The Smattering Podcast 60: 2023 Smattering Portfolio Contest Update

60. Smattering Portfolio Q2 Review

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[00:00:00] Jason Hall: Hey friends, welcome back to The Smattering where we asked the hard questions about investing. I'm Jason Hall joined by the voice of the people. My good friend, my colleague, my partner in this venture, Jeff Santoro. Hey Jeff. I can say good morning, Jeff. I can say, I can actually say good morning.

[00:00:20] Jeff Santoro: I know this is, this is strange.

It's, we are, we are recording around 11:00 AM on the 4th of July. So happy Independence Day, everyone, a little bit late, but yeah, it's weird to record not in the evening. So, good morning to you, sir.

[00:00:33] Jason Hall: Yeah, this is gonna be something we try to do, you know, once a month we've been trying to do just a quick update on the 2023 Smattering Portfolio. And then at the end of the quarter, once the quarter's completely finished.

So this is our first episode that we've first chance to record since the quarter, second quarter ended. So we are gonna do the 2023 Smattering portfolio update before Jeff gets a little housekeeping. Just a reminder for anybody that's joined us here in the past few weeks or, or month or two, and you haven't heard about The Smattering portfolio contest, go into the show notes.

Something Jeff and I had decided to do late last year is a little contest. It's a one year contract test and we're doing quarters so. A lot of luck involved, right? We talk a lot on the show about stocks as being tools for long-term wealth building, but we thought it would be fun. And we've picked some charities and some of our viewers have helped us - some of our listeners have helped us pick some charities too. So the losers have to pay money to the charity of the winner.

So anyway, go back and, and check in the show notes and you can listen to the episodes where we kicked off the contest and get a little more information about it and maybe you wanna play along with us.

[00:01:49] Jeff Santoro: Yeah. And I think even though it's a game and it's short term and that's not what we typically, it's the antithesis of what, it's the antithesis of what we stand for, right?

But it does actually, as we, and we didn't really think of this part ahead of time, but as we were talking about it recently, being able to look at the stocks each month and also do like a quarterly review like we're gonna do today actually does allow us to talk through all of the normal emotions that everyone probably feels with the stocks in their portfolio as months and quarters go by and you see things do really well, and you see things do poorly.

So I think it actually has been an interesting thing to talk through throughout the year, even though we would never recommend you make investing decisions based on one year of returns or one quarter of returns.

So before we dive in, real quick for everyone, if you are new to the podcast, Jason just mentioned, people who might be new even if you've been around for a long time, you should know that we now have a newsletter. The link for that is in the show notes. You can also find it on our social media.

And essentially you get two emails from us a week. Every Saturday when the show drops, you'll get an email with the transcript from the show, and every Sunday morning you'll get our weekly newsletter where we typically write about some thoughts we had related to this week's pod, or maybe something we read or something we've been discussing.

It's called Random Words. Our podcast is called The Smattering. So the newsletter will be whatever the hell we want it to be each week. But we hope we get, you get a kick out of it, it adds a little more value to being a listener to the pod. So check that out, subscribe to it. And while you're at it we could always use reviews and ratings on the podcast apps to help people find the show.

So, with that said, Jason, let's talk about Q2 of the 2023 Smattering portfolio. And just because I wanna hear you say it, tell the audience who won the second quarter of the contest, Jason.

[00:03:48] Jason Hall: Jeff Santoro, let me be the first to congratulate you for actually having three decent months in a row with your, with your stocks.

[00:03:57] Jeff Santoro: I would've expected nothing more than a backhanded compliment. So thank you. I'll take it. I'll take it. Yes. I was the winner. I was the winner.

[00:04:04] Jason Hall: That's true. That's true. You were, you were, and the winner, the first quarter winner was the Un-portfolio.

[00:04:12] Jeff Santoro: It was, yes. And that's partially, that is entirely my fault, actually. Entirely. Yeah. So really, did I win both quarters, Jason?

[00:04:20] Jason Hall: No, no, no. You un-won.

[00:04:25] Jeff Santoro: Yes. So quarter one the winner was the un-portfolio, which for the new folks, that means we, we picked four stocks, each of us two, that we thought we would never buy. And I made the mistake of just choosing stocks I didn't like, rather than stocks that I thought would do poorly.

And they are absolutely crushing it. But Q2, I won – my portfolio just in the quarter was up 24%. Well, and by that I mean through the end of June, from the beginning of January, right? So for the

[00:04:54] Jason Hall: quarter, we mean April, May, and June.

[00:04:55] Jeff Santoro: If we say q2. Yeah, if we say q2, we're talking about just the quarter. If we say year to date, we're talking about January 1st to June 30th. The un-portfolio is still the year to date winner. So it is still crushing us.

[00:05:09] Jason Hall: despite my overall, despite my incredible yeoman's efforts to reverse the run of the two stocks you picked.

[00:05:17] Jeff Santoro: Yeah. I, I really messed that one up.

Here's some other fun stats from the second quarter. So the best stock in Q2 outta the whole portfolio was DataDog, which was a stock that lives in the Team Smattering portfolio. So that's the three stocks that Jason and I picked together. The worst Q2 stock was Blink Charging, which was down 31% just in the quarter. And that was one that Jason picked in the un-Portfolio.

[00:05:42] Jason Hall: So, and I wanna be clear to you, like being the worst is actually the best because I picked it as a terrible stock.

[00:05:50] Jeff Santoro: Correct. So hat tip to you on that. You did, you did well. And then year to date, so through June 30th, from the beginning of the year, Meta is the, still the number one stock that hits up 139%, which is just absurd.

[00:06:02] Jason Hall: So that was, that was one of your, one of your un-portfolio picks on

[00:06:05] Jeff Santoro: Yes, that was one of my un-portfolio picks. And obviously that was a bad pick. If I'm trying to pick stocks that won't do well, but I think you, you, you would agree with me. I. If someone said to either of us, Hey, at the end of q2 Meta is gonna be up 139% for the year, neither of us would've believed that I don't think.

[00:06:23] Jason Hall: Yeah, I would've expected that, that there would've been continued (losses) and there is still a ton of focus on Reality Labs, right. The, the, the metaverse part of the business. And, but I, you know, Zuckerberg, I wanna give him credit.

Two things.Number one, he's done a good job of like controlling the narrative, right? This being the year of efficiency. But, and they have, they've done a lot to lower costs and the ad business has gotten a little better, right. We've seen that. That's, you know, has helped, has helped. And as much as everybody hates Facebook, everybody still uses it.

And Instagram is still really popular and growing and they're really trying with Reels. So on Instagram and Facebook, both to get some momentum with the, the, the thing that has made TikTok so attractive. The challenge with that is, Jeff, that like, it's just not as monetizable and it's not as profitable as sticking ads and feeds, right?

It's just you can't, with these little 15, 30 second clips, it's just a lot harder to monetize. But they're not, they're trying, right? And they're trying and I think that's really, so you put all that stuff together and yeah, there you go. That's, I mean, that's the story of Meta's year so far.

[00:07:41] Jeff Santoro: Yeah. I mean, I, it's not like I picked, you know, my two un-portfolio stocks were Meta and Tesla, and it's not like I picked them because I thought they'd do well and didn't like them. I really did think both would struggle.

I thought the Reality lLab spending would be a way bigger drag on the business than I expected. And I'm still waiting for a Tesla to start, losing money as competition heats up and as they, it seems like they have a supply issue right now where there's, you know, more cars sitting on lots that are being sold.

[00:08:14] Jason Hall: You may not have seen it, Jeff, you may not have seen it, but they did kind of pre-announce a little bit yesterday with deliveries and another record quarter for deliveries, like 466,000 cars in the quarter. But what we don't – so, and they narrowed the, the gap in their overproduction, they didn't produce as substantially more cars than they delivered in the second quarter as they did in the first quarter.

But what we still haven't seen, and like this is the thing I'm waiting for when they report, is all of this discounting how much is that really gonna impact their gross margin and their operating cash flow. Right. And we won't, we won't know that for a few more weeks. So the stock did really good again yesterday in limited trading.

But no, I agree with you. I think we're still just kind of waiting to find out what the implications are of more competition. And the price cuts, we just don't know yet.

[00:09:05] Jeff Santoro: Yeah, and I mean they were, they did cool off a little bit if I believe, I believe both of them cooled off substantially in the second quarter.

Right. So Meta ended Q1 up 76%. And Tesla ended Q1 at up 68%. And then in Q2 alone, meta was only up 35, Tesla was only up 26%. So, still outstanding returns. I think anybody would take that. But you know, they have cooled a bit.

So since we're talking about the un-portfolio, Jason, why don't we just b bang out the other two stocks in there real quick and talk about them. So the two that you chose were AMC and, and Blink Charging So why don't you give a quick rundown on, on where they stand.

[00:09:46] Jason Hall: So, AMC Entertainment, I mean, I think everybody knows generally if you're even remotely following the stock market, how it's been just like the meme stock and there is this group of diehards, they just for some like, you know, you can't reason with an unreasonable person. It's like they've, it's, it's become this cult. They're just completely denying everything that's going on with the economics of the business, right?

So the, AMC is probably the least worst of all of the theater chains, right? They've got good, some good locations. There's just the demographic trends in North America where their business are completely against some massive resurgence in the theaters business, right? So the economics don't work. They're doing everything they can to try to raise more capital. And just feels like there's a lot of bag holders that have kind of propped the stock up.

And you saw in the first and second quarter (correction: first two months) it stock skyrocketed, right? It was up 75% at the end of February. So, it's up like 8% for the year. So it's given back almost all of the gains as like the reality of this being just a highly mediocre business have come, have come to pass.

And Blink Charging, so this is a, they do, they do charging stations, right? And they, they, they're trying to do like services and a little bit of what, like what they're doing, I think it makes sense is like a niche business where if you're, you own hotels or multifamily residential, so apartment buildings or you have a parking garage or something. EVs are becoming like they're the future, there's no doubt about, and they're quickly becoming the present.

Like you run these kinds of businesses, you're not an expert in that kind of stuff. Like making sure the people get billed and all that for, for usage. So there's like a, there's a place where this business fits, but. The idea that this is gonna be some massively profitable business when it's really like where there's value add is pretty niche and the vast majority of it is commodity hardware play.

And you're starting to see companies that do, like welding companies, for example, like Lincoln Electric, companies that have really long industrial histories of manufacturing stuff are starting to get into the business of making these components. And there are other companies like Tesla, right, that like they've demonstrated like this is a core part of their business.

It's just, I don't think like the margins are gonna be really thin and the place where you can make margin is gonna be really small. And Blink's been around for like 15 years. It's not a brand new business. So I think every once in a while, like it kind of falls into the, like the, the zeitgeist and people think it's this new startup and they get really excited and the stock goes up and then it comes down.

It kicked off a ton in the beginning of the year, but it's, it's given up almost all – you know what, Jeff, I'll tell you, I will predict that it's gonna be one of the three or four best performing stocks in the third quarter, and then it's gonna shit the bed in the fourth quarter, because that's what the, that's what it does.

There's not gonna be any business reason to justify it going up. But it's just, it's not a great business. They've never made money, they've never generated positive cash flow. And that's, that's not, I don't think that's, I don't think it's gonna change.

[00:13:08] Jeff Santoro: Yep. Yeah. It's, I, the thing I like about the two that you chose for the un-portfolio is Blink Charging is a business you have serious business related concerns about.

And same, I would say with AMC, but that has the added wild card aspect of the fact that it could be down 15% heading into December. And end the year up just because the, the craziness that goes on with, you know, the guys on the Reddit threads that pump the stock up and do all the crazy stock stuffs.

The apes. Yeah. So that'll be kind of just fun to watch throughout the year, although it's been pretty consistently. Just getting worse, right? Yeah, it was up 75% at the end of February and 23%, 35%, 11%, and then eight. So with the exception of a little bump in April, it's been pretty much a straight hill down for, for AMC.

All right, let's, let's switch gears and let's talk about the Team Audience stocks. So, as a quick review, we let the audience choose three stocks for the portfolio before we chose ours. So they got first dibs and they made very good selections.

The audience chose Brookfield Infrastructure Partners tickers symbol BIP, MercadoLibre, ticker symbol, MELI, and Taiwan Semiconductor, which is ticker symbol TSM.

So Jason, why don't you talk about Brookfield because as anyone who knows you will laugh about, you love this company.

[00:14:40] Jason Hall: Yeah. So first of all, the dividend yield from the beginning of the year was well above 4%. We haven't even factored that into the, this is just the stock price. So it's not even in the total returns.

[00:14:49] Jeff Santoro: No, no. These are total returns numbers, they are in the spreadsheet. We did update that. I redid it to be total returns. So not on the if you're, if anyone looks at the actual Google sheet, not on the portfolio page, but the results do factor in total return.

[00:15:03] Jason Hall: So that's good. That's, that's important cuz we have a couple stocks that dividends or four will be four or 5% of their returns by the end of the year.

So, again, Brookfield infrastructure is just, it's, it's a slow and steady play on the, the global growth in the middle class and the need for more things like water and power and transportation assets and telecommunications assets and all of that kind of stuff. These guys have been around for a very long time. It's a subsidiary of Brookfield Corporation, which is the majority owner of Brookfield Asset Management, which is the asset management company.

So they like, that's the top of the filter for all of these deals and opportunities to acquire these assets. And this like, I mean, if you look, I, I would say besides this and maybe, this and probably Simon Property Group, like if you look at it across the end of the year, these are gonna be the ones that have the least the lowest beta.

In other words, the least volatility stuff just doesn't change very much. Right? They buy these assets, they sign 20 year deals for water or power or data or whatever, and the, the prices are hedged to inflation or hedged to foreign currency exchanges, and then they pay investors a big dividend, right?

So, I mean, let's be blunt, 18% returns halfway through the year. I think we take that for just about any stock, you know?

[00:16:30] Jeff Santoro: Yeah. That's what kind of surprised me, well actually with, with almost all of the stocks that have done well in the portfolio is, I don't think anyone would've expected this much of a return from almost any of these, when the year started.

Cause we were still so depressed about how bad 2022 was. Right. But yeah, I mean they were, they're up 18% through the end of the quarter. It was up 9% just in the quarter, factoring in the dividend. So yeah, I would, I would take these returns too.

[00:16:56] Jason Hall: Here's, here's my concern with it though because it is, is it is up so much and again, you look at the dividend yield against its historical dividend yield and you put that against the interest rate environment that we're in, where you can get, you know, 5% in treasuries right now, you can get over 4% in cash in a, a savings account.

I do have some concern that if like we do see, it becomes more and more clear what's gonna happen with interest rates that they're gonna, I think they're gonna stay persistently high for probably longer than most people expect. That could start weighing on some of these stocks like Brookfields, that it's kind of a stalwart, it's a little bit blue chippy that people know it's safe to hold, and it just might get a little bit, just the fact that it's a little bit I would say maybe even overvalued right now, thinking, it's not one I would be buying right now. I think that could weigh on the returns.

We, I mean, I think, toss a coin. I think there's a better than average chance maybe the stock goes down for the rest of the year. Just because you, once it becomes more clear what's gonna happen with interest rates, people are gonna be less interested in owning, paying a premium for something like Brookfield in this interest rate environment.

So I think that that could, that could put a little pressure on it for the rest of the year.

[00:18:12] Jeff Santoro: Yeah, I think that's fair. And we'll probably, maybe, maybe some of the same will be true with some of the other stocks in the, in the portfolio too. Especially the ones that have done so well in the first half of the year. Like it's hard to imagine they're gonna keep that pace up through the second half of the year.

Let's turn to MercadoLibre. So that's one that I know you and I are both big fans of and both hold in our personal portfolios. You know, real quick review of their last quarter results.

Their revenue was up 35%. Pretty good improvement on their gross margins. And all of the little individual metrics you look for in MercadoLibre on the e-commerce side of the business and on the digital payment side of the business were up pretty substantially, right? So unique active users up 25%. Gross merchandise volume, which is just the sum of all the merchandise that transacts on the platform, that was up 23%. Items sold up 16%, items shipped up 19%. On the payment side, total payment volume was up 46%. Total payment transactions up 72%.

So, you could look at a lot of numbers and kind of get an affirmation of why this is such a, a great company. But the bottom line is they're the premier e-commerce and premier fintech company for most of Latin America.

And that's an emerging market still in a lot of places. So, the stock is up 40% year to date, although it was down 10% in the second quarter, which I think is interesting. I wanna get your thoughts on that because there's really nothing in the results that would tell you this is a 10% worse business than it was three months ago, but it had a rough q2.

So it'll be interesting to see where that one goes for the rest of the year.

[00:19:53] Jason Hall: Yeah. What I'm, what I'm really focusing on is just cash flows. This is, and I think there's a little bit of like some things going on with, with the numbers that cause the cash flows to look maybe higher than they really are. Like you look at it – generated $3.6 billion in operating cash flow. The thing is because MercadoLibre trades on a US exchange, trades on the NASDAQ, and does essentially all of its revenues in like four or five different currencies in Latin America. But it doesn't, it doesn't send that money back to the US, doesn't repatriate it back to the US.

It keeps it in those markets. It's, it's not exactly a perfect number, but just, it's such a, just, you have to be careful when you look at the numbers. If you're looking at Yahoo Finance or something like that, or those numbers rolled into US dollars and a, a lot of it just look at what they report in, in their like non adjusted numbers is, is more important for that business than the adjusted numbers.

[00:20:56] Jeff Santoro: Yeah, and that's why I like to also look at all those . The KPIs for MercadoLibre. The things that are specific to the business, like unique active users and things that are in numbers of items shipped and all that kind of stuff. Cause I think that can also give you an indication of sort of where things are trending.

So, all right, so let's move on to the last one in the audience portfolio. And that's Taiwan Semiconductor. Why don't you give us a recap on that one, Jason?

[00:21:19] Jason Hall: Yeah. So, I mean, let's, let's be honest. You look at May and June that's AI. That's, that's the, so it's caught up in the bubble, right? And, and it's not all bubble, let's be honest.

There's a lot of, there's, there's hype, but there's also reality because when Nvidia says We're gonna increase our chip sales by 41%, or whatever it is, that means that Taiwan Semi is gonna be making 41% more of the most advanced chips that it makes for Nvidia. That's good because this is a really profitable business for, for them.

But I do think it potentially sets us up for maybe a little bit, kind of weaker second half, because all the concerns about China are still there. And I've, I've said I think those concerns are more overstated than they've, than the reality of those in terms of like existential risk or when I say existential, I mean existential for investors, not for the business itself.

But, I do think the combination of maybe more war, worries about Taiwan's relationship with China and kind of some of the exhale of coming through this AI excitement could weigh on, on the performance of that stock for the second half of the year. But I think if you're looking, again, thinking about the toolbox, why would you own Taiwan semiconductor?

Because by, I don't know, 2030 I think is the number, the semiconductor it's gonna be a trillion dollar a year industry, right? And this is the one company that is at the very end of the value chain of producing the, like 90% of the most important chips in the world. The bleeding edge chips, and then that waterfall of this year's bleeding edge chips becomes next year's like secondary chips, right?

So they continue to, to, to, to squeeze the operating value out of those assets even as they're investing in next year's and the year after. And the year after, they continue to generate more and more profits on the long tail of that demand. And this is the one company that, the fabless companies, the Apples, the Nvidias, the AMDs, like they know you're, they're never gonna compete with them.

And that place they have in the market gives them so much scale, gives them so much network effect benefit, which you don't think about in a manufacturer in most cases. But if you're a fabless semiconductor company, you go to the largest, it drives down unit cost for everybody, right? So there's a benefit, there's a cost benefit on the backside.

And when we start to see peak periods of demand where supply starts to get tight because demand is rushed up, they have pricing power, we've seen them be able to raise prices in that environment. It's just such an unassailable business.

[00:24:15] Jeff Santoro: It's interesting to me that they didn't, their stock didn't go up even more than it did after Nvidia reported.

And I do wonder if, because they report before Nvidia does in each quarter, right? So I'm curious to see when Taiwan Semiconductor reports next, if they start to report any of the things that we saw in the Nvidia report. So the big news outta the Nvidia report was that they expect their Q2 revenue to jump to like $11 billion.

And it was, they were estimating like $7 billion or something crazy like that. Like it was a really substantial increase in guidance. So I'm curious if we see Taiwan Semi bump up their guidance in response to what they heard from Nvidia. And then if we, if, if the pop we saw in Nvidia is coming for Taiwan Semi just maybe a little bit later.

[00:25:01] Jason Hall: I don't think so. I think it's, it's already happened. You know, it's a-

Jeff Santoro: You think it's already in there?

Jason Hall: Yeah. It's a buy the rumor, sell the news market.

[00:25:07] Jeff Santoro: So, yeah. The other thing I, I think a lot about with Taiwan Semiconductor, and I, I wanna get your thoughts on this because I don't know it as well as I, as I know Nvidia, you know, my, my quick hot take on Nvidia is a great company.

I'm glad I own it. I'm not selling it, I'm not buying it right now because I'm fairly certain sometime in the next year or three, It'll be down a lot and I'll buy it then. And then sometime in the future it'll go up a lot when they are part of the next sort of big thing. Is Taiwan Semi as cyclical in that same way as Nvidia is with these kind of boom and busts?

With Nvidia was the crypto from a couple years ago and now it's AI. Does Taiwan Semi kind of follow that same boom and bust cycle?

[00:25:51] Jason Hall: Not so - so just thinking about the stock price. No you don't, you certainly don't see the stock have the sharp levels of volatility that you saw from, that you've seen from Nvidia over the past seven or eight years, really, I think you could go that far back.

Now the stock did come down a ton from the high, from the covid run up, and then like that kind of, that, that peak in probably October, 2021. Like it came down a ton from, from there.

But separating the stock price from the business itself, there's a lot of people, and we had Nick Rossolilo on, who has the Chip Stock Investing YouTube page.I suggest you go find his channel and subscribe to it. Look through our catalog of episodes and you can hear we spent 45 minutes or an hour talking with Nick about it. And he's, he kind of admitted that he was one of a handful of people that kind of got it in their head that the semiconductor industry was steadily becoming less and less cyclical.

And we found out that was very much not true. And, and the idea was gonna be that because it's becoming more diversified, right? It's not just semiconductors that go in computers and laptops and then smartphones, cuz now you're talking about cars and, and connected industrial equipment, all of those things.

I think the part of it that most people that kind of reached the idea that this, this opinion that it was gonna be less cyclical, got in their heads, Jeff, is that they forgot about the fact that sure, it's diversifying across industries.

But it's diversifying across industries in the same way that Silicon Valley Bank was diversified across customers. You had a lot of customers, but they were all the same customer that were all affected by like the, the, the, the same, like the fulcrum that leveraged them was the same. And it's the same way for, for the semiconductor industry, because they're all at the end of the chain. They're driven by the consumer economy, right?

Whether you're talking about cars or computers or smartphones or even industrial equipment, the other end of that industrial equipment that's going into a manufacturing facility, it's a manufacturing facility that's making something that supplies a consumer market, right? So when there's a pullback on the economy, it's not just in cars, right? Or people don't just stop buying smartphones or whatever. Like the upgrade cycles are, they tend to overlap. . And it's like fake diversification, I guess is the best way to say it,

[00:28:19] Jeff Santoro: Yeah. It's it's a fascinating industry. Like I, I, I know you already said it, but, but yeah, everyone should go back and listen to both our interview with Nick Rossolillo, but also check out his YouTube page.

Because he does a great job covering the industry.

[00:28:31] Jason Hall: Yeah, we'll put the, we'll put the link in the transcript too.

[00:28:34] Jeff Santoro: Yeah. Yeah. Alright, so to wrap up, Team Audience just so we could kind of put a bow on it, their portfolio ended the quarter well, for the quarter was up 3% as a, as a total. Team Audience was up 30% at the end of q1. And then just in q2, those three months, the return was 3%. So they're up 33% as a total portfolio for the year.

All right, let's move on to, Let's do the Team Smattering one next, Jason. So those are the three that you and I picked together, and I'll kick things off with Boston Omaha, which is-

[00:29:06] Jason Hall: We do not make a good team, apparently.

[00:29:08] Jeff Santoro: Well, I, I'm still dumbfounded at how consistently bad Boston Omaha has done this year. Like, so I'm looking at the month by month returns. Started the year about even right at the end of January. It was right around break even. And then every single month it's gotten worse, down 9%, down 11%, down 23, down 28%, down 29%.

So I, and I don't get it because I, I'm looking back at the Q1 results, which came out in May, their three big buckets of business, their billboards, their broadband, their insurance were all up substantially.

Total revenue was up 40%. Billboards were up 13%.Broadband was up 110%. Insurance premiums were up 36%. The tiny parts of the business, their insurance commissions and their investments in other part were, they're, they're a small percentage. So one was, one was down 32%, one was up 300%. But there's such a small amount, it doesn't have a huge needle moving effect.

And I just can't figure out, I'm not expecting this company to go to the moon, but I would think it'd be closer to break even for the year, because every time the quarter comes out, you look at the results and you're on track. That's, that's what I keep thinking.

They're doing what they said they're gonna do. All their cash generating businesses are doing what they're supposed to do. They're using that to invest in other areas. So yeah, I, I'm a little bit at a loss for why it's been so bad, but I'm so confident in the business over the long term.

But it certainly has been a rough, rough year for Boston Omaha.

[00:30:41] Jason Hall: Yeah. And it is a $600 million company, right? The beginning of the year it was not much over $800 million. And it, it doesn't surprise, it doesn't surprise me that it's down because you know, this is one that a little bit that got caught up in some of the covid kind of crazy runs, like most stocks did because most stocks went up.

But I think because it is so small, and they do absolutely nothing to promote the stock. They don't do an earnings call. They drop a, they drop a press release and they drop the Q each quarter when it comes out, they do their annual meeting, which they do a little dog and pony show for that. I think it's, people are interested in that one a little more for the annual meeting cuz they do it, don't they do it in, they did it in Omaha this year?

[00:31:34] Jeff Santoro: This year was in Omaha. Right after the Berkshire meeting. Like next, the Monday after the Berkshire meeting.

[00:31:37] Jason Hall: Yeah. And I think next year it'll be in Boston. But they don't. They, they just don't do anything. So there's, and because there's not a ton of Wall Street buy side that's covering them, there's just not a lot of, there's, there's nothing out there.

[00:31:52] Jeff Santoro: . So, yeah, I mean that's, that's what I keep thinking. It's just gotta be like the market hasn't noticed or caught up yet. Yeah. Or it's not sexy. There's nothing exciting about billboards. So I guess, yeah. I guess that's it.

[00:32:05] Jason Hall: So we'll just have to kind of wait and see, and this hasn't, this hasn't been, we, we talked about it a little bit in the episode last week, I believe it was that you look at the market this year in our B segment we did the, the, you know, is, are, are we in a bull market or not?

And I kind of stress that so much of the returns of the S&P (500), which is like our benchmark for the market, are driven by like 10 companies, right? Half a dozen, 10 companies have done most of the heavy lifting. Again, Boston Omaha is a microcap stock. Investors are looking at safe stocks, they're looking at blue chips, they're investing in these big companies that they feel are stable and safe. And this is on the other end of the continuum.

So I guess for me, the way I think about it, Jeff, is it's like if you're picking stocks, this one should be more interesting because it's outside of the, the animal spirits right now.

[00:32:59] Jeff Santoro: Yeah, for sure. I think if, if Boston Omaha does turn out to be a massive winner over the long term, this is probably one of those periods of time, investors will look back at and say, oh, I really wish I had bought more Boston Omaha back in 2023.

Alright, moving on to Datadog. So that was a great q2 up 35% up 34% first half of the year. Again, everything looked pretty good here. Revenue was up 33%. They're making slow movements towards profitability. So they're one of those companies that is still unprofitable but is still in like hyper-growth mode, you know, cloud, SaaS, all that kind of stuff.

They still have a net dollar based retention rate over 130%. That's interesting to me because a lot of these other companies that have that statistic or that metric that they report have seen that come down over time. And that's like, that's

[00:33:52] Jason Hall: like comps for software as a service companies is the best way to think about it.

[00:33:56] Jeff Santoro: Right. Well, what's interesting, but like if you look at a lot of the other ones, , they were in the 120, 130, 140 range maybe 5, 6, 7 quarters ago, and then it drops to 120, then it drops to 115, then it drops to 105. They don't give a specific number. They always say above 130%. Yeah. But it's been that way consistently for a couple years now.

So that's interesting to me that they have not seen that number fall off. Whereas a lot of other SaaS companies have they're growing their total customers 30% a year or year over year. They're growing their larger customers around the same. They also report, similar to CrowdStrike does the number of customers that have more than two, or more than four or more than six of their products, those were all up double digits.

And, and up more than they were a year ago. In terms of percentage of customers that have two or more, or four or more, or six or more. So not surprised it's done well. It's, , all the results each quarter look really good. I'm still keeping an eye on if they can keep making that progress towards profitability as they scale.

But this has been a, a good winner for us in our combined portfolio.

[00:34:57] Jason Hall: Yeah. Simon Property Group has not been.

Jeff Santoro: No, it has not. It has not been, tell us why.

Jason Hall: So, I mean, so it's, it's retail, it's real estate, it's commercial real estate. Like all of, like the, the jargony things is like, oh yeah, I'm gonna stay away from that.

It's, it's right in that bucket. So Simon Property is the REIT that owns the Simon Malls. So first of all, they're big, nice malls. These are class A malls. They own the best malls in North America, like the ones that still have really good traffic. And it's ones that retailers and, and brands wanna be in. So that's good.

And they also, a lot of people, like, they just kind of forget or they don't know that they also have the largest factory outlets property base, and those are super popular. People love to go to 'em cause people want a discount.

If you're Nike or Under Armour or any of these big apparel brands, fashion, you want to be in these, in these malls because it's part of your omnichannel now, right? Where you just, you're not just selling to Macy's and they handle the retail. You want your Nike store, right? And you put 'em in these outlets, that's where you put 'em. And they're, they're really easy to re tenant, right? You don't have to worry about these giant anchor tenants, and if they leave, you've got this huge empty spot that no longer drives traffic.

It's a different business model and it fits in really well with, with what the, the retailers and with what the brands want. It's an important part of their business.

But I think what people are worried about that's worth keeping an eye on is because they do have a lot of debt. Because all these real estate based businesses, debt's a substantial part of their capital stack.

It's how they acquire property and as they have to roll debt as it matures and they're refinancing, interest rates are gonna go up, right? So that's going to affect them. But this is, it's not like they own a bunch of offices, right? So I think that's where it's important to remember is that yeah, their cost of capital is gonna go up. And that's gonna weigh a little bit on their business, depending on how much of that they can recoup with when they, when they release when they go back to their tenants.

But. It's really, it's a really good quality business. And if you're looking for yield and you're looking for a yield that's pretty dependable, like they cut their yield, their dividend a ton during the pandemic when everything retail had to close down, but they've steadily been growing it back up.

And the yield you can get on the dividend price right now, I think it's safe and it's super high. Are they gonna be able to grow a ton? No. I think the business could, I don't think it's gonna struggle, but like their growth rate may be affected by, again, those rising interest rates.

But that's a really good business. And yeah, I mean, I think it's, I think it's gonna do really well in the second half of the year.

[00:37:39] Jeff Santoro: So are there specific things that you think that you'll keep an eye on to, to tell you that they're successfully navigating, higher cost of capital as, as they have to roll their debt?

Is it, is it simply revenue and profits? Is it occupancy in their malls? Like what do you look at to make sure that they're, they're staying ahead of those potential headwinds?

[00:37:59] Jason Hall: So these, the, these retail REITs like this, they report sales per square foot is a useful metric. So you wanna watch that number to see if it's gonna continue to grow because that tells you how valuable these properties are to their tenants, right?

So it's a useful metric to kind of figure out if that number is still consistently going up a little bit year over year. That's a positive. Debt to EBITDA is useful. Also, debt to assets, right? So these are leverage ratios against like their ebitda, which is kind of a good proxy for cashflow. And then debt to assets is literally the, the, the assets that they, they own.

So they can tell you like, how are they doing in terms of leverage. They can be useful for that. And then, you know, FFO per share, I continue to look at that, which is funds from operation, which is, basically, it's, it's REIT earnings per share, right? The number is FFO. So those are the ones that I really focus on the most.

[00:38:49] Jeff Santoro: All right, so to wrap up the team Smattering portfolio, so through the end of June, right? So all six months of the year so far it is up 1% as a total portfolio. Nice little recovery here in Q2, because at the end of Q1 it was down 5% and in Q2 it was up seven. So we are looking up, I guess, a little bit with those three picks really much really carried by Datadog and a little bit of improvement with Simon Property Group kind of pulling the weight of Boston, Omaha, which is heading in the opposite direction.

Alright, Jason, let's go to your not winning portfolio and talk about CrowdStrike, which I think we both follow that one pretty closely, but why don't you kick it off and I'll, I'll see if there's anything worth adding.

[00:39:33] Jason Hall: Yeah, I, I mean, I think I would point out that except for your two un-portfolio picks, It's it's, it's one of the best performing stocks in the portfolio. Now you do have Amazon, that's, that's outperformed it.

But I think really the story for CrowdStrike is just a little bit of the market coming back to it. It, was it overvalued in October, 2021? I'm sure it was. The price to sales ratio was trading at, and all, all of the, the metrics, it was very, very highly valued.

But we've seen, like even as companies have been cutting back on, we've seen tech company layoffs and like all of that stuff that's happened. Cost cutting has been more of a thing. Companies are still spending tons of money on cybersecurity, and this is one of the half dozen most important cybersecurity companies in the US right now.

They continue to deliver well. All the metrics you were talking about, those KPIs, growing, their comps number, growing revenue, the number of modules customers subscribe to, all of those things are still moving up into the right. And I think that's, that's really positive. And the market's kind of come back to it, right?

Stock's still way down from, from its peak, but just it's really important. And oh, by the way, they also just absolutely just print cash. That helps.

[00:40:50] Jeff Santoro: It is still way down, but I have to believe that this is one of those companies that's probably never gonna be cheap. It'll probably always trade for a premium.

Because, just looking at their guidance for the current quarter, they're guiding for 35% revenue growth 38% non GAAP income from operations, 55% non GAAP net income. So those are non GAAP metrics, obviously, but , everything, they beat all their guidance heading into this quarter.

They had a great quarter. They have really good guidance for next quarter. They have, they raised all their guidance for q2 I mean, there's really nothing that came outta the Q1 report that would make you kind of scratch your head. Yeah. So, I'm still super bullish on this company and I think that was a good pick for your portfolio.

All right. Let's go to Lemonade. Your, your Moonshot pick.

[00:41:34] Jason Hall: Yeah. So, story's the same as it's ever been, right? This is, it's still all about underwriting insurance better, right? They do all of the customer relationship stuff better than any insurance company. They're really good about issuing claims, fast getting you a price for a policy, or telling you that they're not gonna offer you one.

They're still doing all of those things really well. They're starting to get a little bit better with their gross loss ratio, right? Which is basically what's left over after they cover their costs outta premiums. But they still have a long way to go. They still have a long way to go, right?

[00:42:07] Jeff Santoro: Yeah. They're trending in the right direction. Like, so the last three quarters for gross loss was 94%. 89%. 87%. So good. Heading in the right direction. But those are just way too high.

[00:42:19] Jason Hall: Yeah. Yeah. I mean, we gotta be like close to 70%. It's like, that's, that's really where you wanna be. And they're still a tiny insurance company too.

Like in, in terms of policies, I don't even think they have, what, $700 million and five, between five and $700 million in policies in force. It is a, it is a small number. I mean, I think that is the point. It's, so there is room to continue to grow and like one of the metrics that I like the most is you're seeing the, the premium per customer amount is growing at a very rapid rate, which means that people are taking on multiple lines, which is really good because that's when an insurance company started to get sticky, is when you have your renters and then pet and you're like, let me get my auto insurance now cause I can get auto insurance through them and okay, I'm buying a home. All right. I'm gonna go from renters to home. You, you start adding those things and you become a policyholder for life.

And that's, that's where, ideally what they gotta be, but they actually gotta get a premium that covers enough costs to leave that 30% leftover.

[00:43:20] Jeff Santoro: Yeah. Their premium per customer has, has growth quarter over quarter, year over year. I mean, has never been below 18%. I mean, in the last year or so. So it's, they're, if they can keep doing that and keep bringing the losses down, over time I think this plays out. But it's still early innings and it is still tiny and it still has a lot of work to do, for sure.

[00:43:41] Jason Hall: Then the last one I have no justification for why Trex is up 55%.

[00:43:46] Jeff Santoro: You know, it's funny, I was gonna ask you about that because I, I remember I was thinking about buying it for my own portfolio probably around the beginning of the year, and you had some, you had some concerns that, that gave me some pause. So, tell us how you think it's been going.

[00:43:58] Jason Hall: Yeah, concern, the concerns are the same, right?

And I, and I wanna like, make sure to contextualize it, like, I had concerns about the business. I think I told you at the time, you buy this stock and you hold it for three or five years and I think you're gonna do really well, but the next year or so could be really challenging.

We've already seen, so they make decking, they make the, the decking out of 95% waste wood and post-consumer, post-industrial polyethylene plastic, right? It's that shrink wrap, pallet wrap film, garbage, trash bags, grocery bags, like they use that to make the decking that can last 25 plus years.

But we saw last year all of this, their distributors pulled way back on orders and really went into inventory depletion mode. And generally you see a lot more inventory build in the late fall and winter getting ready for the spring decking season when it kicks off. And so the stock absolutely just got pummeled when that happened.

And so far this year, business has basically been, as management guided, like the results have been basically as they guided, it's down from where it was a year ago. Sequentially we saw a step up when they reported most recently. And I, the only thing I can figure is the, the market is rewarding management for doing what they said. And, and they're, they've always been really good at that though, right? So it doesn't surprise me that the stock has come up.

I do still think we need to find out because you think about as much as rates have gone up on mortgages, HELOCs which is, it's you, you wanna build a new deck, you might spend $10 grand or more, right quick. A lot of people don't just, they can't just write a check for that, right? They're gonna, they're going to get some, use some kind of debt to do it. And I think we still have to figure out how much is that cost going to be a headwind for people doing things like new decks and upgraded decks. So that's a headwind.

[00:45:49] Jeff Santoro: I see. Yeah. Yeah. It's easy to say, oh, interest rates are higher, so people don't wanna move as much, so they're probably gonna put money into their house, but if they're using debt to do the work on their house, they're in the same boat. I mean, a smaller scale. But yeah, that's a really good, that's a good point.

So, all right. So I will give you credit, Jason, your portfolio is on a nice little run here. At the end of April, you were only up 7%, which jumped to 34, which jumped to 39 in the next two months. So year to date, you have the second, the second strongest portfolio after the un-portfolio, which is my fault.

So, even though I did win q2, which I just wanna come back to that for a minute. I, I did win right? The second quarter. You'll be giving money to my charity. I have a tenuous lead because you are, you are, you are doing well, right?

[00:46:39] Jason Hall: That's, that's, that's the thing. That's the thing. Reaching into the, reaching into the toolbox. Jeff, I wanna point out, doesn't matter how your stocks did last quarter, it's how they do over the long term. I'm winning that.

[00:46:51] Jeff Santoro: Yes, that is, that is true. All right. Let's wrap things up here with the, the last group of stocks to talk about, which is the stocks that had the strongest second quarter, mine.

So I will start with Amazon which was my, my first pick. That was up 26% just in the quarter two, and it was, it's up 55% through the first six months. My basic kind of reason for picking Amazon was I felt like they were gonna start to turn around all of the operating losses in the e-commerce side of the business as they were still sort of right sizing all of the growth from the pandemic.

And that kind of is what has been happening slowly. So revenue was up 9%. They're slowly continuing to improve their profitability from bottoming out at a loss of 38 cents per share in the year ago quarter. So March of 2022. And the big thing I noticed in the last quarter was the operating income for the North American segment, which is basically e-commerce in North America.

So amazon.com, all the stuff we buy was up 157%. So, All of the things they're trying to do to get the efficiency things back in place on the east e-commerce side of the business, they've, you are starting to see the results. I think they still have a lot of work to do. It's a good thing that that did happen because AWS struggled a little bit in the last quarter compared to how it had been performing over the previous several quarters.

So it seems like they're on the right path. They're on track to getting back to where they were pre pandemic. So that was, that's, that's kind of how Amazon's been doing. Yeah, that's really been more, even better than I thought it would be over the first half of this year.

All right, so my second one in this is still, this was sort of my moonshot, Outset Medical, which makes the in-home dialysis machine for those who have advanced stage kidney failure. This is still a really small early stage company as well. So if you look at the results, you're not gonna be blown away.

Revenue was up 10%. They're still unprofitable, they're still burning a ton of cash. They're not making a lot of progress in those areas yet. But they've only been a public company for like a couple years now. One thing that I thought really was impressive in their last quarter, their gross margin jumped up 470 basis points to 19.2%.

They expect that to be in the mid twenties by the end of the year and even higher beyond that. And even though the stock is down 15% year to date, they've talked in their earnings calls about the second half of the year being the strongest part of the year for them. So I'm still hopeful in our little one year contest here and even moving forward that the best is yet to come for outset.

So we'll see how that plays out. But it's, it's one of those, going back to our earlier episode about the difference between a stock you love and a stock that does well as an investment. I, I love this stock in terms of what it's doing out in the world, so I just hope that the business can sort of live up to what its potential is in terms of a product that helps people.

[00:49:48] Jason Hall: I think what we're seeing play out with Outset Medical is the, just kind of the realities when it comes to something like dialysis and changing behavior and changing systems and processes for businesses. So you think about hospitals and think about these dialysis centers and you think about people and going from having a trusted medical professional do this thing even though you can't do it at home and it takes forever to like the idea of doing it at home, that can be kind of scary.

And then there's the incentives, right? And, and, and I think one of the things they've tried to really push on, like the investing public, is how, like the economics are better for the industry, right? And the people that are paying the costs. And that should create incentive to, to drive this.

But I'm not sure how completely accurate that is in terms of, like the economics of every part in the value chain. And maybe they're dealing with a little bit of resistance on some of those things. And it, it's either it's, it's gonna hit some like critical mass that's smaller than we thought, or it's gonna take a few years to turn into a massive overnight success, right?

Because these things that always take forever and then outta nowhere, they're huge. And I think that's probably the latter is probably the case for Outset.

[00:51:10] Jeff Santoro: It's hard though, because to your point, there are, there's huge companies based on kidney dialysis that are publicly traded. Like DaVita is one of them.

And you can be sure that they are doing everything they can to influence the decision makers in the healthcare space to not have people use the Tableau home dialysis system. Because they want people coming to, DaVita to get kidney treatment. Yeah, it, this was my sort of like, love it, love the stock, want it, wanna see it do well, hoping it has a big year.

So far it hasn't worked out for me, but we'll see how the second half goes.

All right. We're running kind of long here, so let's get to my last one, Jason. The Trade Desk bottom line is crushing it really, revenue was up 21%, earnings per share up 166%. They returned to profitability after having three quarters of, of a net loss about a year ago. Their free cash flow is increasing steadily. Third consecutive quarter that's gone up, operating expenses as a percent of revenue coming down slowly.

So, bottom line is more and more ads are being served digitally. More and more ads are being served on connected and streaming devices. More and more ads are being served specifically to the person watching, right? So like, I'm getting a different ad than you're getting, and they're in the middle of all of that. That's like the one sentence thesis. If you're, we're not gonna see less digital advertising, we're not gonna see less programmatic advertising. And they're perfectly positioned to benefit from all those, all those tailwinds.

[00:52:34] Jason Hall: They're better than being in the middle of it because a lot of the middlemen are, are the ones that are having to fight on price. To scrap. And they're, they're closer to the marketers, right?

They're partners with the marketers and they're building the tools to help the marketers get better impact from their advertising spend and providing them with the measureables to show it. It's so, so powerful. They're the business that Jeff Green has built, and it was Dave, Dave Pickles, I believe his co-founder partner there.

It's just, they've built the perfect technology and the perfect part of the value chain to continue to take the lion's share of the profits from this, this, this move to digital.

[00:53:22] Jeff Santoro: Yeah. The easy way to think about it is like if you were, if you're Nike, just to pick a random company that does advertising, it used to be you would just spray and pray with your advertising and, everyone who watches NBC on Thursday night is gonna get this ad for Nike.

Whereas now you can say, every 18 to 24 year old male who we know has a history of buying sports equipment or sports apparel, is gonna get this Nike ad on their streaming device. And we'll be able to know on the backend what they did with that, what they did with their shopping after seeing that ad.

That's a completely different ballgame in terms of what data can be given to the advertiser. Yeah. The brand And Trade Desk is gonna make a ton of money facilitating that for years to come.

[00:54:10] Jason Hall: I do wanna confirm it is Dave Pickles is Chief Techology Officer there, he's been there since the founding such, what a great team.

[00:54:15] Jeff Santoro: Yeah. All right. So my portfolio up 37% for the year Q2 result was a 24% improvement after 10% in the first three months. So that, that gives me the q2 victory. So Jason will be donating money to the Children's Hospital of Philadelphia, which is my chosen charity.

Jason Hall: Happily so. Happily So.

 Jeff Santoro: And if anyone else listening wants to play along with us, that would be a charity that I would be super appreciative if you gave some money to, if you are able to.

But you can also give money to any charity, cuz the point is to raise money for charity and to have a little fun here. And for me, the gloat as I was the winner of this quarter. I'm not sure if I mentioned that yet. I wanna make sure. Sure I got that in.

[00:55:03] Jason Hall: Thanks for, thanks for making sure for the 75th time. Jeff, how much am I, how much am I donating?

[00:55:10] Jeff Santoro: I believe we said a hundred dollars each quarter that you lose, so-

[00:55:14] Jason Hall: I'm on it doing it now. Doing it now.

[00:55:17] Jeff Santoro: He, you might think he's joking that he's doing it like right now while we're recording, but this is exactly how Jason operates.

[00:55:28] Jason Hall: Yeah, it's true.Okay. That's, I think that's it for the for the portfolio onto the second half of the year, right Jeff?

[00:55:33] Jeff Santoro: Yeah, we'll do this again sometime shortly after the end of q3, and then again shortly after the end of the year. And we'll see how our stocks do for the rest of 2023.

[00:55:45] Jason Hall: All right. We're gonna take a quick break here and we're gonna come back.We've got just a really short little thing, we're gonna just have a quick conversation on the, in the second part of the show here.

All right, everybody, welcome back.

Jeff and I are here with just a quick little conversation. We want to have like Jeff said at the, at the, at the opening, we're actually recording this on July 4th in the morning before we go out and do all things American. I'll let you interpret that as you will, dear viewer.

And I've been, I've been thinking about something, I've been thinking a good bit about this past weekend. So I come from a bit of a military family and I've always been drawn to people that have served our country in different capacities. And it just, to me, it, it makes me think about, and it sounds kind of cheesy, like financial independence and Independence Day, but what I wanted to talk Jeff about just briefly is, one of the things that we're trying to do on The Smattering is to help everybody figure out their in financial independence, right? And their path to financial freedom. And I wanted to talk to Jeff about it.

Just what does that, I don't, Jeff and I have actually never had this conversation. What exactly does that mean to you? What does financial freedom mean to you? What does financial independence mean to you?

[00:56:56] Jeff Santoro: I never really gave it much thought, but when I, when I do think about it, it reminds me of what's changed in the way I think about investing in the time that I've gotten obsessed with it in the last couple years. And I used to think of investing as being a thing you do for when you retire, so you have money to live.

And that's true. When I stop my day job and stop working, I need to have money to, A: survive, and B: hopefully do fun things for as long as I'm given life on this earth. But when I think about the word freedom tied to it, right, financial freedom, financial independence, it makes me think about wanting to speed up that timeline of having the financial means to not retire, but to do something else that still gives me a lot of joy.

So I happen to be lucky in the sense that I have a day job that I actually do enjoy, that gives me a lot of, it makes me feel good, right? I work in the world of education. So, you know, maybe it's a second order effect, but hopefully the decisions I make make school better for kids. So I, I kind of like that, and it gives me fulfillment, but I'm lucky. A lot of people go to their day job and it's just the thing that pays them and they can't wait to finish doing it.

So, to me, financial freedom, financial independence means. Can you save? Can you invest? Can you get to a point where maybe you, before you turn 65 or 70, maybe when you're closer to 60, or maybe when you're closer to 50, or maybe when you're closer to 40, you can stop doing the thing you don't like and start finding things that give you joy to do.

Not play golf every day and lay on the beach, but go get a part-time job or a job in an industry that doesn't pay well, but you have passion for the things that give you purpose in life. Maybe it's just spending time with your family, watching your grandkids while you're, while your kids are at work. Those types of things.

That really changed the way I think about why we do all this. It's not just to have a pile of money. It's not just to go live my later years in happiness. It's to be able to, for everyone, not just me, maybe step away from the things that we feel like we have to do and step into the things we want to do early enough in life to be able to give those our full, the full vigor of being a little bit younger and not just something we do in our eighties.

So that's kind of how I think about it. What do you think of when you hear financial freedom? Financial independence?

[00:59:29] Jason Hall: So there's, there's a few conversations I've had with people over the past year or so that have really kind of helped crystallize the way I think about it.

One is with my neighbor, Steve, that lives behind me. He and his wife are empty nesters. He's early sixties. Their kids, one's graduated from college, one's in college. So basically in a position he could retire whenever he wants to, but he told me he has to figure out what he's gonna retire to before he is ready to do it.

Because everybody knows what they're gonna retire from. And like if you look at all of the data and so many stories, I think everybody probably knows somebody that retired, they couldn't wait to retire. And then they spent all day on the couch watching tv. Or they thought they were gonna play golf every day and that got really boring after six months.

And like finding some sort of purpose, I think is so, so important. And then we had Lou Whiteman on the show a month or two back, and he talked about one of the things, the powers of like getting to a point where you have some level of financial independence is being able to say no to work you don't wanna do.

Taking the Munger inversion principle, and the way I've started to think about it more is exactly what you're talking about is like, having more opportunities to say yes to the sort of work that I want to do. Because of that purpose driven life, right? That you talk about from your work. Your work gives you purpose, right? And that's hugely valuable. And I'm a person that like, that's, that's more important to me, I think, than a lot of other people. Making sure that I have work that gives me purpose.

And another thing that is I, that I've thought about when it comes to financial independence, like as that wealth grows, I've come more and more to believe that there is an intense responsibility that comes along with that right?

To being, not just not miserly with those funds, but also to be thoughtful about how you apply them to your life. And if you do end up with a windfall of wealth because of the combination of good fortune, good earnings and skill, being mindful about how that can affect your, your kids, right? And making sure that you provide them to, to paraphrase Buffett, not enough to do nothing but enough to do anything.

And, and thinking about how I can leverage those resources to make this world a better place than I left it. I'm an- I love to scuba dive. I've backpacked and hiked basically my entire life. So the whole, you see the cheesy little, take only pictures, leave only footprints thing when you go into nature. Like it's, it's really important to me the older I get, to leave things better than when I showed up and having financial resources to do that. I think I just have a responsibility.

So that's what I think when we, when I start thinking about financial independence and financial freedom, because with freedom, there comes a tremendous amount of responsibility to maintain it and strengthen it.

[01:02:19] Jeff Santoro: Yeah, no, I agree with that. I like that. I think we both agree with each other's kind of ways of thinking about it.

I do agree with you on the responsibility side of things. I think one last thing I'll say, just to sort of wrap it up is what I thought about as I was listening to you speak is having some modicum of financial freedom and financial independence, I think for both of us at this point in our lives has allowed us to do this podcast.

Jason Hall: Yeah. Oh, absolutely.

Jeff Santoro: You know, being able to say no to some other things and have the time to carve out on nights and weekends for me and, and during the day for you to be able to make something that we love and are proud of. And I think we both hope brings people joy and helps other people is really only possible because we are in a position through, I like how you phrased it through good luck or good fortune, good earnings and, and some skill to be able to be here and make this.

So I, I just wanna close out by saying you don't have to wait until you retire to start maybe seeing some of your own financial freedom and financial independence start to kind of work its way into your life. It can be incremental.

[01:03:39] Jason Hall: Yep. Absolutely. Jeff, we did it again, buddy. This was awesome. We did it.

Okay, friends, as always, Jeff and I are so happy to share our opinions on these hard investing questions. Maybe more opinion than you might want to hear, but you hear it anyway. But it's up to each and every one of you to answer your questions when it comes to these hard investing topics.

You can do it. I absolutely believe in you, and we will see you next time. See you Jeff.

[01:04:06] Jeff Santoro: See you next time.