3 Stocks To Buy From Alpha Picks/Pro Quant Portfolio (undefined:KGC)

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Steven Cress, Head of Quant at Seeking Alpha, explains how quant works (0:30). Importance of PEG ratio (4:05). Past performance (8:40). 3 stocks to buy from Alpha Picks/Pro Quant Portfolio (20:05).

Transcript

Rena Sherbill: Very excited to welcome back to Investing Experts, Steven Cress, our Head of Quant at Seeking Alpha. Welcome back to the show, Steve.

Steven Cress: Rena, thank you so much for having me. I really appreciate you organizing this today.

RS: Absolutely. It’s great to have you as always. I know our audience really anticipates and appreciates and gets excited about your picks.

It’s some of our top content, some of our most engaged with content in terms of you letting us know the top quant stocks of the year, of the second half of the year. That has been extraordinarily helpful for people I know firsthand.

So I think a great place for us to start for those that do know and for those that don’t know, if you could give us a brief refresher on what our quant system does.

We just had Emma on talking about cannabis. So she briefly laid out what quant does and how it thinks about cannabis. But broadly speaking, what do you head up? What is our quant system at Seeking Alpha?

SC: Fair enough. So I do head up the quant team at Seeking Alpha as well as our terrific data team as well. So anything that is quant or data related comes through my team, and it’s very helpful.

My research process when I’m looking at stocks that come at the top of our screener, I’m looking at the data at the same time.

But the essence of quant and it’s really not that dissimilar to what a fundamental analyst would do at Morgan Stanley or Goldman Sachs or Merrill Lynch, but we use more of a a data driven process. We’re using mathematics and algorithms to help identify investment opportunities.

And that’s sort of similar to what an analyst at Morgan Stanley or Goldman Sachs would do. They look at a company’s financial data. They look at the industry. They see how fast that company is growing. They look at the valuation framework. They look at the profitability.

We’re doing the same thing, but we’re doing it on a massive scale. So instead of looking at one company at a time, we are looking at about 5,000 companies at the same time. At Seeking Alpha, we do have a specific quant strategy. There are different quant strategies.

The strategy that we have, I refer to as GARP plus, which will be growth at a reasonable price. There are other quant strategies driven by momentum or driven by value or solely driven by growth.

And we have a bit of a diversified approach, and that approach has worked fairly well over the period period of time. Actually, a really long time. I’ve been at this for about thirty plus years, and I’ve been in the world of quant for a long time.

The bulk of my career was actually spent at Morgan Stanley where I ran a prop trading desk in quant strategies. And many of the strategies that I utilize now were really formulated around the year 2001/2002.

So the strategy really goes back a long way, and I really like this GARP diversified approach. And, specifically, we took a deep dive into GARP for us. We’re looking for stocks that are collectively strong on value, growth, profitability, momentum, and EPS revisions, and that would be analysts that are making positive or negative EPS revisions.

So those are the fundamentals that we dig into. And, again, those are similar to the fundamentals that an analyst from Morgan Stanley would dig into. But, again, we’re not looking at it out of a company by company basis.

We’re looking at thousands of stocks at the same time. And something that our powerful computer process system enables us to do is when we look at these companies, we’re not looking at them in absolute terms.

So we’re not looking just the growth rate of a company or its value. We’re actually comparing each company and all their metrics to other companies in the sector. And this gives us the ability to sort out the strong companies from the weak companies. So that tells you a little bit about how our strategy works from a quant perspective.

RS: Can I ask you a question about the metrics? Because I know you’ve been on before touting how much you like the PEG ratio. Gary Vaughan has also been on a couple times reiterating that point.

Can you talk to us about, A, why you favor the PEG ratio or why you like that so much? And if you would, I’m also curious, in these unprecedented times, are there metrics that you are favoring or paying more attention to or trying to place them in context a bit more than usual?

SC: Gary is a a super nice guy. I really like him a lot and he has highlighted a specific metric that I do like.

And the reason why I like PEG is a lot of times when people are looking at value, they’ll typically look at PE or price to book or price to sales and that is a conventional value metric.

But it doesn’t bring in the growth aspect of a company into value. So you’re looking at the value, but you’re kind of ignoring growth.

What I love about PEG is you’re looking at the growth rate of a company combined along with its PE ratio. So it provides you with a growth framework and a value framework all in one metric.

I find many times where a company could be extremely overvalued, where it could have a multiple of fifty, sixty, 70 times, something that we would never think of buying on our quant system, it would probably have a grade of an F with a multiple like that.

If you look at the PEG metric, sometimes that PEG metric could be an A or an A+ while the PE is an F. The reason being is if you’re adding a company’s growth rate, which is growing at say, 50%, 60%, 100% growth with a PE, it makes it all relative.

All of a sudden, the company is not as expensive as you thought. A lot of times our stocks will have to default to a hold rating from a strong buy, and that often occurs when the value grade goes to a D minus.

And it’s sort of like a circuit breaker that we have in our system because we wanna make sure we’re not buying anything too expensive. But I always say a hold is a hold. It doesn’t mean sell.

And even when that’s triggered, if I look at a company’s value metrics and I see right across the board, but I see that PEG ratio at a plus, it gives me more comfort holding on to that stock as opposed to just selling it.

So, really, to answer the question specifically, it’s great to have a metric that you can blend together that has both growth and value combined in one.

And to the point at hand, in terms of, like, the unprecedented nature of the market right now, valuation is one of those things that is very hard to ascertain.

So it seems like this might be a nice work around that troubling or challenging metric at this point.

Often, you’ll hit stocks that are really in a winning cycle. But because the PE and price of sales are in the stratosphere, a stock will be a hold. And it would be a shame to get rid of a stock that’s a hold if it had a PEG metric that was super attractive.

And, again, it should give you confidence to hold on to that. Typically – we have a product called Alpha Picks I’ll tell you more about. We will keep a company in that portfolio with a hold rating for about a hundred and eighty days. After a hundred and eighty days, if the stock really isn’t moving, that’s when we decide to eliminate that from the portfolio.

But we really do say hold means hold. And that PEG metric could often give you confidence if it’s a very attractive breed. I should probably hold on to the stock.

I would say, regardless of the environment, we’re looking at these core factors, whether we’re in a correction mode or whether there’s wars happening throughout the world or there’s hyperinflation.

We’re still gonna be focused on those collective factors that we’re looking at with value growth, profitability, momentum, and EPS revision. That would not change. That’s part of our diversified approach.

Sometimes value stops work better than growth. Sometimes profitability works better than value. But having a diverse set of metrics to look at consistently over time, we find that’s the best way to achieve the performance, and our track record definitely shows that.

RS: So I guess track record is not a bad thing to talk. Perfect segue.

SC: In terms of the the track record, I look at it from three different perspectives and we show this. We’re really transparent about this.

We show what the performance is for our Quant Strong buys going back to 2010. And we actually have a a back test that went from 2010 to 2019. And then after 2019, it simulated trades so you could see the real performance.

And it pleases me to say, the combined back test and the simulated trades since 2010, our quant system has beat the S&P 500 every year. And that is a very difficult task. And we could take sort of a shorter period as well.

We created the Alpha Picks portfolio, where quant buys could be anywhere from 350 stocks to 400 stocks that get rebalanced on a daily basis. It’s not really investable, but the Alpha Picks portfolio is. We developed that and launched it in July 2022, and we have really strong performance with that.

RS: Is there a place, by the way, for listeners to see the performance?

SC: Absolutely. So if you are on the premium site, you literally could go to any stock. And on the right hand side, it will say Quant Beats the Market. And you could click on that, and that will show you the performance for the quant strong buys.

It’ll show you the performance for our dividend grades. It’ll show you the performance for our REITs. So we have quant factors across a number of different products. It’s not just equities. There’s ETFs as well.

We’re very transparent. We show the performance for the quant strong buys for all of those various factor grades. And then if you go to Alpha Picks’ about page, it shows you the performance. Or if you go to PQP, which we just launched in June, it shows you the performance as well.

If we were to take a look at just the quant strong buys, which, as I mentioned, could be 400 strong buys at any given day, we rebalance it. So if a stock comes out and it’s not a strong buy, we wouldn’t count the performance. If it comes in as a strong buy, we can’t. Over the last five years, the quant strong buys are up 265% versus the S&P up 85% for the same period.

Wall Street analysts, we actually measure their strong buys on a daily basis as well. Wall Street analysts are only up about 53 percent for their strong buys, again, versus the Seeking Alpha Quant strong buys up 265%.

If we were to look at those products that we created, Alpha Picks has been around about three years. That’s up 240% versus the S&P up 74%. And the Pro Quant Portfolio, which we just launched around June 1, is up 40% versus the S&P up 6.83%. So that’s actually an amazing return.

Since June 1, up 40% is incredible. We’re only at September 16. So the product is really performing the way that we expect across a number of different portfolios or everything all in.

RS: How you get the Alpha Picks each month, if you would also share how you get the Pro Quant picks, and then maybe if we could give an example for each portfolio so listeners have an idea of what we’re talking about and a real world example?

SC: So for Alpha Picks, if you’re on the premium platform, you’ll see on the left hand menu Alpha Picks. You can simply just click on it, and you can get more information.

A few years ago, a lot of people would say, I can’t buy 400 stocks every day. Is there a better way to do this? So that’s when I actually created a system called Alpha Picks.

And Alpha Picks was designed for long term investors that just wanted a couple ideas a month, and that’s what we do with Alpha Picks. We take our top two quant strong buys every month. On the trading day closest to the first of the month and the fifteenth of the month, we send out an email or we post it on a separate platform for Alpha Picks, and we unveil what the idea is.

So it’s pretty straightforward. It’s very transparent. We have some parameters and criteria, that are designed for longer term investors and people who don’t want a lot of the volatility.

So the market cap can’t be below 500,000,000 with Alpha Picks. We don’t have stocks under $10, and it’s mostly just US stocks. The only ADRs that would be in Alpha Picks are ADRs that are primarily listed in the United States. The performance has been great. As I said, it’s up about 240% versus the up S&P up 74%.

But something we learned along the way is that people wanted more than two ideas a month. So I went back to it with the quant team. And as a result of that request, we developed the Pro Quant Portfolio.

With Alpha Picks, it’s sort of unlimited ideas. We’re coming out with the two ideas every month. With a Pro Quant Portfolio, people wanted a fixed portfolio. So it’s a fixed portfolio of 30 stocks, but we rebalance it on a weekly basis.

So every Monday, we will rebalance it. And on average, I’d say there’s about two to three new ideas that come out every week for the Pro Quant Portfolio, whereas the Alpha Picks, as I mentioned, was just two ideas a month. This is about two to three a week.

We also have less stringent criteria on the Pro Quant Portfolio. Basically, we’ll invest in any market cap. So we don’t have that 500,000,000 restriction. The stock price could be any level for the most part, so it could be below $10. And we invest in ADRs all over the world. And that diversification yeah.

As I mentioned earlier with the factor grades, where we focus on five core factors for diversification, I found over time and through our back test, the Pro Quant Portfolio actually had better performance than Alpha Picks.

And I believe it’s because we have that diversification of market cap size as well as global diversification as well. And that can actually be found on our Pro platform. So if you are a Pro customer, you get that for free in essence. Where with Alpha Picks, you have to pay, I believe, it’s $499 to get access to the Alpha Picks platform.

If you are a Pro subscriber, it’s comes with that that application. So basically, the Pro Quant Portfolio is something you get by being a Pro subscriber.

RS: You can’t not be a Pro subscriber and then access that portfolio?

SC: Correct. You have to be a Pro subscriber to get that portfolio. So, yeah, the systems are a little bit different, but the bottom line is it’s all really derivative of our quant system.

And our quant system ranks over 5,000 securities. And we look at those specific investment characteristics that I mentioned, and we score each of those investment metrics.

And, actually, if you were on the premium platform and you clicked on value, you probably see about 20 metrics. If you clicked on growth, you’d see more than 20 metrics, profitability more than 20. And each of those metrics gets scored.

And we put them into those buckets of value, growth, and profitability. So then we’ll give value a score growth to score for the company. And the companies that score the highest are strong buys, and the ones that are weakest are the strong sells.

And we do that for close to 5,000 stocks on our platform. And, if you were to go into the platform and I would really advise anybody who has not been in the platform to give it a try. Register for the site so you could see what we’re talking about because the free site at Seeking Alpha is a lot different than the paid site for premium.

And on the premium site, you get the factor grades. And, really, the purpose of the factor grades, you can put in any stock, (IBM), Apple (AAPL), Exxon (XOM). And what we want you to do is have an instant characterization of how that stock compares to the rest of the sector and instantly know if that stock is a buy or a sell. And that’s what comes across in our rating summary.

For those valuation grades and growth grades, we make it super easy. We actually use academic letter grades. So if you’re looking at value, you might see a C minus. If you look at growth, you might see an A plus.

And that means that the company’s growth rate on a relative basis is stronger than the sector. Valuation might be in line with the sector. Profitability, it might be far superior to the sector.

So, again, really the whole purpose of those factor grades is for us to do the homework for everybody where we can give them that instant characterization of where the stock is relative to all other stocks.

And I won’t say it’s rocket science, but we are crunching a lot of data every single day. So it’s about 5,000 stocks and hundreds of metrics, cash flow, income statements, balance sheets, all those metrics.

So literally, millions and millions of calculations are being calculated every day to come up with a list of stocks. And as I said, we have a pretty good track record.

What I’ll do is, the portfolios are different, but some names are shared. Because as I said, we’re taking the top stocks from our quant system, and we’re just trying to put it in a way that’s sort of an investable format for our subscribers.

But I will give you three names that are in both portfolios. And there’s not a high crossover, believe it or not, even though we’re focused on the top ideas because, the Pro Quant Portfolio has a high frequency of change, and we’re constantly bringing the best names into it.

There’s actually not as much crossover as you would think, but I’ll give you three stocks that do crossover.

Before you do, let me ask you. When investors are getting these picks, what comes with it? The information that you’re about to tell us, is it a deep dive into each stock?

SC: They do get a deep dive, yeah. So for Alpha Picks, as I mentioned, it’s on the first or the fifteenth of the month. At noon, like clockwork, they will get an email. And in that email, there will be an article on the pick, or they could go to the platform as well.

The platform is very transparent. So it provides the articles for every single stock that was ever recommended, the price that it was recommended at, what its weight is in the portfolio, what the portfolio what the quant rating is.

So is it a hold? Is it a strong buy? Is it a buy? The Alpha Picks platform has a lot of information, and that would be the same with the Pro Quant Portfolio. But in that case, it would be every Monday at 09:30 right now.

We provide the picks so you get an email alert or you could go to the Pro platform and see what the picks are. And we provide an article that reviews all the picks and all the sells and a little bit of a deep dive into it.

RS: Appreciate that.

SC: Alright. So, I’m picking three names here that are in both Alpha Picks and the Pro portfolio. First off is Kinross Gold (NYSE:KGC).

And I’m gonna walk you through it similar to if I was walking you through our platform. Envision that you’re looking at the premium or a pro platform. You would see a chart of the stock. And if you’re looking at the chart of the stock, you would see that Kinross Gold over the last year is up 140%.

And you might say to yourself, well, I really don’t wanna chase a stock that’s up 140%. And I would say that would be a really big mistake because the valuation framework for this company is almost the same now that it was six months ago.

So if you were on the premium platform and you looked on the right hand side below the ratings, and we actually show three different ratings, the consensus of Seeking Alpha contributors, the consensus of Wall Street, and our quant rating.

So outside of the quant rating, you get to see what those other investment segments are saying on a stock. And below that rating summary, you would see the factor grades.

And this is where we highlight value, growth, profitability, momentum, and revisions, and you get that instant characterization by looking at what the grade is for the stock.

So Kinross, currently, the grade is C minus. So that means relative to the sector, it’s a fair valuation. It’s not too expensive, and it’s not overvalued. It’s sort of right in the middle. And as I said, the stock was up 140%, but the valuation now at C minus is actually more attractive than it was six months ago.

Six months ago, the valuation grade was a D. So that valuation framework has actually improved for the company. And six months ago, the growth grade was an F and now it’s a B plus.

So the stock has a better growth framework and a better valuation framework now than it did six months ago relative to the sector. Again, it’s not on absolute terms. It’s actually relative to the sector. So the company is growing way faster than the material sector.

And if you were on the premium or pro page and you scroll down below the factor grades, you can see exactly where the company ranks within the sector or the industry. So on Kinross, within this sector, it ranks eight out of 274 stocks. And within the gold industry, it ranks six out of 47.

So, again, it really gives you that instant characterization of where the company stands relative to the sector. And if a company pays dividends, I mentioned earlier, we actually provide dividend grades as well.

There are really very few platforms out there that will be able to tell you if a dividend is safe or dividend is growing in sort of really an immediate fashion. And here we you could see the dividend grades, and Kinross does have a dividend. The yield is just about a tad over a half a percent.

So it’s not a big yield, but they do pay a dividend. And if you looked at the dividend safety grade, you would see it’s a B minus, and the dividend growth grade is a B plus. So that tells you that it’s fairly safe.

If I were to take a deeper dive into dividends, and show you our back test, you would see basically any company that has a dividend safety grade, a B minus to a plus, has basically, throughout 2010 to date, has rarely ever had to cut their dividend.

So about a 98% success rate for anything that’s in that territory. However, it has a big value rate. If you have dividend grades that are D or lower or F, sometimes 60% of those companies since 2010 have cut their dividend. So if you like dividends, those dividend grades are really important to look at.

So I should probably tell you a little bit about Kinross as well. Kinross Gold, it engages in the acquisition, exploration, and development of gold properties, principally in North America and South America. So it’s involved in the extraction and processing of gold, which has been a great segment to be in as of late because the price of gold has been doing well.

But these companies that can actually extract the gold are printing presses for cash. They are doing incredibly well. So how would we know that? We could actually look at the profitability grade. And when we look at the profitability grade, we click into it, and you see all the underlying metrics. So the overall profitability grade for Kinross is an A plus.

But if you click on profitability, it will immediately show you those underlying metrics, such as gross profit margin, EBIT margin, EBITDA, net income, return on equity, cash from operations, cash per share. And you’d see the gross profit margin for this company with an A grade is 62%. So that gross profit margin is 62% versus the sector at 29%.

And you’d see underneath that that the EBITDA margin is at 56% versus the sector at 17%, so an A plus. So it becomes very intuitive. You see the grades and then you see what the actual metric is and the sector’s median metric as well.

You can quickly begin to say, oh, now I know why this is an A, or now I know why it’s a D. We make it very clear and straightforward. So that is Kinross Gold.

Our second stock is CommScope Holding (NASDAQ:COMM). Bit of a different industry. We’re going from gold to information technology and communications equipment. And this is a similar situation. This stock has done really well too, but it’s growing and the valuation framework is good. So the value grade on CommScope Holding is a B.

The growth grade is a B. The profitability grade is a B plus. The momentum grade and momentum again relative to the sector, it’s an A plus. So it’s crushing all the same stocks in the sector.

And the revisions grade is an A minus, which means that analysts are taking their earnings estimates up at a faster pace than any compared to other companies in the sector.

This company provides infrastructure solutions and communications for data centers. And data centers are sort of like the new Pac Man for energy. They are just consuming huge amounts of energy right now. Obviously, that has a lot to do with the power needed to run chips for semiconductors and artificial intelligence.

So data centers are growing like wild, and their demand for energy is growing like wild. And this company provides infrastructure so infrastructure solutions for data centers, entertainment networks, and communication centers.

Looking at the factor grades, green across the board with B’s and A’s, and it has a quant strong buy.

And our third stock that you would find in both Alpha Picks and the Pro Quant Portfolio would be another mining company. This is SSR Mining (NASDAQ:SSRM). So this is, again, a mining company that’s primarily in North America.

This stock has had a big run up too over the last year. I’m not gonna lie. It’s up 272 percent. But the growth grade right now is an A plus relative to the sector, and that’s exactly where it was six months ago.

The value is still good. It’s got a value grade of a B. Six months ago was an A minus. So the valuation is a little bit more expensive than what it was, but relative to the sector, the stock is cheap.

If I click into the value grade, and then I look at PE, I’ll see the PE, the forward PE is 14 times for this company versus the sector at 16 times. So it’s actually at a 12% discount to the sector. And if I were to look at on a PEG basis, it’s an a plus for PEG. Its metric comes in at 0.16 compared to the sector immediate at 1.38.

So on a peg basis, this is at an 88% discount to the sector. It’s extremely cheap versus the sector. So even though the stock has had a major run up, you’re looking at a stock that’s really, really cheap that has had incredible growth.

So when I’m looking at the growth, and I look at the EPS forward growth, which is the consensus of analysts, looking at the forward growth, it’s 92%.

That is usually a three to five year CAGR growth rate that the analysts are projecting. So the consensus is that this company is growing at a 92% growth rate compared to the sector at 12%. If we were to look at the forward revenue growth, that’s about 10% versus the sector at 3%.

So even the revenue growth is at about a 220% premium to the sector. So that’s exactly why the stock has been running so much, and it will probably continue to run so much because it’s doing so well versus the sector.

RS: I was gonna ask you about dividends. We had Danielle DiMartino Booth on post day one Fed meeting, and she was talking about how she’s looking for dividends wherever she can get them in this market environment.

She also by the way does not exclusively write for Seeking Alpha, and she was heavily touting our dividend screeners and how much she utilizes them. I’m curious what you would say in this moment in particular about dividends.

SC: Well, I actually, just did a webinar and the webinar was focused on what I refer to as a barbell strategy. And it’s employing this barbell strategy on the eve of the Fed cutting rates.

It could be the beginning of a trend that we might see over the next year with two or three rate cuts over the next fifty two weeks. So this typically is really good for small cap companies and mid cap companies because as interest rates are lower, usually, they get to refinance their debt at a lower rate, which gives them more cash.

So small stocks like that could do particularly well. But in the same token, that’s one part of the barbell. The other part of the barbell strategy is trying to lock in companies that have good yields that are high.

So as interest rates go lower, stocks will go up, yields will get lower on stocks. So this is probably a really good opportunity to lock in some yields when they’re a little bit higher before that trends occur.

Because typically, when you do go into a long cycle of declining interest rates, there’s definitely volatility. They’re declining for a a reason because usually there’s a problem with the economy.

But over time, when rates come down consistently, it really helps over the long term boost the market, boost the economy and boost the market at the same time.

So people have a bigger risk appetite. But at the same token, you can have that barbell strategy. You wanna unlock in those higher dividend yields now before those stocks go up and the yields go lower.

And you can also buy companies that typically have maybe more leverage or a little bit riskier as the economy it’s easier for them to sort of function through that a declining interest rate cycle.

So I would definitely be a proponent of getting stocks with good dividend yields now, but I wouldn’t just chase yield. I wanna make sure that the company has really solid fundamentals.

So really the the mother’s milk of investing is looking at value and growth, and you wanna make sure that the stock that you purchase has a great valuation framework and a good growth framework. And it’s really easy to check that on the premium platform.

If you can get a stock that has a dividend yield above the S&P 500, that’s really sweet too. Working with metrics in concert, not just singling out one or two that are, like, hitting high numbers.

RS: Speaking to that risk reward ratio, but also understanding the nature of risk. As I mentioned at the top, we just did this episode, Emma Johnston and I, Emma from your quant team, and we were talking about cannabis, so, obviously, a risky sector.

We were talking about the (MSOS) ETF, that index ETF, obviously, a very risky ETF. In the interim from us discussing that to now, that ETF has gone from a buy to a strong sell.

And Emma talked about this in the episode, that it’s a risky sector and those things are gonna change. And when it does change, it could be a radical change. But I’m curious if you would speak to perhaps the dissenters or perhaps the questioners of a quick change.

Again, while keeping in mind that risk is afoot in risky sectors, what would you say about the changing buy to sell strong buy to strong sell to hold? How as investors should they be quantifying and contextualizing those markers?

SC: So I would say, for some people to see a stock’s rating change from a strong buy to hold, quickly, it’s a little bit unnerving.

But what you have to keep in mind is that stocks trade thousands of times a day. And each time that stock trades, it’s sort of a new vote where the valuation framework is for a company.

RS: Especially, by the way, in the cannabis sector when the volume is so thin.

SC: Yeah. So I actually keep a basket of stocks that I’ve looked at in the cannabis sector, and the basket of stocks today on a whole is up 4.73. And they probably have about 25 to 30 stocks in that basket.

So that’s a huge move for a fairly decent quantity of stocks. We’re not looking at the S&P 500, but we’re looking at about 30 stocks here. That’s a huge move for it to be up 4.73%. And I see there’s some real outliers today. And some of the stocks that you might know, like Corbus Pharmaceuticals (CRBP) or Green Thumb Industries (OTCQX:GTBIF) are up 11 and a half, 9.7%. And we have Curaleaf Holdings (OTCPK:CURLF) up 6.78%.

So I’m not sure what’s happening in the sector today, but bottom line is we’re looking at all those companies. We’re looking at the value metrics, the profitability metrics, the growth metrics, and they’re all being measured every single day. And I don’t know what the news is that’s changing the stock prices so much today for cannabis, but you can be sure our quant system is measuring it.

And, yeah, news happens, stock price happens, and we’re data driven systems. So I often say it’s like a report card that you’ll get in school and your class is being graded on a curved basis. So based on whoever has the highest score, that’s the way the curve’s gonna work. But at the same token, you know, if you have a 98%, you’re gonna have an A plus.

But if you’re gonna have a 92% grade, it’s gonna be an A minus. And that’s just the way it is. It’s a data driven system, and we follow that system. Over time, it works really well. And nothing happens in a vacuum.

RS: I mean, to your point about you don’t know what’s pushing this news. I don’t know what’s pushing it either, I’ve been focused on the Fed today, but I would guess that it’s gonna go back down pretty soon also. And that’s the nature of this sector right now, like it or not.

Steve, any other words of wisdom, of context, of encouragement for investors, either as it pertains to quant or as it just pertains to investing these days?

SC: The market has made a really big run up. I think the Nasdaq (NDAQ) and S&P (SP500) hit its highs back in August, and the Dow (DJI) just hit a high on September 11 just a couple days ago.

So I think the market really is discounting that this cut is going to occur. And then after the cut, there could be some volatility. The reason why the cut’s gonna occur is because the labor data doesn’t look good.

And, simultaneously, we don’t have runaway inflation, but inflation is still proven to be sticky.

There could be some economic data that comes out over the next couple months that could be unnerving to the market. So I would definitely encourage people to sort of go with that barbell strategy or really continue to look at companies that have good fundamentals, good growth rates, fair valuation frameworks, good profitability.

And that sounds like it’s a lot of work, but you wanna own those companies. That’s why these products that we created like Alpha Picks or the Pro Quant Portfolio can make it much, much easier for you. We’ve already done a homework. We screen through balance sheets, income statements, cash flow statements, hundreds of metrics every day to identify the stocks that are the strongest and the weakest.

So if you do not wanna do all that work on your own, it might pay to get Alpha Picks or the Pro Quant Portfolio so we could do the work for you.

RS: Let us spoon feed you. Let us spoon feed you your investments, please. Any final words, Steve, or anywhere else that they can get in touch with?

SC: I just appreciate you putting this together today. Thank you so much for organizing it. And if there are any questions, people can put comments on the transcript, throw the questions in, and we’ll be happy to answer this for you.

RS: Yes. Comment away. That’s a really nice offer from Steve. Take him up on it.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.