Stock Market Nerd’s Guide to Investing

22:39Brad Freeman:And then it's usually, well, press conference, shareholder letter, sometimes that they're sometimes like Uber always has prepared remarks that are different than the conference call, which is a little weird, but they're Uber, they can do whatever they want. It's reading all those investor materials. And then I used to love, I used to love listening live to conference calls and I would get so, I am the type of reader who, if I feel like I missed something, I have to go back a sentence and read it three more times. And I just would feel like I missed 20 different things. And I'm, I'm basically, I just have to read this again at this point.

23:11Brad Freeman:So I do love listening to transcripts quarters, or I think yeah, quarter or whatever. And, and listening on 2X speed, there's so many different vendors to help you do that. So that's a good one if you want to check it out for listeners if they want to check it out. But listening on 2x speed, ironically, it doesn't make me feel like I'm missing things any more than hearing it live on 1x speed. But it's just, if I'm reading or listening and reading along, it's just, it's copy and pasting important passages under bullet points. And then once I'm done having all that information there and just taking, I guess, a few 10, 10, 15 minutes to organize it into sections that I want to write, and then turning all these bullet points and quotes into ideas and thinking through them and implications and all those things.

23:54Brad Freeman:So it is a very, it's gotten pretty step-by-step, which has helped me, I guess, just routines are always nice when you're getting through this stuff, makes it a little less overwhelming and a little bit more habitual and easy to get through and easy to check off progress as you're doing it. But that really is the process I have. The only other thing I use AI for is there's a company, I don't even know if this is AI, but there's probably some kind of something, but it's called Quilbot. I have a contract editor who I'll send this to. He'll send it back to me and then put it in Quilbot and it shows you, this is spelled incorrectly.

24:28Brad Freeman:This is a comma could work better here. So that's super helpful for me. There's always two or three typos that I read two weeks later and just want to pull my hair out. And so AI finding that for me has been helpful as well. I'm excited to share our friends over at the Plink app released a major upgrade featuring a sleek new look, real-time insights, smoother trades, and tools that help you feel more confident with every move. Here's the bonus I think you'll love. They also released the Dividend Match, where they'll match 25 % of all the dividends you earn up to$250 a year. You can track the match along with estimated dividend payouts all within the income hub on the app.

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26:32Not a guess, not a maybe, a real look at where things stand. That's why taking your heart health seriously actually looks like. I use this and you should too. Check your health the way I do. Function provides 160 plus lab tests for$1 a day and member pricing on MRI and CT scans. Join at functionhealth.com slash beginners or use gift code beginners25 for a$25 credit towards your membership. What's the best way to get started in the market? Download my ebook for free at stockmarketpdf.com. Yeah, that's awesome. I use Grammarly for that kind of thing, and I've been using it for years, and it saves my bacon every single time I write something because you spell something, quotations, all that stuff in the wrong place constantly.

27:13It's like AI, AI, AI, but it's just more machine learning. It's what we're doing for a very long time. Yeah, a big fan of that stuff. Okay, so you're a good writer. You're really good at communicating clearly complicated things. Writing about finance is not easy. And as you mentioned earlier, there's a lot of jargon. There's a lot of buzzwords. You do a really good job of making things clear. I distinctly remember reading your PayPal write-up many years ago. And I was newer to that company. And it all made complete sense. And it was very thorough. It was very well-written. I could tell you were excited about the company, but you were...

27:56Unfortunately. measure well yeah so was i but anyway form sort of bag holder here anyway but what like how did you develop that is that something that you think was innate in you or did you learn this in school or is it just because i've been writing so much for so long that i've just gotten better my mom

28:15Brad Freeman:is a phenomenal writer so she and she was my k-12 editor helicopter mom of i i would write i would essays and she would edit them and probably with more of a heavy hand than it was maybe appropriate but she was an english major at michigan she's a phenomenal writer all the the flowery vocab that i use sometimes credit to her and and just great great parents who just gave me a phenomenal education and gave me a lot of support and a lot of help and a lot of knowledge and held my hand without carrying me to the finish line but but just supporting me and guiding me so great parents Shout out to them if they get a chance to listen to this.

28:53But so I love, I think it's extremely important to use the lingo, but to always define it

28:58Brad Freeman:to not to use it in a way where you're trying to casually just one off, off the cuff, mention it and assume that people understand what you're saying, but using it so that they know that when there is someone on CNBC or someone else or some other technically inclined industry insider talking about things, they'll be able to recall those words and understand what they mean because they got a simple definition. So it's combining just really straightforward relationships and between complicated products and not here's what the source code does, but here's what the end use cases is trying to do. And here's what the problem is that they're trying to solve in a way that everyone can understand while also incorporating those buzzwords sometimes in parentheses or in bullets saying, hey, if you hear someone using this word, this is what they mean.

29:44and this is what they're talking about, which I think for people is really, it's extremely valuable for me and hopefully it is for others as well because they feel like they can talk,

29:53Brad Freeman:they now feel like they can talk the language of that industry insider without spending 15 years cultivating the knowledge and while understanding the relationships and the cause and effect of what they're actually talking about. Yeah, that's cool. All right. So I love that your parents were supportive and helped you. That's amazing. Yeah, that's an amazing leg up for you. So kudos to them. They did good. All right. So how do you identify a nerd stock pick? Like how does Rubrik come into your ecosystem? And how do you, how do I identify those kinds of companies? Yeah, so it's, again, the luxury of having a newsletter with a lot of bright, passionate, motivated investors is they will constantly bring me, hey, look at this.

30:37And I will look at them and nine times out of 10, it's just not for me for whatever reason. But that 10th time, the company that is operating in an industry with an extremely long runway that's going to be a structural growth darling for a very long time with one of the most recession resistant enterprise software budgets out there in terms of spending on cybersecurity and cyber resilience versus anything else. So opportunity, very good. And then just seeing how a company exists within that massive opportunity. So we will use Rubrik as the example. So for cybersecurity, we've all, I guess, come to understand people who invest in it.

31:14The big three, it's network, it's identity, and it's endpoint. And then cloud security, you can call it fourth, but it really just, it is tied to all three

31:21Brad Freeman:of those very intimately. And it's hard. It's not really a separate category, but it's just separate workloads within that same category. So pretty much the same thing. And then seeing this company called Rubric, and there are others, Cohesity and Commvault and a few others that have maybe not a fourth cybersecurity pillar, but a very separate and complementary bucket that they've carved out within this large industry where they're not pissing off CrowdStrike. They're not threatening Zscaler. They are partnering and tightly integrating with all these world-class leaders that I've studied for a long time.

31:54And to me, when I saw that, it was like, oh, well, this is... So CrowdStrike is not building their own data backup vault or immutable data backup product that I know that they see how tens of billions of dollars in total addressable market, they're all trying to encroach on each other's territory because they're all trying to extend growth runways. And no one is really doing

32:14Brad Freeman:so that passionately with Rubrik. They're all, they just deepen their integration again with CrowdStrike and Okta, very close partners with Palo Alto, CyberArk. They have not gotten a partnership, Inc., but Palo Alto just bought CyberArk. So you think that's going to happen and seeing just how large of an opportunity they play in and how little stepping on other toes they've done in terms of collaborating with all these companies and ensuring that they're sharing data so that their data recovery processes are even better so that CrowdStrike's endpoint security is even better, that Okta's identity security is even better.

32:45And then getting away from that maybe qualitative and somewhat abstract idea, and then just looking at numbers and seeing, I don't love relative valuation unless you are using very close peers because there are so many different confounding variables that can lead to valuations being different among sectors. And that will just always be the case. But when I see a company, I could pull it up super quickly. There's a chart on my mind. So just like from an EBITDA gross profit standpoint, which Rubrik is in that impending EBIT inflection point of their profit journey, they're about to turn EBIT positive.

33:20So have to use gross profit, which I ideally wouldn't be using. But you look at forward gross profit multiples and Rubrik's at 15. The only two that are below it are Sutton 1 and Okta, and they're outgrowing them in terms of forward gross profit taker convincingly. And then if you look at forward two-year gross profit, Tager for Rubrik is 25%. For CrowdStrike, it's 23%. Rubrik's at 15 times forward gross profit. CrowdStrike's at 30 times forward gross profit. So that's not something that I'm looking at and going, okay, I'm buying right now. But it is something I'm looking at going, okay, we've evaluated the competitive landscape.

33:52It seems like they're playing very nicely and growing very nicely without upsetting anyone. and they're half the price of another leader in a different category, probably because CrowdStrike's even margin is 20 % and Rubrik hasn't broken even. But if you look at just how much they're having to spend for this incremental growth, writing is on the wall for that continued operating leverage. So quantitatively, I love deals, especially for high quality companies versus other leaders. Sometimes for Ascent One, there are reasons that it's a lot cheaper than CrowdStrike. and, but for rubric, when it is a lot cheaper than a crowd strike, but then you still see them beating and raising every single quarter, growing revenue above a 30 % clip, delivering really convincing and an exciting operating leverage, not, and then seeing them jumping up to up into the right on third-party research organizations like Gartner and Forrester, just a lot of different things going for it.

34:43That prompted me to then say, I need to learn about this company. I need to learn what they do. I need to learn where they're going, what they're trying to do, what the team, where the team comes from. So it's a preliminary dive. And if there are a few light bulb moments, oh, that sounds pretty promising. And whoa, that sounds pretty promising too. It's okay, then I need to go read everything. And that's what happened in this case. So it's not a holding right now, but it is a name like a ServiceNow or some of these other really high quality enterprise software firms that I deeply admire that I have done the work to know that there's a forward valuation, a forward growth multiple in my mind that I have that if it gets there, I'm going to be confident and ready to pull the trigger and I'm not going to have to then spend a lot of time learning it.

35:32So yeah. That's awesome. It sounds to me like you've built up, in essence, a wishlist and that you work through that wishlist very consistently so that when you do have an opportunity, you can pounce. Yeah. And I guess other items in the wishlist that are very, that are not at all unique, just a pretty balance sheet. I love when a company is not spending all their free cash flow or spending all their potential free cash flow on debt servicing. Yeah, dilution is something that you'd like to not be egregious. But for a company like Rubric that's gone public within the last few years, there's just still founder grants and rewards and all these things related to the IPO that I'm a bit more patient with not considering that a deal breaker for companies that are early on in their public journeys, especially if they're printing a ton of cash, because then you just know down the line, they're going to be able to shrink if you want to.

36:21So yeah, it's, yeah, I think I should stop rambling and leave it there. No, you're good. You're good. So you mentioned, you mentioned like a red flag or maybe a hard pass. Is there, let's say, let's say you were looking at rubric. If you came through something when you're looking at them, is there anything in particular that maybe not company specific, but just general, a general rule. If you come across something, eh, no, I'm out. I think so. We're public market investors. We all have the same access to information. We are all woefully or it can be woefully reliant on executives being candid and telling us things that can be believed and can be counted on, relied upon.

37:03There are two companies in the portfolio in my mind right now where I fiercely trust the CEO because I have 10 years of data to support trusting him being the right decision and him saying something about 2026 and this and sellsiders not believing him at all and punishing the stock because of it. And just it's building that base of trust with these executives and these leaders, because I think Anthony Noto is the CEO of SoFi. I know you know that, but maybe there's someone listening who doesn't know that said once. And I know it wasn't an original quote, but it really stuck with me. An A-plus leader can overcome a C business model, but in a C leader can ruin an A-plus business model.

37:39Brad Freeman:So I am completely and utterly reliant on being able to trust CEOs and being able to not second guess when they're being candid and when they're just trying to promote their stock. And it's a lot easier to weigh that trustworthiness when we have long public histories with this company and we can go back to their 2021 investor days and see what did you promise me was going to happen and what did you actually deliver? and look at their long track record of results versus expectations and estimate trends and revisions. But if I don't trust you, then how can I look at next 12-month profit estimates in what you tell me to expect and form a valuation in an idea of what your company is worth and have any confidence in that being accurate or useful?

38:25And you can't. So with CEOs that I don't trust, the leash is extremely short. It's the Charlie Munger quote, reputation is built over lifetime and loss in 10 minutes. And if they burn trust, I'm not only selling it, but it's not even going back on the watch list or the coverage network. It's just, I'm done. So yeah. Yeah. I love that. And as I've gotten older and I've got more experience, I've come to appreciate how much impact CEOs really can have on it. So if you had to weigh how much importance that has in an investment? Do you feel like that has a greater or larger impact? I'll pick on a company I own, Visa.

39:08Visa has kind of become a company where you could have a ham sandwich run it and it would still do well. I'm joking, of course, but you don't really need Anthony Noto to run Visa, right? And so how much does that factor into your decision-making? Yeah. And there's a more annoying nuance in context. So maybe for a company like Google, where you could have a ham sandwich probably running that company with how brilliant and how deep of a bunch of talent they have. And Sundar is more of a roast beef sandwich, definitely better. or like a way you way you said he's a very capable ceo but for a company like google um it's still very important because great great company versus it is still important but it is more important for for a less proven company that has much more of their growth ahead of them and much more proving to do and winning to do making sure that there is just a superstar ceo in place um or but that it even extends to some blue chips like a starbucks with just absolutely atrocious leadership in place for a while.

40:14I don't even think Howard Schultz, you can really call a great CEO. He was fine. But basically, now that CEO Brian Nichols has come in, and you see what he did at Taco Bell, and then you see what he did at Chipotle, and you see all of the terrible decisions that were made that are very straightforward to fix and undo. And now you see an A-plus CEO coming in and replacing an F-minus CEO, kind of. And that's for an investment case for Starbucks, that is the entire investment case because the business model, that's not going to give you 20 % revenue growth for the next 10 years with a chat CBT integration and smooth AR.

40:54I mean, quick service restaurants is a declining category in the United States. Volume is shrinking. So if you want to grow and if you want to do well, you have to start from a place of almost doing horribly and then fix it. And so it's just getting back to that first point of every company and every situation is different. It's, it is, it's all, which is, I don't know, annoying answer for a lot of readers because you, you want formulated rules, but, but I think being willing to bend those rules and apply them in different ways is important for investing. Yeah, I totally agree. How would you, how would you deal with Anthony Noto leaving SoFi?

41:32Kind of like what happened with Mark Leonard leaving Constellation Software. Like how Would that really impact your decision to hold that company? And I'm not going to hold your feet to the fire. I'm just curious how much.

41:44Brad Freeman:For something like that, I think it would make me significantly less confident, especially if he took another job at a bank I viewed as not compelling of an investment story as so far. like if and so if a ceo leaves a job and gets an amazing ceo job and a giant pay raise i'm not going to be concerned about that good good for you you earned it but if you make some if a phenomenal ceo who i think is powering the bull case make some kind of horizontal move to a different company that will definitely ding the confidence and ding the conviction yeah for sure yeah yeah i i feel i feel very similar a big reason why i'm so bullish on new bank is david vlez and oh yeah his leadership and if he left the company it would i have faith that the coo and and other people know their stuff but he really to me is is the driving force and if he's gone it'd be it'd be a lot harder yeah like toby toby lucky charlie at shopify there are just generational founders who make me much more comfortable with with owning because i know they are going to yell and scream, maybe not yell and scream, but they are going to push and push and push as aggressively as they need to, to make something that could break work anyway.

43:06So I mean, you saw Zuckerberg do it in 2022 with TikTok trying to destroy their business and, and app and same exact time Apple saying, you can't use our data anymore for your tracking. And then basically having their entire ad business blown up and half of their engagement jeopardized and him saying, we'll figure it out. And then I'm figuring it out. So I don't think a lot of people would have figured that out, but he did. Yeah, yeah, for sure. So how do you feel about, we haven't talked about this much yet. How do you feel about the V word valuation? Like how, how does that play into what you do and how do you try to think through it?

43:40Brad Freeman:Super, super important. So I will never, I won't really exit a company if I think they're getting ahead of their skis, but I will, I'll take it from 6 % to 2 % of holdings and just make it a much smaller. piece and then cross my fingers that there's another opportunity that surfaces that lets me lean back in. So forward valuation really does dictate a lot of the accumulate trim mentality for me because risk reward inherently deteriorates as companies get more expensive and the opposite happens. Valuation is a big part of forward returns. And especially in today's market, they violently, violently fluctuate.

44:15So taking advantage of that, I think while I'm staying mainly invested while I'm keeping core holdings in place, I think is a way for me to be a little bit more of that active manager while still embracing the long-term, I want to hold this company hopefully for a very long time mindset. But beyond that, for most of the companies that I'm looking at, this is where the Peter Lynch emulation really is the strongest, but I love growth multiples. So I love crediting. If a company trades for 100 times forward earnings, and they're going to compound earnings at 100 % clip for three years, in my mind, that's cheaper than a company trading for 20 times forward earnings, it's going to compound at 5%.

44:51So it just earnings growth is the earnings growth and then path of revision trends so that we know those estimates are solid and could even be going up or they're maybe fragile and are probably going to keep going down are two extremely important parts of evaluation for me. So making sure that I'm crediting companies when they are growing profit faster, because that is the single most important determinant for future returns and maybe not ignoring, but stomaching and being okay with a company like CrowdStrike a few years ago that was trading for 500 times forward earnings because they just turned profitable and you're dividing by a penny and that penny is going to turn into 50 cents next year and then$1.50.

45:28So it's using all that added context to not ignore traditional valuation framework, but to augment it with a few other variables that I really like using. And just one other note I'd say is I use peg ratios. So price to earnings is a lot of my growth. I know you know that, but in case a reader doesn't, and sometimes, and I'll use either net income or operating income, if it's a better metric for a company like Uber or free cashflow, it's a better metric for a company like CrowdStrike. Sometimes we talked about how for some companies, free cashflow statement is worthless. For other companies, income statement gets really noisy.

46:03But for most, it does make sense to use one profit metric from both statements, just to make sure there's no unscrupulous ad back happening, nothing weird happening in calculation, and they should mesh pretty well. And if they don't, well, let's dig deeper and figure out what's going on. But I do love using those growth multiples. And I do love using multiple years of growth compounded when I am calculating them because sometimes, especially for non-extremely smooth, boring structural compounders, you can have 80... For MongoDB, where they've had this really large licensing on-premise headwind of profitability for the last couple of years.

46:37So they're going to have something like 0 % earnings growth this year and then 90 % next year, I'd rather treat that as whatever, 45%, whatever it is compounded over two years than saying their growth multiple is a zillion this year and it's 0.1 next year, right? So it just, it helps with diminishing reliance on a single year of profit growth, which can get noisy for various reasons. Support comes from WISE, the smart way to manage the currencies you need around the globe. Fed up with losing out to hidden fees when you send money abroad with your everyday bank? Choose the smart way, WISE. You can count on the exchange rate you'd usually find on Google.

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48:02Prices may vary by store. Exclusions apply. See Home Depot.com slash price match for details. Yeah, that's awesome. Okay. I like that framework. I'm a fan of DCF, so I'm boring. For sure. And I like those, but I always like to hear how other people are looking at that because I think that to me becomes a lot of the art of investing is figuring out the valuation. I will do some modeling, but it's going three, five years out. I always have the caveat. Yeah, just so everyone knows, this is probably wrong. And I'm giving you seven different scenarios because we are making educated guesses on all these variables.

48:40So I do think modeling is super helpful for gauging range of scenarios and range of potential outcomes. I think that's super helpful. Yeah, yeah. So do you have a market cap size that you prefer? And then the second part of that, which is not related, but is how do you think about geography? So are there any geographies you're like, no, I'm out? Yeah. So in terms of market cap, I guess I range from like$4 billion to a couple trillion. So I do think that my batting average with very small companies, sub-billion dollar market caps has been pretty bad in my experience. I've done poorly with that and I've done poorly with healthcare.

49:25So those two areas of investing I've shied away from and maybe taken them out of perceived circle of competence just to focus on the things that have treated me better. So I would say there are no market cap rules, but the bar for investing in a very small company would be extremely high for me right now, just because I haven't done very well with it. But so that and then in terms of other geographies, China is kind of a no touch for me. Just and it's it's detrimentally so this year because, wow, those companies perform well. But in terms of just like great leaders and sleeping well at night and getting back to that idea when they're that when they're as reliant on government policy as they are there and it being favorable and that government can do whatever they want to do to companies.

50:09We saw it happen with Jack Ma disappearing for a little while. That was one of the probably the most powerful businessman in China. And to me, that was just a, I hope the companies do well. I hope everyone makes money and I'm going to watch from over here. So in terms of geographies that I do or do have interest in, I think Southeast Asia is extremely interesting right now. Korea is super interesting right now, just from, not from a population growth and GDP growth perspective, but they are very far along in terms of modernization and the infrastructure to support more e-commerce penetration and more of all those things is very clearly intact.

50:46And then Latin America. I think Latin America is extremely exciting too, because in some places, not in all places there, you do get the population growth factor for growing GDP. You do get a demographic shift that is 10 years behind in terms of e-commerce penetration, in terms of digital financial service penetration for customers that are, when looking on a global scale, especially in Brazil and Argentina and Mexico, where a lot of these companies are playing, GDP per capita is pretty compelling. And a combination of them having a pretty decent amount of money to spend and not having great products yet in place to spend them is pretty ideal for a company like Mercado Libre or C-Limited is now entering Brazil pretty aggressively.

51:25NewBank, I know you know a lot about, but philosophy with venturing outside of the United States is pick the absolute best company you can possibly find. Pick the highest quality blue chip. Do not go bargain hunting, even though you did get to go bargain hunting on new. Well, that was the best company out there. But just blue chips, blue chips, blue chips, blue chips. I want the absolute best of the best, best leadership teams, best business models, most entrenched companies, most beloved brands. Because when you are exiting the United States, accounting irregularities get more frequent. Geopolitical risk is higher and less understood by a Michigander like myself who has left the country a few times in my life and I haven't lived in Brazil.

52:09I know you have more experience with that. I don't know how personal you get with your individual drivers. Oh, I tell them everything. You've been to Brazil and you've seen that, like we were talking about before the episode, that purple card army, which I love hearing from people who have been there. So thank you for that context. But yeah, I love the highest quality companies outside of the USA. That's similarly to I don't like small caps and I don't like healthcare, the bar for investing XUSA is very, very high for me, which means the most special, disrupting, high-quality companies are the only ones I play with.

52:45Yeah. I think that's a great philosophy. And not only does that help your returns, but I think it also helps offset some of the risk that could be, to your point, I don't live in Colombia. Yeah. And so I don't know what's going on on the ground there. and I can play that I'm Brazilian. I'm not, but I've been there twice. My wife is Brazilian. So I have maybe some insight, but I don't live there. And so I think having the ability to offset that risk by buying the best companies you can, I think could help mediate or alleviate some of that. And for non-US listeners, there's accounting fraud that happens here all the time too.

53:22Brad Freeman:I'm just, I'm Trevor Milton rolled a truck down a hill and called it a demo in 2021. But I have more confidence in seeing that more quickly and understanding it more quickly and doing something about it and risk managing with a US-based company than I do with a company across the world. Yeah, I totally agree. So I guess my last question is, if you had to look into your crystal ball, how would you play out what you think is going on with the whole AI thing? Because that's what everybody and their brother wants to talk about. And people are asking us constantly, what are you investing in AI? And I'm not going to ask you to name names, but just what do you think, how do you think this is going to play out if you had to give us a guesstimate?

54:07Yeah, I think a lot of the companies we're talking about right now, we will not be talking about in four or five years. I think there are a lot of similarities to pandemic bubble, to dot-com bubble. I think the similarities are a bit more local right now in terms of refined to pockets of markets. And the craziness is not in 2021, it was every enterprise software name gets 20 times sales and enterprise software is a gigantic piece of indexes. But right now, it just it feels like that is confined to that that's confined to AI infrastructure and quantum computing and these 20 quantum computing seems it's hard to it's hard to envision how that doesn't and not end poorly, but sharply, sharply, sharply correct before maybe it doesn't end poorly for these companies.

54:51He's just, you hear the CEO saying, we are years away from any kind of scalable commercial revenue. We're not going to make any money until several years after that. But sure, give us a$20 billion market cap and we'll keep selling stock and we'll keep telling you we're not real businesses yet. And you can keep making our, the Rigetti computing CEO, I actually have a lot of respect for because he's being very vocal about the fact that this isn't a real business yet, guys. Like we don't have anything that works. Anyone. And it's refreshing to hear him say that instead of rather the Ion Q CEO saying we're going to replace Blackwell in two years.

55:26Come on, man. But I think we are in a bubble for AI infrastructure. That is my opinion. Bubbles can inflate for a long time. They can seduce people into betting against the bubble and losing a ton of money, not because they were wrong about what's going to eventually happen, but because they were wrong about when that was going to happen. And the when, for me, is way too important of a variable in this investment thesis to think that I can make a short bet against quantum computing names or against these third-party data center providers that are going to have no revenue growth as soon as AI infrastructure buildout ends, whenever that happens.

56:05Yeah, so I think it's too important for me to be right about when that bubble stops inflating to make a big bet on puts or make a big bet on shorting these names. But I'm sure as heck not going to buy shares because I did own – I had a few of these high flyers in 2021 entering 2022 and did some trimming, but it was 10 % of the position when it should have been 90 % of the position. Hindsight 2020, but live and you learn. And it really does feel like those corrections are coming for a lot of these pretty, I would say every single quantum name, I'd say a lot of the data center providers, some of the nuclear energy names that we're seeing just go absolutely bananas with no revenue yet.

56:46And it's all based on backlogs. These$300 billion contracts, we are seeing a company that makes no money and has never made any money giving out to Oracle, the opening eye contract. And it's just, yeah, that works as long as you have capital markets that are willing to open up their wallets and say, how much do you need? No matter what, give us more growth. But that is very remnant of 2021. And that doesn't ever last forever. So listen to Sam Allman when he tells you we are in a bubble. And I guess for people who want to keep making a lot of money on the bubble, just I would say be careful. Maybe take profits if you want to.

57:24But what do I know? Do whatever you want. So I thought Palantir was ridiculous 40 % ago, and here we are today. So yeah, ridiculous can get more ridiculous. I'm going to probably keep being vocal about it just because I think it's helpful for some people who are maybe newer to this to understand that things aren't always this fun. And it can go down faster than it's going up right now. And you've done extremely well. And maybe if you want to, take some tips off the table. It's important for me not to tell people to sell anything because I shouldn't be giving advice. But in my mind, if I had one of these names in my portfolio right now, it would be that 90 % trim.

58:07It would be that take it from 8 % to the smallest position in your portfolio. Wait for it to inevitably get cut in half. Don't worry if it doubles again because that's not the risk reward you want to take advantage of. And yeah, I think managing risk right now is so important. And it's extremely important while things remain this fun, which makes it a lot harder to do the right thing. But it goes back to a previous idea we were talking about. I want to outperform the S &P 500 over a few decades. And in order to do that, it is less important for me in the next three, four months or eight months, however much longer this lasts, to outperform by another percent or 2 % or 3 % than it is for me to guard against the extreme downside that it would take to maybe outperform by that extra 3%.

58:51So I am in lower portfolio beta mode. I am in take some high flying exposure off the table mode. I am in make the cash pile a little bit bigger mode. And while things can remain this fun, the probability and likelihood of that happening is quickly falling and I'm taking advantage or I'm acting accordingly. That's my opinion. Maybe this isn't a bubble and it's the first time ever that we've had 100 times plus sales companies that aren't going to sharply pull back at some point. History is on my side, but history does not repeat itself. So we'll see. But it does rhyme. It does rhyme. It's rhyming pretty quickly after just four years.

59:34Yeah, right. Yeah. I think that's very well said. I like, yeah, you're welcome. I really like that idea. And I think being, trying to be prudent when things are, everybody's going crazy And you always know, you can always tell when things are getting a little frothy when Uber drivers are asking you, what do you think about this? What do you think about this? Oh, you're in the stock market. Well, what do you think about this? Okay. When the undergrad buddies start asking me for stock picks, it is, first of all, and best answer to that question is S &P 500 every single time. If they're asking you, what do I buy?

1:00:09It is, you buy an index. If you're asking me that question and unconditionally doing whatever I tell you to do, please buy an index. absolutely and thank me in 20 years yeah exactly all right well brad this has been a fantastic conversation i've actually learned quite a bit today and i've been i've enjoyed it a lot so if people want to find out more about you what you got going on your you mentioned your your newsletter and your website please talk about that yeah and and just throwing some praise back at you i i don't i don't this is going to make me sound bad i don't have deep respect for a lot of people on X who I communicate with throughout the years, but you are one who I think does things the right way and goes about investing the right way and takes good care of their subscribers and their viewers and listeners.

1:00:55So fan of yours as well. But stockmarketnerd.com is where everything is. So the website finally doesn't suck. So it'll be pretty easy to navigate finally. But yeah, that's where everything is. There's a lot of free content if you want to check it out. And if you want more, that'd make me happy. But if you don't, then I will still like you just the same. Yeah. And I will put all those, I will put that in the show notes for sure. I'll put a link to Stock Market Nerd as well as x.com. And I think you're on a few other sites. I'll probably add those as well. So Brad, if you haven't figured it out today, Brad's a smart guy and he's a great follow and he really knows his stuff and you can learn a lot from him.

1:01:33I have through the years and I know you will too. So again, Brad, thank you for joining us today. I really appreciate it. Thank you so much for having me. You're welcome. All right. Well, folks, with that, we will go ahead and sign us off. if you guys go out there and invest with a margin of safety, emphasis on the safety, have a great week and we'll talk to you all next week. We hope you enjoyed this content. Seven steps to understanding the stock market shows you precisely how to break down the numbers in an engaging and readable way with real life examples. Get access today at stockmarketpdf.com.

1:02:08Until next time, have a prosperous day. The information contained is for general information and educational purposes only. It is not intended for a substitute for legal, commercial, and or financial advice from a licensed professional. Review our full disclaimer at einvestingforbeginners.com.

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