Gordon Reid

Certainly in April it was, for good reason. Exuberance is a stage of market cycles that we've all experienced. With AI, we saw exuberance. Companies reported and didn't blow numbers out of the water, or project higher and higher results. So the market said hang on a minute, maybe we priced things in a little too high and too soon.

It doesn't mean that these aren't great companies with great prospects. It's all about pricing. The market spends very little time in fair value. Mostly the pendulum swings from overbought to oversold, and that's what makes a market.

Yes. If you look at the Magnificent 7, which control 30% of the market value of the S&P 500, he's about half weight. So he has about a 15% exposure. Long-term wonderful companies, including GOOG, AAPL and AMZN. But there comes a point where you let risk become too big a part of your investment thesis. Over-concentration is a big definition of risk.

He wants to participate in these major themes, but he's pulled back a bit. Loves these quality companies from the bottom-up. Thinks he can supplement the missing 15% with other companies that are, perhaps, a little bit neglected, better value, more stable. Those can give his clients just as good a return, but with less risk.

None of these chip companies should be considered a long-term hold. Very cyclical sector. Be careful about entry point, with a planned exit. Expensive at 37x. Core to AI revolution. Great space, but be selective. He owns QCOM.

None of the chip companies should be considered a long-term hold. Very cyclical sector. Great space, but be selective. This name has diversification to offset some of that risk, with good exposure to AI.

You should absolutely get advice from both the investment and accounting sides. Highly complex, specific to each individual. Corporations don't get the inclusion rate advantage, so if there's something in your portfolio you're not sure about and it's on the chopping block, sell before June 25.

Other than that, you might want to get ahead of the game by selling off a little bit. But remember, you're pre-paying the government. And with those dollars, over perhaps 4-5 years, you could recoup the loss that you'd have going from a 55% inclusion rate to 66%.

Be aware of it and plan, but he's hesitant to say you should be on the trigger to pre-pay on capital gains. Plus, a different government could potentially move the rate right back to where it was. Important to at least have the discussion.

For a general understanding of capital gains, see the blog from 2022 at goodreid.com.

Owned HD 25 years ago. Took profits 10-12 years ago, and switched to LOW. Based on LOW successfully adopting the HD playbook to grow gross margins, and on valuation (LOW was 4 multiple points lower than HD). HD is now trading at a low 20s multiple, and LOW is about 17x. 

Out of both right now. He became skittish on consumer. It's not they've been poor performers, but the new choices have rewarded clients to a better extent.

Great companies, great franchises. Always looking for an entry point, it's not yet. HD reported this morning, shy on revenue, mentioned consumer pulling back. He wouldn't be surprised to be in one or the other in the not-too-distant future.

Owned HD 25 years ago. Took profits 10-12 years ago, and switched to LOW. Based on LOW successfully adopting the HD playbook to grow gross margins, and on valuation (LOW was 4 multiple points lower than HD). HD is now trading at a low 20s multiple, and LOW is about 17x. 

Out of both right now. He became skittish on consumer. It's not they've been poor performers, but the new choices have rewarded clients to a better extent.

Great companies, great franchises. Always looking for an entry point, it's not yet. HD reported this morning, shy on revenue, mentioned consumer pulling back. He wouldn't be surprised to be in one or the other in the not-too-distant future.

Great company, but expensive. Lots of promise, but high valuation anticipates great success. He thinks they'll be successful, but you have to be sure you're not paying for that in the stock already. He owns AMGN.

Owns this instead of NVO. A much less troublesome valuation. Also has a weight-loss drug in trial. You want to be in before the good news, not after.

Reported dreadful results the other week, he sold. Painful, but enough was enough. Promise of vertical integration making it a juggernaut just didn't happen. 

Have to get used to being wrong as an investor some of the time. It's what you do when you're wrong that's a big factor in your results.

Hard to argue with its results. He owns a lot of the companies that Berkshire does, such as AAPL, CVX, BAC. Quality companies trading at reasonable prices, that pass the test of profitability and growth, with excitement around the business.

He doesn't want to pay the premium to have BRK manage companies for him. May make sense for an individual investor.

Copper trade has legs. Wind at its back from cyclical factors and from a secular standpoint. All the fiscal stimulus in the US is about infrastructure, and a lot of copper is needed. EVs, too, use more copper. Tons of power generation needed for AI, and copper is a key component.

Well positioned, levered to copper prices. For every 10 cent increase in price of copper, it makes $400M in cashflow. 

At a 1-year high, he's pleased with performance. Hold on and wait. CEO has been able to pivot toward EVs and then back to ICE as consumers pushed back. Astute to make money in either environment. Inexpensive multiple.

Overbuilt during pandemic, had to absorb fixed costs, has now grown into the expansion. Making really nice money on e-commerce. AWS has now returned to growth. Growing nicely into its valuation.

Has a big piece of bringing the internet to rural America. Backlog represents about 18 months of revenue. Inexpensive at 15x.