The 5 Keys to Building Generational Wealth - And What Most Investors Get Wrong

Welcome to the Thank you. Thank you. Thank you. Hello and welcome. I'm Austin Root, Chief Investment Officer of Stansberry Asset Management, or SAM as we like to call it. And on behalf of all of us at SAM, thanks for joining. With me today is Founder and Chief Executive Officer of Chaykin Analytics, Mark Chaykin. Mark, thank you. Austin, it's good to be with you. I'm so excited. We are going to be doing something that I've been wanting to do for a while, Mark, and that is talking about ways to build generational wealth, frankly, that most people get wrong. The five ways to build generational wealth that many, many folks don't have right. So before we get into that, I just want to maybe get into your background. You have such a long and impressive career. Talk to our viewers a little bit about that journey. Well, I started in the brokerage business after a year out of college, and I got my broker's license on October 7th of 1966, which ironically is the day that a nine-month bear market ended. And I was with a very fine research firm called Shearson Hamill at 14 Wall Street, right across from the New York Stock Exchange. And I got to know the analysts. I got to know brokers who had been with the company a long time. And so that was my first introduction into the stock market, really, except for what I had read about and studied in college. What's interesting is that for the first two years of my career, every day felt like an uptick because the bear market had just ended. And then suddenly 1969 came around, and the market entered into a two-year bear market. And what I found in that bear market was that fundamental research was virtually worthless in a bear market because these analysts who were like gods to me fell in love with their stocks, basically. And the cheaper a stock got, the more excited they got. We're getting it at a discount price. And finally, toward the end of the bear market, they just threw in the towel and said, oh, let's just get out of this position. So I realized pretty early on that you needed something else to protect client assets and grow them. And for me, that was technical analysis. Now, fast forward a couple of years after I left to start a hedge fund, and I joined a firm called Tucker Anthony and RL Day. And there, I was head of the options department. We had 18 branches. I learned that technical analysis, again, was something really important to options trading. But more importantly, I had a mentor at Tucker Anthony. And that was a guy named G. Stanley Burge, who was really the first quantitative analyst on Wall Street. He's the first person who combined monetary analysis with technicals. And that was a life-learning experience for me. And then I went to Drexel Burnham in its heyday when junk bonds were everything and anything. And there again, I had a mentor named George Douglas, who had one of the two quantitative databases on Wall Street. And George allowed me access to those databases. And we'll see later on in the interview why that's so important to the Chaikin Power Gauge. And then finally, I started an institutional brokerage firm with a partner in Philadelphia. And we started marketing a technical analysis workstation to portfolio managers, hedge funds, traders. And there, I sort of pulled together everything that I had learned and started working very closely with some very well-known institutional investors and traders. Fantastic. And I think we have had different experiences in Wall Street and in finance. But one of the common themes was we both were focused on institutional investing. And then later in our careers have brought that to individual investors. So just to remind our viewers a little bit about my background, I started at the Blackstone Group as an investment banker, hired by Steve Schwarzman. And I remember my very first day, he came in to the analyst and said, some of the company's work. Some of the company's work. Some of you got A-minuses in school. This is not an A-minus shop. So you better buck up or hit the road. And I just learned some great experiences of driving for excellence while I was at Blackstone. From there, I did some investing in private equity and went back to business school at Stanford and then started working within on the public markets side of the world. So I worked for a hedge fund, Steve Cohen, owner of the Mets now, maybe more famous now for owning the Mets. But Steve Cohen was a hedge fund founder and investor and portfolio manager that I learned quite a bit from. From there, I was part of the Tiger management family. So Julian Robertson, I'm sure you crossed paths with Julian Robertson in your days. And now I worked for a fund that was seeded by Julian Robertson by Julian Robertson and later he seeded my hedge fund, North Oak Capital. Now it was at that point then that I started, I met someone named Porter Stansberry. And Porter had the great idea of, gosh, wouldn't it be a value if some of the things that I had learned on the institutional side, we could bring to some of the research clients that he had. Maybe perhaps within the research group, maybe perhaps within the research group, but also he said, no, we should have a Stansberry asset management group for those folks that maybe were wanting to move from a do-it-yourself model to a do-it-for-me. So that's when I started thinking, gosh, wouldn't this be great if we could bring that institutional grade information and ways to invest to a broader audience? And so that's what we're doing at Stansberry Asset Management. Much like what you're doing at Chaykin Analytics. Well, interestingly, although our paths didn't cross, we were in similar places. Steve Cohen, who you mentioned, was at a firm called Gruntal before he started SAC Capital. And when he left, the first call that he made was to Bloomberg to order up five terminals for his new hedge fund. The second call he made was to Bomar, which was our institutional brokerage firm, which became Incinet. and we also had Tiger Hedge Fund as a client. So what's really interesting about this conversation is that what I learned with our institutional brokerage firm, and our mission was to teach fundamentally oriented investors how to use technical analysis to improve their results. And what I learned was all of these successful investors that you just talked about, Steve Cohen, Julian Robertson, George Soros, Paul Tudor Jones, and some of the value investors in the Mid-Atlantic region, the growth investors in Boston, they all had a discipline. It was all different. But what made them successful was they followed that discipline day in and day out. And so eventually I retired from Incinet. We were fortunate enough to sell our institutional brokerage business to a subsidiary of Reuters. And then the financial collapse of 2008 happened. So previous to that, we had been selling our research in our terminal to institutional investors and traders, all with different styles and time horizons. After the financial collapse of 2008, when my wife lost 50% of her 401k plan and was paying 1% to an advisor for the privilege, she came to me and she said, what should I do? And I said, well, close down the account, open up an index account at Vanguard, buy the SPY ETF, so that you're in the market when it finally turns. And I'm going to fulfill my life's dream and pull together everything I learned from my institutional clients. And in the course of a one-year research project, I built the Chaikin Power Gauge. And the Chaikin Power Gauge has 20 factors. It's 85% fundamental, only 15% technical. We bring in the technicals later. And it's based on everything I learned from working very closely with successful investors. Distilled down to 20 factors that drove their decision-making. And that's been a life -changing experience for me because now we're bringing that tool and a whole new suite of tools to individual investors as well. That's fantastic. Now, I'm curious, across all of those experiences, if you had to pick, is there one investor that sticks out in your mind to say, gosh, this was one of the best investors I've ever seen? Well, I have to admit, I prepped for that question. But yes, it's a guy that probably nobody's ever heard of unless you're a Boston Celtics fan. His name is Jim Pallotta. And he was a client of our firm. When we had our institutional brokerage firm trained by a guy named Joe McNay, who founded Essex Research and Management, a legendary investor. He's 90 years old, and he's still active in the company. Jim Pallotta was one of the best equity stock pickers I had ever met. And he built on that success and got hired by Paul Tudor Jones, who was primarily a commodity-oriented hedge fund, to head up their equity business. And he's now catapulted into half ownership of the Boston Celtics, a major soccer team in Italy, and enormous wealth. So I'd say Jim Pallotta, someone nobody's ever heard of, and again, unless you're a Boston Celtics fan, is the best investor I've ever met. That's fantastic. I'm not sure if I've told you this, but Paul Tudor Jones, former overnight head trader, is my neighbor in Maryland. So that's a small world there. I think for me, if I were to answer the same question, I probably learned the most from a man named John Griffin, who founded Blue Ridge Capital. And he was Julian Robertson, a right-hand man at Tiger Management for many, many years before founding Blue Ridge. But if I had to say the best investor, it would be hard for me not to say Steve Cohen. In my mind, his superpower was twofold. One, it was his ability to understand in such a short amount of time what matters most to the stock move and why, to an investment security's price and security's price and why. And then the other piece of that was a nimbleness to not be so proud or stuck in a position. So when I was working for him, we were owners, very large owners of Xerox at a value price. And as we built our thesis, the stock was going up. It was going up nicely. But at some point, Steve was like, this is, you know, I'm watching this. And everything I'm seeing from the fundamental and quantitative side says it's time to move. And we moved. And it was the right time to exit. So that would probably be my answer on greatest investor, in no small part given his incredible returns over decades. Well, someone else who was actually a good friend of mine, never a client, was Marty Zweig, a legendary investor who sort of called the downturn in 1997 on Wall Street week. But what made Marty special was he was one of the first people who understood that the Fed was important and that the market trumped everything. So, you know, this is sort of a common theme that, you know, investing is not just a one rifle shot process. That's right. You have to understand the various pieces that go into moving markets. Yep. Yep. We like to say investing is seasonal, that there are times to be, you know, set it up. And forget it and forget it sounds right. Sounds fine. But there are times to own certain assets and certain strategies. And then there's times to avoid this. I think buy and hold is dead. I think it's been dead for years. Yeah. Sort of died in 73-4 with what was called the nifty 50, you know, 50 stocks. Right. That you could put in your drawer. And because people used to get stock certificates back then, seems sort of paleolithic era. Yeah. Very antiquated. Yeah. Well, one more about the experiences. Your career before we move to sort of some other topics. I'm curious, is there, and I did ask you this ahead of time too, to come up with a story about your career that maybe you've never shared with subscribers or clients before. Well, there's an overarching story that I've never shared. I'm a really good stock picker and I'm a great long-term investor. I'm a lousy trader. And the reason is you're sitting in front of the screen. And if you're me, you're looking at every tick. And it's very distracting. And it tends to make you jumpy if you're me. Although we've created great tools for traders. One story that I have not told anybody is a short sale that I made in the lead up to the 1969 bear market. There were a lot of inflated stocks back then, similar to 2000 and similar today. We would call them meme stocks today. And one of them was a company called Four Seasons Nursing Homes. And they had five nursing homes, which means pretty minimal revenue, but they had the same market valuation as Hilton Hotels. It was bizarre. So I shorted a thousand shares of stock. This is 1968. So I was 25 years old at 99 and a half. And finally, when the stock ticked at 119 and seven eighths, I threw in the towel and said, I can't stand this. I'm not paying anymore. And that was the pain anymore. And that was the top tick in the stock, meaning that I covered my short and lost $30,000 at the top tick. And I learned two things from that. Number one, valuations are never a reason to sell a stock on their own. And number two, never short a stock making a new high because you have no place to cover. There's no place to put your stock. That's great. I agree. I think we have learned time and again, and I have, that sometimes it may not make for a great investment to buy a stock that you think is overvalued, but you certainly don't want to be shorting a stock that's with that kind of momentum because it may not correct until you run out of money. What did John Maynard Keynes say? The market can stay irrational longer than you can stay solvent. Stay solvent. That's right. You know, let me see if I can share a similar story that I haven't talked to folks about. One of the great experiences that I had at Blackstone is we were, I was on the investment banking side and we would represent some very interesting companies and then owners of companies. So we were very quietly set up to have a meeting with Bain Capital. Bain Capital was a very successful at the time. This was in the early 2000s, building up a private equity business where they would buy companies out of public market, fix up the operations, maybe merge them with something else and then take them public again for a much, much larger price and a huge return. We had these meetings in private because Bain Capital was supposed to be this super successful investor and yet they had an investment that was going more than sideways. It was challenged. Dade Baring. So Dade Baring was a diagnostics company, had a razor, razor blade model. They would sell these big equipment and then there'd be consumables related to it. But in 2000, 2001, as the market weakened and we were, approaching a shallow recession, they had tried to sell the business unsuccessfully. So instead paid themselves a large special dividend, a huge special dividend that actually got them a full return of their initial principal. So it seemed to make sense. There was only one problem. It was too much debt for the company to withstand. And so we were in there trying to see if we could avoid bankruptcy or find another suitor. Mitt Romney was a part of the company to withstand. Mitt Romney was a part of these meetings at times. And it was just a challenging situation. What I learned there was that a bad balance sheet can trump a good business, particularly in times of weakness, so market weakness. So I've always wanted to make sure that we own businesses that can sustain, that have free cash flow, that have a good enough balance sheet to sustain, the dry periods or the down periods of the market that you're going to have. The other thing I learned is that, frankly, a lot of the analysis that they were doing was really interesting. So that was when I made my decision to move from being a banker to being in the public markets and being an investor. Well, I know we're going to talk about AI later in the conversation, Austin, but what's interesting to me is that two young guys came out of Lazard-Ferrer, knew each other in college, have built a program. And to do about 90% of the work that you were doing back then as an investment banker. It's amazing. So I don't know where that's going, but as we get back to some of our favorite stocks and talk about AI, it's interesting to see that even a business like private equity and investment banking is being transformed by AI. Yeah, I think absolutely. Informational businesses, if they can be done more efficiently, it will, I think, lead to productivity gains, but it's also going to lead to some dislocations in certain existing business models. Well, why don't we make that transition, Mark? What are your thoughts about what's going on in the market right now? And what are you worried about? And we'll start there. And then also, I'd love to hear about kind of what excites you. Well, we came into 2025 at Chaken Analytics, bullish on the market. First year of the presidential cycle is typically an up year with some, you know, some choppiness in the summer into the fall. But we expected the year to end on a positive note. And then came Liberation Day on April 2nd. And everything got dislocated. Some of the private equity firms like Blackstone, KKR, and Apollo took huge hits. And these are solid companies because people were concerned about debt and the cost of money and the availability of money. Lo and behold, President Trump backed off on April 8th. The market bottomed out. NASDAQ and the small caps actually were in bear markets. The S&P missed by a hair. I'm going to call it a bear market correction. And suddenly we're back up at new highs again. But along the way, we realized that our original script for 2025 was going to play out. Namely, a strong market finishing the year 6,600 to 6,800, which is about 10% higher than it is right now or 8%. How we get there is still up for grabs. We've got a big concern about the Fed and independence and interest rates and will they cut in September and will they cut even after that. I'm basically looking for a lot of volatility in late August into September, which is typical, not just in the first year of a presidential cycle. But then I think we're going to finish the year very strong. Okay. Now, I think you've told me that you are, though, concerned potentially about 2026 being a more challenging year. It is. Historically, what's happened in the presidential cycle is the president comes in on a platform. And the economy starts implementing it. But there are costs involved. And not everything goes right. And I think we're ripe for that. And so the second year of the presidential cycle is typically when bear markets rear their ugly head. They're either in a bear market or you enter into a bear market in that second year. And it makes sense from an actual practical point of view because some of the policies that a president implements are either costly or don't work or have some sort of pain point or have some sort of pain point that people weren't aware of. And that typically surfaces in that second year of the presidential term. Am I going to put my feet in cement and sell everything on December 31st, 2025? Absolutely not. I'm going to let the market tell me what to do. Interesting. I think I probably agree with that. I would say that where Stansberry Asset Management and our team are more focused is maybe even looking a little bit further ahead and saying, Gally, there is no political will to really reduce government spending or address the deficit or the national debt, not only in the U.S., but really across other central banks and governments. And so we expect the path of least resistance to be governments and governments and governments and governments and governments and governments and economies that will try to grow their way out of this. So as long as we have productivity gains and growth in the overall output, economic output of the economy at a faster rate than the underlying debt is growing, then we can probably get our way out of work our way out of this. We're concerned that may not happen. But we're more concerned with investors that are sticking their head in the sand and sitting in cash. We are, I mean, whatever happens, the value of dollars will continue to decline. Absolutely. But from my point of view, we're probably in a five to seven year growth period in productivity because I think the introduction of the ChatGPT product, making it available to individuals in October of 2023 is very comparable to the introduction of the Netscape browser in 1994, which basically brought the Internet to everybody. And that ushered in a cycle of productivity, a five year cycle of profit margins, which had been flat, going up year in and year out from 1995, to 2000. And I think we're still early in to 2000. And I think we're still early in that cycle. So I think AI, whatever business you're looking at, if they're using AI, they're going to improve their productivity, either by doing things better, faster, or with fewer labor costs. So I'm very bullish on productivity. And of course, profit margins, which is how we measure productivity, drive price earnings ratios. So if profit margins are going up, then markets can sustain. higher valuations. How do you feel about some of the largest companies in the US that are embracing AI? I think if we were to take, forget what's happened for the last six years in the market, and you went back before that, it was a general rule of thumb that a guaranteed way to underperform the market was to just own the 10 largest business companies in the world. That's not been true recently. And in fact, you've been better off really since, you know, the Great Recession to own the bigger, more productive, innovative companies. How do you feel about where we are now? Well, I think that these set, well, let's call them the Magnificent Seven. They're all in uptrends now that Apple has finally turned around, thanks to that meeting at the White House between Tim Cook and President Trump, where they basically agreed to something that may or may not happen, but they got off the hook for tariffs. You've got a situation where the biggest companies are generating the most profits. It's undeniable. But we're looking at the picks and shovel companies. You know, someone once, a WAG said, if you're in the middle of a gold rush, you should be selling picks and shovels because that's a tried and true business. So we're looking for the company, we're looking for two sets of companies. The companies that are building the infrastructure, the data centers, and everything surrounding that, and the companies that are starting to implement AI. And typically, that's going to be a smaller company. Not necessarily small cap, but mid cap companies, because they're more nimble. They don't have as many embedded systems. We used to say that God created the world in six days because he didn't have an installed base. And that's when I was in the software business. A lot easier for a small company to implement AI successfully than it is for a massive company like General Motors or someone with a big infrastructure and systems that are hard to modify. I think we would 100% agree with that. I would say two additional things. Those businesses that are not implementing AI are at risk. So if we just talk about your software example, if a business is embracing what AI can do for its business model, great. There are plenty of software businesses that we think number of seat licenses are going to go down if they're not implementing AI in the right way. Very definitely. And the first area where they're making an impact is actually writing code. There are amazing stories of code that's being written in two hours that used to take two weeks or more. And that leads to productivity. A, because you can experiment, try things out very quickly, which in doing my stock market research, anytime I was working with a mainframe computer in the old days that slowed me down where I didn't get immediate feedback, I either got bored or it took too long. But now with all the firepower we have in a laptop, I'm doing much more productive research because the feedback is there. And that's what's happening with AI. Feedback is instantaneous. Then the other piece that we like to focus on are those businesses that have true proprietary data. Because then if you harness that proprietary data with the power of AI, you can get something really special for some of these businesses. Well, you know, an oddball example of that could be Uber. Uber knows where we go, where we like to eat, where we travel, how much time we spend in a restaurant or on vacation. And they've got the database. I don't think they've monetized that database yet. But that's a perfect example of a company that will use and can use AI to mine a database and sell it. Absolutely. Absolutely. I'm excited to go through these five keys to investing success and really generational wealth creation potential that we think, frankly, many investors get wrong or don't necessarily fully embrace. I know that the way we structure this is I'll pick two, you pick two, and then there's the fifth one we think is the most important that we both 100% agree on. So I'll start with the first one. And this is a lesson that I learned from Julian Robertson at Tiger Management. And that is that business quality and market leadership is far more important than valuation, as most people think about it. I remember a meeting. So when I was running a hedge fund that was backed by Julian Robertson, we would have meetings every other Tuesday at 101 Park on the 48th floor, and all the portfolio managers would come and you'd make stock pitches. And there was one younger portfolio manager that made a pitch that said, the valuation discrepancy. The valuation discrepancy between some retailers is so huge that we are going to go and own the cheap ones. In particular, there was Sears Holdings. So Eddie Lampert had acquired Kmart and Sears Holdings. He was going to build this great new business. And then the other one was Odd Lots and Big Lots. So we're going to own Sears Holdings. We're going to short Costco because it trades at a huge valuation. And we're going to own Odd Lots and we're going to own Odd Lots and Big Lots. And we're going to short TJ Maxx. Now, on a valuation-only basis, this was a great call. The things that he suggested we go long are now bankrupt, as you know. And it's one of the few times that Julian stepped in and made his own commentary, which was just be very wary of not owning those market leaders. And just focusing on how much of the total stock market return is generated by those world-class businesses that continue to compound on themselves year in and year out. So I would just say I see far too many investors trim the flowers and the high-valuation flowers and let the low-valuation weeds grow when quite often the opposite is the right way to go. Well, and in the case of Sears, of course, you didn't really have a management team. You had a hedge fund running a retail business. So nothing against a hedge fund, but stick to your knitting. Right. Absolutely. All right, Mark, what would be a key to investing success that you'd like to share with folks? Well, what I found in my career is that people put their feet in cement and they think they're bigger than the market. And from vast experience and from everything I've read about Graham and Dodd and Warren Buffett and Marty Zweig, the market always wins. Mr. Market is a real thing. And any investor who thinks they're smarter than the market, which means they're bottom fishing or they're holding stale go-go or meme stocks because they think these companies are going to turn around, has just missed the whole point of investing, which is to let the market tell you what's important. Because Mr. Market is always right. Respect the market. Respect the market. Yeah. Yeah. Yeah. Absolutely. I agree with that. I'll give you my next one. I think people talk about, and was it Einstein that talked about the eighth one of the world being the power of compounding and how valuable and mission critical it is to your long-term wealth to let your wealth build over a long period of time at obviously a high rate of return. I think that's pretty well known. The piece of it that is so important for what we do at Stansberry Asset Management is recognizing the importance of limiting the drawdowns. So there's many reasons for this being so important, reducing your drawdowns. And so a couple of these reasons are from an emotional perspective. It's very hard when you lose a big chunk of money to make the right investment decisions longer term. But really, it's purely mathematical. So I want to ask you, I didn't prep you for this question, but if you think about two investors, investor A and investor B, investor A is high volatility investor on, let's say, over 20%, over 20% a year, on the odd years, on the odd years, so year one, year three, he returns 40% a year on all the odd years. On the even years, he loses 20% a year. So on average, he has a 10% return. Not a bad return on average, right? Up 40, down 20, average 10% a year. Over 20 years, that investor A would generate a return to triple's money. Not too bad. Not too bad. If you had the same average return, simple average return on an annual basis and eliminated the drawdowns. In other words, you just had a 10% return a year, you would more than double the returns of investor A. So nearly seven times your money. Investor B would make nearly seven times her money over 20 years. And in fact, if you only generated 7% a year and eliminated the drawdowns, you would make more money than the person that was generating the high average return, but had those huge drawdowns. And the practical explanation is if a stock drops 50%, it's got to double to get your money back. Absolutely. And most people won't stay the course. Right. You know, they'll throw in the towel long before that double if they're fortunate enough to get that double. That's right. And the mathematical piece of this is the compound annualized growth rate. So we talk about that power of compounding. That 10% simple average, if you're whipsawing like this, translates to only a 5.8% compounded average to your point because it's so hard to get yourselves out of this drawdown. So one thing we try to do very much at Stansberry Asset Management is to reduce those drawdowns, reduce the volatility. It's so powerful for your long-term gains, but also helping you to sleep better at night. What's your next one, Mark? Well, this is my favorite, which is don't turn the sound on if you're watching CNBC. Don't get flummoxed by the headlines. I referred earlier to my successful institutional clients and that they had a methodology. For an individual investor, that translates to having a game plan and following that game plan. But what happens is that in this 24-7 news cycle that we're in, both political and financial, investors get thrown off their game. And that's the worst thing you can do in the market to give up your game plan. And typically that happens on April 7th, just before the market's bottoming out, throw in the towel and be out of the market when it finally turns. So my advice to investors is don't pay any attention to the headlines. Yeah, ignore the headlines. And don't put the sound on if you're watching CNBC. Yeah. Now that makes sense. Unless you're commercial comes on, then we want to watch that. Appreciate it. Well, that's great. I think we are in agreement with all of those, but the one that we talked about when we were having dinner earlier as the number one thing that I think most people miss, and we agreed on this, and this has really driven your entire career, is too many investors are either this or that as investors. They're either invested in bonds or stocks. They're either a value investor or they're a growth investor. They only focus on domestic stocks or international stocks. They only do public market investing or only private market investing, large cap or small cap. They're only day traders or they're buy and hold, set it and forget it. I think there are so many great opportunities that live in between that. If you can embrace both sides of this and really be fluid and see the value of both, it really can help your investing. I've called it tweener investing or hybrid investing. What I really want to talk about and what we talked about is calling it crossover investing. Can you cross over and see the value of that other way of type of investing? Well, I look at it in a similar way, but I put a slightly different label on it. When we were marketing our check and power gauge rating and our service to professional investors, mostly advisors and high net worth individuals as well, one of the slides I had said that fundamentals drive the market, but that technicals drive the market to extremes. And to make money on Wall Street, you need to combine fundamentals with technicals. And that's what we're doing at Checkin Analytics. And I know that drives a lot of what you're doing at Sam. Absolutely. In fact, that I think is the number one most important way to be a crossover investor is to understand the fundamentals and also understand the power of the quantitative and technicals. Yeah. And what I would say is that in the technical arena, there's an indicator or an approach called relative strength. And that's actually one of the first things I learned about when I was still at Shearson Hamill, because someone introduced me to a guy named George Chestnut, who had a research department, a newsletter and a mutual fund. And he was looking for the strongest stocks and the strongest industry groups. This is back in, he started in 1956. And I think if you're a value investor, relative strength can keep you in a position longer. So that's where the technicals come in. If you're a momentum investor, relative performance can tell you when it might be time to think about exiting a position. Again, none of this has to do with fundamentals. It's the price action, the market telling you you're either in a good position or a bad position. So I'm a firm believer in technical analysis. I'm a firm believer in technical analysis. But relative strength really isn't technical analysis. It's just analyzing price action in a way that if you go to the racetrack or you watch a marathon, are you going to bet on the horse that's in the lead with a 16th of a mile to go or one that's at the back of the pack? If you have the ability to bet on a marathon and you're in the final three miles, are you going to bet on the guy who's in the lead? Who's falling back in the pack or the guy who's coming to the head of the pack? But that blends very nicely with fundamental analysis because it all starts with the fundamentals. That's right. The high momentum stock that's outperforming the market with weak fundamentals is nowhere to be. That's just thin ice that will eventually cave in. Yeah, that's right. I'm curious, you know, in what type of market do you think Chaken Analytics produces the best relative gains? And then in which type of market do you think it's more challenged to find its footing? Well, to your point about crossover investing, when I created the Chaken Power Gauge, I called it an eclectic model. Warren Buffett, in theory, had a religious model. He only bought value stocks. That was not quite the case because he had a big position in Apple. Legg Mason, Bill Miller only bought value stocks. The guys in Boston were big growth investors. And what I learned was that you need to embrace all market styles. And so the Chaken Power Gauge rating is an eclectic model. And because of that, it really does work well in all kinds of markets. Now, on a relative basis, where it's fallen down is when seven stocks control 80% of the returns in the market. That happened in 2018. Stocks that the Power Gauge found were bullish perform well, but they didn't beat the S&P because these seven stocks, or five back then, were dominating. Same is true today. So the equal weighted S&P, which I know is your benchmark at Sam, meaning that every stock counts the same, is underperforming the traditional S&P because of seven stocks. The seven stocks are still strong because they have strong earnings. But in that kind of market, on a relative basis, the Power Gauge may lag. But for instance, coming out of the bubble, the internet bubble in 2000, small cap stocks did very, very well. Now, we didn't have the Power Gauge then, but we had all the price data so we could go back in time and look. And there was actually a bull market in small cap stocks, which the Power Gauge would have found between 2001 and 2003. And the poster child for that was a fund manager named Chuck Royce, who was one of the best small cap managers ever. Happened to give my son Andrew his Phi Beta Kappa key at Brown. So I'm partial to Chuck. But Chuck Royce, if you go back, his small cap value fund just killed it. And the Power Gauge rating, found those stocks as well. Yeah. Now, you alluded to this, but it's absolutely true that we at Stansberry Asset Management, particularly in one of our strategies that I'll talk about a little bit, fully embraced this concept of crossover investing, harnessing the power of both fundamental investing with quantitative investing and putting them together. And I want to tell a little bit of backstory about how we first met because it had an impact on how we're doing this. So if you'll recall, I talked about how I was an investor for institutional investing, ran a hedge fund. And I did talk with Porter Stansberry about starting Stansberry Asset Management. That's not first what I first did with Porter, though. At first, Porter decided he was potentially going to take a step back from the business. And he invited me to learn about what exactly market market-wise and Stansberry Research was doing. So I ran research. I was director of research and head of the portfolio solutions product. And in that role, we got to see some of the quantitative modeling that was being done at Stansberry Research. Some kind of very innovative things. One of those is the Stansberry Score. One of the sister companies that we looked at was Tradesmith. And then perhaps most or probably most interesting to me is we started talking and looking at this institutional product called Chaken Analytics. And so while I was still at Stansberry Research, we got a chance to meet. And you and your team came in and we started doing some real work with some of the tools that you had. And I thought it was fascinating. And I thought it was how powerful it could be to harness that and add it to the fundamental analysis that we're doing. Now, shortly thereafter, you partnered a little bit with Market Wise and brought your team. And then I left to run Stansberry Asset Management. But it was really helpful to see that. And I like what you're doing at Sam, because I've always felt that there were a variety of ways to use a tool. In this case, the Chaken Power Gauge Rating. One of the most underappreciated is to filter all of your investment ideas through the lens of the Chaken Power Gauge Rating. Because it will help you eliminate some of the potential landmines that always exist in the investment landscape. And if all you did was take your research and filter it through the power gauge, you'll avoid one or two stocks, which at the end of the year are going to affect your bottom line. And I know that's what you're doing. That's right. And so I think we are doing that with something that we call tactical select. So I want to be clear that Stansberry Asset Management, our mission starts and ends with our client. And so whatever their goals are, their individual investment goals, their risk tolerance, their time horizon dictates how we're going to invest their portfolio. And it's really important that we can tailor that to what they want. That means that we have a number of different strategies. We have a forever strategy where we own the world's best businesses essentially forever, so long as we believe that they they continue to be tomorrow's best businesses. They continue to be tomorrow's best businesses. Now, that strategy is one where we're staying fully invested for someone that's focused on a long-term capital appreciation as their objective. We also have a lower volatility strategy we call the all-weather strategy, where it is set up to defend people's capital. Capital preservation is paramount. And we have an income strategy and all the things in between. What tactical select does is it pulls from all of those strategies where we've done the fundamental work. We believe in the business so much that we own it in one other strategy. And then we overlay that with fantastic quantitative data analytics, almost as a risk management tool to your point. So some of that is proprietary. Some of that we use other tools. And one of the foundational tools for for us is the shaken power gauge. Well, you know, it's interesting. I was talking to my wife, Sandy, before I came down to New York for this event, this conversation. And she's been instrumental, as you know, in the whole story of the shaken power gauge. And she actually has become a great stock picker and manages our retirement portfolio. And she said, well, why are you pitching an asset management capability when people have the power power gauge rating? And I said, well, why are you pitching an asset management capability when people have the power gauge rating? And I said, Sandy, anybody who's got 500,000 or more in the market should be considering an asset manager. Not everybody devotes the time that you do or has developed the skills that you have. And, you know, investing requires temperament and time and tools. And we give everybody the tools and they're good, but you still have to have the time and the temperament. So I said, we're doing this so we can share with our subscribers an approach that uses the shaken power gauge rating as part of their process. I appreciate that so much, Mark, because that's exactly right. So there are there are a number of you out there that the way to put this crossover investing to work and the way to build generational wealth might simply be to use shaken analytics and the shaken power gauge and do it on your own. Then there are a number of you out there. Then there are a number of you out there that I'm quite certain it might be better and more beneficial to have Stansberry Asset Management do it for you, in part because we can save you time, save you stress, help you sleep better at night. But I think one really important thing is that we can tailor that. So if your goals are slightly different, we can provide a more tailored, unified approach to how to put your money to work. And they can monitor their portfolios through the shaken power gauge. That's right. That's right. You know, I want to, if you, if you want to, if you're more interested in, in how to figure this out, we have a website you can go to right now. And that is very simple. Sam Chaykin.com. Now, by the way, that's my grandfather's name. Well, that's fantastic. Yeah. So go, go to grandfather, Sam Chaykin.com. And there you can fill out just a few pieces of information. And what we want to do for you right there is provide you a free financial review. So even if you're not necessarily interested in using us as a financial advisor, we'd be happy to provide a financial review for you. So that's samchaykin.com. That is very generous. And that's one of the reasons that I was so excited about doing this event with you, because that's an offer you can't refuse, really, if you're a serious investor. Yeah. Now, I want to ask you a question. Your subscribers like to hear stocks that you're interested in and that may work. After looking at some of the ones that we own based on very bullish ratings from Chaykin, I can tell you that I was going to talk about an example of a type of a company that we think is interesting now. Curious, do you have one? I do. And it's Palantir. We didn't get in, in the beginning, a Palantir, but that's good because it went sideways for four years in that sort of 18 to 30 range. And then the power gauge picked it up when it broke out on a positive earnings report. And we've viewed that as a trading vehicle. Some of our clients wish we had viewed it as an investment vehicle, but we've had three trades in Palantir, each with 50% profit in less than six weeks. And the power gauge just picked it up because of that combination of fundamentals and technicals. Now, Palantir has a very rich valuation. So if you ask me to justify it based on 100 times sales or 250 times earnings, I couldn't do it. But the combination of the fundamentals and the technicals, analysts raising their estimates, we didn't get into that. I learned that at Drexel Burnham, that analyst estimates are an important part of the power gauge rating and how a company beats or disappoints Wall Street. But it led us to Palantir, and we've had three very successful trades just in the last year in the stock. That makes a lot of sense. That is important. Momentum is not just in stock price, but also momentum in the business where analysts are having to change their numbers upward because the business is just doing better than people expect. That can be incredibly powerful for a stock price. Yeah. You talked about Steve Cohen, and one of the reasons he was successful was that he had a lot of commissions to give out. And he got what back then was named first call. In other words, if there was an analyst at Goldman who had suddenly turned more bullish on a stock, guess who got the first call? It was Steve Cohen to the point where they named a service. After that process, it was first call, and it's still going strong under the umbrella, I think, of Thomson Reuters. Why did he get the first call? Because the analyst raised his earnings estimate. Yeah. And then the Steve Cohen's of the world jump in and buy it. Well, now everybody can get that data. That data is now in the power gauge every night. Yes. Yes. And so this is the dynamic that's changed on Wall Street. Previously, it was only available to the hedge funds. Now, it's available to the investing public. And I was just going to say, I think that you're providing your, you know, the combination of fundamental investing with Chaken Analytics is providing a first call for some of these really interesting opportunities. I'll give you an example of something that our tactical select product, be an example of something that we might own and may or may not currently. This is a business that maybe no one's ever heard of. It's called Allegion. Now, Allegion, we very much like from a fundamental business perspective. Allegion is focused on providing locks and doors and security systems. So from a secular perspective, security is not becoming less important for not just homes, but a lot of what they do is institutional. So schools, hospitals, commercial office buildings, that's not an area that's becoming less important to us, unfortunately. It's becoming more important. They have industry-leading brands. Stanley, Von Dupren, Schlage, to name a few. So from a secular fundamental perspective, we really like it. It's a very well-run business. They're shareholder friendly. They raise dividend. They buy back stocks. It is a name that's very bullish in the Chaken Analytics, Chaken Power Gauge. And, you know, we could probably delve into the multi-factors as to why, but I'll tell you one of them is what you noted, that they are seeing some incremental momentum in their business. So they had some slow parts of their business in the institutional side, but they're ticking higher. We think it's a very attractive valuation, but a long-term hold of a world-class, well-run business with long-term brands. Yeah. If you had asked me without knowing what the power gauge was saying, I'd say, I've got a 25-year-old measuring tape that says Stanley on it, and I'm not replacing it anytime soon, except now they have these tapes that use lasers to measure things automatically. And so that's where you get into the next generation of these tools. That's true. Now, I will say that their Stanley is focused just on the locks and the doors versus the measuring tape. But having said that, yeah, but they license that brand from Stanley Works. But it is important, what you said, the electronic piece of this, is that as doors become smarter and you need electronification, the price, the value that Allegiant is providing is higher, and the return on investment that they generate is higher. Yeah, and if you look at some of these sad shooting incidents at schools, there's always a malfunctioning door in there, and they're under a lot of pressure from the community, from the parents, to replace this to replace this with a safer sounder solution. Yep. I want to just do two more things with you, Mark. One, we talked about returns. I do want to provide a framework for how well Tactical Select has done since inception. When we were building this many years ago, we were excited and struck by the power in terms of the data. We put the data around and said, okay, what were we going to say, what were we going to own based on this feedback from these quantitative models under what days? And we went back through three bear markets and three bull markets to have that backtest. Now, backtests can say anything that people want to say. So take that with a grain of salt, right? But the backtest was very interesting to us in that it not only outperformed and kept up in the up markets, it really protected folks in the down markets. So we were excited to get started. Since we got this started in early February of 2023, it has outperformed the market and outperformed its benchmark, the S&P 500 equal weight, by more than 5% per year on an annualized basis, north of 15% annualized return. Yeah. I mean, that 500 basis points is what you mean, and that's a big deal. 500 basis points, over 500 basis points per year of outperformance, really driving strong returns. And I think that the key for us, if you think about the backtest, is we really have had a mostly upward market since then. And it's doing that outperformance, not just in down markets, but also in up markets. Yeah. I looked at the portfolio that you shared with me and I saw some names that brought a smile to my face because they're stocks that either we've recommended or I focused on as future potential recommendations in our newsletters. So clearly you're following a good path. Thank you. Thank you, Mark. And so the last thing I wanted to say is we talked about some folks watching this will say, you know, I want to do the do-it-yourself route and use the shake and power gauge. And that's probably the focus I want to do. Some folks are going to say, golly, it will be helpful to have Stansberry Asset Management and I'll decide to go that route. I suggest, and we talked about it, that most investors are going to want to do both. They're going to see you. They're going to want to be helpful in our department. They're going to want to give you lunch over the next. They're going to find out how to do that. They're going to be helpful in our business. You know, they're going to be helpful in your business. They're going to be helpful in yourSC. And I want to bring you one little thing that we do that I think is different than many financial services companies out there. You know, the financial services business, as we know it, has really bifurcated. You have the T. Rowe Price stock pickers of the world that are building their portfolios, but don't generally have much relationship with the end client. And then you have some financial advisors that do a good job with a financial plan, but aren't necessarily making the investment decisions themselves for which you're paying them. At Stansberry Asset Management, and given the tools that we have from Jake and Analytics and others to help optimize what we're doing in our own internally sourced research, we're doing both of those things. And in addition to my team on the investment side, you have a dedicated wealth manager. So what a novel concept to bring these things back together. So we really think that for many folks, doing both is going to be the right way to do it. Yeah. And a cautionary tale. I have a good friend up in Connecticut who's a wealth manager, at Morgan Stanley, and has followed the company line for 25 years, built a fabulous business, very happy clients. Well, in the last three years, that's not the case. Why? Because 60% in stocks, 40% in bonds, and the bond portfolios have gotten decimated. You can't invest by rote. It just doesn't work. So the approach that you're using is what I would call nimble and creative. And I'm excited to see how our audience responds to this, because the Chaikin subscriber is a pretty savvy investor. We've done demographics on it. And I think it'll be interesting to see how this resonates. Fantastic. And for those that want to learn a little bit more information, please go to samchaikin.com. That's samchaikin.com. Fill out a little bit of information, and we will provide you a free financial review. Mark, thanks so much. It's been a pleasure, Austin. Absolutely. And for all of you at home, thank you.