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What's happening in the market sham? Is this the go forward reality that AI is
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going to compress these kind of stocks in a normal functioning market? What we are always debating is when a
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set of cash flows go from becoming highly confident to less highly confident. It's a when conversation. So
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when will Coca-Cola's cash flows be impacted? When will Eli Lilly's cash
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flows be impacted? And the answer to the when gets translated by the public markets
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into three things. Your price to earnings multiple. The second is a revenue multiple. And the third is
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what's called your weighted average cost of capital. And the basic math of this
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is that when you have a high whack, it's called you're massively discounting
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these cash flows. When you have a low whack, you're assuming that these things
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are very durable. Okay. So what is happening? We used to debate when this is no longer a when moment. the market
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is very much in an if mode. Are these cash flows durable at all? >> Could they fall off a cliff in year
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three? Is there some AI model that's going to come around the corner and obliterate this business without me
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knowing it? And because they've shifted into this if mindset, your risk becomes
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totally different. You have this event risk that you don't know how to price.
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And whenever the market shifts into that mode, what you see are that the holders
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of those equities want a massive margin of safety. What does that mean? They have to take pees way down. If you used
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to trade at 40, you should trade at 20. If you used to trade at 20, you should trade at 10. They take revenue multiples
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down. You used to trade at 10 times revenue. Now you're going to trade at three times. You take the whack way up.
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Used to be a 6% discounted weighted average cost of capital. You know what? I'm taking you to 12 or 13. That's the
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market's way of saying, I'm now debating if these things will even exist, and so
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I need to give myself a huge buffer to own this stuff. That's what's happening
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right