1 00:00:00,080 --> 00:00:01,960 Welcome back everyone. Today on the Joseph Carlson 2 00:00:01,960 --> 00:00:03,400 Show. We're going to be going over one 3 00:00:03,400 --> 00:00:05,880 of the worst days that we've had in the market in years. 4 00:00:06,160 --> 00:00:10,240 Yesterday software companies crashed, they got pummelled and 5 00:00:10,240 --> 00:00:12,960 even non software companies, ones like S&P Global and 6 00:00:12,960 --> 00:00:15,920 Moody's, the big wide Moat financial companies, they got 7 00:00:15,920 --> 00:00:18,600 crushed as well. And it all comes down to one 8 00:00:18,600 --> 00:00:22,200 thing, anthropic. Anthropic and the threat of AI 9 00:00:22,200 --> 00:00:24,040 is now invading the global market. 10 00:00:24,040 --> 00:00:25,680 We're going to be going over the whole subject. 11 00:00:25,680 --> 00:00:29,360 We'll be looking at My Portfolio and the $60,000 that I lost 12 00:00:29,360 --> 00:00:31,400 yesterday. We'll be going over my plans in 13 00:00:31,400 --> 00:00:33,200 the future. What are the best decisions to 14 00:00:33,200 --> 00:00:34,840 make in this type of environment? 15 00:00:34,960 --> 00:00:36,520 Now, of course, we have a lot of other news to get to. 16 00:00:36,520 --> 00:00:38,920 For example, we have Uber that just reported their earnings. 17 00:00:38,920 --> 00:00:40,440 The stock is down after reporting. 18 00:00:40,720 --> 00:00:42,560 We have Google reporting their earnings. 19 00:00:42,840 --> 00:00:45,800 The decision of whether or not to keep your shares or sell out 20 00:00:45,800 --> 00:00:48,080 of Google and take some gains, that's one that we'll be 21 00:00:48,080 --> 00:00:50,320 discussing. And we also have the fail of the 22 00:00:50,320 --> 00:00:54,320 week, which in this case is Netflix's Ted Sarandos, the Co 23 00:00:54,320 --> 00:00:57,640 CEO, appearing before Congress. Congress has a way of asking 24 00:00:57,640 --> 00:00:59,480 business leaders interesting questions. 25 00:00:59,480 --> 00:01:04,239 For example, Ted Cruz asks Ted Sarandos, the Netflix CEO, are 26 00:01:04,239 --> 00:01:07,320 we on stolen land? That is, that's true. 27 00:01:07,480 --> 00:01:09,280 He really asked him that. We'll be going over the whole 28 00:01:09,280 --> 00:01:10,920 exchange in the fail of the week. 29 00:01:11,120 --> 00:01:13,840 Now, we start things off today by looking at what happened 30 00:01:13,840 --> 00:01:15,200 yesterday. It was one of the most 31 00:01:15,200 --> 00:01:17,600 significant sell offs, especially in a high growth 32 00:01:17,600 --> 00:01:20,560 industry that we've seen for some time throughout history. 33 00:01:20,560 --> 00:01:22,800 Software companies, especially ones that have that nice 34 00:01:22,800 --> 00:01:26,360 business model of recurring revenue that subscription 35 00:01:26,360 --> 00:01:30,160 software companies, they've held a higher multiple because of the 36 00:01:30,160 --> 00:01:34,040 predictability and reliability and pricing power inherent in 37 00:01:34,040 --> 00:01:36,480 their business model. They have what's called sticky 38 00:01:36,480 --> 00:01:38,920 businesses, meaning that when people sign up for their 39 00:01:38,920 --> 00:01:41,800 software and they incorporate it in their business, it gets 40 00:01:41,800 --> 00:01:45,040 intertwined in their workflows, embedded in their processes, 41 00:01:45,320 --> 00:01:47,720 therefore making it difficult to move away from those 42 00:01:47,720 --> 00:01:50,680 applications. Those applications also update 43 00:01:50,680 --> 00:01:53,280 frequently, they offer more features and they grow 44 00:01:53,480 --> 00:01:56,000 organically. Now these companies, these 45 00:01:56,000 --> 00:01:58,400 software companies typically again have traded at higher 46 00:01:58,400 --> 00:02:01,200 multiples because of the high margins, predictability and 47 00:02:01,200 --> 00:02:03,800 reliability. Now what happened yesterday is 48 00:02:03,800 --> 00:02:07,720 an escalation and a trend Anthropic has been on for some 49 00:02:07,720 --> 00:02:10,720 time and that is building out business to business tools. 50 00:02:10,720 --> 00:02:14,680 The Anthropic is a bit different than most other AI models or AI 51 00:02:14,680 --> 00:02:16,560 companies. Most of them are focused on the 52 00:02:16,640 --> 00:02:19,560 end user, the consumer. You have Open AI, you have 53 00:02:19,560 --> 00:02:22,320 Gemini, you have XAI, where people are downloading them on 54 00:02:22,320 --> 00:02:25,480 their mobile phones. But then you have Anthropic, 55 00:02:25,720 --> 00:02:28,400 which said that we're not going to focus so much on that. 56 00:02:28,600 --> 00:02:31,360 We're going to go straight for corporations, We're going to go 57 00:02:31,360 --> 00:02:34,240 for business utility. Just a week or so ago, Anthropic 58 00:02:34,240 --> 00:02:37,960 announced an AI plugin for Microsoft Excel, one that was 59 00:02:37,960 --> 00:02:41,040 highly advanced. It could do complex tasks just 60 00:02:41,040 --> 00:02:43,360 with text prompts. It could build out spreadsheets 61 00:02:43,360 --> 00:02:46,920 and DCF formulas and do lots of things that financial analysts 62 00:02:46,920 --> 00:02:50,080 can do right in Excel. It can also do things that data 63 00:02:50,080 --> 00:02:52,640 analysts can do. It can draw insights and retain 64 00:02:52,640 --> 00:02:56,040 context from what's going on in the Excel spreadsheet with no 65 00:02:56,040 --> 00:03:00,160 knowledge of Excel coding. Anthropic built that plugin, and 66 00:03:00,160 --> 00:03:03,320 it was better than Microsoft's Copilot, so we had a hint of it 67 00:03:03,320 --> 00:03:06,080 a week ago. Anthropic was building out tools 68 00:03:06,440 --> 00:03:09,560 on different verticals that are highly specialized for different 69 00:03:09,560 --> 00:03:12,080 types of jobs. Yesterday, Anthropic announced 70 00:03:12,080 --> 00:03:14,560 an AI automation tool specifically targeting 71 00:03:14,560 --> 00:03:18,400 professional analysis and financial and compliance work. 72 00:03:18,680 --> 00:03:21,880 This is legal work. So now they're moving from Excel 73 00:03:21,880 --> 00:03:24,840 spreadsheets to targeting entire verticals of financial, 74 00:03:24,840 --> 00:03:28,520 compliance, and legal teams. This plugin can supposedly do 75 00:03:28,520 --> 00:03:31,920 the grunt work that financial analysts and legal teams and 76 00:03:31,920 --> 00:03:36,200 compliance teams do, making that cost go down to essentially 0. 77 00:03:36,560 --> 00:03:39,240 The companies that make a lot of money with legal compliance, 78 00:03:39,240 --> 00:03:42,840 consulting, financial analyst information, all of that type of 79 00:03:42,840 --> 00:03:47,120 stuff went down hard and that included S&P Global and Moodys 80 00:03:47,520 --> 00:03:50,200 from the Wall Street Journal. AI threatens Wall Street's cash 81 00:03:50,200 --> 00:03:54,000 cow financial and legal data. The market's pricing in the 82 00:03:54,000 --> 00:03:56,480 Anthropic is essentially going to be able to scrape and 83 00:03:56,480 --> 00:03:59,960 synthesize financial, legal data and market data for free. 84 00:04:00,240 --> 00:04:03,480 And that a huge bulk of the work that companies like S&P Global 85 00:04:03,640 --> 00:04:06,680 with their market intelligence, and Moody's with their entire 86 00:04:06,680 --> 00:04:09,520 risk analysis part of the company, all of that's going to 87 00:04:09,520 --> 00:04:12,240 be automated or at least dramatically cheaper, making it 88 00:04:12,240 --> 00:04:14,800 so that companies like S&P Global don't have the pricing 89 00:04:14,800 --> 00:04:16,839 power and the growth path that they once had. 90 00:04:16,880 --> 00:04:19,760 Anthropic exposed a perceived vulnerability in some of the 91 00:04:19,760 --> 00:04:23,480 widest Moat companies that we've ever heard of, S&P Global and 92 00:04:23,480 --> 00:04:25,480 Moody's. These are looked at as the 93 00:04:25,480 --> 00:04:28,560 duopolies, the monopolistic companies, the ones that really 94 00:04:28,560 --> 00:04:32,000 can't be touched because they deal with such complex data and 95 00:04:32,000 --> 00:04:35,400 regulatory, financial, legal. That's the type of stuff that AI 96 00:04:35,400 --> 00:04:37,040 is not going to be able to do well. 97 00:04:37,040 --> 00:04:39,920 Anthropic saying no, we can do that too. 98 00:04:40,080 --> 00:04:43,320 That messaging put a lot of pressure on these companies, but 99 00:04:43,320 --> 00:04:45,560 it also had a strong waterfall effect. 100 00:04:46,040 --> 00:04:49,160 Once the market realized that these type of companies can be 101 00:04:49,160 --> 00:04:52,160 impacted by AI, it was all bets off. 102 00:04:52,280 --> 00:04:56,160 Every single company is now being scrutinized intensely of 103 00:04:56,160 --> 00:04:59,280 whether or not Anthropic will be able to impact their business 104 00:04:59,280 --> 00:05:02,280 model, whether it will be able to do essentially the same thing 105 00:05:02,280 --> 00:05:05,640 for a lot cheaper or faster. The market acted swiftly to sell 106 00:05:05,640 --> 00:05:09,760 off potentially any company that had any potential exposure to AI 107 00:05:09,760 --> 00:05:12,400 disruption and we saw a lot of that yesterday. 108 00:05:12,480 --> 00:05:14,320 I'll highlight some of the companies that we talk about the 109 00:05:14,320 --> 00:05:16,800 most here just to highlight how much they're down over the past 110 00:05:16,800 --> 00:05:18,640 five days. The biggest one that's down the 111 00:05:18,640 --> 00:05:21,040 most over the past five days is Equifax. 112 00:05:21,080 --> 00:05:24,440 Equifax had a massive sell off yesterday, which I was very 113 00:05:24,440 --> 00:05:26,680 fortunate to have sold it before that sell off. 114 00:05:27,160 --> 00:05:29,520 So that was some lucky timing. I did not anticipate this 115 00:05:29,520 --> 00:05:31,600 happening. So this wasn't me thinking in 116 00:05:31,600 --> 00:05:33,520 advance that it's going to sell down and then timing it 117 00:05:33,520 --> 00:05:35,520 perfectly. In some cases, it's better to be 118 00:05:35,520 --> 00:05:37,440 lucky than good. This is one of those cases. 119 00:05:37,680 --> 00:05:40,760 Equifax, like many of the financial companies reliant on 120 00:05:40,760 --> 00:05:44,720 data, was crushed over the past five days, falling 14%. 121 00:05:45,200 --> 00:05:48,000 Then we have S&P Global. Now this is a large holding and 122 00:05:48,000 --> 00:05:50,280 I still maintain my position in this one. 123 00:05:50,600 --> 00:05:54,040 It is down 13%. We have Duolingo over the past 124 00:05:54,040 --> 00:05:56,760 five days. This one's down 13% as well. 125 00:05:57,080 --> 00:05:59,760 The market's pricing in big disruption with Duolingo. 126 00:06:00,000 --> 00:06:01,520 This is one that I disagree with. 127 00:06:01,520 --> 00:06:03,800 I don't think it's going to be quite as bad for this company as 128 00:06:03,800 --> 00:06:06,440 what's being priced in. We also have into it. 129 00:06:06,840 --> 00:06:09,800 This is one that I've been concerned for some time that it 130 00:06:09,800 --> 00:06:12,800 would get this SAS treatment that would be bucketed in with 131 00:06:12,800 --> 00:06:15,960 the rest of software companies and get evaluated like it's a 132 00:06:15,960 --> 00:06:19,640 Salesforce or Adobe into. It's down and astounding 12%. 133 00:06:19,640 --> 00:06:21,760 It's the lowest valuation it's been in years. 134 00:06:22,240 --> 00:06:24,600 Then we have FDS, which is fax set. 135 00:06:24,640 --> 00:06:26,560 That's another data supplier company. 136 00:06:26,720 --> 00:06:29,440 That one's down 12%. FICO, like many of these stocks 137 00:06:29,440 --> 00:06:32,040 has been a disaster recently. It's down 12% as well. 138 00:06:32,320 --> 00:06:36,080 We even have Spotify, which Spotify is down 11 percent. 139 00:06:36,240 --> 00:06:38,280 Is Spotify getting disrupted by AI? 140 00:06:38,280 --> 00:06:41,000 What we'll discuss, We have Moody's, this one was hit to a 141 00:06:41,000 --> 00:06:44,600 lesser extent, it's down 10%. We have Uber, this one's also 142 00:06:44,600 --> 00:06:47,240 down 7%. And then we have MSCI, this 143 00:06:47,240 --> 00:06:50,000 one's down 7% as well. And there's a lot more where 144 00:06:50,000 --> 00:06:52,320 that came from. So many companies were hit hard 145 00:06:52,320 --> 00:06:54,480 yesterday and they're still getting hit hard today. 146 00:06:54,480 --> 00:06:58,360 If we look at My Portfolio, this is one of the the worst losses 147 00:06:58,360 --> 00:07:00,960 I'd say in the past few years in a single day. 148 00:07:01,360 --> 00:07:04,160 It was a quick sell off. I lost around between both 149 00:07:04,160 --> 00:07:08,720 portfolios, around $60,000 in one day, so around 5% of the 150 00:07:08,720 --> 00:07:10,680 portfolio. When we look at the categories 151 00:07:10,680 --> 00:07:13,920 here, the ones that were hit really hard is the financial 152 00:07:13,920 --> 00:07:15,800 category. These are the Devcantasario 153 00:07:15,800 --> 00:07:18,280 holdings. S&P Global, Moody's and Intuit 154 00:07:18,280 --> 00:07:21,760 were hit very hard, each one of them down around 10%. 155 00:07:22,320 --> 00:07:25,160 We look at MasterCard and luckily, fortunately, this is 156 00:07:25,160 --> 00:07:27,040 one of the ones that was actually green on the day. 157 00:07:27,040 --> 00:07:29,720 So investors are not worried about MasterCard, which I don't 158 00:07:29,720 --> 00:07:32,240 think they should be. Intuit stock has declined so 159 00:07:32,240 --> 00:07:33,840 fast. I believe it's getting into the 160 00:07:33,840 --> 00:07:36,120 territory of being a good opportunity. 161 00:07:36,360 --> 00:07:38,240 This is one that is growing very quickly. 162 00:07:38,640 --> 00:07:42,160 It's difficult to believe that AI will replicate TurboTax and 163 00:07:42,160 --> 00:07:44,800 people will just do it with AI. Most people want to make sure 164 00:07:44,800 --> 00:07:47,360 that their taxes are done correctly and not have 165 00:07:47,440 --> 00:07:49,840 hallucinations. So Intuit's one that I think has 166 00:07:49,840 --> 00:07:51,920 built up a history and trust with a lot of customers. 167 00:07:52,320 --> 00:07:54,920 In my opinion, it will be one that will likely do well in the 168 00:07:54,920 --> 00:07:57,000 future. This one I continue to hold in 169 00:07:57,000 --> 00:07:59,120 the tech categories where I put most of my focus. 170 00:07:59,120 --> 00:08:01,440 This is where we get into some of the big tech companies plus 171 00:08:01,480 --> 00:08:03,800 ASML. I still own my full share in 172 00:08:03,800 --> 00:08:05,880 Google. I haven't sold any and I still 173 00:08:05,880 --> 00:08:08,440 continue to hold all of it going into this earnings. 174 00:08:08,800 --> 00:08:12,320 I believe that Google's earnings today are much more risky than 175 00:08:12,320 --> 00:08:15,120 they were previously just because of valuation. 176 00:08:15,160 --> 00:08:18,640 Investors are getting a little antsy, a little anxious going 177 00:08:18,640 --> 00:08:21,280 into these earnings. The stock is down 3% when 178 00:08:21,280 --> 00:08:23,120 there's so far. Really nothing wrong with 179 00:08:23,120 --> 00:08:26,560 Google, but when we look at this company, it's trading at a 30 180 00:08:26,560 --> 00:08:29,000 Ford PE. This is one of the highest PE 181 00:08:29,000 --> 00:08:31,400 ratios on a Ford basis that Google's traded at. 182 00:08:31,720 --> 00:08:35,200 It's typically not priced like this, so there is reason to be a 183 00:08:35,200 --> 00:08:38,760 bit more cautious and there's a higher likelihood of a post 184 00:08:38,760 --> 00:08:42,240 earning sell off than before. What keeps seeing Google is I I 185 00:08:42,240 --> 00:08:44,520 just believe this company is a big winner long term. 186 00:08:44,520 --> 00:08:46,960 I don't think they're going to get disrupted by AI. 187 00:08:47,080 --> 00:08:49,680 They have too many users, they have too many tools, they have 188 00:08:49,680 --> 00:08:53,760 too many unique great assets. Google Cloud is great, Waymo's 189 00:08:53,760 --> 00:08:57,080 great, YouTube is great. You have all the business assets 190 00:08:57,080 --> 00:09:00,000 where they're infusing Gemini. They have their own leading 191 00:09:00,000 --> 00:09:02,880 model, and I think that this one will just continue to do well 192 00:09:02,880 --> 00:09:05,200 over time. It may sell off in the short 193 00:09:05,200 --> 00:09:08,280 term because of valuation concerns, but Google remains a 194 00:09:08,280 --> 00:09:10,360 winner long term. Now, the newest position, one 195 00:09:10,360 --> 00:09:12,880 that I'm building up extremely fast, is Meta. 196 00:09:13,000 --> 00:09:15,040 I've been putting a lot of money into this company. 197 00:09:15,040 --> 00:09:18,280 It's already a $118,000 position. 198 00:09:18,680 --> 00:09:21,400 This is one that I've been building up so quickly because I 199 00:09:21,400 --> 00:09:23,480 feel more and more confident about the future of it, 200 00:09:23,560 --> 00:09:25,760 especially given the position of the market right now. 201 00:09:26,120 --> 00:09:29,600 Meta is a company that I feel is entirely insulated from AI 202 00:09:29,600 --> 00:09:31,480 risks. It is a company where they 203 00:09:31,480 --> 00:09:33,680 control their own model. They have their own 204 00:09:33,680 --> 00:09:35,120 infrastructure. They have their own 205 00:09:35,120 --> 00:09:37,560 supercomputing. The products that Meta owns and 206 00:09:37,560 --> 00:09:40,360 the platforms they own are not going to be disrupted by 207 00:09:40,360 --> 00:09:42,840 artificial intelligence. They don't have the same type of 208 00:09:42,840 --> 00:09:45,080 risks. And while I believe that it's 209 00:09:45,080 --> 00:09:48,520 highly insulated from the risks right now, it's also a company 210 00:09:48,520 --> 00:09:51,560 that's growing incredibly fast and has a low valuation. 211 00:09:52,080 --> 00:09:53,920 To me, it is a place to put money. 212 00:09:53,920 --> 00:09:56,640 This is a buy, so I'm buying it substantially. 213 00:09:57,080 --> 00:09:58,680 Does that mean the stock will go up tomorrow? 214 00:09:58,920 --> 00:10:01,120 I don't know. I can't guarantee anything, but 215 00:10:01,120 --> 00:10:03,200 this is one that I feel very strongly about right now. 216 00:10:03,360 --> 00:10:06,080 You can see that with how big the position is and the fact 217 00:10:06,080 --> 00:10:08,680 that I have another $10,000 going into this one this 218 00:10:08,680 --> 00:10:10,720 evening. Now, part of where I raised 219 00:10:10,720 --> 00:10:13,320 money for this is with the sale of Salesforce. 220 00:10:13,600 --> 00:10:16,600 I sold the company this morning. Salesforce is a company that I 221 00:10:16,600 --> 00:10:19,600 have been questioning whether I should own for the past year. 222 00:10:19,720 --> 00:10:22,160 A couple weeks ago I said I was going to sell the company, so 223 00:10:22,160 --> 00:10:24,120 this is no surprise. I've already signaled it. 224 00:10:24,360 --> 00:10:26,880 I've talked about it frequently, and I said that the sale 225 00:10:26,880 --> 00:10:29,920 proceeds would go towards Meta. That's exactly where they went. 226 00:10:29,920 --> 00:10:33,240 Salesforce is a company where you can debate all day long 227 00:10:33,240 --> 00:10:35,480 whether or not AI will kill the company or not. 228 00:10:35,560 --> 00:10:38,600 But even putting aside the AI fares, even if we just leave 229 00:10:38,600 --> 00:10:41,880 that completely out of the equation, I still believe that 230 00:10:41,880 --> 00:10:45,160 Meta is just a better company regardless of AI fares, 231 00:10:45,160 --> 00:10:46,920 regardless of what's going on with the market. 232 00:10:47,240 --> 00:10:50,280 When I look at Meta both from a valuation perspective, from a 233 00:10:50,280 --> 00:10:53,960 Moat perspective, from a growth potential perspective, Meta 234 00:10:53,960 --> 00:10:56,560 seems like a superior asset to me overall. 235 00:10:56,760 --> 00:10:59,080 That's ultimately the reason that I decided to sell it. 236 00:10:59,200 --> 00:11:02,600 So I believe Meta is a quality upgrade over both Equifax and 237 00:11:02,600 --> 00:11:05,880 Salesforce in doing this type of transformation and putting both 238 00:11:05,880 --> 00:11:07,640 of those companies assets into this one. 239 00:11:08,120 --> 00:11:10,960 I believe that overall My Portfolio is stronger today. 240 00:11:11,000 --> 00:11:13,160 We also have ASML, which is selling down with the rest of 241 00:11:13,160 --> 00:11:16,200 the market doesn't make much sense, but ASML is down and then 242 00:11:16,200 --> 00:11:18,360 we have Microsoft. This is another one that I'm 243 00:11:18,360 --> 00:11:20,560 getting very close to starting to buy. 244 00:11:20,920 --> 00:11:23,280 I believe that Microsoft is traded down to the range of 245 00:11:23,280 --> 00:11:24,880 being good value. Let's go ahead and take a look 246 00:11:24,880 --> 00:11:27,760 at the Story Fund for a minute. This one's 390 thousand, 247 00:11:27,760 --> 00:11:30,680 $123,000 in gains. If we go through the holdings in 248 00:11:30,680 --> 00:11:32,920 the Story Fund, Amazon has been fine. 249 00:11:33,240 --> 00:11:34,480 Netflix has actually held up well. 250 00:11:34,480 --> 00:11:36,920 That one's been fine. We have Google, which investors 251 00:11:36,920 --> 00:11:39,480 are a little bit antsy about with the the upcoming earnings, 252 00:11:39,480 --> 00:11:40,800 but that one overall has been fine. 253 00:11:41,200 --> 00:11:43,400 Then we have Microsoft. This is one that actually got 254 00:11:43,400 --> 00:11:46,680 hit in the sell off because Microsoft is a software company 255 00:11:47,200 --> 00:11:49,120 to some degree. We have S&P Global. 256 00:11:49,120 --> 00:11:50,800 Again, investors are scared about that one. 257 00:11:51,400 --> 00:11:55,000 And then Duolingo, this is 1 where investors continue to 258 00:11:55,000 --> 00:11:58,000 liquidate this company. If we look at the market cap, 259 00:11:58,040 --> 00:12:02,800 it's at a $5.5 billion market cap, but that also doesn't 260 00:12:02,800 --> 00:12:06,240 factor in that they have $1 billion in cash. 261 00:12:06,840 --> 00:12:10,040 If you were to net that out, this is a company trading at a 262 00:12:10,040 --> 00:12:13,560 four and a half billion dollar market cap that's doing hundreds 263 00:12:13,560 --> 00:12:16,000 of millions of dollars per year in free cash flow. 264 00:12:16,120 --> 00:12:19,720 The free cash flow yield today is 6.45%. 265 00:12:20,040 --> 00:12:22,800 You don't often see a company growing as fast as Duolingo 266 00:12:22,800 --> 00:12:25,080 that's trading at this high of a free cash flow yield. 267 00:12:25,080 --> 00:12:26,800 Investors want nothing to do with this company. 268 00:12:26,800 --> 00:12:29,160 It's being thrown out with all the other AI concerns. 269 00:12:29,720 --> 00:12:32,360 We also have a lot of shorts cashing in on this company. 270 00:12:32,360 --> 00:12:36,600 The short interest is now way above 20% so shorts are piling 271 00:12:36,600 --> 00:12:39,080 in, which of course creates more aggressive selling. 272 00:12:39,080 --> 00:12:42,840 Maybe I'm just stubborn, but I'm holding Duolingo and I may buy 273 00:12:42,840 --> 00:12:45,200 more of it. I just like the stock. 274 00:12:45,200 --> 00:12:48,040 I like the company. I think it's very profitable and 275 00:12:48,280 --> 00:12:51,200 overtime we'll see if the business model survives. 276 00:12:51,480 --> 00:12:54,600 But right now I believe that Duolingo is a lot more than just 277 00:12:54,600 --> 00:12:57,600 a learning app. It's a very refined one. 278 00:12:57,600 --> 00:13:00,200 It's very user friendly. It's something that it creates 279 00:13:00,200 --> 00:13:02,560 an addictiveness in users. They want to use it every single 280 00:13:02,560 --> 00:13:04,600 day and that's difficult to accomplish. 281 00:13:04,600 --> 00:13:06,280 So there's the damage to the portfolio. 282 00:13:06,280 --> 00:13:11,120 Overall, it was around a 5% hit, which is a big hit. 5% is a lot 283 00:13:11,120 --> 00:13:14,240 to lose in a single day, but that money will be compounded 284 00:13:14,240 --> 00:13:15,920 back. These companies are growing. 285 00:13:15,920 --> 00:13:17,800 I have incredible assets in the portfolio. 286 00:13:17,920 --> 00:13:20,840 It's going to go far above 5% in the future that I'm confident 287 00:13:20,840 --> 00:13:21,960 of. Now, switching gears a little 288 00:13:21,960 --> 00:13:24,480 bit, one of the things that I wanted to comment on and warn 289 00:13:24,480 --> 00:13:28,560 about was this tendency that I see from many investors to 290 00:13:28,560 --> 00:13:31,320 simply look at all the companies that are selling off and start 291 00:13:31,320 --> 00:13:34,160 to just buy the ones that are selling off the most. 292 00:13:34,640 --> 00:13:37,240 They're buying the ones that are trading down the most or have 293 00:13:37,240 --> 00:13:40,080 the lowest valuation. While that seems like good 294 00:13:40,080 --> 00:13:43,280 investing on the surface to buy companies that are oversold or 295 00:13:43,280 --> 00:13:47,160 ones that the market's panicking on, I believe things are a bit 296 00:13:47,160 --> 00:13:49,640 more complex than that. One of the things that investors 297 00:13:49,640 --> 00:13:53,080 often look at as an attractive trait is the ability to be 298 00:13:53,080 --> 00:13:56,240 patient, The ability to have duration. 299 00:13:56,760 --> 00:14:00,080 Duration means that you don't need to sell companies that are 300 00:14:00,080 --> 00:14:02,880 going down in stock price. The market gives you a lower 301 00:14:02,880 --> 00:14:04,440 bid. You don't have to take it. 302 00:14:04,840 --> 00:14:08,040 You can simply just hang on. You can wait overtime for 303 00:14:08,040 --> 00:14:11,080 earnings to grow or from things to change and the market to give 304 00:14:11,080 --> 00:14:14,240 you a higher bid. That is duration, and it's one 305 00:14:14,240 --> 00:14:16,280 of the best things that we have as investors. 306 00:14:16,920 --> 00:14:21,000 But duration, even though it's a great benefit, also only 307 00:14:21,000 --> 00:14:24,120 protects you if the company that you own has a business model 308 00:14:24,120 --> 00:14:28,680 that will survive and thrive. Duration only benefits you if 309 00:14:28,680 --> 00:14:32,360 the business model survives. Waiting and being patient only 310 00:14:32,360 --> 00:14:35,760 benefits you, the investor, if the business model is thriving. 311 00:14:36,560 --> 00:14:40,080 Patients, if you're not careful, can turn to denial. 312 00:14:40,600 --> 00:14:43,880 If you have companies in your portfolio that are selling down 313 00:14:43,880 --> 00:14:47,680 day after day because the business model is in decay, the 314 00:14:47,680 --> 00:14:51,040 business model is being eroded. AI is attacking it from all 315 00:14:51,040 --> 00:14:54,040 fronts and making real damage to the value proposition of your 316 00:14:54,040 --> 00:14:56,960 company. That is not good investing to 317 00:14:56,960 --> 00:14:59,560 simply hold on. That is denial. 318 00:15:00,160 --> 00:15:03,040 Investors that may feel like they're trapped in a company 319 00:15:03,320 --> 00:15:05,840 because they've been in it before, they're in the red on 320 00:15:05,840 --> 00:15:07,600 it. They have sunken cost fallacy, 321 00:15:07,600 --> 00:15:10,880 meaning they're waiting longer and longer hoping that someone 322 00:15:10,880 --> 00:15:13,320 will give them a higher bid so they can just exit out of it. 323 00:15:14,120 --> 00:15:17,760 That is denial, and I see many investors get stuck in this 324 00:15:17,760 --> 00:15:20,240 denial. If you're not careful, duration 325 00:15:20,240 --> 00:15:22,400 and patience can quickly turn into denial. 326 00:15:22,760 --> 00:15:25,640 And the way they determine that is by the business model. 327 00:15:26,160 --> 00:15:30,360 If you look at different industries like cable TV, cable 328 00:15:30,360 --> 00:15:33,840 TV used to be an incredible industry with high margins, 329 00:15:33,880 --> 00:15:36,960 residual business customers that paid every single year. 330 00:15:36,960 --> 00:15:39,600 It's one of the most profitable big companies in the world. 331 00:15:39,600 --> 00:15:41,880 These were the giants of our time. 332 00:15:42,480 --> 00:15:46,080 But cable TV was disrupted by a superior technology called 333 00:15:46,080 --> 00:15:48,760 streaming. Now cable television trades at 334 00:15:49,000 --> 00:15:52,480 record low valuations companies that you can buy for very cheap. 335 00:15:52,800 --> 00:15:56,360 Anybody can buy them anytime, but they trade for cheap because 336 00:15:56,360 --> 00:15:59,520 the business models have been decayed, they've been eroded. 337 00:15:59,600 --> 00:16:02,960 Being a patient investor in cable television has not paid 338 00:16:02,960 --> 00:16:05,160 off. The patients has accumulated 339 00:16:05,160 --> 00:16:08,000 losses and has given up opportunity to put the capital 340 00:16:08,240 --> 00:16:10,600 into business models that are thriving and growing. 341 00:16:10,600 --> 00:16:13,440 So I'd give a word of caution before buying SAS companies that 342 00:16:13,440 --> 00:16:16,480 are at a discount that are seat based when AI is making it 343 00:16:16,480 --> 00:16:20,400 easier to do seat based things robotically to at least look at 344 00:16:20,400 --> 00:16:22,840 the threats to the business model itself. 345 00:16:23,320 --> 00:16:25,960 For you to have the extraordinary gains over time, 346 00:16:26,240 --> 00:16:29,400 you need the business model to survive and thrive. 347 00:16:30,000 --> 00:16:31,600 The business model does not survive. 348 00:16:31,600 --> 00:16:34,040 It doesn't matter what valuation you're buying the company at 349 00:16:34,320 --> 00:16:36,480 PayPal, investors have learned that the hard way. 350 00:16:36,840 --> 00:16:39,320 You can get stuck in a company indefinitely. 351 00:16:39,520 --> 00:16:42,760 Sunken cost can keep you there for much longer than you deserve 352 00:16:42,760 --> 00:16:45,720 to be there. So look for the business model. 353 00:16:46,120 --> 00:16:48,960 When I look at this, I look at companies that I believe right 354 00:16:48,960 --> 00:16:52,440 now, at least for my judgement, AI can't touch. 355 00:16:53,160 --> 00:16:55,760 One of them is Amazon. Amazon ultimately is a physical 356 00:16:55,760 --> 00:16:58,080 infrastructure play. It's a company that is very 357 00:16:58,080 --> 00:17:00,480 insulated from AI. Amazon's business model is not 358 00:17:00,480 --> 00:17:02,560 going to just survive, it will thrive. 359 00:17:02,560 --> 00:17:05,560 We have ASML. AI can do many things to help 360 00:17:05,599 --> 00:17:07,480 ASML. Maybe it can help calculate and 361 00:17:07,480 --> 00:17:10,520 calibrate some settings on many of the toolings that they have. 362 00:17:10,599 --> 00:17:14,440 But AI can't build a $400 million machine. 363 00:17:14,760 --> 00:17:17,079 It can't build perfectly smooth class. 364 00:17:17,440 --> 00:17:20,240 It can't make thousands of suppliers do unique business 365 00:17:20,240 --> 00:17:23,520 with ASML. ISML is highly insulated from 366 00:17:23,640 --> 00:17:25,440 AI. The business model is going to 367 00:17:25,440 --> 00:17:27,760 survive. Costco's another company that's 368 00:17:27,760 --> 00:17:31,400 up like 19% this year. It's just off to the races. 369 00:17:31,880 --> 00:17:34,960 Costco's always been a very insulated company from almost 370 00:17:35,040 --> 00:17:37,120 any disruption. That's why investors have paid a 371 00:17:37,120 --> 00:17:39,800 perceived high price for it. But Costco's always looked a 372 00:17:39,800 --> 00:17:42,680 little cheap in hindsight. Looking at Costco today, this is 373 00:17:42,680 --> 00:17:45,680 another company that I haven't sold, I have my full position in 374 00:17:46,080 --> 00:17:48,760 and Costco is certainly not going to be disrupted by AI. 375 00:17:49,440 --> 00:17:51,280 We have GE. This is another one. 376 00:17:51,600 --> 00:17:54,120 I don't have it in My Portfolio, but GE is one that I can't 377 00:17:54,120 --> 00:17:56,880 imagine AI being any meaningful risk. 378 00:17:57,000 --> 00:17:59,680 We have Google, another one that has a business model that's 379 00:17:59,680 --> 00:18:02,000 insulated. It's not going to be disrupted 380 00:18:02,000 --> 00:18:03,680 by AI. It already went through the 381 00:18:03,680 --> 00:18:06,840 biggest threat, which was Chachi BT, and they passed that threat 382 00:18:06,840 --> 00:18:08,920 just fine. We have MasterCard. 383 00:18:09,440 --> 00:18:12,280 MasterCard is 1 where they do have a whole data analytic side, 384 00:18:12,280 --> 00:18:15,360 so I could see some pressures from AI on that side. 385 00:18:15,360 --> 00:18:19,120 But MasterCard is mostly a network, which AI can't disrupt, 386 00:18:19,400 --> 00:18:22,440 and MasterCard is a data provider, which AI can't 387 00:18:22,440 --> 00:18:24,960 disrupt. What AI disrupts is the stuff in 388 00:18:24,960 --> 00:18:26,240 the middle. We have Meta. 389 00:18:26,240 --> 00:18:28,360 This is another one obviously I'm buying into. 390 00:18:28,360 --> 00:18:30,400 I think it's highly insulated from AII. 391 00:18:30,720 --> 00:18:32,720 Think it's a supercomputing power. 392 00:18:32,960 --> 00:18:35,320 Mark Zuckerberg has taken the company in the right direction 393 00:18:35,320 --> 00:18:38,360 to widen the MO of it. We have Netflix now. 394 00:18:38,360 --> 00:18:41,520 There is some chatter of whether or not AI will disrupt this by 395 00:18:41,520 --> 00:18:44,040 making it easier to create high quality content. 396 00:18:44,160 --> 00:18:47,560 Part of what makes good content is good dialogue, good writing, 397 00:18:47,560 --> 00:18:50,280 good pacing. That's all stuff that AI suffers 398 00:18:50,280 --> 00:18:52,320 with, especially over long terms. 399 00:18:52,720 --> 00:18:55,680 Episodic content, seasons of content. 400 00:18:55,840 --> 00:18:57,400 I don't think you're going to get that with AI. 401 00:18:58,000 --> 00:19:00,320 Now another one that's trading down a lot, but I'm putting it 402 00:19:00,320 --> 00:19:03,040 in the bucket where I, I don't believe AI is going to disrupt 403 00:19:03,040 --> 00:19:05,480 it is Spotify. Finally, we also have Visa. 404 00:19:05,600 --> 00:19:07,440 If we throw a MasterCard, we have to throw a Visa. 405 00:19:07,640 --> 00:19:11,320 This one is primarily a network. AI is not disrupting networks. 406 00:19:11,440 --> 00:19:13,960 These are the companies that I believe are the most insulated 407 00:19:13,960 --> 00:19:17,040 from the threats of AI while still maintaining strong growth 408 00:19:17,040 --> 00:19:20,200 prospects in a very prosperous business model in the future. 409 00:19:20,520 --> 00:19:22,840 And these are primarily the ones that I'm focusing on when I'm 410 00:19:22,840 --> 00:19:24,600 investing in them. Now, it's true that I could buy 411 00:19:24,600 --> 00:19:26,840 cheaper companies, and there's always cheaper ones that exist 412 00:19:26,840 --> 00:19:28,520 in the market at any given in time. 413 00:19:28,880 --> 00:19:31,600 But remember, when you're holding an asset for a long 414 00:19:31,600 --> 00:19:34,480 period of time, everything comes down to the business model. 415 00:19:34,760 --> 00:19:36,680 The business model is headed in a good direction. 416 00:19:36,680 --> 00:19:40,480 Or if it's being decayed, you can look at duration or the time 417 00:19:40,480 --> 00:19:43,680 you hold a company as a multiplier on the business 418 00:19:43,680 --> 00:19:45,560 model. If the business model is good 419 00:19:45,720 --> 00:19:48,840 and it survives and it thrives, duration will multiply your 420 00:19:48,840 --> 00:19:50,440 wealth. The business models being 421 00:19:50,440 --> 00:19:52,920 decayed, duration will only accumulate losses. 422 00:19:52,920 --> 00:19:55,400 When I look at these companies, I believe they are amongst the 423 00:19:55,400 --> 00:19:57,560 best business models. Now moving on, we get to some 424 00:19:57,560 --> 00:20:00,280 companies reporting earnings, one of them that just reported 425 00:20:00,280 --> 00:20:02,800 as Uber. This one's down around 4% on the 426 00:20:02,800 --> 00:20:05,080 day. The earnings report was a little 427 00:20:05,080 --> 00:20:08,440 underwhelming to some investors, but this is a very difficult day 428 00:20:08,440 --> 00:20:10,480 to report earnings on. But the rest of the market 429 00:20:10,480 --> 00:20:13,040 trading down, never a day that you want to show up and give 430 00:20:13,040 --> 00:20:15,520 your earnings report. You want to do it when investors 431 00:20:15,520 --> 00:20:17,880 are feeling good. And now it's just not the time. 432 00:20:18,040 --> 00:20:20,400 One of the main concerns for investors with Uber is the 433 00:20:20,400 --> 00:20:23,120 threat of more mobility companies like Waymo and Zoox 434 00:20:23,120 --> 00:20:25,520 entering into this arena. Here's how Dara addresses this 435 00:20:25,520 --> 00:20:27,600 question. I I think that the mobility 436 00:20:27,600 --> 00:20:29,480 space, this is a trillion dollar space. 437 00:20:29,680 --> 00:20:33,640 And remember we have been born out of competition right there 438 00:20:33,640 --> 00:20:38,040 was when we first came out, everyone was trying to capture 439 00:20:38,320 --> 00:20:40,960 the market share. And what's unique about Uber is 440 00:20:40,960 --> 00:20:43,240 that we truly have a global footprint. 441 00:20:43,560 --> 00:20:46,920 We're not just AUS business, we're a global business and we 442 00:20:46,920 --> 00:20:51,120 have both mobility and delivery under one roof now over 443 00:20:51,120 --> 00:20:55,520 46,000,000 members. And so we're able to actually 444 00:20:55,520 --> 00:20:59,520 consistently over a long period of time show in a huge market, 445 00:20:59,520 --> 00:21:02,960 in a very competitive market. We can gain category position, 446 00:21:03,000 --> 00:21:06,200 we can grow faster than the market and at the same time we 447 00:21:06,200 --> 00:21:09,160 can increase margins as well. So competition is nothing new 448 00:21:09,160 --> 00:21:11,360 for us. We're used to, we compete 449 00:21:11,720 --> 00:21:17,560 heavily in every single market that we that we operate in and I 450 00:21:17,560 --> 00:21:19,960 think it's going to stay the same just because the market and 451 00:21:19,960 --> 00:21:22,600 the prize is so big for us. What Dahr says here is 452 00:21:22,600 --> 00:21:24,680 ultimately true. It is a massive total 453 00:21:24,680 --> 00:21:27,080 addressable market. Uber's still growing quickly, 454 00:21:27,200 --> 00:21:30,200 growing profits quickly as well, trading at $74. 455 00:21:30,200 --> 00:21:33,320 Uber is a company that in a better market if we're in a big 456 00:21:33,320 --> 00:21:35,520 bull market right now, not one that has so much negative 457 00:21:35,520 --> 00:21:37,560 sentiment in it. This is one that I could see 458 00:21:37,560 --> 00:21:40,280 going up well past 100. Now moving on, we finally get to 459 00:21:40,280 --> 00:21:43,720 the fail of the week, which in this case is the Netflix Co CEO 460 00:21:43,720 --> 00:21:47,560 Ted Sarandos and a representative from Warner Bros 461 00:21:47,960 --> 00:21:51,280 appearing before Congress to testify underoath and get 462 00:21:51,280 --> 00:21:53,400 question about their proposed acquisition. 463 00:21:53,880 --> 00:21:57,280 The goal here of course is to look at the committee and answer 464 00:21:57,280 --> 00:22:00,960 any questions about monopolistic concerns and market powers, 465 00:22:00,960 --> 00:22:02,560 pricing dynamics, that type of thing. 466 00:22:03,120 --> 00:22:06,680 But of course, anytime you see big business leaders go in front 467 00:22:06,680 --> 00:22:08,960 of Congress, they don't really get asked the important 468 00:22:08,960 --> 00:22:10,960 questions. In most cases, they get asked 469 00:22:10,960 --> 00:22:14,360 questions about whatever's on Congress, mind, anything that 470 00:22:14,360 --> 00:22:16,240 they thought of. Seemingly in the last five 471 00:22:16,240 --> 00:22:19,160 minutes, many of the the congressional members were just 472 00:22:19,160 --> 00:22:21,000 there to yell at Netflix for being woke. 473 00:22:21,720 --> 00:22:23,240 That was a lot of the questioning. 474 00:22:23,320 --> 00:22:27,760 And by implying that somehow by buying HBO, they'd make HBO more 475 00:22:27,760 --> 00:22:30,800 woke, which I'm not sure if they've ever watched HBO before, 476 00:22:30,800 --> 00:22:33,560 but it's not exactly known for traditional family values. 477 00:22:34,160 --> 00:22:37,720 In any case, the questions got so off the rails at one point 478 00:22:37,720 --> 00:22:39,480 that I just want to highlight a couple of them here. 479 00:22:40,080 --> 00:22:43,120 One of them was directed at Ted Sarandos, and this one comes 480 00:22:43,120 --> 00:22:47,160 from Ted Cruz. One simple question are we right 481 00:22:47,160 --> 00:22:53,080 now on stolen land? That's a real question. 482 00:22:53,320 --> 00:22:55,240 This isn't AI. That was real. 483 00:22:55,560 --> 00:22:58,000 Now, if you're confused of why that question is asked of a 484 00:22:58,000 --> 00:23:00,760 Netflix executive, well, you're as confused as me. 485 00:23:00,800 --> 00:23:02,480 But Ted Cruz explains further Hair. 486 00:23:04,280 --> 00:23:06,760 I have no idea the history of this land, of this, where we're 487 00:23:06,760 --> 00:23:08,640 sitting today, nor do I, Senator. 488 00:23:09,480 --> 00:23:12,160 So that speaks volumes that neither of you are willing to 489 00:23:12,160 --> 00:23:14,160 say, hell no, we're not on stolen land. 490 00:23:14,160 --> 00:23:17,240 And I will say it's a Grammys when you see an entertainer say 491 00:23:17,520 --> 00:23:20,000 nobody is illegal while we're on stolen land. 492 00:23:20,000 --> 00:23:22,640 And then you see entertainers leap to their feet, clapping so 493 00:23:22,640 --> 00:23:26,160 excitedly at the notion that America's fundamentally 494 00:23:26,160 --> 00:23:30,000 illegitimate. It starts to convey that the 495 00:23:30,000 --> 00:23:33,360 entertainment world is deeply corrupt. 496 00:23:33,360 --> 00:23:35,840 And I will point out that same singer who says no one is 497 00:23:35,840 --> 00:23:39,400 illegal on stolen land promptly went back to her $14 million 498 00:23:39,400 --> 00:23:42,200 mansion. And and somehow that stolen land 499 00:23:42,200 --> 00:23:45,200 she wasn't concerned about just the United States of America. 500 00:23:45,480 --> 00:23:49,800 Just to summarize this exchange, Ted Cruz asks a Netflix 501 00:23:49,800 --> 00:23:54,320 executive about a very political statement that he didn't make, 502 00:23:54,920 --> 00:23:58,400 that Netflix didn't make, and that an employee of Netflix 503 00:23:58,400 --> 00:24:00,480 didn't make or even someone affiliated with Netflix. 504 00:24:00,480 --> 00:24:04,160 In fact, that statement happened by a 23 year old at the Grammys. 505 00:24:04,640 --> 00:24:06,960 Billie Eilish doesn't even work for Netflix. 506 00:24:06,960 --> 00:24:09,480 She doesn't even produce films. She has nothing to do with the 507 00:24:09,480 --> 00:24:12,000 company. Now keep in mind that Netflix 508 00:24:12,000 --> 00:24:15,000 and HBO both didn't host the Grammys either. 509 00:24:15,040 --> 00:24:16,760 They have no connection to it whatsoever. 510 00:24:17,120 --> 00:24:20,280 Ironically, the company that did host it was CBS, which is owned 511 00:24:20,280 --> 00:24:22,720 by Paramount, the only company not a part of this deal. 512 00:24:23,080 --> 00:24:25,120 So this is the type of questioning that they get being 513 00:24:25,120 --> 00:24:28,520 asked about politically charged, of which they have nothing to do 514 00:24:28,520 --> 00:24:31,000 with the people they have no affiliation with, with events 515 00:24:31,000 --> 00:24:32,120 that they had nothing to do with. 516 00:24:32,200 --> 00:24:34,800 Another thing that Congress routinely likes to do is to 517 00:24:34,800 --> 00:24:37,800 challenge the business models of companies that they have nothing 518 00:24:37,800 --> 00:24:40,920 to do with as well. Josh Halley, for example, wants 519 00:24:40,920 --> 00:24:43,360 to tinker with the business models of virtually every 520 00:24:43,360 --> 00:24:46,400 business that he interacts with, of ones that he's never worked 521 00:24:46,400 --> 00:24:49,400 at, ones that he hasn't built, companies that he has no 522 00:24:49,400 --> 00:24:51,600 agreements with. But Josh Halley insists that he 523 00:24:51,600 --> 00:24:53,320 knows how their business should best be run. 524 00:24:53,400 --> 00:24:55,800 And will you commit to fairly compensating your workers in the 525 00:24:55,800 --> 00:24:59,120 industry with residual payments? Senator Halley, I would, I 526 00:24:59,120 --> 00:25:01,480 would, I would like to tell you this is a very complicated 527 00:25:01,480 --> 00:25:04,360 answer because we prepaid. That's usually on the way to no 528 00:25:04,360 --> 00:25:05,760 that that's usually a way of saying no. 529 00:25:05,760 --> 00:25:08,600 So I'm looking for yes. I understand this is not a yes 530 00:25:08,600 --> 00:25:10,040 or no answer. Because it kind of is. 531 00:25:10,040 --> 00:25:12,560 Though it kind of isn't because I and we were going to sit down 532 00:25:12,560 --> 00:25:14,040 with the unions of. You're disappointing me. 533 00:25:14,080 --> 00:25:16,040 Starting in the next few days. So we're sitting down with the 534 00:25:16,040 --> 00:25:18,840 unions for new contract talks that start actually in three 535 00:25:18,840 --> 00:25:20,120 days. This is a this that's a 536 00:25:20,120 --> 00:25:22,600 complicated long no. I would really hope it would be, 537 00:25:22,600 --> 00:25:24,480 yes. Ted's Randall's, of course, is 538 00:25:24,480 --> 00:25:26,480 correct that this is a complicated answer. 539 00:25:26,480 --> 00:25:29,560 It's not as simple to say that every single contract should 540 00:25:29,560 --> 00:25:32,600 include residuals. In some cases, actors and 541 00:25:32,600 --> 00:25:35,200 producers like having a lot of upfront money. 542 00:25:35,400 --> 00:25:38,440 It de risks the situation. They can pay for their entire 543 00:25:38,440 --> 00:25:41,320 production upfront without any risk of performance. 544 00:25:41,840 --> 00:25:44,920 In those cases, many actors, many producers may say, I rather 545 00:25:44,920 --> 00:25:48,640 have $10 million upfront than $1 million plus residuals. 546 00:25:48,760 --> 00:25:51,520 And they can make those choices on a case by case basis. 547 00:25:51,600 --> 00:25:53,800 But when you're in front of Congress, someone that doesn't 548 00:25:53,800 --> 00:25:56,760 work in the industry or know the industry inside and out, someone 549 00:25:56,760 --> 00:25:59,720 that hasn't studied it or built it or contributed to it, will be 550 00:25:59,720 --> 00:26:02,600 insistent that they know the exact way those agreements 551 00:26:02,600 --> 00:26:04,360 should be made between two different parties. 552 00:26:04,760 --> 00:26:07,360 And if they're wrong, that's the wrong answer. 553 00:26:07,360 --> 00:26:10,080 And this committee went on like this overall for about an hour. 554 00:26:10,400 --> 00:26:12,960 It was extremely unproductive, unrevealing. 555 00:26:12,960 --> 00:26:15,600 Nothing really new happened or anything changed. 556 00:26:15,880 --> 00:26:18,680 It was just Congress launching complaints about Netflix. 557 00:26:18,800 --> 00:26:20,360 And that is why it's the fail of the week. 558 00:26:20,600 --> 00:26:21,720 That's gonna be it for this episode. 559 00:26:21,720 --> 00:26:23,320 Hope you enjoyed. See you in the next one.