Tech Is the Cheapest Since 2022. Walmart Is 46 Times Earnings. Where Is the Bubble?

Chris Mayer and Robert Hagstrom explain how they decide whether a falling stock price has exposed a mistake or given them a chance to buy a business they already know well.

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On 100 Year Thinkers, Matt Zeigler and Bogumil Baranowski ask both investors to put that judgment to work during a Nasdaq selloff. Robert starts with an unlikely pair: Nvidia and Walmart. What assumptions about growth and returns on capital would justify paying a higher earnings multiple for the retailer? Chris starts with free cash flow per share. He explains what he wants to know about a business before its stock drops 30% and he has to decide whether to buy more, hold on or sell.

They give their winners the same scrutiny. Chris admits that a run of strong quarters can tempt him to spend all his research time on the companies that are struggling. Robert borrows a habit from Sherlock Holmes: look for the evidence that could overturn your favorite explanation. The conversation closes with a question for AI executives trying to win over a town that would host a data center. What does the community get in return for the power and water the facility will use?

Topics covered:

- Robert Hagstrom on why volatility rises when different investors start making the same trade

- What the valuations of Nvidia and Walmart imply about their future earnings

- Chris Mayer on free cash flow per share and Ben Graham’s voting machine and weighing machine

- What readers of The Warren Buffett Way and 100 Baggers sometimes miss about their authors

- How Robert Hagstrom uses detective work to test an investment thesis

- Why Chris Mayer revisits companies that keep delivering strong results

- What a concentrated portfolio asks of an investor and where indexing fits

- How a watchlist helps both investors put a sharp price decline in context

- When share buybacks make sense and what AI companies need to explain to local residents

Robert Hagstrom’s research at EquityCompass

https://www.equitycompass.com/author/robert

Chris Mayer’s books at Woodlock House Family Capital

https://www.woodlockhousefamilycapital.com/portfolio

Chris Mayer on X

https://x.com/chriswmayer

Chapters:

00:00 What a Nasdaq selloff tells long-term investors

12:23 Ben Graham’s weighing machine and free cash flow per share

17:58 Who sets the example for patient investors today?

22:07 What readers miss about Robert Hagstrom and Chris Mayer

26:07 Sherlock Holmes and the evidence against an investment thesis

32:52 Studying winners as skeptically as mistakes

39:05 The case for picking businesses in an indexed market

44:36 Building a shopping list before prices fall

49:12 When a falling price earns a closer look

53:37 What shareholders need to hear from CEOs

1:02:07 Why data centers are a hard sell for their neighbors

Learn more about the Excess Returns podcast network:

https://excessreturns.co

No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.