I've Analysed 1,000+ Stocks. Don't Buy The S&P 500

a mediocre company at a remarkable premium. What is going on here? If dog shit had wings, it would be Intel. Oh, for the love of God. People say that you can't beat the market, and having analyzed hundreds of stocks over the past 15 years, it's true that only a few companies ever see consistent outperformance. But the difference between the three lines that you see on your screen now isn't random, and all the gurus telling you to just buy an ETF and not bother with any analysis, have probably never done this professionally. Now, if you're new here, I'm James. I was Chief Investment Officer to a number of funds in the city before now investing my money with you here full-time. And today I'll show you the model I used to pick stocks back when I was managing 8 figures in the city, ranking the biggest names in the S&P 500 from S-tier down to F-tier to see which of them I'd own and which of them I'd avoid. And with this, you can hopefully make a better call on whether or not ETFs live up to the hype and are the right investment for you. Okay, so we're going to begin with arguably the heaviest hitter on this list, Nvidia. It became the biggest company in the world last year, and I think it's the most popular retail stock still, regardless of some of the recent moves that we've seen in other AI names. So for many of you, this might be S tier. For periods of time, I thought it was more like A, but what I'm going to do is of course apply a bit of intuition to keep this fun, but I'm also going to refer to my process here. Now you can get a free trial of this for 7 days via the link in the description if you want to check it out. And as we go through these names, it should become apparent how we use it. So it's essentially a ranking of all of these global stocks through about 767 names, I think. So if we have a scroll down from top to bottom, sorted by the intelligence score, which is the overall rank of these factors that I look for as a pro and I still look for to this day, we can see that Nvidia ranks 24th. Remember, this is out of like 750 companies. That's very easy to see that the fundamental profile is, as you might expect, very broad, very impressive. On each of the 7 factors, but that includes valuation. And I thought Nvidia was meant to be too expensive to own, and I'm using my own words there to go back a year or two. I just would never look at it given the valuation. However, when we scroll down, not only is it a really strong company smashing its peers, which are in white for each of the same factors, but what you can see here is that it's no longer expensive. Now you might think that sounds crazy because after all it's still at a price-to-free cash flow ratio, which is just an alternative to using earnings or the PE ratio— we'll be using this as we go on— of like 41 times cash. But the reason that isn't such a crazy number is because it's all relative. And relative to the 10-year average ratio at 59 times, it now actually looks to be at about a 30% discount to where it has historically traded relative to the fundamentals. Not the price, the fundamentals. So for that reason, Nvidia— if I just pull up a chart, excuse, forgive the Ferrari Roma Spider in the background, I don't know how that got there. Thankfully, I don't have a Mrs., so there's no Mrs. to criticize. Let's take a look here at what is— what's been going on. We all know the rally. This is on a log scale, which smooths everything out. If we take it off log, of course it looks like a nosebleed. But again, guys, everything is relative. Log scale and viewing things relative to the stock's own 10-year average. This is a rolling average and a median so that it's not skewed by big extremes. So for that reason, Nvidia is S-tier. Some of the strongest fundamentals in the world, and it's no longer expensive. In fact, mic check, 1, 2, 3, Nvidia is cheap. Words I never thought I'd hear myself saying just a couple of years ago. And if you want to dig into this more, you can see historically when it was undervalued, where it's highlighted in green below that dotted line, which is the fair value, where it is again today. So yeah, take a look at the, the link, check this out, go into more detail. We'll keep up the pace here. So we've already got our first S-tier stock, so we're off to a good start. And I don't want you to think this is going to be some contrarian thing where you know, as a professional, I'm going to shoot down the popular names. That's generally going to be the case, but there are exceptions. So just so we know where we stand, we've got this S to D. We should probably update this, change it to F tier, making it the worst of the worst. We'll put that in purple. I quite like purple, but a cool, cold color. And so we know where we're at. The S&P, the ETF, is otherwise going to be in the middle, right? So it's the benchmark. So companies that we have in B will probably perform in line with the S&P. So there's no real advantage or necessarily disadvantage to otherwise owning them. A tier, we think, are great companies that should beat the market, but they might be a bit expensive or whatever, but they should still beat the market. And then S tier is like Epic, also feasible to hold at the current valuation, and will smash the market. That's what you're saying. Obviously C is like A below that, and F is like rubbish and not cheap. So there we go, waffling on. Let's pick up with— who do we take from here? Uh, okay, we'll continue to Go at some of the retail names while they're hot. Tesla. Now, a lot of the crowd that own Nvidia will also revere Tesla. It's not S-tier for me, I can tell you that straight one. It's not A-tier. Is it B-tier in line with the market? We'll have a quick look at the chart. You might think at first glance that, well, that looks to be better than the market. But I'm not so sure. Intuitively, I would be taking Tesla down to C, so below the market, or possibly even F, dare I say. But let's consult the old process here. Okay. So, uh, by that I mean like ye olde process, not the old process I no longer use. I'm waffling on. I've had too much coffee this morning. Tesla, let's use it this way, 464 out of 750, call it. So it's really in the middle. Now keep in mind that these are generally speaking quality type companies, so you are still making a comparison within a, a biased pool. You're comparing Tesla with mostly quality profile stocks, which might be a bit unfair if you're looking at something which is really, really cyclical, not at all quality. And without getting too much into the weeds here, you know, you could be looking at like a mining stock, which is never going to be quality profile because it's super volatile. Or I don't know, someone like Freeport-McMoRan, okay, a great cyclical stock when you want volatility But that's not the aim of the game here, guys. Upside volatility is good, but we're trying to build a portfolio, something we can hold similar to— you might, you know, just set and forget with the S&P ETF. But here we're trying to scrutinize the big holdings that half of your portfolio is going to be exposed to when you buy something like SPY or VOO, whatever your preferred S&P 500 ETF is. They're all so exciting and different. Anyway, to go back to it, Tesla, you can see immediately it's only 2, 2.5 out of 5. It massively lags peers in a bunch of the metrics— efficiency and durability most notably. Some of the things it doesn't even really have the data for. Its footprint therefore is not very broad, and that is basically summarized in the score. Now looking at whether or not the stock is rich or cheap, it actually looks to be slightly undervalued here. So I don't think it's a stinker where, you know, it's also— it's a below average company in my opinion. And if you disagree, guys, just let me know in the comments. Please don't introduce a lot of hate, but you know, we have fairly thin skins, we former professional traders who are now on YouTube. Um, but let me know in the comments, would you, would you have this up with B? Maybe it's even A tier for you. I think given the rankings, most of you would agree that, you know, it's maybe in line with the S&P. Personally, I think it's below. Um, I'm not going to put it in F, that's too harsh because it's at a slight discount. So yeah, still below the market, but I think C, maybe a few of you would have it in B. So moving on, who should we go with next? Let's look at another favorite here in Meta. Okay, Meta is a company that unfortunately is crucial to the world. I've talked about this in other videos. I say unfortunately because— or is it crucial? It's just so sticky, it's insidious, um, and you can't run a business or Although I'm trying to be a content creator without it, having tried for a few months of Reels and just found that it was a waste of time. I, I just don't like the platform, simply put. I'm not going to get on my ethical high horse, but, um, I, I do have very strong views on that, which I'll keep to myself for now. Um, I don't like the way that it's conditioning society, and I don't agree with it in many ways. However, undeniably it is so entrenched in the world, in the ecosystem, in business now. It's a necessary evil, albeit I'm trying to keep my stuff on YouTube exclusively and put out content that hopefully, despite what we're doing here, hopefully helps people. It's educational content, it's positive content, positive information rather than toxic stuff. Anyway, maybe you rate my ratings here as toxic, putting Tesla down in C. Anyway, Meta, I'm inclined to put it as an A. We might upgrade it depending on valuation, so let's go ahead and take a look rather than me waffling on here like a Belgian street vendor. So the dad joke's the strongest one. 23rd, 23rd. Don't you know? Would you believe that? 23rd. So it's actually one place above Nvidia. Geez Louise. Give me a slice of extra cheese. That is, uh, that is better than I thought. In fact, let's have a Jurassic Park moment. Whoa. That is one great pile of, uh, good stuff actually from the looks of things. All right. Waffle, waffle, waffle. Big old footprint. That's why it's 23rd. 4 out of 5. 4 stars out of 5 was Arctic Monkeys. Um, do I have ADHD? I don't know. Stock market's always my therapy. I'm getting excited. 4 out of 5, smashes its peers within comms. You know what, I can't argue with this. I just hate the company personally. But as an investor, although of course you're entitled to— you are entitled to allow ethics into this, you're an individual, you know, you're not bound by a mandate. And when you're investing your own money, I'm not going to again pretend to— I'm not virtue signaling by saying I think there's a lot of greenwashing bullshit out there. And I don't necessarily believe with all this ESG stuff. I think there's actually, there's quite a lot of bias. And therefore, okay, quickly, it's bullshit. If I can just say it quickly, probably get canceled. You can still utilize some ethics. So like, maybe I personally, I don't like to, and I generally avoid where possible. I can usually come up with a better idea anyway. Invest in like aerospace and defense, um, tobacco, yeah, tobacco and alcohol, kind of our vices. I don't drink anymore. Um, I've never smoked. I don't feel as strongly about, you know, anti-tobacco as I do, say, anti-defense. Um, anyway, I do feel strongly opposed to, um, to corrosive social media, how it's, uh, destroying relationships, fragmenting, and it's all deliberately designed like that. Gambling is another I won't invest in. So this is all personal preference, right? And there's no problem. When I was a bit younger in the city, read as more arrogant, um, where's Altria, uh, Philip Morris? I wouldn't have had a problem investing in Philip Morris, in perhaps Lockheed Martin and whatever else. Maybe this is a sign that I'm maturing a bit, I'm getting a bit older, um, You know, I'm pushing 40 now. Jesus, a couple of years' time, and I still don't have things figured out, mainly because of bloody Meta, Instagram screwing up relationships and poisoning the world. I'm kidding, turning us all into zombies. But to get back to it, where were we on this ramble? Meta, yeah, one, investing in it. Okay, move on, JR, you've, you've made that clear. All right, however, This is an absolutely spankingly good profile and it's not expensive. It's only 10% at 10% premium. You can see when it was cheap in the past and I have owned it in the past. My view on, you know, my personal view has changed in the last couple of years as I've seen society continue to degrade and the issues have become more apparent. But this is a stock which I loved back here. I made a fortune for the fund owning this company, as I'm sure some of you guys will have done well if you owned it back then. And there was another massive opportunity in 2022. Again, I remained bullish on the stock professionally. And yeah, that's pretty much my last year in the city. Obviously went bad— it went well before leaving in, in 2023. So yeah, that's my life story around Meta. I was clearly triggered by that. Trigger warning, uh, objectively now. So this is why you asked me to do a job as a professional— or if you're not asking me, but why I would just do a job as a professional, leave personal opinions at the door. This is not for my money now. This is if I was running a fund still, or, you know, addressing you as my client. Not that any of this is advice or recommendations around the personal realms of YouTube, of course. Uh, this to me looks very, very strong. In fact, I would have to upgrade it to S tier, and it's one of those hate it or love it. Personally, I hate it. Professionally, I'm going to give it the benefit of the doubt and upgrade it to S. I hate to say it, it's an exceptional company for nefarious reasons. Okay, so take a breath. Okay, something less nefarious that we can probably All relate to. How about Costco? Let's now go for a trip to Costco. Oh, breathe. That feels wholesome. Imagine it's Sunday, or maybe even Saturday morning, you're planning a barbecue, or you're having some friends around. Meta hasn't destroyed relationships, and we're all socializing in person and having a good time, not being adversarial and, I don't know, manipulating each other with algorithms and short-form content and paid ads and relative comparison, social comparison. We're all together, we're gonna have a barbecue, the sun's shining. Yes, time to go to Costco, cash and carry, right? Costco is, I think, more than a B. It's definitely not below the market, it's at least in line, and I'm inclined to give it an A tier off the bat. I will have a look at the profile and the valuation, but just starting with a chart, which is probably where— look, I'm not criticizing, but why a lot of you guys will start, um, I guess because this stuff is now intuitive, because these profiles and the fundamentals are kind of— and the stories are etched in the back of my brain from over the years. Again, it's just one of the side effects of, uh, of being in this game. I can tend to quickly pull up a chart and understand what the sentiment is because I kind of know the story already over the years, particularly with companies like this which are long-term compounders generally, although we're looking at the broader S&P now. So the stories typically aren't changing overnight, but for AI risk now, in the case of Costco, AI isn't a threat. If anything, I'd imagine that AI might be perhaps beneficial to logistics and delivery and fulfillment, that kind of thing, as it's likely to be for some of the consumer staples, some of the food manufacturers and what have you. They are some of the, if you're cynical, few beneficiaries of AI taking over. But again, without getting on the soapbox, this is one for another day. I think that's becoming something of a dare I use his words, something of a psyop perhaps. I think we are— we're being held hostage as— as— or held captive by that fear being planted in society that AI is going to make us all redundant and, you know, it's going to enslave us or whatever. I think that's too much. Anyway, moving on from slavery, back to Costco. Can we go back to the sunny place, the happy place? Just before we do, there's an AI risk flag in this column. That's what I was getting to. Where some of the companies that we'll be looking at are flagged as having a high risk or threat of AI disruption negatively impacting them. However, in the case of Costco, it doesn't have that for the reasons I've mentioned. It ranks 166th. So this is like in the top 20% of, you know, those 750 companies in this entire universe. So it is still top tier. It's not quite top 10%, But 3, considering that most of that, so that's like 60% if you take an average of the rankings, most, most of the companies in here, right? When we just clear this, most of the companies here, you know, there's only 10 that have more than 4 stars. So like 3s and 4s are pretty, pretty reliable. So in the case of Costco, it seems like it's actually dropped down a little bit recently. I thought this was higher, so maybe this is a bit more of a B. It's bloody strong. I would say it has— it does have above average fundamentals. We've established that as a great smooth trend, so certainly a compounder, but it's now at a 20% premium. Hmm. And it had been a lot higher last year, so it's not screaming great value. I think it's in line with the S&P at least, and maybe if we're being a little bit kind, might upgrade it. So for a bit of positivity, I'll give it the benefit of the doubt and put it in A tier. I know this stock is loved by many investors just as much as it's loved by we consumers, right? So Costco, their cash and carry business, very, very strong brand. I, I think, I think that has a good moat and it's therefore A tier. All right, moving on. I don't know how long we've run so far, but I like these to be more meandering. I saw in some of your comments on my other videos that you kind of like to see how bizarrely, how the mind works, how the thought process works. So, um, let's go through. All right. In my usual accent, Berkshire Hathaway, or Berkshire Hathaway, as we would say in England, in a posher part that I'm from. Um, Berkshire. I can't call it Berkshire. It sounds weird. Berkshire. Berkshire Hathaway. Right. For many years, this would be, oh my God, Berkshire, Berkshire's bought this, Berkshire sold Coke, whatever. Sounds weird. No, uh, that's not an accusation, just to be clear, for lawyers get on to me. No nefarious dealing activities. Warren's bought Coca-Cola, or Warren sold Coca-Cola, I should say. Who cares? He's bought Apple, he's sold Apple. Who the fuck cares? We've all bought and sold Apple. It's irrelevant. I hope you don't think that is arrogant, but just to sum it up, what Berkshire Hathaway has bought or sold is irrelevant nowadays, guys. At best, it's B-tier. It's just like buying the S&P. At best. It's not A-tier. There's been a whole changing of the guard there. Rest in peace, Charlie Munger's died. Um, Buffett now I think is 99. Um, is he? Let's just check. 95. I apologize, Warren, you've got another 4 years or 5 years until the century. Um, you know, bless him, he's, he's done incredibly well. He is a legend, but he's no longer relevant, I'm afraid. His wisdom absolutely is, but stock picking, which he doesn't really have much— I don't imagine much of a steer on nowadays, it's delegated to sub-PMs. Um, yeah, meh, so what? So yeah, is it better than buying the S&P? No, I think it's the same. Um, let's take a look at the valuation. It can be a tricky one to value. You can see here now, actually— oh God, you can see how low it is. I guess it holds quite a few financials. It becomes tricky valuing on a free cash flow basis. I guess there's so much capital expenditure in terms of how it acquires things. I just don't know. You can see when it was cheap, when it was highlighted historically, it has tended to perform well then, but it hasn't been cheap in a long time. It actually looks overvalued, and that's what it's telling us, like significantly overvalued. So I'm not putting that in line with the market, I'm afraid. Um, don't mean to offend, but I'm going to be honest and call it how I see it. That's, that's below market, C tier. I'd rather own the S&P with these weightings. So let's move on. How about another big name out there? Amazon. Okay, let's have a think about this. Amazon, Amazon, Amazon. Is it better or worse than the S&P? I'd be inclined to maybe have it in A tier in years gone by, maybe even S at points. But it feels like a long time since I've, I've felt that way about the company. Is it below the S&P? No, I don't think it's below. So I'm thinking that this could be our first B-tier company. Now if we go to the model, we can see Amazon is 428th out of 750. So that kind of makes sense. It's in the middle of the pack, 2.5 out of 5, middle of the pack. Yeah, pretty— it's an okay profile. It excels in reinvestment and growth, but free cash flow, again, it's all this capital expenditure amongst the AI names. Like, it, it's really diverging from what the cash position is, and it just doesn't look attractive., so kind of one offsets the other. I think it's too harsh to have it in C, but only, only a touch too harsh. Um, okay, we'll give it the benefit of the doubt and put it in B. It's still exposed to cloud, AI. The retail business is a retail business. We'll go with B. Okay, so who else do we have on here? Let's go to a different sector. So how about a pharmaceutical company? So we'll go with Johnson Johnson. So this is an unusual one. As a staple and with its track record— pull up a chart in a second— you might think this is A or B. Some of you might think, oh, this is so boring, it's not tech, this is like C, or heaven forbid, maybe even worse. I don't think this is, uh, F tier. We're still yet to find one of those. Hmm, is it B or C? Let's hold it in B for a moment. And first of all, start with the chart. Jeez. Okay, now there was a thing they had. They had a very good product in, uh, 2021. I forget what it was. Ah yeah, never mind, never mind. Ah, but look at that, it's, it's, you know, it went sideways over the pandemic and post-COVID era, but it's just ripped higher in the last year. That's really interesting. So let's take a look at the fundamentals. The market or investors know something. So 335 out of 750-odd, it's a similar story to Amazon, middle of the pack. This is confirming my intuition. There's not great reinvestment or growth here. It is more of a staple of pharmaceutical. What's really interesting is that just before it took off, you can see that it was undervalued in the fourth quarter of 2024, and then it just went crazy in 2025 through to, to date. So that— so it went from, where were we, $150 to $250 in that period of time. So this was when it was cheap and funds were beginning to look at it, and then it's just ripped 70%. So it's beaten the S&P in that period, and it's certainly a long-term compounder. It's one that my grandma actually used to own, which makes sense given that it goes back to like the '70s, '60s when it IPO'd. But yeah, at the, at the current valuation, it looks very expensive. So can I give this the benefit of the doubt? Would I own it over the S&P? No. Do I think it's worse than the S&P? Maybe. I think it's, uh, C or B. Maybe I just leave it in line with the market. B. These companies, they're just going to do what the market does, I think, overall. Okay, so how about Microsoft? Okay, a lot of people will have this in S tier. For me, it's 9 times— or 9 months out of— 9 months out of 10— 9 months out of 12, or I don't know, 11 months out of 12, when I've reviewed things, it's generally been in A. And I think this can be a pretty quick one for me. Let's pull up the ranking just to make sure I haven't— well, I have lost my marbles, but when it comes to stocks, I haven't. Okay, this is looking more like S tier, and the valuation, yeah, it's suggesting there's quite a premium there, but it's a lot less than it has been historically. Even like at a 50% premium, this has been up at 100, 120% premium. I think it just had, uh, very strong earnings. Just probably changed the profile. Okay, it's S or A. Which would you guys put it in? It's Microsoft. There's AI, there's cloud. It's Microsoft. I think you've got to say it's an elite company. It's better than Costco. All things considered, it's better than Costco. So we'll, we'll have it up in S tier. Okay, uh, mix things up. Walmart. This feels like a very Buffett-esque company. I'm going to have a look, see whether this is C or B. I don't think it's A tier. We'd have to go back a long way before I considered it A tier. I think 2017 or '18. Maybe off the top of my head. Um, this is one that I was interested in. Oh, there you go. 2017 was when it, um, the year following sort of the sell-off and the depression in the price and the share price here. This is when it was up on my radar as a budding fund manager in 2017, going into 2018. And I mean, in that time, not to blow toot my own horn too much, If we take the midpoint there, say it's, uh, oh yeah, it's up, uh, 400%. Just saying, S&P hasn't done that, has it? Anyway, what do I think of it now? It's another one of those long-term compounders. The Walton family, if I'm not mistaken, are the richest family in America. Richest family, um, so I guess the richest— let's just see, Walton's richest family, because I guess Musk makes it the richest— richest family, richest family in the world. Okay, so yeah, collectively that makes sense. So you wouldn't really bet against them unless, unless you're looking at my screener. I don't know. So let's have a look at Walmart. Where does it rank? 520th out of 700. So this is probably like the bottom, nearly the bottom third. Um, that doesn't look like Microsoft. I know it's in a different set. It doesn't look like Costco, does it? So this isn't a Costco. It's not A tier. Is it B tier or C tier? Hmm. Ah, I do not like the look of this at all. Do not like the look of this at all. Um, here you go in green when it was cheap. I was talking about 2017, 2018. That's when I would have been buying it, right? Professionally, and a few years before that it was also nice and cheap. So 7 years before, um, and now it's horrendously expensive. So it's a mediocre company, an unremarkable company at a remarkable premium. It's not unremarkable, but, uh, yeah, I— where would I put this? Oh, it's the world's richest family, James? Oh, okay. Um, yeah, C or B. I'll just put it in B and move on. There's nothing, nothing to write home about with Walmart. Maybe even lower, C or B. Do I think it's better than Tesla? Yes. Do I think it's better than Berkshire Hathaway? No, I think it's about the same. But it will perform like the market does. Okay, moving on. Next, we haven't looked at any banks yet, so I think we should go JP Morgan in a minute. But why don't we go crazy and look at Micron and AMD, some of the AI 11 names. Now again, many of you are going to go, oh, Nvidia, Micron, or many people on forums. If you're watching this and you've made it this far through my rambles, you probably I don't know, more discerning connoisseur of stock picking content. I'm not sure. I'm amazed if you've made it this far. Micron. Okay. If you were to look at the share price, you would think this was— it was just discovered a cure for cancer, right? Unfortunately, it hasn't. Not yet. AI might. Who knows? That'd be a wonderful thing if it does. Um, is it in line with the S&P? I don't know. I'd rather own Walmart. I'd rather own Johnson Johnson. I'd rather own Amazon than Micron. I think it's down here with Tesla. So to just sense check this intuition, let's pull it up here. 685 out of 750. It's right down at the bottom. So this has been clearly like a speculative AI rally, and I know that's impacted many other companies, including many of them in this universe, some of which are ranked at the top of this list. But the difference is they have quality underlying business models and fundamentals to begin with. So it's a quality profile that catches that tailwind, ignites, rather than just everything including dog shit in the woods igniting when you're building a campfire and ignites. It's like everything fucking igniting. Weird metaphor, but anyway, another one. So 20% discount to the fundamentals. Oh, that's, uh, I did not expect to see that. So I can't put it down in dogshit territory. I believe that's a technical term for F tier, because it's actually a slight discount. So the cash flow, what have you, is actually catching up. So I think it's a Tesla situation. I do feel a bit harsh on Warren Buffett now, having him down with the likes of Micron and Tesla. But I don't know, whatever. I think he'll underperform the market over the next few years, or continue to do so, as he has been. All right, that's where we go with Micron. So Back to our tier list. We're making good progress here now, believe it or not. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10. We're halfway through. Oh, okay, and breathe. Right, next up, Apple. I'll just put you in S tier, pal. No debate. I'm not gonna offer any unique insights into Apple, am I? It's Apple, okay? Look at the chart. You don't need to look at the charts, you know what it'll look like. Go up here. Where is Apple? It's going to be right at the top somewhere. Or is it? Oh my God, where is it? 38th. Okay, so if you consider that the 767— 750 companies, anything in the top 75 is in the top 10%. Okay, and this is 38th. So this is like a top 5% company. This is still arguably S tier. Look at that, look at that, look at that, look at— I don't know where my phone— oh, I'm filming on it. Look at that, the phone, if you could. iPad through there, AirPods there. You know, we're surrounded by Apple products and I don't hate them. I'm not a hater when it comes to Apple. I'm a lover, a lover boy. Um, okay. 55% premium. Hmm, look at when Apple was cheap. You can see this measure, guys. So, okay, not to sound like I'm contradicting myself or anything, when a company is truly amazing, when it is truly epic, Stocks don't tend to sell off because of the valuation. Great companies don't. You shouldn't let— generally speaking, if it's an S-tier company, you shouldn't let valuation get in the way unless it's just obscene. Stocks don't fall because they become overvalued. That's what I was trying to say. That's the one that I've heard. Over the years, and I found it to be true personally. Great companies will trade at a premium. Ideally, you want to look for when they're cheap. It's more like when these stocks are below fair value, that's a much more— that, that's when valuation becomes like super relevant. When they're trading at a premium, they tend to trade at a premium most of the time. So it's like, yeah, That's not new information. That's therefore not as relevant as when an amazing company is actually at fair value or below fair value. And you can see the effect here. And this actually, to Buffett's— oh no, no, I'm wrong, forget what I was saying. I think here, this is when Buffett kind of liked it, 2017, 2018. That was the last time it tagged fair value. But for years, in fact, I remember a girl— it's not romantic, but I remember a girl when I started at Bloomberg. She was also on the graduate program. She was Swedish. And Patricia Sanevitz, if you're watching, hello after all these years. Um, we were graduates, so we were like 21, 22. Must have been 100 of us. I remember Patricia, she'd been either working part-time, I think, during university, or had interned or something at Apple, written a thesis or whatever, like alongside studies. And she'd been awarded shares. And I remember her in 2009, 2010, it would have been 2010 when we started at Bloomberg, saying how she got these shares. And maybe it was like $5 apiece. That would probably make sense looking at the history here. And she was saying, I wonder whether to sell because we were, you know, we were grads, we weren't being were paid pretty well, but, um, you know, in the grand scheme of London and starting out, you weren't paid mega bucks to have money left over, particularly when you're hitting up all the bars in London as a young man, and in her case, a young lady. And, um, yeah, she was, she was asking the question around the campus, so to speak, around the cohort, you know, would you sell or would you hold on to them? She was tempted to sell. If I recall, it was probably around 14. I just have the numbers 5 and 14 in my head, and there you go, you can see them on the chart. I believe that she held on to them, and I hope to God that she did. Um, I've made a few mistakes of omission in my time, but mainly with watches. I used to collect watches a lot back then, I was starting out, and I can think back to the Rolexes, for example, where I started out. Tend not to wear that brand anymore for what it's become, but back then, you know, I, I think of the ones that I sold and the ones that got away, so to speak, and just how cheap now, with the benefit of hindsight, I sold them for. At the time it was like fair money, but, you know, a bit of buyer's regret— no, sorry, seller's remorse. And yeah, anyway, I just hope she sold on. So for years it remained so cheap. 2007, Jesus, for like 7 or 8 years to 2015, it was still cheap. Up at like $30 a share all the way from $6. It's like fivefold, five extra money, and it was still cheap. Anyway, waffling on. So make a call on this, James. Is this S tier or A tier? It's a cut above Costco. It's just as valid as Microsoft. It's just as valid as Meta. Is it just as valid as NVIDIA? I guess we have to say so. Yeah. Okay, so it's S tier. Done. All right. I know we meandered there. I weave is what I do. See, quote Trump. Why don't we go with something different like ExxonMobil? Was it Dick Cheney that was in that film a few years ago? Like a biography of his about Exxon and all the rest. Capitalism, is that what it's called? Uh, okay, what are we doing with this? It's an oil company, so recently it'll have gone through the roof, right, because of that thing beginning with W. Oh, uh, the ticker, ZOM, right, because of war. Otherwise it just trades like crude oil, not surprisingly, underlying. I mean, it's a higher quality company. There's no doubt in that. And I'd rather own it than the commodity. But don't confuse this. Don't be fooled by the rocks that I got. Don't be confused by this because ExxonMobil is still Jenny from the block. It's, uh, it's just so cyclical. Let's see where it ranks. 600,000. 1.5. This is below average even though it's a quality oil and gas stock compared to all quality stocks. I'm not, I'm not putting this one in the same league as the S&P. I think it's below. And this is, this is making me feel happier about having Berkshire Hathaway down there. These old names probably just underperform the S&P. Berkshire— I can't say Berkshire Hathaway— Berkshire and Exxon, uh, down there. Um, these feel to be better quality than Tesla, better quality than Micron. But yeah, it's not F tier, although cyclicality-wise I'd have it down there. But I think, uh, I think it's, uh, it's C. If you keep hearing me refer to cyclicality, guys, I'm I think I touched on this a little bit earlier, but it's the idea that the business cycle affects pretty much everything, but quality stocks, because they're more robust and resilient, tend to be less affected because they have relatively inelastic demand or less sensitive demand. Demand is less sensitive to the swings in the business cycle. So mining companies, oil and gas companies, are more volatile because they're more cyclically sensitive, they're more pro-cyclical. So you won't find many quality profiles in those industries because it's already a negatively skewed pool of companies or universe. However, they do exist. Caterpillar would be an example within industrials, which is like an A or maybe even an S tier industrial, but it's in a sector that you generally don't want to own to begin with. It's like the least dirty shirt. I remember Bill Gross of PIMCO used to use that term back in 2012 when we had all the debt crisis. It was, I think, when he was bigging up treasuries, even when the US was rumored to potentially be about to default on the old debt cliff, fiscal cliff. He was still saying, well, within, within Europe, we like this, we like that, when Brexit was going to be a thing. Um, and it was this idea of, well, which bonds do you hold? They're all dirty shirts. You don't really want to put any of them on, but this is the least dirty shirt. Um, so anyway, moving on from that analogy, I can show you that this, uh, this shirt is fresh on, especially for YouTube. Uh, okay, moving on. You know, too much information. That's a C tier. Okay, and if we just have a look at this, yeah, it's not an S tier or an A tier company to begin with, and it's at a bigger premium than Apple, so Exxon, you're down in C. Okay, Intel. Now this has become very popular this year because it's been caught up in the AI 11 trade along with the likes of Micron. So by default, I'm going to begin with it on par with Micron. Let's see where it ranks. Now for memory, let's have a chat. This is— oh my God. This is literally down at the bottom. Oh, for the love of God, what is going on here? So it's just had like huge earnings surprise as well as a spec rally, and it is horrendously overvalued. This is awful. I don't even want to look at it. Get out of my office. I don't want to look at your face. I'm disgusted. Get out of here. This is where molasses fly, right? Oh, ah, I'm lost for words. I don't, I don't even want to look at Intel, but I have to. And to think as well, some monthly— to think if you look at the daily chart— oh, so weekly, that's probably the best. Look at that rally, it'd gone from 19 to 130. It's just disgusting. It's just disgusting. If dog shit had wings, it would be Intel. Shouldn't be there. That, ladies and gentlemen, is our first F-tier company below the S&P, lower than Tesla, lower than Micron. Which actually looked somewhat favorable in terms of valuation and, you know, had a more consistent trend to begin with, below Berkshire Hathaway and below ExxonMobil. Intel, F tier. So I'm sorry guys, but if, if you are bullish on it, but, um, you know, maybe the story is changing, maybe this is going to be a big beautiful breakout, but, um, Yeah, I'm not interested. I would imagine in the near term we're going to see a retracement to the previous high. It's generally how these charts tend to go. Look at that, it's taken like, well, since the dot-com Y2K to break out of this range, roughly sort of $43, $45 to $60. Um, it wouldn't surprise me if it comes back to sort of $60-ish, maybe $50 to $60, if it comes back and retests that. Maybe it continues higher thereafter. We'll have to keep an eye on the earnings, but for now it's pretty much the weakest company in the universe. So that's F tier by definition. Okay, Cisco. All right, what do I have? Uh, does anybody remember the, uh, classic? Always makes me think of the thong song, strangely enough. There he is. Anyway, without getting on to Cisco the artist, Cisco, the tech company. Where would we have this? Okay, honestly, it just sounds like more sort of beta, more S&P fodder. Some of you, again, if you're into the AI trade and you're into the more hypey stuff, might have it, you know, maybe even up there with Nvidia, certainly associated with these names like Micron and, I don't know, Intel. But as you can see, there's a big— when I view it through my lens and through our model, there's a huge dispersion and difference between those names. You know, some of them are S, some of them are B, some of them are C, and one of them is F so far. So let's take a look. Let me see that profile. Cisco, let me see that. Okay, hang on, hold the phone. Let me see that multiple. There we go. It is horrendously expensive because of the AI rally, and it's a mid-tier company to begin with. So I think otherwise, with the score that it has, if I'm being objective for a minute, it's kind of top third, just in the top third, or the top of the middle third, whichever you like. Let's say it's like two-thirds of the way up the list. That might suggest that it could be an A-tier stock. But looking— that made me grimace. And looking at the valuation, there's no way I'd have it up with Costco here. So pull up a chart. Oh geez, okay, maybe because of the tech theme and stuff, maybe this now is more of a compounder. I'm gonna have this in line with the market. I feel a bit sorry for Amazon being categorized in the same thing, but I'm going to have Cisco there. I don't think it's below C for the ranking, and also, well, yeah, for the rankings, the valuation isn't actually good. That, that's to its detriment. But yeah, it can't be A tier, guys. It's going to be B. Now, JP Morgan. Let's go for one of the financials and one of the I don't know, rulers of the world, uh, one of the dynasties. Where would we have this? I reckon it's probably in line with the S&P. Um, again, it's a case of it being in an unfavorable sector, financials. Just as I don't want to be in industrials, generally speaking, I'd prefer not to be in, you know, anything to do with basic materials, natural resources. Um, yeah, and it's kind of middle of the pack. The comparing it to free cash flow, you can see this chart looks crazy because it's a bank and they don't tend to generate a lot of free cash flow. You'd be better off comparing it to, say, tangible book value, or there's other ratios that you tend to look at with financials. But without getting bogged down in that Sure, as a compounder, I think it's basically like the S&P in terms of the return that you're going to get, maybe slightly subpar, um, owing to the fact that it's, it's a bank, therefore it's more sensitive to interest rates than, say, I don't know, Costco maybe, which is a more durable sort of cash-and-carry budget consumer staples like retailer. Uh, okay, I'm happy with it there. So let's see where we're going with this. What else do we have on the list? Have a scroll down. Let's go with AMD. We'll finish off with AMD and Alphabet. Oh, there's Broadcom as well. That's the chip stocks. All right, quick takes then. AMD, I doubt that it's A. Maybe it's B. I don't think maybe it could be C. Let's take a look. We'll start with it in B, see where it ranks. So AMD, 313 out of 700-odd, as I keep saying, middle of the pack, actually in line with the valuation. So this isn't the worst play, which is an English way of saying it's not a bad play if you're bullish on the AI-11, which this is part of. Which you may or may not be now given the recent sell-off. So if we take a look at AMD and see that it's, uh, it's been on a wild rally, it's really come alive. It went sideways for like, what's that, through the '80s through there for like 30 years, and it seems to have come alive. So it's a difficult one. If it had any premium in it, which I'd have expected it to do given the recent rally in AI. I'd have put that down in C, but I'm gonna maybe give it the benefit of the doubt and have it in B along with Cisco and, uh, and Walmart. You know, those kind of companies probably perform roughly in line with the market, maybe a little bit under. So you might beg to differ there. Okay, uh, then the next one, Broadcom. Well, for a period of time, this might even have been S tier. I think it's an A-tier company, but you may have seen my other video where the big reveal, if we, uh, pull this up now, uh, IVGO, it's hella expensive, as they say in America. That is an insane premium. Now, if I was to judge it on the basis of the valuation alone, which is where So many people go wrong, and where value investing breaks down, you know, day one, you're placing the valuation before the business. Quality-focused investing, which is what I specialized in professionally and what I've pursued personally, is the other way around. You put the business first and the valuation second. So it's not to say that you're just a growth investor or a momentum monkey, because those companies may or may not, and in many cases may not, so don't have defensible positions. So actual, like, broader quality metrics, which is what this footprint shows you for each of these companies. Broadcom does have that, and it ranks— where were we? 125th out of 700-odd. So it's inside of the top 20%. Which is still— that's A tier, let's be real, that's A tier. This premium, however, is like scary. So right now I wouldn't be comfortable owning it here. So I think if you were valuation sensitive and you had to go now, I'd possibly have this down with B. But I think longer term, once things settle out and earnings catch up, perhaps over the next, you know, 3 or 4 quarters, over the next year. I think long term this is an A-tier company alongside Costco. Maybe we've— we're best to look at this over, say, like a 5-year horizon, which is probably how long you'd be holding the S&P for at a minimum if you were just putting your money in an ETF, right? You're not speculating month to month or even necessarily year to year. You shouldn't be anyway. So we'll give that benefit of the doubt and put it in A. So we've got 3 companies left. Well, let's round off with tech. So Alphabet, where does this one go? For me, this is my favourite company in the world. Um, I of course love the platform. I love making videos on YouTube for the reasons that I mentioned. Um, contrasting the experience on Meta, I think whilst, you know, it is still algorithmically compounding against you, it is a more positive environment for being entertained as well as learning things, hopefully like this, from sharing ideas and being a bit more human where it doesn't need to be as edited. That's why I'm going with this video, with it being hopefully open and free-roaming. It shows you how I think about things, um, the ums and the ahs and all. It's not scripted. So let me show you why, and then we'll get into where it settles. It's ranked in 52, call it 50th place, so it's still top 10%, 4 out of 5, beautiful footprint. But back when I was really bullish on it, the valuation was out here as well. It was undeniable, undefeatable as a proposition. And I've mentioned this in some of my other videos, but as I sold my house in— was it apartment? In late '22, I think it was December 2022, and then it cleared— is that the word?— in January, completed in January '23. I'd been sitting in cash around here, and then I was beginning personally— like, I had, I'd raised a load of cash, and naturally I was looking to put it into the market because the market sold off like 30% or whatever, nearly. Going back at that point, we're like 25% perhaps. I don't think we quite saw 30%. Take this off log, it'll become clearer. Um, this is monthly. Sorry to slow the video down, but let's just confirm, get our facts straight. Yeah, the drawdown hadn't quite reached 30%, it was like 25%. I remember it really clearly, and I was just waiting. It was a matter of another few percent, not only on the S&P but on my watch list. And at the time, Google, Alphabet, was like the surest thing. Where I would literally have put my house on it. It didn't quite trade at the level, it was a few dollars, I think $78 or something, and it may have traded $85, something like that. That had been sat there waiting for— in fact, just for old time's sake, again for clarity or posterity, let me pull it up. Don't know which one I had it on, maybe it was Google. Uh, here you can see— where were we? You know what, I've, I've since drawn this retracement, but there we go. Look, the, the low was 83. I thought 85. 83. And I was talking about 77. So yeah, it's a sickener. 76 it might have been, so I think it would have been around the previous peak. $76 and it traded $83. Keep in mind that I was watching this like all year, of course, like anticipating it. Um, I was a few dollars off, uh, off getting in. Call it $80. And, uh, yeah, it's traded $400 since. So I'd have had not only— I have made money in this, I've had significant investments in my pension and around it from time to time in Google, but it's, uh Yeah, it's definitely the big one that got away. This would have been a potentially life-changing sum, but thankfully I'd done pretty well in some other areas around that time. So yeah, the one that got away. And here you can see exactly what was driving that decision, apart from the great fundamental footprint, which is still the same back then, albeit this was, this was also out here given valuation. Yeah, it was just such a discount and had all of the future going for it. Cloud was— I think it just turned profitable. People were really sleeping on its growth compared to peers like Amazon, Microsoft. And as a consumer, I loved YouTube, and it's actually what inspired me to begin creating on the platform. And, uh, yeah, I had a very good experience. With the, uh, with the platform as a creator. So, um, yeah, both as a consumer and using it as a business or as an individual, um, a creator or a personal brand, dare I say, I have only good things to say about them, which I definitely can't say for Meta, for example. It's the opposite. So, um, yeah, it's now too crazy of a premium to, uh, to put this in S tier. But I have fond, fond memories of the one that got away, you know, is so close. And it vindicated my process. Still, don't be a dick for a tick, they say. But, you know, I'd been sitting on that for months waiting, and it just didn't quite trade. And in the end, everything else worked out. So right now it's A-tier, um, probably in line with Broadcom. Yeah, fair enough. Uh, in line with Costco, very different sector. You could give it a nudge up, but I'm gonna let it settle in A because of the valuation for now. Despite what I was saying a few minutes ago, 150 times is just too much. 150% premium is just too much for me personally. It's all gonna be, you know, you— it's all, uh, relative. It's all personal. Might I pay a 50% premium for a certain company? For Alphabet, yeah, I probably would. Would I pay 150% premium for it? No. It's a similar premium to Broadcom, so I think that makes sense. We can move on now and conclude with the final two. So Eli Lilly, I lost a lot of money to these guys because I own Novo Nordisk. And if you don't know, they're a big competitor. Well, they are Novo Nordisk's competitor, nemesis in fact. And they produce essentially diabetes drugs, insulin. Um, and they've just walloped Novo Nordisk. It's as simple as that. So if we pull up Eli Lilly, it's been on a tear. I'll tell you what, I prefer this one a bit better to see the line. Had been on a tear, but maybe there's a little bit of reversion here taking place. Because I don't know, is Novo maybe showing some signs of life or recovery? It's beginning to perhaps bottom out here. So, you know, maybe all of the optimism when it was winning and rubbing it in the face of Eli Lilly— get this onto a log scale, that looks more appropriate— maybe there's a bit of profit taking starting now. But let's see where it ranks. LLM, LLY, 164. So this is, uh, yeah, just inside of the top 20% in the universe. So I, I think it's fair to say that this is above the S&P because that would be average, that'd be middle of the pack. So yeah, it's probably A tier. Um, it's at a pretty lofty premium for something that isn't tech. Uh, so yeah, I think I'm okay with, with putting this, putting this in A. It might drop down to a B. Um, there aren't many companies doing what it does, so I'd say it's basically a duopoly between them and Novo. And now that Novo's nearly been wiped off the face of the earth with CEO changes, profit warnings, and counterfeiting on top of Eli Lilly's competition, the competitive threat. I think we can put that in A. I'd probably rather own it than the market over the long run. And we'll do some comparisons just after we wrap up with this last one to see how this tier ranking, whether it would have, you know, given us an edge over the market or not. So Visa, you know, this is the quickest one. You might think, ah, it's like Visa, meh. It's not crypto, it's not, I don't know, AI, it's not whatever. Let me tell you something. Sit down for a minute, son. Let me tell you something. I'll teach you a thing or two about a thing or two. Really bad Sopranos impression. Visa is S-tier. I think it's in 5th place up here. And you may see that it does carry that AI risk flag. And this warning or this label in terms of the model that I've built here, again, you can get access to it via the link in the description if you want to check it out. Got to say that, guys, keep reminding you of mine along here. Um, it has such sticky entrenched network effects. It owns the payments network along with Mastercard, is basically a duopoly. It's very hard to get credit cards in people's hands if you're just starting out. Even if you've raised all of this money in this funding, you're not going to compete with Visa and Mastercard. They're certainly not going to lose sleep, and they've got a lot more growth to capture still. And it's owing to network effects, a little bit like the social networks and platforms, albeit those were disrupted by— software was disrupted by AI. Very clearly in March with the SaaSpocalypse. Just pull up a chart. Is it IGV selling off? Uh, where was March? Down here, this big sell-off compared to, uh, semis. You can see how it just fell off a cliff as semiconductors, chip stocks rallied. Everybody is so optimistic on AI that they also began smashing software because the thought Claude is going to replace Intuit, for example, which is otherwise a high-ranking company overnight, and it just hasn't recovered. Adobe is another casualty that I mentioned at the outset. Um, these companies just are trading like death for that reason. But getting back to it, whilst there is, according to McKinsey, Goldman, JP Morgan, a lot of the analysts that the Big Four and the investment banks that are producing research on the sector looking at AI disruption, whilst they've marked or flagged Visa, Mastercard as those that are at risk of AI disruption, I think it's— would underselling or overselling— I think it's overdoing it a little bit. I think it's underselling the network effects here. So for me, this remains an S-tier company. You might otherwise, I don't know, drop it to market perform, to use the analyst term. Um, it might divide opinion, but I think this is S tier. It's one of the greatest compounders in the S&P. Visa and Mastercard. I think it was only listed in 2007 or '08 in this case. It doesn't have a super long history, but the linearity, the smoothness of that trend is as consistent as anything you'll see in the S&P. And that actually is what is captured there, 98th percentile for the trend. So it's kind of in line with the valuation, nothing to be scared about. AI risk, you might beg to differ and downgrade it from there. But for me, I still think every time you tap Apple Pay, even when you're not using your physical card, like Visa or Mastercard are getting paid. So that's the tier list. Now let's look at how these companies might have performed. I think the best way to do this is to pull up a chart on TradingView, and what we'll do is look at, say, the S-tier and the A-tier companies, so the above average ones compared to, well, the ones that we've got at the bottom. And what you can see here with the chart is that there's a huge dispersion between them. So in green, if I put this text on here, these are the S and F tiers— sorry, S and A tiers within the S&P. So in other words, the top 9 of those stocks that we've just looked at. So let me get that in the same color so it doesn't confuse things. You can see that this is over the past— was it 3, 4 years? Because there was a company that was listed here, which is meaning we can't go back any further. But you can see those right at the top having returned 180% over this time. Now, in blue, that's simple enough. That is the S&P 500. So had you bought SPY or something like VOO, that's basically what you're looking at. So that returned just over half, so 100% compared to 180%. And then down at the bottom, these are the bottom 9 according to the model. So again, like, if we go bottom 9 model on there. So that's value of fundamentals, guys. Hopefully you've enjoyed this tier ranking, and if you have, then watch this video next because I'll show you how you can expand this universe beyond the S&P and look to find even better companies globally, including those that might not already be amongst the top or biggest names in the index. Potential 10-baggers. See you in the next one.