FidelityConnects: U.S. equities, uncovered: How Fidelity finds its best ideas

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<b>Subtitles are AI Generated</b>

 

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Hello, and welcome to Fidelity Connects. I'm Pamela Richie.

 

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The Magnificent 7 has played a major role in driving market returns.

 

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Rising spending on data centres, chips, energy,

 

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and infrastructure is creating new opportunities.

 

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Today's guest is looking beyond the AI winners to identify the

 

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next phase of beneficiaries across industrials, financial services,

 

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transportation, and others as well, other sectors as well.

 

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Portfolio manager of Fidelity US Focused Stock Fund Steve Dufour

 

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joins us here today.

 

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Despite the ongoing market noise Steve remains disciplined for his concentrated

 

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fund with a simple approach to own high quality businesses with

 

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durable earnings growth and let stock selection, not market forecasts,

 

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drive his investment philosophy.

 

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Warm welcome to Steve. Great to see you.

 

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Great. Thanks for having me, Pamela.

 

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Delighted to have you here today.

 

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So we kind of mentioned your style, lots of people familiar with your fund but

 

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it's a very interesting and new moment for any fund at this

 

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time in the market. You focus on growth, what's growth

 

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right now?

 

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Growth the last two years has been artificial

 

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intelligence.

 

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As the US market has been dealing with higher

 

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interest rates, which has kind of dampened a lot of cyclical

 

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industries, housing, trucking, RVs,

 

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boats, you name it, a new technology,

 

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artificial intelligence, has come about and they are spending, I

 

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used to say billions and I would probably move into trillions of

 

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dollars. Primarily, the first step was data centres to create a technology

 

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that people think is going to drastically change the way we do business

 

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in the US and around the world.

 

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That has been growth. That's changing a little bit right now

 

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so that makes the job a little more fun because I get to

 

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do work on other industries.

 

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We mentioned in the introduction there it's maybe the

 

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AI beneficiaries. Let's expand on that a little bit, what that means.

 

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Maybe there's an evolution to kind of guide us in how you're

 

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looking at things and where it's going now.

 

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Very, very simplistically, over the last kind of two and a half

 

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years started off with people who were making money

 

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building these first generation LLM models.

 

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A large language model

 

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is nothing more than data,

 

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some good chips, some power.

 

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We owned the chips, we owned the

 

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power and we owned the companies that cooled it, we owned the companies that

 

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have the backup power, we owned the whole stack of how we create a

 

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LLM. We transitioned over the last year to, all right,

 

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now these LLMs are working, who is benefiting from the LLMs being

 

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used and where these tokens are going, so

 

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connectivity between the data centres as well as the tokens need

 

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to be stored so it was in DRAM and NAND and

 

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in disk drives.

 

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That kind of was A to B and now I'm trying to

 

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go to C, which is find companies that are doing a good job of

 

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being early adopters of these models and using them

 

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not only to improve their cost structure but to grow their

 

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top line.

 

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As I look at the evolution of AI, and it's moving fast, I'm

 

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kind of going along the way because eventually, I

 

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know it's hard to believe, but we will have built most, if not all, the data

 

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centres that we really need.

 

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Then we will actually ... the usage will continue to

 

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grow but it won't grow at the same rate.

 

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The durable growth will be companies that get out in front,

 

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improve their profit margins as well as their products, and can

 

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grow for many, many years. That's kind of my evolution.

 

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When I put a slide together and I put the themes in the fund I put artificial

 

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intelligence but it's changing very rapidly

 

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the types of beneficiaries of AI as well as the companies.

 

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This is a fund, we've mentioned off the top it's concentrated so you don't have

 

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a lot of room for a lot of different stocks, a lot a different plays.

 

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Just tell us a little bit about, maybe generally about turnover and how you're

 

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choosing stocks for this fund but maybe just in light of what you've said

 

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how much that's had to change recently, if it has.

 

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It has had to change.

 

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I put constraints on myself because

 

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I know myself.

 

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I try and have 36 stocks.

 

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In order for a new name to come in the fund

 

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it's gotta be an attractive investment but it's got to be better than one of my

 

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current soccer players.

 

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If you want to hold up the board and put in player A and take out

 

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player B you had better be better player

 

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or have fresher legs or whatever the reason is you're changing, defence

 

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versus offence.

 

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That's that and I try and run with zero cash.

 

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I run with zero cash, 36 stocks, anytime

 

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something new shows up I can't buy it because I have no cash, I have

 

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to find something to come out.

 

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It makes me go through and say, let's go through the

 

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fund again and go down and say what is the upside, downside in that name

 

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versus the new name and let's keep changing.

 

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Given the earnings growth in

 

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the market right now it's very, very hard to keep a portfolio

 

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together that has strong relative

 

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earnings and attractive prices because the earnings growth is very, very

 

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high right now so if something's had one

 

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or good years of earnings growth but it's now starting to slow

 

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you probably have to say goodbye and move into something that's

 

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growing a little faster.

 

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We're really on the eve of some of the biggest tech names reporting

 

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so if this is replayed by people later on they'll know that we're speaking

 

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just before the second quarter earnings for the tech majors come out.

 

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Many of those, or some of those, are in your top 10 but as you're saying,

 

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you're moving into other places as well.

 

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Does that include a cyclical story?

 

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You mentioned higher interest rates off the top.

 

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Those are coming down, they have been coming down.

 

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Tell us a little bit about where you're playing within that cyclical story, if

 

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at all.

 

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A number of people on the call may have heard me talk about this before, I

 

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think I was talking about it in the early fall and heading into the thing is

 

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that one area has been trucking here

 

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in the US. It's hard to believe given the strength of the stock market

 

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but we've been in kind of a three to four year trucking depression.

 

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And so

 

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Why is that? Just over-inventoried through COVID,

 

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after COVID?

 

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COVID, the stores all wanted stuff.

 

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You had to deliver stuff. People bought trucks, blah, blah blah.

 

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You ended up with too many trucks and stuff like that.

 

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Now we've kind of worked our way down, the truck orders came

 

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down, and when you ask a question later, I'm assuming, about

 

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the Mag-7 this is kind of a different story.

 

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This group is lowering their CapEx and in a cyclical

 

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industry lower CapEx is Nirvana.

 

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We did a lot of work on trucking.

 

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I own a less than truckload carrier.

 

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I own a truck engine manufacturer.

 

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I own a full truck manufacturer.

 

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It's starting to show that they're both getting volume and,

 

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more importantly, they're getting pricing.

 

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Our LTL company we own has

 

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35% excess capacity.

 

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They have huge warehouses that are just waiting for

 

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volume to pick up. When the volume picks up you have huge incremental margins

 

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because the plant is already a fixed cost.

 

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It's a fun area and you're

 

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getting twice the market EPS growth

 

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at a below market multiple so it's exactly what I like

 

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to do. I like to let people know this is

 

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a company, a fund that follows strong earnings and attractive prices and

 

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you can have AI at the same time you have a Class

 

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8 truck manufacturer because it allows [indecipherable] we buy

 

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earnings. I don't care how you do your earnings, that's what we

 

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buy. The fund moves with

 

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the earnings.

 

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That's exactly what I was going to ask you. I was gonna say is trucking some of

 

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the cyclical story, the AI, sort of is it accretive in a company?

 

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Is that becoming more magnificent than the Magnificent Seven?

 

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I mean, the Magnificent 7 are still earning.

 

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Yes.

 

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Okay, the answer is yes. So there's got to be room in your...

 

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The problem with the Magnificent 7, and I own a number of them, I'm watching is

 

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their CapEx. Our largest position is Google and their CapEx

 

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in three, four, five years has gone from – and don't hold me to exact numbers

 

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– but roughly $35 billion a year in CapEx and

 

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now they're spending close to $200 billion.

 

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That's a big increase in CapEx.

 

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That's what the market

 

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is trying to digest, is this a one-time thing

 

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which, if it is, these companies are going to be great, or

 

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is this an ongoing need of CapEx which could be

 

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more difficult to their model and become ...

 

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they could be closer back to railroads versus high growth tech

 

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companies? That's why the market is very volatile right now because the

 

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market's trying to determine where these models are going

 

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three to five years from now, which is a very hard thing to do as we sit here

 

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reading the tea leaves.

 

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It is a difficult thing to do.

 

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With Fidelity you get incredible opportunities to meet with executives,

 

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CEOs, those running the companies.

 

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Even before the rest of the world hears forecasts from earnings calls

 

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you have a sense.

 

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Can you give any more context to whether this is a bit of a one-time

 

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thing that's been bitten off and that will end?

 

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I mean, what do you have in terms of the view there?

 

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My view is that this has been a technology

 

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that has been thrust ...

 

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that has emerged and grown faster than anything that anyone

 

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currently alive. I wasn't here when railroads were introduced or

 

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lighting or some of the other new technologies so I don't really know the

 

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growth rates that they had, but nothing we've ever seen is

 

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growing faster than this.

 

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It's very difficult.

 

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The market is gonna go through over exuberance

 

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and then under,  whatever the under exuberance is or negativity,

 

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and then back. My belief, and I'm just following the

 

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number of tokens that are being generated and used, is we

 

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have a long, long, long way to go.

 

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I am an AI believer but there is going to be periods where

 

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the gets a little too exuberant

 

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and you just got to take the pull back.

 

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I see it

 

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with the companies I talk to, everyone is kind of trying out AI

 

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right now but no one has really fully jumped

 

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into the deep end of the pool.

 

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We're still very, very early.

 

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And with that bring us back to transportation and the discussion

 

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there. Trucking is a little bit of an anomaly within transportation

 

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but are there other areas of the industrials/transportation part

 

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that are of interest?

 

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We own Cummins Engine which is in our top 10.

 

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That one's just ...

 

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sometimes you get lucky versus smart.

 

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They have two businesses. One business is they're the largest manufacturer

 

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of class 8 engines in the world.

 

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That business has been awful and now is getting very good very

 

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fast. Their other business is they do backup power

 

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of data centres. For every data centre out

 

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there you need 1.2 times the

 

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electricity usage in backup power so that when something

 

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unforeseen happens the plant doesn't go down and all the chips melt

 

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and blah, blah, blah. That

 

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one, you get kind of get lucky. I've been investing in AI and

 

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I'm trying to get cyclicality in the fund and you have a stock that has a

 

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little bit of both.

 

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That's one area, would be backup power,

 

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is another great area.

 

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I think

 

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depending on what primary power

 

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source we eventually really lean on for all these data

 

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centres you're still always going to need backup power.

 

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Here in the US there's kind of only two or three different ways to

 

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do it and Cummins is one of the leaders in that.

 

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You must watch the power discussion with great interest.

 

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What do you see there as there are different types of power vying for

 

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being the next generation AI power source.

 

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At the moment it's a little bit of everything.

 

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How do you watch that?

 

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Just sort of share with us. I don't know if you're invested in it but watch it.

 

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We used to be in kind of stage one of AI.

 

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Some of our largest holdings were

 

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independent power producers which provide

 

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peak capacity to the regulated utilities here in

 

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the US. They have extra capacity that basically sits

 

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idle until a 110

 

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degree day in August and then they get paid 10X

 

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the value of what they have for usage of three days.

 

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The data centre people came around and said, ooh, you have all this extra

 

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capacity, we would like to buy it for our data centres.

 

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That is an area that we owned and we did

 

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but I kind of moved on from that.

 

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I do follow ...

 

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as in this fund I think there's going to be

 

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a day when we're going to own small nuclear providers

 

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for these data centres but right now they don't

 

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have a product that works, they don't have earnings.

 

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I wait till the

 

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earnings. It's kind of like in technology I think quantum computing,

 

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and I've done way too much work on quantum computing, is going to be just

 

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fantastic but there is no way to buy a company that actually

 

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earns any money.

 

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When you have 36 stocks we try, as you've talked

 

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with me in the past about the fairway, I try and have all these

 

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gates so that we crush it in the upside but in

 

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the downside we don't get crushed.

 

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You stay away from companies that are overlevered, you stay away from companies

 

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that don't earn money. Those are designed for

 

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the downside not for the upside because

 

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there are times when those companies will do better than what I own but

 

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I know that over a cycle we will do better with what we

 

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do own.

 

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Yeah, that's fascinating.

 

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Outside some of the areas are there beneficiaries across other sectors that are

 

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of interest? I know over the course of many years you certainly follow

 

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the healthcare industry very carefully,  don't know if this is a moment for it

 

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but tell us a little bit about that. You've got one in your top 10, certainly.

 

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Eli Lilly, it

 

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was great, then it was mediocre, actually poor,

 

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now it's kind of good again.

 

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Eli Lilly was supposed to be so easy. It's a duopoly in

 

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the GLP-1 industry.

 

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Basically, they were in the diabetes business and

 

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someone realized that some of the diabetes products were resulting in weight

 

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loss. They then isolated it and found that they

 

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could create a product that they could use for weight loss.

 

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Their main competitor over the years in diabetes has been Novo Nordisk

 

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and the two of them, kind of like LLMs, each

 

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would then put out a new product and say their new product was better than the

 

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next one, and they leapfrogged each other and it's a little more.

 

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The next thing that happened is Eli Lilly got too far ahead

 

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so Novo Nordisk decided to go with pricing because

 

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they didn't have a good product so they cut price.

 

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That was harmful to Lily.

 

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But now the products continue to get more ...

 

18:37.616 --> 18:42.154

now people are leaning toward Lily products because

 

18:42.154 --> 18:47.259

they're so further ahead. I think it's very early on.

 

18:47.259 --> 18:51.864

Proving that weight loss helps with a lot of

 

18:51.864 --> 18:57.202

things, sleep apnea, joints,

 

18:57.202 --> 19:00.939

a whole bunch of things are very helped by weight loss.

 

19:00.939 --> 19:05.077

Right now we're only getting

 

19:05.077 --> 19:09.114

coded through the insurance for weight loss, and

 

19:09.114 --> 19:11.016

severe weight loss not for ...

 

19:11.016 --> 19:15.487

it's too expensive for that but the outlook is very, very good.

 

19:15.487 --> 19:19.625

It's an interesting, I mean, they often were called evergreen

 

19:19.625 --> 19:22.494

for different reasons because you're always gonna need healthcare.

 

19:22.494 --> 19:25.030

They're always often gonna be in that area.

 

19:25.030 --> 19:29.034

Now with different types of drug companies, and again, I'm speaking more

 

19:29.034 --> 19:33.272

broadly, the idea of healthcare companies being AI beneficiaries

 

19:33.272 --> 19:37.276

has really taken root. It's incredible, we think, what on the

 

19:37.276 --> 19:41.413

research side can be done on many areas of that.

 

19:41.446 --> 19:45.551

Do you see that bit yet as being very compelling and the reason for

 

19:45.551 --> 19:47.686

it, or not yet?

 

19:47.686 --> 19:53.425

Not too compelling. I was the

 

19:53.425 --> 19:59.131

energy sector leader here in 1996

 

19:59.131 --> 20:03.435

and we were very excited when they went from vertical

 

20:03.435 --> 20:05.237

to horizontal drilling.

 

20:05.237 --> 20:09.241

It was a new technology and it was going to bring

 

20:09.241 --> 20:13.178

on more resources. You know what, it did, and resulted in

 

20:13.178 --> 20:16.648

lower oil and natural gas prices.

 

20:16.648 --> 20:20.953

So sometimes new technologies to industries, particularly if

 

20:20.953 --> 20:25.424

you can create drugs faster and better and

 

20:25.424 --> 20:29.828

everyone can do it then you have too many drugs too fast.

 

20:29.828 --> 20:32.598

I have not bought into that.

 

20:32.598 --> 20:36.335

I am not investing in the fund based on the industries could be able to get

 

20:36.335 --> 20:40.372

their drugs faster or more effective because

 

20:40.372 --> 20:44.910

I think if they do I think they actually will be too many of them.

 

20:44.910 --> 20:51.250

I'm interested in healthcare because a number of the healthcare providers

 

20:51.250 --> 20:55.487

have very, very low operating margins and

 

20:55.487 --> 20:59.891

are very good candidates for the use of AI to

 

20:59.891 --> 21:04.630

get rid of paper processes,

 

21:04.630 --> 21:05.631

all the bad Ps.

 

21:06.531 --> 21:10.535

All the bad Ps will be able to get

 

21:10.535 --> 21:14.806

away of ... you can go from a company with a very low operating margin to a

 

21:14.806 --> 21:19.378

medium operating margin

 

21:19.378 --> 21:23.915

by basically giving approval for procedures,

 

21:23.915 --> 21:28.153

for everything can be done. The first wave can be done through AI and

 

21:28.153 --> 21:33.058

then the tougher decisions can be given to a person to look at.

 

21:33.058 --> 21:37.996

There's a lot of these processes that are going to be very

 

21:37.996 --> 21:41.600

helped out with AI.

 

21:41.600 --> 21:45.804

That's what I'm more interested in, as well as companies that are changing kind

 

21:45.804 --> 21:49.741

of their nature either through a new product here, kind of

 

21:49.741 --> 21:52.544

like Lily did with GLP-1s, and stuff like that.

 

21:52.544 --> 21:56.782

I'm not investing whole hog yet into how

 

21:56.782 --> 21:58.917

they're going to use AI technology.

 

21:58.917 --> 22:02.054

I think they will and I think it will change things but I'm just not convinced

 

22:02.054 --> 22:07.192

it will be good for the stocks.

 

22:07.192 --> 22:11.263

What you mentioned there, I mean, it goes across financials,

 

22:11.263 --> 22:15.033

it goes across anything with back office, essentially.

 

22:15.033 --> 22:17.069

That can go across many sectors.

 

22:17.069 --> 22:23.241

Correct. As well, what you want is low margins.

 

22:23.241 --> 22:27.179

If you have a company that has 80% operating margins there's just not

 

22:27.179 --> 22:30.282

a lot to throw the AI at.

 

22:30.282 --> 22:36.355

You want to throw the AI in a huge pile.

 

22:36.355 --> 22:40.258

It goes against pretty much everything I've been taught about stocks where we

 

22:40.258 --> 22:41.026

want great margins and...

 

22:41.026 --> 22:45.297

That's really interesting. It is kind of, yeah, it's counterintuitive

 

22:45.297 --> 22:46.131

to the way you think.

 

22:46.131 --> 22:46.198

Yes.

 

22:46.198 --> 22:50.535

Take

 

22:50.535 --> 22:54.706

us through a little bit about where

 

22:54.706 --> 22:56.975

that comes into ... is insurance of interest?

 

22:56.975 --> 22:57.142

I mean, there have to be places--

 

22:57.142 --> 22:58.110

Oh.

 

22:58.110 --> 22:59.544

--for it still to work--

 

22:59.544 --> 22:59.578

Oh.

 

22:59.578 --> 23:04.916

--not just health insurance but

 

23:04.916 --> 23:04.950

— I'm getting a yes.

 

23:04.950 --> 23:09.621

Is that a particular place where you're holding stocks that are insurers?

 

23:09.621 --> 23:13.658

We have stock. Talked to one real large insurance company

 

23:13.658 --> 23:19.197

and they explained through the entire process, he was saying

 

23:19.197 --> 23:23.435

that there was a hotel company that they ensure all

 

23:23.435 --> 23:27.439

their hotels around the world. The process to get the new bid

 

23:27.439 --> 23:31.977

for covering all these hotels around the world takes months because

 

23:31.977 --> 23:36.014

each hotel has three feet of data on when the

 

23:36.014 --> 23:38.884

roof is and blah, blah, blah, it all has to be thing.

 

23:38.884 --> 23:43.121

Then the insurance company has to say, okay, we will ensure your 350 hotels

 

23:43.121 --> 23:46.425

around the world for X.

 

23:46.425 --> 23:50.495

The process of going through the data and seeing

 

23:50.495 --> 23:55.000

if there's been a change year-to-year at blah, blah, is cutting

 

23:55.000 --> 23:59.171

zillions of hours out of the process and they're able to make their

 

23:59.171 --> 24:03.175

bids crisper which is allowing them to keep their business

 

24:03.175 --> 24:06.211

from being moving to another company.

 

24:06.211 --> 24:10.148

Not only does it take costs out, it actually helps the top line.

 

24:10.148 --> 24:13.585

That is just one example.

 

24:13.585 --> 24:17.756

These companies, some of these companies it's just paper

 

24:17.756 --> 24:22.260

process. All this stuff takes

 

24:22.260 --> 24:27.065

zions of hours that can be done really, really quick.

 

24:27.065 --> 24:31.203

It sounds great. I mean, who wants to be stuck processing all that kind of

 

24:31.203 --> 24:35.273

stuff? Is it a one time, and I don't mean by tomorrow, but I mean

 

24:35.273 --> 24:39.578

once they get the process, for instance, an insurer who's

 

24:39.578 --> 24:43.748

taking a look at hotels across the globe, once they get that in and

 

24:43.748 --> 24:47.886

sorted and get the companies that they're insuring on that

 

24:47.886 --> 24:51.857

track then what?

 

24:51.857 --> 24:54.192

That's a good question.

 

24:54.192 --> 24:57.028

I think it's probably three to five years.

 

24:57.028 --> 25:00.966

I think you're right, in three to five years I've got to say then what? Right

 

25:00.966 --> 25:06.471

now it's not just the process of getting

 

25:06.471 --> 25:10.408

the better process and the price, got to then remember you don't want to

 

25:10.408 --> 25:15.480

underwrite bad insurance. If you can reduce your losses

 

25:15.480 --> 25:19.150

... going back and looking through and understanding what we should not do.

 

25:19.150 --> 25:23.889

You know what, we really shouldn't do Florida

 

25:23.889 --> 25:26.458

hurricane insurance in this thing.

 

25:26.458 --> 25:30.495

People think you shouldn't do this zone of

 

25:30.495 --> 25:33.999

Florida but actually that's the zone you should be in.

 

25:33.999 --> 25:37.936

They're able to process data so much, I think it's

 

25:37.936 --> 25:42.040

gonna be ... you're 100% correct that probably three, five and maybe

 

25:42.040 --> 25:44.776

seven years it's all been a thing but that's a long time.

 

25:44.776 --> 25:48.713

I won't even be there in three, five, I will be on

 

25:48.713 --> 25:52.684

to a new group. They have

 

25:52.684 --> 25:55.820

a lot of runway ahead of them, a lot.

 

25:55.820 --> 26:00.158

There's a lot of industries, hospitals, healthcare insurance,

 

26:00.158 --> 26:04.396

regular insurance, all these things where it's just ...

 

26:04.396 --> 26:05.397

LTL truckers.

 

26:06.264 --> 26:10.435

How do we deliver the goods,

 

26:10.435 --> 26:12.237

blah, blah, like this?

 

26:12.237 --> 26:14.306

There is so much stuff that is being ...

 

26:14.306 --> 26:18.243

they're taking just little 1 and 2 percentile but but when you have

 

26:18.243 --> 26:22.347

a business that has 5% and 6% margins, 1 and 2% is

 

26:22.347 --> 26:24.182

30, 40% increase.

 

26:24.182 --> 26:25.183

That's incredible.

 

26:25.984 --> 26:28.987

There's a question coming in that fits into some of the things that you're

 

26:28.987 --> 26:33.158

talking about, the disruption, the ability on the other side of disruption.

 

26:33.158 --> 26:36.595

What is your position, Steve, on software stocks?

 

26:36.595 --> 26:40.165

I mean, we certainly saw them get absolutely clobbered.

 

26:40.165 --> 26:42.901

Is there any interest in dipping a toe back in?

 

26:42.901 --> 26:46.905

You're saying, no, no, zero because you want to

 

26:46.905 --> 26:49.774

wait and see where those chips fall.

 

26:49.774 --> 26:53.812

Two things, one is they have very, very high margins, which I'm avoiding

 

26:53.812 --> 26:55.814

high margins right now.

 

26:55.814 --> 27:00.018

Two, in this new world

 

27:00.018 --> 27:03.955

of AI there's no reason for me ...

 

27:03.955 --> 27:07.926

only 36 stocks, I don't really need to go and take the other side

 

27:07.926 --> 27:11.529

of a losing argument right now and say, you know what, I think they're being

 

27:11.529 --> 27:15.634

punished. They probably are over punished, and they probably could recover

 

27:15.634 --> 27:19.704

in three to five years, but I think their economists

 

27:19.704 --> 27:22.173

go down and then back up and they're probably ...

 

27:22.173 --> 27:24.509

it's great for a value investor, a turnaround.

 

27:24.509 --> 27:28.046

I think if you own a basket of them you'll probably do great.

 

27:28.046 --> 27:29.814

But as you said, I got to pick one.

 

27:29.814 --> 27:33.952

Pick one of these companies that's being disrupted and

 

27:33.952 --> 27:37.589

get it right and blah, blah, blah, and it's not worth it.

 

27:37.589 --> 27:42.794

I play the AI theme

 

27:42.794 --> 27:46.798

with better companies. I'm not saying that they're ...

 

27:46.798 --> 27:50.735

they're probably a good part of a value, some type of other thing,

 

27:50.735 --> 27:55.573

but people don't invest in my fund to pick turnaround names

 

27:55.607 --> 27:59.811

that could be three to five years because I don't have the patience.

 

27:59.811 --> 28:03.948

Okay, fair enough. Just round that out as we close out

 

28:03.948 --> 28:06.384

here with why this particular type of fund.

 

28:06.384 --> 28:10.388

While you're watching markets get thrown all over the place a little bit

 

28:10.388 --> 28:14.693

on the CapEx story, I mean, on a few other stories as well

 

28:14.693 --> 28:18.430

within there, why do you want to own a very concentrated US stock fund right

 

28:18.430 --> 28:21.266

now?

 

28:21.266 --> 28:26.438

I think you'd want to own a concentrated stock fund because there are a lot of

 

28:26.438 --> 28:30.475

potholes on the road, and sometimes this market just

 

28:30.475 --> 28:34.579

kind of runs with a theme too far and you need

 

28:34.579 --> 28:38.917

to make sure you keep in mind not only growth but

 

28:38.917 --> 28:40.885

at a reasonable price.

 

28:40.885 --> 28:45.090

I think if you do those two things it excludes a lot of stuff that could really

 

28:45.090 --> 28:46.091

hurt you on the downside.

 

28:47.058 --> 28:51.162

If I stick to what I say I do I'm giving you

 

28:51.162 --> 28:53.965

growth but I'm also ...

 

28:53.965 --> 28:57.936

as I tell people at presentations, number one job for Steve every day is

 

28:57.936 --> 28:58.937

stay employed.

 

28:59.938 --> 29:03.975

As I look to stay employed for another 20 years I try

 

29:03.975 --> 29:07.278

to make sure that I don't own things that are toxic.

 

29:07.278 --> 29:11.249

I think when you buy a big basket of things I think you're buying

 

29:11.249 --> 29:15.854

some toxicity that I think I do a good job of keeping out of your portfolio.

 

29:15.854 --> 29:17.689

Fantastic. That's a great message.

 

29:17.689 --> 29:19.657

Steve, thank you very much for joining us.

 

29:19.657 --> 29:23.194

It's great to see you again and have a good summer.

 

29:23.194 --> 29:24.229

Thank you, Pamela. Good to see you too.

 

29:25.130 --> 29:27.198

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29:27.232 --> 29:29.434

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