1 00:00:00,040 --> 00:00:03,480 Welcome back everyone, we have a jam packed episode. 2026 has 2 00:00:03,480 --> 00:00:05,880 been off to a rocky start for many of us that are tech 3 00:00:05,880 --> 00:00:09,080 investors and invested in lots of great software companies. 4 00:00:09,440 --> 00:00:12,480 But as in every case, when there is a sell off, when stocks are 5 00:00:12,480 --> 00:00:15,240 going down, there's also opportunities. 6 00:00:15,520 --> 00:00:18,120 There's companies that trade down that shouldn't, and 7 00:00:18,120 --> 00:00:19,720 frankly, they're buying opportunities. 8 00:00:20,280 --> 00:00:23,080 In this episode, I'll be making the case for three companies, 9 00:00:23,080 --> 00:00:25,480 three that you've already heard about, three that everybody's 10 00:00:25,480 --> 00:00:28,680 heard about, but three of the Max 7 that I believe are the 11 00:00:28,720 --> 00:00:32,800 best buys today, I'll be going over why mathematically, I 12 00:00:32,800 --> 00:00:34,800 believe that is the case. Now, of course, we also have a 13 00:00:34,800 --> 00:00:37,480 lot of other news to get to. For example, we have Chris Hohn 14 00:00:37,480 --> 00:00:40,640 who gave his portfolio update, the 13 F filing. 15 00:00:40,880 --> 00:00:43,800 This gives us an inside look into what he was doing at least 16 00:00:43,800 --> 00:00:48,520 from 2025, and it shows us how he values his stock before this 17 00:00:48,520 --> 00:00:50,400 sell off. So we'll be looking at that. 18 00:00:50,440 --> 00:00:53,240 We have some breaking news that Warner Brothers is now talking 19 00:00:53,240 --> 00:00:56,040 with Paramount. Netflix allowed for a 7 day 20 00:00:56,040 --> 00:00:59,040 grace period for them to talk and potentially have a best and 21 00:00:59,040 --> 00:01:01,040 final offer. We'll be looking at the strategy 22 00:01:01,040 --> 00:01:03,440 of Netflix behind this. We also have news that Goldman 23 00:01:03,440 --> 00:01:06,520 Sachs released a list of AI losers companies that they 24 00:01:06,520 --> 00:01:09,360 consider a sell. Amongst them was Duolingo. 25 00:01:09,720 --> 00:01:12,200 Duolingo is a stock that's been eviscerated. 26 00:01:12,200 --> 00:01:14,120 It's down dramatically. It's one of my holdings and I 27 00:01:14,120 --> 00:01:17,360 made a comparison that Goldman SX has done this very same thing 28 00:01:17,520 --> 00:01:19,840 with Netflix. They also rated Netflix. 29 00:01:19,840 --> 00:01:23,360 They sell very close to the absolute bottom in 2022. 30 00:01:23,920 --> 00:01:27,480 Now this is a post that I made on X and we had Jeremy Lafaye 31 00:01:27,480 --> 00:01:30,160 from Financial Education respond to this directly. 32 00:01:30,200 --> 00:01:31,840 So I'll be going over his response. 33 00:01:31,840 --> 00:01:34,520 I'll be giving some thoughts on Duolingo and some of the 34 00:01:34,520 --> 00:01:37,040 arguments that Jeremy makes. And of course, we have the fail 35 00:01:37,040 --> 00:01:40,000 of the week, which in this case I am forced to address Jemoth 36 00:01:40,000 --> 00:01:43,680 Polyhypatia who in a recent All In episode suggested that the 37 00:01:43,680 --> 00:01:47,000 only reason that Warren Buffett has out performed over his 38 00:01:47,000 --> 00:01:51,080 lifetime was because of Fair disclosure laws suggesting that 39 00:01:51,080 --> 00:01:53,040 Warren Buffett had inside information. 40 00:01:53,360 --> 00:01:56,680 That that inside information is why Berkshire did so well up 41 00:01:56,680 --> 00:01:59,120 until around 2000. We'll be looking over this claim 42 00:01:59,120 --> 00:02:01,120 that Schmoth is making in the fail of the week. 43 00:02:01,120 --> 00:02:02,800 So we have a ton to get to in this episode. 44 00:02:02,800 --> 00:02:05,680 And if you haven't tried out Qualtrum yet, now is the time. 45 00:02:05,680 --> 00:02:08,800 We just released the most advanced tool yet, which is our 46 00:02:08,800 --> 00:02:10,919 chart builder. The Qualtrum chart builder 47 00:02:10,919 --> 00:02:13,560 allows you to create highly customized and aesthetically 48 00:02:13,560 --> 00:02:16,360 beautiful charts with ease. You can you can simply go in, 49 00:02:16,360 --> 00:02:20,360 add stocks, add metrics, change colors, change combinations and 50 00:02:20,360 --> 00:02:23,040 then you can stylize it and customize it exactly how you 51 00:02:23,040 --> 00:02:24,840 want. So far the initial feedback on 52 00:02:24,840 --> 00:02:27,520 this tool is amazing. Everybody that's used it frankly 53 00:02:27,520 --> 00:02:30,560 really loves it and you can try it out now risk free. 54 00:02:30,560 --> 00:02:34,360 Join Qualtrum today with a 7 day free trial at qualtrum.com. 55 00:02:34,440 --> 00:02:37,200 Now as we start off today, I can't help but notice that the 56 00:02:37,200 --> 00:02:40,000 sell off is continuing, but only for part of the market. 57 00:02:40,200 --> 00:02:43,520 If you look at the S&P 500, it's actually flat this year, which 58 00:02:43,520 --> 00:02:45,400 of course is discouraging. If you're looking at your 59 00:02:45,520 --> 00:02:48,960 portfolio and noticing that it's down 10 to 15%. 60 00:02:49,360 --> 00:02:52,480 Many investors that are in tech companies, data companies, big 61 00:02:52,480 --> 00:02:56,400 tech software companies, their portfolios are going down while 62 00:02:56,400 --> 00:02:57,920 the rest of the market remains flat. 63 00:02:58,360 --> 00:03:00,720 And that is because money's not leaving the market. 64 00:03:00,760 --> 00:03:04,160 It's just repositioning from some companies to others. 65 00:03:04,480 --> 00:03:06,600 We can see that happen in Lifetime. 66 00:03:06,960 --> 00:03:11,040 For example, here's a chart showing S&P Global against 67 00:03:11,040 --> 00:03:13,120 Walmart. Both of these are great 68 00:03:13,120 --> 00:03:15,320 companies. Walmart's everywhere, very 69 00:03:15,320 --> 00:03:17,720 reliable. S&P Global is a strong data 70 00:03:17,720 --> 00:03:19,520 company. It has the credit rating agency. 71 00:03:19,880 --> 00:03:23,320 Most people would argue that S&P Global has a bigger Moat, but 72 00:03:23,320 --> 00:03:25,840 when we look at the data here, it shows a different story. 73 00:03:25,960 --> 00:03:28,480 This is Walmart versus S&P Global. 74 00:03:28,680 --> 00:03:31,120 Walmart is in blue, S&P Global is in red. 75 00:03:31,160 --> 00:03:34,720 And this shows the trailing PE ratio over the past couple of 76 00:03:34,720 --> 00:03:37,680 years. Notice that back in 2021, S&P 77 00:03:37,680 --> 00:03:40,080 Global demanded a higher PE ratio than Walmart. 78 00:03:40,120 --> 00:03:41,920 It was considered a much higher quality. 79 00:03:42,080 --> 00:03:45,120 It was growing faster, growing earnings faster, and it had a 80 00:03:45,120 --> 00:03:48,160 considerably wider Moat. Retails and Notorious are being 81 00:03:48,160 --> 00:03:51,720 incredibly competitive, but we look at the PE ratios over time. 82 00:03:52,000 --> 00:03:55,160 That blue line, which is Walmart, continued to grow 83 00:03:55,160 --> 00:03:58,840 upwards while S&P Global plummeted downwards right in the 84 00:03:58,840 --> 00:04:01,960 tail end of 2025. In the beginning of 2026, we see 85 00:04:01,960 --> 00:04:04,640 this massive Divergent. We're now Walmart for the first 86 00:04:04,640 --> 00:04:09,280 time in years trades at a 54 trailing PE ratio and S&P Global 87 00:04:09,280 --> 00:04:12,120 trades at a 28. Even on a forward basis, if 88 00:04:12,120 --> 00:04:14,920 we're looking over the next 12 months, Walmart trades at over 89 00:04:14,920 --> 00:04:19,760 double the PE ratio of S&P Global, 21 for S&P Global, 43 90 00:04:19,760 --> 00:04:21,839 for Walmart. Investors are liquidating 91 00:04:21,839 --> 00:04:24,640 companies like S&P Global and putting that capital in the 92 00:04:24,640 --> 00:04:26,720 companies like Walmart. And I see this the same thing 93 00:04:26,720 --> 00:04:30,400 with My Portfolio. My Portfolio is down around 10%, 94 00:04:30,400 --> 00:04:33,600 maybe more now. We see that over the past just a 95 00:04:33,600 --> 00:04:36,840 couple of months, we've lost nearly $100,000, maybe 70 to 96 00:04:36,840 --> 00:04:40,520 $80,000 in this portfolio. And while that can seem painful, 97 00:04:40,840 --> 00:04:43,360 I also look at the companies that I hold and they're still in 98 00:04:43,360 --> 00:04:45,040 great condition. When we look in the tech 99 00:04:45,040 --> 00:04:48,320 category, Meta continues to trade down after reporting 100 00:04:48,320 --> 00:04:50,960 blockbuster earnings. Their earnings report was 101 00:04:50,960 --> 00:04:54,720 incredible. They'll grow 25% plus revenue in 102 00:04:54,720 --> 00:04:57,880 2026. Meta trades near A20 Ford PE 103 00:04:57,880 --> 00:05:00,200 ratio, again half the price of a Walmart. 104 00:05:00,720 --> 00:05:03,560 We have ASML, this is one of the few companies it's held its own 105 00:05:03,560 --> 00:05:05,960 during the sell off. Investors haven't been scared of 106 00:05:05,960 --> 00:05:07,720 this one. We have Google that's also 107 00:05:07,720 --> 00:05:09,880 trading down a little bit. This one was a bit higher 108 00:05:09,880 --> 00:05:11,880 valuation, but even Google's getting hit. 109 00:05:11,960 --> 00:05:14,200 We also have Microsoft, which is also been selling off. 110 00:05:14,200 --> 00:05:17,720 We have MasterCard, now in a downtrend, going down seemingly 111 00:05:17,720 --> 00:05:20,000 every day. We have S&P Global. 112 00:05:20,120 --> 00:05:23,080 This one again has had a massive sell off in just the past couple 113 00:05:23,080 --> 00:05:24,760 of weeks. We have Intuit. 114 00:05:24,800 --> 00:05:29,120 This one is trading at below its 10 year valuation on every 115 00:05:29,120 --> 00:05:32,640 single valuation metric. You name it, price to free cash 116 00:05:32,640 --> 00:05:36,040 flow, price to operating cash flow, PE ratios, every single 117 00:05:36,040 --> 00:05:37,400 one. It's at the cheapest valuation 118 00:05:37,400 --> 00:05:39,520 it's been in a decade. And it's important to understand 119 00:05:39,520 --> 00:05:42,320 why this is happening. Why are investors so quick to 120 00:05:42,320 --> 00:05:44,400 sell these companies? Why are they selling US ME, 121 00:05:44,400 --> 00:05:46,560 Global and Moody's? Why are they selling big tech? 122 00:05:46,800 --> 00:05:49,560 Why are they selling every software company and racing to 123 00:05:49,560 --> 00:05:52,560 slow growing retailers? Well, the reason why is because 124 00:05:52,560 --> 00:05:55,440 investors are scared. This is a panic. 125 00:05:55,800 --> 00:05:57,960 Investors are selling these companies because they're scared 126 00:05:57,960 --> 00:06:01,160 of AI and there's no lack of fodder to fuel these concerns, 127 00:06:01,480 --> 00:06:04,320 to fuel these fares. Investors are scared and they 128 00:06:04,320 --> 00:06:07,280 have reason to be. Every single day there's another 129 00:06:07,280 --> 00:06:11,080 hyper viral article that concerns investors that tells 130 00:06:11,080 --> 00:06:13,920 you about how all these software companies are going to 0, how 131 00:06:13,920 --> 00:06:17,000 every one of them is going to be disintermediated with AI. 132 00:06:17,000 --> 00:06:18,280 They're all going to be destroyed. 133 00:06:18,840 --> 00:06:21,080 The world as you know it, all the tools that you use, they're 134 00:06:21,080 --> 00:06:23,720 not needed anymore. We're getting these every single 135 00:06:23,720 --> 00:06:26,160 day. We recently had one that said a 136 00:06:26,160 --> 00:06:29,040 big thing is happening, basically going over how 137 00:06:29,040 --> 00:06:31,880 everything's going to change. All these software companies are 138 00:06:31,880 --> 00:06:34,880 going to be disrupted and you better just hang on or sell out 139 00:06:34,880 --> 00:06:37,480 of them. That one went hyper viral, was 140 00:06:37,520 --> 00:06:39,840 millions of views. It was shared across every 141 00:06:39,840 --> 00:06:42,360 single community, investing community, hedge fund manager, 142 00:06:42,600 --> 00:06:44,880 everyone saw it. And we have another one that was 143 00:06:44,880 --> 00:06:47,280 just recently shared. Yesterday, we had another 144 00:06:47,280 --> 00:06:50,480 article by a different author that fanned the flames once 145 00:06:50,480 --> 00:06:53,320 again of AI concerns of software. 146 00:06:53,520 --> 00:06:56,840 This one was by Nicholas and it's called vertical software. 147 00:06:57,000 --> 00:06:59,880 Are we cooked? This article has 2 million 148 00:06:59,880 --> 00:07:02,560 views, thousands of likes. It was spread across the entire 149 00:07:02,560 --> 00:07:04,560 social media sphere. And it's difficult for me to 150 00:07:04,560 --> 00:07:07,080 believe that these articles, which are hyper viral, they're 151 00:07:07,080 --> 00:07:09,480 spread to millions of investors, many of them hedge fund 152 00:07:09,480 --> 00:07:12,720 managers, people with Bloomberg terminals, people that control 153 00:07:12,760 --> 00:07:15,840 immense amounts of money. They're reading these articles. 154 00:07:16,000 --> 00:07:18,360 And I believe it has an impact on stock prices. 155 00:07:18,600 --> 00:07:21,120 It is changing sentiment across the board. 156 00:07:21,480 --> 00:07:23,920 When you look at the reality with many of these companies 157 00:07:23,920 --> 00:07:27,360 that are being obliterated in the stock market today, many of 158 00:07:27,360 --> 00:07:29,200 them, their fundamentals appear to be fine. 159 00:07:29,560 --> 00:07:32,280 Their margins are going higher. They're acquiring customers. 160 00:07:32,680 --> 00:07:36,480 They still have pricing power. Many of the fundamentals do not 161 00:07:36,480 --> 00:07:40,160 represent the concerns that are being founded today, and I 162 00:07:40,160 --> 00:07:43,080 believe that there hasn't been strong rebuttals, but I think 163 00:07:43,080 --> 00:07:46,200 we're starting to get them. One that I've read is from 164 00:07:46,200 --> 00:07:50,160 Unemployed Capital Allocator. He wrote a rebuttal to Nicholas, 165 00:07:50,160 --> 00:07:52,240 and I believe it's worth mentioning a few things here. 166 00:07:52,320 --> 00:07:55,720 One of the major points he makes is addressing this claim that 167 00:07:55,720 --> 00:07:57,880 you're not going to need user interfaces. 168 00:07:57,880 --> 00:08:01,080 That's one of the biggest claims from the AI is going to destroy 169 00:08:01,120 --> 00:08:04,120 software bears. They're saying that software is 170 00:08:04,120 --> 00:08:06,160 dead because you don't need a user interface. 171 00:08:06,440 --> 00:08:08,480 You can just do everything through a text box. 172 00:08:08,960 --> 00:08:11,720 You can do it all through a chat, you can go to your job and 173 00:08:11,720 --> 00:08:14,560 you'll just have a text prompt and you can ask it whatever you 174 00:08:14,560 --> 00:08:16,240 want and get all the information you need. 175 00:08:16,680 --> 00:08:19,280 Sounds very easy. Easier than messing with a a 176 00:08:19,280 --> 00:08:22,840 bunch of user interfaces, right? Well, that's not necessarily the 177 00:08:22,840 --> 00:08:26,000 case, he says here. No, a text box isn't going to 178 00:08:26,000 --> 00:08:29,320 replace learned UI. Where does learned UI really 179 00:08:29,320 --> 00:08:31,560 matter? Which is user interfaces, tools 180 00:08:31,560 --> 00:08:34,400 with tons of degrees of freedom, and where actions per minute 181 00:08:34,400 --> 00:08:37,840 actually does matter? Professional workflows, modeling 182 00:08:37,840 --> 00:08:41,159 software, video editing tools? Ones where knowing the shortcut 183 00:08:41,159 --> 00:08:44,720 is a decent part of the job. A text box is not replacing 184 00:08:44,720 --> 00:08:46,840 this. The idea is quite alluring to 185 00:08:46,840 --> 00:08:50,400 those that don't know the UI. Look, you can just tell it to do 186 00:08:50,400 --> 00:08:54,120 something and it does it until you need to do it multiple 187 00:08:54,120 --> 00:08:57,240 times, then you start to go. Man, I wish there was a quick 188 00:08:57,240 --> 00:09:00,840 way for me to send this prompt to do this exact thing I want it 189 00:09:00,840 --> 00:09:03,160 to do. Oh, and remember all the info 190 00:09:03,160 --> 00:09:05,800 I'm supposed to provide so that I can get back exactly what I 191 00:09:05,800 --> 00:09:08,200 want. Maybe I can map it to a button 192 00:09:08,240 --> 00:09:11,360 and a keyboard short. Oh wait, that's the user 193 00:09:11,360 --> 00:09:13,480 interface. Text is amazing because it's 194 00:09:13,480 --> 00:09:16,840 universal. Text is also absolutely horrible 195 00:09:17,040 --> 00:09:19,920 because it has infinite degrees of freedom and introduces 196 00:09:19,920 --> 00:09:22,920 another level of abstraction. This is not what you want when 197 00:09:22,920 --> 00:09:25,400 you need to do a lot of specific things quickly. 198 00:09:25,560 --> 00:09:28,080 This is exactly right. Just think of the role that user 199 00:09:28,080 --> 00:09:29,920 interfaces and software actually play. 200 00:09:30,360 --> 00:09:32,880 For example, if you want to check all of your stocks on your 201 00:09:32,880 --> 00:09:35,640 watch list and see how they're trading today, you want to open 202 00:09:35,640 --> 00:09:39,640 up an empty chat and have to type in, hey, can you get me all 203 00:09:39,640 --> 00:09:42,880 of the stocks in My Portfolio and what they're trading today, 204 00:09:43,040 --> 00:09:45,800 enter and then have it surface that information seems like a 205 00:09:45,800 --> 00:09:47,920 bit of a hassle. Wouldn't it be a little easier 206 00:09:47,920 --> 00:09:50,920 to just open up an app and already have all of your watch 207 00:09:50,920 --> 00:09:53,440 list organized in the way that you want, presenting the 208 00:09:53,440 --> 00:09:55,720 information in the way that you've already organized it, 209 00:09:55,920 --> 00:09:57,640 remembering what you've done previously? 210 00:09:58,280 --> 00:10:00,520 Are we really going to replace every user interface that 211 00:10:00,560 --> 00:10:03,400 already has information standardized and organized and 212 00:10:03,400 --> 00:10:07,560 the way that we want to see it for an empty text chat that will 213 00:10:07,560 --> 00:10:10,320 have to prompt it every time we want to do something? 214 00:10:10,400 --> 00:10:13,080 Many of the arguments that these software bearers are making make 215 00:10:13,080 --> 00:10:14,840 sense. On the surface they sound kind 216 00:10:14,840 --> 00:10:16,880 of cool till you really think about it. 217 00:10:17,400 --> 00:10:20,240 Once you realize what you actually want to accomplish and 218 00:10:20,240 --> 00:10:23,560 the fastest way to do that. Software is needed, user 219 00:10:23,560 --> 00:10:26,560 interfaces are needed, and open-ended text chats aren't 220 00:10:26,560 --> 00:10:28,680 without their downsides. One of the arguments that's 221 00:10:28,680 --> 00:10:31,200 being made right now is also that software companies with all 222 00:10:31,200 --> 00:10:33,680 the business logic that they do, all the things that they 223 00:10:33,680 --> 00:10:36,480 systematically figure out, well that's basically worthless 224 00:10:36,480 --> 00:10:38,920 because AI can simply do that in a markdown file. 225 00:10:38,960 --> 00:10:42,480 There is zero chance that a complex web of markdown file is 226 00:10:42,480 --> 00:10:44,600 going to replace business logic entirely. 227 00:10:45,040 --> 00:10:47,440 The reason is quite simple. You do not want to introduce a 228 00:10:47,440 --> 00:10:51,280 layer of unpredictability and degrees of freedom of your core 229 00:10:51,280 --> 00:10:53,840 business logic. This is the stuff of nightmares 230 00:10:53,840 --> 00:10:56,920 even for simple levels. When you introduce complexity 231 00:10:56,920 --> 00:11:00,160 and interdependency, it is a straight line to system failure 232 00:11:00,160 --> 00:11:02,960 in bankruptcy. This is of course 100% correct. 233 00:11:03,080 --> 00:11:06,040 Imagine for example that you don't have any set business 234 00:11:06,040 --> 00:11:07,600 logic and you're not using software. 235 00:11:07,880 --> 00:11:10,320 Instead you have AI bill all of your customers. 236 00:11:10,960 --> 00:11:13,600 Well the AI hallucinates and gets 1 calculation wrong. 237 00:11:13,680 --> 00:11:16,480 All of a sudden you build your customers all the wrong amount 238 00:11:16,600 --> 00:11:18,120 and now you have to make up for it. 239 00:11:18,160 --> 00:11:20,360 Any type of mistake with core business logic would have 240 00:11:20,360 --> 00:11:22,840 critical failures. And we've seen what AI does. 241 00:11:22,840 --> 00:11:25,440 In many cases it changes its mind with the same prompt given 242 00:11:25,440 --> 00:11:27,760 two times. In many cases it can't read 243 00:11:27,760 --> 00:11:30,720 simple instructions. Nailing it down to do the same 244 00:11:30,720 --> 00:11:32,840 thing routinely is incredibly difficult. 245 00:11:33,120 --> 00:11:36,440 After all, every time the AI does something, it re analyzes 246 00:11:36,440 --> 00:11:37,960 it and does it in a different way. 247 00:11:38,200 --> 00:11:40,880 That's why if you ask it to generate an image, then you ask 248 00:11:40,880 --> 00:11:43,840 it to generate the same image again, it will look different 249 00:11:43,880 --> 00:11:47,000 every single time. Trying to replace core business 250 00:11:47,000 --> 00:11:50,320 logic of a company that's ran by years of tested software is not 251 00:11:50,320 --> 00:11:52,720 going to be replaced by AI. These arguments have become very 252 00:11:52,720 --> 00:11:55,400 pervasive, and they spread throughout X and Reddit and 253 00:11:55,400 --> 00:11:57,440 other investment circles, all throughout Discords. 254 00:11:57,960 --> 00:12:00,440 When you really look through a business and what it needs to 255 00:12:00,440 --> 00:12:04,040 run, these companies are not going to trust AI to run core 256 00:12:04,040 --> 00:12:06,120 business logic. They're not going to replace all 257 00:12:06,120 --> 00:12:08,040 user interfaces with text prompts. 258 00:12:08,120 --> 00:12:11,000 Most of the core arguments behind the death of software are 259 00:12:11,000 --> 00:12:13,040 unfounded. They're not practical in real 260 00:12:13,040 --> 00:12:15,120 conditions. So as I look at this, I try to 261 00:12:15,120 --> 00:12:18,280 make sense of what's true and what's not true with the AI 262 00:12:18,280 --> 00:12:20,560 concern. And from what I can tell, many 263 00:12:20,560 --> 00:12:22,800 of these companies are being way oversold. 264 00:12:22,880 --> 00:12:25,200 The fares are frankly just incredible. 265 00:12:25,200 --> 00:12:28,080 At this point, investors don't want any software company for 266 00:12:28,120 --> 00:12:31,480 any reason, no matter how resistant they are to AI. 267 00:12:31,760 --> 00:12:34,080 In some cases, these companies are going to be beneficiaries 268 00:12:34,080 --> 00:12:36,120 from AI. I'll just highlight a couple 269 00:12:36,120 --> 00:12:38,640 examples here. Again, we're looking at S&P 270 00:12:38,640 --> 00:12:41,480 Global, which has been crushed over just the past couple of 271 00:12:41,480 --> 00:12:43,360 months. We look at it and it's trading 272 00:12:43,360 --> 00:12:47,080 at a 21 Ford PE ratio. Why is the market so concerned 273 00:12:47,080 --> 00:12:49,240 about S&P Global's market Intel business? 274 00:12:49,600 --> 00:12:52,960 Well, because they sell a lot of data, and apparently AI is going 275 00:12:52,960 --> 00:12:55,800 to make all that data freely available and easy to consume 276 00:12:55,800 --> 00:12:58,280 for everyone, which of course is not the case. 277 00:12:58,320 --> 00:13:00,360 A lot of their data's proprietary to begin with. 278 00:13:00,680 --> 00:13:03,800 AI doesn't have access to it. And the breadth of data that S&P 279 00:13:03,800 --> 00:13:06,800 Global has with private markets and commodities, physical 280 00:13:06,800 --> 00:13:10,120 assets, things that are hard to collect and organize, is going 281 00:13:10,120 --> 00:13:11,960 to give them immense pricing power. 282 00:13:12,280 --> 00:13:15,720 That segment continues to grow even though the stock is getting 283 00:13:15,720 --> 00:13:17,880 crushed specifically because of that segment. 284 00:13:17,880 --> 00:13:20,760 But even if you were to assume that S&P Global's market Intel 285 00:13:20,760 --> 00:13:25,480 business went to 0, it was literally 100% disrupted. 286 00:13:25,480 --> 00:13:28,760 S&P Global would trade at a 27 Ford PE. 287 00:13:28,840 --> 00:13:31,040 It's still a company that would be reasonably priced. 288 00:13:31,040 --> 00:13:33,440 In fact, it would be cheaper than its long term average. 289 00:13:33,600 --> 00:13:36,360 That's much bearish sentiments being priced in today for 290 00:13:36,360 --> 00:13:38,440 companies like this. We look at other companies that 291 00:13:38,440 --> 00:13:42,080 are trading down today, ones like Big Tech, the Mag 7. 292 00:13:42,480 --> 00:13:45,200 The Mag 7 has traded down dramatically over just the past 293 00:13:45,200 --> 00:13:47,240 couple of months with many of the same fares. 294 00:13:47,680 --> 00:13:49,800 In this case, it's not that they're going to be disrupted by 295 00:13:49,920 --> 00:13:52,760 AI to some extent, that's the concern, but it's also that 296 00:13:52,760 --> 00:13:54,400 they're spending a lot of money on CapEx. 297 00:13:54,760 --> 00:13:57,320 The market's finding a reason to sell out of all of these growth 298 00:13:57,320 --> 00:14:00,400 companies, whether it be software or the Max 7. 299 00:14:00,920 --> 00:14:03,360 When we look at the Max seven overall, here's how the 300 00:14:03,360 --> 00:14:05,880 valuations breakdown. First of all, if we look at them 301 00:14:05,880 --> 00:14:09,320 all together, all combined, and we average out the PE ratio, 302 00:14:09,680 --> 00:14:13,720 they're trading at an 80 trailing PE and a Ford PE ratio 303 00:14:13,720 --> 00:14:16,680 of 52. That seems a little expensive. 304 00:14:16,840 --> 00:14:18,920 A Ford PE of 52 is kind of pricey. 305 00:14:19,240 --> 00:14:22,080 But there's one big outlier in the mag seven. 306 00:14:22,360 --> 00:14:25,880 That is Tesla. Tesla's trading at above a 200 307 00:14:25,880 --> 00:14:28,440 PE. If we remove Tesla from the 308 00:14:28,440 --> 00:14:32,760 calculation, the Ford PE ratio goes from 50 to 27. 309 00:14:33,160 --> 00:14:36,040 So it's dramatically reduced just by removing that one 310 00:14:36,040 --> 00:14:37,720 company. The valuations look a lot more 311 00:14:37,720 --> 00:14:40,760 sensible then we look at removing other companies. 312 00:14:40,760 --> 00:14:44,840 For example, if we remove Apple, NVIDIA and Tesla and we just 313 00:14:44,840 --> 00:14:48,760 have the big four tech companies left, the PE ratios look even 314 00:14:48,760 --> 00:14:50,600 better. In fact, when we look at this 315 00:14:50,600 --> 00:14:52,080 over time, this is what it looks like. 316 00:14:52,360 --> 00:14:54,960 We have the PE ratios of these four companies, Amazon, 317 00:14:54,960 --> 00:14:57,200 Microsoft, Google and Meta over time. 318 00:14:57,760 --> 00:15:00,160 And this is also a little bit misleading because we have 319 00:15:00,160 --> 00:15:03,600 trailing PE ratios and for example Meta is actually more 320 00:15:03,600 --> 00:15:06,320 expensive on a trailing PE because of a one time tax hit. 321 00:15:06,560 --> 00:15:09,440 It would look even cheaper today and it's at the lowest point in 322 00:15:09,440 --> 00:15:12,640 a multi year timeline. We look at the big four growth 323 00:15:12,760 --> 00:15:16,040 by comparison, even though the PE ratio of these companies is 324 00:15:16,040 --> 00:15:18,840 declining dramatically. We have earnings per share 325 00:15:18,840 --> 00:15:20,560 growth that's also growing dramatically. 326 00:15:20,960 --> 00:15:24,600 And again, this chart also isn't even as high as it would 327 00:15:24,600 --> 00:15:27,720 normally be because of the major tax hit that Meta recently had. 328 00:15:27,960 --> 00:15:29,640 We also had Microsoft with a tax hit. 329 00:15:29,720 --> 00:15:31,720 We can even look at these companies on an operating cash 330 00:15:31,720 --> 00:15:34,640 flow basis. They are racing up to all time 331 00:15:34,640 --> 00:15:36,520 high. The core business, if you 332 00:15:36,520 --> 00:15:39,640 measure it on an organic basis, meaning how much cash they're 333 00:15:39,640 --> 00:15:43,280 generating without the reinvested CapEx, it is growing 334 00:15:43,280 --> 00:15:44,920 substantially. Every single one of them. 335 00:15:45,000 --> 00:15:47,640 Google's the only company that's trading at a reasonably high 336 00:15:47,640 --> 00:15:51,640 valuation as a big tech company. If we were to remove Google from 337 00:15:51,640 --> 00:15:55,600 the equation, meaning we only have Meta, Amazon and Microsoft, 338 00:15:55,600 --> 00:16:00,560 those three companies, the forward PE ratio is a 24 for 339 00:16:00,560 --> 00:16:04,160 those three of the MAG 7, 24 Ford PE. 340 00:16:04,640 --> 00:16:08,120 To put that in comparison, when we look at the S&P 500 right 341 00:16:08,120 --> 00:16:13,440 now, the S&P 500 is trading at an estimated 22 Ford PE. 342 00:16:13,440 --> 00:16:17,760 So you're paying almost the same price for Amazon, Microsoft and 343 00:16:17,760 --> 00:16:20,720 Meta that you are for the entire S&P 500. 344 00:16:20,880 --> 00:16:23,440 Are these companies average companies that should trade 345 00:16:23,440 --> 00:16:25,600 within the average of the S&P 500? 346 00:16:25,960 --> 00:16:27,960 Should they be priced with the same level of growth 347 00:16:27,960 --> 00:16:29,480 expectations? And Mote? 348 00:16:30,080 --> 00:16:31,800 Well, I don't think so. I think these companies are 349 00:16:31,800 --> 00:16:33,840 substantially better than the S&P 500. 350 00:16:34,240 --> 00:16:37,040 The historical analysis proves that they're growing earnings 351 00:16:37,040 --> 00:16:38,920 much faster. These are the companies that are 352 00:16:38,920 --> 00:16:41,640 pushing the indices higher. They're growing their cash flows 353 00:16:41,640 --> 00:16:43,480 much faster. These companies are generating 354 00:16:43,480 --> 00:16:47,000 record net income, record earnings and record cash flows. 355 00:16:47,080 --> 00:16:50,040 So I understand if you're afraid of software companies, if you're 356 00:16:50,040 --> 00:16:52,120 afraid of big tech and their CapEx investment. 357 00:16:52,440 --> 00:16:55,440 But just keep in mind that every time there's a rotation, there's 358 00:16:55,440 --> 00:16:57,080 a sell off. There's a big narrative out 359 00:16:57,080 --> 00:17:00,480 there that tells you, you need to avoid these companies even 360 00:17:00,480 --> 00:17:04,319 when they're at 52 week lows, when they're at multi year low 361 00:17:04,319 --> 00:17:07,040 valuations, when they're fundamentals still look very 362 00:17:07,040 --> 00:17:10,040 sound in most cases. Those are buying opportunities 363 00:17:10,079 --> 00:17:12,720 and I believe for many of the companies today, they have once 364 00:17:12,720 --> 00:17:14,680 again become buying opportunities. 365 00:17:14,680 --> 00:17:16,200 Now let's go ahead and move on to some news. 366 00:17:16,319 --> 00:17:17,200 Now. The first piece of news that 367 00:17:17,200 --> 00:17:20,160 we'll discuss today is Chris Holmes 13 F filing. 368 00:17:20,599 --> 00:17:23,560 Many of these super investor 13F filings are being reported. 369 00:17:23,560 --> 00:17:25,920 They're coming in every single day and we finally got Chris 370 00:17:25,920 --> 00:17:28,079 Holmes. Now when we look at the the 371 00:17:28,079 --> 00:17:30,640 changes that Chris Hohn did, let's go ahead and just look at 372 00:17:30,640 --> 00:17:32,800 the activity here and we can discuss them. 373 00:17:33,280 --> 00:17:37,680 We have right here the the buys and sells what he did and this 374 00:17:37,680 --> 00:17:43,520 is as of Q4 of 2025 S the most recent that we know this data is 375 00:17:43,520 --> 00:17:47,400 as of December of 2025. During that time period, he 376 00:17:47,400 --> 00:17:52,080 added to Microsoft, he added to S&P Global, he trimmed Visa, he 377 00:17:52,080 --> 00:17:55,160 trimmed Canadian Pacific, and he trimmed Canadian National 378 00:17:55,160 --> 00:17:57,400 Railway. Now all of these are relatively 379 00:17:57,400 --> 00:18:00,440 small changes, but I think that there's a couple things that are 380 00:18:00,520 --> 00:18:03,520 notable here. Chris Hoehn determined that it 381 00:18:03,520 --> 00:18:09,240 was worth adding to S&P Global and Microsoft as of Q42025. 382 00:18:09,240 --> 00:18:11,640 Now, if we look at the price of these companies that he was 383 00:18:11,640 --> 00:18:15,320 adding to again Q4 of 2025, we can look at them right here. 384 00:18:15,800 --> 00:18:18,960 We have the prices all across this quarter from beginning to 385 00:18:18,960 --> 00:18:22,800 end for both S&P Global and Microsoft, meaning that he was 386 00:18:22,800 --> 00:18:28,040 buying Microsoft and buying S&P Global at prices around $480 to 387 00:18:28,040 --> 00:18:31,560 540. S&P Global was right around that 388 00:18:31,560 --> 00:18:33,560 same price and he was adding to both of them. 389 00:18:33,600 --> 00:18:36,960 Where do they trade today? S&P Global's fallen around $80 390 00:18:36,960 --> 00:18:39,520 since Chris Holm's last buy of the company, so it is 391 00:18:39,520 --> 00:18:41,920 substantially cheaper. Microsoft today is trading at a 392 00:18:41,920 --> 00:18:46,360 price below $400.00 per share, so the stock is a full $100 393 00:18:46,360 --> 00:18:47,840 cheaper than his last purchase of it. 394 00:18:47,960 --> 00:18:50,560 What this tells me is that Chris Holm believed these companies 395 00:18:50,560 --> 00:18:54,920 were undervalued last quarter at 80 or $100 more expensive than 396 00:18:54,920 --> 00:18:57,120 they are today. And unless something has 397 00:18:57,120 --> 00:18:59,800 fundamentally changed, unless he's changed his mind after 398 00:19:00,080 --> 00:19:02,960 reading the things online and seeing some of the data, he 399 00:19:02,960 --> 00:19:05,320 probably thinks that they're substantially undervalued today. 400 00:19:05,680 --> 00:19:09,800 My guess is when we see the reports for Q1 of 2026, we're 401 00:19:09,800 --> 00:19:12,240 going to have seen a lot of super investors pie this dip. 402 00:19:12,560 --> 00:19:14,040 I think there's going to be a lot of them that buy it 403 00:19:14,040 --> 00:19:16,520 aggressively. Now moving on, we get to news 404 00:19:16,520 --> 00:19:20,720 that Netflix has worked with Warner Bros to allow seven days 405 00:19:20,840 --> 00:19:23,600 of Warner Bros to consider Paramount's offer. 406 00:19:23,880 --> 00:19:25,920 Sounds a little bit complicated, but let's go ahead and just read 407 00:19:25,920 --> 00:19:28,240 what's going on here. Netflix has said in a statement 408 00:19:28,240 --> 00:19:30,800 that it believes that software remains superior, but has 409 00:19:30,800 --> 00:19:34,280 granted Warner the seven day waiver of certain obligations of 410 00:19:34,280 --> 00:19:37,640 their merger agreement to engage with Paramount to fully and 411 00:19:37,640 --> 00:19:41,080 finally resolve this matter. So Netflix doesn't need to do 412 00:19:41,080 --> 00:19:42,680 this. They have in their agreement 413 00:19:42,720 --> 00:19:45,640 that Warner Bros can't shop alternative agreements. 414 00:19:46,000 --> 00:19:48,040 Like they basically are tied into Netflix. 415 00:19:48,400 --> 00:19:51,600 But then it says here that Netflix wavered their agreement. 416 00:19:51,600 --> 00:19:53,960 They said, hey, you know what, go ahead and just listen to 417 00:19:53,960 --> 00:19:57,160 Paramount go get their final and best offer, even though it's in 418 00:19:57,160 --> 00:19:59,880 our contract to not allow that, we're going to make a special 419 00:19:59,880 --> 00:20:02,120 exemption. So you have 7 days to talk to 420 00:20:02,120 --> 00:20:04,280 Paramount and get their best offer. 421 00:20:04,840 --> 00:20:06,840 Now, it's interesting why Netflix is doing this. 422 00:20:06,840 --> 00:20:09,200 When I've looked at this news, I've tried to analyze it, but 423 00:20:09,520 --> 00:20:12,600 from what I can tell, my best guess is that Netflix is 424 00:20:12,600 --> 00:20:14,120 basically just calling their bluff. 425 00:20:14,400 --> 00:20:18,120 They're telling Paramount to put up or shut up, to do something, 426 00:20:18,520 --> 00:20:21,640 to just give your best offer and then leave us alone. 427 00:20:21,760 --> 00:20:25,080 If Paramount puts up a low offer, if they don't put up 428 00:20:25,080 --> 00:20:28,760 something attractive after this seven days, then Netflix can 429 00:20:28,760 --> 00:20:31,720 finally argue that it's done, that it's over with. 430 00:20:32,240 --> 00:20:34,640 They don't have to deal with activist investors and with 431 00:20:34,880 --> 00:20:38,520 Paramount constantly nipping at their heels, wanting to to be 432 00:20:38,520 --> 00:20:41,880 part of this deal. If they have one week to finally 433 00:20:41,880 --> 00:20:45,760 conclude this, maybe the drama can be put aside and Netflix 434 00:20:45,760 --> 00:20:47,760 always has the option to counter an offer. 435 00:20:47,760 --> 00:20:50,680 They have the first call on it. If Paramount puts up a billion 436 00:20:50,680 --> 00:20:54,280 dollars more or $5 billion more, Netflix can decide if that's 437 00:20:54,280 --> 00:20:56,600 still worth it. They can model it out and they 438 00:20:56,600 --> 00:20:59,640 can see if it makes sense. Netflix is going to pay more 439 00:20:59,640 --> 00:21:01,840 than what they believe is worth it for their shareholders. 440 00:21:02,080 --> 00:21:05,400 They're very long term focused. So I see this as a strategic 441 00:21:05,400 --> 00:21:09,000 move from Netflix telling Warner Bros that they have time to act, 442 00:21:09,440 --> 00:21:12,360 exposing their weaknesses, putting it back on them. 443 00:21:12,360 --> 00:21:15,440 The ball's now in their court and finally seeing what they do. 444 00:21:15,480 --> 00:21:18,320 If they are going to provide a higher offer, we'll find out 445 00:21:18,320 --> 00:21:21,200 within one week and moving on, we have some more Duolingo 446 00:21:21,200 --> 00:21:23,120 drama. It's a stock that always has a 447 00:21:23,120 --> 00:21:26,080 lot of opinions, but in this case, this is part of a viral 448 00:21:26,080 --> 00:21:30,480 post on XI posted about the cell rating that Goldman Sachs 449 00:21:30,480 --> 00:21:33,640 recently gave Duolingo. They said that Duolingo was an 450 00:21:33,800 --> 00:21:39,280 AI loser, rated it as a cell. And I noted in my ex post that 451 00:21:39,440 --> 00:21:41,040 Goldman Sachs has done this before. 452 00:21:41,200 --> 00:21:43,560 They've also done this in the past where they wait for a stock 453 00:21:43,560 --> 00:21:47,000 to drop a huge amount like 70 plus percent and once it's at a 454 00:21:47,000 --> 00:21:49,280 very low price they give it a sell rating. 455 00:21:49,680 --> 00:21:51,560 They did the same thing with Netflix. 456 00:21:51,720 --> 00:21:56,160 Goldman Sachs gave a sell rating on Netflix June 10/20/22. 457 00:21:56,160 --> 00:21:59,240 And if we look at the math of the performance of Netflix 458 00:21:59,240 --> 00:22:05,200 versus the QQQ or the S&P 500, it is up 320% since then. 459 00:22:05,200 --> 00:22:08,520 So Netflix's performance since Goldman Sachs gave it that sell 460 00:22:08,520 --> 00:22:11,440 rating is now about triple the QQQ. 461 00:22:11,480 --> 00:22:14,160 Another fun fact worth mentioning is that Goldman Sachs 462 00:22:14,160 --> 00:22:17,440 sell rating on Netflix almost exactly time the bottom. 463 00:22:17,880 --> 00:22:20,600 They gave the down rating and it occurred when the stock was only 464 00:22:20,600 --> 00:22:25,640 5 to 10% away from the absolute bottom of the 2022 sell off. 465 00:22:25,680 --> 00:22:28,400 Now I put this on X and a lot of people had a lot of feedback and 466 00:22:28,400 --> 00:22:31,920 opinions on it and one of them was Jeremy Lafave from Financial 467 00:22:31,920 --> 00:22:34,600 Education. He responded to this tweet and 468 00:22:34,640 --> 00:22:36,840 reacted to it in one of his recent videos. 469 00:22:37,360 --> 00:22:40,160 I just want to play the video so we can go through it and kind of 470 00:22:40,160 --> 00:22:41,640 discuss his comments here together. 471 00:22:41,800 --> 00:22:46,320 This one Joseph Carlson posted this said Goldman just said that 472 00:22:46,320 --> 00:22:50,200 Duolingo little Dingo is an AI loser and said it's a cell. 473 00:22:50,240 --> 00:22:52,680 Here's a performance from when they called Netflix a cell right 474 00:22:52,960 --> 00:22:53,800 now. I thought this was worth 475 00:22:53,800 --> 00:22:57,680 mentioning here. And the reason being is just 476 00:22:57,680 --> 00:23:01,640 because 1 stock has done well in the past and somebody said it 477 00:23:01,640 --> 00:23:03,800 was a sell, doesn't mean the next stock's going to do that, 478 00:23:03,840 --> 00:23:07,160 right? And so let's be honest, there's 479 00:23:07,160 --> 00:23:09,600 a big difference between somebody like a Duolingo and 480 00:23:09,600 --> 00:23:13,120 somebody like a Netflix, right? A Duolingo is like a niche 481 00:23:13,120 --> 00:23:19,000 product that, you know, how many people are really going to stay 482 00:23:19,000 --> 00:23:22,400 signed up for Duolingo for the next 5-10, fifteen, 20 years? 483 00:23:22,480 --> 00:23:26,040 I don't think there's very many, you know, I, I, and I don't 484 00:23:26,040 --> 00:23:28,240 think that's AI, don't think that's a big statement. 485 00:23:29,000 --> 00:23:30,760 Like, sure, there's a lot of people that might try out a 486 00:23:30,760 --> 00:23:32,920 product like that and like, oh, I think it would be fun to learn 487 00:23:32,920 --> 00:23:34,400 Italian. Oh, I think it would be fun to 488 00:23:34,400 --> 00:23:36,520 learn Spanish or, you know, whatever, right? 489 00:23:36,920 --> 00:23:39,480 I'm gonna learn French. OK, You know, and they sign up 490 00:23:39,480 --> 00:23:41,440 for a bit and they kind of mess around with it and they pay a 491 00:23:41,440 --> 00:23:43,600 little bit or maybe they don't pay and they just see ads or 492 00:23:43,600 --> 00:23:46,560 whatever, right. And then eventually they stop 493 00:23:46,560 --> 00:23:48,520 using it. Netflix is not that sort of 494 00:23:48,520 --> 00:23:50,160 company. There's a huge difference here. 495 00:23:50,920 --> 00:23:54,160 Like Netflix, the type of company that when somebody signs 496 00:23:54,160 --> 00:23:56,480 up, like they're going to stay signed up five years out, 10 497 00:23:56,480 --> 00:23:58,280 years out, 20 years from now, right? 498 00:23:59,120 --> 00:24:02,000 Unless somebody comes and replicates Netflix whole 499 00:24:02,000 --> 00:24:03,720 business model, which isn't super realistic. 500 00:24:04,000 --> 00:24:05,440 Duolingo's not that sort of company. 501 00:24:05,920 --> 00:24:08,400 People might sign up for the product and try it out and then 502 00:24:08,400 --> 00:24:11,960 not use it anymore and they might start paying and then, you 503 00:24:11,960 --> 00:24:14,560 know, six months later they're going to stop paying, or a year 504 00:24:14,560 --> 00:24:16,320 later or two years later or something like that, right? 505 00:24:16,640 --> 00:24:19,160 Netflix, that's a hard one. Like once people sign up for 506 00:24:19,160 --> 00:24:22,880 Netflix to get them off that Netflix account, it was 507 00:24:22,880 --> 00:24:25,360 difficult. Like Netflix would have to go up 508 00:24:25,480 --> 00:24:28,360 dramatically in price. And so Netflix, when they 509 00:24:28,360 --> 00:24:30,400 capture a customer, they probably have a customer for the 510 00:24:30,400 --> 00:24:32,360 next 20 years, next 10 years, right? 511 00:24:32,840 --> 00:24:34,200 Duolingo's not that same company. 512 00:24:34,560 --> 00:24:38,800 So I think that's very, very important to keep in mind here. 513 00:24:39,040 --> 00:24:41,440 But I think it's natural sometimes for investors to say, 514 00:24:41,440 --> 00:24:44,640 well, this analyst or this company, they said this was a a 515 00:24:44,640 --> 00:24:46,520 cell in the past and look at it did so well. 516 00:24:46,520 --> 00:24:48,480 So this kind of the company and and things like that. 517 00:24:48,720 --> 00:24:53,520 But you know, I just see massive fundamental differences between 518 00:24:53,800 --> 00:24:56,280 a certain company like that and somebody like a Netflix, right? 519 00:24:56,640 --> 00:24:59,480 So that's his comments on Duolingo and I actually really 520 00:24:59,480 --> 00:25:03,240 like them because I I think it represents the other side. 521 00:25:03,360 --> 00:25:05,640 Every stock there's, there's two trains of thoughts. 522 00:25:05,720 --> 00:25:08,200 There's two different stories behind it, narratives behind it, 523 00:25:08,760 --> 00:25:11,600 and I think that Jeremy really does represent the bearish 524 00:25:11,600 --> 00:25:13,080 narrative on Duolingo really well. 525 00:25:13,120 --> 00:25:16,560 The first argument that he says is that Netflix is not like 526 00:25:16,560 --> 00:25:19,680 Duolingo. And he refers to Netflix as a 527 00:25:19,680 --> 00:25:22,720 product that everybody wants. They want to be entertained. 528 00:25:23,280 --> 00:25:25,560 You know, when you sign up for Netflix, you never really cancel 529 00:25:25,560 --> 00:25:27,560 it. And Duolingo, by contrast, is a 530 00:25:27,560 --> 00:25:29,800 niche product. You may sign up for it, try to 531 00:25:29,800 --> 00:25:32,400 learn a language for a while, get bored of it and move on. 532 00:25:32,760 --> 00:25:34,360 So that's the way that it's described. 533 00:25:35,000 --> 00:25:38,960 But when we zoom back to 2022, when Goldman Sachs gave that 534 00:25:38,960 --> 00:25:43,440 cell rating on Netflix, Netflix had just lost subscribers for 535 00:25:43,440 --> 00:25:45,920 six months in a row. Netflix was shrinking. 536 00:25:46,720 --> 00:25:49,120 So Netflix wasn't viewed as a product that people signed up 537 00:25:49,120 --> 00:25:51,600 for and kept forever. It was viewed as a product that 538 00:25:51,640 --> 00:25:54,360 was shrinking subscribers returning. 539 00:25:54,440 --> 00:25:56,000 Netflix is a subscription business. 540 00:25:56,000 --> 00:25:58,880 If they're not constantly gaining subscribers at a rate 541 00:25:58,880 --> 00:26:01,200 exceeding their churn, then they're going to lose 542 00:26:01,200 --> 00:26:02,640 subscribers. Their business is going to 543 00:26:02,640 --> 00:26:04,840 shrink. That was the exact narrative 544 00:26:04,840 --> 00:26:06,360 that was happening during that time period. 545 00:26:06,440 --> 00:26:09,280 In fact, if you go back to 2022, the narrative at that time was 546 00:26:09,280 --> 00:26:12,520 that Netflix was basically dead. They weren't one-of-a-kind. 547 00:26:12,600 --> 00:26:13,960 They didn't have market dominance. 548 00:26:14,440 --> 00:26:16,040 They're a company competing with Paramount. 549 00:26:16,040 --> 00:26:18,880 They're competing with Disney Plus and HBO and YouTube. 550 00:26:19,080 --> 00:26:21,760 They're being crowded out by many of the free streamers, user 551 00:26:21,760 --> 00:26:24,600 generated content. Instagram and Netflix was just 552 00:26:24,600 --> 00:26:28,080 this saturated streaming company that couldn't compete and was 553 00:26:28,080 --> 00:26:30,600 losing subscribers. Now it looks like a company 554 00:26:30,600 --> 00:26:32,960 that's undefeatable. It looks a lot different. 555 00:26:32,960 --> 00:26:35,840 It's more cash generative, but the exact same thought process 556 00:26:35,840 --> 00:26:39,320 existed back then with Netflix. The difference is Duolingos 557 00:26:39,320 --> 00:26:43,080 actually never lost subscribers. Duolingo's never had six months 558 00:26:43,080 --> 00:26:45,520 of shrinking. Duolingo's always grown. 559 00:26:45,880 --> 00:26:48,120 The subscriber numbers are growing quarter over quarter 560 00:26:48,120 --> 00:26:50,360 incredibly fast. Another thing that Jeremy says 561 00:26:50,360 --> 00:26:52,840 here that I think is a common description of Duolingo is that 562 00:26:52,840 --> 00:26:55,360 it's niche. It's a niche product. 563 00:26:56,200 --> 00:26:59,960 Right now there are over 1.5 billion people learning English, 564 00:27:00,320 --> 00:27:03,120 1 1/2 billion. That's not what I define as 565 00:27:03,120 --> 00:27:05,800 niche. When a huge chunk of the world 566 00:27:05,800 --> 00:27:09,480 is actively trying to learn a subject, and there's one company 567 00:27:09,480 --> 00:27:12,520 that offers a very good product at teaching that subject, 568 00:27:12,840 --> 00:27:15,800 keeping people motivated, making it fun to learn that subject, 569 00:27:16,360 --> 00:27:18,200 that's not a niche product. That is something that's 570 00:27:18,200 --> 00:27:20,000 appealing to a massive amount of people. 571 00:27:20,400 --> 00:27:22,440 There's huge network effects with English. 572 00:27:23,080 --> 00:27:25,920 English is not something people learn just for vacation. 573 00:27:25,920 --> 00:27:28,320 It's not something that they learn because they don't have 574 00:27:28,320 --> 00:27:31,160 Airpods that can translate. English is the language of 575 00:27:31,160 --> 00:27:34,840 business, of aviation, of mathematics, of coding. 576 00:27:34,920 --> 00:27:37,880 It has massive network effects. For many people, learning a 577 00:27:37,880 --> 00:27:39,920 language is not something they're just doing for fun. 578 00:27:40,080 --> 00:27:42,560 It's not a flavor of the month. They have real motivations 579 00:27:42,560 --> 00:27:45,280 behind doing it. Duolingo has capitalized on that 580 00:27:45,280 --> 00:27:46,840 market. And of course, that's not the 581 00:27:46,840 --> 00:27:49,200 only language that they teach. They cover hundreds of different 582 00:27:49,200 --> 00:27:51,640 languages back and forth in different directions, better 583 00:27:51,640 --> 00:27:54,880 than any other application. In the edtech language learning 584 00:27:54,880 --> 00:27:56,520 category, they're by far the biggest. 585 00:27:56,880 --> 00:28:00,120 They have a bigger market share than Netflix does of media or 586 00:28:00,120 --> 00:28:01,720 YouTube does of content creation. 587 00:28:02,320 --> 00:28:05,960 Duolingo is enormous in this category of learning languages 588 00:28:05,960 --> 00:28:08,160 in different subjects. Another subject that they've 589 00:28:08,200 --> 00:28:11,680 advanced into is chess. Chess has 600 million people 590 00:28:11,680 --> 00:28:15,120 that are active players of this game. 600 million is not niche. 591 00:28:15,120 --> 00:28:16,760 That's quite a big market to grow into. 592 00:28:17,240 --> 00:28:20,160 Even if Duolingo captures a tiny fraction of that market, they'll 593 00:28:20,160 --> 00:28:23,440 be substantially bigger. And of course, chess players are 594 00:28:23,440 --> 00:28:25,920 growing in numbers as well. The sport overall is growing. 595 00:28:26,240 --> 00:28:28,880 Chess is one of those games where you don't really learn it 596 00:28:28,880 --> 00:28:31,080 for a short amount of time. People play it their entire 597 00:28:31,080 --> 00:28:32,480 lives. It's like a culture. 598 00:28:32,720 --> 00:28:34,760 It's considered a a learning exercise. 599 00:28:35,160 --> 00:28:37,520 There's so many people across the world that play that one 600 00:28:37,520 --> 00:28:40,240 common game. Then Duolingos, also in math and 601 00:28:40,240 --> 00:28:42,160 music, which of course are not niche as well. 602 00:28:42,360 --> 00:28:44,800 These are basic fundamentals that everybody on planet earth 603 00:28:44,840 --> 00:28:47,760 needs to learn. Every kid in school is learning 604 00:28:47,760 --> 00:28:50,200 these things. They're pivoting into categories 605 00:28:50,200 --> 00:28:53,120 that are the opposite of niche. They go into categories that 606 00:28:53,120 --> 00:28:55,360 billions of people are actively trying to learn. 607 00:28:55,400 --> 00:28:58,240 The thought process that Duolingo users just to use the 608 00:28:58,240 --> 00:29:00,240 app for a couple months and then they quit. 609 00:29:00,800 --> 00:29:02,800 That can happen. And in fact, that's the story of 610 00:29:02,800 --> 00:29:05,320 many people when they share a bearish view on the company, 611 00:29:05,720 --> 00:29:07,000 they'll say, well, I tried it out. 612 00:29:07,000 --> 00:29:09,760 I tried to learn something for a month or two, and then I just 613 00:29:09,760 --> 00:29:11,320 broke my streak and never used it again. 614 00:29:11,800 --> 00:29:13,200 That's not what the numbers show. 615 00:29:13,680 --> 00:29:17,480 When we look at the numbers, Duolingo is a stock that is down 616 00:29:17,560 --> 00:29:20,040 80%. It is getting crushed. 617 00:29:20,160 --> 00:29:22,920 While all the numbers, all the charts look like this. 618 00:29:23,600 --> 00:29:25,480 This is what every single one of them looks like. 619 00:29:25,880 --> 00:29:28,760 The numbers are all going up and to the right at a fast pace. 620 00:29:29,160 --> 00:29:31,880 Millions upon millions of people using it every single day. 621 00:29:32,280 --> 00:29:36,760 Duolingo has over 50 million daily active users, people that 622 00:29:36,760 --> 00:29:38,760 are logging on and using it at least once a day. 623 00:29:39,200 --> 00:29:41,880 When we look at Duolingo and the amount of people that are paying 624 00:29:41,880 --> 00:29:44,080 subscribers, that's what this chart is. 625 00:29:44,640 --> 00:29:47,080 It continues to just climb up and to the right. 626 00:29:47,400 --> 00:29:54,000 Since 2020, it's up 945% from 1.1 million to now 11.5 million. 627 00:29:54,080 --> 00:29:58,400 At the end of 2023, Duolingo had 5 million people that were on a 628 00:29:58,400 --> 00:30:01,400 year or longer streak. So 5 million people that I've 629 00:30:01,400 --> 00:30:04,320 used the service every single day for over a year now, that 630 00:30:04,320 --> 00:30:06,720 number is 10 million. The amount of users that are 631 00:30:06,720 --> 00:30:09,720 dedicated users using the application every single day for 632 00:30:09,720 --> 00:30:13,000 over a year has literally doubled in just the past couple 633 00:30:13,000 --> 00:30:14,720 of years. And we see this trend 634 00:30:14,720 --> 00:30:16,200 continuing. And then finally, I'll just 635 00:30:16,200 --> 00:30:19,080 mention one last thing. Jeremy mentioned that Goldman 636 00:30:19,080 --> 00:30:22,280 Sachs, just because they said Netflix was a sell right at the 637 00:30:22,280 --> 00:30:26,720 bottom 5% from the absolute bottom in 2022, they got that 638 00:30:26,720 --> 00:30:29,160 call completely wrong. That doesn't mean they're wrong 639 00:30:29,160 --> 00:30:30,680 with Duolingo. And that's true. 640 00:30:30,800 --> 00:30:33,480 Maybe they're right with it. Maybe Duolingo will continue to 641 00:30:33,480 --> 00:30:35,560 go down and be a bad investment. That could be the case. 642 00:30:36,200 --> 00:30:39,840 But I'll I'll mention that my my point in bringing up Netflix is 643 00:30:39,840 --> 00:30:43,640 not to say that Netflix is similar or the same as Duolingo. 644 00:30:44,160 --> 00:30:46,320 I'm not arguing that those businesses are fundamentally the 645 00:30:46,320 --> 00:30:47,680 same. They're very different, like 646 00:30:47,680 --> 00:30:51,640 anybody can point out. But what is the same is Goldman 647 00:30:51,640 --> 00:30:55,240 Sachs and many of these analyst firms have a long history of 648 00:30:55,240 --> 00:30:57,520 giving sell calls right at the bottom. 649 00:30:57,880 --> 00:31:00,080 They'll have buy calls when the stock is going up. 650 00:31:00,560 --> 00:31:02,720 They'll hold it as a buy for years and years and years. 651 00:31:02,880 --> 00:31:06,600 And then after stocks get crushed when they're down 70%, 652 00:31:06,960 --> 00:31:09,960 then the professional analysts will say now it's a sell. 653 00:31:10,120 --> 00:31:12,480 They'll give this sell call at the exact wrong time. 654 00:31:12,480 --> 00:31:14,560 And they've done this continually within their sell 655 00:31:14,560 --> 00:31:17,120 list, the companies that they're calling software losers and that 656 00:31:17,120 --> 00:31:19,000 investors should get out of and sell today. 657 00:31:19,280 --> 00:31:22,360 They also have Salesforce, one of your own holdings, Jeremy. 658 00:31:22,720 --> 00:31:25,240 They call this one a sell. They're telling you to get out 659 00:31:25,240 --> 00:31:27,000 of it now. Now that Salesforce is 660 00:31:27,000 --> 00:31:29,040 completely crushed. Now it's being priced for 661 00:31:29,040 --> 00:31:31,920 complete doom. Goldman Sachs says it's a sell. 662 00:31:32,000 --> 00:31:34,520 They also just recently called Adobe a sell. 663 00:31:34,640 --> 00:31:36,160 They said that that one's not worth holding. 664 00:31:36,160 --> 00:31:37,880 It's going to be disrupted by AI. 665 00:31:38,400 --> 00:31:41,160 And this is, again, not something that's uncommon. 666 00:31:41,320 --> 00:31:44,160 These companies and analysts wait until stocks drop 667 00:31:44,160 --> 00:31:47,560 dramatically and then they tell investors at the very bottom to 668 00:31:47,560 --> 00:31:50,440 get out exactly like they did with Netflix. 669 00:31:50,840 --> 00:31:52,840 Now moving on, we get to the fail of the week, which we have 670 00:31:52,840 --> 00:31:55,720 to highlight Chamath Polyhypatia for a recent take that he 671 00:31:55,720 --> 00:31:58,720 expressed on his podcast, the All In podcast. 672 00:31:58,720 --> 00:32:02,200 Now, Chamath has had an obsession for some time with 673 00:32:02,200 --> 00:32:05,040 comparing himself to Warren Buffett, but we'll look at the 674 00:32:05,040 --> 00:32:08,360 most recent example here. Here is Chamath Polyhypatia 675 00:32:08,360 --> 00:32:12,160 talking about fair disclosure laws and how Warren Buffett 676 00:32:12,240 --> 00:32:15,320 presumably benefited from that, and that's how you explain his 677 00:32:15,320 --> 00:32:19,240 out performance. In 2000, we introduced the law 678 00:32:19,720 --> 00:32:22,360 called Reg FD. And what was the point of Reg 679 00:32:22,360 --> 00:32:25,640 FD? It was basically that if you're 680 00:32:25,840 --> 00:32:30,560 ACFO, you cannot talk to an individual stock manager and 681 00:32:30,560 --> 00:32:33,160 tell him something that you then don't tell everybody else 682 00:32:33,520 --> 00:32:38,320 essentially inside information that used to be not illegal. 683 00:32:38,320 --> 00:32:40,720 I won't say that it was legal. I would just say that used to be 684 00:32:40,720 --> 00:32:43,800 not illegal. You call your buddy, he says, 685 00:32:43,800 --> 00:32:45,440 hey, how you doing? He goes, man, quarter was a 686 00:32:45,440 --> 00:32:48,040 blockbuster. You would go and buy the stock 687 00:32:49,120 --> 00:32:51,840 and starting in the 2000s, it became illegal. 688 00:32:51,840 --> 00:32:53,920 And there used to be these networks of information 689 00:32:53,920 --> 00:32:56,080 arbitrage that that took advantage of this. 690 00:32:56,120 --> 00:32:59,640 Now this is an example of Warren Buffett's returns pre and post 691 00:32:59,640 --> 00:33:01,400 Reg FD. Now what do you see? 692 00:33:02,640 --> 00:33:08,520 His returns were double the market returns when this kind of 693 00:33:08,520 --> 00:33:12,760 information sharing was legal. And the minute that he became 694 00:33:12,840 --> 00:33:16,760 illegal and you had to basically act on the same edge as 695 00:33:16,760 --> 00:33:20,880 everybody else, his returns went to the market return. 696 00:33:21,440 --> 00:33:24,440 He generated 0A. In fact, he probably on the 697 00:33:24,440 --> 00:33:27,400 margins lost a little bit. So this is the single best 698 00:33:27,400 --> 00:33:29,760 investor in the world. This is what happens when you 699 00:33:29,760 --> 00:33:32,840 have information symmetry. Now the problem with Chamas 700 00:33:32,840 --> 00:33:35,560 theory here that Warren Buffett only outperformed because of 701 00:33:35,600 --> 00:33:38,400 asymmetry and information is that as soon as you put that 702 00:33:38,400 --> 00:33:40,320 under any type of scrutiny, it falls apart. 703 00:33:40,640 --> 00:33:42,960 For example, we can just look at the best investments that Warren 704 00:33:42,960 --> 00:33:45,800 Buffett has ever made, where he really made his money, the 705 00:33:45,800 --> 00:33:48,280 overall best performing investments he's done throughout 706 00:33:48,280 --> 00:33:51,200 his career. By far the best investment 707 00:33:51,200 --> 00:33:53,120 Warren Buffett has ever made was Apple. 708 00:33:53,640 --> 00:33:58,200 That came after these disclosure laws that came presumably when 709 00:33:58,200 --> 00:34:01,520 Warren Buffett didn't have an edge, but he bought Apple at the 710 00:34:01,520 --> 00:34:04,840 cheapest price you possibly could back in 2016. 711 00:34:05,360 --> 00:34:07,160 Apple's outperformed everything since then. 712 00:34:07,400 --> 00:34:09,239 It's outperformed all of big tech. 713 00:34:09,239 --> 00:34:11,920 It's compounded faster than the market by multiples. 714 00:34:12,159 --> 00:34:16,800 He turned $30 billion into $100 billion in less than 7 years. 715 00:34:16,840 --> 00:34:19,400 This was an incredible investment by Buffett, and this 716 00:34:19,400 --> 00:34:21,679 came with the added limitations that he had to invest in 717 00:34:21,679 --> 00:34:24,639 something that was massive, so his pool of investments was even 718 00:34:24,639 --> 00:34:26,840 smaller. The reason that Berkshire hasn't 719 00:34:26,840 --> 00:34:29,159 outperformed the market for the past 10 years is because 720 00:34:29,159 --> 00:34:32,239 Berkshire is huge. So even when Warren Buffett is 721 00:34:32,239 --> 00:34:35,679 doing the same playbook, buying companies like Apple at extreme 722 00:34:35,679 --> 00:34:37,719 discounts with the same knowledge everybody else has 723 00:34:37,719 --> 00:34:41,199 about the company, but a better aptitude for investing, a better 724 00:34:41,199 --> 00:34:44,560 long term understanding, even though he did that, improved it 725 00:34:44,560 --> 00:34:47,840 once again with Apple, it just doesn't have the same impact. 726 00:34:48,080 --> 00:34:51,159 Berkshire's already too big. He already owns so many energy 727 00:34:51,159 --> 00:34:53,719 companies and railroad companies and so many different companies 728 00:34:54,040 --> 00:34:57,440 that the new investments and the good ideas can't lift the weight 729 00:34:57,440 --> 00:35:00,160 of this massive company. The reason that he's not 730 00:35:00,160 --> 00:35:03,160 outperforming today is because Berkshire is too huge. 731 00:35:03,480 --> 00:35:06,240 It's a problem that Warren Buffett created by being too 732 00:35:06,240 --> 00:35:08,960 good at investing. And that explains the difference 733 00:35:08,960 --> 00:35:12,640 in performance pre 2000. Then post 2000, almost every 734 00:35:12,640 --> 00:35:15,320 investment that moved the needle for Berkshire were ones that he 735 00:35:15,320 --> 00:35:18,640 held for literal decades. Coca-Cola, Moody's Corporation, 736 00:35:18,640 --> 00:35:21,760 American Express, Bank of America, large companies 737 00:35:21,760 --> 00:35:25,000 publicly visible to any investor that Warren Buffett bought at 738 00:35:25,000 --> 00:35:29,480 discounts and held for decades. There's no inside information. 739 00:35:29,480 --> 00:35:31,640 It wasn't because he knew something about the upcoming 740 00:35:31,640 --> 00:35:33,920 quarter. It's because he bought companies 741 00:35:33,920 --> 00:35:36,040 at discounted prices and held them long term. 742 00:35:36,280 --> 00:35:37,440 Now this is what I don't understand. 743 00:35:37,440 --> 00:35:40,960 Chamoth, I don't get why you seem obsessed with discrediting 744 00:35:40,960 --> 00:35:43,200 Buffett. You're trying to do so here by 745 00:35:43,200 --> 00:35:46,000 suggesting that the only reason that he was a good investor 746 00:35:46,040 --> 00:35:49,400 above normal was because of information asymmetry, which 747 00:35:49,400 --> 00:35:51,160 again, is ridiculous on the surface. 748 00:35:51,160 --> 00:35:54,040 He held companies for decades. It's not from information 749 00:35:54,040 --> 00:35:56,200 asymmetry. The other thing that you've done 750 00:35:56,200 --> 00:36:00,880 before is you've compared your returns, your firm to Buffett's. 751 00:36:01,280 --> 00:36:04,680 You compared them at a year one against year one, like you're 752 00:36:04,680 --> 00:36:07,680 going to outperform Buffett. But once the SPAC bubble 753 00:36:07,680 --> 00:36:10,880 collapsed in 2021, that comparison quickly vanished. 754 00:36:11,360 --> 00:36:12,560 No more. You didn't want to show 755 00:36:12,560 --> 00:36:15,400 investors how you compared against Buffett because he 756 00:36:15,400 --> 00:36:18,160 outperformed you, because he's a better investor. 757 00:36:18,760 --> 00:36:20,840 And that's not an insult. He's a better investor than me 758 00:36:20,840 --> 00:36:23,560 or anyone else here, but he's a better investor than you as 759 00:36:23,560 --> 00:36:26,080 well. Your information that you shared 760 00:36:26,080 --> 00:36:29,800 with investors was that Virgin Galactic was a great investment. 761 00:36:30,320 --> 00:36:33,200 It's down 95%. You shared the Open Door was a 762 00:36:33,200 --> 00:36:36,000 great investment. It's down 70% all time You 763 00:36:36,000 --> 00:36:38,400 pumped Clover stock, another one down 90%. 764 00:36:38,400 --> 00:36:40,640 Then Achillea, another one that's down huge. 765 00:36:41,080 --> 00:36:43,360 Pro Kidney, another one that's down 80%. 766 00:36:43,360 --> 00:36:46,200 Sofi is one of your only SPACS that's in the green and it's 767 00:36:46,200 --> 00:36:48,400 underperformed the market overall. 768 00:36:48,400 --> 00:36:50,640 The information that you've provided investors, that you've 769 00:36:50,640 --> 00:36:53,520 said that you have the inside tract that you understand is a 770 00:36:53,520 --> 00:36:56,920 great company, they have been crushed over the past five 771 00:36:56,920 --> 00:36:58,720 years. Investors have been continually 772 00:36:58,720 --> 00:37:01,560 burned following your advice and instead of just admitting that 773 00:37:01,560 --> 00:37:04,520 Buffett is a better investor, an honest investor, one that had a 774 00:37:04,520 --> 00:37:08,200 very transparent and forthcoming career, one that allowed other 775 00:37:08,200 --> 00:37:10,800 retail investors to join alongside the success of 776 00:37:10,800 --> 00:37:14,000 Berkshire, to reap in the same rewards as Buffett, to have the 777 00:37:14,000 --> 00:37:17,200 exact same incentive. You try to incorrectly discredit 778 00:37:17,200 --> 00:37:19,880 him, play his success. And that is the reason that 779 00:37:19,880 --> 00:37:22,080 today you are the fail of the week that's going to be for this 780 00:37:22,080 --> 00:37:23,800 episode. Hope you enjoyed seeing the next 781 00:37:23,800 --> 00:37:24,040 one.