New Firm & Approach: Launch of Humalis Investment Strategies with a concentrated, research-driven equity approach focused on 50 large-cap names and 65–75 SMID positions.
Small Mid Caps: Strong emphasis on SMID as a favorite sleeve for thematic stock-picking and diversification, positioned to benefit from market breadth broadening.
Dividend Growth: Preference for companies that consistently raise dividends over time rather than chasing high yields, expected to benefit as performance broadens beyond mega-cap tech.
Value Stocks: Bullish stance on intrinsic, fundamentally cheap value names, arguing the broadening rally should increasingly favor value alongside SMID and dividend growth.
Financials/Regional Banks: Positive on Financials with a barbell view—mega-banks and small banks seen as winners; expects mega-mergers among regional banks as mid-sized players struggle to compete.
AI Theme: Extensive discussion of AI’s dominance with nuance—less like the 1999 bubble, but risks flagged around circular financing and sustainability of profit margin expansion.
Stock Highlight – ORCL: Oracle (ORCL) cited as a long-term holding driven by balance sheet strength and cash, now capitalizing on AI infrastructure demand as a non-Mag 7 beneficiary.
Transcript
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Visit van.comxcompound to learn more. >> Hello and welcome [laughter] to Live from the Compound. Who is Brian Bellski? All right, today we're going to have a lot of fun. You have a really big [music] news to share with the audience. I want to set this up for a moment. Guys, on the compound we have our regular guests and then we have our regular regular guests. The people that the crowd goes [music] crazy for every time they're on. They make a huge impact and people are always asking for more. When are you going to have so and so back? One of our [music] regular regulars is here announcing the launch of his own firm. We're super excited to have him back. It's a special edition of Live from the [music] Compound. We're literally live, not on Zoom, and we're here with our friend [music] Brian Bellski. Brian, welcome back to the show. How are you? >> Thanks so much for having us. It's amazing. >> What will you be revealing today? >> We're revealing our new firm. [music] >> Okay. Uh, and it's called Humalis Investment Strategies. >> Humalis Investing Strategist. >> Investment strategies. Yeah. Strategies. Humalis investment strategies with the acronym HIS. And the way I think about it, it's all his anyway. And when I talk about investing, um, you have to have a lot of humility when you invest. Period. And humilis is is Latin for humble. So a lot of people like, Belki, you're not humble. I mean, no, no, I actually am very much so. And but we we have a lot of conviction on how we talk about things. So our tagline is investing with conviction and humility cuz one of our lesson or one of our >> Oh, so you have high conviction but it's in the need to be humble. >> Correct. >> I got you. I like I like that. Yeah, I do. >> So how did I come up with this whole this whole tagline? So do you remember u uh Lewis Rukiser? >> Yes. So um I remember >> our YouTube audience will remember him well. >> Yeah. Look it up on the internet. >> They are the great grandchildren of his viewers so they'll remember. >> So I I remember you go to Owings Mills Maryland and it was a Friday night December of 2000 and I was so nervous man. I was so nervous to be on lastini was on with Mary Frell and Luca and I'm nervous and I'm like what do I do? What do I do? How do I get through this? And I started praying and there's this really important scripture that I've always said right before I do any public speech and it started that night. It's it's Micah 68. It's from the Old Testament says God asks you to do a lot of things but you absolutely positively must act justly, love mercy and walk humbly. To this day I still quote that before I go on every single television show, before I go up and do a speech. It just grounds me. So, we're not going to be right all the time in this business. >> Well, that's the line that got you through that first big appear. For people that don't know, Lewis Rukiser uh show, what was it called? >> Wall Street Week. >> Wall Street Week. So, it was every Friday night. It was like the markets closed >> and then it would air on PBS, but it predates CNBC and >> for a fairly long period of time, it was the last word in Who Knew what they were talking about on Wall Street. Correct. Okay. Correct. So, that got you through there and you've you've maintained that idea. >> Yep. I maintain that and and that's what really got so then as I started this process about okay uh you know working for the man for all those years was fantastic when you work for great places like amazing time at Beimo and then Oppenheimer for a couple years before that then my amazing time at Meil Lynch Piper Dne um you meet amazing people and you go through a lot of great things and you learn an uh a tremendous amount of things about a business and in this business in particular but at the end of the day this business is all about relationship ships period. And we've had we've been very blessed to have great relationships all along. So I wanted to capitalize on those relationships. And quite frankly, when you're doing three jobs, when you're doing institutional strategy for Canada, institutional strategy for the US and portfolios, it's a lot. >> Yeah. >> It it was time to kind of focus on one. And that's why we decided, let's focus on portfolio strategy. Let's focus on our separately managed account business and running equities in both Canada and United States. and we decided to pull the trigger. >> Okay. So now this is going to be the way you manage money going forward. >> It's your own firm. >> You'll have active strategies on the stock in the stock market. Yep. >> And you'll now be in a position to focus on that and not focus on the priorities of a much larger corporation that's doing a lot more things. >> Yeah. Like say for instance, >> you're doubling down on doing stock market stuff for the people that trust you with with uh their investments. So in the institutional strategy world, you have to publish all these great research reports. And one of the ones that we've done for years is called the chart book. We've we've published a chart book since 1996 or seven. And so on the on the institutional side, we've get a call from 72 or Millennium or something. Hey, Bellski, can you walk me through this return on equity model for industrials and what how that works and where are the signals that takes a tremendous amount of energy and research to try to figure that out where we're it's not like we're not going to do that anymore, but we're not going to be that literally pointed uh in terms of institutional just to try to prove to people that we know how to do things with respect to calling the market. I've said for a long time that the stock market is a market of stocks. Too many people that do what I do are so focused on the index and make it the big market call all the time. And obviously institutions want to try to figure out and and make sure that you're a tool in their tool belt in terms of how they're running their portfolios or what they're thinking about. But we just want to run portfolios. We just want to talk stocks. We we're part of the to quote the movie Stripes. We're the last of a lost generation. I mean we we like to tell stories and talk about companies and how they relate to your life. And that's one of my rules of investing. Uh, investing is like life and life is like investing. If you think about it, you know, why do you like to go to Costco? I mean, why do you like to buy Apple? Why do you buy Netflix? Think about how important these great American companies were during co whether or not it's Netflix or Google or Zoom or Think about that. We could not have gotten through COVID without these great American companies. >> How many great American companies are you going to be owning in your model portfolios? What does this look like? >> Great question. So, that's where the conviction comes in. So, again, rule number three of investing is I don't know everything. In fact, I'm not the smartest person in this room. There's a lot more smarter people in this room than me, but I think I know a lot about the 50 companies we run in terms of our US focused portfolio. I don't need to know a lot about the 450 companies that we don't own, but I I think I know enough about the 50 companies. Typically, in large cap money, we've proven through all this fancy back testing, 50 is a pretty good number. And so, from the US focus portfolio, we're going to follow through with respect to what we're thinking on sectors and industries and our our themes from a fundamental perspective. So, we feel really comfortable with with 50 companies as much of a 6% position and as small as 1%. In our small midcap uh portfolio, which we've talked about on the show here, I love I mean, as a parent, you're not supposed to have a favorite child, right? >> But this is my favorite child, the Smid, because you can play themes and and stocks and stories and and so around 65 to 75 because the risk p the risk spectrum is >> more stocks in that category. Y >> um >> I guess that makes sense. You would want to be more diversified as the cap size falls >> if you're trying to capture more of those individual stories, >> right? So here's a great example. >> Like a macro bet, >> right? So if you're going to be if you're loving like we doubled down on Google earlier this year when everybody thought no one was going to use search again, right? Or or Apple like say if we have a 6% position in Apple in a large cap portfolio, we're still going to be kind of underweight 6%. But in in our SMDcap portfolio, SMID um we love this company Celsius. I've own it for a long time. You think I'm going to have a 6% position of Celsius? >> The energy drink. They're killing. >> Delicious. Or or or Shake Shack. I mean, it doesn't make sense. >> You need more names cuz you're not going to take a 6% bet. Correct. With Okay, got it. >> So, where we think we're different is not just because of our approach of doing, you know, frankly, market strategy for all these years, but actually really live running money. We started in 2005 officially when we were at Meil Lynch and then but I think that we put our we've always proven that we put our money where our mouth is and because we were FINRA registered analyst we had to write the research report first then it was published to the world and then all the all the portfolios come out but I I think this where where we're differentiated now is we're not just tech we're not just go go momentum we're not just large cap we've always thought of the market holistically from an equity perspective so whether or not it's Smid which we love, which we don't think people own enough of, but you know, that's a whole other perspective. Value, we love value value stocks here, like intrinsic fundamental value stocks. And then dividend growth because of the income. We focus on those companies that grow the dividend over time and have a proven track record, not about yields, about dividend growth. So, where we're going with the market, we think ultimately is that the market, we've been talking about it, we meaning the collective market people have been talking about broadening out for a long time. >> I think it's got to happen at some point. It is will happen. So yeah, it is happening. >> It is happening. So I think what's going to happen is we're going to not at this not at the expense of Apple or Google, but I think we're just going to see a spreading out of of performance, which will actually help benefit dividend growth philosophies, value philosophies, small midcap philosophies, and I we're very well positioned for You you mentioned the rally broadening out and people are looking at a lot of the names that are getting bombed out and there are a lot but if you look at the equal weight S&P the NASDAQ and the Russell the equal weight all three of those are within 3% of their 50 of their all-time high. >> Now at the other end of the spectrum you do have I was looking at this this morning there are 26 stocks that are down 40% or more from their 52 week high not like their alltime high. >> Yeah. >> So 5% of stocks are in the S&P are down more than 40%. 20% of the index, I'm sorry, one uh a third of the index. So, one out of every three stocks are down 20% or more below their 52- week high. So, in this market that we're in right now where it's it's AI or nothing, you really do have to if for for what you're doing, you have to be a good stock picker. >> Yes. And that's where it goes back to the stock market as market of stocks. And I remember when I was at Merrill and we were actually very bearish in 2007208, but there's always something to buy. there's always something to buy even when you're negative. And on the on the AI side, on the tech side, not all stocks are created equal. You have a lot of semiconductors and different kind of fundamental trends. The mark the stocks that you talked about with respect to um um the unweight the equal weighted S&P. You know what why we remain so bullish, Michael, is because if you looked at the earnings revision trends, okay, if you look at the fusion index of FY2 versus FY1, just lost everybody in math, but it's just math. If you take a look at that, they actually were improving a lot better and a lot faster than the the big cap tech stocks or the top 10 companies. So that breath in and improvement of fundamentals, we think is really what's led us to these new highs. So it also proves that, you know, you want to focus more on stocks. Now, that also increases your risk, but at the end of the day, you have to be able to have a process and a discipline that kind of helps diffuse some of that risk. There's an argument out there. Um, our mutual acquaintance, Adam Parker, wrote about this this week where he's looking at the uh he's looking at the the dispersion amongst the Mag 7, and he made the case like last earnings quarter, Meta was the best performer. This quarter it was the worst. He looked at Nvidia compared to the other Mag 7s. Are they correlated or not? All of these things all year just go in and out. There's like no rhyme or reason behind good earnings uh uh responses in the stock price versus bad. It just seems like it's this company's turn to outperform or underperform. The case he's making is that the active bets that you should be making might be away from the mag 7 and just have those be a market cap weight because there's really no way to know or understand why they're moving in the same direction or against each other. whereas lower down in caps size, you could probably have uh less over and underweight but have an even bigger impact on your portfolio results. What do you think about that idea? >> I think that's 100% spot on and we've been underweight the mag seven because we don't own um a couple of those stocks in there. Okay. >> And we've been overweight other areas of the MAG7. That's kind of number one. Number two, look at last week, right? Look at last week on on what Meta did versus Google. So you're starting to see a differentiation with respect to fundamentals. Now now does it change next quarter and it's going to be another stock? Could be. But at the end of the day, that's why it makes sense to be more neutralize those and then overweight the rest. That's why [clears throat] for instance, >> you know, we're very very blessed and fortunate to own uh Oracle since 2014. Part of the reason why >> not in the Mag 7, >> not in the Mag 77 performance. >> Yeah. So, but we bought that company because of the balance sheet and the cash. And you really want to bet against Larry Ellison? No. I mean, the dude owns a Hawaiian island. I mean, come on. >> Yeah. Um, but now what he's been able to do and what they've been able to do in Oracle last couple years to really take advantage of what's happening in the AI side, that's an example of finding a stock that's not a mag 7 that has done amazing, >> right? >> And Broadcom's come and come and gone for the mag 7 if you you keep looking. But we've we've been there for a long time, too. But you our thing with owning 50 stocks goes back to you don't have to be the smartest guy in the room. Don't need don't need to know everything. You don't have to own everything. One of the one of the things with institutional clients. I have I used to when I when I was, you know, last week, uh, talking to a institutional dividend growth portfolio manager, they own 250 stocks in their portfolio. How do you strategy? >> Yeah, man. How do you how do you make a difference in that? You have 20 basis points a year, 15 basis points. I'd rather make a bet and and have a process in terms of looking that at that particular discipline to really make a difference. And that's how we >> Do you think there's like a pendulum though where the market wants one thing and then another period of time where it wants another like there's there's a moment where everybody wants to own everything diversification and then the pendulum swings and it's like the hottest products on Wall Street are concentrated >> earlier in the year. Think think about the after liberation day when all of the names that were exposed to China and the AI trade got smoked. You know what didn't at all? Birksher, >> right? >> And if you look at if you look at the full picture year to date, Birkshshire, the gap was so big in April between the S&P and Birkshere. And now it closed and went the other way because now any all that anybody wants is AI. It's sucking all the oxygen out of the market. You know, I keep thinking about this um AI stuff uh and the AI stocks now relative to everybody likes to make the comparison of 992000. I think it's absolutely not that. It's not anywhere near that. Now, do the price performance stuff, the valuation, sure, but you if you were in the business back then, if you had a dot on there, it was going up. It was going up. >> There's not some version of that right now. There might be >> there might be a little bit of it Josh but I mean literally anything in techn if you go back to look at also um private wealth positions equity positions in 992000 okay 90% of their total investment positions were stocks >> okay and 100% were tax stocks >> why did they get because they were too they were they weren't >> divers had the money taken away from you if you weren't allocating to tech we're not quite that extreme Now, >> we're not that quite extreme. And I I'll even go back further. I remember in the very beginning of of my career, uh, in 1990 back at William O'Neal and Company, and we'd have all these famous dignitaries come through, Peter Lynch, and talking about mutual funds who you guys had the amazing fortune of seeing. Oh my gosh. Anyway, um, there used to be a 10-year track record, then there was a fiveyear track record, then there was a three-year track record, but >> quarterly. [laughter] How'd you do last quarter? >> Yeah. how you know what have you done for me lately, Janet Jackson? But it actually did change in the late '9s to to a one-year track record because of what was happening. These guys had to get paid. >> To me, I think the biggest difference between then and now is the margins on these companies and the Moes and the growth and all that sort of stuff. So, there's this company called Duality Research that does amazing work. And they showed the forward PE, which everyone's talking about. It's hasn't been higher in 20 whatever it is. It's it's not cheap. He says okay but you have to look at profit margins because profit margins are also at an all-time high. So he adjusted the forward PE and he says it comes to 17.75 times less than one standard deviation above its 20-year average of 16.2 adjusted for profit margins meaning comparing this to >> yeah so he says so yeah if this is a bubble it's probably the cheapest bubble in history >> yeah I I don't going back to the bubble thing well let's talk about profit margins first part of our process >> I mean sorry sorry but look at these forward profit margins >> why would stocks not why would the multiples not be high in this type of environment >> correct >> but the but that the second question to this is how sustainable is the rate of of that profit margin rising because it's not the absolute level of the profit margin. It's does 14 and a half go to 16? >> Maybe the answer is yes. >> Oh, if that stalls out. Yeah, you're right. That's really the the question. That's what puts an end to this is when that goes into reverse if it does. Well, that's why you know part of our process for 30 when we started publishing the chart book late 90s is that you look at valuation you look at earnings growth and then you look at operating performance and and we've been studying this for years and years and years and you have to look at all these things. I think too many people only look at earnings or only look at valuation or only look at price. And I think this is what a lot of people are missing. But the the term bubble I think is is the most overused term in investments just like dysfunctional family is in terms of you know how how families are. By the way, all families are dysfunctional just >> in their own special way. >> Exactly. We'll see that in three weeks and at at Thanksgiving. Anyway, um just because asset prices go up doesn't mean it's a bubble. You know when it's a bubble? When the man's making money, who's the man? Everybody. Financial services. If you think about this, think about 99200, the IPO activity, the secondary activity, the M&A activity. You had all these deals, not not just one or two, but all of them done with stock that was meaningless. It had it had no value. And you had all-star analysts. You had rockstar bankers. Frothy frothy frothy frothy frothy frivolous. We're nowhere near that. >> I was I was yelling about it this morning with Ben. To me, words matter, right? You people are throwing around the term bubble. To me, a bubble is, and I know it's shorthand for expensive. I get it, right? I always say to >> But a bubble, a real bubble is one in which there is no there is no road map. There is no possible scenario to which future cash flows can justifies today's prices. No way. It cannot happen. Like impossible. There's no model that you could show me. And that's not what this is. And then also part of the second part of that is that and so therefore asset prices must correct and don't give me 50% because Amazon and Micro and and Google fell 50% in 2022. Asset prices must correct by at least 50 60 70 and not rebound in two quarters or two years. They must go down and stay down. So you could say stocks are expensive and and we're going to have a bare market. Sure. But a bubble to me is which there is no possible justification for today's prices. >> Go back to the moat thing, right? because that's really important or or whether or not it's from an operational perspective or a cash perspective. Let's go look back at two of the poster children, Lucent and Worldcom. I mean, they had no they had nothing. I mean, that that was part and parcel where we didn't have a 50%, we had a 90% pullback. So, we're going to have I don't know. >> But they were selling a lot of equipment right up until the end. It's not as though Lucent were masquerading as a company and didn't have an operating business. The thing that the thing that created the top was the orders started to be cancelled because all of the equity offerings that were financing the purchase of that equipment stopped coming in. >> Right. >> Doesn't know that until it's too late. >> No, because they created they created a capacity situation. So that's another big theme in in in investing over capacity. You want to buy the scarce asset and sell the sell the asset with lots of capacity. So going back to the new firm Humalist, we're trying Humulus investment strategies. We're trying to create a scarcity proposal that we're going to have equity portfolios that aren't just one thing but also provide for the for the market dynamic and then also overlay our years of experience. >> Do you think when people talk about where we are today, I feel like after listening to Microsoft and Amazon and Google, you can't say these stocks are in a bubble. I feel like most people say they they deserve what's happening. >> In one special way though, people can say it. They don't like the circular financing of not only the product sales but the buildouts of facilities. And I was listening to uh Gersonner on his podcast talked to Satcha and Sam Alman together >> over the weekend >> and he asked the question flat out, how could a company doing 13 billion have $1.3 trillion worth of uh financial commitments? and he sort of asked it tongue and cheek because he wanted Sam to have a snappy comeback and he did uh starting with we're doing way more than 13 billion in revenue but he then subsequently dropped off the pod and said gentlemen I have to go >> that fuels peoples but that when that stuff happens >> he really did >> he really did and Satcha finished >> Satcha finished the interview now for all we know and I haven't asked Brad about this for all we know it was planned and Sam said hey I have 20 minutes for your show I can't do the full hour I don't I have no idea but I'm just making the point people don't like the circular nature of a lot of the deal making the overlapping we'll give you revenue for this you give us revenue for that right >> and that is what gives rise to the bubble talk it's not just about valuation it's about the structure of the deal making and I think we could all agree any company that comes out and says we have a deal with Nvidia or a deal with open AAI it's an automatic 10% pop in the share price but that I was just going to say exactly what you just did that and that's not Apple, that's not Microsoft or Google. We're talking about Open AI and anthropic and which don't have share prices. >> So, Open AI. All right. So, let's just say they're doing 20 billion in revenue. Whatever it is, okay, it's not 13, it's 20. Maybe it's let's say it's 25. They're looking to go public at a trillion dollars. Guess what? >> They better grow into they better get to hundred billion in revenue. Now, you might say, and I don't know anything about this, Michael, there's no roadmap for open AI to get to $100 billion. Fine, maybe that's the bubble, but is it in the is it in the public market? It >> Yes. Yes. Because think of how many of these companies are reliant on OpenAI continuing to spend at the rate it's spending in order to keep reporting their numbers. And that's the part that people are saying, we're not calling this a bubble cuz Microsoft's 100 times earnings. We're calling this a bubble because the revenue growth is not sustainable if somebody kicks out one of these legs to the chair. I'm not suggesting I'll be the one to see it coming, but I don't dismiss the bubble concerns as easily as somebody who just compares PE ratios. >> Yeah, we're in the same boat. And I kind of go back to my O'Neal training as well, like stocks are rarely >> Shaquille O'Neal taught you a long time ago. Bill O'Neal, Bill Bill O'Neal, the great Bill O'Neal. Stocks are rarely linear for long. So, you know, uh, call call me call me cynical. Why Bowski are opening a firm at the top of the market? So, my comeback would be, well, I don't think we have the we're not at the top of the market. We still think we're >> That's funny that you said that upon your announcement. You're I think you're a little bit self-conscious about, oh my god, what if it is the top and and [laughter] I chose to launch my firm the same day? Well, I mean, you know, again, that comes back to the humility or self-deprecating, but but I I you know, our call is is that a 25 year secular bull market started in 2009. I know you and I have talked about maybe different maybe it started in 2011 what 13. Yeah, 13 >> um potato. But I think we have I think we got about another 10 years to go. But we are going to have >> we are going to have a recession again. We are we're going to have a bare market again. We are before this big secular bull is done. And it maybe is one of these frothy people failing or really tripping. >> Small mid a a partial defense against the unwind of the AI bull if and when it ever happens. Meaning market cap comes out of the oracles and out of the um out of the Microsofts and looks for a home in an area that's not reliant on open AI getting to a trillion. Like is that a possible story? I think all three strategies are meaning dividend growth value in Smid. >> You think they'll act as a counterweight in a portfolio of some sort? >> I do. [clears throat] Depending on how bad it is. >> I think they could. Yeah, >> I do because again, if you go back into Smid in particular, I know a lot of people have talked about, you know, the Russell 2000 aren't making any money. Well, you can't make a broader index thing. You got to look at the companies. The the S&P 600, um, it's got lots of cash in the companies. Some of them are paying dividends. The midcap index the mid within the S&P looks really great as well. And you combine the two, there's a lot of great ideas. So if you think about like, you know, I already mentioned Celsius or Shake Shack or Chewy, these types of names that have nothing really to do with AI or I love small cap financials like Glacier Bank Corp in Montana. It's amazing company or First Citizens was a roll up a lot of I mean these smaller banks I think are very well positioned from a from a relationship standpoint just like the big banks are. We love financials in general from the value perspective, but I think that that both those areas meaning smid and value are going to be huge winners through this. And I do think too that there's not enough dividend growth investing either out there. So I think I go back to when I was >> we don't like the we don't like the taxes. >> No, we don't like the tax >> relative relative to the the buyback. >> Well, just reinvest the dividend. Reinvest the dividend. >> No, no, no. We don't want to pay the taxes on the dividend. No, >> I was looking at Ford versus GM. >> Yeah, >> I don't know that there are huge differences between the two. I know Ford's got the bestselling truck. GM's got more high-end luxury SUVs. I get that, but the really big difference seems to be GM's uh return of capital to shareholders is almost all uh in the form of buybacks and Fords is almost all in the form of dividends. I don't know, like I feel like that's a pretty it's a pretty big difference. Um, and and I don't know what else is very different. >> I think that's right. If you go back to like I go back as a young strategist in the late 90s and I remember marketing in uh Boston at Fidelity and I remember meeting with a portfolio manager there and he's like Belki I got he was a small cap manager. >> Yeah. >> He's like Belki I got to buy Microsoft to perform. >> I don't I don't know if we're quite there yet um on that. But the other thing too is I wonder if if there there's got to be some data out there. Chart guy can figure it out or something. I wonder how many value managers there are now relative to 10 years ago or man. >> How many left? Not many. How many left? >> And they have less money. >> Yeah. Or dividend growth. It's like straight down. That actually is a is a contrarian signal. Right now you have to have the fundamentals. Don't be contrarian just to be an be contrarian if you have the analysis to back it up >> or why it will change >> or why it will change and I think that again let's go back to the dynamics of the market. I think we're going to have broadening out. If you have broadening out that obviously makes it for more cyclical areas of the market, more cyclical areas within consumer discretionary with industrials and certainly within financials which we still believe after all of this are still underowned. >> Which part of the financials because there's a lot of different areas. Well, we think we still think it's a um a bifurcated market, meaning the really big are going to do well and the really small are going to do well. That's why I think the in between. We're going to have a lot of we're going to have mega mergers of these regional banks because they can't compete with the big and they can't compete with the small. >> Yeah, >> that's coming. >> I saw one. Who was it like two weeks ago? >> Fifth Third and was that? Yeah, someone else. Yeah. Oh, Comria. They bought Com. There's going to be more coming. There's going to be more coming >> because they can't compete with the really big now. Honestly too, take the here's some perspective. Think about the financial crisis, but even in the early 2000s, would you have ever thought that Goldman Sachs would be talking about private wealth in the early 2000s? >> Yeah. >> No way. What do they talk about now all the time? >> Right. >> So, I think the the big banks with the multi-divisional assets of wealth, consumer, commercial, uh, institutional, very well positioned, right? the medium-sized banks, what we used to call the regional banks, they're it's going to be hard for them to compete. I think the brokerage business is still a great business because it's scalable. The asset management business is scalable, but the small banks, these guys are cranking on earnings. Uh, and we think that they're going to continue to be a beneficiary, let's say, of volatility in the market. >> You have a uh year-end price target on the S&P 500 at 7,000. I know you've uh consistently been more bullish than the pack in the last 10 years. In the last couple of years, you've sort of been still bullish, but like not quite as far ahead of the pack because everyone else is caught up to you. >> How are how do you think about just the idea of an S&P target? Do we even need to do that anymore being more on the asset management side versus the brokerage side? What are what are your thoughts on on where we are? You know, it's uh it's a great question because we we we've written this piece called the year ahead piece and I think I've written like 26 of them in last year. >> You do it every you have to do it every year. >> Yeah, I got to do it every year. [laughter] >> Are you done? >> You're done. >> I don't listen man. That that thing is 40. I mean it's the smart guy piece. I don't you know I but more for institutions but we put our piece out earlier as we do usually following presidential election years because we wanted to give more guidance and so we put it out in early November right a week after the election in our bull case for 2025 was 7,000. >> So a year ago going into the going into the the election where were you 7 >> 7,000 for the bullcase for 2025. >> All right. So 6856 today. So, we're here. But, but I'm not saying that to do this. I'm just saying that you did nail it. >> Well, I mean, but but what we said is that a lot of things have to happen. Now, >> we put it out early. The good thing now that we're going to be a portfolio advisory business, we can watch all the other people kind of put theirs out and see what because in the past it was Belki puts us out early. And I'm not saying people c I'm not saying people copy me or anything, but we for a reason we put it out early. Um, >> it's impossible for other strategists to not shade themselves with things that their colleagues think or say publicly. >> Of course, and I was >> we're all human, right? >> We're all human. That's that's exactly right. And when everything was going down in April, we said very clearly that if you're an advisor, man, right, and you're basing your business on a strategist target, come on, don't. Targets are an academic practice. that are an academic practice and they're they're a have to versus a get to. Um we get to put out a target going forward. We don't have to put out a target and we will put out a target, but what we said in April is we own what we own, man. We own what we own and we didn't change anything and we were very very very >> So you you uh you deserve the commendations. Um you were one of the few that did not come out in the in the heat of battle in April and say everything we told you 3 months ago, throw it out. Stuck to your guns. think investors were well served, paying more attention to you than anyone else. Um, so congratulations on that. >> Thank you. Thank you for that. >> Um, what do you uh let's let's just close here. You're uh starting a business. [laughter] It's your f it's the first business you'll ever uh be running. How excited are you? How like what are what are some of the first things that you think the public will see as a result of you being in this new position? Well, one of the interesting thing is I have an aura ring in my and every morning I wake up and about three out of the last four uh mornings it says you have major signs of a whatever because of the stress and you don't sleep and it's it's very exciting. >> It's butterflies. I'm telling you man I um on Friday when we changed our LinkedIn and we sent out we put our website up live and we have people signing up for our research. we'll have research and we'll have our portfolios up soon. It was try not to be emotional. It was it was overwhelming the response and when you're in the weeds, man, and you're working hard, you have no idea what you're doing and your impact on other people and it's just I've heard from people >> from William O'Neal, Dane Bosworth, early 90s, from Piper, a lot of people from Mel >> like your fans come out of the woodwork and say, "I've been waiting for you to do this." Right. >> Yeah. Yeah. Congratulations. And then the my my great partnership at Beimo. I mean, the the brokers and the adviserss up there are just amazing and sending me great well-wishes and everything. It's so gratifying and you but I don't I'm not doing that for that. I I'm doing it because I wanted I wanted a new chapter in my life and I'm super excited about being off on my own and doing this and being able to do what I love. >> How excited are you for Brian on a scale of 1 to 10? I'm not going to lie. >> 11. Yeah. So, what are you going to be doing for people that want to learn more about your services? So, we have our website up, humilisuinvestment strategies.com. Um, look it up. Um, and we will be >> hu Not [clears throat] everyone speaks Latin. >> Hu hu m i >> i l i s >> i >> l i s.com. >> Nope, can't do that. But humilisinv.com or humalisinvestment strategies.com. >> Perfect. Okay. and and we'll have our portfolios up and running soon and we're hopeful to have um Beimo has a wonderful partner still in Canada. We're hopeful to have um um some great partners in in the US as well. Um and we're going to be portfolio uh advisory delivery only. We're not going to compete for assets. We just want to help people and and run the portfolios. And I'm I don't know if you know this about me, but I'm kind of an old school guy. Like I believe that this business is all about relationships. If a if an adviser trusts us or broker trusts us uh to help them run their equity and they have some great clients, we will go out and meet that client because I think that's important and I don't think a lot of people do that as much anymore. That's how I learned the business and so I think we're kind of going back to that. Ladies and gentlemen, audience fan favorite uh Michael and I uh one of our favorite people we've ever met on Wall Street. We're so proud of you. We're so happy for you. >> I am proud. Listen, I could You guys have been amazing. Like, seriously, amazing. Barry and team, the entire the entire family here has been so supportive of me [clears throat] and it means the world to me for everything you've done for me. And we're going to be great partners going forward, >> dude. So excited for you. You guys check out humulus.com. Uh, uh, humulusv.com. That's it. >> Let's subscribe to Brian's stuff. Let's get on the list. And uh my man, good luck to you. Wish you all the best. And I'm I know we'll see you soon. >> Thank you, man. >> All right. [music]
Brian Belski Says "The Bull Market Continues"
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Visit van.comxcompound to learn more. >> Hello and welcome [laughter] to Live from the Compound. Who is Brian Bellski? All right, today we're going to have a lot of fun. You have a really big [music] news to share with the audience. I want to set this up for a moment. Guys, on the compound we have our regular guests and then we have our regular regular guests. The people that the crowd goes [music] crazy for every time they're on. They make a huge impact and people are always asking for more. When are you going to have so and so back? One of our [music] regular regulars is here announcing the launch of his own firm. We're super excited to have him back. It's a special edition of Live from the [music] Compound. We're literally live, not on Zoom, and we're here with our friend [music] Brian Bellski. Brian, welcome back to the show. How are you? >> Thanks so much for having us. It's amazing. >> What will you be revealing today? >> We're revealing our new firm. [music] >> Okay. Uh, and it's called Humalis Investment Strategies. >> Humalis Investing Strategist. >> Investment strategies. Yeah. Strategies. Humalis investment strategies with the acronym HIS. And the way I think about it, it's all his anyway. And when I talk about investing, um, you have to have a lot of humility when you invest. Period. And humilis is is Latin for humble. So a lot of people like, Belki, you're not humble. I mean, no, no, I actually am very much so. And but we we have a lot of conviction on how we talk about things. So our tagline is investing with conviction and humility cuz one of our lesson or one of our >> Oh, so you have high conviction but it's in the need to be humble. >> Correct. >> I got you. I like I like that. Yeah, I do. >> So how did I come up with this whole this whole tagline? So do you remember u uh Lewis Rukiser? >> Yes. So um I remember >> our YouTube audience will remember him well. >> Yeah. Look it up on the internet. >> They are the great grandchildren of his viewers so they'll remember. >> So I I remember you go to Owings Mills Maryland and it was a Friday night December of 2000 and I was so nervous man. I was so nervous to be on lastini was on with Mary Frell and Luca and I'm nervous and I'm like what do I do? What do I do? How do I get through this? And I started praying and there's this really important scripture that I've always said right before I do any public speech and it started that night. It's it's Micah 68. It's from the Old Testament says God asks you to do a lot of things but you absolutely positively must act justly, love mercy and walk humbly. To this day I still quote that before I go on every single television show, before I go up and do a speech. It just grounds me. So, we're not going to be right all the time in this business. >> Well, that's the line that got you through that first big appear. For people that don't know, Lewis Rukiser uh show, what was it called? >> Wall Street Week. >> Wall Street Week. So, it was every Friday night. It was like the markets closed >> and then it would air on PBS, but it predates CNBC and >> for a fairly long period of time, it was the last word in Who Knew what they were talking about on Wall Street. Correct. Okay. Correct. So, that got you through there and you've you've maintained that idea. >> Yep. I maintain that and and that's what really got so then as I started this process about okay uh you know working for the man for all those years was fantastic when you work for great places like amazing time at Beimo and then Oppenheimer for a couple years before that then my amazing time at Meil Lynch Piper Dne um you meet amazing people and you go through a lot of great things and you learn an uh a tremendous amount of things about a business and in this business in particular but at the end of the day this business is all about relationship ships period. And we've had we've been very blessed to have great relationships all along. So I wanted to capitalize on those relationships. And quite frankly, when you're doing three jobs, when you're doing institutional strategy for Canada, institutional strategy for the US and portfolios, it's a lot. >> Yeah. >> It it was time to kind of focus on one. And that's why we decided, let's focus on portfolio strategy. Let's focus on our separately managed account business and running equities in both Canada and United States. and we decided to pull the trigger. >> Okay. So now this is going to be the way you manage money going forward. >> It's your own firm. >> You'll have active strategies on the stock in the stock market. Yep. >> And you'll now be in a position to focus on that and not focus on the priorities of a much larger corporation that's doing a lot more things. >> Yeah. Like say for instance, >> you're doubling down on doing stock market stuff for the people that trust you with with uh their investments. So in the institutional strategy world, you have to publish all these great research reports. And one of the ones that we've done for years is called the chart book. We've we've published a chart book since 1996 or seven. And so on the on the institutional side, we've get a call from 72 or Millennium or something. Hey, Bellski, can you walk me through this return on equity model for industrials and what how that works and where are the signals that takes a tremendous amount of energy and research to try to figure that out where we're it's not like we're not going to do that anymore, but we're not going to be that literally pointed uh in terms of institutional just to try to prove to people that we know how to do things with respect to calling the market. I've said for a long time that the stock market is a market of stocks. Too many people that do what I do are so focused on the index and make it the big market call all the time. And obviously institutions want to try to figure out and and make sure that you're a tool in their tool belt in terms of how they're running their portfolios or what they're thinking about. But we just want to run portfolios. We just want to talk stocks. We we're part of the to quote the movie Stripes. We're the last of a lost generation. I mean we we like to tell stories and talk about companies and how they relate to your life. And that's one of my rules of investing. Uh, investing is like life and life is like investing. If you think about it, you know, why do you like to go to Costco? I mean, why do you like to buy Apple? Why do you buy Netflix? Think about how important these great American companies were during co whether or not it's Netflix or Google or Zoom or Think about that. We could not have gotten through COVID without these great American companies. >> How many great American companies are you going to be owning in your model portfolios? What does this look like? >> Great question. So, that's where the conviction comes in. So, again, rule number three of investing is I don't know everything. In fact, I'm not the smartest person in this room. There's a lot more smarter people in this room than me, but I think I know a lot about the 50 companies we run in terms of our US focused portfolio. I don't need to know a lot about the 450 companies that we don't own, but I I think I know enough about the 50 companies. Typically, in large cap money, we've proven through all this fancy back testing, 50 is a pretty good number. And so, from the US focus portfolio, we're going to follow through with respect to what we're thinking on sectors and industries and our our themes from a fundamental perspective. So, we feel really comfortable with with 50 companies as much of a 6% position and as small as 1%. In our small midcap uh portfolio, which we've talked about on the show here, I love I mean, as a parent, you're not supposed to have a favorite child, right? >> But this is my favorite child, the Smid, because you can play themes and and stocks and stories and and so around 65 to 75 because the risk p the risk spectrum is >> more stocks in that category. Y >> um >> I guess that makes sense. You would want to be more diversified as the cap size falls >> if you're trying to capture more of those individual stories, >> right? So here's a great example. >> Like a macro bet, >> right? So if you're going to be if you're loving like we doubled down on Google earlier this year when everybody thought no one was going to use search again, right? Or or Apple like say if we have a 6% position in Apple in a large cap portfolio, we're still going to be kind of underweight 6%. But in in our SMDcap portfolio, SMID um we love this company Celsius. I've own it for a long time. You think I'm going to have a 6% position of Celsius? >> The energy drink. They're killing. >> Delicious. Or or or Shake Shack. I mean, it doesn't make sense. >> You need more names cuz you're not going to take a 6% bet. Correct. With Okay, got it. >> So, where we think we're different is not just because of our approach of doing, you know, frankly, market strategy for all these years, but actually really live running money. We started in 2005 officially when we were at Meil Lynch and then but I think that we put our we've always proven that we put our money where our mouth is and because we were FINRA registered analyst we had to write the research report first then it was published to the world and then all the all the portfolios come out but I I think this where where we're differentiated now is we're not just tech we're not just go go momentum we're not just large cap we've always thought of the market holistically from an equity perspective so whether or not it's Smid which we love, which we don't think people own enough of, but you know, that's a whole other perspective. Value, we love value value stocks here, like intrinsic fundamental value stocks. And then dividend growth because of the income. We focus on those companies that grow the dividend over time and have a proven track record, not about yields, about dividend growth. So, where we're going with the market, we think ultimately is that the market, we've been talking about it, we meaning the collective market people have been talking about broadening out for a long time. >> I think it's got to happen at some point. It is will happen. So yeah, it is happening. >> It is happening. So I think what's going to happen is we're going to not at this not at the expense of Apple or Google, but I think we're just going to see a spreading out of of performance, which will actually help benefit dividend growth philosophies, value philosophies, small midcap philosophies, and I we're very well positioned for You you mentioned the rally broadening out and people are looking at a lot of the names that are getting bombed out and there are a lot but if you look at the equal weight S&P the NASDAQ and the Russell the equal weight all three of those are within 3% of their 50 of their all-time high. >> Now at the other end of the spectrum you do have I was looking at this this morning there are 26 stocks that are down 40% or more from their 52 week high not like their alltime high. >> Yeah. >> So 5% of stocks are in the S&P are down more than 40%. 20% of the index, I'm sorry, one uh a third of the index. So, one out of every three stocks are down 20% or more below their 52- week high. So, in this market that we're in right now where it's it's AI or nothing, you really do have to if for for what you're doing, you have to be a good stock picker. >> Yes. And that's where it goes back to the stock market as market of stocks. And I remember when I was at Merrill and we were actually very bearish in 2007208, but there's always something to buy. there's always something to buy even when you're negative. And on the on the AI side, on the tech side, not all stocks are created equal. You have a lot of semiconductors and different kind of fundamental trends. The mark the stocks that you talked about with respect to um um the unweight the equal weighted S&P. You know what why we remain so bullish, Michael, is because if you looked at the earnings revision trends, okay, if you look at the fusion index of FY2 versus FY1, just lost everybody in math, but it's just math. If you take a look at that, they actually were improving a lot better and a lot faster than the the big cap tech stocks or the top 10 companies. So that breath in and improvement of fundamentals, we think is really what's led us to these new highs. So it also proves that, you know, you want to focus more on stocks. Now, that also increases your risk, but at the end of the day, you have to be able to have a process and a discipline that kind of helps diffuse some of that risk. There's an argument out there. Um, our mutual acquaintance, Adam Parker, wrote about this this week where he's looking at the uh he's looking at the the dispersion amongst the Mag 7, and he made the case like last earnings quarter, Meta was the best performer. This quarter it was the worst. He looked at Nvidia compared to the other Mag 7s. Are they correlated or not? All of these things all year just go in and out. There's like no rhyme or reason behind good earnings uh uh responses in the stock price versus bad. It just seems like it's this company's turn to outperform or underperform. The case he's making is that the active bets that you should be making might be away from the mag 7 and just have those be a market cap weight because there's really no way to know or understand why they're moving in the same direction or against each other. whereas lower down in caps size, you could probably have uh less over and underweight but have an even bigger impact on your portfolio results. What do you think about that idea? >> I think that's 100% spot on and we've been underweight the mag seven because we don't own um a couple of those stocks in there. Okay. >> And we've been overweight other areas of the MAG7. That's kind of number one. Number two, look at last week, right? Look at last week on on what Meta did versus Google. So you're starting to see a differentiation with respect to fundamentals. Now now does it change next quarter and it's going to be another stock? Could be. But at the end of the day, that's why it makes sense to be more neutralize those and then overweight the rest. That's why [clears throat] for instance, >> you know, we're very very blessed and fortunate to own uh Oracle since 2014. Part of the reason why >> not in the Mag 7, >> not in the Mag 77 performance. >> Yeah. So, but we bought that company because of the balance sheet and the cash. And you really want to bet against Larry Ellison? No. I mean, the dude owns a Hawaiian island. I mean, come on. >> Yeah. Um, but now what he's been able to do and what they've been able to do in Oracle last couple years to really take advantage of what's happening in the AI side, that's an example of finding a stock that's not a mag 7 that has done amazing, >> right? >> And Broadcom's come and come and gone for the mag 7 if you you keep looking. But we've we've been there for a long time, too. But you our thing with owning 50 stocks goes back to you don't have to be the smartest guy in the room. Don't need don't need to know everything. You don't have to own everything. One of the one of the things with institutional clients. I have I used to when I when I was, you know, last week, uh, talking to a institutional dividend growth portfolio manager, they own 250 stocks in their portfolio. How do you strategy? >> Yeah, man. How do you how do you make a difference in that? You have 20 basis points a year, 15 basis points. I'd rather make a bet and and have a process in terms of looking that at that particular discipline to really make a difference. And that's how we >> Do you think there's like a pendulum though where the market wants one thing and then another period of time where it wants another like there's there's a moment where everybody wants to own everything diversification and then the pendulum swings and it's like the hottest products on Wall Street are concentrated >> earlier in the year. Think think about the after liberation day when all of the names that were exposed to China and the AI trade got smoked. You know what didn't at all? Birksher, >> right? >> And if you look at if you look at the full picture year to date, Birkshshire, the gap was so big in April between the S&P and Birkshere. And now it closed and went the other way because now any all that anybody wants is AI. It's sucking all the oxygen out of the market. You know, I keep thinking about this um AI stuff uh and the AI stocks now relative to everybody likes to make the comparison of 992000. I think it's absolutely not that. It's not anywhere near that. Now, do the price performance stuff, the valuation, sure, but you if you were in the business back then, if you had a dot on there, it was going up. It was going up. >> There's not some version of that right now. There might be >> there might be a little bit of it Josh but I mean literally anything in techn if you go back to look at also um private wealth positions equity positions in 992000 okay 90% of their total investment positions were stocks >> okay and 100% were tax stocks >> why did they get because they were too they were they weren't >> divers had the money taken away from you if you weren't allocating to tech we're not quite that extreme Now, >> we're not that quite extreme. And I I'll even go back further. I remember in the very beginning of of my career, uh, in 1990 back at William O'Neal and Company, and we'd have all these famous dignitaries come through, Peter Lynch, and talking about mutual funds who you guys had the amazing fortune of seeing. Oh my gosh. Anyway, um, there used to be a 10-year track record, then there was a fiveyear track record, then there was a three-year track record, but >> quarterly. [laughter] How'd you do last quarter? >> Yeah. how you know what have you done for me lately, Janet Jackson? But it actually did change in the late '9s to to a one-year track record because of what was happening. These guys had to get paid. >> To me, I think the biggest difference between then and now is the margins on these companies and the Moes and the growth and all that sort of stuff. So, there's this company called Duality Research that does amazing work. And they showed the forward PE, which everyone's talking about. It's hasn't been higher in 20 whatever it is. It's it's not cheap. He says okay but you have to look at profit margins because profit margins are also at an all-time high. So he adjusted the forward PE and he says it comes to 17.75 times less than one standard deviation above its 20-year average of 16.2 adjusted for profit margins meaning comparing this to >> yeah so he says so yeah if this is a bubble it's probably the cheapest bubble in history >> yeah I I don't going back to the bubble thing well let's talk about profit margins first part of our process >> I mean sorry sorry but look at these forward profit margins >> why would stocks not why would the multiples not be high in this type of environment >> correct >> but the but that the second question to this is how sustainable is the rate of of that profit margin rising because it's not the absolute level of the profit margin. It's does 14 and a half go to 16? >> Maybe the answer is yes. >> Oh, if that stalls out. Yeah, you're right. That's really the the question. That's what puts an end to this is when that goes into reverse if it does. Well, that's why you know part of our process for 30 when we started publishing the chart book late 90s is that you look at valuation you look at earnings growth and then you look at operating performance and and we've been studying this for years and years and years and you have to look at all these things. I think too many people only look at earnings or only look at valuation or only look at price. And I think this is what a lot of people are missing. But the the term bubble I think is is the most overused term in investments just like dysfunctional family is in terms of you know how how families are. By the way, all families are dysfunctional just >> in their own special way. >> Exactly. We'll see that in three weeks and at at Thanksgiving. Anyway, um just because asset prices go up doesn't mean it's a bubble. You know when it's a bubble? When the man's making money, who's the man? Everybody. Financial services. If you think about this, think about 99200, the IPO activity, the secondary activity, the M&A activity. You had all these deals, not not just one or two, but all of them done with stock that was meaningless. It had it had no value. And you had all-star analysts. You had rockstar bankers. Frothy frothy frothy frothy frothy frivolous. We're nowhere near that. >> I was I was yelling about it this morning with Ben. To me, words matter, right? You people are throwing around the term bubble. To me, a bubble is, and I know it's shorthand for expensive. I get it, right? I always say to >> But a bubble, a real bubble is one in which there is no there is no road map. There is no possible scenario to which future cash flows can justifies today's prices. No way. It cannot happen. Like impossible. There's no model that you could show me. And that's not what this is. And then also part of the second part of that is that and so therefore asset prices must correct and don't give me 50% because Amazon and Micro and and Google fell 50% in 2022. Asset prices must correct by at least 50 60 70 and not rebound in two quarters or two years. They must go down and stay down. So you could say stocks are expensive and and we're going to have a bare market. Sure. But a bubble to me is which there is no possible justification for today's prices. >> Go back to the moat thing, right? because that's really important or or whether or not it's from an operational perspective or a cash perspective. Let's go look back at two of the poster children, Lucent and Worldcom. I mean, they had no they had nothing. I mean, that that was part and parcel where we didn't have a 50%, we had a 90% pullback. So, we're going to have I don't know. >> But they were selling a lot of equipment right up until the end. It's not as though Lucent were masquerading as a company and didn't have an operating business. The thing that the thing that created the top was the orders started to be cancelled because all of the equity offerings that were financing the purchase of that equipment stopped coming in. >> Right. >> Doesn't know that until it's too late. >> No, because they created they created a capacity situation. So that's another big theme in in in investing over capacity. You want to buy the scarce asset and sell the sell the asset with lots of capacity. So going back to the new firm Humalist, we're trying Humulus investment strategies. We're trying to create a scarcity proposal that we're going to have equity portfolios that aren't just one thing but also provide for the for the market dynamic and then also overlay our years of experience. >> Do you think when people talk about where we are today, I feel like after listening to Microsoft and Amazon and Google, you can't say these stocks are in a bubble. I feel like most people say they they deserve what's happening. >> In one special way though, people can say it. They don't like the circular financing of not only the product sales but the buildouts of facilities. And I was listening to uh Gersonner on his podcast talked to Satcha and Sam Alman together >> over the weekend >> and he asked the question flat out, how could a company doing 13 billion have $1.3 trillion worth of uh financial commitments? and he sort of asked it tongue and cheek because he wanted Sam to have a snappy comeback and he did uh starting with we're doing way more than 13 billion in revenue but he then subsequently dropped off the pod and said gentlemen I have to go >> that fuels peoples but that when that stuff happens >> he really did >> he really did and Satcha finished >> Satcha finished the interview now for all we know and I haven't asked Brad about this for all we know it was planned and Sam said hey I have 20 minutes for your show I can't do the full hour I don't I have no idea but I'm just making the point people don't like the circular nature of a lot of the deal making the overlapping we'll give you revenue for this you give us revenue for that right >> and that is what gives rise to the bubble talk it's not just about valuation it's about the structure of the deal making and I think we could all agree any company that comes out and says we have a deal with Nvidia or a deal with open AAI it's an automatic 10% pop in the share price but that I was just going to say exactly what you just did that and that's not Apple, that's not Microsoft or Google. We're talking about Open AI and anthropic and which don't have share prices. >> So, Open AI. All right. So, let's just say they're doing 20 billion in revenue. Whatever it is, okay, it's not 13, it's 20. Maybe it's let's say it's 25. They're looking to go public at a trillion dollars. Guess what? >> They better grow into they better get to hundred billion in revenue. Now, you might say, and I don't know anything about this, Michael, there's no roadmap for open AI to get to $100 billion. Fine, maybe that's the bubble, but is it in the is it in the public market? It >> Yes. Yes. Because think of how many of these companies are reliant on OpenAI continuing to spend at the rate it's spending in order to keep reporting their numbers. And that's the part that people are saying, we're not calling this a bubble cuz Microsoft's 100 times earnings. We're calling this a bubble because the revenue growth is not sustainable if somebody kicks out one of these legs to the chair. I'm not suggesting I'll be the one to see it coming, but I don't dismiss the bubble concerns as easily as somebody who just compares PE ratios. >> Yeah, we're in the same boat. And I kind of go back to my O'Neal training as well, like stocks are rarely >> Shaquille O'Neal taught you a long time ago. Bill O'Neal, Bill Bill O'Neal, the great Bill O'Neal. Stocks are rarely linear for long. So, you know, uh, call call me call me cynical. Why Bowski are opening a firm at the top of the market? So, my comeback would be, well, I don't think we have the we're not at the top of the market. We still think we're >> That's funny that you said that upon your announcement. You're I think you're a little bit self-conscious about, oh my god, what if it is the top and and [laughter] I chose to launch my firm the same day? Well, I mean, you know, again, that comes back to the humility or self-deprecating, but but I I you know, our call is is that a 25 year secular bull market started in 2009. I know you and I have talked about maybe different maybe it started in 2011 what 13. Yeah, 13 >> um potato. But I think we have I think we got about another 10 years to go. But we are going to have >> we are going to have a recession again. We are we're going to have a bare market again. We are before this big secular bull is done. And it maybe is one of these frothy people failing or really tripping. >> Small mid a a partial defense against the unwind of the AI bull if and when it ever happens. Meaning market cap comes out of the oracles and out of the um out of the Microsofts and looks for a home in an area that's not reliant on open AI getting to a trillion. Like is that a possible story? I think all three strategies are meaning dividend growth value in Smid. >> You think they'll act as a counterweight in a portfolio of some sort? >> I do. [clears throat] Depending on how bad it is. >> I think they could. Yeah, >> I do because again, if you go back into Smid in particular, I know a lot of people have talked about, you know, the Russell 2000 aren't making any money. Well, you can't make a broader index thing. You got to look at the companies. The the S&P 600, um, it's got lots of cash in the companies. Some of them are paying dividends. The midcap index the mid within the S&P looks really great as well. And you combine the two, there's a lot of great ideas. So if you think about like, you know, I already mentioned Celsius or Shake Shack or Chewy, these types of names that have nothing really to do with AI or I love small cap financials like Glacier Bank Corp in Montana. It's amazing company or First Citizens was a roll up a lot of I mean these smaller banks I think are very well positioned from a from a relationship standpoint just like the big banks are. We love financials in general from the value perspective, but I think that that both those areas meaning smid and value are going to be huge winners through this. And I do think too that there's not enough dividend growth investing either out there. So I think I go back to when I was >> we don't like the we don't like the taxes. >> No, we don't like the tax >> relative relative to the the buyback. >> Well, just reinvest the dividend. Reinvest the dividend. >> No, no, no. We don't want to pay the taxes on the dividend. No, >> I was looking at Ford versus GM. >> Yeah, >> I don't know that there are huge differences between the two. I know Ford's got the bestselling truck. GM's got more high-end luxury SUVs. I get that, but the really big difference seems to be GM's uh return of capital to shareholders is almost all uh in the form of buybacks and Fords is almost all in the form of dividends. I don't know, like I feel like that's a pretty it's a pretty big difference. Um, and and I don't know what else is very different. >> I think that's right. If you go back to like I go back as a young strategist in the late 90s and I remember marketing in uh Boston at Fidelity and I remember meeting with a portfolio manager there and he's like Belki I got he was a small cap manager. >> Yeah. >> He's like Belki I got to buy Microsoft to perform. >> I don't I don't know if we're quite there yet um on that. But the other thing too is I wonder if if there there's got to be some data out there. Chart guy can figure it out or something. I wonder how many value managers there are now relative to 10 years ago or man. >> How many left? Not many. How many left? >> And they have less money. >> Yeah. Or dividend growth. It's like straight down. That actually is a is a contrarian signal. Right now you have to have the fundamentals. Don't be contrarian just to be an be contrarian if you have the analysis to back it up >> or why it will change >> or why it will change and I think that again let's go back to the dynamics of the market. I think we're going to have broadening out. If you have broadening out that obviously makes it for more cyclical areas of the market, more cyclical areas within consumer discretionary with industrials and certainly within financials which we still believe after all of this are still underowned. >> Which part of the financials because there's a lot of different areas. Well, we think we still think it's a um a bifurcated market, meaning the really big are going to do well and the really small are going to do well. That's why I think the in between. We're going to have a lot of we're going to have mega mergers of these regional banks because they can't compete with the big and they can't compete with the small. >> Yeah, >> that's coming. >> I saw one. Who was it like two weeks ago? >> Fifth Third and was that? Yeah, someone else. Yeah. Oh, Comria. They bought Com. There's going to be more coming. There's going to be more coming >> because they can't compete with the really big now. Honestly too, take the here's some perspective. Think about the financial crisis, but even in the early 2000s, would you have ever thought that Goldman Sachs would be talking about private wealth in the early 2000s? >> Yeah. >> No way. What do they talk about now all the time? >> Right. >> So, I think the the big banks with the multi-divisional assets of wealth, consumer, commercial, uh, institutional, very well positioned, right? the medium-sized banks, what we used to call the regional banks, they're it's going to be hard for them to compete. I think the brokerage business is still a great business because it's scalable. The asset management business is scalable, but the small banks, these guys are cranking on earnings. Uh, and we think that they're going to continue to be a beneficiary, let's say, of volatility in the market. >> You have a uh year-end price target on the S&P 500 at 7,000. I know you've uh consistently been more bullish than the pack in the last 10 years. In the last couple of years, you've sort of been still bullish, but like not quite as far ahead of the pack because everyone else is caught up to you. >> How are how do you think about just the idea of an S&P target? Do we even need to do that anymore being more on the asset management side versus the brokerage side? What are what are your thoughts on on where we are? You know, it's uh it's a great question because we we we've written this piece called the year ahead piece and I think I've written like 26 of them in last year. >> You do it every you have to do it every year. >> Yeah, I got to do it every year. [laughter] >> Are you done? >> You're done. >> I don't listen man. That that thing is 40. I mean it's the smart guy piece. I don't you know I but more for institutions but we put our piece out earlier as we do usually following presidential election years because we wanted to give more guidance and so we put it out in early November right a week after the election in our bull case for 2025 was 7,000. >> So a year ago going into the going into the the election where were you 7 >> 7,000 for the bullcase for 2025. >> All right. So 6856 today. So, we're here. But, but I'm not saying that to do this. I'm just saying that you did nail it. >> Well, I mean, but but what we said is that a lot of things have to happen. Now, >> we put it out early. The good thing now that we're going to be a portfolio advisory business, we can watch all the other people kind of put theirs out and see what because in the past it was Belki puts us out early. And I'm not saying people c I'm not saying people copy me or anything, but we for a reason we put it out early. Um, >> it's impossible for other strategists to not shade themselves with things that their colleagues think or say publicly. >> Of course, and I was >> we're all human, right? >> We're all human. That's that's exactly right. And when everything was going down in April, we said very clearly that if you're an advisor, man, right, and you're basing your business on a strategist target, come on, don't. Targets are an academic practice. that are an academic practice and they're they're a have to versus a get to. Um we get to put out a target going forward. We don't have to put out a target and we will put out a target, but what we said in April is we own what we own, man. We own what we own and we didn't change anything and we were very very very >> So you you uh you deserve the commendations. Um you were one of the few that did not come out in the in the heat of battle in April and say everything we told you 3 months ago, throw it out. Stuck to your guns. think investors were well served, paying more attention to you than anyone else. Um, so congratulations on that. >> Thank you. Thank you for that. >> Um, what do you uh let's let's just close here. You're uh starting a business. [laughter] It's your f it's the first business you'll ever uh be running. How excited are you? How like what are what are some of the first things that you think the public will see as a result of you being in this new position? Well, one of the interesting thing is I have an aura ring in my and every morning I wake up and about three out of the last four uh mornings it says you have major signs of a whatever because of the stress and you don't sleep and it's it's very exciting. >> It's butterflies. I'm telling you man I um on Friday when we changed our LinkedIn and we sent out we put our website up live and we have people signing up for our research. we'll have research and we'll have our portfolios up soon. It was try not to be emotional. It was it was overwhelming the response and when you're in the weeds, man, and you're working hard, you have no idea what you're doing and your impact on other people and it's just I've heard from people >> from William O'Neal, Dane Bosworth, early 90s, from Piper, a lot of people from Mel >> like your fans come out of the woodwork and say, "I've been waiting for you to do this." Right. >> Yeah. Yeah. Congratulations. And then the my my great partnership at Beimo. I mean, the the brokers and the adviserss up there are just amazing and sending me great well-wishes and everything. It's so gratifying and you but I don't I'm not doing that for that. I I'm doing it because I wanted I wanted a new chapter in my life and I'm super excited about being off on my own and doing this and being able to do what I love. >> How excited are you for Brian on a scale of 1 to 10? I'm not going to lie. >> 11. Yeah. So, what are you going to be doing for people that want to learn more about your services? So, we have our website up, humilisuinvestment strategies.com. Um, look it up. Um, and we will be >> hu Not [clears throat] everyone speaks Latin. >> Hu hu m i >> i l i s >> i >> l i s.com. >> Nope, can't do that. But humilisinv.com or humalisinvestment strategies.com. >> Perfect. Okay. and and we'll have our portfolios up and running soon and we're hopeful to have um Beimo has a wonderful partner still in Canada. We're hopeful to have um um some great partners in in the US as well. Um and we're going to be portfolio uh advisory delivery only. We're not going to compete for assets. We just want to help people and and run the portfolios. And I'm I don't know if you know this about me, but I'm kind of an old school guy. Like I believe that this business is all about relationships. If a if an adviser trusts us or broker trusts us uh to help them run their equity and they have some great clients, we will go out and meet that client because I think that's important and I don't think a lot of people do that as much anymore. That's how I learned the business and so I think we're kind of going back to that. Ladies and gentlemen, audience fan favorite uh Michael and I uh one of our favorite people we've ever met on Wall Street. We're so proud of you. We're so happy for you. >> I am proud. Listen, I could You guys have been amazing. Like, seriously, amazing. Barry and team, the entire the entire family here has been so supportive of me [clears throat] and it means the world to me for everything you've done for me. And we're going to be great partners going forward, >> dude. So excited for you. You guys check out humulus.com. Uh, uh, humulusv.com. That's it. >> Let's subscribe to Brian's stuff. Let's get on the list. And uh my man, good luck to you. Wish you all the best. And I'm I know we'll see you soon. >> Thank you, man. >> All right. [music]