AI Powered Edge: Your 2025 Investment Playbook - December 2024 Training

Welcome. Welcome from all over the world and the United States. We are very happy to be with you. This is David Trainer and Kyle Guskey. And today we're going to be talking about how you get your AI-powered edge to help with your 2025 investment playbook. I'm going to go over the secrets behind how new constructs has outperformed the S&P 500 by 35% from 2021 through 3Q24 using our AI-driven fundamental analysis. As always, disclosures and disclaimers. We are not investment advisors. This is not investment advice. We do not intend to give any investment advice. We are not investment advisors. Please consult someone else for that. We are providers of information. We are publishers of information. for the purpose of making more informed decisions, but we are in no way giving out any advice here. So as I mentioned at the top, I want to hear from you guys in the chat. What city are you from? We've got— already mentioned some folks from New Zealand, the UK, Portugal, Honolulu. Love hearing about that. What kind of investor are you? Are you retail? Are you advisor? Are you a hedge fund manager? Let us know. And then importantly, let me know what stock picker— everybody gets to choose one. What stock ticker you want me to analyze at the end of the show. Put that in the chat and we will count up the most popular and we'll hit at least 2 or 3 of those at the end. Here's the agenda today. I want to talk about the current state of the market and then how best— how to best prepare yourself for 2025. I'm going to go over how the media and Wall Street manipulate numbers to trick you into buying the wrong stocks. I'm going to show how to perform real due diligence and find the best stocks and avoid the most dangerous stocks in today's market. And as a bonus, again, I'm going to go over 3 stocks based on popular demand. So get your ticker requests in the chat. Once again, I'm David Trainer. I'm the founder and CEO of New Constructs. I've been doing this, this kind of work for almost 30 years. I got my start as an executive compensation consultant, and I was hooked when I was told my job was going to be going to boards of directors and telling them, whatever you do, don't pay executives based on accounting earnings because you can grow accounting earnings while running the business into the ground. And ever since then, I've wanted to understand the truth about earnings. And that goes far beyond what you see on an income statement or what you read in an analyst report. And one of the things I learned while on Wall Street is that this work can no longer be done manually. You need technology to do it right. And, and that's a big part of what New Constructs has done. That is the new construct. It is a technology framework, an AI machine learning, if you will, that helps us go through filings and get more details and more information on companies than anybody else in the world. So let's get to it as we head toward the end of 2024. The markets are grappling with significant uncertainty. A new president is about to come into office, which means there will be new opportunities for our markets. There's the potential of new laws and tariffs that will come into play for 2025 and beyond. More importantly, we're also looking at geopolitical potential— geopolitical tensions kind of higher than we've ever seen. These things have been simmering along for a while, and global conflicts could be revving up. And with market volatility accelerating as investors brace for 2025, we believe that you need precise tools to navigate these unpredictable conditions. The old tools don't work as well anymore. Time is here for new tools so that you can capitalize on opportunities and avoid costly mistakes. Look, the markets are always evolving. The tools you use need to always evolve. And today I want to deliver you the playbook to thrive in 2025 and beyond. Because no matter what happens in the economy or in the markets over the next year, I'm proud to say we have the perfect database to read the field and thrive as investors, no matter the external circumstances in the markets or the economy. And if you're new here and wondering why you should listen to our upcoming playbook, to navigate the 2025 market, you should know that our stock picking has beaten 16,000 buy-side professionals to claim the number 1 all-time ranking according to SumZero, a buy-side only competition. Buy-side only competition means you don't have a bunch of sell-side analysts. By the way, they don't do well anyway. Wall Street analysts don't do well anyway. But what you don't have is a bunch of penny stock picking non-professionals, I would say, who get lucky every now and then and get a crazy number. No, these are people who pick stocks for a living. Picking real stocks, not over-the-counter penny stocks that you, you know, you just hope and pray for. This is a real competition based on really intelligent professional investors. On top of that, our work has been studied and validated by prestigious institutions such as the MIT Sloan School of Business, the Harvard Business School, Ernst Young, and the Journal of Financial Economics. These folks have published papers Proving the superiority of our data, our stock picking, and our models. And we've also been amongst the first to recommend many of today's most valuable stocks, including Microsoft at $42 a share, Apple at $1,950 a share, Eli Lilly at $36 a share, and even Nvidia at $0.57 per share. And we've also been able to recommend many lesser-known hidden gem winners such as Williams-Sonoma, Jabil, Sprouts Farmers Market. And as we close out 2024, we also noticed an increasingly overvalued stock market. Bond yields have surpassed earnings yields. Whenever Treasury yields are greater than earnings yields, Treasury bonds are perceived as cheaper and lower risk. It's rare when this happens, and it usually signals a rotation out of stocks into bonds. It makes sense, right? Why take the risk in equities when the yield, the cash flow yield, or the earnings yield is below what you get in effectively a risk-free bond? And we don't need to look at bond yields to see that the market is overvalued, right? The S&P is on course for 20% plus performance in 2 consecutive years. This has happened just 4 times in the past 150 years. S&P 500 earnings estimates for 2025 have rolled over and declined over the last few weeks, despite the fact that the market has been skyrocketing up. At the same time, the S&P 500 continued to rise. We're not the only ones talking about this. The S&P 500 firms, the S&P 500 make up nearly half of the world's total market cap. Right? We didn't see anything like that till back in the— since back in the tech bubble, and it's even more now. Yet while the markets are hitting all-time highs seemingly on a weekly basis, it's important to remember a key quote From the Oracle of Omaha. Warren Buffett once said, be fearful when others are greedy, and greedy only when others are fearful. We live this out every day at New Constructs. While others are pouring money into the Magnificent 7 stocks, Warren has a $325 billion cash hoard. The Oracle of Omaha doesn't claim to be an expert at market timing, but he knows when stocks are expensive. Not only that, we've also noticed insider trading hitting a record high in over 2 decades. A record number of US executives are selling shares in their companies while retail investors are buying more than ever. That's a bad trade-off. Corporate insiders from Goldman Sachs to Tesla and even Donald Trump's own media group are cashing in on the stock market surge that has followed Trump's election victory. Now, despite the uncertain and overvalued market, and despite the bond yields currently being higher than equity yields, you should not give up and settle for bonds. This is not a scare story. We're just pointing out that markets are more complex. It's the easy money's been taken, right? These trades are crowded. It's time to get something more sophisticated. Because our research suggests that there are still plenty of stock opportunities in the market with massive upside potential, and these gains can happen quickly in the next 3 to 6 months, even in this market, such as getting added to the, the most attractive stock list in our rating system is a very good thing. As you guys have been listening the last few months, we've been going through our database and identifying trends and backtesting ideas to see places in our data that provide really super strong performance, even beyond what our ratings do, which again, proven to outperform. And so, but we've got so much data, we've been figuring out more things. And one of the things we found recently is that getting added to the Most Attractive Stocks list can be a really good thing for stocks. For example, LifeVantage added to the Most Attractive Stocks model portfolio in July 2024. It was up nearly 40% over the next month. Allison Transmission added to the models, added to the attractive, most attractive stocks model portfolio in February 2024, up 24% over the next month. What's that annualized? Right. That's like almost 260%, over 250% annualized. Crocs added to the most attractive stocks model portfolio in May 2024. It was up over 22% within the next month, over the next month. So finding good picks in a difficult market is not easy. This is the point here, right? Wall Street's telling you the same stuff over and over. Other research firms telling you the same things over and over. At New Constructs, we've got technology to keep up with the evolving trends in accounting and valuation to make sure that we're picking the best and identifying the worst in a way that no one else can. Another trend that we've noticed that's troubling, right, that speaks to how difficult this market is, is that the number of stocks rated attractive or very attractive has been declining a lot by 29% in the last year. The number of good stocks are going way down. They're going way down. Not surprising, right? As money and liquidity keep flowing in and stocks just keep going up, up, up, the number of good stocks is going away because everybody's looking at the same stuff. And they're crowding in to a lot of the good stocks. But it is still entirely possible if you have the right research to find good stocks, because the truth is you're being misguided by Wall Street and the media. How do I know this? I saw it firsthand when I was working on Wall Street going back almost 30 years. I was meeting with the co-heads of the technology research team. At Credit Suisse. These are the folks that ran the equity research technology group. They came over in a big deal when Credit Suisse bought Frank Quattrone's technology investment banking franchise. And one of the most unsettling practices of my entire Wall Street experience was when I was meeting with these guys and they told me that they actually had 2 sets of earnings estimates. that they used basically to manipulate markets and investors. This was such a bad story that when I went back and told my boss about it, he said, stop talking, David. Go see the head of the department because I don't want to know. Because this was potentially, if not unethical, illegal. Let me get into the details of exactly what happened. These guys told me that they had 2 sets of numbers that they used for stock ratings. The ones they gave to institutional clients And they use for their internal models, and then the ones they display to the public. The background is I was trying to get them to use my Value Dynamics Framework model, which those of you guys have heard. I ran a specialty group inside of Credit Suisse's equity research department that was showing them how to use a better model for earnings that took into account footnotes and our reverse discounted cash flow model. And before the technology team joined Credit Suisse, I had nearly all the analysts around the world using this model. So I went to the tech guys to get them to use it. I was meeting with the head of the departments. And at first, they gave me all the normal excuses as to why they could not use my model, which I refuted politely. I'd been getting these excuses for months from all the other analysts. And quite candidly, they weren't very good. So finally, when I really boxed them in, they gave me the real reason they could not use my model. They literally told me, hey, David, if we use your model, then people will realize our estimates are way too low and the stock will look too expensive. And I said, well, what are you talking about? Well, then why would you have a buy rating on companies that you think will have such low earnings? And then they came back to me and said, oh, come on, you know how it works, David. Stocks go up when they beat the number. So for the stocks we like, we publish extra low estimates. So they can more easily beat the number. Makes sense. So my buy-rated stocks, I purposely have low earnings estimates out there so it's easier for them to beat the number. I responded with, so do you publish extra high earning estimates for the stocks you do not have a buy rating so it's harder for them to beat the number? Yes, of course. That's how it works. And then I ask, well, then how do you come up with target prices for your buy-rated stocks if you've got such low earnings numbers? And that's when they said they have a different— they have 2 sets of numbers. Oh, no, no, David, we have a different set of estimates that we use for target prices and talking with our institutional clients. I responded and said, so you want to keep the higher estimates that you use to value the stock a secret while using the lower estimates to help the stock go up by keeping the consensus estimates lower, correct? Technology research at Credit Suisse then told me yes, correct. True story, and I didn't really know what to say. I admit I was like 24, 25 years old, and that's when I went back and went to my mentor and said, "Oh my God! I can't believe what I just heard." And I started to relate it to him. He said, "Stop, stop, stop! Go tell the big boss," because my that guy did not want to have anything to do with that liability. And and that's when I kind of got the hint. That maybe I just shouldn't talk about this too much. And then everything happened with the tech bubble. As you know, Credit Suisse was the worst of all tech bubble offenders for the Spitzer settlement and the Global Research settlement that happened because these analysts were out there writing reports to the public saying everyone should buy this IPO while sending private messages to their friends saying, I can't believe anybody is stupid enough to invest in this piece of blank. So, but that for me was when I saw firsthand Wall Street's earnings manipulations. Do I think things have gotten better on Wall Street since then? No, I think they've gotten worse. I have lots of friends on Wall Street. I was on Wall Street for longer, much longer after that. No, things have gotten worse, not better. So just to reiterate here, they had 2 sets of numbers they used for stock ratings, the ones they gave to institutional clients and used internally. And the ones they displayed to the public. And the reason was simply because, well, that's how Wall Street works. And the sad truth is, 95% of stocks covered by Wall Street are usually listed as buy or hold. That's because their paychecks depend on you buying stocks. It's how they make money. They're out there to sell. That's why they call it the sell side. Those of you that have been around the business for a while, you know, the sell side is Wall Street. The buy side is investors, and the sell side is in the business of selling stock to other people. That's why they want to have things have good ratings. Now, while Wall Street— while Wall Street wants you to buy or hold 95% of stocks, as seen in the previous chart, less than 15% of our stocks have an attractive rating or better. We're the opposite. Here's some examples of how our stock market rate— our stock ratings compare to Morningstar ratings. Here, as you can see, Morningstar ratings, they are all top rating. We had meaningfully different ratings for all but just a couple. This is not unusual. Morningstar, I would consider to be more a Wall Street firm than an independent firm because they get paid by their clients as well. Plus, we have found specific story— I'm sorry, specific stock examples in recent history that were rated as buys and then compare them to our own rating system. So we got Morningstar in aggregate, but then here are a bunch of individual examples. So according to Wall Street, New Fortress Energy, ticker NFE, was a buy or hold this year. According to New Constructs, NFE was unattractive or neutral. The result? NFE is now down 65% year to date. Another example, Wolfspeed was a buy or hold this year. New Constructs, it was unattractive throughout the entire year. It is now down 79% year to date. Keep in mind, these stocks are down big in a very, very strongly up market. According to Wall Street, Moderna was a buy or hold this year, but in New Constructs, it was rated unattractive and very unattractive throughout the entire year. Guess what? That stock is now down 55% year to date. So maybe you want to know, especially those of you new that are new with us today, why is our research different? I can put it in one word: diligence. We do the hard work to get you the truth. That hard work is analyzing thousands of pages of SEC filings. In those pages, we uncover critical data that is often legally Buried in the footnotes or the notes to the financial statements. This is all the data in a 200-plus page filing that you see after the income statement, balance sheet, and cash flow statement. And if those— for those of you that have not seen the movie The Big Short, I have another excellent case study for you here. I'm not going to play it right now. I am going to ask Kyle to put the link to this. YouTube clip into the chat so you guys can see it. But this is an amazing scene where these guys go in and they're talking to a senior person at S&P, Standard Poor's. And one of my great buddies and investors pointed out to me, haha, she's got— she's blind. So she's got these funny things in her eyes, which is, I think, not unintentional. But in the end, when they ask her how her models can have positive AAA or, or, or high ratings on all these known to be really bad companies. They press her on that. She goes, oh, she goes, guys, don't you know everyone else is doing it? If we don't give them the good ratings, then everyone else is going to just give them a good rating and they'll go right down the street and give someone else the business. So in order to keep the business, we got to do, do the same thing that everyone else does. So anyway, that's a great, great clip. If you haven't seen it, You're gonna love it. I recommend it. There you go. There you see the blinders on, but I don't think everyone can hear that, so I'm gonna skip it anyway. But it's a great scene, and it was actually pointed out to me by one of New Constructs investors in our company about just how perfect it would be for a presentation like this. So I hope you enjoy that. Another thing that's different about New Constructs is that our goal is not to chase after investment banking deals. Nor are we driven to inflate any company's earnings. We have none of these incentives in place. Our commitment is to deliver the unvarnished truth, to earn your trust through clear and honest reporting in our ratings. Everything about our research is 100% transparent, and, and that's why so many clients love what it is we do. And we can prove that we meticulously analyze every detail, right down to the crucial data, legally hidden in the footnotes. Transparency is our ethos. We provide comprehensive insights into how we calculate every metric in our models. So you can trust us to reveal the full story of a stock 100% of the time, as much as possible, based on legally available and publicly available data. You may also be wondering, sure, your, your stock ratings at New Constructs are different from Wall Street, but how do we know they are better? Well, how about being ranked number 1 by SumZero every month for 43 straight months, oftentimes in multiple categories? Again, SumZero, 16,000 buy-side professionals. That's some pretty good evidence. Here's some other evidence. Top-tier institutions prove the superiority of our ratings at every layer. That top report is a study published by Harvard Business School and MIT Sloan professors Proves that our data is superior. Proves that the market is missing— the entire stock market is missing key footnotes data that has novel alpha, idiosyncratic alpha that nothing else out there has. That's a pretty good start for building models. Then Ernst Young, in the middle of the page, they wrote a paper proving that our models are better because we take into account better data. And then Harvard Business School published another paper showing that our stock ratings outperform human ratings. So the key point of all this is that there's no way that these highly prestigious institutions are going to go to the trouble, do the work to publish a paper that they can't be 100% sure is true. And beyond that, that they can't 100% be sure they can prove to their peers is true, because when you're publishing at these kinds of institutions, You can't just publish a paper like, oh, I put a great paper out there, you got to take a look at it, like people do with the news. No, these people's papers get vetted and reviewed by peers, administrators, and if they get it wrong, it can cost them their job, their whole career. So that's why we feature these kinds of papers. I'm not showing you a bunch of news items. I've got probably 2,000 features in the news. We don't really talk about those because, you know, News is not always real. These kinds of papers are real. And they're real because the people that wrote them could base them on real data as well. So here's what we're getting at with respect to the— to our ability to get to the truth. When you look at the true economic earnings and valuations of a business, you get the facts behind any stock. And that's something these papers show you we do better than no one else. Benefit to you is that it helps you make a better investment decision for you or your clients and can help you uncover hidden opportunities in the stock market, such as Provident Financial Holdings added to the Most Attractive Stocks model portfolio in January 2024, up 18% over the next month. Crocs added to the Most Attractive Stocks model portfolio in March 2024, That was up 21% over the next month. Dorian added to the Most Attractive Stocks model portfolio in May 2024. It was up 18% over the next month. What is that? That's almost like 200% annualized. Plus, shifts in our rating system to unattractive and unattractive warn investors about stocks about to fall. So we're good at identifying the market for great stocks as well as the market for the worst stocks. SF added to the Most Dangerous Stocks model portfolio in November 2024. It was down 30% over the next month. National CineMedia added to the Most Dangerous Stocks model portfolio in April 2024. It declined 24% over the next month. Adtran Holdings added to the Most Dangerous Stocks model portfolio in April '24, and it declined 18%. Over the next month. We believe if you want to survive and thrive in 2025's market, you need trust. You need modern tools. You need independent, non-conflicted research. Why would you trust anyone who's conflicted? Wall Street and the media. You don't have to. Our independent research has a technology edge. It's called RoboAnalyst technology. How do we do it? We use the first, best, and only AI for investing. I say it's the only AI, real AI, because it's based on real data, not pretense that we have some magical formula doing all the work. Our roboanalyst gives us the ability to get the data, build the models, and reveal the truth. Here's how it's visualized. Here's the rating system. You can see on the far left, you've got the overall risk-reward rating system. That's going to be a function of quality of earnings and valuation. And these criteria are what drive that overall rating. This AI has the ability to comb through thousands of government filings with precision, analyzing every line and footnote. Executives from Goldman Sachs, Morgan Stanley, Merrill Lynch, UBS, you name it. Have all you— now let me do a deep dive on the 5 metrics. 5 metrics our rating system includes: economic earnings versus reported earnings. That's how the true earnings compare to accounting earnings. Then we look at return on invested capital. We want to know which companies are making the most money with the capital that investors have given them. The same way you manage— you measure a money manager. We need to look at companies the same way. Wall Street never talks about the balance sheet. Never. Almost never. Why? Because they're in the business of making balance sheets bigger. They want companies to sell more stock, sell more debt, because they make money on that. They don't want people thinking about balance sheets because they want every company's balance sheet to be huge because that keeps Wall Street in business. On the other hand, return on invested capital tells you the companies that are making the most use of the balance sheet. The more money they can make with the less capital, the better. Now, flipping over to the valuation metrics. We have our free cash flow yield. We modify that based on research over the years to look at a 2-year average because CapEx can be very volatile. So we want to look at at least a 2-year average free cash flow yield. And then we exclude cash from the balance sheet. We're not worried about changes in cash really so much, changes in financing. We want to understand changes in the operations of the business. So think about it as a smoothed-out operational free cash flow. And then we've got the price to economic book value. That's the price to the no-growth value of the business. It's really one of my favorite ratios, especially for finding cheap stocks, because I love finding stocks where the price is below the economic book value, where the price is below the no-growth value. So effectively, the stock price is implying a permanent decline in profits. We love it when we find super strong cash flows. and rising cash flows with a stock price that implies a permanent profit decline. And then last but certainly not least, probably the most sophisticated element of any rating system in the entire world, that is our market implied growth appreciation period metric. This measures the number of years of profit growth baked into the current stock price. I say this is the most sophisticated metric because it is the only one that That is based on real reverse discounted cash flow analysis applied. People send me articles about people doing videos about value investing applied. One of our biggest clients signed up this summer because he took value investing applied at Columbia Business School. And you know what that client told me? He said, David, I spent a lot of money to learn all this stuff, but there was no way to do it. With new constructs, I can actually apply this. Now, the good news is you guys don't need to go to Wharton or Columbia. You can get the benefit of the highest level, most sophisticated concept of value investing applied with, with our system. And this is a great example of it. This market implied growth appreciation period, we put those concepts to work at a scale and with a level of precision that has never been seen by anyone in the world. Then we make it simple for you. That's the, that's the funny thing about Columbia Business School or Wharton or a lot of these schools, right? You know, and then we see this most importantly in undergrad, right? What do you think they really want to accomplish at, at, at the undergraduate level? They want to put people out in the world that can make a lot of money and never need to go back to school, or do they want you to have to come back for some more high-priced school like business school? Yeah. Right? And so the analogy here is that's not what we're about. We're about here at New Constructs. We make it simple. Our job is to synthesize all this huge amounts of data down to something simple for you. Green is good. Red means bad. Green means good. Red means bad. It's that simple. Attractive and better, green. Dangerous or worse, or unattractive or worse, bad. And all 5 metrics play a critical role in rating a stock. We are the only stock rating system with an official US patent behind us. And we've been out there in the media talking about how, what makes real AI. And we can get this to you. In fact, I think we've got a blog post, Kyle, if you don't mind maybe dropping that into the chat. This is a great interview I did on AI, really talking about how AI is not magic. How data matters more than the technology. No matter how good your technology, if you don't have good inputs, you're gonna have bad outputs. Think about it like, as, as one of my, my, my partners and advisors, great data expert Evan, Evan Schnibman likes to say, look, the technology's the engine, but the data's the fuel. So I don't care how great your Formula 1 car is. If you're, if you're putting dirty, you know, regular gasoline in it, it's not gonna run well. And that's the same is true for AI. It's all about the data. Now, to trust an AI, you need to be able to audit the data. You need to be able to see what's going into it. If they're not willing to show it to you, red flag. ChatGPT, these large language models based on the internet, they're not reliable. Why? Well, if you can audit the entire internet, then maybe you can trust it. But as far as I know, that would probably be impossible. And finally here, reliable AI must be based on a focused dataset. What I mean by that is a very specific and curated dataset, properly curated for a machine to use it. That means there's not an AI for everything. There's an AI that works for fundamental data and fundamental research. There's an AI that maybe works for a how to find the best convenience store or how to give me a map to a particular location or how to find the best restaurant. Or how to, how to diagnose the difference between a virus or a cold. Things where we can have specific and directed datasets that we can handle, that humans can handle at this point to make sure is right. Potentially an AI can put those things together, but until we get it right at the most granular level, you can't trust the output. I think that makes a lot of intuitive sense. Feel free to let— put any questions in there about that if you disagree, but I think that makes a lot of intuitive sense. So our Robo Analyst technology leverages AI, number one, to do research that most people don't do. That's how you get an edge in this world. You do things that other people don't do and to also do the proper diligence on your behalf. As Tom Brady says, to win in this world, you have to be do— you have to be willing to do things other people will not do. That's why we created a technology. And by the way, for many years, I did a lot of things people, other people were not willing to do in terms of just the grinding out how hard it is to teach a machine to read things like a, like a 10-K. And we've had an amazing team of people working on that problem for 20 years. Unlike what you might hear most of the press or for some talking heads, teaching machines to do things is really hard. Machines do not have any of the natural contextual analysis that humans have. It's a difficult thing to do. And we chose to focus and lean into that because we wanted to do something that had never been done before. In particular, what it is we do is we analyze the footnotes in a way that no one else has, and Harvard Business School proves that no one else is doing it in their paper that shows the market is missing footnotes. Most investors and professionals don't have the time to read 200-plus page 10-Ks and 10-Qs every single quarter to do their proper diligence. They don't do it. You know what they tell me? Oh, as long as everyone else is using the same bad data, I'm okay with bad data. Happens all the time. Plus, it would be really expensive to do this work. It would cost these firms millions of dollars per quarter to get the proper data and calculation. That's why they don't do it. It's simply easier for firms to blast out buy, buy, buy, right? This is for a reason. They want you to think that their red is good and their green is bad, or they just want you to believe— they just want you to think it's easy. Because guess what? If you never look behind the curtain, then you're forever tied to them and addicted to them, reliant on them to continue to feed you these signals. And that's what they want. They want you to be addicted to their dope. Now, earlier we hinted at a playbook to navigate 2025's overvalued and uncertain market. And with your permission, I'd like to get into how you can get that exact playbook today. Imagine this: you're sitting at your desk, sipping your morning coffee. In less time than it takes to watch a rerun of your favorite TV show, you've adjusted your portfolio to weather any market storm. You've identified the— you've identified the hidden gems poised for explosive growth in the current market. And you've sidestepped the landmines that could blow up your portfolio. And the best part, you don't need a PhD in finance or supercomputer in your basement to make it work. You don't need to go to Columbia's Applied Value Investing School. You don't need to go to Wharton's Applied Value Investing School. I would say we've got better educational materials on our site if you want to learn all that stuff, or you can take advantage of that stuff being applied. Because guess what? Even if you go to that school, You need to have— find some way to do it, just as, as the client that told me who graduated from Columbia's version of that school. Why? Because our AI technology will do all the heavy lifting for you. Think about it like us taking all the concepts from Warren Buffett, from Michael Mauboussin, from Charlie Munger, from Al Rappaport, from Bennett Stewart, and building that into an AI. A very focused AI. So what is the playbook I've been hinting at to help you navigate 2025 and beyond? Here it is, our Most Attractive Stocks Model Portfolio. The comprehensive nature of our research entails countless pages of data and documentation, including information from balance sheets, income statements, cash flow statements, footnotes, dozens of other disclosures. Producing and maintaining this level of detailed research would set you back millions of dollars each quarter. And with our Most Attractive Stocks, along with the rest of our model portfolios, you get the stocks delivered to you on a silver platter every month. To me, this is even better than going to Wharton Business School or Columbia Business School. Because this requires a whole lot less work and gives you more diligence in what you get even out coming out of that. Now let's get into more details on how this all works. Stocks make our most attractive stocks list because they have, one, high-quality earnings based on return on invested capital, returns on invested capital that are rising, and economic earnings and cash flows that are positive. And 2, they have cheap valuations based on free cash flow yields that are positive. Price-to-economic book value ratios that are relatively low, and growth appreciation periods that are relatively low. 3 stocks, 3 stocks from our November portfolio were up 18%, 13%, and 12%, all over just 1 month. The large-cap most attractive stocks outperformed the S&P 500 by 35% from 2021 Through 3Q24. The most attractive stocks are up 530% since inception versus the S&P 500 up 326%. There you can see the chart. With this portfolio, we're constantly refreshing and renewing to find the best stocks in the market. I didn't mention before, but we cover over 3,000 stocks at New Constructs. That's like 50% of the global market cap. I'm sorry, 70% of the global market cap. It's like 98%, 99% of the US market cap, maybe even higher. The point is we're covering all the most attractively— most actively traded stocks to identify and screen for the best and the worst. And in fact, over the past month, we've added 13 new attractive stocks into the Most Attractive Stocks Model portfolio. Now, avoiding the wrong investments is just as crucial as picking the right ones. As a great friend of mine once said, used to quote Ben Hogan, being good at golf is just as much about how well you hit your bad shots as it is about how well you hit your good shots. That's where the second component of this playbook comes in. Our most dangerous stocks. Stocks make our most dangerous list because they have, one, poor quality earnings. Based on misleading earnings. Okay, they got accounting earnings going up, economic earnings going down. I don't like that. Rising and positive GAAP earnings while economic earnings are negative and falling— that's a bad thing. They also have low return on invested capital, and they also have, on top of that, expensive valuation. So you're talking bad economics, expensive valuation. We think that's a ratio or a recipe for disaster. The free cash flow yields are low or negative. The price-to-economic book value ratios tend to be extremely high, and the growth appreciation periods tend to be really high as well. 3 stocks from our November Most Dangerous Stocks portfolio were down 30%, 16%, and 12%, all over just 1 month. The Most Dangerous Stocks model portfolio outperformed shorting the S&P 500 and Russell 2000 by 16% year to date through 3Q24. Look at this, down 74% since inception versus shorting the S&P 500 and Russell 2000, which was down 88%. So significant and long-term outperformance. Important question, what's the difference between GAAP and GAP? GAAP Stands for generally accepted accounting principles. GAP is growth appreciation period. I want to jump that in and answer a question right away. GAP is growth appreciation period. GAAP, 2 A's, generally accepted accounting principles. So back to the, back to the message here. Our model portfolios are trusted by advisors, RAs, Top hedge funds, including Merrill Lynch, Morgan Stanley, you name it, all the big firms. The top investors in the world have used these exact model portfolios to make investment decisions for years. New Consciousness ranked number 1 by SumZero every month for 43 straight months. There's a lot of new opportunity in this world. There's a lot of noise. We believe that you should have the best tools. And rather than do the opposite, as described in this Peter Lynch quote, selling your winners and holding your losers is like cutting the flowers and watering the seeds. These new most attractive stocks often uncover new market-beating opportunities in the stock market, as we noticed in the past year. Universal Insurance Holdings added to the Most Attractive Stocks model portfolio in August 2024. and increased 13% over the next month. Hanesbrand added to the Most Attractive Stocks model portfolio in September of this year, up 13% in just the next month. Chimera Investment Corp added in August of 2024, up 13%. Show me another firm that has papers written by Harvard Business School, Ernst Young, the Journal of Financial Economics, And MIT Sloan School of Business written about them. And I'll show you another firm that you can trust as much as New Constructs. And trust is at a real premium these days. We've noticed that trust in the most— in most US institutions has withered across all media platforms. Look at this great slide that Christian pulled out. Trust in most US institutions has withered. Look at this. Congress, big business, newspapers, the president. Everything. Why? Well, a lot of fake news doesn't help, but people are getting smarter. They're understanding that people are not always telling them what they should hear, but more about what they want them to hear to get them to do what they wanted to do. We've seen this happen and play out in a big way over the last few years. Gaslighting has been at unprecedented levels. The news is more fake than ever. Wall Street is more fake than ever. People are getting away with saying things more ridiculous than ever. And we think New Constructs is a bastion of truth and reliability in that darkness. At New Constructs, we believe in transparency and authenticity. We believe in truth. We only recommend stocks that we believe are truly valuable based on superior data. So it's not just about having good intentions. It's about applying that good intention to doing work that no one else does to give an edge, to then produce something that's proven superior. We're not talking about stocks that we are compensated to promote or rate as attractive for a paycheck. We didn't get paid by any of the companies we cover. We are not conflicted. Okay, uh, Kyle, what are our top choices here for stock picks for us to go through for everybody today? Yep, we had, uh, no repeats, so I put them in a random picker. We've got WSM. Oh yeah, this is a, uh, it's a goodie. This was, Kyle, this is, this was on our focus list for a long time, right? Yes, it was. We actually recently took it off because of valuation, as you can see here. It was such a good stock pick, it couldn't be on the focus list anymore because it was up some huge— I don't remember the numbers, but this was a super good pick for us. You can see it's just, uh, done extremely well. We called this stock I don't remember, Kyle, how low the price was, but it was much, much lower. I think I'm guessing double digits probably when we first noticed it. And yeah, so good company, bad stock at this point. So we liked it when it was green here and green here. Now, this is an example of a great company. It's doing really well. High quality of earnings, high return on invested capital. Right. But the valuation's gone up. The market has realized that it's a great company and that it was cheap. Now it's no longer cheap. This is what happens over time. Companies, people find out about it, they go in, they crowd in, they get in the trade, you know. And, and, you know, this is where it gets really crazy in meme stocks. And by the way, we think like Nvidia and Tesla and a lot of these Mag 7 stocks, they're almost like meme stocks now because they're just going up despite Being extremely expensive and really having no real fundamental connection with fundamentals. Okay. What's our last one, Kyle? AVGO, Broadcom. Yeah. Very popular these days. Surprised we didn't get more requests for this one. Yeah, this is the newest entry into the trillion-dollar market cap club, I believe. I think Hakan pointed that out for us. Yeah, I think I remember seeing this, this, this request I noticed came along early. I'm not surprised people are interested. Yeah, super expensive, folks. I mean, a 40.8 price-to-economic book value. If we had time, I would love to do a reverse DCF model on this one because I bet the expectations required for future cash flow are absurd. You can see stock prices up a ton. The economics of this business aren't as good. Like Nvidia, it's green here and red here. So I mean, I think this is what's happening. Like, as we run out of really good stocks to pile into, maybe we go into lesser, uh, stocks or worse stocks. Um, plenty of stocks on the Most Dangerous Stocks list that have been piled into as well. Um, but yes, that's the benefit of New Constructs with our sort of fundamental bearings. You can make sure you get the best of both worlds— great fundamentals, cheap valuation. And if you're looking to sell, bad fundamentals, expensive valuation. That's, to me, That's the golden ticket for getting smart about how to invest. So yeah, let's see here what the fundamentals here— yeah, fundamentals headed down, economic earnings headed down, return on invested capital heading down while the valuation's going up. That's not good. Look at this, as high as 28%, skyrocketing 8.7% in the most recent period. Margins dropping, invested capital turns, margins dropping in more than half. Uh, yeah, this does not look good. Free cash flow yield Free cash flow, $80 billion negative because they did a huge acquisition. So I'm guessing what's happening here, likely overpaid for that acquisition. When you look at $79 billion, that's a big, that's a big number. I mean, I'm guessing that, yeah, the invested capital probably went up a lot just on its own from that. Probably doubled invested capital. I don't know off the top of my head, but yeah, price-to-book value, you see the ratio. The economic book value is actually going down, stock price going way up. A big divergence from what you've seen in the past here. Yeah, the economic book value of the stock is around $6 a share now. It was up around $31, $33 a share, um, but still nowhere near $250. Okay, thanks so much for your time today. Thanks for being with me, and we look forward to having you as a customer. Thank you.