1 00:00:00,040 --> 00:00:02,880 Today on the Joseph Carlson show, stocks are going crazy. 2 00:00:03,040 --> 00:00:05,680 Some of the biggest companies in the world like Amazon are up 5 3 00:00:05,680 --> 00:00:08,000 or 6%. The overall indices are up 4 00:00:08,000 --> 00:00:11,080 around 3% on the day. And this comes at a time of 5 00:00:11,080 --> 00:00:14,800 renewed optimism of de escalation on tariffs. 6 00:00:15,040 --> 00:00:17,320 There is news that the White House is considering slashing 7 00:00:17,320 --> 00:00:19,080 Chinese tariffs to a huge degree. 8 00:00:19,160 --> 00:00:21,760 We'll be going over the latest in this news, Trump's attempts 9 00:00:21,760 --> 00:00:25,080 to de escalate the situation. Scott Bessent, the one that's 10 00:00:25,080 --> 00:00:28,320 leading this charge of trying to calm the markets and potentially 11 00:00:28,320 --> 00:00:30,320 making deals with lots of trading partners. 12 00:00:30,560 --> 00:00:32,920 We'll be looking over all the latest as well as how this 13 00:00:32,920 --> 00:00:36,440 effects our portfolios. Now we also have news just 14 00:00:36,440 --> 00:00:39,320 yesterday that Tesla reported earnings they missed on 15 00:00:39,320 --> 00:00:42,840 everything and the stock is up around 7% on the day. 16 00:00:42,840 --> 00:00:45,960 Like you would expect, we'll be going over why this is a common 17 00:00:45,960 --> 00:00:49,840 occurrence, why Tesla misses on everything and the stock goes 18 00:00:49,840 --> 00:00:52,080 up. And we also have Moody's and 19 00:00:52,080 --> 00:00:55,600 Equifax, two companies in My Portfolio that both reported 20 00:00:55,600 --> 00:00:58,800 earnings will be reviewing both of them as well as going over 21 00:00:58,920 --> 00:01:01,200 all my portfolios and the holdings in them. 22 00:01:01,200 --> 00:01:03,440 We're going to take a look at what my performance looks like, 23 00:01:03,480 --> 00:01:06,760 how it stacks up against the market and which companies I'm 24 00:01:06,760 --> 00:01:08,680 looking at buying. So we have a lot to get to in 25 00:01:08,680 --> 00:01:10,600 the episode. Let's go ahead and jump in Now. 26 00:01:10,600 --> 00:01:13,200 We kick things off by first looking at what's causing this 27 00:01:13,200 --> 00:01:16,040 market to surge today. Some of the biggest companies 28 00:01:16,040 --> 00:01:19,440 like Amazon, which were the most impacted by the Chinese tariffs, 29 00:01:19,720 --> 00:01:21,360 are the ones that are up the most today. 30 00:01:21,440 --> 00:01:23,920 And that is because the news that the White House is strongly 31 00:01:23,920 --> 00:01:26,400 considering slashing the tariffs. 32 00:01:26,640 --> 00:01:28,800 This is a de escalation of the trade war. 33 00:01:29,000 --> 00:01:31,360 This is what investors have been looking forward to. 34 00:01:31,360 --> 00:01:34,080 The Trump administration is considering slashing its steep 35 00:01:34,080 --> 00:01:37,840 tariffs on Chinese imports, in some cases by more than half, in 36 00:01:37,840 --> 00:01:40,480 a bid to de escalate tensions with Beijing. 37 00:01:40,480 --> 00:01:43,000 Now, so far, President Trump hasn't made a final 38 00:01:43,000 --> 00:01:45,280 determination. They say that the discussions 39 00:01:45,280 --> 00:01:48,200 remain fluid and several options are on the table. 40 00:01:48,480 --> 00:01:52,680 One administration official said Trump would act unilaterally and 41 00:01:52,680 --> 00:01:56,320 would need to see some action on Beijing to lower the tariffs. 42 00:01:56,320 --> 00:01:58,880 So although nothing is definitive right now, it does 43 00:01:58,880 --> 00:02:01,120 look like there's a strong chance of the escalation. 44 00:02:01,360 --> 00:02:04,040 In fact, 1 senior White House official said the Chinese 45 00:02:04,040 --> 00:02:07,880 tariffs were likely to come down between roughly 50 and 65%. 46 00:02:08,160 --> 00:02:10,840 The administration is also considering a tarred approach 47 00:02:11,080 --> 00:02:14,200 similar to the one proposed by the White House Committee on 48 00:02:14,200 --> 00:02:18,360 China late last year. 35% levies on items the US deems not a 49 00:02:18,360 --> 00:02:22,240 threat to national security, but at least 100% for items deemed 50 00:02:22,440 --> 00:02:24,640 as strategic to Americans interests. 51 00:02:24,640 --> 00:02:28,040 The strategy is adapting here from a broad based aggressive 52 00:02:28,040 --> 00:02:31,320 roll out of tariffs on China, tariffing every single item that 53 00:02:31,320 --> 00:02:35,160 we can, to now much more nuanced strategic specific approach. 54 00:02:35,560 --> 00:02:38,480 And overall, the market likes this more strategic approach. 55 00:02:38,480 --> 00:02:40,680 Investors are getting further and further on board of this 56 00:02:40,680 --> 00:02:42,520 plan. Now during this entire tariff 57 00:02:42,520 --> 00:02:45,760 rollout, the one person that investors can really think, if 58 00:02:45,760 --> 00:02:47,800 you're an investor and you're excited about your portfolio 59 00:02:47,800 --> 00:02:50,720 going up today, the person that you owe the most gratitude 60 00:02:50,720 --> 00:02:53,880 towards is Scott Besson. He is the one that's in the 61 00:02:53,880 --> 00:02:57,240 White House that is the most for free trade collaboration and 62 00:02:57,240 --> 00:03:00,120 making smart and strategic deals with our partners. 63 00:03:00,200 --> 00:03:02,720 He's also the one that shares the best message, the most 64 00:03:02,720 --> 00:03:05,200 unified message. For example, he recently said 65 00:03:05,480 --> 00:03:08,840 that America first does not mean America alone. 66 00:03:09,480 --> 00:03:12,760 This is a much needed message, one that's being repeated over 67 00:03:12,760 --> 00:03:15,240 and over again, showing that even if you believe America's a 68 00:03:15,240 --> 00:03:17,520 great country, if you're like me, if you have a flag in your 69 00:03:17,520 --> 00:03:20,600 background, if you're very American first, it doesn't mean 70 00:03:20,600 --> 00:03:23,960 that you want to do it alone. America's made better by our 71 00:03:23,960 --> 00:03:27,280 strategic partnerships, by our strong ally ships across the 72 00:03:27,280 --> 00:03:29,600 world. He says, quote, America first 73 00:03:29,600 --> 00:03:32,880 does not mean America alone. To the contrary, it's a call for 74 00:03:32,880 --> 00:03:36,000 deeper collaboration and mutual respect among our trade 75 00:03:36,000 --> 00:03:38,760 partners. This is the message that America 76 00:03:38,760 --> 00:03:41,280 needs going forward. And Scott Besson continued on, 77 00:03:41,280 --> 00:03:43,920 saying, quote, far from stepping back, America First seeks to 78 00:03:43,920 --> 00:03:47,040 expand US leadership in international institutions like 79 00:03:47,040 --> 00:03:49,840 the IMF and World Bank. Scott Besson in a private 80 00:03:49,840 --> 00:03:52,520 meeting, said that he expects de escalation with China. 81 00:03:52,520 --> 00:03:55,160 The de escalation will come in the very near future, Besson 82 00:03:55,160 --> 00:03:57,280 said during an event hosted by JP Morgan. 83 00:03:57,560 --> 00:04:00,840 He characterized the current situation as essentially a trade 84 00:04:00,840 --> 00:04:03,040 embargo, according to people who attended. 85 00:04:03,080 --> 00:04:05,120 So we can clearly see what's going on here. 86 00:04:05,120 --> 00:04:08,280 The evolution of the strategy over time, it's starting off 87 00:04:08,280 --> 00:04:11,960 Broad bold, going in with huge sweeping tariffs, imposing them 88 00:04:11,960 --> 00:04:14,800 on virtually every country in the world and then reducing them 89 00:04:14,800 --> 00:04:18,560 more strategically, more focused to align with specific products 90 00:04:18,560 --> 00:04:21,720 and countries that better align with EU s s strategic goals. 91 00:04:22,160 --> 00:04:25,960 And the market like seeing this transition as this continues on, 92 00:04:26,200 --> 00:04:28,800 going from this broad based tariff to this more strategic 93 00:04:28,800 --> 00:04:31,720 approach, the market will be bullish as a response. 94 00:04:32,280 --> 00:04:34,440 And the next bullish phase of this, the next thing that 95 00:04:34,440 --> 00:04:38,800 investors can look for in terms of big days like today is a 96 00:04:38,840 --> 00:04:42,200 ladder, a ladder of new trade deals announced with different 97 00:04:42,200 --> 00:04:44,600 strategic partners over the upcoming months. 98 00:04:45,040 --> 00:04:47,800 The White House is also reportedly very close with many 99 00:04:47,800 --> 00:04:50,080 key deals, some like Japan and India. 100 00:04:50,360 --> 00:04:52,560 When these get announced, there's only one way the market 101 00:04:52,560 --> 00:04:54,280 can go. And throughout all of this, with 102 00:04:54,280 --> 00:04:57,080 the trade policy becoming more clear, with investors becoming 103 00:04:57,080 --> 00:05:00,360 more optimistic, you can start to see what the best decisions 104 00:05:00,360 --> 00:05:02,520 have been. And that has been to stay the 105 00:05:02,520 --> 00:05:05,000 course and buy the dip. Now, let's go ahead and move on 106 00:05:05,000 --> 00:05:07,240 to some headlines. The first big piece of news is 107 00:05:07,240 --> 00:05:11,800 that Tesla is in the green by 6%, which may leave you with the 108 00:05:11,800 --> 00:05:14,280 impression that Tesla had a fantastic earnings. 109 00:05:14,760 --> 00:05:17,920 But I'm here to report, regrettably, that Tesla's 110 00:05:17,920 --> 00:05:20,720 earnings were not great. In fact, they weren't only not 111 00:05:20,720 --> 00:05:23,360 great, they weren't even good. Tesla's an interesting case 112 00:05:23,360 --> 00:05:25,200 because once again, they missed on everything. 113 00:05:25,400 --> 00:05:28,480 Top and bottom line, miss revenue and earnings per share. 114 00:05:28,680 --> 00:05:31,200 The net income was down 71% year over year. 115 00:05:31,320 --> 00:05:33,960 The revenue declined 9% year over year. 116 00:05:34,200 --> 00:05:37,480 The operating margins are lower than Texas Roadhouse, a sit down 117 00:05:37,480 --> 00:05:41,360 restaurant, yet somehow the stock is in the green. 118 00:05:41,600 --> 00:05:44,440 It's in the green by 7% at this point. 119 00:05:44,480 --> 00:05:48,480 Tesla missing on earnings and the stock going up after is not 120 00:05:48,480 --> 00:05:50,240 a surprise. It's more of a seasonal 121 00:05:50,240 --> 00:05:52,680 tradition. It's like daylight savings time 122 00:05:52,680 --> 00:05:55,400 or being surprised when Mariah Carey comes around in November. 123 00:05:55,680 --> 00:05:58,840 It's something that we all know is going to happen, but we all 124 00:05:58,840 --> 00:06:00,680 act shocked when it happens again. 125 00:06:01,040 --> 00:06:02,760 And here we have it happening again. 126 00:06:03,040 --> 00:06:05,520 Tesla missed big and the stock is in the green. 127 00:06:05,600 --> 00:06:07,880 And it's clear why this continues to happen. 128 00:06:07,960 --> 00:06:10,600 Tesla's unique example of a company where investors are not 129 00:06:10,600 --> 00:06:13,800 focused on any of the numbers or the past historical results. 130 00:06:14,000 --> 00:06:16,840 They are squarely focused on the commentary from management. 131 00:06:16,880 --> 00:06:21,040 And Elon Musk delivered where he needed to, which was the 1st 5 132 00:06:21,040 --> 00:06:24,640 minutes of the earnings call. He casually stated that Tesla 133 00:06:24,640 --> 00:06:27,520 would become bigger than the next 5 biggest companies 134 00:06:27,520 --> 00:06:29,240 combined. Now, keep in mind, this is a 135 00:06:29,240 --> 00:06:32,320 company that's struggling through seasonal sales to sell 136 00:06:32,320 --> 00:06:35,640 its vehicles, a company that generated less than free cash 137 00:06:35,640 --> 00:06:39,160 flow than Netflix, and the CEO of the company saying that it's 138 00:06:39,160 --> 00:06:41,720 going to become the biggest company times 5. 139 00:06:41,840 --> 00:06:44,360 Even though these future promises and visions by Elon 140 00:06:44,360 --> 00:06:47,320 Musk seem a little out there, investors give him more credit 141 00:06:47,320 --> 00:06:48,800 because of what he's accomplished. 142 00:06:49,040 --> 00:06:52,520 Tesla, after all, is a huge outlier, a huge success that 143 00:06:52,520 --> 00:06:53,840 shouldn't have been in the first case. 144 00:06:54,280 --> 00:06:57,160 So investors look at these big, bold promises from Elon Musk 145 00:06:57,440 --> 00:07:00,040 with greater optimism. And although they missed on 146 00:07:00,040 --> 00:07:02,560 everything this quarter, not everything was bad. 147 00:07:02,760 --> 00:07:05,600 Tesla investors have reason to be incrementally bullish based 148 00:07:05,600 --> 00:07:08,280 on this quarter. If we look at the earnings call 149 00:07:08,280 --> 00:07:11,520 summary, transcript of what happened, what really went on 150 00:07:11,520 --> 00:07:14,640 this quarter, nothing summarizes it better than the transcript 151 00:07:14,640 --> 00:07:17,720 summary generated by Qualtrim. This is something that we've 152 00:07:17,720 --> 00:07:19,640 dramatically improved and updated. 153 00:07:19,840 --> 00:07:23,440 It breaks it down by topic and it explains every single thing 154 00:07:23,440 --> 00:07:26,280 that Tesla did or any company that just reported earnings. 155 00:07:26,800 --> 00:07:30,000 For example, if we look at what Elon Musk actually talked about 156 00:07:30,160 --> 00:07:32,560 on this quarterly call and what investors are bidding the 157 00:07:32,560 --> 00:07:36,400 company U-71 of the first things he mentioned on the call was 158 00:07:36,400 --> 00:07:38,720 Dodge. Investors have been concerned 159 00:07:38,720 --> 00:07:42,320 that Elon Musk is damaging the brand of Tesla by being involved 160 00:07:42,320 --> 00:07:44,800 with DOGE. Elon Musk addressed his work 161 00:07:44,800 --> 00:07:47,400 with the Department of Government deficiency focused on 162 00:07:47,400 --> 00:07:49,840 reducing waste fraud in the US government spending. 163 00:07:50,040 --> 00:07:53,360 Due to completion of the foundational DOGE work, Musk 164 00:07:53,360 --> 00:07:56,640 will soon be reducing his time spent on government activities 165 00:07:56,920 --> 00:07:59,120 and reallocating more time to Tesla. 166 00:07:59,560 --> 00:08:03,720 So he basically said, hey, look, we've done most of the set up, 167 00:08:03,840 --> 00:08:07,200 I'm not really needed there anymore, and now it's just doing 168 00:08:07,200 --> 00:08:09,720 unnecessary damage to the Tesla brand. 169 00:08:10,040 --> 00:08:13,000 So I'm going to step away from Doge, let them do their thing. 170 00:08:13,240 --> 00:08:15,760 I'll still have some connections there, but I want to kind of 171 00:08:15,760 --> 00:08:18,600 detach so I'm not damaging the brand of Tesla. 172 00:08:19,120 --> 00:08:21,680 He stated that the protest against his government work are 173 00:08:21,680 --> 00:08:24,920 by groups previously benefiting from inefficient spending. 174 00:08:25,360 --> 00:08:27,720 So a lot of the people fighting back against DOGE were people 175 00:08:27,720 --> 00:08:29,720 that were upset that their jobs are being cut. 176 00:08:29,840 --> 00:08:32,679 But this is huge news for Tesla investors. 177 00:08:32,960 --> 00:08:36,640 They want to know that their CEO is more focused on Tesla than it 178 00:08:36,640 --> 00:08:39,200 is on the US government, especially when that's damaging 179 00:08:39,200 --> 00:08:41,480 the brand. So this is one of the reasons 180 00:08:41,480 --> 00:08:44,280 the stock is moving up. We also have Tesla's current 181 00:08:44,280 --> 00:08:47,600 state and the outlook. This is Elon Musk's commentary 182 00:08:47,920 --> 00:08:49,600 on what he expects for the future. 183 00:08:49,840 --> 00:08:52,920 And this is where we get into those big grandiose plans. 184 00:08:53,280 --> 00:08:58,000 Elon stressed Tesla's not crisis mode unlike the past, but 185 00:08:58,000 --> 00:09:00,720 expects some challenges and unexpected bumps during the 186 00:09:00,720 --> 00:09:02,880 year. So this is going to be a rocky 187 00:09:02,880 --> 00:09:04,600 year. He's setting those expectations, 188 00:09:04,640 --> 00:09:07,480 but he still paints this very optimistic long term future. 189 00:09:07,760 --> 00:09:10,480 He says he remains highly optimistic, believes Tesla can 190 00:09:10,480 --> 00:09:13,640 become the world's most valuable company, especially with 191 00:09:13,640 --> 00:09:16,360 successful execution and autonomy and robotics. 192 00:09:16,720 --> 00:09:20,160 He emphasized that the company's long term vision large scale 193 00:09:20,160 --> 00:09:23,480 production of autonomous vehicles and humanoid robots. 194 00:09:23,560 --> 00:09:26,120 We know that Tesla has been closer and closer to their robo 195 00:09:26,120 --> 00:09:28,880 taxi plans. They plan on doing this in 2025. 196 00:09:29,280 --> 00:09:32,560 He says the robotaxi in autonomy is a core focus. 197 00:09:32,840 --> 00:09:36,440 Launching fully autonomous paid ride services in Austin in June 198 00:09:36,640 --> 00:09:40,080 using Model wise. So we plan on this going live in 199 00:09:40,080 --> 00:09:43,440 June and investors again, we're looking for that to check off 200 00:09:43,480 --> 00:09:46,000 and they got it. Scaling is planning in other 201 00:09:46,000 --> 00:09:49,120 cities quickly with the intent to generalize solutions that 202 00:09:49,120 --> 00:09:52,840 work across entire jurisdictions relying on AI rather than city 203 00:09:52,840 --> 00:09:56,080 specific mapping. So we know that Elon Musk has 204 00:09:56,080 --> 00:09:59,200 said that Waymo is kind of doing it city by city. 205 00:09:59,200 --> 00:10:00,640 They have to map the entire city. 206 00:10:00,960 --> 00:10:05,160 The way that Tesla's doing this is building AI that works in any 207 00:10:05,160 --> 00:10:06,560 city. And then their only real 208 00:10:06,560 --> 00:10:09,360 restraint is jurisdiction. Just the red tape. 209 00:10:09,760 --> 00:10:12,120 So he doesn't consider Waymo much of A competitor. 210 00:10:12,160 --> 00:10:14,800 He predicted millions of autonomous Teslas will be 211 00:10:14,800 --> 00:10:18,560 operating in the second-half of 2026 with scaling depending on 212 00:10:18,560 --> 00:10:21,520 regulatory approval. There you have this more bullish 213 00:10:21,520 --> 00:10:24,560 sentiment. Millions of autonomous Teslas 214 00:10:24,880 --> 00:10:27,280 next year. That is an incredible statement. 215 00:10:27,520 --> 00:10:28,880 They still have to deliver on this. 216 00:10:28,880 --> 00:10:32,840 But again, this is the reason the stock is up 6%, up 7%. 217 00:10:33,160 --> 00:10:35,000 Investors really love seeing this. 218 00:10:35,000 --> 00:10:37,680 Elon is checking off all the boxes that Tesla investors 219 00:10:37,680 --> 00:10:40,160 wanted to hear. Drivers in China have already 220 00:10:40,160 --> 00:10:42,600 extensively tested full self driving features. 221 00:10:42,840 --> 00:10:46,200 Tesla's generalized AI based solution adapts rapidly to 222 00:10:46,200 --> 00:10:49,200 different locations. So it's going to work in China 223 00:10:49,200 --> 00:10:52,120 very easily, it's going to work in the US, it'll adapt to any 224 00:10:52,120 --> 00:10:54,240 different location. Now we also talked about the 225 00:10:54,240 --> 00:10:56,960 Optimist, the humanoid robot that Tesla's creating. 226 00:10:57,120 --> 00:10:59,880 They say that by the end of this year they expect to have 227 00:10:59,880 --> 00:11:03,280 thousands of these Optimist robots working in Tesla factory 228 00:11:03,280 --> 00:11:05,120 floors. The long term scale up 229 00:11:05,120 --> 00:11:10,760 anticipated to reach 1,000,000 units per year by 2029 to 2030. 230 00:11:11,200 --> 00:11:14,200 So in just five years, they want to be assembling and 231 00:11:14,200 --> 00:11:17,040 manufacturing 1,000,000 units per year. 232 00:11:17,520 --> 00:11:19,840 So this is something they're working on aggressively right 233 00:11:19,840 --> 00:11:22,000 now. Tesla investors are baking this 234 00:11:22,000 --> 00:11:25,240 into the models because again, as we look at all these topics 235 00:11:25,240 --> 00:11:27,680 that were covered, we have to know that Tesla right now is 236 00:11:27,680 --> 00:11:29,920 overvalued based on its current fundamentals. 237 00:11:30,160 --> 00:11:32,560 But all of this is stuff that's happening over the next five 238 00:11:32,560 --> 00:11:34,520 years. If all of this comes to 239 00:11:34,520 --> 00:11:38,320 fruition, if all of these plans really do happen, if they scale 240 00:11:38,320 --> 00:11:41,400 up, if they're able to execute, then Tesla will justify its 241 00:11:41,400 --> 00:11:43,960 current valuation. Now, one thing I like to see was 242 00:11:43,960 --> 00:11:47,040 that Elon Musk was asked specifically about Waymo as a 243 00:11:47,040 --> 00:11:49,360 competitor. He said that Tesla's approach 244 00:11:49,360 --> 00:11:53,520 with AI and cameras is lower cost, more scalable, and not 245 00:11:53,520 --> 00:11:56,720 reliant on expensive sensors and maps, unlike Waymo. 246 00:11:57,240 --> 00:12:00,880 Now, that's the first thing that I would push back on if I was an 247 00:12:00,880 --> 00:12:03,960 analyst there asking him. It's true that Tesla doesn't 248 00:12:03,960 --> 00:12:08,040 have LIDAR, but it's also true that these expensive sensors and 249 00:12:08,040 --> 00:12:10,440 maps are becoming cheaper by the day. 250 00:12:10,800 --> 00:12:13,240 The cost of Lidar has gone down dramatically. 251 00:12:13,560 --> 00:12:16,440 And when you extrapolate the cost of a Lidar sensor on a 252 00:12:16,440 --> 00:12:19,840 vehicle over the course of its lifetime, the amount of miles 253 00:12:19,840 --> 00:12:23,360 driven, it's insignificant. The lighter sensors add on a 254 00:12:23,360 --> 00:12:26,800 little initial cost, but they're amortized over years of use for 255 00:12:26,800 --> 00:12:29,040 these vehicles. And on top of that, the lighter 256 00:12:29,040 --> 00:12:33,560 sensors do add in another form factor, another visual for these 257 00:12:33,560 --> 00:12:35,640 vehicles. Elon Musk repeatedly said that 258 00:12:35,640 --> 00:12:38,720 full self driving needs to be significantly better than 259 00:12:38,720 --> 00:12:41,280 humans, but he also says the reason that they don't need 260 00:12:41,280 --> 00:12:44,080 LIDAR is because humans don't have radar. 261 00:12:44,080 --> 00:12:46,680 Human drivers would be significantly safer and better 262 00:12:46,680 --> 00:12:50,320 drivers if they had radar. If the cost is not prohibitive 263 00:12:50,440 --> 00:12:51,920 then it makes sense to add Lidar. 264 00:12:51,920 --> 00:12:55,120 But Tesla so far continues to refuse to do so, and they see a 265 00:12:55,120 --> 00:12:57,680 path of making this successful without LIDAR. 266 00:12:58,200 --> 00:13:00,160 They also say that Tesla's existing fleet can be 267 00:13:00,160 --> 00:13:03,520 transformed into robotaxis via software updates, offering a 268 00:13:03,520 --> 00:13:05,760 significant scale advantage and the future. 269 00:13:05,760 --> 00:13:09,720 Musk believes most people will no longer buy cars, instead 270 00:13:09,720 --> 00:13:12,520 using autonomous vehicle fleets. When we look at Tesla more 271 00:13:12,520 --> 00:13:15,400 broadly and breakdown what investors are digging into and 272 00:13:15,400 --> 00:13:18,120 their expectations for the future, it all comes down to 273 00:13:18,120 --> 00:13:20,560 narrative. It makes sense that this company 274 00:13:20,560 --> 00:13:22,520 can feasibly always miss on earnings. 275 00:13:22,960 --> 00:13:25,840 And so long as investors buy into this extremely 276 00:13:25,840 --> 00:13:29,720 extraordinary future, the vision that Elon Musk is painting, they 277 00:13:29,720 --> 00:13:31,320 will still want to hold their shares. 278 00:13:31,360 --> 00:13:33,680 Why wouldn't you if you believe it's going to be the most 279 00:13:33,680 --> 00:13:36,880 valuable company times 5? So when we look at Tesla, it 280 00:13:36,880 --> 00:13:38,560 still remains a battle of narratives. 281 00:13:38,840 --> 00:13:41,600 From my investing standpoint, it doesn't resemble the type of 282 00:13:41,600 --> 00:13:44,000 companies that I personally pick, but I can still see why 283 00:13:44,000 --> 00:13:45,640 some investors are betting on this one. 284 00:13:45,880 --> 00:13:48,200 Next we get into a company that's a recent addition to My 285 00:13:48,200 --> 00:13:51,200 Portfolio, one that I've invested a little over $20,000 286 00:13:51,200 --> 00:13:54,920 into, which is Equifax. Equifax also reported earnings 287 00:13:54,920 --> 00:13:59,840 yesterday, and the stock surged up 14% on the day and it's up 288 00:13:59,840 --> 00:14:02,880 again another 2% today. So when you look at the stock 289 00:14:02,880 --> 00:14:06,120 price, we can just see the magnitude of the surge. 290 00:14:06,440 --> 00:14:12,520 It went from $215 now to 2:48. So big move by Equifax, erasing 291 00:14:12,520 --> 00:14:14,520 all the losses it had over the past month. 292 00:14:14,560 --> 00:14:17,280 And it leaves investors asking why did the stock go up so much? 293 00:14:17,320 --> 00:14:20,000 And there's a few reasons why. First of all, most analysts had 294 00:14:20,000 --> 00:14:22,840 negative sentiment on this company and I did as well. 295 00:14:23,120 --> 00:14:26,080 If you recall my review going into this week, Equifax was 296 00:14:26,080 --> 00:14:28,720 actually a company that I highlighted as believing that it 297 00:14:28,720 --> 00:14:31,080 would be a tough quarter. I thought there's a high 298 00:14:31,080 --> 00:14:33,840 likelihood it would go down further and that's based off of 299 00:14:33,840 --> 00:14:36,720 looking at the company and the many headwinds it's facing. 300 00:14:37,000 --> 00:14:39,480 It has so many current challenges the companies facing 301 00:14:40,000 --> 00:14:42,640 and they did much better than expected across the board. 302 00:14:42,920 --> 00:14:45,240 They simply exceeded investors expectations. 303 00:14:45,480 --> 00:14:48,040 First of all with their earnings per share in revenue, earnings 304 00:14:48,040 --> 00:14:51,480 per share was a big beat, $1.53 versus $1.44. 305 00:14:51,720 --> 00:14:53,760 So you have a pretty significant beat on earnings. 306 00:14:53,960 --> 00:14:57,120 They also beat on revenue. Every part of the company did a 307 00:14:57,120 --> 00:15:00,200 little bit better than expected. So it wasn't just one part 308 00:15:00,200 --> 00:15:03,600 outperforming across the board. The different segments like the 309 00:15:03,600 --> 00:15:06,800 verification business, the mortgage business, all of that 310 00:15:06,800 --> 00:15:10,440 performed relatively well. Equifax also announced a $3 311 00:15:10,440 --> 00:15:13,640 billion buyback program, so they say they're returning 312 00:15:13,640 --> 00:15:16,160 aggressively capital back to the investor. 313 00:15:16,480 --> 00:15:17,920 Of course, investors like hearing that. 314 00:15:18,240 --> 00:15:20,640 It's better that a company that's highly profitable returns 315 00:15:20,640 --> 00:15:22,000 some money back to the shareholder. 316 00:15:22,120 --> 00:15:25,280 On top of doing this aggressive buyback program, they're also 317 00:15:25,280 --> 00:15:28,800 raising the dividend by 28%. That's hard to complain about. 318 00:15:28,800 --> 00:15:31,440 When a company raises its buyback program and then 319 00:15:31,440 --> 00:15:34,920 increases its dividend by 28%, They're returning capital back 320 00:15:34,920 --> 00:15:36,680 to the shareholder every way possible. 321 00:15:37,040 --> 00:15:40,200 Investors like hearing that. Now there are some other things 322 00:15:40,200 --> 00:15:42,520 that they mention on the earnings call that I think are 323 00:15:42,520 --> 00:15:44,320 worth diving into. And again we'll go into the 324 00:15:44,320 --> 00:15:47,040 Qualtrum transcript summary here, which is the industry best 325 00:15:47,040 --> 00:15:50,320 summary of these companies. We have here the Q1 financial 326 00:15:50,320 --> 00:15:52,640 performance. Equifax reported a strong Q1 327 00:15:52,640 --> 00:15:56,800 revenue of 1.44 billion, which exceeded their midpoint of their 328 00:15:56,800 --> 00:15:58,760 guidance. Their debt leverage ended March 329 00:15:58,760 --> 00:16:01,920 at 2.5 turns, aligning with their long term targets. 330 00:16:02,280 --> 00:16:04,120 So they're saying their debt's not a problem at all. 331 00:16:04,480 --> 00:16:08,080 And then the Adjusted EBITDA margins were 29.3%, slightly 332 00:16:08,080 --> 00:16:10,840 higher than last year and expectations with Workforce 333 00:16:10,840 --> 00:16:13,400 Solutions with margins above 50%. 334 00:16:13,680 --> 00:16:16,560 So that great product they have in the Workforce Solutions 335 00:16:16,760 --> 00:16:20,000 called the Work number has extremely high margins. 336 00:16:20,320 --> 00:16:22,320 This is what investors are paying attention to. 337 00:16:22,360 --> 00:16:24,000 Now. All of this sounds great, but 338 00:16:24,000 --> 00:16:27,560 one of my concerns with Equifax was the DOGE effort. 339 00:16:28,040 --> 00:16:31,200 The DOGE effort was to cut government spending and Equifax 340 00:16:31,200 --> 00:16:32,840 has a lot of business with the government. 341 00:16:33,240 --> 00:16:36,520 So it kind of made sense that Equifax would be under target. 342 00:16:36,800 --> 00:16:39,240 After all, Equifax makes a lot of money from the government. 343 00:16:39,360 --> 00:16:42,400 The government is being reduced by the DOGE effort, but Equifax 344 00:16:42,400 --> 00:16:46,040 pivoted in a brilliant way. The EWS is expanding its 345 00:16:46,040 --> 00:16:49,000 presence in the federal and state government markets with 346 00:16:49,040 --> 00:16:53,600 emphasis on program integrity and reducing 160 billion of 347 00:16:53,600 --> 00:16:57,600 improper payments. So out of all the things that 348 00:16:57,600 --> 00:17:00,280 DOGE and the government's trying to cut and become more 349 00:17:00,280 --> 00:17:03,120 efficient, probably the last thing that they would want to 350 00:17:03,120 --> 00:17:07,560 cut is identity verification, knowing who you're dealing with. 351 00:17:07,680 --> 00:17:10,960 The entire product that Equifax sells to the government is one 352 00:17:10,960 --> 00:17:14,800 that reduces improper payments, IE fraud and waste. 353 00:17:15,119 --> 00:17:17,240 Knowing who you're doing business with means that you 354 00:17:17,240 --> 00:17:19,599 have lower amounts of waste in a very beneficial way. 355 00:17:19,599 --> 00:17:21,440 For Equifax. The government becoming more 356 00:17:21,440 --> 00:17:24,520 efficient actually enhances their products value because 357 00:17:24,520 --> 00:17:27,359 they sell a product that makes the government have less waste. 358 00:17:27,400 --> 00:17:29,840 Their marketing team is aware of this and they're putting greater 359 00:17:29,840 --> 00:17:31,600 emphasis into selling this product. 360 00:17:31,720 --> 00:17:35,240 Now in terms of what this company would do in a recession 361 00:17:35,240 --> 00:17:38,960 or with ongoing tariffs in a slower economy, this is what 362 00:17:38,960 --> 00:17:42,640 they highlighted. Equifax believes that 67% of its 363 00:17:42,640 --> 00:17:46,440 revenue comes from recession resilient counter cyclical 364 00:17:46,440 --> 00:17:51,800 businesses, up from 54% in 2022. So I like that they really broke 365 00:17:51,800 --> 00:17:55,880 down specifically how much of their business is not cyclical 366 00:17:56,200 --> 00:17:59,480 and the majority of it's not historical recession analysis. 367 00:17:59,560 --> 00:18:03,720 2008 to 2009 in COVID suggests non mortgage businesses could 368 00:18:03,720 --> 00:18:06,200 see low single digit growth even during downturns. 369 00:18:06,520 --> 00:18:09,760 The subscription based revenue growth and increased use of 370 00:18:09,760 --> 00:18:13,120 alternative data add resiliency. Now the mortgage business is 371 00:18:13,120 --> 00:18:15,800 more sensitive to economic cycles like we're seeing right 372 00:18:15,800 --> 00:18:17,240 now. The mortgage business is really 373 00:18:17,240 --> 00:18:21,040 slow, but they note that it offers significant upside during 374 00:18:21,040 --> 00:18:25,120 refinancing cycles and post rate cuts, which will eventually 375 00:18:25,120 --> 00:18:28,000 happen. The company expects to maintain 376 00:18:28,000 --> 00:18:32,000 strong free cash flow, strong margin expansion, and return of 377 00:18:32,000 --> 00:18:34,840 capital even during economic uncertainty. 378 00:18:35,000 --> 00:18:37,520 Overall, a very strong report and I'm happy to be wrong in 379 00:18:37,520 --> 00:18:38,920 this case. I always love seeing my 380 00:18:38,920 --> 00:18:41,120 companies do well. I'm now back in the green on 381 00:18:41,120 --> 00:18:45,000 this one by a decent margin, up $2500 where I was in the red 382 00:18:45,240 --> 00:18:47,720 just two days ago. And I still believe that Equifax 383 00:18:47,720 --> 00:18:49,400 Today is meaningfully undervalued. 384 00:18:49,440 --> 00:18:51,520 Now we also have Moody's at reported earnings yesterday. 385 00:18:51,520 --> 00:18:53,240 I'm not going to spend a lot of time on this one. 386 00:18:53,240 --> 00:18:56,400 It was business as usual, just another quarter of this company 387 00:18:56,400 --> 00:18:58,160 doing the same thing it always has. 388 00:18:58,440 --> 00:19:02,120 One notable thing is the Moodys Investor Services. 389 00:19:02,120 --> 00:19:05,080 This is the credit rating portion of the business had a 390 00:19:05,080 --> 00:19:08,040 record high quarter. So debt issuance for big 391 00:19:08,040 --> 00:19:11,560 companies is still happening and we're seeing the debt renewal 392 00:19:11,560 --> 00:19:14,200 wall. As this happens, this very high 393 00:19:14,200 --> 00:19:16,680 margin portion of the business will continue to collect more. 394 00:19:17,040 --> 00:19:21,200 So this is the global tollbooth, a company that every business 395 00:19:21,200 --> 00:19:24,280 virtually in the world has to go through to issue debt. 396 00:19:24,640 --> 00:19:27,480 And as they issue more debt, as we have this renewal, they're 397 00:19:27,480 --> 00:19:30,480 going to make more money. I think that Moody's continues 398 00:19:30,480 --> 00:19:32,760 to be one of the most predictable businesses in the 399 00:19:32,760 --> 00:19:34,640 market. I don't plan on selling this one 400 00:19:34,640 --> 00:19:36,560 anytime soon. Now finally, we got to take a 401 00:19:36,560 --> 00:19:39,080 look at one of my portfolios. This is the story fun. 402 00:19:39,400 --> 00:19:41,800 I've been tracking this one publicly since the minute I 403 00:19:41,800 --> 00:19:44,320 created it. It's a portfolio that's highly 404 00:19:44,320 --> 00:19:47,160 concentrated into a couple companies that I believe will be 405 00:19:47,160 --> 00:19:50,840 huge winners. Now this portfolio is around 4 406 00:19:50,840 --> 00:19:54,200 years old and we're nearing the five year mark, which was my 407 00:19:54,200 --> 00:19:57,440 goal to outperform the S&P 500 / a five year period. 408 00:19:57,920 --> 00:20:01,360 A lot of people say it's easy to beat the S&P 500 in one years or 409 00:20:01,360 --> 00:20:03,760 just two years. It's a little bit of a luck of 410 00:20:03,760 --> 00:20:06,000 the draw. But over a five year period it 411 00:20:06,000 --> 00:20:08,320 becomes bigger. It's a bigger challenge to 412 00:20:08,320 --> 00:20:12,560 outperform the S&P 500. Now I found that to be just the 413 00:20:12,560 --> 00:20:15,240 opposite. I think outperforming the S&P 414 00:20:15,240 --> 00:20:17,960 500 over the one year is very difficult. 415 00:20:18,240 --> 00:20:20,920 In fact, it's a bit of a coin flip to know how your holdings 416 00:20:20,920 --> 00:20:22,720 are going to perform over one year period. 417 00:20:23,120 --> 00:20:25,720 But as you go further amounts of time, it becomes a little bit 418 00:20:25,720 --> 00:20:29,120 easier because the companies that you pick, their performance 419 00:20:29,120 --> 00:20:32,520 starts to weigh in more. What I've seen with My Portfolio 420 00:20:32,920 --> 00:20:36,880 is that when I first created it, it was doing really well Year 1, 421 00:20:36,880 --> 00:20:40,280 matching the S&P 500. Then we got into 2022. 422 00:20:40,800 --> 00:20:44,480 My Portfolio in blue hair started to underperform the S&P 423 00:20:44,480 --> 00:20:48,520 500 to a huge degree. I held companies like Amazon and 424 00:20:48,520 --> 00:20:51,480 Netflix, all these companies that really tanked. 425 00:20:51,800 --> 00:20:54,680 I also held some companies that just didn't work out, ones like 426 00:20:54,720 --> 00:20:56,840 Alibaba. I simply lost money on them. 427 00:20:57,120 --> 00:21:00,320 But during this time period, I started to double down on my 428 00:21:00,320 --> 00:21:03,880 highest convictions, purchasing more Netflix at the bottom, 429 00:21:04,120 --> 00:21:07,360 purchasing more Amazon towards the bottom, at the very lows 430 00:21:07,360 --> 00:21:08,720 that these companies were trading at. 431 00:21:08,760 --> 00:21:10,160 We went through a long time period here. 432 00:21:10,160 --> 00:21:13,200 That was somewhat discouraging. I gave routine updates showing 433 00:21:13,200 --> 00:21:16,680 that My Portfolio was underperforming the S&P 500 all 434 00:21:16,680 --> 00:21:20,880 through 2022 into 2023. But then we started to gain 435 00:21:20,880 --> 00:21:24,240 momentum. Netflix started to pick up and 436 00:21:24,240 --> 00:21:27,080 this one has really carried the portfolio over the past couple 437 00:21:27,080 --> 00:21:29,440 of years. Amazon also started to move up 438 00:21:29,440 --> 00:21:31,960 as well. In 2023, you can start to see My 439 00:21:31,960 --> 00:21:36,520 Portfolio catch back up to the S&P 500 led by Netflix, Amazon 440 00:21:36,520 --> 00:21:39,840 and Google. It met the S&P 500 in 2024 and 441 00:21:39,840 --> 00:21:41,800 ever since then it's started to surpass it. 442 00:21:42,160 --> 00:21:45,720 Since 2024, it's continued to surge higher and higher, 443 00:21:45,920 --> 00:21:49,160 primarily led by Netflix. When we get into 2025 right 444 00:21:49,160 --> 00:21:52,440 here, you can see that we had an advantage going into 2025 445 00:21:52,760 --> 00:21:54,920 already outperforming the S&P 500. 446 00:21:55,280 --> 00:21:59,720 But moving into it, it also outperformed even in 2025 with 447 00:21:59,720 --> 00:22:01,400 Netflix once again leading the way. 448 00:22:01,840 --> 00:22:07,280 Right now, this portfolio is up 86% and the S&P 500 is up 31% 449 00:22:07,360 --> 00:22:10,160 since inception. This portfolio remains a highly 450 00:22:10,160 --> 00:22:13,360 concentrated a group of bets in companies that I believe have 451 00:22:13,360 --> 00:22:17,160 both great stories, great narratives behind them and great 452 00:22:17,160 --> 00:22:20,160 fundamentals overall, making them highly predictable. 453 00:22:20,200 --> 00:22:22,760 The reason that I named this portfolio the story fund is an 454 00:22:22,800 --> 00:22:25,200 homage to Peter Lynch. A company story is the 455 00:22:25,200 --> 00:22:28,440 combination of the fundamentals with the narrative and I believe 456 00:22:28,440 --> 00:22:31,520 these companies still remain the best stories in the market. 457 00:22:31,640 --> 00:22:34,040 That'll be it for this episode. Hope you enjoyed and see you in 458 00:22:34,040 --> 00:22:34,640 the next one.