[Music]

Now let's look at the other side of the

coin. So like I said in this market

right now there are certain parts of the

market that that are very expensive in a

bubble like these. But there are also

certain parts of the market that are

very very cheap because they've been

they've been ignored by Mr. Market.

they've been neglected. It's kind of

like everyone is chasing the AI, chasing

the uranium, chasing the quantum

computing that they have ignored these

sectors. So when money flows into the

hot sectors, they flow out of the

non-hot sectors and these non-hot

sectors the the market price has been

dropping dropping dropping even for

companies that are making good money and

now they are very undervalued and as a

result for us as investors they present

great opportunities. Pick them up at a

huge discount. It's kind of like this

guy has got a beautiful wife, but he's

neglect neglected his wife because he's

chasing the new hot chick, right? So, as

he's chasing the new hot chick, he's not

watching his wife. His wife is

neglected. So, we go in and we grab his

wife from him. Yes. So, what are these

sectors? What are these industries that

have been neglected by Mr. Market? We

can go in and we can grab them. Number

one, healthcare. I've said this many,

many times that healthcare is

undervalued and they are still

undervalued. Although they've rebounded

quite a bit, but they've got a long way

to go. Number two, software stocks. So,

as you guys know, there's a lot of fear

that oh, AI will make software companies

obsolete. So, many of the software

stocks that are very high quality,

they've been dropping like flies and

they're really undervalued. And let's

take a look at a few examples in a

while. And number three would be certain

consumer discretionary stocks, certain

industrial stocks, certain consumer

defensive stocks, and certain financial

stocks have all been neglected. Let's

take a look at some examples. So,

healthcare uh what are some examples?

Now, again, these some of these stocks

are not new. I've mentioned them before

and um uh they have been up quite a bit

since I mentioned them, but I think

they're still undervalued and they're

still presenting a lot of uh great value

right now. So first would be of course

United Health which I've been banging

the table is so plenty cheap right I've

been buying and of course now it's way

above my average price and as we know uh

even Warren Buffett couldn't resist it

he say it's too cheap I can't take it

anymore I got to buy it he bought it

right so again the intrinsic value of

United Health is $44 and at the current

price of $358

uh even though it has let's check it out

it it has come out quite a bit right you

can see there was a plunge over there.

It made a double bottom and now it's

kind of like on its way to, you know,

rebound back, right? But it's still

undervalued. Intrinsic value for four,

right? Now, 358. By the way, this

intrinsic value is very conservative.

It's based on very low growth

projections of only 2% in the next 3 to

5 years and less than 1% in the long

term. By the way, these growth

projections are provided by analysts

compiled by Fax, which I think are too

conservative. So if United Health goes

back to its previous growth of 12 to

15%,

okay, then the valuation could be

increased to $600, you know. Uh so what

you're seeing here is the very very

conservative valuation. It could be

worth a lot more than that. Uh next

would be Eleven's Health. So Eleven's

health, same thing. You can see that it

has rebounded

uh from the bottom as well. That's the

bottom. You can see it's beginning to

rebound and the intrinsic value is $512

right now $3.49. So this remains very

undervalued as well. So there are a lot

of cheap uh high quality companies in

the market. Next we have got um software

companies. So again there's this fear

that AI will destroy all the software

companies and as always the market tends

to overreact. Will all AI companies be

destroyed? Will they all be disrupted?

Some of them yes. Some of them, no. Some

of them, honestly, I'm not sure. So, out

of all of them, I would say the ones

that I am the I've have got the most

confident in that they will in fact

benefit from AI and not be disrupted

from it would be examples be Salesforce.

And I think Salesforce doesn't get

enough credit. They have been uh

delivering very good profits, cash flow,

but the stock price is still very cheap

again because of this fear that oh,

they'll get killed by AI, which I I I

don't think so. Again, I could be wrong.

You know, I'm not, you know, I'm not

infalluable, right? But in terms of

probability, I think they've got a good

chance of uh riding and doing well in

the AI wave. So, Salesforce, you can see

that it has been, you know, uh wave up,

wave down, wave up, wave up, sorry, wave

up, wave down. It's kind of been

consolidating here, and I think

eventually it's going to rebound back

up. Uh so, intrinsic value is 320. You

can see the current share price 245. So

again, it looks quite undervalued and

the fundamentals are pretty strong,

right? Very strong predictability,

relatively good profitability, good

growth, strong mode, high financial

strength. Um,

and if you take a look at the financials

over here,

and you know, there's really no

complaint about the financials, right?

You can see revenue has been growing.

You've got net profit uh in green that's

been growing. You've got free cash flow

that has been growing very well. So

again, it's supported by earnings. So

here's a good example. Another great

software company in my opinion is a

Canadian software company listed in

Toronto under CSU but they've got a

USOTC thicker which is CNSWF

which is constellation software.

So this is another company which is very

very high quality. You can look at their

financials. Financials have been very

very strong as well. Uh look at their

free cash flow growth. Look at their

revenue growth and their intrinsic value

is 3341.

Again remember that how is intrinsic

value calculated? Intrinsic value is

calculated in many ways but in this case

it is the using a discounted free cash

flow valuation model. So in other words

you you add up all the projected free

cash flow how much cash the business

will generate in the next 20 years and

you discount it to present value. So

that tells you what the company's worth

and right now the share price at 2788.

Um now I've been actually watching this

stock for quite a while but I've never

bought it because it was too expensive.

But recently it got cheap and I started

buying it for the first time. And why

did it get cheap? Why did the share

price drop below the intrinsic value? Uh

because of again this fear oh AI is

going to destroy it. And the founder

recently stepped down because of medical

reasons. And to me, I think a lot of

these fears are are irrational. Okay.

Now, I know some of you have been asking

me about Adobe a lot in the comments,

and I have mentioned it many times. Some

of you have not heard what I said, so

I'm going to say it again. I've already

sold Adobe right now. Adobe to me

uh is

one that I'm really not sure. Okay. Will

it be disrupted by AI? I'm really not

sure. And that's why I decided to sell

it. My actually my daughter is a lot

smarter than me, it appears, right? My

daughter, she bought Adobe as her first

stock about uh it's about three three

years ago, right? And she sold it at

like 600 bucks. And I I asked I said,

you know, why are you selling it? Right?

And eventually it collapsed. So she was

actually smarter. She got out a lot

earlier. I got out at about close to 450

thereabouts. 400 450 I got out, right?

And she said to me because she's a

designer, she's in the creative industry

and she says Adobe now Adobe now sucks

right they are so expensive they keep

raising their prices and subscription

model and I can use something a lot

cheaper which is what uh Canva and stuff

like that so she sold it because she

felt that she was not happy as a

customer which was a pretty good idea

right so I'm out of Adobe I don't plan

to buy back now again could I be wrong

could Adobe succeed and do well it could

right I I can't predict the future but

again when I look at all the software

stocks whether Adobe and Salesforce and

Tyler Technologies and Service Now and

Constellation Software I can't buy all

of them obviously right. So if I can't

buy all of them I rather buy the ones

that I think have the strongest chance

of doing well in the AI arena. So Adobe

I'm not sure and that's why I've not you

know bought it back since I sold it at a

pretty good profit actually. Right. So

that those are software companies. What

else? Okay. So in the other sectors

uh you have got again great companies

have been neglected and nothing wrong

with the companies. They are making

money. Their revenue growing, profits

are growing but again the share price

dropped. Why? Because it's like the

husband nothing wrong with the wife but

the husband is just chasing a younger

chick and ignoring her and neglecting

her. That's why her market price fell.

That's why we want to go in there like I

said steal the wife. All right. So what

are examples of um some industrial

stocks? So one of them is actually a

copart.

Um so copart has dropped like crazy as

you can see you know and again there's

nothing wrong with the business.

Business is doing really really really

well. Okay, if you look at the

financials, check it out.

You know, revenue is growing as you can

see. You know, profits are growing, free

cash flow, free cash flow is growing.

They've got so much cash. They've got

hardly any debt. Right? Now, if you

can't see the lines, let me change to a

bar chart. It's easy to see, right? You

know, they they've got so much cash.

They got hardly any debt. Fundamentals

are solid. They've got a return on

equity of 18% ROIC 18% very strong

fundamentals intrinsic value $54 right

now $44 you know undervalued right now

again these are not recommendations for

you to buy I'm not making any

recommendations I'm just sharing it with

you uh as a case study for educational

purposes you know but for me I've been

buying all right I've been buying and of

course does it mean that you'll go up

tomorrow no it could still go lower

right because it's being neglected

It could still go lower in the short

term, but I know that these are

companies where if I just buy, close my

eyes, 3 5 years from now, likely they're

going to be double or you know more,

right? So that's these are investments.

These are not short-term trades. Another

example of um industrial stock that has

been kind of like uh neglected is waste

management.

Not a terribly exciting stock, you know,

waste management, clearing waste to

recycle and all that. But again, look at

the fundamentals.

Okay, they've got a very high ROE of

32%.

And uh if you look at the financials,

you can see very strong business. Okay,

revenue growing consistently.

And again, uh free cash flow, free cash

flow has been a bit flat because they've

been making a lot of acquisitions,

right? But you look at the net profit

and green profit has been growing up

very consistently as well. And this is a

div dividend aristocrat. But this is

slightly undervalued uh but it's not

terribly undervalued but it's still not

expensive. Right. So intrinsic value 226

um and right now selling at 217. Okay.

So again there are many of these stocks.

I I give you one last example.

financial companies and certain

financial companies like financial

analytics companies like Faxet, S&P

Global, you know, recently they dropped

again for no good reason simply because

they are ignored. They are neglected by

Mr. Market and S&P Global again is a

very high

quality company that's got a very strong

economic mode. Uh fantastic financials.

Check it out. Get revenue growing

consistently.

You can see free cash flow sorry net

income increasing free cash flow going

up

and uh return on equity you can see it's

uh 11.76%.

Which is not bad right I mean not super

high but it's not bad as well right

intrinsic value 528 and now it's at 478.

You can see recently it dropped

over here and you can see the wave

patterns right you know wave up wave

down wave up wave down wave up wave down

wave up wave down wave up wave down

eventually after it bottoms you know the

wave will will just continue. So again

the market is not cheap but it is not in

a bubble and it is on a very very clear

uptrend. So the trend is your friend as

long as the uptrend remains in force.

Probabilities that prices will just keep

going higher all the way to the end of

the year. But again, having said that,

remember it doesn't go up in a straight

line. You will have pullbacks and

potential corrections along the way.

Remember that, right? Wave up, wave

down, wave up, wave down, wave up, wave

down, wave up, wave down, wave up, wave

down. Now we're going through a wave up.

There will be wave downs but we should

see the market again continue to go

higher at least for the next uh 2 to 3

years at least. Now eventually will

there be a bubble bursting? Yes. When

will it happen? I don't know. Now here's

the trick. In order to continue to

succeed in investing and to build our

wealth must we be able to time the top

of the bubble. I wish we could but it

but it's impossible. So the trick is not

to time the top of the bubble. The trick

is not to get out before the bubble

burst. No, no, no, no, no. That's not

the trick. The trick is to ensure that

for our investment portfolio, our

investment portfolio, we only invest in

companies which are not in a bubble.

That means companies that are actually

making money generating free cash flow.

Companies where the profits support the

stock price. And for those stocks that

we are in that are in a bubble, we have

to put a very tight stop-loss. So the

moment the bubble burst, the price goes

down, hits the stop loss, we get out and

we lock in the profits. You see the

difference? Now let me share something

interesting with you.

Look at this chart. Now the blue line

over here

uh was is the NASDAQ. So the NASDAQ

consists mainly of tech stocks which in

that time in the year 2000 these were

mostly the dotcom stocks that were again

not making money. Okay. So that's the

blue line. Now this line over here the

second line this was the S&P 500 that

consists of all kinds of stocks tech

stocks and non- tech stocks. The green

line that you see is the stock price of

Burkshshire Heatherway which is the

company managed by Warren Buffett. Now

notice something interesting.

Notice that

when the.com bubble was forming, right,

the NASDAQ was going up

9798 to the year 2000, the S&P was also

going up. Can you see that? This was

going up. This was going up. But what

happened to Warren Buffett's company?

Burkshshire was going down.

Why? Because Warren Buffett had no tech

stops. He had zero tech stocks and so

when everyone want everyone was chasing

the tech stocks it was going up and

everyone was neglecting the non- tech

stocks. Hence Warren Buffett's companies

were oil all dropping in price although

the companies were making good money

like what I mentioned right the

neglected companies. Now eventually when

the bubble burst what happened the

companies that were not making money the

dotcom companies they dropped 77%.

Okay from 2000 to 2002 in 2 years it

dropped 77%.

And people basically lost their life

savings those who were fully in the tech

stocks. Okay, the S&P 500 which consists

about half of the tech stocks dropped

49%.

In the next two years,

but what happened to Warren Buffett's

company Burkshshire Heatherway? Notice

that from 2000 to 20ou 20ou 2002

when the S&P dropped 49% and the NASDAQ

dropped 77%. Burkshshire went up 80%.

Why?

Why?

Because Buffett was holding all the non-

tech stocks. So when the tech stocks

burst, all the money ran away from the

tech stocks and they bought into the

non- tech stocks and the non- tech

stocks went up. So what were the non-

tech stocks that Buffett was holding

that went up 80%. These were his major

positions. Gillette, you know, the the

shaving razor thing, Gillette, which no

longer exists because it's been

acquired. The Washington Post, which

also doesn't exist anymore. It's no

longer listed. Coca-Cola, that's still

around. Moody, still around, and

American Express, because these were all

the non- tech stocks. So, what is the

lesson? The lesson is to ensure that in

your portfolio

you should have only a small allocation

to the bubble stocks which again are the

speculative nonprofitable AI stocks,

quantum computing, uh cryptocurrency,

uh uranium, right? You must have a small

allocation and for those make sure you

got a stop loss. So when a bubble burst

you cut loss very fast but at the same

time the majority of your portfolio

must be companies that are making money

that have got high free cash flow which

are some AI stocks but you should also

have a lot of non AI stocks and that's

so if you look at my portfolio about 40%

of my companies that I own have got

nothing to do with AI directly these are

the healthcare companies the financial

companies the consumer staples the

consumer discretionary and the

industrial companies because I know that

when the bubble bursts and everything

goes to hell, my portfolio could still

go up 50 to 80% and so will yours. Okay,

hope this has been useful and as always,

keep watching. Subscribe if you have not

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Coup and may the markets be with