On this week's Stansberry Investor Hour, Dan and Corey welcome their colleague Bryan Beach back to the show. Bryan is the editor of Stansberry Venture Value and a senior analyst on Stansberry's Investment Advisory.

Bryan kicks things off by discussing passive investing, the stock market's "relentless bid," and what could derail passive investing in the future. He points out that the total assets invested passively surpassed those invested actively last year. Not only is this an important fundamental change, but Bryan says that this alters the dynamic between investors and Mr. Market that legendary economist Ben Graham outlined 70-plus years ago. Then, using Microsoft as an example, Bryan analyzes whether it's realistic to expect the Magnificent Seven companies to return to lower multiples...

As Microsoft's earnings go up, obviously the price we should be willing to pay goes up, even if the multiple stays the same. If we set our stake in the ground saying we're willing to pay 10 times earnings from Microsoft or whatever it was in 2012, you've got to kind of ask yourself, "Is it ever going to get down to that again?" Because this is one of the seven stocks that has that relentless kind of bid.

Next, Bryan talks about all the headwinds Apple has faced in the past six months and why he believes the stock would be down much more than it is today if it weren't receiving so many passively invested dollars. He says the size of the relentless bid reached a critical mass during the pandemic, and now the S&P 500 Index will continue to grind higher indefinitely. The only thing that can offset this natural inertia is bad economic news (such as tariffs), and even that is temporary. As Bryan points out, many passive investors aren't aware of what they're doing, so it would take legal changes to fix the problem...

My dental hygienist [said] "I don't fool around with the stock market." I'm like, "You don't? Aren't you in your 401(k)?" She said, "Oh, I invest in a 401(k)."... She didn't even realize that was the stock market... So this idea [is wrong] that at some point, if the stock market goes down, people are going to panic and stop contributing to their 401(k). A lot of these people at the individual level... are not fearful or greedy. They don't really even know what they're buying.

Finally, Bryan explains that this relentless bid does not apply to every corner of the market. He says small caps and microcaps are still great places to find value. Plus, Bryan discusses the unique situation Tesla is in today, makes a bullish case for restaurant-operations company PAR Technology, and discusses what he got wrong with special purpose acquisition companies ("SPACs") back in 2022...

I was making fun of... TMC, the metals corp that makes robots to mine stuff off the ocean floor. No money, no revenue, no cash flows. So this is back in 2022... [Today, TMC] still doesn't have revenue... What do you think has happened with that since? Yeah, [it's up] 407%.

Click here or on the image below to watch the video interview with Bryan right now. For the full audio, including Dan and Corey's post-interview thoughts, click "Listen" above.

Additional past episodes are located here.)

This Week's Guest

Bryan Beach is a former "Big Four" auditor and a certified public accountant who holds bachelor's and master's degrees in business and accounting, respectively. He spent six years in public accounting and then a number of years as a controller and director of publicly held software companies. He also ran his accounting consulting practice. Bryan's ability to sift through company filings – finding opportunities and red flags – is his specialty. His unique experience in creating and auditing financial reports allows him to see what most investors miss.

Bryan is the editor of Stansberry Venture Value, an advisory service focused on small-cap value investing. He's also a senior analyst and contributor to our flagship product, Stansberry's Investment Advisory.

Dan Ferris:                 Hello, and welcome to the Stansberry Investor Hour. I'm Dan Ferris. I'm the editor of Extreme Value and The Ferris Report, both published by Stansberry Research.

Corey McLaughlin:    And I'm Corey McLaughlin, editor of the Stansberry Daily Digest. Today we talk with Stansberry Venture Value editor Bryan Beach.

Dan Ferris:                 A fellow value guy. I've known Bryan for many years – Corey and I both have. He's a great guy. He's a great, smart value guy who's always got something a little bit different to offer and I can't wait for you to see what he's got on offer today. So, let's do it. Let's talk with Bryan Beach. Let's do it right now.

                                    Bryan, my friend. Welcome back to the show. It's been a little while.

Bryan Beach:              Hey, Dan. Good to be back. Yeah, it's been about a year.

Dan Ferris:                 It's time. It's time for the Beach update on the world.

Bryan Beach:              Yeah.

Dan Ferris:                 Before we hit the record button you actually told what I believe is kind of a funny little story about your – a presentation that I was in the audience for and that many of our colleagues were in the audience for. It was a little meeting within the company – in January?

Bryan Beach:              That was in January. Right. Yeah. Yeah.

Dan Ferris:                 And the takeaways that people came to you with after the meeting I thought were very funny because they were polar opposites. But maybe you can talk a little bit about that? And eventually we know we're going to talk about Par Technologies, too, right? I mean, that –

Bryan Beach:              Yeah. Yeah. that's my go-to. Yeah, so that was an interesting presentation. And I think it was pretty engaging. I got a whole lot of feedback at the happy hour afterwards. But what was funny, Dan, was it's like nobody seemed to understand my point. So, in that sense it was not a good presentation. I had people coming up being like, "Oh, you think the market's never going down again?" And I'm like, "Wow. That was not the point." And some people were like, "You're an Apple bull. You think Apple is going up forever." And other people were like, "You're crazy. Apple's not going up forever." And I'm like – some people thought it was a bearish Apple presentation and some people thought it was a bullish Apple presentation.

                                    The topic – you guys have actually covered it here before – was the relentless bid, which is a term I didn't coin. I know Mike Green was on – a guest of yours a little while ago and talked about that. So, that was actually what the presentation was about.

Dan Ferris:                 Actually –

Bryan Beach:              And I just – I guess I haven't figured out a way to make my point –

Dan Ferris:                 Bryan, for our listeners, I just want them to know the relentless bid refers to the constant buying that we associate with so-called passive investing. So, people are relentlessly buying stocks for their 401(k) and bidding them up. And we seem to be in an endless bull market that can't be wrecked. So, I just wanted to clarify that for our listeners.

Bryan Beach:              Yes, that's a good definition. And I can elaborate on that a little more. 401(k)s – and mixed funds in general, particularly the S&P 500 Index, is not an equally weighted index. You buy more of the bigger stocks. Every time you put $100 in the S&P 500 Index I think Apple gets $7 and the Magnificent Seven get $35. So, when you talk about people passively investing through their 401(k), most of those dollars are going into S&P 500-linked indexes. And 35% of that is just going into seven stocks.

                                    So, what's interesting for guys like you and me is what does this mean when we look at historic valuations? Because this relentless bid, in other words – passive 401(k) investors are kind of new to the market. Passive investing and 401(k) index investing is not new in and of itself but we've kind of reached a critical mass – I think it happened in January of 2024 – where the sheer volume of passive investing dollars passed the volume of active investing dollars. And I think that's a profound difference and I haven't quite figured out what that means going forward. But that's an interesting topic. That's kind of what the discussion was about that day.

Dan Ferris:                 Yeah. And we also, as I recall, didn't we address what could derail this? If this is going to continue, if people are just going to continue contributing to their 401(k)s regardless of what the market is doing, regardless of how expensive something might be, regardless of how they might be putting a third of their money into the top seven or 10 or whatever it is, no fundamental information whatsoever changes their actions, what on earth could ever derail it?

Bryan Beach:              Yeah, I don't know. I mean, a couple of things I have theories about.

Dan Ferris:                 I do, too.

Bryan Beach:              First of all, at one point, at some point – I think it's going to happen in the 2040s, maybe. Some actuary figured this out. But I think it's going to happen in the 2040s or something. At some point people are going to start withdrawing from their 401(k)s, when they start retiring. And when it reaches equilibrium, the inflows and outflows will kind of offset. But we're not there yet because this is kind of a new topic. Or, not new. If people started – the people who started contributing to their 401(k)s in 2000 aren't retiring yet. And so, really, we haven't reached a critical mass where the people who have been contributing for two or three decades, for an entire career, have started to withdraw yet. So, at some point, Dan, to answer your question, there's going to be more of a natural equilibrium where the relentless bidders are kind of offset by relentless retirers. And so, we're not there yet.

                                    The government has for decades encouraged retirement saving through tax advantage accounts and things like that. If something were to change with that, which I don't know that anyone's even talking about that being a possibility, obviously that would derail 401(k) funding. And then, Corey, I think you've written about this, too. People are starting to invest more in equally weighted S&P 500 funds as opposed to just the S&P 500 that's weighted by market cap, where the top seven companies get 35% of your dollars.

                                    So, Dan, if something fundamentally became illegal about weighted indexes or something like that or it became less encouraged to – if the government stopped encouraging retirement savings, that would derail things. And at some point I think we are going to reach a point where the retirees are kind of sort of offsetting the savers in that. But until then, I think the market's valuations are just going to be different. I don't know. People – I know you guys are always making fun of people who say this time is different. We value investors love to make fun of people. In the Internet boom they were like, "Oh, revenues don't matter. This time is different." And we saw what happened with that. And every financial crisis seems to be predicated on somebody who thinks this time is different.

                                    So, that's a radioactive catchphrase, especially for guys like me with the value bid. But at the risk of being made fun of in one of your articles, maybe this time is different as it relates to valuation.

Dan Ferris:                 To be quite accurate, though, Bryan, something is different every time. Right?

Bryan Beach:              Yeah.

Corey McLaughlin:    Yeah.

Bryan Beach:              You know how I like to think about this? Actually – and I've been rambling enough, so I'll turn it back to you for a second, Dan. I remember you wrote years ago you read – or reread chapter 8 and 20 in The Intelligent Investor –

Dan Ferris:                 Month. Every month. Yeah.

Bryan Beach:              – every year or something like that. Every month? It must be back there behind you somewhere in that shelf full of scholarly works. But why don't you – can you remind me – oh, he's actually going to get it. Should I go get mine, Corey?

Corey McLaughlin:    Go get it, yeah.

Bryan Beach:              Let's see if this looks like he actually pulls it out every month. Dan, talk to me about –

                                    [Crosstalk]  

Dan Ferris:                 In nomine Patris. It's really –

Corey McLaughlin:    He knows where it is. So, yeah, I believe him.

Dan Ferris:                 In nomine Ben Graham and Warren Buffett and the spirit of David Dodd. It's really chapter 20. Chapter 8 has the parable of Mr. Market. That's the part you want to reread. But –

Bryan Beach:              Well, let's talk about that for a second. Can you remind me what's going on with that parable? I'd like to hear that.

Dan Ferris:                 Right. So, basically Graham says if you're going to be in the stock market, imagine that you are in business with a partner in some private business concern and that your partner is a manic-depressive. So, every so often he's willing to – some days he wants to buy your interest and some days he wants to sell his interest to you. And he gets depressed and he wants to sell his interest and he'll take whatever you offer him. And he gets elated with the prospects of the business and he wants to buy yours for whatever you'll ask. So, that's – when you are in the stock market, you need to look at it in these terms. It's just a simple statement of a contrarian view of the market.

Bryan Beach:              And I always think of it – I don't know why. Maybe this is part of it and maybe it's just in my head. I always think of it as a fence. And maybe this is part of the original metaphor or allegory or whatever, but every day Mr. Market comes up to the fence and he's either – most days he's got a reasonable offer, but some days he's overly scared, overly fearful. Some days he's overly greedy. And then, the other side of the fence you've got Ben Graham just – or Dan Ferris – just rational, calm, no emotion, just like, "I'm going to pass. I'm not going to take your offer." Or, "Yeah, I'll buy that. If you're willing to pay that since you're so scared, or if you're willing to sell that because you're so scared, I'll buy it. If you're willing to buy me out because you think it's so valuable, I'll buy it."

                                    So, what I think is interesting as it relates to passive investing is if we were to go like Bill & Ted's Excellent Adventure and go back in time, bring Ben Graham to the future, sit him down at my Bloomberg Terminal, explain "Here's what an index fund is, here's what 401(k) investing is, here's what people are doing. Where does passive investing fit into this kind of classic metaphor?" Because I believe it's a fundamentally different participant. It's like a – I don't want to say brainless because these people aren't stupid. I mean, they're savers. But there is a mindless zombie showing up at the fence with Mr. Market and Ben Graham, and just every two weeks "Buy... buy... buy... buy..." There's no fear. There's no greed. It's just kind of a relentless – and so, Ben Graham and Mr. Market are still there doing what they've always done since the 1930s when he wrote that, or 1940s, whenever. That's still a part of the dynamic. But what happened in January, I think, of 2024 is the total dollars that the zombie came in and started bringing to the table or bringing to the fence now exceeds the give and take between Mr. Market and Ben Graham.

                                    I don't know. What do you think? Is that a fair way to kind of adjust that timeless parable? Or do you think that maybe the passive – do you lump the passive investors over there with Mr. Market and that?

Dan Ferris:                 Well, I smiled a little bit when you said they're fundamentally different, because of course the fundamentals mean nothing to them. So, – and the zombie bid, that's a good one, too.

Bryan Beach:              Right.

Dan Ferris:                 But yeah, the Mr. Market thing is about an intelligent – so-called intelligent investor using the market to serve them. So, that still is there. And if the passive bid is part of that, then so be it. But I think the real point is how are you ever going to get – the opportunity set has just changed. The opportunity set at any given moment is "Eh." To a value-oriented person it's like – for 15 years or whatever it's been kind of "Eh," except for these random moments every now and then. And the best you can do, you've got to forget about valuation. And I said – I remember Austin Root and I were talking – I think it was part of some kind of roundtable thing we did at Stansberry – a couple of months after March 2020. And I finally told him, I said, "No, I'm not worried about valuation right now. All I want to do is be on the other side of March 2020 and that's where I am and I'm bullish." Just for that reason alone, because that's the way it kind of tends to go when a big decline happens and the Fed cuts rates back to zero, you know what I'm saying? It's just – you buy stuff.

Bryan Beach:              Yeah.

Dan Ferris:                 So – and we have a model where we buy stuff that looks really expensive probably to a lot of people but we think it looks cheap relative to what we assess growth expectations to be based on the market's lower assessment of them. So, it's not – that whole cigar butt thing, that's over. The whole price to book and all that stuff, that's over. And by the way, I can't help talking a little bit about chapter 20 here because, yeah – well, here's the thing.

Bryan Beach:              OK. Oh, you've got it out? Yeah.

Dan Ferris:                 I've got an example of one of the ideas in chapter 20, which is a company that basically is rich enough and earns enough income to either buy outright or borrow enough plus buy all its own outstanding shares, all its remaining outstanding shares. And you recently sent around an e-mail that gave me a pat on the back for being the first guy to pick W.R. Berkeley. And there's another one. I don't know if I said this in my e-mail response, but the other one was Microsoft. And before anybody put that in their letter, I sent an e-mail around that showed that Microsoft was able to use its – all its cash and all its cash flow to buy and finance the purchase of – through debt – all of its outstanding shares and actually still have plenty of capacity left. It was just incredible, in '05 or '06 or sometime.

Corey McLaughlin:    They still are, by the way, even with all the AI spending. They're still there. It's – I know Mike DiBiase  wrote about that recently, too.

Bryan Beach:              Well, what's funny with Microsoft, because this gets exactly what you're talking about, Dan. It's just kind of "Eh." So, I work with Mike on Stansberry Investment Advisory. I also write, of course, my Microcap letter. But Mike and I are – we've been part of that investment advisory team for years. Alan Gula and Whitney are – and Mike and I now – actually it's a big team. We've got – I'll name everybody. Bill McGilton's in there.

                                    So, we – yeah, we – but we recommend companies and we recommend Microsoft. I'm making this up. I can't remember. But [enterprise value to earnings before interest, taxes, depreciation, and amortization] on Microsoft was 10X or something when we recommended in 2012 or whenever it was. If Mike were on here, he'd know the exact date and price and all that. But we like to raise the price based on the multiple. So, eventually, as Microsoft's earnings go up, obviously the price we should be willing to pay goes up even if the multiple stays the same. So, if we set our stake in the ground saying we're willing to pay 10 times earnings from Microsoft, or 12 or whatever it was, in 2012, you've got to kind of ask yourself is it ever going to get down to that again? Because we're talking about this is one of the seven stocks that gets – that has that relentless kind of bid.

                                    And by the way, that zombie analogy, that really only plays out for six or seven stocks. So, if you get down to the 400th biggest company in the S&P 500, the zombie is like a little toddler with nickels in his pocket. Ben Graham kind of can pat him on his head and say, "Oh, you want to put some nickels to work?" But with these – the Magnificent Seven, there's some real money there and he's – I don't have an argument here. This is one of the problems maybe with my presentation is I wasn't making an argument – I was just trying to get people to think about things differently, like has the relentless bid on these seven stocks fundamentally changed the valuation to such that you're not going to get the same kind of valuation metric you got in 2012? Maybe we will and I'll look like an idiot next time I'm on here. I sure have said some dumb things over the years. We'll get to that in a minute. But it's just a question I'm asking. With Microsoft, is that 2012 valuation ever realistic to think about with some of these big companies? I might – while you're answering, I might look it up, if you don't mind answering.

Dan Ferris:                 OK. Yeah. It is – these are great questions.

Corey McLaughlin:    Yeah, that's the question. Is there a quantifiable way to measure the impact of this relentless bid on valuations, particularly of those huge companies? What you guys are saying, maybe it doesn't matter. Just look at the company itself and then the market's going to do what – whatever it does. We know there is an influence with 401(k)s and –

Bryan Beach:              So, this is – and there are people who really think it's a dumb idea, Corey. When I write about it or talk about it – like, the other – it wasn't long ago Apple was down 20% with the tariff in a day and I got an e-mail or text from somebody, "Hey, where's the relentless bid?" But my assertion is not that Apple is going to close at an all-time high every single day. It's not. But when you look at the year Apple has had – and you've written about this a lot, Corey. Over the last 12 months, earnings for the last several years, and revenues for the last – we're talking about single-digit growth, low-single-digit growth. It's still, of course, very profitable. But Buffett sold all his shares, the best investor of all time. That's bad PR. They've lost some lawsuits. Google and Apple have kind of lost some important lawsuits. Let's – they launched that Vision Pro thing. It didn't take off. Their AI product is not taking off. And of course, no company in the world probably has more exposure to the Chinese tariff uncertainty than Apple. Maybe. I don't know. We can debate that. But Apple's exposure to that is – it's just bad news, bad news, bad news, bad news, bad news, bad news. And shares are up 5% over the last 12 months.

                                    And I'm just like – it feels like in the good old days – maybe not the good old days – in the old days, if it was just Mr. Market and Ben Graham or Mr. Market and Dan Ferris, it feels like Apple would be down like 40% based on that. And it's down – it's up 5%. Now, if you want to be a hater, you can point out, hey, if I cherry pick the all-time high in December, Apple is still down 18% from there. OK. It's down 18% over the last – but again, it's had a horrible six months, Dan. And Corey, you've been writing about this as much as anybody. You write about it every day. It's been a rough six months for Apple and we're down 19%, and we're still up over the last 24 months. Some portion of that, I would say – if it was just – I mean, it's impossible to quantify. But if it were just Mr. Market and Ben Graham, it would be down a lot more than that. Can't prove it. It just feels that way. And if this were a $10 billion company or even a $100 billion company, like the 300th biggest company in the world instead of the biggest company in the world, I think it would be down a lot more because the relentless bid zombie at the fence is much smaller for those size companies.

                                    So, Corey, I think you brought up a great observation. You can't prove it. I can't prove that this is happening. I think everyone – and Mike Green was a great guest for pointing this out – I think everyone is – maybe not everyone. Everyone who thinks about this point, and not everyone's thinking about it, but everyone who thinks about this point acknowledges that at least in theory the relentless bid can really screw things up.

Dan Ferris:                 Distort, yeah.

Bryan Beach:              Not screw things up but –

Corey McLaughlin:    Distort things.

Bryan Beach:              – distort. You know what? And I used this in my presentation: Einhorn. Let me see if I can pull up the headline. Einhorn says – I have it right here because I have my presentation open. It's fundamentally broken now. It's coming from David – he used the word – you say distort and I said – I can't remember what I just said and backed off of. But I mean, I didn't say it was fundamentally broken. But if you're – if you come from a school of thought where it should just be me and Mr. Market, that's what I'm comfortable with, yeah, it's fundamentally broken now. The relentless bid on some of these big stocks is distorting the valuation that we're going to see.

Dan Ferris:                 I'm glad you brought up Einhorn, because, yeah, he said the market is fundamentally broken. We – and that was the moment when he said we've got to do something different. Or he was – at that time he was describing what they had done for a few years already or something. And what they did was like radical, radical Ben Grahamite stuff. What they said was "Well, we're not going to get the return – we're not going to find a great business that's trading for 15 times and then buy it and maybe even agitate a little bit or whatever and then it's going to get acquired for 25 times. We're not going to do that anymore because we're not even going to find it in the first place. It's just 25 times all the time."

                                    So – and that acknowledged where the returns have come from for a long time now. Just say 20 years, round numbers. And so, he said, "Well, where do returns come from? Well, we want the returns that can't be stopped, the ones where the cash is flowing and the shares are being repurchased and the dividends are being paid and you can't stop that return. You can stop that valuation return by just having the valuations exorbitant all the time." Right?

Bryan Beach:              Valuation, yeah.

Dan Ferris:                 So, I thought "Wow, that's brilliant." And that's where I – five years later or whatever, I'm finally there now myself. I'm like "Well, this is where returns really do come from." That's where they really – if you own a piece of land or if you own a bond that's not – that you didn't buy for, like, $80 or something, if you own a – it's cash flows. Anyway. Yeah?

Bryan Beach:              Well, he had a really rough seven years?

Dan Ferris:                 Something like that. Yeah.

Bryan Beach:              I mean, he went from being kind of golden child, wonder boy –

Dan Ferris:                 To doing the same thing and having it not work for seven years. Yeah.

Bryan Beach:              Butt of many jokes. I never made those jokes. But a lot of people love to watch that kind of golden boy fall from – and then, he comes out and says, "The market is fundamentally broken. I'm not doing what I used to do." And –

Dan Ferris:                 Yeah, he's had a couple of great years.

Bryan Beach:              – he's back in the golden boy status. So, yeah. Yeah. So, I just kind of pulled it up. I think Microsoft – it's like 8 or 9 times earnings in 2012 and it's 22 times today. And looking at Apple – again, Apple pre-pandemic. I'm not talking about 30 years ago. Pre-pandemic, Apple was – from '15 to '18 Apple was less than 10 times earnings. And it was growing like crazy. When it was growing like crazy, it was less than 10 times earnings. Nowadays, it's over 20 times earnings. I think that Corey answered your question. And again, maybe I'm just looking for the answer that I want to see or looking for the answer that I think is interesting, but I think that the size of the relentless bid reached some kind of critical mass during the pandemic. I mean, it seems to have – or maybe I'm conflating different issues. But I'll put some numbers. These are maybe a year old. These are estimates for 2024: $600 billion dollars a year in 401(k) investing. Most of that is tied statistically to the S&P 500, and 35% of that will go into the Magnificent Seven. And so, Corey, you write about the valuation of the Magnificent Seven all the time, and everyone is – thinks it's out of control, but usually people don't acknowledge the relentless bid when they're talking about that.

                                    In fact, I read an article yesterday – sorry, I was kind of trying to pass it over to you, Corey, but now I'm going to interrupt myself.

Corey McLaughlin:    Go for it.

Bryan Beach:              I just saw an article yesterday where someone was like – the Magnificent Seven had a great May, I guess, and they were like, "Oh, people are flocking to safety."

Dan Ferris:                 To safety.

Bryan Beach:              And I'm like that's an active – first of all, yeah, that's not safe. Secondly, that implies that it was an active decision. And I just think what happens is in a relatively quiet month there is going to be upward pressure on the Magnificent Seven. If there's a huge tariff upheaval like there was for Apple a couple of months ago in April, then yes, that's going to override any kind of gentle pressure from the relentless bid. But in general, on a quiet month these things are going to roll up a little bit. They're going to grind higher a little bit. That's their natural inertia.

Dan Ferris:                 That's right. The marginal bid is hedge funds or whatever – whoever is active left. And then when that's maybe not there for a month or two, "Oh, everybody got scared in April" and the fear maybe carried into May and then whoosh, then the passive bid shines and everybody ETFD and it's back up. Yeah. Yeah, so...

Bryan Beach:              Well, but it's steady. It's a steady drum beat. It can't overpower one really bad bit of news in any given – but it's a steady drum beat. Apple's not back where it was yet from March, but it's up probably 30% from when I was getting texts making fun of me for people who were at that presentation and thought it was an "Apple is never going down again" presentation. By the way, the people who thought it was a bearish presentation, I had a slide where I just rattled off everything I rattled off for you. I was like "Listen, look at all this bad stuff happening." I guess someone just started paying attention –

Dan Ferris:                 They heard "bad stuff." Yeah, that's right.

Bryan Beach:              – at that moment, like "Oh, he's bearish on Apple." I'm like, "No, you missed my point." Yeah.

Corey McLaughlin:    But the price is actually off.

Dan Ferris:                 The price is up and the valuation is high.

Bryan Beach:              The price should not be up. Yeah. So, it's interesting, Dan, that you're shifting your mindset a little bit as it relates at least to the biggest seven or the biggest part of the market, it sounds like.

Dan Ferris:                 Well, I don't know if I would go that far because – well, I understand that there's something happening and that it's probably – it's the old thing about being – the market can be irrational longer than you can be solvent or whatever. I forget exactly that expression but it amounts to that. And value guys like me are the ones you get caught up in it. Value people and total novices. What does that tell you? But what I think is it does – I still think a Nifty Fifty analogy is still good. And I still think there are things that could derail it. And I think we're in the midst of one of the only things that might be able to derail this endless bid, and that is the critical mass – speaking of critical masses – of the – talk about a relentless flow. We're talking about a relentless flow. That relentless bid is a relentless flow. And I'm – and the relentless flow I'm talking about is China joins [the World Trade Organization] in 1994. They're the mercantilist. We're the host, reserve country, whatever. And we're endlessly sending – Warren Buffett would say we're endlessly shipping our net worth to them. And we're endlessly shipping dollars to them and getting cheap goods in return.

                                    So, they've got all these dollars. What do they do? Well, they come in and buy U.S. stocks and U.S. debt and U.S. everything. That's what – and that's not just China. It's like the whole world. We're in a constant endless trade deficit with the whole world on goods, not services, but the goods are the thing that matters. And so, what do they do? Well – and even when those effects go into other currencies like other reserve currencies, not the world reserve, like the euro or the yen, people have a billion USD of euro and they say, "What can I do with this? Let me see. I know what I can do. I can get freaking dollars. I could pledge it for dollars and buy U.S. stocks. That's what I could do." And you'll get – if you have a billion USD of euro or a billion USD of yen and you go to the big bank and you say, "How much USD will you give me?" They'll say, "Well, we'll give you a billion. Yeah, we'll give you a billion." Now, if you go to them with a billion USD of rupees, they'll say, "Eh, how about $400 million?" Or whatever the haircut is. It's massive, is the point.

                                    But there's a lot of – that effect is relentless. And it seems like of all the things that Trump is doing in his administration, this idea that we need to tariff the heck out of everybody so that you can't transship from China to everybody else and get in under tariffs without paying them, he's going to tariff shit out of everybody to try to rebalance this, this flow. And if that – if he's 30% successful, that is a massive shift. It's a massive shift because the trade – as trade goes, investment goes. And you can see the trade deficit –

Bryan Beach:              Yeah, you're talking about something offsetting the relentless bid, not necessarily something changing –

                                    [Crosstalk]  

Dan Ferris:                 No, it doesn't stop it. But the point is that there's a bid coming from someplace else that's pretty damn big, too. And stopping that one,  like I said, like the marginal bid in March 2020 or April 2025 or whatever it is, the marginal bid freaks out, the marginal bid could get a lot bigger if this attempt to disrupt these flows succeeds even a little bit. So, that's why – and I've recommended in – if you know how these flows have worked, I've recommended a Europe fund and a Japan fund in my Ferris Report letter because – and they've done OK. And they've especially done OK since Trump got elected because people recognize this.

Bryan Beach:              Sure. Yeah.

Dan Ferris:                 So, that could – but you're right. You're right. I've – I said it wrong, didn't I? I said it could disrupt that. No, it would offset it. You're absolutely, absolutely correct, Bryan. Thank you. Yes.

Bryan Beach:              It's just offsetting it. My nephew who's a fireman, my dental hygienist as kind of the exemplars of the relentless bid. Let's drill down to the individual level. My dental hygienist asked me what I did. I kind of told her. "Oh, I don't fool around the stock market." And I'm like, "Oh, you don't – aren't you in your 401(k)? You guys have a –?" "Oh, I invest in a 401(k)." I'm like, "Well, then you're in the stock market." And she didn't even realize that was the stock market. And her and she's –

Dan Ferris:                 No, no, no, no.

Bryan Beach:              – totally funding it. I'm not making fun of her. She's a smart person. Just this is how – and she didn't realize it could go down. She hadn't even opened her statements.

                                    So, this idea that at some point if the stock market goes down people are going to panic and stop contributing their 401(k), I don't think – I think a lot of these people at the individual level that are part of this $600-billion-per-year juggernaut and counting, $15 trillion in assets tied to the S&P 500, they're not fearful or greedy. They don't really even know what they're buying. They're very good at their jobs, whatever those jobs are, and they've been taught to save it. And they don't really know the nature of what's in that 401(k). They might think it's a mattress. I don't know. But – where they're stuffing their cash. But I think it's going to take something fundamentally changing with the way – with what's legal or what's – as far as how you can save for retirement for things to – for it really to get disrupted. And I could be wrong. I don't know.

                                    But I do know that when I see valuation charts from 2005 of the S&P 500 and, like, "Look, it's twice as expensive as it was in 2005," and the author, whoever's printing that, is kind of implying that's going to revert back, and I'm like "That's an apples-to-oranges comparison." I just – the market is, I believe, fundamentally different now with the size of the relentless bid. There's a new person at the fence every two weeks. It's not just Ben Graham and Mr. Market anymore. And so, when you look back at 2005 and what the [cyclically adjusted price-to-earnings ("CAPE")] ratio – I'm like, "I don't know that that matters to me much." I don't know if we're going to get that –

Dan Ferris:                 Yeah, every time I say CAPE, everybody says, "Dan, it doesn't matter anymore," like they're trying to do me a great service. "Dan, come on. It doesn't matter." Yeah.

Bryan Beach:              Well, Dan, I look at all your CAPE charts. It's a good thing it's not a drinking game the way you make a – every time Dan prints a chart with a valuation... So, I think that it's useful. I just think the farther back any kind of valuation chart goes, it gets a little bit less. I mean, the market's a lot different than it used to be. And that's true for a lot of reasons. Imagine – Ben Graham used to have to write letters to get financial reports, and that's how he would evaluate. I mean, look at our Bloomberg Terminal. The market is different in a lot of ways, but certainly 401(k) investing is one of those things.

Dan Ferris:                 Yeah, it's my nature to want to sort of push back or whatever. So, forgive me, Bryan. I don't mean to – I'm not trying to, yeah, I'm not trying to beat you over the head and argue.

                                    [Crosstalk]  

Dan Ferris:                 But one thing I will say is I think a lot of people think history doesn't matter anymore. The history before just call it 1980 or something like that, they think it doesn't matter anymore. There was a really interesting piece – Jesse Felder, who we've had on the show, sends around a really nice e-mail at the end of every week that I just gobble up. And there was a piece in there about how maybe people are making a mistake and they think history doesn't matter anymore. Ray Dalio has been on this train for longer than any other, because he said, "I just – I didn't find anything during my lifetime but when I went back 500 years I realized all these things have happened again and again and again and again." And it's not – it always feels a little different. There is something different every single time, but the basic forces don't change. Human nature doesn't change, etc. So – and if we're still having this debate in five years I'll probably still be giving the same answer because it's just kind of how it is. And I think we're in danger, a lot more in danger now of another sideways market like 1929 to 1954, I think it's '66 to '82, those kind of markets. At the end of those nobody is saying "buy the dip," right? Halfway through, everybody is tired.

Bryan Beach:              Yeah. Yeah. Yeah, it does feel like we're – it's been sideways for a while. I mean, even the downs of 2020 and the ups in 2021. But I mean, we're still kind of just flat over the last, I don't even know, you're looking at –

Corey McLaughlin:    If you go back to essentially the beginning of his year, honestly, it doesn't feel like it, but it's pretty, it's basically flat.

Dan Ferris:                 Yes, so technically the top was February 19, when the S&P 500 was 6,144. And that's February, and it's only June. So, four months. Who cares? But – and I've said, "Hey, maybe the sideways market has begun" seven times or something. So, look, I freely admit, I'm like Jim Grant. I'm like, "Well, I've been bearish on this and that for 10 years and it's gone up 1,000%." So...

Bryan Beach:              Not to circle back. He had a really compelling short selling argument on Apple in 2022. And all of his kind of – not all of them, but the main operational predictions he made about the actual business proved correct, and then the stock went up 46%. But he's one of those guys. He's smart. He should know – I feel like he should know. He's like, "Oh, I guess Mr. Market is just super excited." And I'm like, "There's a third guy now."

Dan Ferris:                 That's a good way to look at it.

Bryan Beach:              And there's some really smart people I don't think who really are thinking about that.

Dan Ferris:                 I think that calling it a third guy is a very smart way of looking at it, Bryan. I'm going to steal that from you and probably – it'll probably show up in the next Digest or within another Digest or two, because it's true. That's the way – that is at least the model that you should hold in your head about it. You should say, "Well, we've got Dan and five other people, including Bryan, and then we've got Mr. Market. And then we have a 17-foot-tall zombie who's just, like you said, "Buy... buy... buy..."

Bryan Beach:              Yeah. Well, the size of the zombie depends of course on the size of the stock. But yeah, that's what we're up against. And you know what? That's why I like small caps. Small caps have been really hard lately, but there's no relentless bid down where I've got my sleeves rolled up. Of course, there's index funds that are tied to small caps but not microcaps necessarily. It's very much still the old-fashioned Ben Graham and Mr. Market down in small-cap world. And in other corners of the market, too, probably overseas. But –

Dan Ferris:                 I mean, corners, the S&P 493. There's the Seven and then the 493. And the 493, if you put the two charts together, the 493 actually looks flat. You've got to get the Seven off the chart to see it going up.

Bryan Beach:              Maybe that's – that's how I prove it, Corey. And Tesla's interesting because Tesla's in the Seven. Tesla's a great case study just because everybody hates Musk so much. It's kind of funny. I don't want to get into politics, but he was kind of a hero to the left in certain – talking about environmental – and he was the guy that's bringing electric to the auto industry. And then fast-forward and now they're spray painting cars at the dealerships. Just kind of – I mean, he's hated. And Tesla's way down. So, this is really going to test the theory. And what happens if Tesla slips into the 493? That's – that is – once you're out of the Mag Seven or once you're out of the Mag Five or whatever you want to – you lose that sacred status, who knows what's going to happen?

                                    So, actually, when I first started doing that presentation, I think I was more interested in Apple just because it was – it happened to be the biggest, so it seemed like it was the easiest way to test this relentless bid. But what's happening with Tesla right now is – it might be a more interesting way to look at things because it's way down and we're about to see if this life preserver that is the relentless bid is going to help stem the tide. And I think that's three metaphors at once, but you kind of follow what I'm saying.

Dan Ferris:                 Hey, I've been known to sling an extra metaphor or two myself. But they've shifted in Los Angeles, Bryan, I just want to – from burning the Tesla dealerships to burning Waymo cars now. So, I don't know – are they Teslas, though? Maybe they're Teslas.

Bryan Beach:              Oh. OK.

Dan Ferris:                 But yeah, we'll see. If they burn enough of them, maybe the supply and demand dynamics will push the price up. I don't know.

Bryan Beach:              Yeah. OK. I like the way you're thinking.

Dan Ferris:                 All right. Well, we normally – I don't mind talking about this for the whole time.

Bryan Beach:              Your listeners probably started fast-forwarding about 22 minutes ago.

Dan Ferris:                 Yeah, I think they probably did. Right.

Bryan Beach:              But we can turn the page.

Dan Ferris:                 We can go 22 minutes and put a little note in that says, "Fast-forward to 46 minutes" or whatever. Whatever this ends up being in the final cut. But as we also pointed out before we hit record on this, the last two times you were on you wound up pitching the same stock, Par Technology. We all had a bit of a laugh about it, but I thought it was interesting. I thought, "Wow, Bryan's found a business that he really likes." And that – I don't know. It means something to me. I think it ought to mean something to our listeners, too. So, maybe we should get the update on that if you feel like it.

Bryan Beach:              Well, what was funny was I recommended Par on this show in August '23. I didn't realize – I've been on this show more than I realized. And so, it's up 65% in a couple years. That's pretty good. It beats the market. And then you had me on a year ago in May, and you're – same question. "What's your favorite...?" It was Par again. And I re-introduced it, explained the whole bit like – I had completely forgotten that I've already told your audience about it. But I was at a – I was presenting at a conference last month and someone asked me my favorite stock again and I'm like "I just – I really like Par still."

                                    Par is a "bet the jockey" kind of a thing in many ways. I really love their CEO, a guy named Savneet Singh, who was a Buffett disciple, and he and his buddies figured out just as an intellectual exercise that if Buffett were 20-something today – and this is back when he and his buddies were 20-something, they had all been successful entrepreneurs and sold companies already at that point and they were looking for how to invest their capital. And they realized that they think Buffett would be in software in the 2020s, as opposed to insurance maybe in the – I mean, not that insurance – I still think insurance is the best business in the world. But when Buffett was 20-something, there was no software. Super thick margins, especially if you can get a good subscription model.

                                    So, Singh and his buddies, I think they started a fund to buy software companies. And then they found this little company called Par Technology, which was tiny back then, that had one product, a brick software that was used in restaurants, quick service restaurants, fast food joints. And the other thing Par Technology had was every – hardware. They had every cash register at McDonald's. It started as a cash register business. So, they still had that cash register business. I think I recommended this back in 2018. And it's – Savneet Singh ended up saying, "You know what? I don't want this to just be in my portfolio." He ended up being the CEO and he's kind of jettisoned off the – they had a really weird government contractor business in the middle of it. Again, they do some crazy stuff down in the microcap world. Restaurant software and government –  top secret government consulting. And he's just been rolling up developing and buying, and he's become – Par is becoming – it's a completely different company really than it was when we recommended and even since I first talked about it here. It's getting so that any kind of software a restaurant needs, they offer it. And when you think about it, restaurants use a lot of software for inventory management, for scheduling their employees, obviously everything to do with paying a bill and running your cash registers and – which, I think there's a more technical term for cash registers now. I mean, they're touch screen computers now. But all of that.

                                    And I don't – it's one of those things where I don't really follow it that closely because I'm just – I'm sure Savneet Singh's got it under control. It doesn't, as you like to say – you love the verb "gush' when it comes to cashflow. It does not gush cashflow because he's constantly investing in new technology and making sure – so, he's not in the gush phase yet.

Dan Ferris:                 Well, wait a minute, though. I don't preclude the reinvestment of all that gushes. So, the gushing is the initial thing and then what you do with it is kind of the next step. So...

Bryan Beach:              So, if you're looking at free cash flow, [capital expenditures] is usually kind of part of that calculation and he does a lot of that, of reinvesting the cash flow. Revenues have gone from about $200 million to $450 million since I recommended. Cash flow is going to be relatively breakeven. In the – in one of my podcasts with you, I kind of explained this, but it takes about seven years for a subscription model and software to flip positive, to flip to earnings positive. And we can dig into that if you want, but they're flipping to positive this year. 2025 is a big year. So, the market's not super in love with this company. It's up 65% since I recommended it in August '23. It's up 46% last year since I was on the show last year. It might go down 20% from here. I'm just – I don't really pay that much attention to it. But yes, it's become an interesting tradition to catch up on Par. It's not, it's not as small as it was. It was a $300 million dollar, $350 million dollar market cap – I'm sorry, enterprise value when we recommended it. It's $3 billion now. They've – he's – he raises money opportunistically with shares. And so, it's been a – it's not really a microcap. It's certainly not a microcap, but it's not really a small cap anymore. It depends on where you draw the line.

Dan Ferris:                 But that's what you're looking for, right? You want to find the small caps that become a big one.

Bryan Beach:              Yeah.

Dan Ferris:                 So, Savneet Singh is the Warren Buffett of restaurant software, which is cool. Do you know who Mark Leonard is? When I say it, you'll go, "Oh, yeah, yeah, yeah."

Bryan Beach:              Oh, gosh. You've put me on the spot. Oh, yeah, yeah, yeah. I'd like to hear your version –

                                    [Crosstalk]  

Dan Ferris:                 He's the Warren Buffett of software, period. He's the founder of Constellation Software.

Bryan Beach:              Yeah.

Dan Ferris:                 Yeah.

Bryan Beach:              Constellation. Right. The Canadian – yeah, there's all kinds of people that kind of – Tyler Technology, Constellation, there's a lot of people who understand the fundamentals of software. And the guys – it's a surprisingly small portion of the investing public that gets excited about it, just the thick margins and the recurring nature of some of these descriptions. Yeah, so Constellation has been rolling up a lot of these and bought a company I was looking at –

Dan Ferris:                 Oh, really? Wow.

Bryan Beach:              – right out from under me. So –

Dan Ferris:                 Well, that's kind of an affirmation for you, though. But it's amazing. It's one of these things that it just goes up and up and up and it's never anything that anyone would call cheap. I think right now it's like – just – not that we use [price to earnings] so much but it's a reasonable enough benchmark, it's like a hundred times earnings or something. It's just – and all the compounders, though, are like that, aren't they?

Bryan Beach:              You're talking about Constellation?

Dan Ferris:                 Like, Costco is, I think, 60 or 65 – last time I looked, like, 66 times. And so, that thing that you described with Apple, "Well, it was 10, now it's 25 or whatever," it's happened all over the place with the compounders.

Bryan Beach:              Well, maybe that kind of gets to kind of refuting the relentless bid idea. Maybe it's not just the relentless bid because those companies aren't big enough to be benefiting from that as much. So –

Dan Ferris:                 Well, wait a minute. Constellation, I've got on the screen, it's like a hundred billion market cap. It's not trillions.

Bryan Beach:              Is that – and Constellation is –

Dan Ferris:                 Toronto. CSU in Toronto.

Bryan Beach:              Where's that listed? It's –  so, that that wouldn't be in the S&P –

Dan Ferris:                 Correctamundo.

Bryan Beach:              – 500 anyway, right?

Dan Ferris:                 Yeah. So, not – you're right. Yeah. So, not that way. But Costco is $440 billion or so.

Bryan Beach:              Yeah. Do you still have that in your portfolio? You recommended that – ?

Dan Ferris:                 We do still have it because dumbass Dan picked all the great compounders and then sold them. If I had kept all those stocks, we would have to create a separate hall of fame for me because it would be 10 – I'm not kidding. It's the dumbest thing I've ever done in my life.

Bryan Beach:              So, what kept you out of it? Was it stop losses or –

Dan Ferris:                 Oh, it was dumber than – I mean, it was dumber than stop losses.

Bryan Beach:              – you sold during the pandemic?

Dan Ferris:                 I forget the rationale. I was wanting to get back to real value or some stupid thing like that. I just was – and I was probably – you know what, I was probably, as I recall, which clearly I don't recall, crystal clear what I was thinking, but I might have even been getting to one of those points I've gotten several times in my career, where I'm like, "Everybody else sells tens of thousands of subscriptions at a pop and I don't sell sh**. They're all just the most successful people I've ever literally ever met in my life doing the exact same thing as me. And my track record's better than theirs and nobody gives a sh**."

                                    And I've gone through some real ups and downs with that over the years. And I finally – I don't know, I've been at it so long. It's like you can just – you can't hurt me anymore. You're just like –

Bryan Beach:              Well, so, wait a minute. Because you were so tired you sold Costco or your sold all your compounders – ?

Dan Ferris:                 No, I was trying – no, no, no, I didn't sell Costco, but I did sell Microsoft and some other things, because I figured, "Well, they're getting expensive and I need to be searching for real value. And I'm not living up to my true potential. Or maybe that's the problem. Maybe the problem is I've got all these big stocks that the whole world owns and I'm ignoring all the great stuff lower down in the capitalization."

Bryan Beach:              Got you.

Dan Ferris:                 So, that proved to be a very dumb idea over time. And I – like I said, the dumbest thing I've done personally and in any newsletter is sell a great business for some dumb reason, like a stop loss or something else. I mean...

Bryan Beach:              Well, I – down in down in microcap world, it's not easier. There is – I was on this show in 2022 – again, yeah, Tera sent me all the links to my old shows. So, you and I were comparing two little microcaps. I was looking at [special purpose acquisition companies ("SPACs")]. I was looking at all the SPACs who had fallen because I thought that there was a really cool idea to get value heat. And I've done pretty well with that, but there was one little – this is a consolidator of physical therapy –

Dan Ferris:                 Practices, yeah.

Bryan Beach:              – practices. Yeah. And it was cash flow-positive until the pandemic. And I'm like – I didn't think the pandemic would kill the business model and this, that, and the other. And then, you and I were talking about this. This is a good little business. And compounders, you can do it the right way. It's smart. And they had some mismanagement during COVID. And so, I was like, "Yeah, let's recommend this." And then you and I – well, I was making fun of them and you kind of piled on the TMC, the metals corp that makes robots to mine stuff off the ocean floor. No money, no revenue, no cash flow. So, this is back in 2022. My little compounder that I thought was so savvy, scooping this out of the – scooping it out of the scrap heap. I checked it and it's down 99%. I sold it way before then. So, I haven't been following it. I don't know what I got wrong with that. But operationally, it was hard to roll these things up. They didn't have a ton of debt, but they weren't making money. The metals corp still doesn't have revenue that I can see. And if you want to guess – just throw out a number. What do you think's happened with that since July 2022?

Dan Ferris:                 2022? Five hundred percent?

Bryan Beach:              Yeah, 407. Four-oh-seven. So, I am – down in microcap world it's hard to predict. And clearly I missed something on both sides, on both sides at that point. So...

Dan Ferris:                 If it makes you feel any better, Bryan, I did the identical mistake with an even worse looking company, Orthodontic Centers of America. I got on the long side of that piece of crap. Yeah.

Bryan Beach:              Uh-oh. Yeah.

Corey McLaughlin:    Well, and if it makes you feel any better, I just looked up TMC's chart and it's – 250% of that is this year, so –

Bryan Beach:              Yeah. There's some fun stuff that I must have missed with my robot mining research. And I just didn't – and I don't even think I turned over one rock with that thing. I just read the description and moved on.

Dan Ferris:                 Yeah. Who wouldn't?

Bryan Beach:              So, yeah. Well, obviously a lot of people. But that's what we're talking about, guys. I mean, there's still a good old-fashioned Ben Graham fence, Mr. Market fence there with some of those companies. There's a lot of. excitement around underground mining or whatever that – I think the metals corp kind of pivoted at some point or at least stopped using that as their main selling point.

Dan Ferris:                 This has been a lot of fun. It's time for our final question, but I wish that more of our discussions would go this way because we just – I didn't feel at – one point I did kind of mention and we both said, "All right, well, we've talked enough about this passive thing." But except for that, we didn't feel like we had to worry about that. And I think that's the way it ought to go on Stansberry Investor Hour. I think we did our listeners a service. I hope they agree. And if they did, I hope they'll write in and tell us. And if not, maybe they can write in and tell us that, too. But it's been a lot of fun talking with you about this.

                                    So, the final question, which you have answered a number of times now, is the same for every guest, no matter what the topic – financial, nonfinancial, same identical question. If you've already said the answer, feel free to repeat it. The question is simply if you could leave our listeners with one thought today, one single takeaway, what would you like it to be?

Bryan Beach:              Well, I think I really hate to go back to this, but there is just a lot of misunderstanding with long-term valuation as it relates to the overall market and big stocks. And I'm not saying I have the answers, but if your listeners could just cast a little bit of a skeptical eye when they see a long-term valuation chart for a big company or for the S&P 500, I think they will be ahead of, I don't even know, 80% of people who even write about this for a living. It's just – it's not a topic that people understand.

                                    I also continue to think that if you're scared or confused – "scared" might not be the word, but if you're intimidated or confused about the dynamics there, again, my message is not that Apple is never going to go down again or that the market will never go down again, but these dynamics don't exist down in the microcap world in the small cap land. If you like good old-fashioned value investing where Mr. Market's making stupid offers or he's overly fearful or overly greedy, that still happens down in microcap world and it can lead to some crazy swings. So, this is not for your rent money. It's for a small portion of your portfolio, but it's fun. And it's – and you can learn a whole lot about businesses doing that.

                                    So, to the extent your audience just likes to learn about business, maybe you don't even put much money at all. You get $500,00 and find 10 little companies and learn a lot about them, and it's a great way to learn investing. And you can learn it for cheap education. Just buy a few of these stocks. And if you want to, you can read my letter. I don't know. But that's a suggestion. It might be a bad one, but yeah.

Dan Ferris:                 No, I think it's a very good one. I think it's a very good one. It's called Venture Value, published by Stansberry Research. I'm a huge fan, of course, obviously. And take that for what it's worth to you. And Corey, too, right?

Corey McLaughlin:    Me too.

Dan Ferris:                 Whatever Corey and my opinion of our employers' products is worth.

Bryan Beach:              Yeah, well, I appreciate that plug. It was very half-hearted, but I appreciate it.

Corey McLaughlin:    No, seriously, the stories of the companies that you've got in there alone are fascinating.

Bryan Beach:              Yeah, these are fun little companies. Yeah. Yeah. All right. Well, thanks for having me guys. It's been a blast. And maybe – it's good to run into some people who have a big audience where they're writing to and seem to understand the relentless bid. You're ahead of most of us. So, all right, guys. Thank you.

Dan Ferris:                 That was great, and I know this is self-serving, but I meant what I said, man. I wish more discussions would go that way because we were just freewheeling, digging into the passive bid, the relentless passive bid, and I didn't feel like – I always eventually feel like it, and I did this time, too, but for a long time, I wasn't worried about getting a pick out of the guest, which I know listeners do love, but I hope they also appreciate what I'm talking about there. We just dug into it and went after it, and I tend to think deeper is better. The deeper you go into one topic, the better it is.

Corey McLaughlin:    Yeah, and it's something that Bryan's written and talked about for a while, obviously. And yeah, to me, it's just one of those things where people – casual people think the market – he mentioned some of his family members or friends. I think of my – one of my – during the tariff panic that my kid's, one of my kid's teachers was like, "What do you think's going to happen next here?"
The market was down 20% that day or – from the previous high. And I was like "Well, the worst is probably over here. Just chill out for –" and it's – but the point I'm getting at is when people think of the market, a lot of people just don't even understand what that even means. We're talking about 30% of the S&P 500 in seven companies, you could – do you know that that's the market? Do you know where that's – where all that is going? So, obviously, if you're listening to this, you probably have a better idea of it. But it's just – there's a lot to get into as far as the impact of just the passive – really, it's the passive trend and it just – it shows up in that idea that Bryan talked about.

Dan Ferris:                 Yeah, he's right. There is an endless tension between what he discussed and what I keep writing about in the Digest, like these historical valuation things that everybody tells me are meaningless now, and I keep taking it as a contrarian signal. And I wind up being right in 2022 or even late 2018 or whatever it is and then I'm wrong again. So –

Corey McLaughlin:    Yeah, they're only meaningless until they're not, Dan.

Dan Ferris:                 I know. That's the thing, isn't it? It's like I don't want to be caught as one of the guys who is just whistling past the graveyard, so to speak. So, yeah, I'm glad we talked about this. It's very important. He's right. It's value guys, Ben Graham, and then the zombie at the gate relentlessly buying for no fundamental reason whatsoever. It's a very good way – a third guy in the market is a very good way to think of it. And that's what you can count on Bryan Beach for, is those kind of insights. So, that was great. That's another interview. It's one of my favorites yet, I have to say – completely biased. Take it for what it means. And that's another episode of the Stansberry Investor Hour. I hope you enjoyed it as much as we really, truly did. We do provide a transcript for every episode. Just go to www.investorhour.com, click on the episode you want, scroll all the way down, click on the word "Transcript," and enjoy. If you liked this episode and know anybody else who might like it, tell them to check it out on their podcast app or at investorhour.com, please. And also do me a favor, subscribe to the show on iTunes, Google Play, or wherever you listen to podcasts. And while you're there, help us grow with a rate and a review. Follow us on Facebook and Instagram. Our handle is @InvestorHour. On Twitter, our handle is @Investor_Hour. Have a guest you want us to interview? Drop us a note at feedback@investorhour.com or call our listener feedback line, 800-381-2357. Tell us what's on your mind and hear your voice on the show. For my co-host, Corey McLaughlin, until next week, I'm Dan Ferris. Thanks for listening.

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