TDI Podcast: Masterminding (#937)

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22:58ibkr.com slash connections. and we're back with Frank Curzio from Curzio Research. First of all, Frank, you know, I didn't ask you about this. Two things. Do you want to tell people right now where to get your newsletters and all the great things to do? And secondly, do you want to, I don't know if you want to do this and maybe shut me down here, but do you want to talk about your conference coming up? Yeah, my first ever conference. I wasn't sure this was available for the public, but that's why. Yeah, it's available. We're going to have lots of speakers. We're going to make those announcements for speakers.

23:26We've got lots of sponsors already. It's going to be a Pier 66. It's for Curzio One investors. That's a high-end membership to the private placements I invest in personally at the same exact terms that I get. You get access to all of our products and services, which is like seven of them, that we charge several thousand dollars for some of these services, which is an AI service, crypto intelligence service, small cap service. So a lot of research, I do videos on these all the time. So you see that - And just to let everybody know, just to let everybody know, I was invited to speak there. And unfortunately, because it's literally down the block from me, not that Frank wouldn't fly me to France or somewhere else to speak, but nonetheless, it's literally down the block from my office at the pier 66 hotel, which is absolutely seriously beautiful, fully redone within the last year.

24:07It is a gorgeous facility. Right, right on the water on the intercoastal right there, right in my fishing grounds. I can't be there because I have a family wedding up in Jersey. You're lucky because you didn't know this is probably gonna be about 120, 550 people there. High-end investors. These are all mostly, I would say 95 % of credit investors. We probably raised over$30 million for companies through this group of investors, but I know you have a boat and I I was going to make sure you get free boat rides. So it's probably what I'm going to do though. You know what I'm going to do? I'm going to hook you up with my son who has actually charter service.

24:36There you go. Right there. No, right there. He has a beautiful 44 footer that. Oh, does he? Yeah, yeah, yeah. That's great. Gorgeous. It's perfect for you. It's so high end. Yeah. I really wish you could make it. Cause we, you know, I love these podcasts with you. We've been doing this for how many years? Over 15 years now. And everybody knows you're there. It's going to be really cool. It's a good, good guest and stuff like that. So it would have been good to pitch your services and stuff like that. Cause I know you do really well now. So, so how do people get in touch with you otherwise, or for this?

24:59I would say instead of going to curzioresearch.com, you could do that. Just listen to our podcast, Wall Street Unplugged. I've been doing it for a long time. It's an hour long podcast. We really cover everything. It's unconventional. You know, nobody tells us what to say or to do. Cause I have my partner, Dale Creech on it. Who's a senior research analyst here. We cover all the topics, but you're going to hear different opinions because, you know, we don't have to, you know, follow anybody's lead on anything. I'll be told to do anything. And, you know, you're going to, a lot of it's contrarian and a lot of it's real.

25:25Sometimes we get passion and you'll hear cursing and stuff like that. But, you know, it's one of the most why I listen to financial podcasts, which we're very proud of, which yours is as well. And, you know, I pay, yeah, it is, it helped me build this business, right? And it's remarkable what the podcast has done. I know it helped build your business, but go there, listen, if you like it, then go to Curzio Research. Because we like, you know, listen, we could sell you and have a good promotion on a very exciting stock or whatever. But instead of doing that, listen to us first, see if you like it.

25:51If you do, then go to our stuff and then, you know, start out a low price newsletter, you know, which could be anywhere from like$10 a month and, you know, go from there. But usually people who subscribe to one of our products end up subscribing to many of our products. And then those who are credit become Curzio One because, you know, they know our research is weird. We back it back all of our research recommendations. If we're wrong, we're going to tell you exactly what to do with it. Because in this business, sometimes you're going to be wrong. We're right more than you're wrong. We wouldn't be doing what we're doing.

26:14But, yeah, that's what people want to know. Should I buy more? Should I sell? And we're always there for you. So it's pretty cool. So what's also great about Frank's hour-long podcast is he speaks so fast, you actually get two hours worth of podcasts in one. You don't have to speed it up. You don't have to put out 1.5, right? That's so true. I know. I hear you. Let's talk about rates. Let's talk about rates. So the rates. You know, this whole big thing came along that, hey, you know, we need rates to go down because, you know, name what it is. You know, the housing market slowed down. It's better for businesses.

26:44It's too high. It's actually choking the economy, screwing up unemployment, blah, blah, blah, blah, blah. And the idea was, if nothing else, it was going to make housing more affordable, which I have a totally different opinion on. Rates down, housing prices up, but that's okay. The long rate has come up a bit. One of the things is there's some concern about the overall governance and the Fed and the Fed now in the next year to become an arm of the government with politicized. I guess that's the right word. Is there any concern of yours about these bond vigilantes or any of these other concern about U.S.

27:19bonds having a problem that may spark a sell-off or some other concern in the U.S. economy slash stock market? Not right now. I mean, you would see it with the spreads. The bond market is a good leading indicator, right? I mean, we saw that when – what we had, the carry trade went bad. I mean, you see a lot of things go bonkers in the market. We saw that with tariffs when tariffs were first announced when Trump decided, which I thought was the most worst strategy ever, to deal with every country at the same exact time because every conversation is different. And then I think Besant talked to my shoulder and said, hey, the bond market is really confused right now.

27:53They're telling you you better get this straight and you better have some clarity. And all of a sudden he's like, OK, well, we're good with China for three months and we're good with this for three months. But the bond market was – you saw the spreads basically widen. You see a lot of confusion in that. CNBC is very good about talking about it, but it's a leading indicator to tell you, hey, you know, something's a little broken or not working right. We saw that at the beginning of the announcement. So when it came to tariffs, you're not really seeing too much of it. We're seeing, you know, rates supposed to come down, but the higher end is a little bit higher right now.

28:21But I think you're going to see rates come down, you know, with the Fed lowering rates, too. I mean, that's on the short end of the curve. but it doesn't bother me right now because this is something I follow and I'm not seeing any cracks in the foundation, which I normally see if you see something big that's going to happen, which is a black swan event. You saw it with the credit crisis. You saw it just recently with the carry trade. You saw it even with when it came to COVID. You know, you're not really seeing it too much right now. So I'm not really too worried. Right. What about you? I mean, I'm curious to hear your opinion on that.

28:48You know, I'm not concerned. I'm just keeping aware of it. Yes, exactly. You know, it's right now. I think the market, the environment, the investor sentiment is there's a lot of things out there that we could pinpoint either individually or combined with other things that are concerning or worrisome or, you know, even to a point they could be, I don't know, they could be horrifying. Right. I mean, if we were to just snapshot come out of nowhere and see what's going on in our government and our deficits and all that, I'd be like, oh, my God, let's get out. But the fact is we've slow boiled it and here we are.

29:27So I think that investors are either one of two things. They're exhausted. They're dumb. They don't care. Or they're just giving it a buy saying, you know what? It can only last this long. Let's see what happens. Worst comes to worst. We could always move out. And particularly it used to be that making a decision you had to make because it could take you a long time to unwind something or get out of something. or it wasn't as easy as this click a button, I'm done. I mean, literally I can sell client portfolios out with one click of a button, done. Everything is clean. I mean, literally in less than a minute, I could clean a whole portfolio out.

30:06So, you know, I think there's something to be said about people saying, you know, I got time. I'm not too worried about it. No, no, I hear you. But you see those concerns coming again, leading indicator right now, I'm not really seeing it. So I'm not too worried about it. So, yeah, exactly. But I'm monitoring it. Well, let's go into the other area. Let's go into valuations. Let's start with publicly traded companies and let's go into the private markets. PE forward on the market cap weighted S &P 500 is somewhere around, what, 22 plus? Mm-hmm, 22. You know, that's historically high. The CAPE cyclically adjusted is also at a relative, it's not at the highest it's ever been, but it's high.

30:48large caps clearly which everybody is making the story and the narrative that they deserve to be as expensive as they are okay that's fine I have no problem with that you know if they're going to make the money if you're going to see an NVIDIA that does you know looking for a 50x or 50 % not 50x 50 % growth on a year over year they could support well actually been doing 50 % on quarter over quarter I think but nonetheless if they did 50 % year over year they could support a 50-60 PE right I mean that's not a problem they'll grow into it for a while until they can't. But there seems to be an inability for markets to go down for any reason.

31:23And valuations keep on getting higher and higher. And yes, earnings were actually really good. You look at what do we see? 11 % growth on a year-over-year basis? And we're expecting double-digit growth next quarter for the rest of the year into 2026. Right. So we can argue about valuation if we consider that the earnings growth won't continue forever. I think that's an unreasonable thing to say, right? Would you agree with that? I wouldn't agree with that with the short term because - No, not the short term. Not the short term. I'm saying long term, you have to wonder, are we going to stay with these kinds of growth rates?

31:59Well, if you describe long term, if you're looking at longer than a year or two years, I think we're going to see double-digit growth in earnings, and we're seeing it right now. I mean, whenever you've seen a market, think about it, where people are worried about the return on investment for AI. These companies, have you seen the numbers that they're reporting? Have you seen the growth? Great. I mean, they're generating massive returns on their AI spend right now. And you want proof of that, look at the layoffs. I mean, there's massive layoffs taking place. When have you seen massive layoffs take place with the market at all-time highs?

32:24Yep. Or near all-time highs? You don't see it. Doesn't happen. So the efficiency, the productivity gains that these companies are making are fascinating. It's going to result in fewer jobs. And that's why some of the young people going into the jobs market these days are having such a difficult time. because the job is they want, those internships slash first year slash entry levels are like, no thanks. I mean, I don't know about you, but even mundane items that we use AI for are incredible time savers. And not only time savers, not only time savers, impactful. Yes. So where do we go from here then?

33:05I mean, where do we go from here? Let's talk about the valuation argument before we get to AI. So you're going to hear something different from me. Someone who's been a fundamental analyst for 30 years. Okay. For me, I always looked at why didn't I own Microsoft at 80 times earnings? Why didn't I own Apple at 70 times earnings? Why didn't I own Netflix at 120 times earnings? 10, 15, Amazon. Why didn't I own these? Instead of saying, look at the PE. It's so expensive. It's never going to grow into it. So for me, I always check my ego at the door because whenever I think I'm the best in the world, it slaps me in the face.

33:34That's why I love doing what I'm doing, right? It's kind of like golf. If you get a 59, you get a charge for 15. As soon as I come in saying, hey, honey, things are great. Smack. Things are great. I'm always questioning. I'm like, holy shit. Especially when I recommend a new stock and everyone's like, that's a great pick. I'm like, shit. Oh, no. So I'd rather people doubt you. But when it comes to valuations, we're so used to looking at PEs. I'm going to tell you right now, on market right now, 22 times forward earnings is cheaper than it was pretty much the past three, four years. Because if you look back, we're growing around 8%, right?

34:01You have to look at the growth in PE, right? Because you could be trading at 10 PE and be super expensive if you're not growing earnings at all, right? And you could be cheap if your PE is 30 and you're growing earnings by 25, 30%, which you're seeing out of NVIDIA. So it doesn't mean it's expensive simply based on a PE. You have to look at growth. And we're growing and expected to grow double digits. I mean, not just double digits, like 11, 12 % we're expected to grow, which is very, very high compared to the past, which nobody talks about. They just say, hey, 22 PE is much higher than a 10-year average of 20, 19.9.

34:30So we're trading at an exceptional premium to the market, but we're growing a lot faster. So not all areas, but if you look at the growth markets, that's why. So what did I get wrong in Netflix? With Netflix, it was, okay, I'm looking, comparing it to traditional cable companies, and I didn't realize that instead of comparing Netflix to individual cable companies, Comcast, whatever, Charter, every single cable company was trying to be like Netflix. Netflix controlled the market. Their total addressable market was about 10 times the size of the rest of the cable companies. And that's what people miss with Palantir.

35:00So Palantir, we've been recommending since it's$12. Okay, you could say, oh, it came down from whatever it was, 180, it's 155 right now. We said, look, you're looking at the wrong metrics. The price of sales is 200 times, the PE is through the roof. We heard that at 10, 30, 80, 120, 150. We heard the same argument, the stock went higher. So instead of saying the same thing, what are we getting wrong? What you're getting wrong is, Palantir is one of the only companies in the world from day one, they could, it's the pure play AI that they can come to any single company, S &P 500, and immediately you're going to see fantastic results.

35:33And you saw that every company in the defense sector that they work with, the oil companies, you have CEO of major oil companies coming on stage with them saying the productivity, what we've seen with this company and what they're doing for us is incredible. So instead of looking at price to sales or PE, you have to look at the total addressable market because the total addressable market is a trillion dollars for this company. It's not defense and it's not just oil. It's any company wants to use AI services. These guys have the Holy Grail right now, right? So I know you could get it through, some of the bigger companies through cloud and AI services and Copilot and Gemini and all that stuff.

36:04I'm not even talking about that. This is a company that comes in that works with you completely and does everything for you. And you're seeing, I mean, the massive amount of clients that they're signing up, the margins that they're generating, the massive growth that they're seeing, it continues. As long as you're going to see that growth, you're going to see Palantir shares go higher. Yes, they pull back a little bit, but still, this is a name that we had for a long time. My point here is when you're looking at valuations, you can't just look at a simple PE because it doesn't work. That's coming from someone that's tracked this stuff all my life and knows everything about balance sheets, every single thing, income statements I've been studying for 30 years.

36:34It's different when you're seeing growth. The market for the last 12, 15 years, they want to see growth. They want to see the hope for growth. If you're wondering why Tesla trades at such a crazy valuation, why does Ford and GM trade at low valuation? Because they're talking about, hmm, should I still sell EVs? I don't know. We're seeing a decline. And they're talking about robots and robo taxis. Disney, Disney knows this is a company I hated for a long time because they can't really compete on the same level as streaming and they're competing against bigger players. But as soon as they started making announcements of parks that open up in the Middle East, they should open up a hundred parks.

37:07That's their growth model, right? So when you have this growth model that people could see, even if it's five years, 10 years out, that's what drives the stock price higher. You know, when you look at valuations and stuff, some of them are expensive, but you're looking at AI, you're looking at crypto with this administration, 100 % pro crypto. I'm talking about things that are coming out in the equity side that are gonna be very interesting and disruptive in technologies. There's a lot of areas for growth and it's probably gonna continue because rates are going lower next year, which everybody knows.

37:30Well, what about switching over then to the thought of private businesses, private equity? So private equity is doing, I think I told you this, that I was down at an event in Miami. I don't usually go to a lot of events, but I was at this one. A couple of the guys that I know, Meb Faber, a few other ones, Ritholtz and Josh Brown, they're all down there. They're all down over at this event. And I said, you know what, it's in Miami, I'm going. And so I go to this cocktail party and I don't know if I had a sign on my back. I don't know what was going on. But all these guys coming up to me unsolicited, you know, you got to be in private equity.

38:07Got to get your clients in private equity. You know, what are you doing about private equity? I'm like, what? Why is everybody saying this to me? Is it a private equity conference? I don't understand what's happening. And it's kind of weird. And now private equity is trying to get their shoe into, you know, 401ks, trying to get it, you know, make it so it's like, oh, no big deal. You just have to hold your money. I can tell you, I got private equity for clients that we adopted. It's a pain in the ass. And the question is, are they ever going to come out? Now, yes, some of them will come out with great returns over the long haul, but the liquidity is non-existent.

38:37The capital call requirements and things like that are something you need to contend with. Taxation issues, long-term nature of getting your K-1s in. I just got a K-1 literally today. What are we in? We're in September. I got a K-1 from one of the companies today. So that means you can't do your taxes. You can't complete your taxes. And then the valuation, whatever they feel like it's worth. Now, you've got companies like in the AI technology area, Anthropic. Anthropic, I think their valuation tripled in the last six months. What do you mean, uh-huh? Are you agreeing with me like it's a no big deal agreement?

39:15Or are you agreeing with me like, okay, we'll talk about it. There's a lot of stuff you said there. First of all, when it comes to private equity, I would say 98 % of retail investors that invest in private equity are going to lose their money because they don't understand the deal structure. Sometimes I don't understand the deal structure, and I do this for a living. Okay, I'm talking about deal structure where if you're looking even at SPACs, they didn't have to disclose warrants. You don't even know what's under the hood. You don't know when they're able to sell. So what they do is they buy these companies through SPACs, and they have to find a really cool company and say, okay, let's find a cool company that's growing.

39:47Okay, the value of that company is$400 million. by the time it goes through the SPAC process and you transfer everything through the shell company, you change your name or whatever, that valuation is like$2 billion. And what happens once you announce that merger is you have these pipe investors. And now you're saying, okay, I want to raise more money for this. Okay, we'll give you shares at a dollar. We'll give you shares at$2,$2.50 with warrants. So you have this massive amount. They're pumping it to the public market saying this is the greatest thing ever, right? Just like Virgin Galactic. It's the greatest.

40:15Everyone's going to space. The whole world's going to space, right? These guys cashed out. Him, what was it? Chamath, and I'll say this. Chamath, Polyhapitiya. Yeah, Polyhapitiya. And Branson. And Branson,$300 million each they made off of that. That stock is what,$2,$3 now? Right, they cashed in at what,$25,$30? I made a lot of money on it too, but yes, continue on. Yeah, but I'm just saying most retail investors got annihilated because they don't know how these deals are structured. They're just like, hey, this is an AI company that's growing. Okay, well, what's the valuation of it? All right, is it$300 million or if it's$10 billion?

40:45Because it's worth like maybe a billion. So if I get in$300 million, that's good. That's the Peter Thiel stuff. So when I'm looking at that and looking at these deals, that's one part of the deal where if you're going to open up this market to 401ks, you want to do it where they could track the performance. So if BlackRock creates an ETF of private investments, then you could see it crash or go down. At least you know because a lot of these deals, and I get into these deals a lot, and again, I've made a lot of mistakes, and now I understand exactly what I want and what I need when I'm helping these companies raise money.

41:15Anthropics is a different story. This is one of the fastest growing startups that I've ever seen, right? I mean, the biggest winner here is Amazon by far. Amazon invested in this company very early, $8 billion, 33 % stake. Not only is Amazon - Is that what they have, 33 %? Yeah, 33 % they have, 33%. So not only is that 8 billion worth more than 60 billion, but now you have Amazon generating billions in revenue since Anthropic is running its massive models through AWS. They're using Amazon's chips to power it. But when you look at Anthropic, you could see if you look on like the large language model list and it's pretty much unbiased because you have coders and they have which ones are the best services.

41:50And if you look on this particular name, you don't see them on a lot of lists like the best for math or tool use, affordability, speed. But what are they the best at is you're looking at a company that is going all in on agentic AI. And when you look at agentic AI, that is a future of AI. That's just basically digital employees. That's how you have to think about that. Well, let's explain that. Let's explain that. Tell us what the word means Because I think most people haven't heard that. When I say most people, me, haven't heard that phrase before. I don't know why. So these are, so agentic coding, right?

42:23How do you spell it? A-G-E-N-T-I-C. So this is agentic coding. So this is AI agents. And this is what the whole, all the biggest companies in the world are doing, right? Agentic, agentic. Agents, but it's called agentic coding, right? So that's what they're the best at. So basically these are tools, they'll interact with tools that help, you know, read files, write code, run commands. They'll access databases. is they'll gather all this information and then they'll execute actions, which you actually did on my podcast. When you were on my podcast, when you booked a trip basically and said, look how easy this is.

42:53And you did it off the fly. It wasn't even planned, right? So not only do they have these mechanisms for feedback and they can adapt to things, but that's what makes them learn from their mistakes and get better and better and better, making them the perfect digital worker, which means now you're seeing them replace in so many different industries where, why is that huge? Because now these things work 24 hours. You don't have to worry about paying them unemployment. You don't have to worry about paying their benefits, 401ks or anything, right? And no drama. So if you look at how big this market is, and that's what they specialize in, it's a reason why the list of investors that came into the Series F round, which was huge, right?

43:28I think it was 13 billion or something for 180 billion valuation. Fidelity, Lightspeed Venture, and also BlackRock, Blackstone, Goldman, Jane Street, Ontario Teachers Plan. I mean, these guys get pension funds investing in it, T. Rowe Price, TPG. I mean, Qatar Investment Authority, these are real players generating billions of dollars knowing that this is the future of AI. It's not just large language models. This is the next step for AI that it's just on the surface right now. We're probably in the first, second inning that you're going to see the biggest companies in the world. They're going to be using all these bots to do a lot of the jobs of employees, and that's pretty much here.

44:08That's why you're seeing a lot of layoffs. It's pretty crazy. But they deserve that valuation. I read some really interesting articles. One was from Goldman. There was a couple of the research players out there that did this also talking about what jobs are not going to be needed. The highest probability of jobs that would be out of business in X number of years due to the advent of AI. And you have things like, you know, for example, if there is such a job as this, a proofreader. Like, what do you need that for anymore? Right? It's the equivalent of what you need a receptionist for. I'll make it simple.

44:38Anything that's non-blue collar is at risk. Which is interesting because everybody always used to fear the blue collar job loss on all the time. That's all it was all about. Oh, my God. Technology is going to replace this, the efficiencies. Well, there's electricians. You can't replace that. You need professionals to do that, and they're going to be able to charge a fortune. But that was something for years was a problem. It's kind of fascinating, actually, that the Trump administration is so focused on manufacturing slash cars slash blue collar, right? Well, because, of course, there's a big amount of votes there.

45:10But it's so fascinating that they haven't even had the intellectual honesty, to be honest with you, to talk about what about the white-collar jobs? Like what's going on there? Nobody wants to like talk about it. And those beginning jobs, even for lawyers or paralegals and stuff like that, like when you come out of college, right, that's what's killing it because those jobs, they don't really need to hire anyone for that. And that's – for kids right now, you had the greatest opportunity of your life. I mean, you hear everyone telling you how terrible things are, but, but, you know, even yet open AI, right.

45:40Came out that the CEO came out, he says on the industry, he's doing a big run on podcasts and stuff like that. So, and he came out and said, this is the first time in history that you'll be able to have a billion dollar business run by one employee. I think that was fascinating. Love that. I love that. Right. Because now you, but that's the opportunity to learn AI. Cause I have two kids. One's looking at colleges. Now the other one's 14 is a freshman in high school, two daughters, and I'm pushing them all in on AI. Not that it makes you cheat, but the research that's available at your fingertips for AI is unbelievable to ask good questions.

46:10And I mean, you can take a picture of something and say, analyze this on a fifth grade level, on 11th grade level, and it gives you the whole summary in two seconds. And yeah, it really is incredible what AI is doing. But you have to be into AI if you're young, if you're in college, because that's the future and you're going to make a fortune. Even if you're working, just learn it. If you find a way to improve productivity, your boss is going to pay you more money. So don't just sit there and don't embrace it. And just for us mere humans, looking at AI as a, I don't want to call a total substitute for search, but an easier, more methodical way.

46:42For example, let's bring up my AI, shall we? Here we go. Here he comes. Hey, again, Andrew. Hey, tell me about Frank Curzio, the newsletter writer. Tell me a little bit about him. Frank Curzio, the mastermind behind Curzio Research, is a well-known newsletter writer who focuses on providing in-depth market analysis and investment education. He made his mark with the Curzio Research Advisory, a large-cap investment advisory service. With a history steeped in Wall Street experience, Frank and his team aim to empower individual investors. All right, stop. You like that? No, don't stop it. Hey, hold on, I got more, I got more.

47:20Tell me about something. Tell me something. Whose podcast is better, Andrew Horowitz's or Frank Curzio's? Andrew Horowitz and Frank Curzio both host popular financial podcasts. Horowitz's podcast delves into investment strategies and market analysis, while Curzio's Wall Street Unplugged often features industry experts and unique investment insights. It's tough to declare a winner since it really depends on your style and preference. If you're after disciplined investing advice, Andrew's might be your jam, but for market-moving news, Frank's podcast could be the way to go. Oh, that is awesome. That was awesome.

47:59That was just on the fly. I'm going to pull that out as a clip. That was totally on the fly, by the way. That was totally on the fly. No, no, I didn't plan that. I literally did not plan that. No, I just took my phone. I put it up to the microphone here, and I just started asking away. Which AI is it? So that is CoPilot. That's the CoPilot mobile app. Yeah. Benny Hoff should spend less time criticizing CoPilot and worry about his stock, by the way. Speaking of which, let's get into that. Now, let's get into Salesforce because one of the most beloved stocks of all time by your old pal, Jim Cramer, who brings Benny off any time he wants to be on the Mad Money show.

48:32And I don't think there's been a time that I recall that Cramer wasn't in love with him. Salesforce recently put out some earnings and it was OK, but there was some disappointment in there, particularly around the AI strategy. Yeah, listen, CRMs are severely threatened by AI. And this is something we talked about for a while. I mean, you hear me talk bullish about the market conditions overall, but we're bearish on a lot of names. Chipotle was another name that we've been bearish on for over a year, year and a half. Disney, we were very bearish on for a long time, for like four or five years. Some of them would get right, some of them would get wrong, but Salesforce, we were very bearish on because they talk a big game.

49:08But when it comes to CRM systems, and if anyone has a business over$3 million, they know how important that is. You can't just use one system, right? You have to use a bunch of different systems. It's just some of them are good in other areas, credit card processing, just labeling, going over marketing strategies and stuff like that and reading headlines. Now with AI, you could build – you could tailor it to yourself, and it's a lot cheaper. So it threatens all these companies. And Benioff was out there saying, hey, you know what? We're ahead of this. We're all AI. But it's not showing up in the results.

49:38So when you're a CEO and you overpromise another to deliver, you piss off your investors and your biggest investors, and that's what they've been doing. So now you're looking at a company and saying, okay, I looked at these numbers. And yes, it looks very, very good in that you're growing and everything looks awesome. But when you look specifically at the AI component, you're not seeing that growth. They're going to say it's up 120%. Okay. And that seems like great growth. It's up 120%. I get it, right? That's huge growth. But when you really look at the details here, they come out with a metric and there's KPIs.

50:08It's not all the same KPIs for all companies, as you know. Sometimes it could be same store sales. Sometimes it could be average revenue per user. You know, for this company, it's CRPO, it's Current Remaining Performance Obligation, right? So when you, that number rose 11 % to 29.4 billion. I'm not going to throw too many numbers at you, but just know AI, which grew 120 % is only 1.2 billion of that. And it's, from last quarter, it grew 11 % year over year, but it did not grow quarter over quarter. And when you look at that, that tells investors and tells the street saying, okay, this AI is supposed to be a huge growth component.

50:45You're seeing it with a lot of companies, whether it's Marvel. I know they didn't put great earnings. Micro, you have Dell. You see this component, IBM, that AI getting bigger and bigger piece of the chunk. This should be growing, and it's not growing. And this is a severe threat to this business model. But this is another issue. The amount of money that they have under their model also incorporates how much money is coming in from various contracts they have, right? The Cs. Yep, exactly. Well, also, they increase the price. I've been with Salesforce for 15 years or whatever it is. This is the first time I recall, maybe a second, but the first time I recall in a very, very long time.

51:20They actually increased my price. Small amount, but like 10%. You take that into the equation, that means basically they're not growing. Yeah, and that's the negative thesis on Disney. Right now, their earnings are good, but it's because they're cutting content. So you're cutting content, which is worse for the consumer. You're throwing commercials all over it, and you're raising prices. What do you think is going to happen to your subscriber base? You know, same here. You know, when you're not seeing the benefits and you're raising prices, you're going to lose customers. But I'm not telling you to short it here.

51:45This is a company that we said avoid at all costs, but don't short. I mean, I need to see a couple more quarters and see if they get this right. But it's trading below a market multiple of 20 times, which is very cheap for a tech company. and they just announced another$20 billion buyback, which increases to 50 billion. Now that might be a big number to you. I'm just saying that's 20 % of the market cap. That's a massive number that you're buying back. Plus it's a Dow component. So money's automatically gonna flow into Dow companies and stuff like that. But when you look at this company where it is, I wouldn't tell you they shorted here, but I don't see the catalyst of why you would buy the stock.

52:20I need to see that as the CEO. And instead the CEO is criticizing Co-Pilot and Microsoft and everybody else. he's got to stop over-promising and under-delivering because right now he lost all credibility. Well, we're talking with the mastermind, Frank Curzio. Love it. So is the mastermind, Frank Curzio. So I'll just tell you Eminem Curzio, okay? Small caps. Let's get into that. Small caps have been lagging, right? Small caps have been on the lowest of all low lists for a while. There's been discussion about like 70 % of the small caps on the Russell 2000 are basically defunct companies to a degree, and nobody wants them, and RISCON has been there, but it's been really all the money's been pouring into large cap.

52:59There's been some moments of, oh, look at that, but small caps are still not near their all-time high yet. You're very bullish on them. Is there a specific sector, micros, smalls, what? What are we talking about? Just small caps. I went by the Russell 2000 here, but when have you seen a market, you're a student of this market like I am for a very long time, for decades, usually when you see a bull market, which we've seen a raging bull market since the credit crisis, basically, right? With a few bumps in a row, 2017, COVID, but overall, and if you look at that timeframe, what happens in bull markets?

53:29Usually they say the crappy companies go much, much higher. They don't say that. That's usually what happens, right? So usually small caps outperform when you see the markets go higher and they underperform during defensive times because people don't want to take on risk. It's really weird to see over this period, especially over the past three, four years since COVID that small caps has significantly underperformed. And maybe a lot of has to do with, you know, the major, you know, the max seven companies, especially the hyperscalers that just have blowout margins and massive growth across. I don't know if you've seen the report, they have like seven divisions and every one of them are growing 25 % plus.

54:00It's remarkable when you look at some of these companies. But small caps now, especially with America, more money coming into America, more manufacturing jobs coming into America. These are companies that don't have that much exposure overseas, but just even in the infrastructure market, I love the oil market right now. I know OPEC, you know, may cut production again, but oil prices at 60. If we see lower interest rates, you're going to see more building. Plus, if you're looking at the international markets, they're on fire right now. Okay. They've been outperforming the markets because they've all, almost every single market, I'd say 95 % of them have been cutting rates all year.

54:31We're the only like, you know, country that hasn't been cutting rates yet. Right. So, you know, that's going to lead to more construction, but just bringing up the prices in certain things where there are some small caps that have a little exposure overseas. So So it's not the Russell 2000 I would tell you to buy, but the names that I'm seeing within small caps within those industries, one name is called DigiPower, which owns 200 megawatts of power. Okay, right now on the market for Bitcoin mining, that goes for$1 million a megawatt, right? So that's 200 million right there. And they own it. They don't lease it.

55:05They own this. They own it. They went through the policies and everything. They've owned it for like six, seven years and they're a Bitcoin miner, but they're transitioning into data services. And when you transition, that's tier three. So tier one is Bitcoin mining. When you transition, the value of those megawatts go from about 1 million to 10 to 15 million. And that's, I don't know if you saw the power lately. I don't know if you know electricity prices are skyrocketing. It's why solar is probably a great bet. First time it's going to be economical forever because prices are going, there's not enough energy to power AI.

55:33There's not enough energy out there. That's why if you look at the hyperscale is they're buying stuff 20 years out. That's not even going to be available five years, like three mile island. They're buying stuff like what is it? Oklo, which has no revenue, not a proven strategy, not a proven technology, no revenue. They're trading at$9 billion valuation. Okay. Because they have SMRs, which is basically, you know, like these small nuclear reactors that are transferred. You can bring them back and forth, right? That are mobile. But if you're looking at DGXX with the power that they own, you know, that's a great name too, that I love right now trading at like$2.

56:03That's a name I'm invested in personally. But I'm going to hold it long-term because they're transitioning to tier three right now. So those assets – and you talk about companies trading under$100 million market cap. So there's a lot of value in small caps that I'm seeing and lots of ideas that I really like that I haven't seen pretty much over the past five, seven years. And we've been doing very, very well in our small cap newsletter, our AI newsletter focusing on these names, just names that are up several hundred percent for us. But, you know, we're able to pick them apart because they're lumped in with all the small caps and people really don't like small caps.

56:34But we have a market with very powerful tailwinds that I mentioned before. That should be really good for a lot of small caps. But you have to analyze them. You can't just throw a dart and, you know, it's a bull market. I'm going to make money. You really have to do the research on it. That's what we do, the homework on it. Good stuff. Good stuff. Good stuff. Frank Curzio, always a pleasure to have you on. And I look forward to your great event, although I won't be there. I'm sure it will be great. And the next time you're on as well. Thanks for joining me today. I appreciate it. Thanks for having me on, man.

56:59Love you, bro. Thanks. See you soon. Bye. Well, that's what we have there. And that was a great show because it's fast moving. It's hard hitting. It's information. It's information overload. Fast talking. I even speed up dramatically when Frank is on the show. I know it. I feel it. And I got to re-listen because I know that I get all ramped and amped when Frank's there. So talked about a lot of things all the way from IBM and Marvell and Palantir and AMD. We talked about the economics, the Fed, and we talked about valuations. We talked about Salesforce and what's going on there. We also talked about false market values.

57:36And, of course, the mastermind through AI, Frank Curzio. Some things that you don't find everywhere. So thanks for joining me this week. Next week coming up, I believe, is I think we have Peter Schiff scheduled for next week, if my memory serves me correctly. but nonetheless a lot going to happen over the next few weeks with the topsy-turvy decisions that will be made over tariffs and the results or the after effect of the results of the recent economic numbers we saw in the jobs number and of course all that is gearing up to I think it's on the 16th we have the Fed decision on rates so a lot of things happening no shortness of excitement here join me next week we'll talk more about it thanks so much see you soon

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59:56We'll be right back.