How do you distinguish between a temporarily beaten down AI stock and one that might never recover?

I think that one of the key ways to do it is to look at the companies that seem foundational.

NVIDIA, for example, is a foundational company.

They are involved in the build-out, for example, and I don't really see that as being something that is going to change.

There are other components of the market where, again, you're starting to see these companies take huge amounts of debt on.

So they might be foundational companies, but they also might be creating a mismatch for themselves.

And there I'm thinking about the metas of the world and the alphabets of the world, which are great companies and I have no problem having exposure to them.

You know, what should they do overall to their portfolios?

Explain to me what the Noah principle is and, and why it's important.

So we can think about the Noah principle as being, uh, you know, going back to the Old Testament, Noah at one point had to build an ark, right? And you know, the, we...

I won't recount the story.

I believe that, you know, most people, you know, are familiar with the story of Noah, but Noah went through a period of time where he was building this large boat and looked like an idiot, right? Why are you building a boat, Noah? Right? W- what, what is it that you're going to do? How is it that you're going to collect two of everything w- you know, when, look, it's sunny out.

When we think about investing, uh, o- one of the, you know, o- one of the key elements that is, that is simply true is that people have a very, very hard time preparing for, in a really principled way, the upcoming flood, right? We can talk about AI now, right? Right now we know that there are a lot of people who believe that the AI's in a bubble.

There's, like, circular investment.

There are all of these things that we, you know, that, that we can worry about, and at some point the market will decide to worry about it.

Like, if, if this AI stuff does kind of cool down and we start to see consumer staples or these more defensive names actually start working, like, how painful is the process of getting from here to there?

So Bill, tell us a little bit about this.

Well, I live in Louisiana.

I married a Louisiana girl.

I have lots of friends in Louisiana from cooking and from the oil field.

And so we mixed up a lot of different blends and, and, sent them out for people to try.

And, you know, we weren't trying to build a Tony's type seasoning, which is good.

I like Tony.

Um, but yeah, Bill, go ahead and tell people where they can purchase these and where they can follow you if they have some followup questions.

You're listening to BQN: Assimilate the Audio

Infinite Diversity [upbeat music]

Yeah.

Like, there's, there, there are episodes of this, like, subgenre that I really like.

There are some that I'm really cold on.

Um, but I was, I was really impressed by this.

I thought it was really well done.

I, I was impressed by how much it committed to the bit and went for just all-out e- embrace of the, of the horror kind of construct.

How could

you not? Exactly.

And it's obviously Jeffrey Combs to me.

There's other good work here.

And I'm going to pick one thing specifically for secondary systems in a second, but like I'm watching Deep Space Nine right now and seeing Jeffrey Combs as, brunt and way in it really kind of almost i think it's taken for granted like how different these characters are and how different shran is from that stuff like it's not just that he plays different characters and puts different makeup on like he embodies these completely radically different flavors of characters that are pretty well cut like they're three-dimensional and interesting and they kind of define um particularly way in and shran they're like the kind of stand-in for this whole Like they kind of embody the face of a whole society kind of.

And the amount of work that he does to like lift the Andorians into some of Enterprise's best stuff is like immediately on display in the Andorian incident.

He's dynamic.

Like, as you look across these five episodes and sort of think about that, like, entire Star Trek story, what do you think these five add to that sort of overall story? narrative? Are there ways they connect to other Star Trek? Are there things they set up? Are there things they pay off? Like, what resonates with you as you're sort of thinking about these five episodes and the franchise as a whole?

Okay.

No, I think that we come from a very similar place.

We are actually somewhat agnostic as to whether a company retains their capital or they pay it out in the form of a dividend or a share buyback.

All told, what we want to see is good capital decisions, right? I believe that if you've got a company that's paying a high dividend but they're poor at managing capital otherwise, that's not that helpful.

Now, if you've got a company that's retaining all of their capital, and are bad at managing it, you'd rather have the capital being paid out.

Our preference is not towards dividends, but it is also not towards bad management of capital or hoarding of capital, which a lot of companies do.

So for us, our preference is for share reductions to happen, which comes in the form of there's tax advantages for a share reduction.

Can you talk about that one a little bit? What kind of holdings you have?

[laughs]

I've never found evidence that the story was true, but David, you are not alone in suggesting its truth many times.

And there are studies that show that people who trade the most perform the least well.

But I am here to tell you that we do have an anecdote in the form of this campfire story because my father bought these shares directly from IBM, so they were not in a brokerage account.

And so everyone involved forgot that they existed.

From 1983 until the end of 2024 when another Bill Mann, me, received a letter from IBM saying-

[laughs]

... "Hey, we have these shares for you.

How do you explain the difference between that? Because again, I think part of the reason there aren't many people allocating momentum is because they just don't understand how it works in practice.

Well, yeah, and I love the way that you put that because it almost feeds to what we think is our worst basic instinct when it comes to investing is that, are we performance chasing? And you go back to your basic finance classes and they will tell you that one of the worst things that you can do is to performance chase.

If you are a fundamental-based investor, obviously value is a very, very clear story how you go about investing.

What a momentum factor is suggesting is that you are letting some of that control go in terms of what you believe the market ought to do.

And you're signing on to what the market is doing.

So in some ways, it's just the reality that at some point, different sectors are going to work.

And you don't necessarily get those signals.

So how long do you hope to let these things run for? What's your ideal holding period for your momentum strategy?

Could it be that these smaller mid-size companies actually gain most of the efficiencies without having to have a big cost outlay in terms of their R&D for it?

It's so funny, Ben, thinking of these companies that are, that, that are fantastic at generating returns on equity as being the risk assets because of the investment, you know, the investment that they have to make to build out something that doesn't yet exist.

And, you know, and, and they're guessing.

You know, they're guessing, you know, what the tenor of AI is gonna be.

They're guessing what the payoff schedule's gonna be.

They're guessing what the economics are gonna be.

Um, so I think in some ways looking at what's happened, say, you know, from about mid- you know, the, the middle of 2025 in the markets till now is that we're seeing sort of a recognition, uh, that the Mag Seven and the top 10% and, you know, and, and the AI companies had such a large component of, you know, of, of, of, of the economy and of the market that there's really only two ways that you're going to be able to revert that.

Tons

What about the rest of the U.S., though, and the bottom leg of that K that people keep telling me about?

Yeah, I think that there's a great deal of concern in middle America here.

We see, for example, the amount of layoffs and job reductions here in the U.S. is at a record for 2025.

And even though that's not showing up in the top line number, again, that's being- by very few things and so when the Fed got together the other day and you saw you saw comments there there were Fed governors who were who were looking for a larger cut and some who didn't want any at all and- we're hearing from the comments even more- division within the Fed and it just has to do with the fact that there is so there are so few things that are driving- growth- so.

We at Motley Fool Asset Management don't tend to get too excited about one-day responses, but it would be kind of a Goldilocks response for the Federal Reserve for the NASDAQ prices to be coming down a little bit while the remainder of the market, starting with material stocks, are going the opposite direction.

Does that story represent anything bigger? You talked about the 7 versus the 497.

Yes, and so you could declare Oracle to be a non-official member of the Mag7.

I would say that it is a sign.

As you look back on the first half of the year, any broad reflections on stocks and the market reaching record highs?

Ricky, I would say that one of the most interesting things that's happened in 2025 is that all of the asset classes within the biggest asset classes in the U.S. have sort of congregated.

I saw something really interesting the other day that showed that the highest and lowest yield amongst the five major U.S. asset classes is now less than 1%.

So, U.S. corporates are yielding about 5.2% all the way down to three-month treasury bills that are about 4.3%.

I don't want to dwell too much on things that have never happened before, but this has not happened before.

It really speaks to the fact that all of the asset classes in the U.S. seem to be focusing on what is going to happen with the statecraft in this country, that they are staying at a single point and wondering what's going to happen.

Yeah, the market is up, a little bit.

What is that deficit spending for people like me? And is that important for investors to pay attention to?

Alright, Bill, what do you think?

You left something out when you described Marcus Galperin, which is billionaire.

You know, he's a young man.

He's not retiring.

He's just looking to move on and do other things.

He has succeeded in any way you would hope to succeed.

And it suggests to me that he believes in his bench, because he is very tightly tied to, his financial success is still tied very tightly to MercadoLibre.

Aside from that similarity, Bill, any things that stick out to you as you stack these results together?

When you look at what they were talking about with the quarter and what they were forecasting out, what are you seeing?

For the life of me, I can't really figure out how DoorDash's shares are up and the business is up when every restaurant that I'm tracking is down.

It feels like this is a symbiotic relationship between the two, but maybe it's not.

Here's what I wonder about DoorDash.

I would love if they would give a little bit better information on...

They do give average ticket size information, but I'd love to know what the spread of that is, because I actually have this pet theory that people are much more inflation agnostic than they let on by virtue of the fact that so many people do things like order coffee and use DoorDash and order smoothies and use DoorDash.

I would love to know what those sub-$6 tickets, how many of them there are.

He just wasn't there for the announcement.

Bill, what would the price tag be for something like this?

So, it depends on what you're buying.

I hate it depends answers, but it really does come down to this.

TikTok has 1.6 billion monthly users.

And we can see from the success of a platform like Reddit, since it's become public, if you've got a bunch of users like that, that's a huge value, that's a huge part of the battle.

But the magic of TikTok is that algorithm.

And I don't think that ByteDance would sell it.

Which of those do you want to dive into?

Give us a sense, us dirty Americans, about what's happening in Canada, if you would, please.

Well, Trudeau has been under attack from the Conservatives in Parliament.

And for some time, it's starting to work.

And there is a, as you know... an anti-incumbent wave sweeping the globe, not just Canada.

Trudeau has been in office for nine years.

He's never had a majority government.

He's had to borrow support from the NDP, which is left wing, and socialists.

No, no, I was just going to ask, I mean, because I think we think of our government and their government, Canada, is a very different one, right? It's a parliamentary government, is it not? I mean, so he has to form coalitions almost by definition, right?

I feel like this is not the highly technical definition we were expecting.

You know, in the Terminator, Skynet became self-aware on August 29, 2024.

And that's a pretty exciting definition of AGI.

This one is so much more boring, but it does, in fact, fall from the fact that Microsoft has invested in OpenAI when OpenAI was and is a nonprofit.

And so you have to put some definition that is a little bit different than what you would have with a for-profit company investing in a for-profit company.

And so They apparently did like a little Yalta conference to decide that it's $100 billion in profits, which sounds like a long way away because OpenAI is expected to accumulate losses of about $44 billion between 2023 and 2028.

But it could change very quickly.

Bill, Carter is known for so many things, but this week you wanted to zoom in on a very specific part of his legacy.