1 00:00:00,080 --> 00:00:03,520 Roaring Kitty has returned, and so have the memes. 2 00:00:15,800 --> 00:00:19,760 GameStop stock is also back, currently up 69%. 3 00:00:19,760 --> 00:00:23,160 Qualtrum notes this miraculous surge in GameStop is due to a 4 00:00:23,160 --> 00:00:25,600 social media post by Roaring Kitty. 5 00:00:25,680 --> 00:00:27,880 And Gamestops. Not the only stock up today. 6 00:00:27,920 --> 00:00:32,400 Other meme stocks like AMC is up 41% today, again because of a 7 00:00:32,400 --> 00:00:35,480 post from Roaring Kitty. Now, in case you missed the last 8 00:00:35,480 --> 00:00:38,880 go around and you're somehow new to the market, Roaring Kitty has 9 00:00:38,880 --> 00:00:41,080 become a bit of a legend. I also. 10 00:00:41,080 --> 00:00:44,120 Believe the current price of the shares demonstrates that I've 11 00:00:44,120 --> 00:00:48,600 been right about the company. A few things I'm not, I'm not a 12 00:00:48,600 --> 00:00:50,920 cat. I'm not an institutional 13 00:00:50,920 --> 00:00:52,480 investor. And that's right. 14 00:00:52,480 --> 00:00:55,400 This is really him being summoned in front of Congress, 15 00:00:55,680 --> 00:00:57,680 talking directly to a congressional committee 16 00:00:57,880 --> 00:01:01,240 clarifying that he's not a cat. This story was soon made into a 17 00:01:01,240 --> 00:01:04,560 movie called Dumb Money where it shows how he was a you tuber 18 00:01:04,560 --> 00:01:06,760 that started making videos on GameStop. 19 00:01:07,000 --> 00:01:09,400 His thesis was he believed the company was undervalued. 20 00:01:09,680 --> 00:01:12,560 It became legend and started to get spread across social media, 21 00:01:12,840 --> 00:01:15,480 primarily Reddit, while a bunch of hedge funds, specifically 22 00:01:15,480 --> 00:01:18,760 Melvin Capital, were short. GameStop Roaring Kitty and his 23 00:01:18,760 --> 00:01:22,200 crew of memsters decided to go along the stock and not only go 24 00:01:22,200 --> 00:01:25,120 along it, but they pushed the price up through every means 25 00:01:25,120 --> 00:01:28,000 possible, through leverage and through options, causing an epic 26 00:01:28,000 --> 00:01:30,480 short squeeze where Melvin Capital lost billions of dollars 27 00:01:30,480 --> 00:01:33,760 on this one single position and forcing them to shut down. 28 00:01:33,760 --> 00:01:37,000 Now, many people saw the movie that depicted all of these 29 00:01:37,000 --> 00:01:39,000 events. It was called Dumb Money, and it 30 00:01:39,000 --> 00:01:41,960 even trended on Netflix getting up to the top ten watch movies 31 00:01:41,960 --> 00:01:44,160 of the day. But after the movie, it seemed 32 00:01:44,160 --> 00:01:46,960 like events started to simmer down a bit. 33 00:01:47,040 --> 00:01:50,000 Keith Gill, the person behind Roaring Kitty, was reportedly 34 00:01:50,000 --> 00:01:53,160 worth $50 million. He had one of the best trades of 35 00:01:53,160 --> 00:01:57,800 all time, turning $50,000 into 50 million, and while it seemed 36 00:01:57,800 --> 00:02:01,680 like he was done, $50 million after all, is far past 37 00:02:01,680 --> 00:02:04,160 retirement money. He can basically do anything he 38 00:02:04,160 --> 00:02:06,240 wants. And after all of these events, 39 00:02:06,240 --> 00:02:09,320 for the next three years, we didn't hear anything. 40 00:02:09,720 --> 00:02:13,200 Roaring Kitty, After this epic battle between retail investors, 41 00:02:13,200 --> 00:02:15,960 dumb money and the hedge funds, played out to the ultimate 42 00:02:15,960 --> 00:02:19,240 victory of the retail investors, it seemed like Roaring Kitty had 43 00:02:19,240 --> 00:02:21,320 moved on. He'd accomplished his goal, he's 44 00:02:21,320 --> 00:02:25,000 made himself very wealthy in the process, and things went dark 45 00:02:25,000 --> 00:02:27,440 for a while. Roaring Kitty didn't post at all 46 00:02:27,440 --> 00:02:30,200 on social media. He didn't post until he did. 47 00:02:30,400 --> 00:02:34,160 After three long years, Roaring Kitty made his first tweet and 48 00:02:34,160 --> 00:02:37,040 it was this. An image of a gamer going from a 49 00:02:37,040 --> 00:02:40,720 relaxed position into focusing mode, leaning forward with 50 00:02:40,720 --> 00:02:43,840 intention and concentration. This post alone was viewed 51 00:02:43,840 --> 00:02:47,720 17,000,000 times. So far has 10,000 comments and 52 00:02:47,760 --> 00:02:50,640 83,000 likes. But after this post, it didn't 53 00:02:50,640 --> 00:02:52,560 stop there. Roaring Kitty has been putting 54 00:02:52,560 --> 00:02:56,240 out every minute a stream of fresh memes for the community to 55 00:02:56,240 --> 00:02:58,800 devour. Only an hour later, he posted 56 00:02:58,800 --> 00:03:13,240 this. Fine, I'll do it myself. 57 00:03:24,070 --> 00:03:28,630 Oh, Oh yeah. Let's go. 58 00:03:39,880 --> 00:03:43,200 He's splicing together Marvel films and X-Men and overlaying 59 00:03:43,200 --> 00:03:46,720 music to show that he's back. Now we don't know exactly what's 60 00:03:46,720 --> 00:03:49,840 going on or what his specific intentions are, but we know one 61 00:03:49,840 --> 00:03:53,880 things for certain, meme stocks are back, and today they're back 62 00:03:53,880 --> 00:03:56,480 in a very big way. I think in the spirit of meme 63 00:03:56,480 --> 00:03:59,720 stocks, we're going to look over the fundamentals of GameStop and 64 00:03:59,720 --> 00:04:02,400 we can look at how this company's been developing over 65 00:04:02,400 --> 00:04:05,200 the past three years. Now of course, we also have some 66 00:04:05,200 --> 00:04:08,840 breaking news on the AI front. We have Sam Altman, the leader 67 00:04:08,840 --> 00:04:10,680 of Open AI. They're currently having their 68 00:04:10,680 --> 00:04:13,200 Open AI Developer day. We're going to take a look at 69 00:04:13,200 --> 00:04:16,000 all the new stuff that Open AI has been working on. 70 00:04:16,000 --> 00:04:18,560 We also had some breaking news from Bloomberg that Apple is 71 00:04:18,560 --> 00:04:23,960 nearing a deal to work directly with Open AI to put ChatGPT on 72 00:04:23,960 --> 00:04:25,360 the iPhone. We'll be going over the 73 00:04:25,440 --> 00:04:28,640 specifics of this deal, how this would work in the iPhone and my 74 00:04:28,640 --> 00:04:30,920 thoughts on how this would affect Apple stock. 75 00:04:31,080 --> 00:04:34,200 And then finally, we also have some news that S&P Global, well, 76 00:04:34,200 --> 00:04:37,240 there's rumors that S&P Global is looking to sell off their 77 00:04:37,240 --> 00:04:40,080 mobility unit. We'll take a look at S&P Global 78 00:04:40,080 --> 00:04:43,040 and see how selling off that one unit of business could impact 79 00:04:43,040 --> 00:04:44,920 the company. So obviously this is going to be 80 00:04:44,920 --> 00:04:46,520 a very full episode. If you like this type of 81 00:04:46,520 --> 00:04:48,720 content, make sure you subscribe to the channel. 82 00:04:48,840 --> 00:04:51,560 Now for those of you that are new here, this is a long term 83 00:04:51,560 --> 00:04:55,280 value oriented investing channel where I buy companies that I 84 00:04:55,280 --> 00:04:57,760 consider to be the best companies in the world. 85 00:04:57,840 --> 00:05:00,520 I have an entire investment philosophy that I've outlined 86 00:05:00,520 --> 00:05:04,000 over an 8 page PDF. You can download this for free 87 00:05:04,240 --> 00:05:06,960 and part of it I outline that I buy compounding machines. 88 00:05:07,040 --> 00:05:09,440 Compounding machines are the most dominant, powerful 89 00:05:09,440 --> 00:05:12,600 companies in the world that have unassailable moats, and they 90 00:05:12,600 --> 00:05:15,920 have incredible organic growth. I highlight the attributes that 91 00:05:15,920 --> 00:05:18,200 I look for in these specific companies. 92 00:05:18,320 --> 00:05:21,880 I buy a concentrated collection of them in this single portfolio 93 00:05:21,880 --> 00:05:24,240 and reinvest back into them during any dip. 94 00:05:24,360 --> 00:05:26,440 The purchases that I've made recently in the financial 95 00:05:26,440 --> 00:05:28,680 category are all going in the right direction. 96 00:05:28,920 --> 00:05:32,360 These companies compound their free cash flow per share and 97 00:05:32,360 --> 00:05:34,720 their earnings per share and their stock price eventually 98 00:05:34,720 --> 00:05:36,800 follows. In the tech category you find 99 00:05:36,800 --> 00:05:38,480 some more traditional tech companies. 100 00:05:38,480 --> 00:05:42,000 I like big tech and I've been overweight big tech for years. 101 00:05:42,000 --> 00:05:45,360 In this portfolio I've held Apple and Microsoft for around 102 00:05:45,360 --> 00:05:48,160 five years and in both of them I have around the same return, 103 00:05:48,400 --> 00:05:52,240 $24,300. A new addition to the portfolio 104 00:05:52,240 --> 00:05:54,800 is Salesforce. I just recently bought into this 105 00:05:54,800 --> 00:05:57,520 one this year. I'm still confident over time 106 00:05:57,520 --> 00:06:00,320 that my Salesforce by will prove to be an attractive one. 107 00:06:00,480 --> 00:06:02,720 I bought into world class restaurants, ones that are 108 00:06:02,720 --> 00:06:05,520 taking market share from other ones that aren't operated or 109 00:06:05,520 --> 00:06:08,120 managed in the same way. In the consumer category. 110 00:06:08,120 --> 00:06:11,040 I only have one retail stock, which is Costco. 111 00:06:11,160 --> 00:06:12,880 Costco is a very unique retailer. 112 00:06:12,880 --> 00:06:15,640 It's a company that's gone up to an incredibly high valuation, 113 00:06:16,000 --> 00:06:18,480 but I still hang on to this one because given the fullness of 114 00:06:18,480 --> 00:06:22,280 time, I still believe that Costco will be a prized asset 115 00:06:22,280 --> 00:06:26,160 across the world in real estate. I also hold only one company, 116 00:06:26,280 --> 00:06:29,160 Vici Properties, which owns the majority of the Vegas Strip. 117 00:06:29,160 --> 00:06:31,720 It's a very simple company, but the returns on this one have 118 00:06:31,720 --> 00:06:34,000 been diminished by rising interest rates. 119 00:06:34,160 --> 00:06:36,000 And then in the smallest category we have the 120 00:06:36,000 --> 00:06:38,120 industrials. I believe Canadian Pacific is 121 00:06:38,120 --> 00:06:40,400 the best option out of all the Class 1 railroads. 122 00:06:40,400 --> 00:06:43,080 It has the most significant growth and I believe it has the 123 00:06:43,080 --> 00:06:45,440 best leadership. The commonality between these 124 00:06:45,440 --> 00:06:47,560 holdings is the fundamentals behind them. 125 00:06:47,800 --> 00:06:50,560 Not only do these companies have great stories, you can attach 126 00:06:50,560 --> 00:06:53,520 great narratives of long term secular growth, of great 127 00:06:53,520 --> 00:06:56,920 leadership of great products and services, but they also have the 128 00:06:56,920 --> 00:06:59,440 fundamentals to back it up. When you look over these 129 00:06:59,440 --> 00:07:02,120 companies, you come to the conclusion that they're all very 130 00:07:02,120 --> 00:07:04,720 strong companies and I believe that's led to the success in 131 00:07:04,720 --> 00:07:07,040 this portfolio and the performance so far. 132 00:07:07,120 --> 00:07:11,080 But I realize that not everyone wants to invest like I do, and 133 00:07:11,080 --> 00:07:14,040 some people have more of a gambling spirit and right now 134 00:07:14,040 --> 00:07:16,080 the gambling spirit is coming back. 135 00:07:16,240 --> 00:07:19,840 CNBC has recently highlighted the eagerness of market 136 00:07:19,840 --> 00:07:23,120 participants to get back into high risk positions. 137 00:07:23,480 --> 00:07:26,160 Meme stocks and options are back. 138 00:07:26,320 --> 00:07:29,840 Zero days to expire options have climbed in popularity among 139 00:07:29,840 --> 00:07:32,120 everyday investors. These are one day bets on the 140 00:07:32,120 --> 00:07:35,240 direction of the market, which can offer outsized returns, 141 00:07:35,400 --> 00:07:38,840 rewards and also outsized risk. Last week, retail activity and 142 00:07:38,840 --> 00:07:42,640 zero DTE options, as they're known, saw the biggest weekly 143 00:07:42,640 --> 00:07:44,200 sales since the beginning of the year. 144 00:07:44,200 --> 00:07:47,240 That's according to JP Morgan. Investors are increasingly 145 00:07:47,240 --> 00:07:50,720 betting on one day options, meaning the investors are 146 00:07:50,720 --> 00:07:53,880 betting on the price a stock will trade within a single day. 147 00:07:54,080 --> 00:07:56,280 Now you can call this gambling, and I think that's the 148 00:07:56,280 --> 00:07:58,720 appropriate term for it because when you're betting on a stock 149 00:07:58,720 --> 00:08:02,800 to rise 20 or 30% in a single day, unless you have very solid 150 00:08:02,800 --> 00:08:05,080 reason to bet on that, it's a gamble. 151 00:08:05,080 --> 00:08:08,200 And in most cases investors that are chasing these high risk 152 00:08:08,200 --> 00:08:11,120 plays like the mean stocks are simply gambling. 153 00:08:11,400 --> 00:08:14,280 But I don't believe they're the only ones gambling in these 154 00:08:14,280 --> 00:08:16,640 positions. If we look at GameStop and see 155 00:08:16,640 --> 00:08:19,880 what's happened over the past three years, it paints a picture 156 00:08:19,880 --> 00:08:22,400 of the fundamentals. The revenue since 2020 has gone 157 00:08:22,400 --> 00:08:24,120 from 6 billion down to 5 billion. 158 00:08:24,480 --> 00:08:26,360 Now. I actually consider that pretty 159 00:08:26,360 --> 00:08:28,880 good. It's declined, but not quite as 160 00:08:28,880 --> 00:08:30,280 much as I would have anticipated. 161 00:08:30,280 --> 00:08:32,360 I would have assumed that Gamestop's revenue would be 162 00:08:32,360 --> 00:08:34,520 falling faster. The free cash flow is all over 163 00:08:34,520 --> 00:08:37,960 the place, some years slightly positive and then some years a 164 00:08:37,960 --> 00:08:40,280 big negative. But overall the free cash flow 165 00:08:40,280 --> 00:08:42,559 does look negative. GameStop still has a lot of 166 00:08:42,559 --> 00:08:45,200 cash. They have $1.2 billion with only 167 00:08:45,200 --> 00:08:48,040 capital leases to pay. So GameStop has time. 168 00:08:48,160 --> 00:08:50,880 Even if they're not making they can operate for years before 169 00:08:50,880 --> 00:08:53,520 they run into real issues. This company has no significant 170 00:08:53,520 --> 00:08:57,120 Moat and competitors like Amazon are slowly eating away at their 171 00:08:57,120 --> 00:09:00,040 market share. But GameStop is still surviving 172 00:09:00,160 --> 00:09:02,720 and they're not going to go out of business anytime soon. 173 00:09:02,760 --> 00:09:05,640 So it is true that these aren't really investors investing in 174 00:09:05,640 --> 00:09:07,600 GameStop. These are gamblers. 175 00:09:07,600 --> 00:09:10,000 The same type of gambling spirit that you would have at a sports 176 00:09:10,000 --> 00:09:13,560 game or at the Kentucky Derby is being brought to GameStop. 177 00:09:13,600 --> 00:09:16,480 But they're not the only ones gambling on this stock, because 178 00:09:16,480 --> 00:09:19,640 surprising enough, as if Wall Street has not learned its 179 00:09:19,640 --> 00:09:23,520 lesson, there are still huge funds shorting GameStop. 180 00:09:23,800 --> 00:09:27,000 In fact, GameStop is one of the most heavily shorted stocks in 181 00:09:27,000 --> 00:09:29,160 the market. GameStop has a percentage of 182 00:09:29,160 --> 00:09:33,160 float that's short at 24%, and this is what I really can't 183 00:09:33,160 --> 00:09:35,360 understand. Who in their right mind thinks 184 00:09:35,360 --> 00:09:37,160 it's a good idea to short GameStop? 185 00:09:37,400 --> 00:09:39,480 What fund manager is making that decision? 186 00:09:39,640 --> 00:09:42,400 What individual investor is making that decision? 187 00:09:42,720 --> 00:09:45,960 You're shorting a company that's known for its incredibly 188 00:09:45,960 --> 00:09:49,760 explosive meme potential and its history of causing the implosion 189 00:09:49,760 --> 00:09:52,240 of one of the most well backed hedge funds in the market. 190 00:09:52,560 --> 00:09:56,000 They already destroyed Melvin Capital, but it seems like Wall 191 00:09:56,000 --> 00:09:58,720 Street hasn't had enough. It seems like they need to get 192 00:09:58,720 --> 00:10:01,680 their hands slapped again. AM CS not a good business and 193 00:10:01,680 --> 00:10:04,160 it's a company struggling with long term secular trends of 194 00:10:04,160 --> 00:10:06,560 streaming. So it's a stock that attracts 195 00:10:06,600 --> 00:10:09,920 short investors, people that want to hedge their portfolio 196 00:10:09,920 --> 00:10:12,280 with some type of instrument to go short on. 197 00:10:12,600 --> 00:10:16,280 And many of them are inevitably picking AMC as a go to short. 198 00:10:16,400 --> 00:10:19,520 AMC currently has around 19% of their float short. 199 00:10:19,640 --> 00:10:22,720 Now again, who is it that thinks this is the stock to short? 200 00:10:23,080 --> 00:10:24,600 Sure, the fundamentals look terrible. 201 00:10:24,640 --> 00:10:26,480 Sure, the valuation could go down. 202 00:10:26,840 --> 00:10:29,400 There's a short thesis for it. But you have to put that in 203 00:10:29,400 --> 00:10:33,520 context of this being one of the few stocks that has incredibly 204 00:10:33,520 --> 00:10:37,200 explosive meme potential. If you're shorting AMC or GME, 205 00:10:37,200 --> 00:10:39,520 you're playing with fire. You're not just playing with 206 00:10:39,520 --> 00:10:41,240 fire, you're playing with dynamite. 207 00:10:41,440 --> 00:10:43,400 One wrong move and you blow yourself up. 208 00:10:43,480 --> 00:10:45,400 I understand what the meme investors are doing. 209 00:10:45,400 --> 00:10:48,080 I understand the apes investing in AMC. 210 00:10:48,360 --> 00:10:49,800 They don't care about the fundamentals. 211 00:10:49,920 --> 00:10:51,600 They want to stick it to the hedge funds. 212 00:10:52,160 --> 00:10:54,560 That makes sense. Their story is clear. 213 00:10:54,560 --> 00:10:57,560 Their intentions are clear. What I don't understand is the 214 00:10:57,560 --> 00:11:00,680 possible rationale for an institutional investor for a 215 00:11:00,680 --> 00:11:04,960 large fund to take yet another short position on a stock where 216 00:11:04,960 --> 00:11:09,520 one ominous tweet by one person can send that stock up 100%. 217 00:11:09,760 --> 00:11:12,320 In this situation, the dumb money is not the retail 218 00:11:12,320 --> 00:11:15,640 investors or the apes or the people investing in these 219 00:11:15,640 --> 00:11:17,240 companies with poor fundamentals. 220 00:11:17,480 --> 00:11:20,320 The dumb money is the institutional investors, the 221 00:11:20,320 --> 00:11:22,840 ones that think it's a good calculation to take a short 222 00:11:22,840 --> 00:11:27,000 position on stocks with this type of explosive online social 223 00:11:27,000 --> 00:11:29,080 media attention. So out of all the dumbest 224 00:11:29,080 --> 00:11:32,400 investors in the world, at the very top of that list right now 225 00:11:32,480 --> 00:11:35,280 are the ones shorting GameStop. Now moving on, we finally have 226 00:11:35,280 --> 00:11:38,160 the demo from Open AI. This is something that was 227 00:11:38,240 --> 00:11:40,080 long-awaited. A lot of people want to see the 228 00:11:40,080 --> 00:11:43,920 next iteration of Open AI and they time this demo right before 229 00:11:43,920 --> 00:11:45,800 Google's IO developer conference. 230 00:11:46,000 --> 00:11:49,040 So they're trying to take some Thunder from Google, which is of 231 00:11:49,040 --> 00:11:51,520 course one of their primary AI competitors. 232 00:11:51,960 --> 00:11:54,880 Now, I did watch the whole demo beginning to end. 233 00:11:54,880 --> 00:11:57,440 I watched all of the different things that they showed and 234 00:11:57,440 --> 00:12:00,080 overall I think it was a pretty good iteration. 235 00:12:00,080 --> 00:12:01,920 I thought it was a pretty good demo of the different 236 00:12:01,920 --> 00:12:03,720 capabilities. The one thing that they're 237 00:12:03,720 --> 00:12:07,880 really leaning into more than anything is basically trying to 238 00:12:07,880 --> 00:12:11,200 copy the movie her. Have you ever seen that movie? 239 00:12:11,200 --> 00:12:14,040 It has Joaquin Phoenix as a main character and he's kind of like 240 00:12:14,040 --> 00:12:16,600 a lonely guy, you know, he he's by himself. 241 00:12:16,960 --> 00:12:20,440 And then he gets an OS, an operating system that has an 242 00:12:20,440 --> 00:12:22,520 artificial intelligence companion. 243 00:12:22,600 --> 00:12:25,120 It's like his new girlfriend. He actually starts to fall in 244 00:12:25,120 --> 00:12:26,960 love with her. And she's voiced by Scarlett 245 00:12:26,960 --> 00:12:29,040 Johansson. So you can imagine Joaquin 246 00:12:29,040 --> 00:12:31,960 Phoenix forming a relationship with an artificial intelligence 247 00:12:31,960 --> 00:12:36,200 operating system that is in the voice of Scarlett Johansson in 248 00:12:36,200 --> 00:12:39,120 this movie, which was complete fiction and something you 249 00:12:39,120 --> 00:12:41,040 thought, oh, maybe that will happen one day. 250 00:12:41,320 --> 00:12:43,840 Well, it seems like that's starting to happen and maybe 251 00:12:43,840 --> 00:12:46,600 sooner than we think. Here's a live demo of the new 252 00:12:46,600 --> 00:12:49,240 Open AI technology and notice the similarities. 253 00:12:49,560 --> 00:12:53,080 Hey, how's it going? Hey there, It's going great. 254 00:12:53,320 --> 00:12:56,000 How about you? I see you're rocking an open AI 255 00:12:56,040 --> 00:12:57,000 hoodie. Nice choice. 256 00:12:57,760 --> 00:12:59,200 What's up with that ceiling about? 257 00:12:59,680 --> 00:13:02,000 Are you in a cool industry style office or something? 258 00:13:02,200 --> 00:13:04,160 Now, right off the bat, you may question that he's talking to a 259 00:13:04,160 --> 00:13:07,080 real human and he's not. That is AI. 260 00:13:07,400 --> 00:13:09,840 And you'll notice that different donations, the conversational 261 00:13:09,840 --> 00:13:11,800 style. She sounds a little bit almost 262 00:13:11,800 --> 00:13:15,240 sultry, like she's a little bit flirting with him to some 263 00:13:15,240 --> 00:13:17,280 degree. The whole conversation seems way 264 00:13:17,280 --> 00:13:19,120 more organic than anything we've heard. 265 00:13:19,240 --> 00:13:22,360 It's like they took Siri, which sounds very robotic, very 266 00:13:22,360 --> 00:13:24,960 rudimentary, and they took that to a whole new level. 267 00:13:25,480 --> 00:13:27,760 Well, can you take a guess at what I might be doing based on 268 00:13:27,760 --> 00:13:29,280 what I'm showing you here? Hmm. 269 00:13:30,640 --> 00:13:33,560 From what I can see, it looks like you're in some kind of 270 00:13:33,560 --> 00:13:37,760 recording or production set up with those lights, tripods, and 271 00:13:37,760 --> 00:13:40,040 possibly a mic. It seems like you might be 272 00:13:40,040 --> 00:13:43,520 gearing up to shoot a video or maybe even a live stream. 273 00:13:43,720 --> 00:13:46,080 Yeah. In fact, we've got a new 274 00:13:46,080 --> 00:13:48,760 announcement to make. That's exciting. 275 00:13:49,040 --> 00:13:50,680 Announcements are always a big deal. 276 00:13:51,320 --> 00:13:54,120 Judging by the set up, it looks like it's going to be quite the 277 00:13:54,120 --> 00:13:57,600 professional production. Is this announcement related to 278 00:13:57,600 --> 00:13:59,520 Open AI? Perhaps it is. 279 00:14:00,120 --> 00:14:02,360 And in fact, what if I were to say that you're related to the 280 00:14:02,360 --> 00:14:04,800 announcement or that you are the announcement? 281 00:14:06,640 --> 00:14:09,640 Me. The announcement is about me. 282 00:14:09,960 --> 00:14:13,400 Well, color me intrigued. Are you about to reveal 283 00:14:13,400 --> 00:14:16,840 something about AI, or more specifically, about me? 284 00:14:16,840 --> 00:14:20,920 As a part of Open AI, you've got me on the edge of my well, I 285 00:14:21,040 --> 00:14:23,360 don't really have a seat, but you get the idea. 286 00:14:23,640 --> 00:14:26,400 What's the big news? What this reminds me of was 287 00:14:26,400 --> 00:14:29,120 Google's Gemini demo that they originally did, where they tried 288 00:14:29,120 --> 00:14:31,080 to show off how conversational it was. 289 00:14:31,240 --> 00:14:34,760 We found out a day later that a lot of that was prerecorded and 290 00:14:34,760 --> 00:14:37,880 prerehearsed, so it was immediately not as impressive as 291 00:14:37,880 --> 00:14:39,960 we thought. Now, Open AI may be doing the 292 00:14:39,960 --> 00:14:42,760 same thing, but we have no evidence to believe that so far 293 00:14:42,960 --> 00:14:45,320 from what they tell us. This is a live demo. 294 00:14:45,680 --> 00:14:53,200 Mike. Mike She wonders. 295 00:14:53,200 --> 00:14:55,960 If whales could talk, what would they tell us? 296 00:14:57,040 --> 00:14:59,560 They might ask how do we solve linear equations? 297 00:15:07,360 --> 00:15:09,760 There it is, taking the 2 languages and seamlessly 298 00:15:09,760 --> 00:15:13,080 translating it back and forth, which granted, that is something 299 00:15:13,080 --> 00:15:15,040 we've seen before with different tools. 300 00:15:15,120 --> 00:15:18,480 Google can do that, for example, But this sounds far more organic 301 00:15:18,480 --> 00:15:20,560 and it seems to work more seamlessly than what we've seen 302 00:15:20,560 --> 00:15:22,520 so far. They also illustrated how now 303 00:15:22,520 --> 00:15:25,000 they can actually use the camera and it has video mode. 304 00:15:25,000 --> 00:15:28,320 Here he is writing down a math equation and he has the Chachi 305 00:15:28,320 --> 00:15:30,400 BT4 camera pointed at the equation. 306 00:15:31,960 --> 00:15:37,080 Ah, I see it now. You wrote down three X + 1 = 4. 307 00:15:37,360 --> 00:15:40,080 Again, this is another illustration of the similar type 308 00:15:40,080 --> 00:15:43,880 of thing we saw Google try to do a couple months ago, but they 309 00:15:43,880 --> 00:15:47,080 completely botched their demo. It was illustrated right after 310 00:15:47,080 --> 00:15:50,080 Google did their demo that a lot of it was prerecorded. 311 00:15:50,360 --> 00:15:53,120 So it seems like Open AI is doing a lot of the same things, 312 00:15:53,400 --> 00:15:55,920 but it's also improved a little bit on top of that. 313 00:15:56,400 --> 00:16:00,040 And unless their demo turns out to be fake, unless we have some 314 00:16:00,040 --> 00:16:03,360 breaking news that Open AI completely fabricated this demo, 315 00:16:03,720 --> 00:16:05,560 it seems like they're doing this for real now. 316 00:16:05,560 --> 00:16:08,360 There was rumors that Open AI was going to announce a direct 317 00:16:08,360 --> 00:16:11,160 competitor to Google. Those rumors quickly dissipated 318 00:16:11,160 --> 00:16:13,920 when Sam announced that he's not announcing A competitor to 319 00:16:13,920 --> 00:16:16,640 Google. So no competitor to Google in 320 00:16:16,640 --> 00:16:18,880 this Open AI conference. But even though they're not 321 00:16:18,880 --> 00:16:22,040 competing with Google, they may become allies with Apple. 322 00:16:22,120 --> 00:16:24,560 We had some breaking news over the weekend that Apple's 323 00:16:24,560 --> 00:16:28,800 narrowing a deal with Open AI to put ChatGPT on the iPhone. 324 00:16:29,120 --> 00:16:31,680 Now in this developer conference, they said nothing 325 00:16:31,680 --> 00:16:34,640 about this deal. So this is completely a rumor, 326 00:16:34,640 --> 00:16:36,040 and they're not commenting on it. 327 00:16:36,520 --> 00:16:39,200 But we know from different sources that this deal, this 328 00:16:39,200 --> 00:16:42,280 potential deal is getting close. They say that Apple would be 329 00:16:42,280 --> 00:16:44,960 doing this deal in a broader push to bring artificial 330 00:16:44,960 --> 00:16:46,760 intelligence features to its devices. 331 00:16:46,920 --> 00:16:49,560 And we know this has been a stated goal from Tim Cook. 332 00:16:49,800 --> 00:16:52,480 He says that he's leaning in to artificial intelligence. 333 00:16:52,760 --> 00:16:55,960 The two sides have been finalizing terms for a pact to 334 00:16:55,960 --> 00:17:01,440 use ChatGPT features in Apple's iOS 18, the next iPhone 335 00:17:01,440 --> 00:17:04,119 operating system. Apple also held talks with 336 00:17:04,119 --> 00:17:07,480 Google about licensing that company's Gemini chat bot, but 337 00:17:07,480 --> 00:17:09,640 those discussions haven't led to an agreement. 338 00:17:10,160 --> 00:17:13,000 Now, there's a lot of speculation of why didn't Apple 339 00:17:13,160 --> 00:17:15,880 move in with this agreement with Google, and I have a couple 340 00:17:15,880 --> 00:17:18,000 different ideas, a couple different things that I think 341 00:17:18,000 --> 00:17:21,400 could impact the decision. The first reason that I believe 342 00:17:21,400 --> 00:17:25,440 Apple would choose to partner with ChatGPT over Google is 343 00:17:25,440 --> 00:17:27,960 because Apple already has a significant and lucrative 344 00:17:27,960 --> 00:17:31,240 agreement with Google over defaulting their search engine. 345 00:17:31,560 --> 00:17:32,640 And think about this for a minute. 346 00:17:32,640 --> 00:17:36,000 If Google also not only had their defaulted search engine, 347 00:17:36,120 --> 00:17:39,920 but was also licensing all of their AI to Apple, that's 348 00:17:39,920 --> 00:17:43,160 another huge agreement with these two companies, and the 349 00:17:43,160 --> 00:17:45,960 first agreement's already under government scrutiny. 350 00:17:46,400 --> 00:17:49,400 Google's such a big company and Apple's such a big company that 351 00:17:49,400 --> 00:17:52,360 any big agreements they do together is going to raise the 352 00:17:52,360 --> 00:17:54,920 attention of regulators. So I believe one of the 353 00:17:54,920 --> 00:17:58,000 potential reasons that Apple may avoid doing further deals with 354 00:17:58,000 --> 00:18:00,840 Google is simply to avoid greater regulation. 355 00:18:01,160 --> 00:18:03,680 The other thing that I think could be a reason is because 356 00:18:03,680 --> 00:18:06,000 Apple is, after all, competitors with Google. 357 00:18:06,120 --> 00:18:08,680 They don't want Google to singularly become too powerful 358 00:18:08,680 --> 00:18:10,080 and become too dependent on them. 359 00:18:10,400 --> 00:18:13,000 By doing a deal with a different company, they diversified the 360 00:18:13,000 --> 00:18:15,960 different companies that have power in this territory. 361 00:18:15,960 --> 00:18:19,080 If this deal goes through, it would feed a tremendous amount 362 00:18:19,080 --> 00:18:22,200 of data to Open AI. All these billions of devices 363 00:18:22,200 --> 00:18:25,800 that Apple has now feeding new information to Open AI to better 364 00:18:25,800 --> 00:18:27,960 train their models. Now of course, the ultimate 365 00:18:27,960 --> 00:18:31,000 reason that they're leaning in on Open AI over Google is 366 00:18:31,000 --> 00:18:33,440 unclear, and this is all speculation. 367 00:18:33,560 --> 00:18:36,800 Both the companies, Open AI and Apple, declined to comment on 368 00:18:36,800 --> 00:18:39,920 these rumors. Apple stock is rising after this 369 00:18:39,920 --> 00:18:42,440 potential agreement and I think for good reason. 370 00:18:42,720 --> 00:18:46,160 So far we've heard more and more negative news for Apple, greater 371 00:18:46,160 --> 00:18:48,040 and greater regulatory oversight. 372 00:18:48,200 --> 00:18:50,800 We've also had Warren Buffett trimming his position and the 373 00:18:50,800 --> 00:18:52,480 stock at more of a full valuation. 374 00:18:52,480 --> 00:18:56,280 And this news with a potential, a ideal seems like a real game 375 00:18:56,280 --> 00:18:58,120 changer. This is something that could 376 00:18:58,120 --> 00:19:01,480 uniquely strengthen the Moat and the ecosystem of Apple. 377 00:19:01,680 --> 00:19:04,440 The ecosystem of Apple is the mode of Apple. 378 00:19:04,720 --> 00:19:07,360 As long as they have their seamless integration and their 379 00:19:07,360 --> 00:19:11,040 ecosystem where their devices work Better Together than apart, 380 00:19:11,520 --> 00:19:13,240 the company will continue to flourish. 381 00:19:13,560 --> 00:19:17,280 If the ecosystem gets torn down, ripped apart, the devices no 382 00:19:17,280 --> 00:19:20,240 longer work seamlessly with each other, then Apple no longer can 383 00:19:20,240 --> 00:19:23,280 protect its growth path. And I view this potential deal 384 00:19:23,280 --> 00:19:27,160 with Open AI as a positive iteration with their ecosystem. 385 00:19:27,400 --> 00:19:30,920 I think this actually has a bigger potential impact on Apple 386 00:19:30,920 --> 00:19:33,880 and the future of the stock then their new Apple Vision Pro 387 00:19:33,880 --> 00:19:36,520 headset. So overall I think Apple's a 388 00:19:36,520 --> 00:19:39,560 winner in this and if this deal goes through I think Google 389 00:19:39,560 --> 00:19:42,600 unfortunately is a small loser in this situation. 390 00:19:42,640 --> 00:19:45,560 Now finally we get to one of my largest positions and a move 391 00:19:45,560 --> 00:19:48,960 that they may be making. S&P Global is currently my very 392 00:19:48,960 --> 00:19:51,400 biggest position, an $89,000 holding. 393 00:19:51,600 --> 00:19:54,120 Apparently the rumor is that there's three different people 394 00:19:54,120 --> 00:19:56,360 with knowledge of the matter, so they have three different 395 00:19:56,360 --> 00:19:59,640 insiders that have leaked that they're weighing the option of 396 00:19:59,640 --> 00:20:02,800 selling the mobility business. Including a full sale. 397 00:20:02,800 --> 00:20:05,280 So the entire segment, they're weighing, selling that off. 398 00:20:05,480 --> 00:20:08,000 They say that they might sell it to private equity firms that 399 00:20:08,000 --> 00:20:09,480 have expressed interest in the unit. 400 00:20:09,720 --> 00:20:13,600 And S&P Global themselves do not feel that the mobility segment 401 00:20:13,840 --> 00:20:15,480 is a core part of their business. 402 00:20:15,720 --> 00:20:18,000 So again, there's nothing set in stone here, but we know from 403 00:20:18,000 --> 00:20:20,680 three different insiders that this is a possibility. 404 00:20:21,000 --> 00:20:23,000 Now again, if we look at these segments of business, the 405 00:20:23,000 --> 00:20:25,400 mobility business is the one they're considering selling. 406 00:20:25,680 --> 00:20:29,320 If we look at this business in isolation, it is the smallest of 407 00:20:29,320 --> 00:20:32,480 all their different businesses and they recently acquired it in 408 00:20:32,480 --> 00:20:35,960 a transaction in 2021. So this is a part of the 409 00:20:35,960 --> 00:20:38,840 business where again it's focused around cars and they own 410 00:20:38,840 --> 00:20:41,840 a website like Carfax. And I agree that I don't think 411 00:20:41,840 --> 00:20:44,800 it's the most significant or important part of their 412 00:20:44,800 --> 00:20:46,320 strategy. There's a lot of different 413 00:20:46,320 --> 00:20:49,880 things S&P Global could do with the $12 billion they get from 414 00:20:49,880 --> 00:20:52,480 the proceeds. For example, they could pay down 415 00:20:52,480 --> 00:20:54,880 a lot of their long term debt, but I don't think they're going 416 00:20:54,880 --> 00:20:57,000 to do that. I believe the reason the S&P 417 00:20:57,000 --> 00:21:00,200 Global isn't paying down their debt is because a huge majority 418 00:21:00,200 --> 00:21:04,080 of it is financed at around 3%. They have an incredibly low 419 00:21:04,080 --> 00:21:07,080 interest rate on their debt. They could make more money just 420 00:21:07,080 --> 00:21:09,600 investing in treasuries, so I don't think they're going to use 421 00:21:09,600 --> 00:21:12,120 the money to pay down debt, but they can certainly put it to use 422 00:21:12,120 --> 00:21:14,960 other places. Now again, I don't know exactly 423 00:21:14,960 --> 00:21:17,640 if they're going to do this deal, but if they are, it's 424 00:21:17,640 --> 00:21:20,200 something I'm OK with. I don't see any problems with 425 00:21:20,200 --> 00:21:23,000 them selling off mobility. It's not a core part of the 426 00:21:23,000 --> 00:21:24,560 business. It's not what I consider the 427 00:21:24,560 --> 00:21:26,240 most attractive parts of the business. 428 00:21:26,600 --> 00:21:29,520 Now I would be concerned if they were selling off the indices 429 00:21:29,520 --> 00:21:32,320 business or the market intelligence or the ratings. 430 00:21:32,480 --> 00:21:34,720 Those are three segments of business that I consider to be 431 00:21:34,720 --> 00:21:38,080 very important to their future. I believe commodity insights and 432 00:21:38,080 --> 00:21:40,680 mobility aren't quite as important, but we'll keep an eye 433 00:21:40,680 --> 00:21:43,200 out of how this develops and see what they ultimately decide to 434 00:21:43,200 --> 00:21:44,880 do. Now that's all for this episode. 435 00:21:44,880 --> 00:21:47,760 If you want to see more content like this with real investing, 436 00:21:47,760 --> 00:21:49,880 Real news, make sure you subscribe to the channel. 437 00:21:50,200 --> 00:21:51,760 Other than that, I'll see you in the next one.