reacted to it. So what if I tell you those stocks are not economically sensitive? They're not borrowers. In a prior era, junk stocks had a lot of debt. These days, they could sell equity. All they have to do is make some shit up about we're inventing a flying carpet. So that's one. Two, I don't think they're - Right, access to the capital markets isn't the issue.

32:14I get that. So I don't think they're economically sensitive. I think they're demographically sensitive. And the demographics, meaning the young investors, that's on their side. It's a flood tide of 27-year-olds with lots of money who want to have fun. Yeah. There's nothing economically sensitive about the way those folks trade. These guys are just, it used to be a couple of years ago when the first meme stuff came out, you know, with GameStop or whatever, that people said, all right, what are like do we sweep x do we look for words like what are the household name stores that the 27 year olds will try to squeeze up higher but when you look at kohl's um i think people have been shorted for years it's basically going to be pickleball ports courts at some point the whole thing makes no sense and the god it's gone from 60 to seven or eight and so people were just happy to be short this melting ice cube forever and then it gets squeezed to 14 in one minute i'm surprised that they didn't learn anything though from three years ago yeah are clients like still doing this Why would you be short Kohl's down 95 % from a tie with 35 % short interest in the stock?

33:11When we ran our hedge fund, we really didn't short any stock to trade below$10 a share. It's dangerous. Yeah. You know, you shorten to five. So the open door thing to me is crazy. It was 50 cents and you were shorted. Like, what are you doing? Like, I mean. Why are we shorting 50 cents stocks? It goes up five cents. It's 10%. I mean, whatever. Like, you know, that's just insane. But I think the point is just that, you know, the retail investor is a little less sensitive to valuation. A little. No, it's irrelevant. It's not even in the conversation. It's not in the conversation. I did this several years ago.

33:45I had this guy, Igor Tolshinsky, who runs World Quant at a conference. And he did this whole thing, you know, talent's everywhere. We have two million. We're creating millions of signals a year. And it was like 250 people in a room when I was in Strategist Morgan Stanley. So I said, hey, just give us one of the two million signals, man. Like, help a brother out. Give us one signal. And he goes, low price. And everyone laughed. Right. And I went back to the office. I met one of the team and I said, this was like hiding a point. This guy's not frigging kidding. Yeah. Okay, you go to certain countries.

34:10At that time, I said it's Vietnam and other areas. People just buy$3 stocks. They think they're cheaper than$8. Then we studied splits in America and they generate subsequent return. You can divide a numerator and denominator by three. Why does it generate subsequent return? Because people think it's a better deal when it's lower. They don't even know about the denominator, even here in the US. It's so stupid. It's genius. Right. Okay, so this guy was in our face in front of 250 of the smartest quants every from you and he's like low price And so and so I think that's that's an important issue that the other thing is a lot of money now is being run um Valuation neutron purpose.

34:42So I don't know if you guys talk to like folks who run quant money, but It's kind of important for people to hear this So take any of the big multi strats on it, you know, they're just 15 or 20 of them people know the names Okay, and I don't want to, you know single anyone out because they're all clients of trivarian, but A lot of them have like 35 quant teams. Quant team can be one to five guys. Like separate pods doing different quantitative things. And they run 50 to$150 million each. You may be like 50, 150 million. That's nothing. Okay, calm down. There's 35 teams. They run six to 1 ,200 gross.

35:12Now it's a$20 billion quant business. Does that sound bigger to you? All right, here's the part that's crazy. Each one of these teams has hundreds of longs and hundreds of shorts. And they run market sector and valuation momentum neutral. And they have a three hour to two day holding period. their long data strategy is 10 days so turn over 10 % a day so you want to know like why you you bought a stock like microsoft it was up a lot in the aftermarket and then it faded afterward because the only thing these quant guys don't do is play during earnings it ruins the alpha of their algo as soon as his earnings is over and there's a lot of liquidity there they're going to grab that with something else so you see a lot of guys short stocks it miss and they're happy and then it goes up the next five days their longest stock it beats and it goes down a lot of that's just there's 15 firms that are doing what I just described to you.

35:55So everyone thinks like, nobody cares about valuation. It's like, they don't care about valuation because they're long, crazy expensive stocks and short, crazy expensive stocks on purpose. And they won't take a trip. Yeah. They're valuation neutral. So some of that stuff, the impact that that has in the market, when there's 10 firms with$20 billion on balance sheet with three hour to two day holding period is massive. And you're like a long, only guy, you're doing real work and you're holding stocks for three years. Why is my stock going down? Why is it going down? Because everybody who's trading it does not care about what you care about.

36:22Yeah. That's opportunity. Yeah. And so durations on your side. They're focused on two days. Yeah. So if you're focused on five days and you can like make it through the next two days. But if I told you your job and all these multi-strats have fundamental guys who do, they have to call the quarters. If I told you, look, you're going to cover a consumer book right now, 30 longs, 30 shorts, you're a smart guy. And I told you, you're going to get paid if you get the quarters right. All you're going to care about is what's in the price, who's going to beat, who's not. And you have to be long, short.

36:48You're going to be neutralized. And then these guys make$20 million in one year. You know what's so hard about that game? Michael makes this point all the time. If you were to do a sports betting strategy like that, at least you know the odds. So like if the Giants beat the Green Bay Packers, they were supposed to lose, right? They were getting 10 points. And not only did they not lose, but they win. Everyone knew what the expectations were going in. They're published. They're literally published on the internet. So these guys get paid. We don't know. These guys get paid$20 million to figure out the odds.

37:19before they report. I would argue that real long-term investors are really doing some kind of Monte Carlo. Like, they're saying, well, what's in the prices this thing has a 10 % chance of being successful. I think it's 40%. Right. And there'll be asymmetric upside. Like, that's really what they're doing. It's guessing the expectations of everyone else. Yeah, and they're playing a distribution game. But the guys calling the quarters, like, they have to bet on upward revisions. They're Vegas. They're basically handicapping the stock. But they have the ability to do things in detail, talk to experts, go to court case.

37:47Like, they're diving in at a level that somebody who's running$50 billion with 20 names or 40 names trying to be at this, they're not. So they're playing a different game. But how do they know what's expected? Is it just like the whisper number back in the day? Talk to every sell site, and always talk to your peers at the buy site. Go to idea dinners, hear what people are saying. Go to sector specialist dinners, ask what they're saying. Look at every natural language process. Sounds exhausting for a two-day trade. It is, but if you're running$100 million at$8 to$1 ,200 gross and you get it right.

38:16Yeah. No, totally get it. Stuff adds up. The reaction to Microsoft. So just let's just go here because I think this is, put the table up. So we're looking at, what do we think the reaction is by the close? Well, it's a pretty big fade. It's on the lows of the day. It's up three, but it's up 4%. It's still, you know, all-time highs. It gapped up to 555 and it's now at 535. But this is on a stop that's 35 times, 35 times forward PE. and based on this chart, what you can see is in Q1 of 2023, which is really not that long ago, it went into their earnings at 23.8 times. So it's a lot of turns higher on forward multiple and it's still rallying.

39:02So this is interesting. The revenue was massive. I mean, we'll talk about that in a sec. This is from Consensus Media. They do great work here. I was just about to look up the revenue. What stands out to me here is that they've beat on EPS the last X number. What is this? 10 quarters in a row? Whatever it is. Whatever it shows, it's beat every time. But the single-day reaction, a lot of pretty deep red, right? Like a lot of pretty deep red. It can be. You know, it can be. I think you're— That's the part that's hard. You don't know where the number—where the whisper number is. And it's also, like you said, how much is rallied first and, you know— How much is it up before the print?

39:35And it's not just what they reported, but what's the implied guidance that they changed the full-year guidance enough that people— We saw that a little bit yesterday where a company beat—like carrier beat but didn't raise the full-year number. or it's people thought the applied number was low. Whatever, there's a lot of that. Then there's, what about the gross margin? Was there a mix issue? Some people focus just on the Azure growth or the AWS growth. So it's really hard sometimes to isolate. One of my friends said this to me years ago. It's a 19 variable problem and we have to isolate it to one so we can understand.

40:05This is too many variables to get right. Last night, Gmonster said, tonight is a breakout moment for AI. Meta and Microsoft. Meta and Microsoft just sent a message. Who said that? Gene Munster. Meta and Microsoft just sent a message to every company. There's gold in those hills. I believe he meant Herman Munster. I don't know who Gene Munster is. I apologize. No, Gene is like one of the top technology analysts. They call Gene when Dan Ives is busy. Gene's good. I just don't know who it is. What is Gene? I'm shocked that you don't know this guy. He's been around forever. Okay. I just don't know him.

40:39Yeah. We'll connect you. Finally, somebody said something positive about AI. is important. So throw this Azure chart up, John. So the guy's Bosch on AI and he's kind of saying, we got what we got on last night. Well, breakout moment just in terms of like, it's another CapEx guide hire from Microsoft. That's rewarded. Meta, yeah. And Meta reaffirmed and actually raised the lower bound. The midpoint of the thing came up. Yeah. So this looks fake. This is from Alex Morris. It's Microsoft's Azure revenue runway. Look at NVIDIA's revenue run rate. The chart looks the same. Yeah, it's unbelievable. It's unbelievable.

41:17I put one in my note. You emailed me, Josh. I put one on the video. It looks exactly the same. No wonder the stock's up. Look at the consistency of this growth every single quarter for seven years. You almost, like, you couldn't have a better business. And it's insanely profitable, by the way. So listen to that. Speaking of profitability, this made me laugh. This was in the deck. Microsoft Cloud gross margin percentage decreased year over year to 68 % driven by the impact of scaling AI infrastructure. They're spending all this money and the margins are still 68%. How about$120 billion annualized CapEx run rate, which is almost 40 % of revenue?

41:59I'm not surprised. We used Azure out of the gate at Triveria to do storage and compute because they charge a little less for storage than AWS. and we don't use as much compute. So, you know, given what we do, but we ended up getting rid of them. I'll tell you why. They, it's, you know how like in a casino, you can't find like the exit door on purpose. Like they don't want you to, so we were, I forget what our bill was. No clocks, no windows. Yeah, exactly. So maybe our bill at Trivaria was six, seven grand a month to do what we did. And then one month I get a bill, boop, 10 grand. So I just email like, hey, that seems on a percentage basis, like a fairly chunky, you know, increase.

42:37is there anything did we do we use more compute did we you know do we use more storage like and like it took three months to get an answer back from these guys i'm like look i'm not going from 84 to like 120k annual run rate without an email and so i found these two dudes who um do my it these two guys and i was telling this to a client they're like what's the ticker i'm like no no it's two guys from new jersey yeah exactly it's two guys anyway so and they um kind of like kind of got me my own service for way less money. So I got rid of it. I think that Azure just has pricing power and if people aren't paying attention, they just keep raising it on you and you don't notice.

43:12I think within, so one of the things - That's why their margins are so high. One of the things about Azure early on, like 10 years ago, 2015, at the dawn of the cloud computing era, there was a debate. Is Microsoft better positioned than Amazon or any other competitor, Google? Right. And the smart answer, which I didn't know, but somebody explained this to me. The smart answer is Microsoft because the world is filled with people who have earned IT credentials as Microsoft experts for the companies they work for. So if you already are – There's GitHub. There's LinkedIn. There's a lot in the curriculum there that people use.

43:52We use it. We use it a lot. But the IT professionals working at the Fortune 500, they're Microsoft credentials. So that's what they're doing. I'll give you another data point. that. At the beginning of this year, Gartner, which is a big kind of IT services company, came out with a 10 technology transfer the next few years. So we thought, let's search every earnings call transcript, 400 tech companies, and let's look at any evidence of what these, you know, and I'll give you ambient intelligence with your computer's off, it's monitored to you, disinformation security, so people send you bullshit and it has to flag it for your IT, polyfunctional robots, post-quantum photography, agentic AI, so agents, all these things.

44:27So we tagged the stocks and we kind of created baskets and we followed their returns and multiples, whatever. And one of my big sum reports, we wrote this in January of this year, was, holy crap, like Microsoft's in a lot of these areas. Like Microsoft, it was in like five or six of the nine areas. And so one of our main conclusion points was people might be slightly underestimating like the number of balls they have in the hopper in a number of these areas. So it's kind of funny you say that because I kind of feel like they've invested in a lot of different areas. I sort of feel that way about Google too, but we'll see.

44:54100 million monthly active users on Copilot, 800 million monthly active users using different products within Microsoft that include AI. I don't think the product is that awesome, but I think I'm a user too. It tries to predict what words I'm going to say. Teams is the worst thing ever, which is completely irrelevant. So the big question now is the CapEx. The whole market is hanging on that. And Josh mentioned that they got it to over$100 billion. They're talking about$30 billion for fiscal Q1. And I mentioned that chart earlier looked fake. This sounds fake. I don't know what this number means, but here's a quote from the call.

45:31When you think about the full year comments I've made on CapEx, as well as a Q1 guidance of over$30 billion, here's the part. You first have to ground yourself in the fact that we have$368 billion of contracted backlog we need to deliver, not just across Azure, but across the breadth of the Microsoft Cloud. I don't even know what that means. $368 billion in backlog. I mean, even if it's half of that, Well, these businesses were high single digits CapEx of sales, and now they're going to be like 15%. So that math kind of checks out. That doesn't seem crazy to me. Michael has a CapEx to revenue chart or a CapEx to headcount chart of all of the gigantic, and they're all spending this way.

46:12The only one that's not is Apple. Apple's CapEx for this year is$11 billion. So I guess the question kind of back to your - What world are they living in? Well, back to your crowded question too, right? So there's a lot to talk about. I'll unpack here, right? Because a cynical person could say, look, like they're not going to get the return on this investment. The depreciation burden on their cogs goes up because – I've never seen anybody talk over the mic. You got to talk into it. I just – I feel like it's in my way. He was telling you a secret. I feel like it's in my way. You know, sorry. Thanks for – I'm not as comfortable with this number one shit as you guys are.

46:43No, so the CapEx sales – the CapEx has like a three - to four-year useful life, right? So the problem is you depreciate that really quickly over your P &L. And so there could be a burden on your cogs. your gross margins go down, then your multiple goes down. Because that price of forward earnings you showed is really correlated to gross margins for most businesses. So the risk would be they don't get return on it and depreciation is up, margins are down. And so that's definitely one of the biggest couple of big investment controversies. But I think it's a little bit like the crowded question. I think you may ultimately be proven to be right if you're bearish, the return isn't there, but you might not know the breadth of proof cases to the end of 2027 or 2028.

47:20And so it's a long time to sit out. You're saying it's 830. The main course is about to be served. And there's a massive party after with the most beautiful people in the world and like the hottest singers. But you want to leave now because like you want to like, you're worried about your parking, like the exit, like how fast you're going to get onto the highway. Check this out. Last thing I have in Microsoft. Right. Like your parking spot at the stadium is, you know. Also from Alex Morris. All right. So R &D expense at Microsoft nearly tripled over the past decade from$12 billion to$32 billion over the same period, but it declined by 150 basis points as a percentage of revenue.

47:55This is unbelievable. That sounds like productivity. It's unbelievable. They came out saying they saved$500 million on something a couple weeks ago, right? And I don't know how to think about that because you can do some monkey business with the accounting. I don't want to take people deep into the depths of accounting, but I remember years ago when I was a semiconductor analyst, I used to cover Intel and others. Intel would do this thing where they'd have a new technology, like a new wafer. And so they would first kind of have that in the depreciation. And then they'd say, well, we're really close to doing it.

48:22We'll count it as R &D. Or they'd move dollars from R &D back to COGS. And so what happens is the gross margins go up, even though the operating margins doesn't change, but the stock market reacted to changes in gross margins. So there's some fluid stuff around like, you know, what you're investing in AI, whether you call it CapEx, whether you call it R &D. I wouldn't spaz about it. I think it's just that the net margins and the revenue have been good and the stock's up because of that chart you showed earlier. Let's do meta quickly. And then we have other stuff to get to. Yeah, let's talk about cooler stuff than this.

48:51So meta said there are 8 billion people on earth and meta said 3.4 billion of those people actively use either WhatsApp, Instagram, or Facebook on a daily basis. There's never been a company in the history of the world that has had this percentage of humanity as a daily active user. The stock is now 27 times earnings. Right. Is that high enough? Given like how powerful this company's ability is to reach into everyone's minds and decide what we buy, where we go, how we shop, who we talk to. It's pretty scary. Here's a chart from ChartKid, Matt. 43 % of the world uses Meta every day. And that number for context was 26 % of the world in 2018.

49:40so and that was i don't know if they had a billion users and people said how do you get bigger than a billion well this is how time yeah i think that i think i think that it's hard to know like what the right multiple is okay i'm taking your question sorry i keep leaning over the thing no put it right in my face um i think it's hard to know what the right multiple is because if i said to you like let's rank order these big companies about which ones we're sure are going to be around in 2040 or aren't going to be majorly eroding in 2040, I might put Meta higher up the list than some of the other companies on the list.

50:13Yeah. You know what I'm saying? Because you're not sure, like, you know, do the kids, are they going to use the next generation going to use it? You know, they do. They're on Snap and TikTok, but they're on Instagram. They do. But you don't know about 2040, right? Like, I didn't know that, you know, when I was a kid, sorry, I'm the one. No, it's us. It's us. It's us. It's falling. You may be insecure about my face and the thing and all of it. I'm not used to having large cylindrical objects in my face, so I'm just trying to get it right. So, you know, I think that there may be some longer-term logic to why it doesn't trade at quite as high a multiple as the other businesses.

50:48And I would argue like some of the other ones have like we talked about Microsoft. They have like eight or different, nine or different things that could work out, right? Like I know LinkedIn, when people first saw the side of the deal, were like, whoa, they overpaid for LinkedIn. Well, now it's like, I see a data point. Like LinkedIn says there's 38 ,000 more job openings this week than last week. And I'm like, oh, that's much more interesting than the jobs report that comes out the first Friday every month. LinkedIn is crushing it for them. Actually, LinkedIn revenue for back to Microsoft is up 9%.

51:12But they said - Every quarter. They said there's been a slowdown in hiring activity. Is that not more interesting to you than whatever the B-Lex tells us in the Friday? Right. That's what I'm saying. Exactly. All right. Last thing for me on the meta thing, Adam, we can move off this, is again, the CapEx. I think 30 times seems right. That's it. I'll give a number. John, chart on, please. So they have a chart showing their quarterly and year-to-date CapEx in the most recent quarter versus the prior year. And it's just unbelievable. I mean, they were getting killed in 23 and 24 for losing all the money in Reality Labs and investing so much money.

51:44Last year was$15 billion year-to-date. And now they're 30. To be fair, half of that is hiring people. What do you mean? Paying billion-dollar salaries. I don't know if that's in here. But either way, it's wild. They are all the way in. I think if you read Zuckerberg's letter, which he put out the day of earnings. Yes, he put out yesterday. It's basically like all these other companies that are doing AI, they envision it as a way to replace people. And we see it as a way to empower people. And that's why we're different. I think their vision is like, they're going to standardize the whole world.

52:21They have 3.4 billion in their audience. we're going to get everyone standardized on our AI tools. Do you have the Ray-Bans? Do you have the Meta Ray-Bans? I feel like you would. I feel like you're the kind of guy who would have the Meta Ray-Bans. No. I'm the opposite of that. You're not an early technology adopter? No, it's not that I'm not an early adopter. It's that particular kind of thing, walking into a room and having people feel like I'm filming them. That's like what I'm trying to – I'm trying to avoid attention when I move these days. I would not be that person. Interesting. You know, I think the more – If you were at a house.

52:54I don't have my. I don't want to. If you were in a backyard barbecue with a whole bunch of people, you're friends with some of them, some of them you've never met before, and somebody walks into the backyard with f***ing cameras on their sunglasses, how anxious are you to be in that person's line of sight throughout the course of that day? Because I am going in the house to watch TV. Yeah, I don't really go to parties or have friends, so I. Fair. That's a. Fair point. I did know that. It's a weird application. like the worst part of this show for me and I thought about this for the first time ever is at the end of the show you ask about like what TV shows I've watched and then I feel like the biggest loser of all time if you want to talk about like the books I'm in but like I just everyone's like did you see this one and I'm always like I hate TV now what is a book you wrote you wrote I actually prepared this time to think now you won't ask me of course I will ask you shouldn't have mentioned it you wrote this week you wrote a piece about why valuation doesn't work yeah Was it last week?

53:51No, Sunday. Fantastic. It was so good. Nice. And it's not, look, value investors don't need to be piled on, and that's not what you were doing. I think you're trying to catalog the various reasons why it's been so difficult. I could answer it with one term, just say cloud computing. And if I just say that and I show you a chart from 2015, that pretty much answers everything. But you, I thought, did this more thoughtfully than I would. um what's the message about why valuation doesn't work for picking stocks anymore and after we go through that we'll diagnose whether or not some of those things will ever reverse yeah i mean part of me thinks it's like i could teach a semester at at school about that like to answer in 30 seconds isn't easy but i'll just say we will spot you 60 seconds 60 seconds i'll say it's because um the market um makes stocks cheaper stocks that get cheaper on average get cheaper for a reason that the fundamentals are more likely to be impaired and stocks that get more expensive get more expensive on average has that always been the case less than it used to be it used to be i listen i'll answer this way i used to think like value investing made sense and growth investing was crazy in like the late 90s when i was forming my investment districts i'm like all right well i know like how much of a discount should happen in recession i know where demand and supply is and when they'll run out of ability to borrow money and i'll just get kind of dimension the value and growth was like i'm looking at my finger and there's something called a TAM, it's a total available market, and that guy doesn't know, you know, whatever.

55:14And so it just made more sense to me. And now I'd say it's like the exact opposite. Like, if I show you every stock that trades about 10 times forward earnings in the megalactic cap universe, there's a single one in there, you'd be like, whoa, that's kind of surprising that American Airlines is cheap. Like, of course it's cheap. It's going to file for bankruptcy in the next 10 years or whatever. Like, you know, the auto, the traditional autos. Did you know that General Motors traded a low price? Like, there's nothing on that list. It's all cheap for a reason, a reason we understand. And so the value guy's just gambling on some future improvement that they can't see and have no visibility on because if they could, we would see a tip.

55:43That sounds more speculative than betting that people will still want iPhones next year. Yeah, than betting on AI working. Yeah. So I was at this pitch for a public AI high-fee fund from this billionaire investor who was raising money on JPMorgan's private network. And I was like, I don't want – I'm going to hate this. I want to hear this pitch and I'm going to be so cynical and mumble about it when I walked out. And even with my negative pre-attitude, the guy crushed it. How should he give him? So, so it's funny. It's funny. He said, uh, the answer is zero because you know, I'm a cynical guy, but, um, I was with somebody.

56:19Uh, I'll answer the question. What happened is it's like a high fee public and you're buying Nvidia and broad common infrastructure. And by the way, they're all, it's all 50 % since the guy reads them. So the person dog and pony shit show said, Hey, isn't this all obvious? And then he gave an answer. And I was like, this guy's money. He goes, yeah, you know, this guy's got several billion dollars personally. And he goes, um, is it Chamath? He goes, I have made 120 % of my net worth on things that everyone else told me was obvious and then lost 20 % on everything else everyone's ever told me about.

56:47And I was like, huh, okay. So you bought some cloud computing 10 years ago. You're buying some AI stuff now and you're trying to get me to sell it when there's seven years left in the cycle. Come back to me and, you know, like I said, you're at the party. It's 830. There's a dinner and a band and a party till 2 a.m. That's 830 p.m. You want me to leave? Yeah. Because it's at 27 times earnings on Meta. Great. Show us these charges. That's how I feel about it, yeah. Here's a price to forward earnings over time. So how does this figure in? This is part of the AI answer. So I just think Costco is a poster child for a company where you get margin expansion, it gets a higher multiple.

57:21This thing is a low margin business and the multiple got to over 50 times late last year on forward earnings. And the reason is because their net margins were going up and people thought they'd do a better job of monetizing at the door and all that kind of stuff. And I pointed it out because there are a lot of really low margin businesses in the market. I am recommending McKesson and Cardinal and Sincora, their drug distributors. For people listening, if they knew what the revenue of McKesson was, if you guys knew, I'd be shocked. Okay. McKesson is 360 billion revenue company. Oh my God. One year at 1 % margin.

57:52They're a drug distributor, a pass-through. If they can somehow predict employee and customer behavior better and margins go to 1.5%, that's 50 % earnings growth. It's going to trade at 25, 30 times earnings. So there's a lot of these like tens of thousands of employees, tons of revenue, billions of dollars, low margin. And if AI enables them to predict behaviors better and margins go up a little, you'll see Synthes and Costco and Walmart and all these businesses. So there you want to, not one, but a valuation mean reverting guy is going to say, oh, well, this thing looks expensive. And all they're really doing is shorting companies that have potential for margin expansion and productivity.

58:27And so that's, that's like a key to why I don't want to use valuation in like a three-year window to pick winners from losers. Another thing would be, and I don't know if you're about to show another chart. You have NVIDIA as the poster child of AI revenue beneficiaries. So this looks like your Microsoft chart you showed. It looks fake. The right half of it looks fake. They guided it up in May of 23. It looks like a projection. Right. It just looks like some idiot first grader dragged across an Excel. Yeah, like in Silicon Valley. It's exactly what you criticize the U.S. for. Like, dude, did you just drag that across Excel?

58:52Like, put some cyclicality in. Like, what are you doing? You're fired. Right? So that's an obvious, you know, everyone knows the revenue beneficiaries. We talked about that. I think the part that's tricky for people, and I don't know if you have another one, is just the impregnable businesses. So whatever it's, you know, aggregates or toilet paper or, you know, water or waste management or whatever, like those stocks can trend higher, not because things changed at all, their growth algal changed, but because in 2030, I know I'm still that waste, I'm still going to need water and toilet paper. And so the relative 2030 estimate achievability got better.

59:20And all you're doing if you short them on valuation or sell them is saying, you don't want to sell, but you're selling businesses that have a higher probability of being around than others, right? I showed another one, I think I picked Getty Images or something of like, that looks really cheap versus history. Do you think that makes any sense to get longer because it's cheap? No, like you don't want to loan companies that have a whole like tax accounting or there's a bunch of software companies where like they're not going to exist. So they got cheaper for a reason. The reason is they're more likely to be disrupted.

59:46Number two, the way quantitative money is managed. We're going to go, we'll go through all six reasons. So that's what I was talking about. The whole valuation neutral stuff with the, you know, 100. Yeah. So that, that they don't care. They're longer short the valuation. All right. Three, we did this too. We tell investors a less valuation sense. We know that. Okay. Wait, hold on. I have a question. So cheap stocks, shitty companies, let's call them shitty companies get cheap. They stay cheap. They get cheaper until they just die. Right. Does that mean that the market is more efficient now than it used to be?

1:00:13Because there used to be an overreaction to the downside. I think it just means that the market has gotten more anticipatory. It used to be years ago, people would say, well, I want to buy the stock because it's already discounting most of a recession. So even if we have a recession, it's already discounting it. Now, stocks that get cheap into a recession are still the worst during a recession. The market was right to take them down in an anticipatory fashion because the market knows they're most impaired. The market gets increasingly anticipatory. I think that's the answer to your question. So maybe it makes sense that the biggest pods of money are talking about three-day windows.

1:00:45Because over the long term, everything's already in the price. I think that valuation will work. And I want to avoid incredibly expensive stocks and incredibly cheap, like the top and bottom decile. Stay in the middle, 80%. then I don't have to worry about valuation at all. I just find margins. But it's all about margins. Yeah, margins are accelerating revenue or other fundamentals. So yeah, I think that makes sense, yeah. You point out that valuation has not worked for a long time. Like, this is not new. No. It's just getting worse. It seems to get more extreme. Right. Okay. Behavior into a recession.

1:01:16Did we just talk about that? Exactly. All right. And then valuation being related to margins. I think that's like a really key point. Yeah. It feeds into my cloud computing shtick. it's like these are companies that used to have a computer room like if they wanted to expand they would have to buy more servers from Dell and HP they would have a cost that just isn't there anymore it's a different type of cost part of who we talk to are like these cross asset guys or usually like if I go out of the US or I'll say people over a certain age and I'm 56 so I'll say my age or older they tend to sort of use like Grantham or or Shiller PE or CAPE or like a valuation mean reverting framework.

1:01:55And they'll say, well, I want to be underweight US equities. This is a TMT bubble like 2000. And I don't agree with that. But I push back on them. As I say, all you're saying is you think margins are going to get killed for US equities. Because if I show you how much market cap has above 60 % gross margin today versus history, I've shown you how many companies have high margins. All you're saying is that, you know, that you think margins are going to kill. So like, you know, I like the example of like, do you think there's anything that's worth more money than anything else? Like, do you think the Four Seasons is worth more money than Motel 6?

1:02:27If they were both$40, which one would you choose? Yeah. Right? Like, they're not going to trade at the same multiple because one is growing faster and has higher margin superior to the other. So this is what they got wrong, the bears. This is from Duality Research. And in 2017, 2018, when we were hitting, quote, peak profit margins, it was really difficult to foresee that the mega caps would continue to take market share to expand their margins. It was impossible. But that's exactly what happened. We're still at all-time highs in the market because we have all-time highs, all-time highs in profit margins.

1:02:59Yeah, the median stocks margins in the top 500 aren't all the way back at highs, but they're certainly up a lot from where we were six, nine months ago. And the mega caps are high. So yeah, S &P, maybe on a dollar basis, that's true. But I look at even like the median stock, and I think the median stock probably has – I know CapEx is up for the big hyperscalers, but the median stock has lower CapEx year over year. Wage pressure is down year over year. I haven't seen a lot of companies – maybe we'll see it, like you said, in the illegal immigrant stuff with healthcare services or restaurants or roofers or home builders.

1:03:34But generally, we haven't seen companies talk about labor shortages at all yet. So I don't think wage pressure is there. Commodities, Bloomberg Commodity Index, they're kind of down. Currency is going to help a little bit. So some companies have trouble with pricing, but a lot haven't so far. So I think the median company could probably have gross margin expansion in the next six months. This is the funny thing about tariffs. Like even if that becomes a problem for companies, it's happening at profit margins that are starting at 14%. Like they'll figure it out. Yeah. And also like it really – like I'm underweight staples and – we're underweight discretionary.

1:04:05We have kind of a cautious view on staples because I think they're the most vulnerable. But 58 % of the S &P is tech comp services and financials. And on the margin, like they're not really going to be that impacted by tariffs in terms of the bulk of the earnings. And we've seen that so far during this earnings season with who's reported generally in tech and financials, cup services. So sure, like, you know, if you're a staple company and you kind of have no game and Walmart comes to you and says, yo, eat it, you can decide. Like either you eat it or they put you on like shelf 912 on the back and they hurt your sales, right?

1:04:36It's always a trade. That's a trade-off. Volume versus price. But Walmart and Amazon are$1.5 trillion in revenue. So they got the wood, you know. So you got to kind of – so I think it makes sense to be cautious on most of the staples and select consumer stuff. But I don't know why I'm negative on JP Morgan or negative on the tech companies that are exposing. It's funny you were talking before about like the long-term growth rate. I was thinking about Palo Alto Networks and they announced a deal this week. And I remember thinking like, man, these cybersecurity things. This is like five years ago.

1:05:06Like this is so obvious. Like of course you need security. And this talks like 8X since then. And by the way, like this, talk to any IT guy. It's like the last thing they'll cut. Like I'm going to move my office tomorrow. And the guy came today to make sure the firewall on the thing that I'm starting tomorrow is like 100 % good. I think this was, I think this is one of the layup trades, even before AI. Still. Picture a board of directors at a publicly traded company taking a vote. Right. Let's reduce cyber spend next year by 10%. We have time for one more. And I really wanted to get to this because I think it's low-key, one of the most fascinating things to be following going forward.

1:05:44The Wall Street Journal did a really good, very data-heavy piece about AI already disrupting new college graduates. And my daughter's 19. So her friends, older siblings, have all just graduated college in the last year or two. and every one of them wants to have a conversation with me for some reason, as if I know anything about how to get a job, how to do an interview, how to present myself on Zoom. I literally can't help anyone. That's not true. But I also will never say no to a young person who, especially if we know. We have more interns than employees. Especially if we know the family. So anyway, I'm doing meetings like that and I'm trying my best.

1:06:27But anecdotally, and I now have the data to back this up. But anecdotally, it really feels hard, harder than ever, other than in a recession, to be coming out of a great school, BU, Tulane, Michigan. Whoa, whoa, whoa, whoa. Schools where people should get hired. Whoa. What? I went to Michigan. I know you did. Let's not lump that into some of the other places you mentioned. People should. Tulane and comparable schools like Michigan. Let's calm down with the Michigan-Tulane compromise. It feels anecdotally talking to parents that kids coming out of school are having a tougher time than ever. Yeah, totally.

1:07:03And now we have the data to back this up. So I'll just show a couple charts. So here's one. Share of graduates in the labor force with a bachelor's degree one year after graduation. So this is just really showing like the big picture, the backdrop. And then here's some stuff from the piece. the unemployment rate over the last 12 months ending in may for recent u.s college graduates these are people between the ages of 21 and 24 is 6.6 percent that's compared to four percent for the overall labor force just googling what is burning glass institute just because i made it up for the purpose of this conversation okay i just want to know 50 drop in entry level hires at major tech companies.

1:07:44Right. That's down by half since 2019. Look, like, like, chat GPT. It's really tough. Chat GPT deep research 03 is like 10 ,000 interns. Okay, we, I'm like you on this front. We have a ton of interns because everyone's kid, niece, nephew, friend's kid. I just say yes. The truth is none of them are useful to me because all that we do is code in Python against our database and it takes us time. Are they faster than Uber Eats though? Oh, right, right, right. Right, right, right. No, but I don't want to do that stuff. So I try to give them a real project and have their name go on a piece of research and have them help.

1:08:19And so what we've been using them more for is spot-checking some of the work we're doing with natural language processing or that kind of stuff. Where, for example, I mean, we have – I'll give you four or five projects I'm working on with different interns, friends of mine, kids, whatever. One, we did a piece looking at activist investing. We published it this week. and I think you're on my distribution list. So we kind of looked at, you know, the history, the distribution of returns on activists. So we had the person help us kind of really define who the correct activists were, remove some individual names that didn't make sense, that kind of stuff.

1:08:51We're doing a piece on variable compensation of management teams. That's really hard to do with natural language processing because it's not like it's on page 151 of the Bank of America, you know, 10K of what the guy made. And, you know, it's really complicated. So we're trying to do some kind of spot checking, reading, Like trying to use them to do something that I can't do with NLP. Litigation. We're doing a big piece on lawsuits because there are a lot of stocks that look optically cheap. You know, maybe they had a fire at PCG or Y Electric or maybe they did a PFAS at 3M or maybe they did an opioid or whatever.

1:09:20So you have the interns helping you with an AI. Yeah, with natural language processing kind of output to sort of make sure it makes sense. So are you guaranteeing them all full-time jobs when they finish school? No, we don't. You can't. We just try to help my friends and relatives, kids have on the resume that they worked at my firm and that kind of stuff. Here's the question. Last chart. But your point's well taken. Like you got to have differentiated skills. And for us, it's like coding or other stuff. Pay attention to the slant hire under bachelor's degree in the fourth column. This is unemployment rates by educational attainment and age.

1:09:58people with a bachelor's degree in 2018-2019, 3.8 % unemployment. Now it's 4.9%. That is a really big jump in a four-year, six-year span of time. Look at graduate degree, same thing. And graduate degree is as steep a slope from then to now. And these numbers are not all of a sudden going to reverse. I think that what struck my eye immediately was where your mind was, which was the graduate degree at 4.2, 23 to 25 is the same as some college, no degree in 18, 19, 4.2. That's a little bit, that's a little bit messed up. If you stayed in college from 18, 19 to get your master's degree at 25, you got nowhere, you know, that, that would be a rough six years, you know?

1:10:40Um, so yeah, I, I think, I think it's the trajectory of this. I think it's because you have to get a degree in something that's useful. I mean, you know, um, and, and look, we, I have friends that are very senior at big law firms, investment bankers, everyone's having the same conversation. Like, how are we going to train people to be like our generation? Because if I can already get a 30 page brief written, that's 70 % accurate in one second for free. Why did I pay a first year, you know, you know, a bunch of money, bill a client 500 grand and they write something that's 70 % accurate and it takes them a month and I have to yell at them.

1:11:07Like there's every profession, investment banking, like, come on, what do they do? They take the pro forma P &L combined for two entities. Well, I can use chat, TBT, DB research, and do that. The Gen Zs are going to, are going to hate, they love AI now for their homework. They're going to hate it. I'm really worried about this for the second half of the decade. I think there'll be a new body of stuff that forms. And whether it'll be, I'll give you a great example in healthcare where, you know, we may have talked about this last time. But, like, if healthcare, if you get better at, like, image recognition with AI models, let's say right now 6 % of women are told they have breast cancer when they don't.

1:11:44Because you've got to have zero type 1 error. You can't have anybody have cancer and tell them they don't. Right? So, if somebody comes in, you tell them they have it. There's more false positive. There's always false positive. False positive, type 2 art, right? So what if it's 6 % right now from the best radiologist in the world and it goes to 0.01 % with AI? But when it's 0.1%, somebody finds out you screwed me, type 2 of the machine, and there's a lawsuit. Like there's going to be – there's no lawsuits at 6%, but there will be a 0.01 if it's not a human. So there will be a whole body of new things that happen on checking and quality control and on legal.

1:12:12I think there will be new jobs that form. There will be – Oh, like become an expert in the things that AI usually gets wrong. It gets wrong or there's going to be new stuff that happens. I'm not – What do you think about this? I think there's a lot of possibility of a – and I think it's just higher or less people to do the high-paying jobs and that they have. One last point is the S &P 500 is way different than the economy. And I think people like economists always like, oh, we don't want to see – we want CapEx to pick up and whatever. So I just think the top 100 companies can be superior for sure.

1:12:43I think that entry-level jobs are now superfluous and it is a huge, huge issue. You agree with me? This is not going to be great. No, it's awful. Because I think I saw something that only 10 % of respondents, business respondents, are using ChatGPT or any sort of AI system now. When it is more pervasive, when it's 20 and 50 and 70 and eventually everybody. I think it's higher than that. Whatever it is. You just don't need kids to be doing entry-level roles, which is catastrophic. Now, I also know that there's always this fear with new technology. And there's always new jobs created. So I don't want to.

1:13:20I'm a little bit in that camp. So I don't want to be hyperbolic. Yeah, you're, you're. But eventually, that's the key. I would say like, look, you used to use, you know, it's the Milton Freeman thing, right? Like there used to be, you know, used to use, you know, shovels to dig ditches. And then you got like big, big machinery. And, you know, if it's a jobs program, you tell people to use spoons. Like people will just, they'll navigate towards some other, some other skilled things. And there's a lot of stuff that's going to happen there. I mean, you know, I think there's going to be AI software.

1:13:48There's going to be AI semiconductors. There's going to be power infrastructure. There's going to be energy transition. There's going to be life services. Of course. There's going to be, you know, life sciences. There's going to be tons of old people demanding, you know, tools and diagnostics and services and other stuff. So, look, I also get that there's a lot of really high-paying professions that don't require an education where I can get the knowledge for free. I mean, anytime I have some HVAC guy at my house, we got a new air conditioner in my kids room today, I'm thinking the PhD in 30s or experience got me shit on my HVAC guy who can just drill me with pricing and I have zero elasticity of demand, right?

1:14:22So, I mean, there's a lot of professions like that where, you know, plumbing that I think are going to be, so those impregnable the moms in my town are all getting this content fed to them by the algorithm now on Instagram about like push your son and daughter toward like these types of professions. My son goes to culinary school. He'll be fine. I'm kind of happy about that. People are going to eat. Yeah, people are going to eat. Until the robots come. All right. We could cap it there because this kid, Max, is going to throw himself out the window. Everything's going to be fine. You'll be fine.

1:14:53I promise you. This is the longest season. You have fun on the show today, Adam? You know, honestly. You said it goes fast. Did it go fast today? It goes crazy fast. All right. I'm sitting there thinking, like, I wish I had in my life something like this I could do all the time. Like, I'd come on once a month to be like. Well, listen. I love being with you guys. Great to see you. We'll take you up on that. Anytime. Honestly, it's easy for me, and I love being here. All right. So we want to hear about all the books you're reading. Big brain. Let me hear. No, I just not. I was kind of kidding. It's just that the – Are you reading books still?

1:15:28Because Michael gave up, and so did I. No, I – I'm going to read one book by the time the summer is over. I'm reading a book, and this guy will be psyched that I'm plugging this. It just literally was on my stack. It's called On Board. This guy, Jonathan Foster, runs a fund called Current Capital. It's been on a bunch of boards of companies, and he gave me his book. And obviously, because I'm a sucker, he references some of my work in the book. So – Okay. But he's good. Actually, I'm looking at your shelf there, Barton Biggs on finance. I'm also in that book. So this is a good little moment for me.

1:15:55Adam's in 13 % of the books. 2 % of your shows and about 9 % of your books. So this is a great one. I love it here. I started listening to books, and I think I could do it. I think it's going to stick. It's funny you say that. I just – I've learned – I didn't know this about myself. two years ago but i and maybe maybe this is like bad bad thing to say but like i just don't remember stuff when i hear it like maybe my wife my mind drifts yeah so i listen to podcasts and afterward i'm like i my wife's like we listened to that in the car when we were driving together i'm like i i wasn't there i drift sometimes she's like no no you literally we were talking about like i don't remember yeah i'll just if i read it and i see the chart i remember it forever if we play golf i will remember all 18 holes the right the left i'm like a visual guy and and if you tell me like the name of the guy we played with i will not remember but that happens to me when i read a book too i'll read a 400-page book and a week later I'm like, wait, I don't remember anything.

1:16:39See, I'm just more visual that way. So I just prefer to read it. And I think it's also, you know, I'm still like, you know, I guess I'm like in the generational gap of like I physically hold the book. It feels weird to say that I'm an audiobook guy now, but no shame. No, you're in the majority. I'm wrong. You're right. I just don't enjoy, I just also, for some reason, don't have a lot of time in my life. My wife's got me on this guy, Jay Bernstein's podcast, and I will listen to it. He has this thing where people talk for six minutes and I walk to work and it's like a 15-minute walk. So I can actually tolerate the six minutes.

1:17:11He's pretty, he's got some very interesting guests on, but I just not, other than compounded friends, I'm just not a regular, you know. I think I've got my AirPods on three hours a day, honestly. Oh, really? Just all the time. I read a physical book. I finished it yesterday. Very proud of myself. What does the word physical mean? I don't read nonfiction anymore. I only read novels because I'm a writer. I'm the exact opposite. I only read nonfiction. I want to get – I want to become – I want to improve my writing, and I don't think you can do that unless you read good writing. So I read Our Friend Gary Steingart is out with a new book.

1:17:44Gary is one of my favorite authors ever, probably my favorite novelist right now. Give him a round. So Gary wrote Super Sad True Love Story, which was a smash hit in the 2000s decade, and he's had some huge hit books. And the new one is really short. I read the large print edition and it's only like 200 pages it's the perfect summer novel and when you get to the last two chapters like your heart breaks in half it's like this is the thing that only novels can do and you don't get from reading a non-fiction I love this side of you this is a very nice side of you Lake Success did that for me yeah this book will this book will completely break you when you get to the last but it ends in a decent place But it's – this is the only books that I am going to give time to is like things that are evocative and bring emotions out.

1:18:39It's an experience. I love it. I love where your head is right now. Oh, it's called Vera or Faith for people that are like, what's the book? Really, really great summer book. I have a stack on my bedside. I just try to like kind of put them in and read them. Most people recommend them. So, but 98 % nonfiction, but I should, I should be better. I like where your head is. What about you? What are you, Mike? I'm listening to The Godfather. Oh, the original. It's incredible. Mario Piso. Okay. Breaking news. It's good. I like it. Hey, you know, many years ago, it might've been 2000. You and the mafia?

1:19:18No, there was, there was like a, you know, top, top books of the last century or whatever. And, and I like got them all and I was like committed to 2020 and I plowed through like 12 or 13 of them. but I couldn't make it all through because some of them are like, you know, a thousand pages or whatever. But, you know, it was like forced me to read like the old, the oldies, but goodies. It's smart. It's good. I like, I like this. Don't you feel like this has been a good ending as opposed to like I watched the, what's the TV show? Yeah, it's amazing. Neighbors and Friends. Michael listened to a book based on a movie.

1:19:45So we got, we got that going for us. And you, you're reading some. And I read large print edition of a 200 page book. And I'm reading about this guy who was like on the board of a bunch of companies. He's actually very interesting. He taught me a bunch of things. But I'm like, if it's not stocks or sports, I'm kind of out. I got it. I got it. I'm trying to broaden my horizons. Can't say this to everything. Yeah. Yeah. Well, pleasure. Thanks for having me. Yeah, thanks. And if anyone, if I could do the 30-second plug, just go to trivectorresearch.com. Oh, I was sending people there. Check it out.

1:20:10Let's give them the URL, though. Yeah, we'll give them the URL. Okay. www.trivectorresearch.com. And if you say you're a compounded friend's fan, we'll give you a month for you just to check it out. Look at that. All right, ladies and gentlemen, this has been Adam Parker. Great to see you. Follow Adam on LinkedIn where he's active. And please check out Trivector and Trivariate, his research products. Great job on the show this week, guys. Great job on all the shows. Thank you so much. The entire compound crew. Amazing experience. Thank you. Continue to crush it. All right, guys, thanks for listening.

1:20:45We'll see you soon. Welcome back. Thank you, man. Appreciate it. That's all right. We got to get it quick. Okay, guys.