00:00Traditionally, what's not a value stock is a growth stock.
00:06Indeed, if you look at, for example, the Russell 1000 value and the Russell 1000 growth,
00:13and you put a portfolio of those two together, then you get the Russell 1000.
00:20And that means that if the stock is not in the value portfolio,
00:25it's in the growth portfolio, which means, and this is kind of, in a way, shocking,
00:32that people will be holding expensive, and expensive, I mean, like high P ratio,
00:42low growth stocks. And that doesn't make any sense whatsoever. So there's a good reason,
00:49potentially to hold in like an expensive high growth stock, it's expensive because growth is
00:56right. But to hold an expensive low growth stock, that's baffling. So our paper kind of sketches a
01:05new approach where expensive low growth is excluded from any portfolio.
01:12What's extraordinary. And one more question is because Paul's looking at me going,
01:15we got to talk to Kim about SpaceX. But you know, I look Professor Harvey at this,
01:20and it seems to be a complete shift towards the joke of Stephen Colbert growthiness is value dead.
01:28No, not at all. So what's dead is investing in expensive low growth stocks, in my opinion.
01:38Those stocks are losers historically, and they should not be in your portfolio. So growth
01:45should be measured by growth metrics, sales growth, profitability growth, R&D growth, not
01:52the stock is expensive. That's not good enough. We need to look at fundamentals. Okay.
01:57And that's why our paper is called fundamental growth.
01:59This is great. Paul, did he just describe SpaceX?
02:02Exactly. So Kim, we do have a pretty notable IPO that's going to begin trading today. SpaceX
02:10IPO valuation. I think the analysts are telling me is 95 times revenue. Talk to us about what this kind
02:16of deal means to you. And one of the key issues is, where does it go to need in the
02:21various stock
02:22indices out there? Yeah. So this is a stock that is high growth, and it will be expensive. And you
02:31mentioned one metric. It's expensive, and that often means that the expected return going forward is going
02:42to be modest. And indeed, if you look historically at IPOs of large firms, and you look at the performance
02:50over the next three years, it is essentially flat compared to the market.
02:57So the IPO, by the time it gets to IPO, these stocks are often fully priced. And all of the
03:07action,
03:08the explosive growth happened before the IPO, when those so-called accredited investors and insiders
03:18were transacting in this stock. So what I'm saying is the big upside has already happened.
03:24Yeah. So those that bought the stock for $10 or $100, they got the explosive growth,
03:31and the retail or the average investor is left with the residual, the dregs.
03:39They could not buy the stock earlier on because they are not accredited or qualified.
03:46Yep. Bloomberg had some reporting yesterday, Cam, that the demand from retail investors
03:53in the pre-market trading exceeded $100 billion for a $75 billion offering here. It sounds like retail,
04:01nonetheless, is going to participate in a big way.
04:04So again, there's a good reason for that demand. This will be likely the number seven largest stock
04:13in the US by total market capitalization. It is reasonable for retail investors to diversify their
04:20portfolio. So they want some of this stock. I understand that. So the problem is that they're
04:28getting in at a very high price. So SpaceX, I'm looking at the derivatives market is at $177 already.
04:38So, and you're not getting in necessarily at the allocation price of $135. You're getting in at the
04:45close. I just want to point this out. He has a derivative pricing at Duke. They don't have that at
04:52Chapel Hill. They don't have the pricing right now at Chapel Hill. Hey, Cam, another part of this deal,
04:58which is really interesting, I think, is just if you're buying stock today in this company,
05:04you've bought off on a vision of Elon Musk, of maybe even the cult of Elon Musk. How does that
05:11typically
05:11play out over time? So it's difficult to draw historical comparisons because this is such a big IPO.
05:25Many don't realize that this company is not a new company. It's been around, you know, for 24 years.
05:34So it's got a long track record. People know the company. It's in the news. And it is large. So
05:43this IPO is larger than the sum of all the IPOs in 2025. So it's really hard given that it's
05:53so
05:53extraordinary in terms of the size to draw historical comparisons. Many IPOs are small. This is giant. And
06:03also there is the possibility that SpaceX will be merged with Tesla to become like a colossal company.
06:14So again, to draw historical comparisons is difficult. Vision is important. And you are correct
06:22that a lot of people are buying the vision. They're buying this vision of extreme growth potential.
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