A Super Stu’s days! Because we've upgraded Stu’s days this year. Actually, I didn't ask, what's your mom think of that? Does she like Super Stu’s days better than just Stu’s days?

I haven't actually gone through it with her. I should ask her. I think she'd probably be a fan of Super Stu’s days, but she's a pretty humble person, too, so she might think that we're taking a bit of a risk with more adjectives.

Oh, well, I can tell you my mom loves it. It was her birthday yesterday, and she was just in the hospital for a bit. No, she's doing great, just a little rehab. She was listening to the podcast regularly, and she loves Super Stu’s days. A huge fan. He just makes her smile, that Stu.

They played it 24 hours a day, and she was like, I got to get out of here.

No, actually, I did suggest that. They rejected it at wholesale at the hospital because they are concerned about people's health. But for my mom, it was a good way to pass time because she's very interested in being a successful investor. She's done well listening to you. Unfortunately, she spent the first part of her life listening to me, before I met you, and then that got her off on the wrong track. But now we got her moving in the right directions, Stu, both health-wise and financially. So that's good. So thanks to you and all your great advice. And I'm sure as well as I travel and I run into different advisors and I run into different investors who listen to the podcast, they love listening to you and just all the wisdom that your many, many years of experience and that we're able to share it regularly on almost every Tuesday. Stu’s day. So it's a good thing.

Well, thanks very much. That's very kind. So I'll take it. As my mom would say, I'm knocking on wood, which meant knocking on your head.

Oh, yeah. My wooden head and more importantly, my wooden teeth, which are a much bigger problem. But we won't talk about that. So, Stu, we've been talking and laying the groundwork around just what's been happening in markets. We talked about a few pretty interesting concepts around the enthusiasm that can build within markets and go from enthusiasm to over-enthusiasm to exuberance to just plain crazy. And so some of the focus around those discussions has been the space of artificial intelligence over the last several months. Then we've been talking about concentration in markets, where you have a small group of companies, and sometimes even a small group of companies isolated in a particular part of the market or particular industry or sector that are driving the bulk of the gains while the rest of the market lags. Then we talked about the relative performance of that concentrated market or that market that has more exposure to that area versus a broader set of markets that have different types of companies or different mix of sectors and assets. Then we talked about just valuation in general, that you get a market or a particular area of the market that gets very expensive relative to the rest of the market. And then what you need to sustain that as time goes on. Then we get to yesterday, Stu, with all of these topics, and just out of the blue, a small company in China makes an announcement, or at least it becomes better known across the general public, that they've got this new solution in artificial intelligence and that, lo and behold, it works as well or better than anything that's been come up with in North America or Europe with lots of expensive hardware and chips and massive data centers using tons of energy. And it's just a revelation. And again, we don't have any very specific inside knowledge of exactly what it is. But the whole idea that artificial intelligence could maybe be cheaper to run in the future, maybe more broadly accessible, different winners versus different losers, kind of threw a wrench into the whole market narrative that's been building over the last couple of years. And we see stocks in that particular area—again, some winners, some losers—some of the stocks that have been big winners become big losers almost overnight on what seemingly seems like to be a surprise or just a little bit of news. What I like about what happened—I don't like what happened in terms of anyone losing money, obviously—but I do like the idea that it brings all of these concepts that we've been talking about together into a real world example. Okay, all this is happening, and then boom, this happens. Okay, now we see how markets really work to iron out those excesses or look into different areas. Anyways, I'm talking way too much. I'm sure the listeners want to hear your perspective on how this all comes together with all of the things, again, that we've been talking about for the last several months.

Well, it's interesting. I probably will start off with the wall of quotes, and I'll go to a Mark Twain quote, which is, in effect, it's not what we don't know that gets us into trouble, it's what we thought was true and wasn't. And whether or not some of these discussions have been building in the last couple of weeks, they certainly had a moment on the weekend where people questioned some of the underlying assumptions around artificial intelligence. And those two biggest ones were how much it cost outright to train a model and how much capital had to go into that, and then the second was how much to run artificial intelligence on an ongoing basis. Simply put, I'll leave it to you to read the exact white paper that they put out with the physics and everything, because I know that's your baylywick. So inside portfolios, we can spend a lot of time on the things that we don't know. We can prepare for all those types of things. And then we think we get certainty around some things. And we have to be careful when the list of things we know for sure is getting long because one, it may not be true, and two, the more we think something's true, the greater the likelihood we're going to put a higher valuation on it. Because it looks so visible. And valuation is a way of saying, how protected am I against some of these ebbs and flows that will come in the market? And sure as yesterday, we had some significant doubts put into the stock market around the cost, the amount of capital that might be required for some of these models. Who knows? In a couple of months, that could change back and we could be on to something new. And when we think back in the last 6-12 months, there had been some discussion around quantum computing, and you're sitting there going, well, would that really change things? There were some things that you thought of that you didn't know how to handicap from a betting standpoint, to put it in that analogy, but certainly this froth that came to the surface on the weekend made people change their mind. And it resulted in a decline in more hardware-oriented stocks. But conversely, it wasn't just a decline in the market, it actually had a couple of ripples on effects as well. The second thing that we love to think about is when I drop a pebble in the water and I just watched the ripples go off. So the first was if artificial intelligence was cheaper. So you see some of the software businesses that might have agents that might help you work with some of this data in a cheaper manner, their stocks actually took off to the upside. The confusion around all of this, if you're a tech consulting company, it looks pretty good for you because a lot of executives say, hey, call the consultants, we need to get some more advice than we maybe thought. Then from a negative standpoint, there have been so much enthusiasm around redoing North American electrical grids and all sorts of things. And that could still very well continue for decarbonization and some other things. But again, it just threw into doubt in the short term, you had one buyer community that had heavily dominated the share prices of those companies. And on the day of an announcement, there wasn't a new buyer community ready to step in right at the same price. So you get these large movements. And as analysts, we do our best to try and envision a whole range of scenarios in advance. So sometimes you're at the ready and you get a big price change and you can say, well, we've taken out these opportunities from the share price, so it could be interesting. There are other times where you see a decline and you say, well, I don't know if that's enough. I just don't know. And then, conversely, some stocks took off yesterday. Maybe there's positives, like cheaper AI. But there was some note of also just capital are redistributed in the market. So there were some consumer staples stocks that were up 3 or 4%. And I highly doubt that those businesses are automatically worth 3 or 4% more. But on any given day, when you get share price movement in big companies, a portion of that money might leave the market, but another portion of it needs to be redistributed through the market. It's almost like if you had a balloon filled with water and you squeeze the middle, the two ends pop out. So there were some stocks that on the surface would have nothing to do with this, and they were moving around quite rapidly as well yesterday. So it was a big event. And as the dust settles, I'm sure I'll have more to say on the matter. And I'm sure you'll have a variety of other portfolio managers on from the growth teams and the value teams to think how do we think through this? But the last point I would say, on valuation front, is once you see something, it's hard to unsee it. So if you had this comfort with a certain valuation range because of the dominance of a certain thesis, and that gets put to doubt, even if those doubts then are extinguished, you may not fully go back to exactly the same thesis you had before because you're like, well, I hadn't considered DeepSeek, so maybe I got to put a list of things that I haven't considered in my risk factors.

Yeah. In that way, I don't think it changes in any way the importance of artificial intelligence and what artificial intelligence is going to mean to the human race. Or that it's going to extinguish investment or enthusiasm around AI and what it can do for us. But it does change, again, the mindset in terms of, like you say, how much it's going to cost, from an investment perspective, where the winners and losers are going to be near term. When you have that adjustment. But I think what I wanted to highlight more than anything was you have that adjustment in an area where valuations have been stretched. That balloon is really full in that one area. There's a lot of water over in that one area. So you squeeze it and the movement is quite sharp. And that's really what we saw yesterday. I think on the other front—and what would be a sign, I think, of optimism, and we've talked about this as well—is like you say in your balloon analogy, the money or the water did spill elsewhere. So it wasn't a complete abandonment of the value of stocks and people's excitement around the stock market because we're in an environment where rates are generally going down, where profits are likely going to rise because we've got growth and low risk of recession. The money found itself into other areas, which is actually quite healthy to see things spread around when it's been so concentrated for quite some time.

I think that's true. On days like yesterday, you own some stocks in your portfolio where you sit and say, boy, I wish I thought about that. And then you own some other stocks in your portfolio. You're like, well, that's great. I didn't know that would be that helpful. So it does remind you about having a portfolio, right? You're trying to expose yourself to a variety of outcomes. And when we think about financial plans, we think about compounding over long periods of time. And that means a variety of things in a portfolio. It means sometimes there'll be stocks in there that go down. It means there'll be lots of stocks that go up. It's the totality of trying to expose your portfolio to positive options as they develop over time. So that's one thing that we think about yesterday. I think there's always a chorus of valuation-oriented people that come out on days like yesterday and tout their wares, but they've probably been touting those wares for some time. It's not like they were bullish on Thursday and became bearish on Friday. So we have to recognize that there's a pretty wide-ranging set of outcomes for any individual specific company. But if we collect a portfolio of businesses and we say, I'm okay with this valuation relative to the scenarios I can envision, and I'm collecting positive options across each of the stocks in my portfolio, then the odds of that turning out over time is pretty good. And also make sure that I'm not exposed to the world playing out in just one specific way. Because in the last two months, whether or not it's tweets or whatever, we just know that the range of outcomes appears to be a little bit wider. Those are the things. Yesterday is very much like a business-as-usual type of day, even though on the surface it would appear maybe to not be.

Yeah. I think the most important thing that we're doing here, that we're attempting to do with the podcast, is to educate. We want people to be successful investing. I think all of us can be guilty at different points in time. Some of this is just social. I'm out with some friends and they go, oh, you should see this stock that I bought. I just piled all my money into it and look at it go, or I'm in this thing and, oh, boy, it's too bad you're not in it. You walk away going, I wish I've got this portfolio of great businesses, or I've got somebody like you managing my portfolio of great businesses. And I wish I had 100% of my money over in that thing instead of spread around and properly diversified with the right amount of risk and with a financial plan around it where I know what I need to get to where I need to go. This portfolio is going to do that and then maybe even a little bit more because Stu is a pretty sharp guy and his team is pretty good and they do a great job managing money. But, boy, I wish I had 100% of my money over there. Then a day like yesterday is a reminder that there's a reason why you don't have 100% of your money over there. There's a reason why you have a little bit of it. Sure, you want to make sure, like you say, you've got emerging industries, you've got the potential for growth, but you also want to have some of this other stuff, which at some point that might be the one where you wish you had 100% of. That's not right now. It's the other thing. But then it's going to be that. And then you go and you say, hey, well, I got some of that, too. And that's the idea of having a portfolio. And I know I'm not articulating this the best way. And this is why you're here to fix what I'm just doing because you always do. But I just think yesterday was just one of those like, oh, that's right. That's why I do it this way versus that way. I'm going to feel a lot better if I do it the way I'm doing it over time.

Maybe I'll finish off with another quote from the wall. It was Tom Gainer from Markel, a great investor, who said, there's old portfolio managers and there's bold portfolio managers, but there's not a lot of old, bold portfolio managers. That's the notion of exposing ourselves to a whole bunch of positive options.

Yeah, it's like I love HP sauce. It's my favorite thing. I do a lot of little videos inside for advisors.

My brother-in-law calls that Huggy's Pride.

Huggy's Pride?

HP sauce. I don't know exactly what it's from, but he calls it Huggy's Pride.

I just know about the Queen. It was the Queen’s sauce. So I'm doing videos, I'm putting on sausage rolls and things. I basically find food to put HP on. But then they came out with HP Bold. And so, wow, it's like, I like HP. Why don't I have HP Bold? And I found out it was not that good and nobody got it. And so there's your «bold and old». I'm just sticking with the old stuff.

All right. It sounds good, Dave.

Excellent. Well, a couple of good lessons learned. You can get too much of a good thing, so spread it around. The market will day to day, month to month, year to year, A humble you, and B, teach you lessons that, again, if you bank them, will help you be a better investor. I'm glad we got you on today on a Super Stu’s day to talk about what happened yesterday because it's so illustrative of some of the things that you want to make sure you learn and you bank in your mind, even in my wooden head, to make you a better investor over the long term, which is what it's all about.

Great. Thanks, Dave.

Yeah. Thanks, Stu. And everyone who listens to the podcast, if you like the podcast, give us a «like». If you want to hear more because Stu is on every week and we've got lots of great investment experts, hit «subscribe» or follow where you get your podcast. I guess, subscribe on YouTube. The marketing folks don't give me the details. They just asked me to do this. But we love having more listeners. We know lots more of you are listening. Please share it with a friend. Get a friend to subscribe and like. We want to have everyone listening to the podcast that we can. And hopefully you'll join us on our next episode of Super Stu’s days next week.