The Secret Safe Haven In a Stormy Market - June 2024 Training

All right, let's get going. Today's training is about how to make money in a very difficult market. It's the way to get the best hedge against inflation, and as the title says, find a safe haven in a stormy market. Always got to remind you of our disclosures and disclaimers. We are not advisors. We're not giving advice. We are providing proven superior research for making more informed investment decisions, but it is by no means advice. And I want to hear from you guys. I want to hear from you in the chat. What city are you from? And don't forget, give me the stock tickers you want me to analyze here at the end. We're going to take a vote or a log account of all of the most, um, requested stocks. And at the end, I'm going to do an analysis for you so you can see exactly what, what we— what our research says about the stocks you want to know. And then let us know what kind of investor you are. Type it in here. We want to get to know you guys. Put it in here and give yourself the best chance to be one of the tickers— to get one of your tickers on the list that we get to analyze here at the end of the training. So here's our agenda. It's the critical importance of income today. Whenever inflation is high, a dollar today is worth more than a dollar tomorrow. Even more so, time value of money matters. So it's important to understand that cash is king and money in your pocket is better than money in the future. We're going to talk about 3 high-income stocks that you want to avoid. Because stocks that pay out a lot are not necessarily good stocks all the time. And then we've got the special bonus here at the end where we're going to analyze 5 of the most requested stocks using our superior data and research. You guys know me, I'm the founder. I've been doing this for over 25 years. Our data, our research has been proven superior by the Journal of Financial Economics, Ernst Young. You know it, no other research firm can match that claim. None. We are the first and best AI to analyze financial statements. And what better proof do you need than we've been ranked for number one for 37 months in a row on SumZero, which is a buy-side-only platform. Our mission, pure and simple, improve the integrity of the capital markets. I believe that a rising tide lifts all ships. So if we can help investors allocate capital more intelligently, Then the market gets better, our society gets better, we all become wealthier, and new construct should be, you know, compensated commensurably, right? If we're creating more wealth based on a, you know, let's say it's $100 trillion capital markets and we improve that, that $100 trillion capital markets, the return on that capital, we improve that by 1%, we're adding $1 trillion of value. You know, we get a small share of that, we should be doing very well. But that's the value add that we're looking to bring. To individual investors who at the end of the day can improve the efficiency of the capital markets because that's where it starts, and that's why our research is focused on you. I believe you deserve honest research. Believe you deserve to build wealth comfortably. I believe you don't have to be a speculator. I don't believe you should have to watch Roaring Kitty and hope that some crazy fad is going to drive stocks up. I believe you deserve to make advice based on proper due diligence. I, I believe you do deserve, deserve a chance to succeed. So let's talk a little bit about why we're here, right? The market's, uh, looking pretty rough these days, and society is looking pretty rough. You know, people aren't feeling too good. Inflation's hurting, right? And I think we're seeing a divided economy, and that's all the more reason why we need to empower the small or the individual investor to make smarter decisions. Because if we don't help these folks create more value for themselves, they're going to continue to get squashed by the elite, the top 1%. And I don't think that's right. Inflation's not going away. Yeah, the report today was slightly milder, but guys, let's, let's face it, right? I mean, when inflation's been this high for this long, it doesn't help when it's slightly milder. We're all feeling the pain at the checkout, at the grocery store, the gas station. I mean, the prices are high. It's just, it costs a lot more to do things than it used to. When We haven't seen this in our economy in a long time. It's a bad sign. Not for decades has it been like this. And the Fed has already said they're going to keep rates high. We were all thinking it was going to be at least 2 rate cuts. Well, at the beginning of the year, it's 4 rate cuts. In the last few months, it's down to 2 rate cuts. And the Fed has now said maybe 1 rate cut. So interest rates are not going to get any lower anytime soon. Now we got geopolitical risk. You got Gaza and Hamas. and Ukraine and Russia. Like, how are we going to afford to continue to support all these wars? I mean, this is just not possible. It's crazy. And then we've got an election. I mean, all right, if anyone, if someone had told you 10 years ago that the 2 leading candidates would be the folks we're talking about now, and you understood like their bio, you're like, there's no way. There's no way. I mean, we got to do better than that as a society. So, you know, that's not exactly something that gives us comfort either. All this is going to add to stock market volatility. And let's face it, I love this slide. Christian put this in here. We need to have a little levity in our lives. This one's a funny one, right? Can it— can Nvidia continue to carry the entire stock market? It's not going to be easy. I did an interview the other day for somebody from Forbes, and I think we figured out that, that to justify its current stock price, Nvidia's profits will have to be more than twice the GDP of Mexico. Something like that. Something crazy. It's going to be in Fortune in a little while. The numbers are outrageous. Outrageous profits. Twice the GDP of one of the largest countries in the world is what the current stock price at Nvidia means. You know, it's really becoming another meme stock. And look, don't get me wrong. It's a better meme stock than GameStop. So why are we here today? The market is stormy. There are a lot of risks out there. But there are ways to stay safe. There are intelligent ways to beat Wall Street. It takes hard work, but it's possible. And the sooner off you're, you're safer, the better. The sooner you can start compounding income, the more you can compound and the better off you are. I believe the tide's going to be coming out soon. Things just can't continue to go this long, right? The Goldilocks path has been going on for too long. Uh, it's not going to be too far in the future. Could be any day now. We're going to see who's naked, who's done their research. And some of that's already beginning, right? We've seen this happen recently, right? Just a few years ago— Moderna, Zoom, Etsy, Peloton, DocuSign, Wayfair— way more, way more stocks than that. Just check out our zombie stock list. A lot of them have this chart. We caught a lot of the tops on this. We caught a lot of these before The before they're even IPO'd. The bottom line is these stocks might look sexy and they're going up, but they've got a long way to come down, and and it's scary how fast they can come down when sentiment shifts. So the message today: we're not about here. We're not here to be popular. We're not here to help people who want hype and speculation. We're here to help you eat your vegetables. Right? We want you to build a portfolio the, the right and the healthy way, not the cheap, easy way. That's not what New Construct's about. We want to help you find quality investments. We want to help you make more intelligent investment decisions. That may sound cheesy, but nobody on Wall Street can say that. Wall Street is about selling stock, pure and simple. There are hundreds of studies out there that prove this. Anybody from Wall Street that you know will tell you that. That's their job. The original reason for financial advisor at Merrill Lynch and Morgan Stanley— those are retail distribution platforms to help sell stock. That's what their original purpose was and remains, right? So look, people who are looking to provide you true quality good investment advice, it just doesn't happen. And We're talking about stocks that have a proven track record, and, and, and we have a proven track record of finding some of the best things that you can possibly find in the stock market. It's not penny stocks, it's not tiny stocks, it's not beaten-down value stocks, it's not SPACs. This is real quality investment stocks. We're talking dividend stocks, solid dividend-paying stocks. One of the best ways and safest ways to build wealth. Why? Because they've got less Risk and a higher return than non-dividend stocks. Why the return's higher? Because you're getting paid cash today. That income today compounds, and a lot of the stocks we're going to be talking about, we see dividends going up, right? We have a— we, we understand that there are dividend stocks that are high quality. There are dividend stocks that are high quality with great cash flows and dividends that are growing. And the beautiful thing about a dividend stock is that it's going to be paying you whether the market is going up or down. A lot of my friends, some really smart folks, are telling me that, like, they feel like economists are saying that today is more like the 1970s than anything they've ever seen. And in that time frame, in that year or in that decade, dividends accounted for 71% of returns. 71%. Since 1930, dividends are 40% of returns. A study from the Hartford Funds found that since 1961, 69% of the total gains came from reinvested dividends. So over that same time frame, if you put $10,000 in the market, you get about $650,000. If you put $10,000 into dividend investments or reinvestment, you get $4 million. Big difference. Dividends can make a huge impact. So when I'm investing my own money, I want to know that I have the highest chance of getting something back, right? I want the best risk-reward. Our rating system, our research, our methodologies about kind of a simple fact: I can't predict the future. I don't have a crystal ball. People ask me that all the time. Oh hey, when is that danger zone stock going to blow up? When is that zombie? I can't tell you when. All I can tell you is risk-reward. In a world where no one can predict the future, or where I admit that I can't predict the future, and I don't know anyone who can, but if you can't predict the future, the one thing you can do, and you are really obligated to do, is to manage risk-reward. Position yourself so you've got the best chance of outperformance in the future. That's risk-reward. Lowest risk, highest potential. You want to match those things up. That's the only way To really be successful long term, if you can't predict the future, position yourself with the best risk reward. And the beautiful thing about dividend-paying stocks is that they're paying you today, and you're guaranteed cash on a regular basis. Stocks without dividends—they require more speculation. You know, it's all based on. It's all based on. Future returns. It's just inherently more risky. So you're hoping, praying that, hey, like that stock, that stock outperforms. Ideally, you want both. And that's really what we're talking about here. You can have your cake and eat it too. You can have dividend-paying stocks that are good, attractive investments. You shouldn't be praying. You shouldn't have to hope. You should be able to trust that you've done your diligence. That's what the new construct is all about. Getting, giving people the ability to do the diligence that they know they need to do. And it's not sexy. It's not crypto. It's not speculation. It's not penny stocks. It's real work, right? And it's hard to do, and very few people do it because most people don't want to work hard. But if you know where to look, you can find some of the best and most successful stocks out there. This is not new information. It's not a new thing, right? The best of all time say the same thing. The problem is that this stuff is easier said than done. We're talking about Warren Buffett, one of the greatest of all time. John Rockefeller, one of the most wealthy people of all time. Even Mr. Wonderful. Not a big fan of Shark Tank, but look, that doesn't mean— doesn't mean he's not smart about how to invest, right? Dividends make a difference. So obvious, right? The hard part, where do you get started? How do we find good dividend stocks? Because not all dividends are created equally. Don't fall for the high-yield trap. There are a lot of stocks that look great, but if you don't have the cash flow to pay the dividend, you're in trouble. And, and don't give me— you know, don't forget, at New Constructs, you're measuring cash flow better than anyone else, period, right? So we can help you understand whether or not that company's actually got the cash flow. Because a lot of companies, especially when debt was cheap and not too long ago, and when the market's high, you know what they're doing? They're selling debt, they're selling stock, and they're using that cash to pay dividends. Guess what? When time gets tough, times get tough, they won't be able to pay a dividend. You know, if they've got a big cash hoard from an IPO several years ago and they're using that cash to pay dividends, I call it a fake dividend. The only real dividend is the one that's actually supported by the business. Because the dividend is really— the intention there is it's supposed to be a proxy for how profitable the business is. Unprofitable businesses shouldn't pay dividends. If they're paying— if they're raising money just to give it back to you, you're losing a lot of money. Because I guarantee you, whenever they raise $100 million, there's a lot of that money goes off to bankers and to all kinds of middlemen and to executives and employees. And what you get is going to be a fraction of that. That's not a good deal. Companies should not go raise money to pay dividends because for every $10 you invest, you maybe get one back at best, right? That's not the way it's supposed to be. Dividends should be supported by the business. Case study number one, JCPenney. Great dividend stock for a long time. Guess what? Fell off a cliff. Bad business model. Did anyone warn you? No. Were we warning? Yes. Just because it's been a good dividend stock at one point doesn't mean it's going to be. Same with Kodak. We were one of the first, maybe the first, to point out that this was a— we call it a dead stock walking. You can look it up on our blog. I called this one out way before everyone else. A lot of it because there was off-balance sheet pension debt and other kinds of debt that were weighing on the stock that the company clearly didn't have the profits to pay. They were paying a dividend right up to the very end. Guess what? Boom, blows up. Right? People doing their diligence like we did, you know about it ahead of time. If you don't do your diligence, you get blown up. Barnes Noble, same thing. Great dividend, looked like a great business for a long time until it wasn't. In retrospect, some of these look easy to call, but I want you to know that, you know, before those blowups, people were very positive about these stocks. Wall Street was very positive about these stocks. Very few people were saying, look out, this isn't as good as it looks. And a lot of that's because they're biased. They're not as honest as we are because they've got conflicts. They've got to make— keep their bankers happy, because if analysts don't keep their bankers happy, they get fired. All right, live demonstration time. This is one of my favorite parts of the entire meeting today, right? Because I want to show you. I don't like to just talk. Let's show. So I, I ran our screener on our site. This is available to professional and above investors. And within 10 seconds, I said, give me all the high dividend paying companies with a, a very unattractive risk reward rating. Here's 4 for you real quick. Let's do a deep dive on one of these. Loma Negra, 13% dividend yield. Quality of earnings, bad, real bad. Bottom quintile. What does that mean? That dividend could go poof. in a second. You might not see it one day. You might wake up and find out it's all gone. Same is true for buybacks. I got a, a question from Frederick. What about buybacks? Same thing. People have been borrowing money to buy back stock for a long time. There were even some consultants a long time ago said it was a good idea. It's a good idea if you do have an underlying cash flow positive business. Buybacks, dividends, same thing. Used to be that buybacks were more tax advantageous. I don't think so anymore. So they're all the same. We got people from Brisbane, Australia, Florida, all over the place here. Philadelphia, St. Paul, Minnesota, Phoenix. I love it. This is great. Thanks, everybody. Boston. Awesome. Yeah. So, Stefano, that's exactly my point. They can't pay this high yield. They can't sustain it. Now, sometimes because the stock price is really depressed that the yield all of a sudden goes up. But that's a red flag. I will tell you from the— even from as a youngster on Wall Street, like a really high dividend yield, like if you're just throwing away that much of your money, it's a bad sign. Not the least of which, because if you're really that good a business, right, you should have a place for that capital besides just giving it back to investors. Dividends are a good proxy for cash flow, but companies' purposes are not necessarily just to pay dividends. Their purpose is to earn a high return on the capital you give them and create value. Again, if you start a publicly traded company just to pay dividends and you raise it with $100 million, you're maybe going to get back $10 million or less, right? I mean, are you, you know, you're paying all these people just to pay a dividend? No, the underlying business needs to create value. It's more than that. But we are not rating that stock attractive. Stefano, OBDC. Oh, I don't know about OBDC. I haven't looked at that. We can, we can put that on a list of stocks we'll talk about later. Another couple of questions. Can an ROIC number be negative? Could you give me a breakdown why? Absolutely. ROIC can be negative. It's all the time, especially if profit margins are negative. Then ROIC is going to be negative. You don't have anything in the numerator, right? ROIC is operating profit after tax divided by average invested capital. If your operating profit after tax is negative, you don't have any profit. You're going to have a negative ROIC. Happens all the time. Happens a lot with these IPOs that we've been warning people against. We see a lot of negative return on invested capital in the market. Yes, from an anonymous attendee, the stock market is richly valued, richly valued, and richly priced. I think waiting for A correction is tough. We're, you know, I think it's tough to be a market timer. That's why we're here today to talk to you about what you can invest in and find something safe, right? The stocks we're, we're able to find may not have the highest yields, right? Because we're not going about high yield. We're going for quality yield because these companies are built and managed for the long run. We want our capital in companies, in companies that have abundant cash flows. and increasing dividends, rising cash flows. That's a good business. That's a trustworthy dividend. It's also a value-creating business. Cash is king, right? It's just better to be in companies that actually generate cash flow. Because to the question before, if you're in a business that has a negative return on invested capital and the stock market goes down and capital markets dry up, what's going to happen to that company? It's going out of business in a minute. Because they don't have any money to pay people. They're losing money. They're taking capital and paying it out to employees and executives, right? One of our most recent trainings, I pointed out that one of the most unprofitable companies to IPO in the last several years paid their CEO over $100 million in the last couple of years. $100 million. That's money from your pocket to the CEO's pocket. And that business continues to struggle. It's a zombie stock. Continues to hemorrhage cash flow, but that CEO got 100 million bucks. Now he since quit because they had to restructure the business, and we look we predicted this all gosh years ago. But do you think that CEO's giving his money back? No. So you got to stay out of companies that are negative ROIC companies. It's just dangerous and it's bad. Focus more on cash and less on time. Less time on how high the share price will go. The share price will take care of itself if you're in a good business at a good, at a good price. No matter how bad runaway inflation gets, taxes might get, you don't have to worry about your company running out of money because they actually are sustainable ongoing concerns, and that's a big deal. So let's talk about some hot sectors. A lot of folks are, are, um, interested in sector research, and I got a few disclaimers. Sector narratives are not really my thing, right? You know, you can't paint a bunch of stocks with the same brush. Sometimes Wall Street wants you to do that because, hey, it's easier. It's a narrative. You just say all these stocks are great because they're in this great sector. No such thing. How do we know this is because we focus on every single stock building a perfect or not as perfect. Nothing's perfect. Building the best possible model. From the ground up. That's how we start. When you screen for stocks in our system, you screen with an unprecedented level of precision. For most people, screening and looking at sectors is a way to just easily get rid of a bad— a bunch of companies they know they don't want to look at before they do a deep dive. We start with a deep dive. No one else in the history of the business that I know of has ever done that. There's no substitute for doing that work, in my opinion. There are no shortcuts. There are good stocks and there are bad stocks in bad sectors and good sectors, right? There's, there's, there's never one sector that is all good stocks. I've never seen that. Just too many stocks in any given sector. Is it possible? Yes. Is it likely? No. Is it currently the case? No, it is not. That's the benefit of our research. We can help you discern between the good and the bad. Now, best sectors. We're finding the safest and best dividend stocks are generally found in financials, industrials, and energy. Financial sector, 492 stocks in this sector. It gets an overall for the sector attractive rating, got upgraded here in May, and we have 114 dividend stocks in this sector. That are rated attractive or very attractive. This is just a quick view from our screening tool. Pretty amazing, huh? Some good high returns on invested capital here. Some good high returns of free cash flow. Good low price to economic book value. Very low growth appreciation period. Great risk reward. Strong dividends. 114 of them in the financial sector. Industrial sector, 451 stocks and 32 dividend stocks rated as attractive or very attractive. Again, some pretty good yields there and excellent ROICs. Energy sector, 174 stocks, very attractive rated sector. Don't see that very often. 28 dividend, dividend stocks. So one of the best, the, the most attractive rated sector only has 28 Dividend stocks rated as attractive or very attractive, right? And like you see on this screen, right, the very attractive is only 1, 2, 3, 4, 5, 6, 7, 8. Very much fewer than what we saw in industrials and financials. Look, the world is about being discerning. Success in this world is about being discerning, number one. And look, I think you can see with our research, we're very discerning, and there's no way to do that except to do the hard work. I got a couple questions here I should take. I should follow up on. What about REITs? We can talk about that later. Stocks with good business models that suffer a high yield from stock price depreciation. Yeah, I mean, stocks going way down, you got to make sure it's not for a reason. That happens a lot. Typically those super high dividends, and we've been tracking dividends for a while, typically those dividends get cut when the stock price gets— it's really like severe depreciation, severe decline in the stock price. That typically presages an announcement that things aren't so good or comes right after announcements, announcement that things aren't so good and the company's got to cut its dividend. The notion of a company whose long-term investments in R&D artificially deflate their current margin and ROIC. Yeah, I mean, look, great question. You know, whether you capitalize or not capitalize R&D, it's important to understand that it has no impact on free cash flow. And, you know, there are some strategies that just focus on high R&D. At the end of the day, you need to understand the marginal return on invested capital for that R&D. Is that R&D going to generate value in the future? Best way to know is how it's done in the past. And we track return on invested capital, return on tangible invested capital, all that stuff. I think we do that better than everybody, anybody else. And that's what matters. All right, when you have access to the right data, you get access to the best types of dividend stocks. That's what this all comes about— comes down to, right? Whether we're talking about R&D or return on capital, none of these metrics work if you don't have good data, my friends. A model is only as good as the data that goes into it. And examples of great stocks we've been able to find with great data: number one, Nucor, 50 Years of consecutive dividend payments. Awesome outperformer. Goldman Sachs just talked about on CNBC yesterday. 24 years of consistent cash flows. Great business model. Superior business model. Great outperformer. Sencora, 22 years. So the question then, how do I do this now? Right, David? All this great stuff about the past that the greats love dividend-paying stocks. All this stuff. What do we do today? How do you find companies that pay a reliable dividend? It's not easy. It's very difficult to determine. And you guys know, and anybody who's been to any of our other trainings, we went out and said, you know, hey, let's try Google. And Kyle, what's Google's search or equivalent of ChatGPT? Gemini. Gemini, right? Try Gemini or ChatGPT. We've done this before. I'm not gonna waste your time doing it again today. The bottom line is they're not gonna tell you the truth. And anybody wonder why ChatGPT doesn't always work? Anyone have any ideas on that? You know, it goes back to the old adage, garbage in, garbage out. AI large language models are like any other model. They're only as good as the input. So if you were to guess what percentage of the internet is reliable, good data? All right, how many of you would vote that more than 50% of the internet is reliable? Anybody? What kind of votes am I getting here? No, no, right. Okay, so let's just say 50% of the, of the internet is unreliable. So if you're building a large language model on that, do you expect your answers to be right 50% of the time? Is that good enough? You get my point. Right? I think this first generation of, of, of AI is just people showing off, you know, their computing power muscle. It's a big flex on computing power. The next generation is gonna do what we've done from the beginning, and that is on creating and curating a super high-quality dataset that you can build an AI on top of that you can trust because you know the quality of the inputs is good. I got maybe 30 to 40% of the internet at best. Is is is reliable. And yes, to to John, you can ask a question about a stock or ETF. Put it in the chat. We're taking votes on which stocks we're going to talk about. So if you want to do the real work, if you want to get to the truth, there's only one way. You got to read all the Ks and Qs. These are 200 to 2,000 page documents. It's not easy. You got to decipher footnotes. You got to build models. And here's the fun part: you got to follow the Financial Accounting Standard Board. There are rule changes. We have to deal with rule changes all the time. We have to read what comes out of the Financial Accounting Standards Board every day, every week, tracking what rule changes, because when they change the rules, companies change how they disclose the data and the model doesn't work anymore. We've had to do that multiple times. I've done it many times over the years. It's hard work. It makes like all that data you collected, like all of a sudden, oh my gosh, it doesn't work anymore. It's tough. But you know what? We embrace it. We love it. Because we know every time we do that kind of work, we know that we are widening the moat of our business because no one else is doing it. And we can do this and can build a superior system because of what we call RAP, our Robo Analyst Process. We are the first and best and only AI that works in investing. Let me say that again. The first and best and only AI that works in investing for the reasons I explained before. I'm— we're the only AI that I know of that's based on a 100% reliable data set, and our institutional clients will tell you the same thing. They can actually go through and see all the data that goes into every single model. We'll show you that. Might even have a chance to demo that at the end of the, end of the session today. Why do we show them that kind of transparency? Because we can. Our, our system is superior, and we can show that it's superior. Name another firm that can do the same thing. I'll look at the comments on that too. And I've been asking this for years, and so far no one's come up with anybody who's even close to what we're doing. So what does this AI mean for you? We're able to do diligence on your behalf. Period, right? That's great for you. And it's also oftentimes like, even if you want to do it, you don't have the time or resource or expertise. Who's got time to follow what's coming out of FASB every day? Because a lot comes out of there. Most of it's noise. It's difficult to discern what you need to pay attention to. And then when you got to make a change, it's a huge amount of work. And the other thing is like footnotes. Oh my gosh. Right? People ask me about, oh, what about these other data collection firms? You know, they've got 1,000 people on an offshore location. I'm like, yeah, you think English is hard as a second language? Try footnotes. And accounting jargon and legalese. Kidding me? And why do you think companies use footnotes? Because they want to hide information. Look, when I started reading 10-Ks, I was in my early 20s, and I remember a long one, a long annual report was like 20, 30 pages. Why are they on average 200 pages? Footnotes, right? Income statement, balance sheet, cash flow statement, statement of shareholders' equity. Those maybe take at best 8 pages, 2 pages for each. Usually it's less than that. Usually it's 1 page each, sometimes less than a page each. But then the filings are 200 plus, 2,000 pages. It's all footnotes, all footnotes. Why? Because companies want to obfuscate. I've been doing this for a long time, right? And, and let me tell you, companies want to obfuscate, and we've proven it. And by the way, There's alpha in those footnotes because nobody's reading them. And with our WRAP, with our RoboAnalyst technology, we can find some of the best stocks in the market. Here's an example of one of the— from one of our dividend model portfolios, an energy company we identified in 2021 outperforming big time. Industrial companies back in July 2020 outperforming Big time. And look, I'm never going to do a training without showing you this. I mean, this could be our first slide, right? Top-tier institutions with sterling, awesome reputations for study, not necessarily for free speech, but for study, for studying the stock market, for studying all kinds of things, right? Prove that our data is superior. The Journal of Financial Economics. Who's heard of the Journal of Financial Economics? Who knows what a peer-reviewed journal is? A peer-reviewed journal is one that only publishes articles that the peers and the experts in that particular area of study approve. You got to get it by all these people to get it into a peer-reviewed journal. That's a big deal. And the Journal of Financial Economics published the paper that proves the superiority of our data. And this is the one I lead with the most, because at the end of the day, our modeling and our ratings, they wouldn't be good without superior data. It is the core and most important ingredient, no question. And then Ernst Young was able to write a paper talking about our superior modeling and analysis. It's really my, my favorite because it's the shortest, and it's, and it's got an appendix. It's like, okay, here's New Constructs data, here's Bloomberg's data, here's Capital IQ's data, and And here's the difference. We spent hours trying to reconcile. They said accountants and auditors trying to reconcile couldn't. They just like missing data, even stuff that's reported like debt. Like, I don't remember if it was Bloomberg or Capital IQ or both, but like they couldn't even get the stuff on the balance sheet right sometimes. Forget the footnotes. And then superior ratings. Harvard Business School published a paper. I think it's imminently going to be published in a peer-reviewed journal as well. But published a paper proving that our stock ratings outperform human analysts, superior to human analysts. That's kind of a low bar. But you know, because Wall Street analysts aren't so great. But the point is, they work. They're better. So why do we have superior results? Well, I mean, I want to come back to some of the basics here. No conflicts of interest. I'm aligned with you. I'm aligned with the overall market. Right? Anyone that knows me. And new constructs knows that we're really about making the world a better place, and that's improving the integrity of the capital markets. And I believe that in my heart, and that's why I've been doing this for 25 years. I believe it's the right thing to do, and I'm proud to do it. And I feel blessed to actually be able to wake up every day and believe in what I'm doing. I think it's awesome. I think we're lucky to live in a country where we can make a living making the world a better place. I like to joke sometimes with our analysts like, hey, so if we try to do this in China or Russia. Eh, we might not be around to see the light of day. Those people have got different agendas. Here in the United States, at least so far, I've been able to get away with making the market a more efficient place, and I'm really proud to be able to bring this to everybody, to truly democratize access to good information. No conflict of interest. I'm aligned with you. We have unrivaled rigor. That's proven on the prior slide. Superior data. That's how we get superior results. Nothing else. I don't have a crystal ball. I don't have some magic formula that knows how, you know, fractals work or market timing. All that's a bunch of blah blah blah blah blah, in my opinion. The only assured way to get superior results is to work harder and bring more data to the table every day and find an efficient way to do that. We've done that, and our research is now tracking dozens of stocks with excellent yields. Cash rich that can support dividends. That's what we want. These are stocks that can increase their payouts year after year. That means larger checks to you in your pocket today. So when inflation's running away or market's getting crushed, you're still getting paid. Don't forget, it's important to act now because compounding matters. Compounding matters over time. That's why these dividend-paying stocks are a great hedge against rising inflation. They offer higher returns. They're safer because you're getting paid a little bit all the time. So the right— with the right ones, the best ones, this is focused on stocks that pay strong dividends and have the cash flow to support those, more than enough cash flow. So it's truly something that you can trust to be a dividend stock you can hold over the long term. 20 of these delivered every month. They all have a very attractive or attractive rating and a dividend yield greater than 3%. Of course, positive free cash flow and economic earnings. We want good, sound businesses that can pay the dividend but also have a great rating. I call that win-win. 3 stocks from our April portfolio, which is what the most recent performance is because the June report isn't out, and the May report, we had 3 stocks up in double digits. One of those was a small cap. And I got another dividend model portfolio for you as well, the dividend growth stocks. So this is the best of the best among stocks growing their dividends, not just good dividends and safe dividends, but they're growing their dividends. And we find about 30 of these. We deliver about 30 of these to your inbox every month. That's a total of 50 High-quality dividend stocks. Again, these have to have a very attractive or attractive rating, positive economic earnings and free cash flow. See the theme there, right? 5-year cumulative free cash flow greater than their 5-year cumulative dividends, increasing their dividends for 5 years in a row, and a current dividend yield of at least 1%, right? Again, not a sexy number because guess what? Sexy isn't always good, right? We're here to eat our vegetables, not just chase the fancy thing coming across our screen, right? I'm, I'm not Roaring Kitty. I'm not here to bamboozle you with some great story, right? I love the, I love the ethos of Roaring Kitty and that, hey, I'm trying to help everybody else. I'm trying to democratize the market. Great idea. I'm doing it for real with superior information. 3 stocks from that portfolio. 20%, 15%, and almost 8% in the last month. So you're seeing, you know, these are stocks that pay you and they can have some great returns. So what's the difference in our research? What's the difference? If you haven't heard me yet, I'm going to say it again. Our cutting-edge technology gives you more reliable fundamental analysis, hidden value that the market misses. Nobody else has the footnotes. That means No one else can tell you how much risk is in that stock. No one else can tell you how much reward is in that stock. All this leads to better risk-reward and more potential for you to outperform. Not surprisingly, some of the best investors and hedge funds in the world trust our research. They use it. And I'll be honest, the more I meet with institutional investors, the reaction is, I can't not use this, David. I can't look my clients in the eye, especially the more they know about new constructs, and say I'm not using new constructs. I, you know, and I've had actually certain advisors who I've been referred to by their clients, and you know what they say to me? I'm signing up. I can't not use new constructs if my client knows about new constructs. Otherwise, I'm not fulfilling my fiduciary duties. Think about that. If you know that there's something better out there and you don't use it, you're effectively knowingly using lower quality information. You're taking on risk you don't have to take on. That's why the top investors in the world use our stuff. That's why people who care about due diligence use our stuff. You know, and don't forget, Harvard Business School, the Journal of Financial Economics, Kelley Business, Kelley School of Business, Ernst Young, MIT Sloan. Could you— can we, can we ask for stronger validation? Again, I've been checking over here. I don't think anyone has mentioned another firm that can match the validation that we have. That's a big deal. Doesn't hurt either that we've been ranked number 1 by SumZero for 37 months straight. And of like a ton of categories. Number one all time, number one short, number one value, North America large cap, you know, number two in a bunch of these. I mean, what else do you want me to say here? It's, it's, it's, it's impressive, right? Diligence matters. Hard work is undefeated. We got a few minutes left here. There's Kyle. Um, good to see you, Kyle. And I'll take some more questions here, and then we're going to look up a few stocks. One thing I figured I would, I would, I would check in on here is this article. Remember I told you no one else can do what we can do and people talk about, oh, is AI going to change your business? There is actually firms out there that specialize in analyzing how well ARs, AIs are analyzing SEC filings. This firm is, and I know the CEO is a great guy, Patronus AI. I've spoken to Anand because I'm a huge fan of what he does. I love people that are going to be out there like, Hey, you want to know how good your AI is? I'll check it for you. And what they found is basically the type of performance rate is absolutely unacceptable. People aren't even close to doing what we're doing. All right, I'll, I'll stop there. Uh, Kyle, which, which is one of the top selected tickers that people have suggested or requested? We had, we had 2 repeats, Nvidia and Walmart. So Nvidia, This is a classic example of good company, bad stock. Yeah, I kind of know what to say here that we haven't already said and been published in saying. No dividend yield, but they do make a lot of money. The problem is that this valuation implies— did we say, what did we say about this, Kyle? Something like, I think when it was at $484, the last time we wrote a report on it, they had to have revenue that was equal to or greater than the GDP of Mexico. Yep. And so I think this, look, the stock's more than doubled since then on a price-adjusted basis. Oh yeah, I guess they did a big split. Was it a 10? Was it a 10-to-1 split? I think it was. I think so. Yeah. So yeah, it was at $48 before, now it's at $120. So it's more than doubled. And at $48, it implied its revenue is going to be greater than Mexico and that its GDP— and that the profits would be greater than the GDP of Ireland, I believe. I think if we look that up now, I think it's like the GDP would be— the profits would be greater than the GDP of Mexico. Another quick question we should answer. How many stocks do you maintain in the dividend portfolio in total? What's the annual name count turnover approximately? I don't know the turnover off the top of my head, but we typically have 20 in the safest dividend and 30 in the dividend growth stocks portfolio. So it's about 50, not always that much. Look, if we can't find companies that make the cut, we won't put them on the list. We never fake it. Same is true with all of our model portfolios. We try to maintain— we have a max number, but we don't have a min number. Walmart was the other one, right, Kyle? Yep. Walmart was a great focusless long stock for us for a long time. We rode it for a long time. I don't remember exactly when we got out. Another example of a good company, not such a great stock. It's just gotten really expensive. You look, you know, one of my takes on the market these days is that the meme stock investors got smart. Like, I don't have to pile in to come some complete— pardon my French— shitco like GameStop. I can put my money into Nvidia or Walmart. These are really good businesses. Berkshire Hathaway, Oracle today becoming a meme stock almost, right? Um, and they should. It's better than these complete junk stocks. you know, that you're hoping for a short squeeze on. That's just a huge gamble. So I can— I'm, I'm honestly, I'm happy to see good stocks going way, way up, but it doesn't mean we would recommend them. Thought another request to expose on Walmart was Costco. C-O-S-T. Costco, good company, bad stock. Same thing, super expensive, you know. And look, this is not to say anything bad about these companies. Nvidia is doing awesome things for the world. Walmart's an amazing business. I love Costco. Kyle, how many times a week do I talk about Costco? Every week. Great, great store. Yeah. Yeah. We, we, I've got, I've got, I've got 3 boys and we need a lot of food. Costco keeps us in business, baby. Costco, especially the pricing on meats. Small commercial. Maybe they should do a sponsorship for us. Wouldn't do that because we don't take any money from any of the, any of the people we talk about or anything like that. So that's just a joke. We don't want a sponsorship. But yeah, love the business. I don't, you know, great business, does great things for our family, to be honest with you. We love it. We love so many, like even the seasonings, like they don't have any MSG or preservatives. Like it's just high quality stuff. But again, it's, it's an expensive stock. All right, we got to do, we got to do 3 more here. Kyle, what we got? Yep. Look at Altria, MO. All the way across the board. You know, I joke with my kids all the time when we're talking about like eating good food and not good food. I'm like, listen guys, you know, the best businesses are the ones that sell addictive products. And so, you know, that's true about tobacco and the distribution that Altria has is really impressive. So whatever they're putting into that distribution system, they're going to be able to sell a lot of it. And so you've got really high returns on capital, great cash flow. And, you know, stock price that implies profits will permanently decline by 40%. Now, is there risk that at some point in the future people would just get so upset about these kinds of stocks they just put them out of business? It's possible. So maybe that's what's baked in here. Next. Do 2 more. Get ticker BN. Brookfield Corp. I'm not so sure about what these guys do. But it doesn't look good. Very unattractive. This is a bad score. I would avoid this. Who else would you— The last one we can do, Alibaba, BABA. Yeah, I thought I saw a bunch of that in the chat too. BABA, very attractive. Suspended rating, announced plans to IPO 6 businesses separately. So we don't really know what this business is going to look like until they, they do this. Sort of a tough situation. So we're going to suspend our rating because the financials upon which our ratings are based today, which have been published, are not necessarily as reflective of the future financials. And we know that. And that's effectively the spirit behind our suspended ratings in general, is that the financials that are coming in the future we know to potentially be quite different than what the financials are today. And so we got to suspend the rating because The business today, we know it's going to change. The financials we have today aren't necessarily reflective of the business. All right, I think we've answered all the questions. We did 5 stocks and we're right at an hour. Okay, thanks everybody. Good to be with you today. Thanks, Kyle. See you guys.