But we're really walking a tight rope right now between what's going on in the marketplace and what's going on and what I call the real economy. So we had, really for the past 18 to 24 months, the big AI build out boom. And as far as I can tell, that's still accelerating at an accelerating rate. So I still think that has much further to go before we get anywhere to the areas I call peak soup in kind of areas. But at the same point in time, a lot of the real economy stocks that I'm watching, after earnings last quarter, really have been suffering. A lot of the commodity chemical companies, I think some of them their EBTA was down, you're 50% year over year last quarter. Some of the transports are down, the industrials. So if you're an industrial and you're not levered to the AI theme, they've been under a lot of pressure as well. So I think that's really under the radar right now. And I don't think that's getting much in the way of the market attention. Because it just seems like every day, every week, and we're getting another new AI deal, announced out there. So that's really all of the markets focus, all of the markets attention. So we're right now at that point where the economy is softening, our US economics team does expect that the rate of economic growth is slowing here in the third quarter. In fact, they expect it to slow so quenchily all the way until second quarter next year. And for now, when you look at GDP, that's really being offset by the AI buildout boom. So as long as we're still in this environment where they're kind of balancing one another out, the market should be fine. We're at a little bit of a premium, but again, the market can still climb that wall of worry. Having said that if the economy gets any worse, if we were to hit any kind of recessionary environment, I think that that would take a lot of air out of the marketplace.

Well, it's really tough to tell because, again, with everything that's going on with all the trade and the tariff negotiations, trying to understand what that means. Because, again, you had the big pull forward in the first quarter, all the inventory that people bought trying to get ahead of the tariffs, using that up in the second quarter, and then when the tariffs were kind of put back for a couple of months, then you had another way, if you know, so really trying to understand what the economy's doing at the GDP level, extremely difficult in today's environment. So it's really much more just looking at the fundamentals of those individual companies looking how much the stocks have fallen. And for long-term investors, we're not trying to gain anyone individual quarter, but when you look at a lot of those commodity-comical companies, for example, a lot of them are looking very undervalued today. very much deep value plays, but the same point in time if you're buying into those names today, I think you're going to have to have a lot of intestinal fortitude for the next couple of quarters until the market really starts seeing them starting the bottom out and turn around from a fundamental basis. A bit of a white knuckle moment there, hold on tight and a knuckle through it. Let's talk about AI though. Talk about this AI build out boom and when we were speaking off camera, a bit of it being reminiscent of some of the 90s, we're not, we're not to the bad part yet that we don't want to get to, but is this?

Well it's funny so I'm my podcast a couple of weeks ago as joking you with my co-hosts there that I'm starting to get kind of these mid-90s, late 90s kind of vibes. Really what caught my attention was Oracle when they came out with their guidance, for their cloud business doing $10 billion revenue last year. to in 17 to 18 billion this year, but increasing at 14 fold by 2030 to 144 billion. really just an eye opener. And again, it's not like there aren't other people. You've already got Amazon. You've got Microsoft. You got Google. In that cloud business as well. already a lot of competition. So when I'm seeing you those kind of numbers you will put up out there. really trying to understand you. how much efficiency is there going to be over the course of the next decade to really support the amount of capital that we're putting in there today. So to some degree when I'm looking at AI names based on our base case there, Pretty fully valued, a number of more starting to get back into overvalued territory once again. We still see value there. I mean, names like Microsoft is still a four star rated stock. So we still think that one's undervalued. It's pretty much like the last of the AI plays that's undervalued in our mind. So it's still more to go, but I'm really thinking that it was that long-term investor. Trying to switch gears, look for those other areas of the marketplace that have been left behind. Other areas that do have some good themes behind them, like the real estate market. But yeah. really just though and in the market is paying attention to any of these value names, everyone's still all about growth, which I think will probably be to their detriment over time.

Well, the three sectors that are still undervalued according to our valuations today are going to be real estate. So that's trading about a 7 to 8% discount to fair value. The energy sector trading around a 5 to 6% discount, and then the health care sector, a lot of those big health care names really have gotten you know, beaten up this far this year. So they're trading at about a 5% discount go from a sector level. So all of those areas is where we're looking for different opportunities for real estate. I'm really looking at those names that have very defensive, orientic characteristics. I'm still a little leery about getting into urban office space. I still don't like the risk characteristics. If you look at distress and defaults in the CmbS market, that's still a kind of worrying levels for me. But if you look at some of the healthcare rates, so Ventus is one that we've been highlighting recently, four star rated stock. 12% discount trading with a very nice dividend yield. Health peak would be another one that we're looking at today. That one is actually one of the higher confidence stocks across our ret team. So that's where we're looking for value in kind of these. overlook names.

But one of the... kind of biggest deep value in names today is going to be in healthcare and that's Bristol Myers. So it's a five star rated stock that's our highest rating, trading at a 33% discount to fair value, nice big fat dividend yield at 5.6%. And the name trades at under eight times our earnings estimates this year. Now, they do have some difficulties. They do have a number of patents that will be coming off expiration in the next couple of years. We've already incorporated that into our modeling. But when we look at their pipeline, we don't think the market is giving them really any credit for their existing pipeline. Any of those were to hit in the next couple of years, or if they get some label expansion at some of their existing drugs, we think that there's a lot of value in that name. Now, financials is interesting. So financials is one of these areas that generally we think financials are very overvalued. In fact, it's one of the most overvalued. We've got all the big banks coming out tomorrow. I think the numbers are probably going to look great. Everything that you want to see is going right for the banks right now. We think that's already incorporated into the valuations and more. So we're looking in some of these smaller names that are being overlooked. LPL financials one that you'll be been highlighting. It's a largest US independent broker dealer. So we think it benefits two ways. One, with the markets going up, you just have assets under management increasing every day. more fee-and-come coming from that. But generally, we're also looking forward and we see that there's an increasing amount of people who aren't doing it yourself as much anymore, moving and moving their money to asset managers. So we think they'll be able to grow more money got that way organically as well. So again, another name that we think is pretty undervalued today.

Or is a couple that I would definitely look to take profits on today? So first one is going to be reddit. That's a two star rated stock, trades over 50% premium to fair value. We think that the mark is overestimating just the amount of advertising growth. I think that right now advertisers might be looking at that platform with the controversies surrounding it may not necessarily want to be. Yeah, associated with that platform today. And we still have very high growth expectations. I was looking at our model before we came here. You know, we're modeling up 55% growth on a five-year compound annual growth basis. Looking for $1.67 of earnings this year, growing to 475 by 2029. That still puts you at 55 times earnings. funny, funny line. And then the other one I want to highlight is going to be sure when William's so. Two star rated stock trades at a 30% premium to fair value. The headline that really caught my eye the other week was that they had announced that they're cutting back their match on their 401k. Now, to me, if you're cutting back your match on your 401k, It tells me that things are not going well at your company. I looked historically, it looks like the only other time they cut their match was global financial crisis or the advent of the pandemic. We all know that the housing market is very stagnant right now. Maybe the do it yourself market also getting to be a little bit weaker. That's one where I think I would probably take a very cautious stance on that one going into earnings.