Decoding Q3 Earnings: The Guide to Finding Tomorrow's Winners Today - November 2024 Training

Today we're going to be decoding Q3 earnings, uh, and we're going to be giving you the investor's guide to finding tomorrow's winners today. Uh, doesn't do you much benefit to invest in stocks that everybody else knows about. The key is to getting information before the crowd. And with the election aftermath, we think there are critical investment moves that you can make in the next 2 quarters and beyond, and we're going to be focusing on that today. Our typical disclosures and disclaimers are here for everyone to see. Note, we are not investment advisors. We do not provide investment advice or investment recommendations. So I want to hear from you in the chat, right? Tell me who your favorite investor is. What city are you from? What kind of investor are you? So here's our agenda today. First, I'm going to show you how Wall Street and the media trick you by manipulating numbers. The goal for them is for you to buy stocks. They don't care if they're good or bad, they just need you to buy. That's how they make money. I'm also going to share how the secret to smart investing is with proprietary data that we're going to be delivering to you today from 3rd quarter earnings. We're going to show you how to perform real due diligence and find the best stocks, ETFs, and mutual funds in the market. We're going to do analysis on 2 of the current hottest sectors and actually show you how things changed in terms of sector ratings just in the last few weeks post-election. I'm going to do a free live case study demonstration on Tesla using our professional and institutional member tools. Nice to meet you all. Most of you already know me, but if you do not, my name is David Trainer. I'm the founder of New Constructs. I'm the author of Modern Tools for Valuation. And I've been doing this work for 25 years. I think there are a few folks out there who know accounting, finance, and technology better than we do here at New Constructs. I don't think anyone else knows those 3 together as well as we do. We work really, really hard to provide what we believe to be the best research in the world on the fundamentals of US stocks. Now, we're in a special time of year for New Constructs. We're coming out of earnings season for the 3rd quarter, and we've gone through over 2,500 filings, or about 5 500,000 pages at minimum of information. This means we've updated our stock ratings based on fresh data and analysis. The goal here is to give you a sharp advantage to navigate today's volatile and unpredictable, unpredictable market post-election. We all know the election has a huge impact on the market, and we're able to identify stocks that have opportunity or are too expensive. During 2024, so far this year, there have been on average 843 stock rating changes during each earnings season. Or in other words, every time we go through the 200 to 2,000 to 3,000 filings every quarter after earnings season, we're seeing on average 843 stock ratings changes. 17 typically new attractive or very attractive stocks were added to the most attractive Stocks model portfolio. That's just for this month. 15 new unattractive or very unattractive stocks were added to the Most Dangerous Stocks model portfolio. 5 new attractive or very attractive stocks were added to the Executive Compensation Aligned with ROIC model portfolio. 7 new attractive or very attractive stocks were added this time last year to the Safest Dividend Yields model portfolio. We're gonna expect similar movement when we update this portfolio later this month. Similar situation with the dividend growth stocks model portfolio. 7 new stocks were added last year. Now, the cool thing to remember is that our rating system scans the entire market far beyond the Magnificent 7. We cover over 3,300 stocks. So when we are talking about finding hidden gems or potential blowups, We know what we're talking about because we're looking at the very best and the very worst. This gives us the ability to also spot hidden gem stocks that Wall Street misses. Wall Street doesn't cover anywhere nearly as many stocks as we do. We have the perfect database to read the field and understand how both earnings season and elections are affecting stocks. Now, if you're new here and wondering why you should listen to our new stock releases and rating changes, during this pivotal time of year, you should know that our stock picking has beaten 16,000 buy-side professionals consistently every month for the last 3+ years to claim the number one all-time ranking for stock picking by SumZero. Again, that's a buy-side only competition. We're not talking about Wall Street analysts. That's a very low bar for picking stocks, in case you didn't know. We're talking about other professional investors. And our ratings changes are very pivotal, pivotal with respect to our stock picking. Our stock picking is mostly based, almost entirely based on ratings. Not always, but a lot of the time. Sometimes we think, see things that are even more important than ratings based on our data. But ratings changes are huge and have been proven to be very predictive of future stock price performance. Now, when they— and ratings change, We see even bigger impacts, and we get a lot of ratings changes that helps us identify winners and losers post-earnings season. For example, let's be specific. During the first 3 filing seasons in 2024, we saw a huge percentage here, you see, of stocks who saw their ratings changes go up by 3 levels outperform significantly. So let me break down this chart a little bit here. At the top here, you've got stocks whose ratings improved by 3 levels. So they would go from unattractive all the way to very attractive, right? If they improved 3 levels, the return we saw in the first 28 days after the ratings change was close to 12%. So you get an immediate pop if they improve 2 levels. Went from neutral to very attractive, you're seeing within 28 days a 4% pop. They improve just 1, you get a little bit of a pop. If they decline by 3, you're seeing the stocks go down negative or 6% in a short amount of time, right? So, a big disconnect. If the stock ratings go up by 2 to 3 levels, you're seeing a big movement in the stock price. On the other hand, if they go down by 3 levels, You're seeing a decline. And that decline, I think, is, is even more important considering that we've seen the stock market go up more times than not almost every day this year. So the fact that if a stock rating in our system declines by 3 levels, that's a big deal. Now, these ratings changes importantly are after we get the filings. And update our models and see new financial data. So takeaway here, if the rating goes up by a bunch, you're going to see outperformance in the first 28 days. If it goes down by a bunch, you're going to see underperformance. Now, we're the only research firm out there whose research has been studied and validated by prestigious institutions such as MIT Sloan School of Management, Harvard Business School, Ernst Young, the Journal of Financial Economics. Name another research firm out there in the chat. Anybody? If you guys know any, any other research firm or any other investing firm whose work has been praised by institutions as prestigious as these, let us know, because we believe we're the only one. And we're the only one because our research is amongst the best in the marketplace. And we also have some of the best stock picks that you've ever seen. For example, some of the most valuable stocks in today's market. We recommended Apple at $1,950 a share. We recommended Eli Lilly at $36 a share, Microsoft at $42, and Nvidia at $0.57 a share. That's over 100 times gain since we first recommended it. And by the way, When we were talking about Nvidia back in the day, nobody else was. Our ratings give us early indications. We've also been able to recommend many lesser-known hidden gem winners such as Williams-Sonoma. It's up 494% over 8+ years versus the S&P up just 162%. Jabil up 266%. In the last few years compared to the S&P at just 55%. Sprouts Farmers Market up 428% in the last 4 years compared to the S&P just 59%. Our rating system has allowed us to pinpoint excellent long and short picks, and our results over the years speak for themselves. From January 2021 through the third quarter of 2024, our focus list long model portfolio has outperformed the S&P 500. By 19%, the focus list stocks short model portfolio has outperformed shorting the S&P 500 by 44% from 2021 through the third quarter of 2024. Now, before we get into the training, I have to be transparent with you. If you're looking for the next meme stock or the next hype stock. Don't talk to us. We're not here to do— we're not here to talk about hype. We're not here to talk about crypto. We're not here to talk about options. We're not your firm for that. On the other hand, if you want to be an investor and not just a speculator, if you want to build wealth and retire comfortably, comfortably, if you are a financial advisor who wants to engage in proper due diligence to be a more reliable steward of your client's money, If you're looking for steady income and growth from stocks that have great fundamentals, or if you're looking for a plan of action as we head out of the election, you've come to the right place. Our investing philosophy at New Constructs is not what you're going to see all over the media, right? I love this. This is a great cartoon brought in by Christian, right? If you're here to get rich quick, you know, you can get in that line. If you're interested in slower, steadier Smarter investing—that's how we can help. Now we believe you need new constructs now, new constructs research now more than ever for several reasons. This market has an extreme greed sentiment of you know, and this should not this should not surprise anybody. Anyone familiar here with the CAPE ratio or the Shiller PE? That's getting to dangerous levels. The S&P 500 valuation is starting to get in line with the 2000 dot com bubble peak. But most importantly, we want you to understand that it's important to pay attention to our research because you're being misled by Wall Street and the media. We see so much fake news these days that it's hard to know what is real. And the same is true of stock research. Wall Street's research is designed to make the analysts and investment banks money, not the readers, not you. Let me emphasize that Wall Street research is here to make Wall Street money, not help you make money. No one advertises these facts. The average investor has no access to transparent, accurate information on any unconflicted diligence. There's just no research out there in the public domain that is fair to investors, and the media is littered with analyst recommendations of buys and sells that are actually paid blogs or paid ads Subsidized by companies themselves. And Wall Street, in many ways, research, that's all subsidized by companies as well, because Wall Street makes money from investment banking deals, not from providing good research. That's why Wall Street information is conflicted and biased. Here's a great case study of what's going on. Supermicro Computer, one of the most popular stocks in the market for months. I don't know if you guys have seen the news, but it's down over 50% in the last few weeks. What happened? Well, part of what happened is our research flagged it back at the end of August. We suspended the stock and warned of the major risk and weak internal controls. This is in August of 2024. We saw that there were accounting issues. We made sure our clients knew. We suspended the rating. We made sure that it was clear that our stock rating on SMCI Was risky despite the very strong earnings. The company was not a good stock even without the accounting warning. The result? Supermicro Computer is down over 67% after its auditor resigned in the last couple of weeks. Turns out the AI company might have some fake accounting making earnings look better than reality. So SMCI, great example of a stock we were talking about over the last few months. It was a good company, bad stock, but then we had to suspend it. And effectively provide diligence that you're not getting anyplace else. So investors also face the issue of incomplete or biased research, aka relying on Wall Street stock ratings. So this is specific, guys, to the rating stuff. Now, Wall Street research, a lot of times, you know, the content, can't trust it. But so let's just talk about their ratings, right? What do they say their rating is? I will now discuss how our stock ratings compare to Wall Street's stock ratings. Here's the sad truth: 90%, 95% of stocks covered by Wall Street are listed as a buy or a hold. 95%, 95% of the stock market is what you should own. That's because, as I mentioned before, they make their money By you buying stocks. Their paychecks depend on you buying stocks. So while Wall Street's out there saying that 95% of stocks should be owned or bought, we say only 15%. Only 15% of the stocks we cover get an attractive or better rating, and actually only 4% get a very attractive rating. Now here's a quick sample of how our stock ratings compare to Morningstar stock ratings. Now, this is from a little while ago, but this was a report that we, we pulled off from another company that shared all this data. We're like, oh, wow, here's a bunch of Morningstar ratings. Well, Morningstar gave their best rating to all these stocks. Look how our ratings compared. 4 is our next to worst rating. 4 is unattractive. 3 is neutral. 2 is attractive. 1 is very attractive. We only matched with 2 out of around 15 stock ratings. Here for Morningstar. Not surprisingly, another Wall Street firm being much more positive than we are. Why? Because again, they're in the business of selling stock and playing into the market. Then we found specific stock examples in recent history that were rated as buys and compared them to our rating system. For example, EPAM Systems was a buy or hold this year for the majority of ratings from Wall Street. But for new constructs, EPAM was unattractive or neutral. The result? EPAM is now down 21%, 22% year to date, right? Who was right? They were bullish. We were bearish. Who was right? According to Wall Street, MongoDB was mostly a buy this year. Throughout the year for new constructs, unattractive. It's down now 24% year to date. Who was right? How about Wall Street? Teladoc Health, very popular. By the way, MongoDB, Teladoc, you want to know why they're popular? Let me tell you after we look at what happened with Teladoc. Buy ratings, hold ratings, unattractive rating from New Constructs. What happened? Stock's down 57% year to date. What do these stocks have in common? They lose a lot of money. What do stocks that lose a lot of money have in common? They need investment banking, investment bankers to raise money to keep them in business. So why is our research different? It's diligence. We've done the work. We analyze thousands of pages of SEC filings. Wall Street's not doing that. They're out there trying to figure out how to sell stock. Meanwhile, we're doing diligence. And when we do that diligence, we uncover critical data that's often legally buried in the footnotes. Please let me know if you've seen this case study on— from The Big Short. About how ratings actually go down and how investment, how investment rating agencies actually perform their ratings. If you guys have not seen this clip, please make sure you check out the slides when we post them in the community, our online community. But there's an admission during this, during this movie where the S&P analyst lady admits, she's like, oh, come on. You know, we have to give them a positive rating because if we don't, they're just going to go right down the street and get it from somebody else. So we do it, otherwise we don't get the business. That's how Wall Street works. So we're not trying to get investment banking business like S&P or Goldman Sachs. We're not incentivized to overstate a company's profitability. So you can trust us to be plainly honest with the truth. We don't have misaligned incentives. And New Constructs, it's about the truth 100% of the time, right down to the exact details from the footnotes where we get the most important data. We provide you those details. We provide all the details on how we calculate all the metrics in our ratings and our models at New Constructs. We're 100% auditable. We're 100% transparent. We want you to know how much work we're doing. So you may be wondering, sure, your stock ratings and new constructs are different from others, but how do we know they are better? Well, 42 straight months we've been ranked number 1 on SumZero for stock picking in one of a variety of categories. So stock picking track record is pretty impressive. And as I mentioned at the top, this is versus buy-side professionals, not a bunch of sell-side folks who we've just talked about whose ratings are terrible. Because they've got a different incentive. They're not really there to pick stocks. They're there to sell stock to make sure they can keep getting that investment banking business. Another reason you can trust us. We've got multiple papers written by prestigious institutions that prove our research is superior. This paper, Core Earnings, Core Earnings, New Data and Evidence. Harvard Business School and MIT Sloan professors got this paper published in a top-tier peer-reviewed journal. The Journal of Financial Economics, one of the top 3 peer-reviewed journals in the world. Ernst Young published a paper proving our models were better. Harvard Business School published another paper proving that our stock ratings were better than Wall Street ratings. Now, what you need to know is that when you look at the economic earnings of a business, you get the facts behind any stock and can make better investment decisions. That kind of research helps you uncover hidden opportunities in the stock market. For example, CIGA Technologies. When we upgraded that from unattractive to very attractive in March of this year, the stock was up 37%. Over the next month, the stock was up 37%. We get the 10-K, we crunch the numbers, it gets a big uprating, the stock goes up a lot. Another example, Cytosciences, upgraded from unattractive to very attractive in March. of this year after we parsed the 10-K. The stock was up 32% in the next month. Another example, Cohen and Company upgraded from neutral to very attractive in May of 2024 after we parsed its 10-Q. Over the next month, the stock was up 32%. Now, of course, shifts in our rating system to unattractive and very unattractive warn investors about stocks that are going to fall. For example, Skinexus downgraded from attractive to unattractive in August after we parsed the 10-Q. Over the next month, the stock was down 28%. Big 5 Sporting Goods was downgraded from neutral to unattractive on— in March of 2024. Over the next month, stock was down 27%. Not only does our stock rating system work on an individual stock level, but it also works on a macro sector level. As promised, we're going to reveal the 2 hottest sectors that are booming now that Trump is back in office. But it's important to note, with market-moving catalysts such as earnings season and the recent presidential election, sectors are bound to shift. Our sector ratings are bound to shift. For example, the top-rated sectors before the presidential election were energy and financials. Guess what? After the election, now it's energy and super cyclicals. So that huge run-up in financials you saw right after the election caused the stock rating— it's caused the overall sector rating to decline because the valuations went up so much, right? So these sector ratings, which are part of our professional membership, are super valuable in that sense. And you could see how the financial sector, one of the biggest in the entire market, Right outside of technology. Next up, consumer cyclicals, right? Had a huge move, so big that our rate— the rating dropped. Now let's go into a deeper dive on the first hottest sector in the market right now, energy. Here's our overview of the sector. You get a rating, a sector rating, just like you get a stock rating, right? You can see here quality of earnings, valuation for the energy sector looks pretty good. Looks pretty good. Most importantly, the valuation is still very cheap. We see a lot of stocks A lot of our favorite stocks are in the energy sector. We've been writing on those in our long ideas for quite a while. Still a lot of great opportunity in the energy sector. You can see positive economic earnings, a 9% return on capital, a 5% free cash flow yield, and just a 10% or 10-year market implied growth appreciation period. You'll see there's details explaining how to find the best stocks and the worst stocks within the sector. Same as for the ETFs and the mutual funds. This is all quick, a quick snapshot from our website on the energy sector. We'll also give you from the site a breakdown on exactly how that sector shows up in terms of attractive and very unattractive, or I'm sorry, attractive and unattractive stocks, or for every, every single rating, right? You can see the number of stocks that get an attractive rating. In the energy sector, it's 30, right? Very attractive, 13. So pretty good numbers there for the sector. Now let's go into a deeper dive on the second hottest sector in the market right now, consumer cyclicals, right? So it's looking good in terms of the underlying economics. Free cash flow yield looks pretty good too. Valuation not looking quite as good. So you're saying, why are we talking about this? Well, Look, folks, you know, the market's run up a lot. We talked about how expensive it is. But now, you know, so, so there's just not as much low-hanging fruit. This is the 2nd best-ranked sector. And it gets, you know, 2 unattractive ratings. That should set— that's— that should speak volumes to you about why the overall market is a bit expensive. But here's our outlook. We're still going to show you where to find the best and avoid the worst across all stocks, ETFs, and mutual funds. And look, there's still some good stocks. That's one of the things I always like to say about, you know, sector research or macro research. Look, we're not here just to say that, you know, you should paint every company in any particular sector with the same brush. Even when sectors have bad ratings, right, unattractive ratings, very unattractive ratings, we're probably going to see at least a couple of good stocks in those sectors. But the point here is Right? You're only getting 18 good stocks here for attractive and 9 very attractive in the non-cyclicals sector. So let's do a deep dive. Let's talk about the utility sector. Let me show you how this actually works in one of our— in our system. So here we go. Here are the overall sectors. So we mentioned before, you can get the ratings. You can see here there's the latest in the ratings. So let's do a deep dive. Let's go into utilities. Type in the ticker or type in, click on it and get an answer. And by the way, if you guys got questions about this, go ahead and lob them in now. I'm happy to take some questions as we go through this. I won't push them all to the end. But here's a detailed analysis on the, on the utility sector. Here's that analyst commentary we're talking about, the recommendation section. Here's where to find the best stocks or avoid the worst. These are all links. Here's that distribution we were talking about, right? Utilities looks pretty bad. Right? You can see the number of stocks per rating, but also the market value per rating. So this shows you that even, even, even a larger percent of the capital is allocated to very unattractive stocks than the number of stocks. And you can see the attractive stocks here, there's just one. As a percentage of market cap, it appears to be less than 1%. Doesn't even show up on the chart here. Here's some cool stats too, and I love this macro work we do. You can look at economic earnings compared to accounting earnings at the macro level for every sector. Check this out, right? So accounting earnings taking a dive, economic earnings actually pretty flat. Surprising, right? Return on invested capital flat, but cost of capital going up as it is for a lot of companies in the last couple years as the Fed has been raising interest rates. How much is that going to drop? I don't know. We didn't see mortgage rates drop much after the Fed's last rate cut. So we don't think cost of capital is really actually going to be going down that much anytime soon. Here's where we're seeing things really take off, though. Really, it's the price-to-economic book value ratio. Really, it's value. It's a valuation thing here where prices have gone up faster than the underlying economics of the business have improved. You can see here, right, economic book value is coming down. While market value is headed up. You can also check out free cash flow here, staying pretty, pretty flat while enterprise value is headed up. So look, this is actual enterprise value versus free cash flow. And we got a bunch of key metrics for the sector here. We do a lot of cool, really cool macro work at the sector and industry level. So let's get back to it here. So we believe that if you want to survive and thrive in today's market, you need trust. Trust is what matters more than anything else. I think trust is honestly that most common element of human nature that binds us together. Without it, I think we're all in trouble. But when it comes to investing, it's just as important as it comes— as I think as it is in your personal life. You need to be able to trust the research on which you base investment decisions if you want to keep your money. Just in the same way, you need to trust the people in whom you invest your personal feelings if you want those feelings to See a good return or to not get wasted. In order to get good research, you need to make sure, number one, it's independent, non-conflicted research. If it's conflicted, right, that's like being in a relationship with someone who actually is out to get you. They have a conflict. They don't really care for you genuinely. That's the problem with Wall Street. Why would you trust anyone who is conflicted? Why would you trust any research provider who is conflicted? It also helps that our independent research has a technology edge called RoboAnalyst technology. How do we do it? We are the first and best and only AI for investing. Why do I say we're the only and the best? Because the only people with the data to do it. I don't know any other firm that's out there collecting its own data and has footnotes data. That's what those papers we showed you before are all about. We've done this diligence and other people haven't. That's why we have an edge. That's why our technology, our AI, actually works because it's got super high-quality data. And that data in turn helps us get smarter about getting even more data because we can use this superior data to train our AI, to train our algorithms to find more good data. We know what good looks like. We can teach a machine how to find good data. This is our rating system for stocks. Notice it's very similar as what you see at the sector level, right? It has an RAI. RAI has the ability to come through, comb through thousands of government filings with precision, analyzing every line and footnote. That's the difference. Our ratings are based on going through thousands and thousands of government filings. And this research is super popular, and, and it's used by some of the most sophisticated investors in the world, including Goldman Sachs, Morgan Stanley, Merrill Lynch, UBS, Raymond James, Goldman Sachs Asset Management. Now, there are 5 metrics our rating system includes. Important for you to pay attention to these: economic earnings versus reported earnings. This is how the economics of the business compare to the accounting of the business. If you've been in any of my more recent trainings, You know, that's a really big deal. Stocks where economic earnings are greater than accounting earnings, super special. Return on invested capital. Now, this is Warren Buffett's favorite metric. Charlie Munger too. All the greats have cared more about return on invested capital than anything else. Why? Because it just makes the most sense. Return on invested capital measures how much cash flow companies make on the capital invested in their business. The same way you measure your money manager. You give that money manager a million bucks and they make you $100, you're unhappy with that. You give them $100 and they make you $100, you'd be very happy with that. So the denominator matters. The cash flow that a company generates, not only do you want that number to be good, but it needs to be big compared to the amount of company that— but compared to the amount of capital the company's been given. So return on invested capital, intuitively one of the best and most important metrics. And one of the metrics that we do better than anybody else. In fact, the Ernst Young paper written on our data was focused on return on invested capital. They wrote a paper saying we do ROIC better than anyone else. 2-year average free cash flow yield. Free cash flow yield is one of the most popular metrics of all time. We found this to be a very important metric back when we were running a hedge fund. Free cash flow was like one of our best for picking stocks. Uh, we love it. And our free cash flow, we believe to be the cleanest and best number in the business as well, because again, we got better data. Price-to-economic book value— that's the price-to-no-growth value of a business. So that gives you a really much better measure than a price-to-earnings ratio. We talk about price-to-economic book value in a lot of our research, our long ideas. You get a real sense of how to take advantage of that data point as you read more of our research. And then there's the market implied growth appreciation period. This measures the number of years a company has to grow its profits to justify its price. That's based on expectations investing. If you've been in, you know, another one of my more recent trainings, we spent a lot of time talking about expectations investing. And it's important to understand this concept because it's the easily, easily the best way to think about investing in stocks. Easily the best way to think about investing in stocks when it comes to fundamentals because it helps you understand what the future cash flows have to be to justify the stock price. And when you compare the market's expectations for future cash flows, which are— which is what's reflected in the stock price, to past cash flows, you really get a sense for disconnects. Disconnects not just in expensive stocks, but cheap stocks. For example, when a stock price implies that a company's profits are going to permanently decline, well, you know what? That makes it cheap. That's low risk. On the other hand, if the stock market implies that the company's revenues are going to be bigger than the GDP of Japan, well, maybe that's expensive and there's no more upside left in the stock. It's priced for perfection. All of these elements go into our rating. Now, you don't need to understand all these crazy metrics and DCF models. I want you to understand them because I want you to know how much sophistication is behind our ratings. But at the end of the day, we make it simple for you. Green is good and red means bad. All 5 metrics play a critical role in the rating of a stock, but we boil it down to one signal. Green is good, red is bad. Attractive is good, unattractive is bad. The other thing to keep in mind is that we're the only stock rating system with an official US patent behind it. RAI has also been discussed in major media events. I was recently at the Stansberry Research Conference in Las Vegas, a great conference, by the way. If you didn't get a chance to go to it, you should definitely put that on your list of things to do in the future. And I spent a lot of time, and this video is posted on our site. We've got a nice research blog on it as well, talking about what kind of AI does and does not work. The most important thing to keep in mind is AI is not magic. If people are trying to sell you on some magic, don't look behind the curtain, don't look at our data, then don't trust it. The only AI that you can ever think about trusting is the AI that will share their data with you, that will be straightforward with you about where they're getting their results. If you can't trust and vet the data, you can't trust the results. If they're not willing to share the results with you, then you shouldn't trust them either. This is a summary of my takeaways from the— about AI. It's not magic. Bad inputs are gonna be bad outputs. Anybody surprised that ChatGPT doesn't work any better than you might have expected? It's based on the internet. How much of the internet is a good input? Let's say it's 90%. I know that's too much, but just let's, for all the, the, the AI bulls in the room, let's say 90% of the, of the data is good. So that means 10% of the output of ChatGPT is unreliable. Let me ask you one important question. Which 10% is gonna be out, is gonna be unreliable? Do you know? When you type something into ChatGPT, do you know what percentage of that is reliable and unreliable? If you don't know what percentage of it is unreliable, then none of it's reliable. Alright? That's why if you're gonna trust an AI, you need to be able to audit the data. You need to know that all of the data is reliable. Our AI, our roboanalyst technology leverages AI to do research that nobody else does. That's the key. We're doing things that other people can't do, just like Tom Brady said it is for the Patriots, right? If you wanna be successful, you need to work harder. You need to do things that other people don't do. That's what New Constructs does. That's what we're about. This extra work helps us do diligence that gives our clients an advantage. I believe to win in this world, you have to do things that other people will not do. One of the, one of the main things you can sort of pinpoint on that we do that no one else does, that's analyze footnotes. That's where companies hide critical information. There's alpha in footnotes. That's been proven by professors at Harvard Business School and MIT Sloan. And when you get that footnotes data across hundreds of thousands of filings and millions and millions of research, millions of pages of research and data, you know, you're going to find hidden gems. It's something you can't avoid. It's impossible not to if you do the work right. That's why we created the technology to do this. We're able to find these, these needles in millions of pages of filings. And look, it's okay. No one else has the time to read a 200+ page 10-K and 10-Qs and do proper due diligence. We get that. When I was on Wall Street, I first got there in the mid-'90s, people did that some. By the time the tech people came along, nobody was doing it. That's part of why I started New Constructs. I knew that if we didn't do this, the world would potentially be, you know, at risk of having to operate without the proper diligence. And let me be clear. This does not come cheap. The process of going through 2,500 filings every quarter would cost most firms several million dollars every quarter. I know this. My clients tell me, they say, David, I love the product. It's an amazing product. It's a great product. If I tried to replicate what you do, I'd be spending millions of dollars a year. Plus, I'd have to manage a team. It'd be a whole separate business. That's why New Constructs does it. That's why. It's easier for Wall Street firms just to say, you know what, I'm going to blast out buy now, focus on how bullish I am on the stock and how the stock's going to go to the moon. Don't look behind the curtain and check what kind of diligence goes into my research. Now, 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. No one else does that kind of diligence. Now, free bonus case study for those of you left, but I'm excited. I want to give you an awesome case study here on one of the most controversial stocks in the market. Let's take a look at that right now. Tesla. What does it mean when we say Tesla is expensive? So we can go in here, we can do a rating. Walking you through how to use the system. Let me know if you guys can't see my screen and our rating on Tesla, right? So there's 2 issues with Tesla. Number one, misleading earnings. All right, I'm not sure the numbers are really quite as good as they're made out to be. In fact, we show economic earnings, and this is a great example of what you're getting with a professional membership, right? Economic earnings. Headed down, even though accounting earnings headed up. Most recent quarter, they couldn't even mask it with the accounting earnings, right? They're headed down too. We can all see it. Market share is going down, profits are going down, EV excitement is down, hybrids are more popular. You get it, right? But let's do a valuation analysis on Tesla. Let's, let's run through our, our reverse discounted cash flow model. Now, this is a Tool that's available institutional-only investors, but I want you to understand how powerful this tool is. And this is a great case study for people to get a sense of just how sophisticated our research is. So let's take, for example, because you can see here I've got a bunch of different scenarios here for Tesla, right? And if I put in huge amounts of growth and profitability in our neutral scenario, I can't get to the stock price anywhere in the next 100 years. Same is true in the default scenario. Just doesn't happen. Right? So I created a really optimistic scenario. How optimistic? It's got 30% compounded annual growth for over a decade while improving returns on capital from— you can see here, you know, really low levels, 2%, 2.6% to 164% on average over the next 11 years. So let's get more specific. I mean, those are obviously big numbers, right? To justify $320— I think the stock's even higher today— to justify this high stock price, the company's got to do some pretty impressive performance. Grow revenues at 30% compounded annually for 11 years and see a huge improvement in profitability maintained over that time period. All right, what exactly does that mean? Well, let's take a look. Let's take a look. So if we look, what is, what is the revenue going to be in 11 years? If we believe Tesla can do that, that's $1.7 trillion in revenue. Now, I believe the entire electric vehicle market— Kyle, chime in here if I'm wrong— but I think the entire electric vehicle market in 2035, which would be 11 years from now, I think that entire market is supposed to be around $1.4 trillion. So Tesla's revenue is $1.7 trillion. That's more than the entire— like, that's like 150, 120, 140% of the entire market. And I think $1.7 trillion is going to put Tesla in the top 10 in terms of GDP of the world, like global GDP countries. Put Tesla in the top 10 of all countries in the world in terms of GDP. So $1.7 trillion, that's what's baked into the stock price. Now you might say that, oh yeah, David, that number is, you know, that's because you got super low margin expectations, super low profitability expectations. Not true. Let's look at the implied return on capital, right? You can see here again, barely above zero, right? You saw return on capital, you know, it's around 10% here recently, right? What's it expected to get to? 475%. That's what the scenario implies. 475% return on capital. That's just going straight up. So huge improvement in revenues while seeing also a huge improvement in return on capital. Is that nuts? It's nuts, right? So to see a simultaneous improvement in revenues and return on capital, pretty crazy. Also, in terms of margins, we're assuming they're maintaining sort of the ultra-high margins. 15% margins. You know, this is on par with a SaaS software company. And it's pretty clear, as much as Warren— as much as Elon Musk wants to sell people on sort of the car being a SaaS product, it is not. It is not. So again, extremely high valuation. And this is just a cool part of insights you get as part of being a member of New Constructs. It's kind of work we do. and things we talk about in our members-only trainings. Thank you very much today. Have a great day.