A simpler way to value a stock w/ Andrew Page

Bryce: [00:00:13] Welcome back to another episode of Equity Mates. A podcast that follows our journey of investing. Now, whether you're an absolute beginner or approaching Warren Buffett status, our aim is to help break down your barriers from beginning to dividend. If you've just joined us for the very first time, a massive welcome. Congratulations on starting your investing journey. If you feel like you need to get up to speed, you can check out our Get Started Investing podcast. That'll get you from zero to feeling confident to getting into the markets. Now, my name is Bryce, and as always, I'm joined by my equity buddy, Ren. How are you? 

Alec: [00:00:46] I'm very good, Bryce. Big, big show today. Yeah. One of the biggest guests in equity markets history is on the show. No, it's not My mentor, Andrew Page, who I spoke to, and no, it's not community member Donna, who we have a chat to. 

Bryce: [00:01:02] I would say the biggest guest in Equity Mates history. 

Alec: [00:01:05] I don't Want to. I don't want to offend Malcolm Turnbull or anyone. 

Bryce: [00:01:09] Bigger than Malcolm Turnbull.

Alec: [00:01:10] I don't want to offend Warren Buffett. 

Bryce: [00:01:12] Haven't had him on the show.

Alec: [00:01:14] I don't want to offend. 

Bryce: [00:01:15] I don't care what name you throw out. This is by far and away the biggest guess. 

Alec: [00:01:19] Becky McGhee, that. 

Bryce: [00:01:20] Equity Mates Media has ever had. And it is really exciting. 

Alec: [00:01:25] And the best news is we didn't do any of the work. 

Bryce: [00:01:28] That's it. We did none of the work. It is a massive shout out to the girls over You're In Good Company, Maddie and Sophie, who got Cathie Wood on their show. Now we are really proud and excited for the girls who managed to get about an hour and a half of Cathie's time. By the time I hang up. And we were lucky enough to be out to get a couple of clips from the interview that you will share today.

Alec: [00:01:52] And if you want to hear the full interview, it will be released on You're In Good Company's podcast Feed tomorrow. And importantly, if you don't know who Cathie Wood is, she's the founder and chief investment officer of Ark Invest. One of the most notable investment firms, I guess, in the world, really because of their ultra bullish take on new technology. So everything from electric vehicles to Bitcoin to gene editing and everything in between Ark investing and a lot of those themes. So a fascinating conversation about a lot of new and emerging technology.

Bryce: [00:02:31] Yeah, so huge interview. Make sure you go and check it out on You're In Good Company. Now before that though, we do have one of the second biggest guests ever on the show, which is your mentor Ren, Andrew Page. Now, we've had some great engagement with the Mentor series from the community. And last week we spoke about Donna, who reached out to Ren, was really interested in the valuation formula that you and Andrew had spoken about, but not actually, I guess, demonstrated in detail on the show. So we gave her a call.

Alec: [00:03:03] You had some questions about the work that I've been doing with Andrew Page on the valuation stuff. 

EM Community: [00:03:09] Yes, that's right. Well, it was from the episode that Alec brings interesting stocks. And on that you guys were talking about all the light and networks. And Andrew Page went through a formula for valuations. So I try to do it myself, but I wasn't really following, so I was just wondering if you guys could do a run through of it. 

Alec: [00:03:34] Okay, great. Yeah, well, actually, I've got great news. Andrew and I did that for Netwealth. We went end to end and, well, I had a crack at it and he pulled it apart and tell me what I did well and what I did wrong. 

EM Community: [00:03:48] Awesome. 

Alec: [00:03:49] Well, we've got you. How is you finding your investing journey or do you have any other questions? 

EM Community: [00:03:55] I'm finding it really good. I've been doing it for about three straight out of three years, full on. So I learned heaps. Absolutely learned heaps. Yeah. I was just going to say, am I talking to Ren? Am I?

Alec: [00:04:09] You are. Yeah. Bryce is here as well. I'm just I'm just not letting him get a word if. 

EM Community: [00:04:17] Let me start Ren. Most important, the biggest pull of your show is your laugh. 

Alec: [00:04:26] Oh thank you. I appreciate that. So all I can say is that there's a groundswell of support coming for Andrew Page, my mentor. 

Bryce: [00:04:35] Yeah, you better deliver.

Alec: [00:04:36] He might bump you from the show.

Bryce: [00:04:38] That would be good. I'd be happy with that. I can sit back. 

Alec: [00:04:44] So, Bryce, my homework was to do that worked Example. And here's my conversation with Andrew. 

Bryce: [00:04:50] No pressure. 

Alec: [00:04:52] So let's talk about valuation, because this is definitely one thing that I really want to focus on just getting better at and working on sort of, I guess, alternative ways to value a company rather than like a full discounted cash flow and stuff like that. And last time we spoke, you gave a pretty simple valuation framework. We can sort of do it on the back of a napkin. And it essentially has three key steps. The first step is to collect the data on the company today. The second one is then look forward to how you think the business will go and project its profit in the years ahead. And that might also require looking at its sales, its revenue, and then what will happen to its margin. But what you really want to figure out is the profit that the business will be making in the future. The third step is then consider what multiple the market would give it, the price to earnings multiple that the market will give it in 510 years, how much you're looking for. And then from that you sort of have a rough idea of what the market cap and the share price will be. And then you compare that to what it is today and you say, is that a return I want? Is that going to cross my threshold? You nailed it And all that got We got a lot of emails contact@equitymates.com people reaching out and saying they were interested in the formula and they were asking for I guess some worked examples. So yeah we spoke about two companies last time Netwealth and Audinate and I've pulled some numbers and tried to do some very rough work. The examples so 

Andrew: [00:06:28] Well there's No wrong answer, right? 

Alec: [00:06:29] Well, you don't know much. You don't know how I'm going to do it.

Andrew: [00:06:32] Okay. Okay, okay. But I mean, if your assumptions are right, it will be.

Alec: [00:06:36] True, I guess. Yeah. Tell me if the methodology is right. Okay. The interesting thing here was Netwealth was profitable or is profitable and Audinate is not profitable, It becomes a lot easier when the company is profitable and has been profitable for a number of years to sort of just project that forward. So we'll start with Netwealth. So first step, what is the company look like today? 13.8 share earnings per share. So profit per share, $0.23. That gives it a price to earnings ratio of 57. So pretty expensive. 

Andrew: [00:07:13] Well, potentially, you have to be careful not to prejudge, right? 

Alec: [00:07:16] Yeah. Okay. Okay. Five years ago, 2017, its earnings per share was $0.06. And so that shows us why it's got such a high price to earnings. It's because it's growing quickly. The compound average growth rate over the past five years, 31%. 

Andrew: [00:07:31] Is that earnings per share. 

Alec: [00:07:32] Earnings per share. 

Andrew: [00:07:33] Yes. Phenomenal. 

Alec: [00:07:34] Yeah. So that's the sort of the basic information that we start with. Then step two, and I've just tried to keep this simple. I haven't gone into the company and tried to figure out what I think the business will do and how much it will grow.

Andrew: [00:07:48] Now, the whole point of this approach is to keep it simple. So yeah, don't apologise for that. 

Alec: [00:07:52] Okay, great. Well, I won't do that so I've said over the last five years it grew at an average of 31% a year. So for the next five years let's say it also does that 31% a year for the next five years takes $0.23 earnings per share and makes it $0.89 earnings per share. So if you just say the price to earnings ratio will be the same, the market will be willing to pay the same multiple than it is today 57 Then on $0.89 earnings that gives you $50.73.

Andrew: [00:08:23] Your return is the same as the earnings growth. 

Alec: [00:08:25] Yes. Yes. Pretty good. You take that. 

Andrew: [00:08:29] Great. Fantastic. 

Alec: [00:08:30] Let's be honest. Five years from now, the growth, you know, might be slowing a bit. The market might be a little bit more mature. Netwealth as a K disruptor might become disrupted and the market might not be willing to pay 57 price to earnings ratio. So I said more realistically, 25 that feels like, you know, a more mature for a more mature business that feels like a more realistic multiple. And so that on $0.89 earnings per share at a 25 price to earnings ratio, that gives me $22.25. So today 13.18 a share in five years, 22.25, which means I'm getting an 11% a year return for the next five years. 

Andrew: [00:09:15] Perfect. So the thing I think to frame this up better is that on I use the term before scenario testing. Too often with valuation, people just want to settle on a figure and say this is what it is. The intrinsic value is X. And I think that you're right, if all your assumptions are right, you know, But again, you you need to have a bit of humility here, I think, as an investor, because, you know, the best and brightest in the world continually get forecast from. Right. But where it's valuable is that now you know what needs to happen to get your double digit return. You know, going into this, things like this investment makes sense. If earnings compound at the same rate that they have historically and B, the p e doesn't get below 25. The question is, is that an unreasonable assumption? Well, what have you done? You've taken the you haven't just plucked a number out of thin air. It's like I'm just extrapolating as a starting point. Ms. six extrapolating the last five years early, early company potential to do that is still small. 30% growth is possible for companies of that magnitude. 

Alec: [00:10:14] Well, that's where I want to go next, because I actually think, you know, 31% is a big number and it's a number that a lot of companies don't achieve, let alone sustain as they grow. And so then I said 31% for the next five years feels unrealistic. Let's have it. Let's just say 15% for the next five years.

Andrew: [00:10:37] But still good growth. 

Alec: [00:10:38] 15% for the next five years, you're doubling it. It takes it to $0.46 per share. Yes. If we say a price to earnings of 25, that means 11.50. But hold on. Company share price today is 13.18. So if the growth slows and the multiple investors are willing to pay shrinks back to sort of more normal market conditions, then we actually lose money. Even though profits doubled, we'd lose money.

Andrew: [00:11:09] And this is I think investors too often forget this. They say this company is going to grow really well for the next five years. So I'm buying. It's like. Well, yes, but. But how much is the market already expecting that to grow? And how much is your investment case dependent on the market sentiment towards this company remaining buoyant? You know, it's not it's not that the p e could be 80 in five years time. For all we know it's your guess you can't, no guessing a P is like in a lot of ways guessing a share price. You can't know. So we're not we're not trying to sort of say this is what the P will be. We're trying to sort of say, what does the P need to be? And if the P needs to be 80, then it's just like it's a precarious investment case because we might not be in fact, it could grow very strong 25 Historically, by historic standards, this is still up. You know, the average P is 15, a long term historical average for the market as a whole. 

Alec: [00:12:02] Yeah, well, I didn't want to put 58 in there because then I'd be losing money regardless. 

Andrew: [00:12:07] Yeah. And you and what you might do and I've done this a lot of times is where I'm too conservative in my assumptions and I never buy the damn thing. Right. And the Objective Corp is again, another good example of that. You sort of eyeballed that too closely. And you know, to assume the P was going to get to 61 from 30 after going from 13 like that. But but, but it happened. But you don't. So you're not going to complain about it if it does happen. Like if you base your assumption on a PE of 25 and in five years time in the year 2028, it's on a p a 35, You're not complaining. Right? But at the same time you're not dependent on that sort of happening. And now I've got some now I've got some key indicators to look out for to say this sort of. 

Alec: [00:12:50] On so on? Do you have a sort of general number that you use? Like if I'm thinking five, ten years out, what. And the multiple the, the market's willing to pay normalises Do you have a standard number where you say this is what the normalised pay would be?

Andrew: [00:13:05] No, but I can do a few things. I can look at more established peers and industry averages. You know, I can put the P in the context of growth. So I would say in the case of net worth, if these are just scenario tests, but if it does go up 15% per annum and at that point in time it still has a reasonable sort of growth prospect. I don't think anyone's going to accuse you of being overly buoyant about selecting 25. Right. Maybe it is 15, I don't know. But it's not like it's not like, well, really that's the basis of your investment. The P is going to. No, no, you've I think you've chosen a reasonable number. So I cough it in all of those kinds of things. But again, I really want to underscore the point that what I do is I do what you do. I do it exactly the way you just outlined it. I go, here's a starting point. I'm going to start somewhere. My, my, my initial is extrapolate. Same P.A., same growth. Okay. It looks like that. What if what if the pay isn't as high? Okay, that looks like that one. If the earnings isn't as high. Okay. It looks like it's better. And then I actually developed this spread. Right. And I discount them back to, to, to what I to the present value. So I just sort of maybe want a 10% return per year as a shareholder. So I just divide by 1.15 times and then I've got something to put the current share price in context. It'll in some cases you'll in a lot of cases you'll find that it sits at the lower end. In other words, jeez, even if the more conservative assumptions that I have play out and I hope they can do better, but even if I'm still looking like a reasonable return here. But if if it does do better than I think or does as well as some of my more ambitious forecasts, then I tend to make, I tend to make some good money and it comes back to my favourite word of asymmetry, right? That's what I want as an investor. Tails. Okay, it wasn't that great heads catching, you know, that's an I'll flip that coin all day long even if I just keep making mistake after me is when when that does work and statistically it should work reasonably well, it can be extraordinarily attractive. And I think I just think it's such a sensible, easy way to go about it. So let's say you do it and let's say the next annual your. What comes out. And actually the growth just evaporated. And some issues within the industry make the long term story more unachievable, more difficult. I think at that point you just go. I mean, this is a yes. You'll do everything in your power subconsciously to trick yourself. But if you can be objective about it, get what's broken. No harm, no foul. I expect to lose a certain percent of the time. Dust yourself off and get the hell out rather than sort of, you know, rationalising all the way, all the way down. But on the other hand, if it does start playing out, you might even find that, oh, maybe I can up some of these assumptions as well. It's a constant period, a process of refinement. What's the data telling you? Where does this fit in terms of where it needs to fit to justify the share price? It's just it's not a there's no such thing as a foolproof method. But now you're making investment decisions on a much firmer footing than the company is going to be bigger in five years time. Right. Like it's you doing some really basic maths to sort of tie expectation of business performance to current share price value. 

Alec: [00:16:21] Yeah, and I think that's the key thing. Like in our second scenario there, the company wasn't just bigger in five years time, it was double, the profit was double. And if the multiple went down, we lost money as an investors. 

Andrew: [00:16:36] Yeah, yeah. You see it? I'm trying it out. I can't believe I can't think of one off the top of my head. But there's a lot of examples of businesses that have actually done really well. But over multi-year periods, investors did really badly. And you can't blame the company for that, right? You have to blame the market because the market just overbid it. 

Alec: [00:16:53] The classic example of that is Microsoft's lost decade. 

Andrew: [00:16:56] Actually, we think we talked about this on this podcast at one point in time. That was a great example. Yeah, absolutely. Nailed it in 2000. I think Microsoft is going to go on to be one of the tech giants of the world. Yep, absolutely. You are right. Just it just took you over decades for that to be sort of proven true because the multiples had captured so much of the upside and the term is priced for perfection. In other words, you'll do well if everything goes to plan and if it falls short on any one of those things. I'm not I'm not going to do well. This is my criticism of things like the you know, to put the boot in because I feel like easy targets, but like a wee bit nano or a brain chip, you know, the supporters get really carried away because it is big market potential and it really could grow fast. And they do have products. I mean, I'm not as cynical as a lot of investors that my argument against them has always been. I think it's been validated in recent times but I think has always been is like, yeah, but the market is expecting that and then some. So it's got you're only going to do you're only going to get Alpha here to use the parlance to get the outperformance if it's even stronger than your already strong expectations or if the market is even more positively minded at that point in time, which is possible. This is coming back to stealth, right? This is the crux of my argument there. It's just a love. Like we can plug in any number of scenarios, but it's only the extraordinarily bearish ones that lead to a loss and some slight moves in the right direction lead to a decent game. And that's asymmetry and that's what I want. 

Alec: [00:18:23] And so then I guess because I was thinking like, what's the next step here in terms of like, you know, I've just plug some numbers in and there's some pretty just round assumptions. What if we just continue what happened over the last five years? Or what if we have it is the next build here just becoming better at making those assumptions, like have it putting more data into the model or into your brain and thinking well rather than just halving it. Like what do we actually think will play out or is it any other like investing skills or anything else technically that we can add to this. 

Andrew: [00:18:54] Garbage In, Garbage out is the old saying, right? So I think with time and experience you will get better at making a guess. You can call it a forecast if you want, but it's a guess. Right? And but I've long been a very strong believer you want to be roughly right as opposed to specifically wrong. You know, if this thing ends up growing at 18.4% per annum and you had forecasts of 20% per annum, it's not going to lead to the exact return that you thought, but it's not going to be miles away. Yeah, it's still probably a sensible investment. This is why I like it in terms of, as you said, applying revenue and margins. So revenue growth is something that's easier than bottom line growth because you don't need to think about the internal mechanics. So it's a nice easy place to start. And then I can look at margins and just say what is reasonable. Again, there's a lot of examples in the market of a company like this. Maybe it's like in the US, these markets tend in companies over the cycle, tend to trade at about this kind or they tend to get this kind of margin. If we were talking about self global and my assumption was they're getting to a 30% like they're operating at like, like a tech company, like that's stupid assumption, right? An industrial company is never going to get to that. Well, very unlikely to get to that. So I think it's just basic sanity checks and if you get. To a conclusion that's just based on really you Not I'm not I'm not setting a high bar for this company to hurdle over again. You just put the odds in your favour. 

Alec: [00:20:23] What I might do is actually, I might do a write up on our website because I'm mindful that talking about numbers on a podcast is sometimes a bit difficult to follow. So I'll put Netwealth and Audinate into a blog post so people can write along with the work. For me to go away and keep getting better at it is to just find more companies that I think are good and then apply this. Yeah. Is there anything else I should go and work on? 

Andrew: [00:20:49] Honestly, I tend to encourage people to spend your time more as a student of business than as a student of investing in the sense that if you want to have any kind of hope of coming up with reasonable forecasts, I mean, you need to understand the nature of businesses. And, you know, engineering services firm has very different economics and very different characteristics to an industrial supplier, to a supermarket. They're all they've all got their own characteristics. And I think as a student of business, what you want to learn is what is the economic machinery at play here? How do they what are them? What kind of margins do they get relative to what their variable costs are? What kind of cost base do they need to do it? How much of it how big is the market? How much can they get away? And you just you you want to think about all of this stuff before you even look at the share, before you even know it. Otherwise you really are just pulling numbers completely out of thin air and you need context for all of it. So when you find I mean, start with the numbers if you must and think, wow, P four and they're going at this just like you want to then ask yourself, is this the kind of company that can do that? And I'll give you a very quick example where I think a lot of people went wrong back in the mining boom was they took a lot of the day offices, like podiums. These engineering services companies got two very high valuations because they are businesses that have extreme operating leverage. They are really insanely profitable, growing like the clappers. It was everything I liked about it. But what you realise is that actually these operate in very cyclical kind of industries and the operating leverage works in reverse in those times. You know, it's not something that is going to have consistent demand across the cycle. So it just, it sort of tempers some of those things just by understanding some of the characteristics and factors and natures of that industry. So, look, look at the business, look at peers, look at how they tend to perform in good times and bad. Look for examples of where companies in this space blew up, like there's lots of good examples of insurance companies blowing up, like what went wrong in those situations. You know, they provide very useful red flags that you can look out for in real time for current businesses. Because if a company is not going to perform, I mean, Netwealth could be like the most ridiculously crappy investment of all time If their growth is going to turn around and, you know, they go from 30% per annum growth to like -5% very quickly. So you need that. You need to have a firm basis for those expectations. 

Alec: [00:23:22] Yeah, great. Well, I'll take that away. I'll go and do some more research and when we talk next, let's talk about some new companies. 

Andrew: [00:23:30] Yeah. And I'm keen to follow up on Audinate too, because that is an interesting company. I've got a lot to say about that. 

Alec: [00:23:35] Okay. All right. Well, let's chat Audinate next time and then at least one new one as well. 

Andrew: [00:23:41] Yeah, for sure. Yeah.

Alec: [00:23:43] All right, Bryce, so there you go. I actually enjoyed doing it and it wasn't as daunting as a discounted cash flow. 

Bryce: [00:23:50] Are you daunted by them? 

Alec: [00:23:51] Well, they are quite daunting. They open Excel Cell one click into the cell, start putting numbers in. Now it's just something that it's not quite back of the envelope, but it's something that conceptually there are a few steps and you know the challenge in a discounted cash flow or in this method is still how accurately are you forecasting the future of a company? But once you've got that and then you just sort of say things like, what is the market willing to board the market, be willing to pay, and then you're kind of done. 

Bryce: [00:24:26] Well, that's the whole point of this exercise, Ren, is to sharpen our skills. 

Alec: [00:24:33] Thanks Bryce, so my homework is to do that again. And so next time I try to end or I'll have at least one more company, but maybe a couple. Maybe we dedicate a whole episode. Ren's valuation bonanza.

Bryce: [00:24:47] Yeah, well, let's do one together. I can give you a few forecast tips for a company. forecasting for fools. So that's what I don't understand with this whole thing. 

Alec: [00:24:55] Forecasting is for fools. What do you mean? 

Bryce: [00:24:57] Well, I mean, we say you can't predict the future, you can't forecast markets, but we do it for companies. It's a bit easier I guess, with companies. 

Alec: [00:25:04] But yeah, I guess investing in individual stocks necessitates you forecasting the future. Yeah. And so if you kind of. 

Bryce: [00:25:13] You take the index. 

Alec: [00:25:14] If you can't do it, you don't have to play that game. Invest in individual stocks. I guess this whole exercise is saying we think we can do it. 

Bryce: [00:25:23] Let's find out without saying like long the index. 

Alec: [00:25:27] But I think someone on Reddit ripped us at one stage. It was like equity markets. It's more like ETF Mates. 

Bryce: [00:25:34] Nice, that's good branding, I am glad our messaging is coming through. Anyway, I'm enjoying the ride, but stick around because we're going to take a quick break. And right after we hear from none other than Cathie Wood, one of the world's most well-known, most famous investors at the moment. And we take a quick couple of clips from the You're in Good company interview. That is live tomorrow, 27th of June on the you are in good company faith. So make sure you check that out. But we'll be right back straight after this. Welcome back to Equity Mates. We've just heard from Ren and Andrew Page about Ren's mentor journey and we are now very excited to jump into a couple of clips from the Cathie Wood interview over on your In Good Company podcast. So the first one is Cathie Wood's view on artificial intelligence. 

Cathie: [00:26:30] Artificial intelligence involving neural networks, we believe is going to be the biggest catalyst to innovation in history, and especially now. So if you go through big ideas, you will see how we think it's going to become the biggest catalyst, how many other technologies it's going to activate and bring to life. Neural networks are patterned after the brain, and so we are aiming out there for artificial general intelligence machines, you know, outwitting man, maybe. But right now, right now we like to think about what's going on as augmented intelligence. This is going to lift us all up and make us all very productive, much more productive. So globally throughout the world, there are 30 to $32 trillion paid to knowledge workers. And we believe that the next big wave of automation, which is artificial intelligence, is going to take away those very boring, mundane, tedious jobs pick and pack, pick and pack. But even that's on the light manufacturing side. But on the knowledge worker side, the time to write grants here in universities, I mean, it can take months, three months to write a grant for government funding. We are finding that with neural networks, artificial intelligence, that time collapses to potentially a few hours. Think about that, three months to a few hours. Anything that is rules based and neural networks are powered by algorithms, and algorithms are rules based, right? So any knowledge work that's rules based, meaning probably mundane, boring, you know, paperwork, accounting, legal is. But again, it's going to ink to the it'll displace a lot of paralegals. But to the extent people go to law school and enter the field, the job is going to be a lot more interesting because machines are going to handle the boring parts of the job. And that is going to allow us to leverage our intellect and creativity depending on what the job is to advance the the field even more So we think that this moment is the equivalent of the assembly line entering into the manufacturing space, the first automobiles, and that transformed that created the I mean, that really cemented the industrial revolution. 

Alec: [00:29:50] Fascinating but not super surprising view from Cathie Wood there. The scale of the automation that's going to happen, well, might potentially happen. $32 trillion of knowledge workers that could be automated. It might be time for us to go pick up a trade because I think finance podcasting is not going to be a super sought after skill in our coming A.I. features. But there were some really fascinating and surprising moments from your good company interview with Cathie Wood, including one where Kathy sees opportunities in colonoscopies. 

Sophie: [00:30:33] Where do we think? You know, as young retail investors, should we be putting our money or where do we think is significant. Opportunity is going to occur? 

Cathie: [00:30:41] Yeah, it was interesting. We got a lot of press again for Nvidia because the press loves to criticise. Yeah. So we own Nvidia in most of our speciality funds, but we've been taking it down for quite a while because its valuation skyrocketed relative to the other AI plays that we think are pretty profound and Vedere is doing astonishing things. We got in at $5, it was a 5 to $10 billion market cap in 2014, and we've ridden it all the way up. And most of the funds we took it out of flagship because flagships are very concentrated and we see many other much less expensive air plays. It still needs our 15% compound annual rate of return expectation, but barely, whereas these others are now again, our research could be wrong. I always have to say that for compliance. But you know, these other names we think are 40 50% compound annual rate of because they've been killed as in videos gone up. Doesn't make any sense to us. To give you an example, Tesla. So in video is it 25 times sales, not earnings sales. Okay. Tesla is at six times sales. Twilio, many people don't know the name. Is it two times sales? Twilio In terms of data, you know, the most important competitive advantage, once you've got a visionary leader, air expertise and domain expertise is proprietary data. And so you'll see every company in our portfolio is there, at least in part with an AI angle in mind. It is their data. Tesla has The new Oil. Yeah, there you go. So that's right. And it's becoming even more true that that that has been saying for a little while, but it's ever more true now. So Tesla has more miles of real world driving data than all of the auto companies and tech companies going after transportation in the world put together and probably orders of magnitude more. And that's because it has 4 million plus robots roaming around the world. I have two of them, a model three and a model Y, and they're collecting data every day, sending it back to Tesla, saying, okay, here's a disengagement. Something didn't go right. Let's study that. And, you know, they're using AI and in a profound way that is going to create autonomous autonomous driving. And they're going to launch nationally, and we believe here in the United States, whereas most others are going city by city. Tesla thinks big. It's already mapped this out, and we believe that it will be the biggest beneficiary in the next five years, five, 5 to 10 years from autonomous driving. Thomas Riding revenues today are basically nothing. We believe by 2030 they'll be 8 to $10 trillion globally, which if you want to size that the US economy is roughly approaching $25 trillion. So we think this alone is going to be a $10 trillion global opportunity by 2030. And Tesla is leading that charge. We think Tesla certainly is in the US. China won't let Tesla lead that charge. It'll be some other company, but we can't identify it yet. That's how far behind most companies are. And then we have other companies in the healthcare space. Exact Sciences, you may know. Do you know about Cologuard? Has Cologuard advertised in Australia? Well, it is a test for colorectal cancer and it's a faecal test. So you have to send it in. And it's kind of disgusting, but it's turning to a liquid biopsy. It'll be a blood test. So and so you have to go to the doctors for that. But just with a blood test, a doctors will be able to tell whether you are in the early stage of many cancers, including colorectal cancer. So we think there will be a time where unless you're just very high risk, you won't we won't need to do colonoscopies in the United States. When you turn 40, you go for a colonoscopy every five years and the government will re or insurance companies will reimburse. And it's reaching down earlier and earlier into years. That's how powerful these tests are becoming. They can detect at the earliest stages of cancer. Well, would we like the company that's able to detect every stage of cancer in stage one or before stage one? Just. Learning how the genome is setting up for cancer? Yes, we would say so. 

Bryce: [00:36:17] If you're interested in listening to the full episode with Cathie Wood make sure, as we said, you subscribed to You're In Good Company. The first drops tomorrow, and then there's a second part that will be released shortly afterwards. A huge congratulations to the girls for securing Cathie on the show. She doesn't often do podcasts, so it's a very rare opportunity and strokes that she gave the girls the time. So massive. Congratulations to Maddie and Sophie. Make sure you tune in. But Ren brings us to the end. Next episode, we sit down with an expert from the US, Andrew Walker, who runs yet another value blog to get his thoughts on value investing and how he's approaching the AI hype from a value point of view. So stay tuned. But as always, it's great to chat about stocks in the market, Ren. We'll pick it up next week. 

Alec: [00:37:05] Sounds good.