This week, Dan invites one of the most respected healthcare analysts anywhere in the world onto the show…
His work has been featured in the Wall Street Journal, Bloomberg, the Financial Times, Kiplinger, CBS, and USA Today – just to name a few.
In fact, he was previously ranked by Fortune magazine as the No. 1 health care analyst in the U.S.
And today, he’s here to talk about one of the best value plays anywhere in the stock market.
The one and only Tom Carroll.
Tom knows the healthcare industry landscape as well as anyone. In fact, that’s what led him to start his newsletter with Stansberry Research, Cannabis Capitalist.
According to Tom, nationwide federal legalization of cannabis is inevitable. It’s a matter of when and not if, which gives investors an incredible opportunity right now…
You can get into these stocks at a better value than you could one year ago… but today many of these companies have better revenues, earnings, and balance sheets than ever before…
Tom says if you ignore this opportunity, you’ll likely come to regret it…
Plus, he even shares the name and ticker symbol of THREE of his favorite cannabis stocks that he’s recommended to his readers…
If you’ve considered entering the cannabis space, but weren’t sure the best way to go about it, this is an episode you don’t want to miss…
Editor of Cannabis Capitalist
Thomas Carroll is one of the most respected and longest-serving health care analysts on Wall Street. Prior to joining Stansberry Research, Tom worked at Legg Mason and then Stifel Financial in Baltimore for nearly two decades as managing director and senior analyst of health care.
1:40 – Dan reveals his Top 10 Surprises for 2022… Now remember, these are not predictions. They’re events that could happen, and based on the current conditions of the markets, would shock tons of investors…
4:33 – Could silver hit $30 or more? Or could precious metals outperform the S&P 500? They’re not on a lot of folks’ radars, so this would be a massive shocker…
8:46 – What would happen if Tesla, the current poster child of today’s speculative frenzy, fell below $300 per share?
11:35 – New highs for Bitcoin in 2022? Many people are expecting it. That’s why Dan says bigger surprise would be if it didn’t reach new highs next year…
17:50 – People say things are different now. That this could never happen again… But there’s no doubt a 20% one-day drop in the S&P 500 would be one of the biggest surprises of the year…
22:13 – This week, Dan invites one of the most respected and longest serving healthcare analysts on Wall Street onto the show, Tom Carroll. Prior to joining Stansberry Research, Tom worked at Legg Mason and Stifel Financial. During that time, he was ranked by Fortune Magazine as the #1 Healthcare analyst in the U.S. Today, Tom writes the Cannabis Capitalist newsletter at Stansberry Research.
26:55 – Tom says that there’s not a ton of super sophisticated investors currently in cannabis stocks… “One of my industry contacts called them ‘pajama-traders’…”
30:20 – When is marijuana finally going to be legalized? Tom says, “It almost doesn’t matter right now… Because legalization is all around us, right? We see it with the number of states that continue to create legal programs. We see it with Federal agencies allowing U.S. companies to operate…”
35:21 – “You’re getting right to the heart of my view on the Federal legalization thing… To me, somebody signing a piece of paper at the Federal level, making it completely Federally legal, to me that doesn’t really matter at this point in time. Ultimately, that’s where we’re going… Once that happens these stocks will have gone up 3-4X higher. So, if you’re waiting until then, you’ll miss it.”
43:02 – Dan asks Tom what types of cannabis businesses should investors be looking for… “Where’s the good business model in all of this? Which ones are you most interested in, and which ones are you least interested in?”
44:10 – Tom lists some names of picks that he loves… “One of my favorite stocks for next year is a little company called MariMed, ticker MRMD… One of our best stock picks of last year was a company called GrowGeneration (GRWG)… And upstream from GrowGeneration, you have a company called HydroFarm (HYFM)…”
49:58 – “My gut says [legalization] is probably not going to get done next year… Certainly the heat is turned up on the Senate, with the SAFE Banking Act and the issue of 280E, and the issue of not being able to be traded on U.S. Exchanges, that’s all out there… My sense is probably 20% probability it gets done next year.”
53:05 – Dan is amazed by how fast cannabis stocks rose to bubble heights then fell back to bargain levels… “I watch a lot of cyclical stocks in the work that we do in Extreme Value, and just for my own purposes, and you have to wait longer than 14 months usually to get this wonderful round trip, during which industry fundamentals have improved dramatically…”
53:51 – “The fundamentals have improved, so it’s a better deal now than it was 14 months ago… Yeah… Man, I tell you what, I love this trade all day long…”
57:50 – Tom leaves the listeners with one final thought before the interview closes… “You must own some of these stocks, right now. If you don’t want to own just one of them, or a handful of them, buy MSOS… It is the only cannabis ETF that is able to capture synthetically the price changes of the U.S. cultivators, those are the companies you want to own. They have the best revenue, the best earnings, the best management teams, the best balance sheets…”
1:02:07 – We’ve got some great questions on the mailbag this week… One listener asks Dan if he thinks it’s time to move on from Chinese stocks… Another listener asks Dan to recommend some good books for investors just starting out… And another listener asks Dan the best way to hold cash as safely as possible… Listen to Dan’s response to these questions and more on this week’s episode.
Recorded Voice: Broadcasting from the Investor Hour studios and all around the world, you're listening to the Stansberry Investor Hour.
Tune in each Thursday on iTunes, Google Play, and everywhere you find podcasts for the latest episodes of the Stansberry Investor Hour. Sign up for the free show archive at InvestorHour.com. Here's your host, Dan Ferris.
Dan Ferris: Hello and welcome to the Stansberry Investor Hour. I'm your host Dan Ferris. I'm also the editor of Extreme Value, published by Stansberry Research. Today we'll talk with my friend and Stansberry colleague Tom Carroll. Tom is my go-to guy on cannabis investing. We'll talk with him about that.
In the mailbag today, questions about Chinese stocks, holding cash, and good investing books. And remember, you can call our listener feedback line with any questions, 800-381-2357. Tell us what's on your mind and hear your voice on the show. For my opening rant this week, I will give you my "Top 10 Potential Surprises for 2022." That and more right now on the Stansberry Investor Hour.
Before we do anything, let's talk about what it means when I say "Top 10 Potential Surprises for 2022." It does not mean a list of 10 predictions. What it does mean is that I'm looking at market valuations, interest rates, price action, general sentiment, and I'm saying, "Hm, what would surprise investors if it happened over the next several months, you know, through the end of 2022? OK? What would surprise investors if it happened?"
And I came up with this list of 10 things that based on current conditions I think would surprise the heck out of investors in 2022. So let's jump in and start with No. 1. Given that stocks are up, just call it 25% year to date and that they've been on a tear really for more than a decade, an easy thing to say is that if the S&P 500 finished the year down substantially, like 20% or more, that would really surprise the heck out of investors. Going back to 1928, on average, in the average decade, stocks were up seven years and down in three.
And only six times have they been down 20%-plus since 1928. So six years, right? So that's a rare event, I'm calling it, since 1928, you know? It's almost 100 years, and it only happened in six of those years. So it's not a common thing. And by definition, anything that's a rare event is going to surprise people. And with stocks really outperforming significantly in 2021, if they really underperform significantly in 2022, I'm calling that a surprise.
Alright, the next one is – surprise No. 2 then is about the 10-year U.S. Treasury. And I think the surprise would be if the 10-year Treasury finished the year 3% or higher. Why 3%? Well, it's right under about 1.5% as we speak, like 1.46% today as I record this, and so that would be a roughly doubling of the 10-year Treasury. And that would be a huge surprise and a huge event because the 10-year Treasury is the big bond market benchmark.
It's the thing that people refer to when they just want to get a gauge on interest rates in general. And when people sell other kinds of bonds, not Treasurys – corporate bonds or municipal bonds or anything else – they generally do it based on some amount of spread over the 10-year Treasury, right? So if somebody says, "Well, we want to sell some bonds and we're going to sell them at a 2% spread, 200 basis point spread," 100 basis points is 1%, so that would be a 3.46% yield as I'm speaking to you today.
That's how it goes. And what would happen I think, if we got a doubling of the 10-year up to 3% over the course of the next year, is that the spreads would widen, right? So it would be worse in the bond market than a mere doubling, right? [Laughs] Because the rates would double and then the rates for riskier bonds would be much higher, you see? They would go much higher than just 150 basis points because the spreads would widen.
There are a lot of companies with way too much debt. There are a lot of companies that can't pay their debt, a lot of zombie companies. And I think that would create real problems. So I think it would surprise the heck out of people. Also, the other reason it would surprise everybody is that if you look at a chart of the 10-year bond yield, the 10-year Treasury yield, like go way back to like 1981 – September 1981 – it hit 15.8%, right?
That was the peak. And then it just crashed down to around – just call it 7%-ish by mid-1986. And then it spiked back up or whatever. And then from that point on, from like 1987 or so, like the end of 1987, it's just been steadily down year after year. And, you know, it's not in a perfectly straight line, of course, but it goes down, it comes up, it goes down, it comes up.
All the bottoms are lower than the previous lows and all the highs are lower than the previous highs. It's just a classic long-term downtrend chart. So I think for that to break would really surprise a lot of people. And getting much above 3% would really be – it would set off some alarm bells, I think. So that's why I think the surprise number would be if the 10-year finished in 2022 at 3% or higher.
Alright, let's talk about silver. Surprise No. 3 is if silver hits $30 an ounce. And again, if you look at a long-term chart, go back to like, I don't know, 2002 or so, you've got a pretty good run-up into 2008 when it hit $20. And in 2002 it was like $4 and then ran up to $20 in like March 2008. Then, of course, it crashed along with everything else, but then it soared and hit $48 in 2011.
And now, you know, we've got this long-term downtrend that kind of bottomed out really in March of 2020 along with a lot of other stuff, and then up towards the high 20s, just south of $30. So breaking through that. And then today – it's performed poorly in the past year, right? So we're down around $22 and it's been as low as $21-ish. It's just kind of sucked wind since early, mid-2020-ish.
So, it would be a big surprise then if it just reversed all that and blew through those nearer-term highs and was over $30, which it hasn't been since like, what, 2013. So that would really be a big surprise if silver hits $30. And then by association, surprise No. 4, if gold and silver mining stocks outperform the S&P 500 in 2022, ooh, big surprise. Year to date since January 1, just call the S&P 500 plus 25%.
It's like just shy of that. Let's say it's plus 25%. OK, so if you use the GDX, the Gold Miners ETF, and then SIL for the Silver Miners ETF, GDX is down 14.5%. The Silver Miners ETF – minus 20%, year to date. So completely sucking objectively, not just relative to the S&P 500. The silver miners of the S&P 500 are like 44% apart. [Laughs]
So if they reversed and each went the opposite – if the silver and gold miners outperformed the S&P 500, huge surprise based on recent price action.
Surprise No. 5 is if the year-over-year monthly change in the Consumer Price Index does not fall below 5%. In other words, stays high, right? Most recent one is 6.8% for the month of November. And we haven't seen those numbers for almost 40 years.
I think it's back to like 1982 or something. OK? So if we stayed high, and maybe even went higher, but stayed at least above 5%, because even then you're going back several years to – well, to 2008 anyway. But staying above 5%, staying high, or going higher, and of course, inflation was the one genuine huge surprise in 2021 that wasn't even on my list in 2022, OK? [Laughs]
I'm sorry – it happened in 2021 and it wasn't on my list at the beginning of 2021. But I'm putting it on there now. Inflation stays elevated as it's been lately. I think that would surprise people, especially since – like I just told you, the 10-year is just shy of 1.5%, and that doesn't scream inflation fears to me. And the S&P 500 and other equity indexes are within single-digit percents of all-time highs and they're at record-high, all-time-high historical valuations. That doesn't scream inflation to me.
Alright, surprise No. 6 is if Tesla falls below $300 a share. It's around $900 now. It was over $1,000. I think it hit, what, $1,300? So it's been really high. And it's valued higher than – at any given moment over the past year or so it's been more expensive than the next 10 or 12 car companies, publicly traded car companies combined, and most of them are profitable and it's not.
So it's been absurd. So if it sort of returned to reality and people realized that it wasn't some great miracle and that it's a business like everything else and it's got to perform to deserve a $1 trillion valuation, which it's just shy of right now, it's $900 billion and some. You know, that would be a surprise, because right now it's still priced as though everybody thinks it's the greatest miracle stock.
And it's similar to dot-com stocks in the dot-com era, and RCA, Radio Corporate of America in the 1920s. That thing ran up like – I think it was like a 20 or 30 or 40 bag or some huge amount, and then it crashed like 90%. But radio really was about to explode and become this huge thing. And there really was about to be a radio in every home and it really did change our lives, just like the internet really did change our lives. But that doesn't mean that the stocks weren't extremely overvalued.
And Tesla is that stock. It's that emblematic stock that just has way too much optimism about the future baked into it. Do I doubt that there will be a lot more electric cars on the road over the next 10 years? No, I don't. There will be. That doesn't mean Tesla deserves to be so richly valued. So I think it would surprise people if it fell, boom, like lost two-thirds of its share price quickly.
Alright. Surprise No. 7 is about bitcoin. I think if bitcoin just doesn't make a new high in 2022 it'll be a surprise to a lot of people because it's been on a great tear. It's been a solid six-bagger since I recommended it in Extreme Value around the time the COVID-19 crisis began in early 2020. So I think it would be a surprise if it didn't continue to make new highs.
And if it was less volatile, that would be a surprise because it just ratchets up and down. And when it's way up everybody's real happy, and when it's way down all the bitcoin bulls are ferociously saying, "Buy the dip." But if it just kind of went sideways, that would be a surprise. If it didn't make a new high all year, I think that would be a big surprise.
Now am I telling people to sell it? No. I still think it has excellent long-term prospects. You should have a little bit of money in it, whatever you can afford to lose, just to see how this works out. Because it could work out very well. It could become a really, really important part of the payment system, the global payment system.
And I don't know if it'll ever be a real currency. It sure doesn't trade like one now. But let's put all that aside and just say it would be a big surprise if it didn't make a new high in 2022.
Surprise No. 8 is if the VIX does hit a new all-time high in 2022. And the reason I say that is if you just look at the history of the VIX, if you go back to – like the whole history of the VIX.
It starts in like 1990, and there was another index that predated it that started I think mid to late '80s. And if you just look at that chart, going all the way back, it's kind of sideways with these huge spikes. So, huge spike in 1998 when long-term capital blew up. Huge spike near the bottom of the dot-com bust. Huge spike near the bottom of the financial crisis in March 2009.
Huge spike in late 2011. Remember we got that minus 20%-ish, like just shy of 20% move from May through October? And then of course all-time high huge spike during the COVID-19 bear market. It hit 82. So, you know, the spikes tend to be years apart. And if you look at the 2002 spike, that was four years after the '98, and then the 2011 was actually just two years after the 2009.
So, you know, if I'm saying in 2022 there will be a big spike, there is a precedent, a single precedent in 2011. But I still think it would surprise the heck out of everybody because people look at the near-term past and then they project it onto the near-term future and they say, "Well, that's probably what'll happen." And it does happen that way a lot, enough to reinforce the prejudice. So people look at the near-term past and they say, "Well, the VIX has kind of mostly trended down-ish this year, but it did kind of bottom out in November."
So to me, hey, that could be the start of another more volatile period. We could get a huge spike in 2022. It could be an all-time high. I think that's unlikely, but again, the unlikelihood is what would make it a surprise, right? But it is higher since early November, and we got a spike up to, what, 30-something in November. And then now we're back down below 20, which is really just about the long-term average going all the way back.
So, you know, maybe this is it. Maybe we're setting a higher base and we're going to get a big spike. Who knows. I don't know. I'm not making a prediction. I'm just telling you what would surprise you.
And the recent low of around $65 earlier this month was higher than the low in August. So it's just been a solid year of higher highs and higher lows. So maybe we get a march upward above $85, but even so, I think above $100 would still be a bit of a surprise, and I think below $50 would be a huge surprise. I think that would be a huge surprise.
We live in a weird time when the world is going through this event. It's a huge event, isn't it? Because all these governments all around the world, and all kinds of other people, are basically saying that they want to shut down the oil and gas industry. But the world is running on oil and gas. It is nowhere in the neighborhood of ready for that to happen. So the question is, do the political types just keep pushing and pushing and making it harder and more expensive to produce the stuff? Or does reality kick in and this near-term cyclical runup that we've had to $85 continue correcting and go back below $50, let's just say?
It's a good question I think. You know, does reality prevail or do they just keep pursuing unreality and having to get beat over the head with reality? You know what I'm saying? So if oil becomes a lot more volatile in 2022, that would be a big surprise based on this year's price action.
Surprise No. 10 is the surprise though I'll probably always keep in here. It's kind of a philosophical thing for me at this point. And I think it would surprise the heck out of everybody if the S&P 500 dropped more than 20% in one day. We had Bubba Horwitz on the program recently, talking about how this can happen, and I've discussed why it can happen too.
There are circuit breakers on the exchanges. If the S&P 500 is down 7%, they stop trading for 15 minutes. Then they reopen. Then if it's down 13% in one day they stop trading for another 15 minutes. Then they reopen. And if it goes down 20% they close the exchange.
So you say to me, "Dan, why do you think it's possible for the S&P 500 to lose more than 20% in one day?" And it's a philosophical matter because I think markets are more like natural phenomena. They're not manmade machines. They're things that happen when human beings aggregate altogether and trade freely among one another.
And I think as a natural phenomena we don't have the control over them that we claim to have. So I do think it's possible for the S&P 500 to drop more than 20% in one day. I've talked about it before, I don't want to beat it to death. So those are my top 10 surprises, potential surprises for 2022.
Alright. Let's go ahead and talk with Tom Carroll. Let's do it right now.
Today I have a holiday surprise from one of Stansberry Research's very own subscribers. Now you may have heard the name Rob Lamoureux before. He's a real Stansberry subscriber from upstate New York who shared the secret of how he was able to save his retirement and completely change his life all thanks to one single idea published by our firm. He ended up retiring early, at age 52, bought a condo for his parents overlooking the Atlantic, and was even able to put his four kids through college.
Well, Rob just recorded a short special holiday update in which he reveals the secret in full. No strings attached. Including how he's able to make around 18%-plus annual returns that are guaranteed by law, and why he never has to worry about another market crash ever again. It's his way of paying it forward this holiday season, and it's a message you do not want to miss, especially if you're worried about a market crash on the horizon.
You can see Rob's tell-all update at RobMessage.com, that's R-O-B Message.com, RobMessage.com. Check it out.
OK, it's time for our interview. Today's guest is my Stansberry colleague and friend, Tom Carroll. Tom Carroll is one of the most respected and longest-serving health care analysis on Wall Street. Prior to joining Stansberry Research, Tom worked at Legg Mason and then Stifel Financial in Baltimore for nearly two decades as managing director and senior analyst of health care.
His research was used by institutional investors, newswires, and health care-specific publications as well as CNBC, Bloomberg, and Fox Business. He has also consistently ranked in industry stock-picking awards, including top-five finishes for stock picking from StarMine, the Wall Street Journal, and Forbes. And he was ranked by Fortune magazine as the No.1 U.S. health care analyst. Ladies and gentlemen, please welcome Mr. Tom Carroll. Tom, welcome to the show.
Tom Carroll: Thanks, Dan. Appreciate it. Happy to be here.
Dan Ferris: Yeah, I'm happy to have you on. Hey, listen, before we get to talking mostly about cannabis I think today, tell me about your racecar driver career. I think it's cool that you do – it's not the usual hobby that you find.
Tom Carroll: Yeah, yeah. No, it's different. Well, of course, the season closed in mid-November, so we had to tuck the car away. I'm in the process of figuring out what my winter project is going to be this year. There's always something, right? Because there's a lot of stress put on my particular car.
For example, last year I had to put a new engine in it, brand-new engine. This year I'm thinking about doing some suspension work on it, tightening that up a little bit. And we'll be ready to go come March when the season opens again. So it's a great hobby. I really like it.
I think my favorite part about it now though, Dan, I'll tell you, is teaching other people. I'm a high-performance driving instructor as well, and that goes hand in hand with what I do just by myself when I'm in my little racecar running around the road course. So it's a lot of fun. I really enjoy it. Thanks for asking.
Dan Ferris: Yeah, that's cool. So anyway, I guess I could spend a lot of time on that, [laughs] and it probably would not be what folks are tuning in for. So let's talk about cannabis, man. Because we were passing each other in the hallway in Las Vegas weeks ago and you were super excited about it. And I know I'm excited about it because it looked like a bubble in February, then it crashed, and now it looks like one of the best value opportunities in the world today.
Tom Carroll: Yeah.
Dan Ferris: You agree with that, don't you?
Tom Carroll: I absolutely would agree with that. And you mentioned a bubble. You know, we came off what I call the "cannabis election trade" last year when everything kind of went the way – the best-case scenario for the cannabis world and the stocks just ran way up really quickly and peaked in mid-February. And from that point, they've just been sold off throughout the rest of the year. And it's really disheartening to see that.
Just everything we focus on, and everything we look at, and everything we know about these companies – even through their earnings, their first-quarter, second-quarter, third-quarter earnings reports – were all still very good and much better than the prior year. And these earnings and revenue growth are backstopped with a more friendly regulatory environment as well. And investors just sold them off again. And again, I think that's – and really this I think kind of goes to the volatility of this space still, is there's two reasons for that.
These stocks are not traded on any major U.S. exchange, right? They're not allowed to be because the stocks at least that I like do business in the United States and we still have federal illegality for cannabis. So the New York Stock Exchange, the Nasdaq, they say, "Sorry, guys. You've got to go somewhere else." So you don't have what I call the full depth and breadth of the market analyzing these stocks, taking positions and looking at them. So I think that's one reason.
The second reason is – I learned a new phrase this year. A buddy of mine, kind of one of my industry contacts, he referred to all of the retail investors that own these stocks as "pajama traders."
He said these are people that are sitting around at home, they've got their pj's on, they're trading cannabis stocks amongst other probably lower-priced volatile stocks as well. And I think what he's getting at is basically saying, "Look, there's not a lot of super-sophisticated investors in these names right now. There's a lot of folks that'll trade them for 20, 30 cents a share and then buy them and then sell them off again and go look at crypto or something else. So you don't have kind of the same market activity in this group of stocks as you do, you know, in more mature industries, right?
Health care, energy, and the like. So again, if you understand that you can kind of trade around these peaks and valleys. I'm a buy-and-hold kind of guy and that's how I run my franchise. We take some profits when stocks move up a lot. You get to kind of stratospheric levels, and the bigger, more stable companies we want to buy and hold until we get a much more robust environment for these things to trade, at which time I expect to see huge returns.
Dan Ferris: Yeah, I just realized we introduced you and I said you were a Stansberry colleague and we didn't say that you were the editor of Cannabis Capitalist. [Laughs] So, OK. Yeah, that's right. Everybody knows that. That's right.
So, yeah. Crazy year but, you know, when something gets super cheap and it's still attractive, man, that ticks all my boxes. You mentioned when you were talking that indeed cannabis is still illegal at the federal level, and I have to say that genuinely concerns me. You know, I just have these horrific visions of federal, jackbooted thugs kicking in the door and arresting everyone.
But what is the real situation on the ground? Is that a realistic expectation? Does that happen anymore?
Tom Carroll: No, that doesn't happen at all. You know, the last few administrations have taken a very hands-off approach as five, 10, 15, and now over 40 states have some type of robust legal cannabis market, either medical-only or medical-plus-adult-use, recreational cannabis. So you don't have the fear anymore like you did even five or 10 years ago that you were going to have the Fed knocking on your door and taking all your equipment, and taking all your cash, and slapping you with some kind of federal lawsuit. That is such a non-risk.
Anybody worrying about that should put it completely out of their minds. But with that being said, you know, the regulatory environment – and I have a viewpoint. In fact, one of my subscribers asked me a question that I responded to in my last issue, and this person said, "When do you think we're going to see full cannabis legalization? And what's the probability of that?" So subscribers that are listening can go check that out, but I think at the end of the day it's inevitable that it happens likely in the next two or three years.
But the caveat to that to me is it almost doesn't matter right now because federal legalization, or rather legalization, is kind of all around us, right? We see it with the number of states that continue to create legal programs. We see it with federal agencies allowing U.S. cannabis companies to do stuff. So for example, the SEC, the Securities and Exchange Commission, has registered shares in the United States of some of these companies, like Green Thumb in particular. I think it was the first one.
So if that doesn't fly in the face of federal policy, I don't know what does. You know the FDA, right? Another federal agency approving Epidiolex, which is a cannabis-derived medication, FDA approved. So all of these things are leading up to more and more people being aware of it, more and more investors looking at this group and starting to take some positions. But as I started our conversation today, I think the traders and the "pajama traders" if you will, like my buddy calls them, tend to outweigh that more sophisticated group that's in the shares.
And right now I'm actually thinking about my – I'm in the middle of writing my annual outlook. So every year in January, last year it was February because we were waiting for the election stuff to come in, but I sit back and I take a deep dive into the whole sector and kind of look at the main pieces. So everything from the regulatory environment to revenue to earnings to valuation and then some predictions for the upcoming year. And as I think about the regulatory environment, we had kind of a – I don't want to say it was a bad thing that happened, but the Safe Banking Act, the act that's been out there on both sides of Congress, the House and the Senate, it's been debated for a number of years now, just to allow these companies access to the federal banking system. That was actually attached to the "NDAA", the National Defense Authorization Act.
And it gave these stocks a little bit of a boost, maybe a month, month and a half ago, when there was some rumor that that was going to happen. Unfortunately, at the 11th hour, it was stripped out and the stocks all had a bad day, you know? The stocks in our portfolio were all down probably 5 to 10% that day. Although I look at that not necessarily as a bad thing, I look at it as relatively positive because it means that the Senate now really has the heat turned up as we go into 2022.
So I think by killing the SAFE Banking Act as part of the NDAA, that increases the probability of a more comprehensive law getting looked at in 2022 and also increases the probability of it actually getting done into next year. Now the hurdle – there's always a problem, right? [Laughs] Whether I'm trying to fix something on my car or do a project that my wife has me do, nothing ever seems to go smoothly. There's always a problem. So the problem here is that we got midterm elections next year.
So that's going to suck a lot of congressional mind-space away from doing other things, like the SAFE Banking Act or the more comprehensive MORE Act for cannabis legalization. So I think we're still kind of in this holding pattern of – my view hasn't really changed on the regulatory environment probably from what it was over the last year. It's happening all around us. The ball is moving forward. We're just not quite there yet.
Dan Ferris: But, in a way though, what you described in a de facto way we sort of are there. If we really don't have to worry, like you said, put this worry to rest, you don't have to worry about the Feds kicking in the door and stuff, I mean, that is not an official – the law isn't passed at the federal level as we're saying, but that's really pretty darn – I mean, you know, you're saying it with great conviction and I believe you. So we're kind of there, aren't we?
Tom Carroll: Yeah, and so you're getting right at the heart of my view about the whole legalization thing. To me, somebody signing a piece of paper at the federal level, making it completely federally legal, to me that doesn't even really matter at this point in time. I mean, ultimately that's where we're going to go to. Once that happens, all these stocks will have gone up, 2, 3, 4x. So if you're waiting till then, you missed it.
Dan Ferris: Exactly. Yeah.
Tom Carroll: So you've got to be looking at these things along the way. And that's really what we're trying to do here, is say, "Hey, this is what's going on this month. This is what's going on next year. Here's where the stocks are, here's revenue growth, here's our visibility and our earnings, here's valuation." It's a good time to be looking at these names.
Dan Ferris: OK. One more thing about the regulatory environment. I've noticed that – like where I live in Oregon, they're talking about spending more money to find and shut down illegal growing locations. And I think to myself, you know, they seem to have missed the point that when you over-regulate something you don't take the market away, you just make it more expensive. You know, the black market is always there as long as the laws are too strict.
And I wonder – what is your reaction to that? Are we still overregulated in a lot of places even though it's illegal in many states?
Tom Carroll: I fully agree. I fully agree. And it really depends – it's on a state-by-state basis. And I think what you've seen with the 40 states or so that have some kind of legal program right now, I think step one was just getting it through the state assemblies, the state senate, the state house, whatever they call it in the individual states – writing the laws, getting the program lifted up. And I think a lot of that was done completely not thinking about the illicit market.
So that gets to the point where you overregulate. The illicit market remains robust and is typically the biggest competitor to the legal market in any particular state you look at. Now, as you point out in Oregon, states are starting to kind of pendulum swing the other way. They're saying, "Alright, we've got these programs lifted up already. They're operating pretty well, we're pulling in tax revenue, we're helping people, but now we've got this issue. We really need to start looking at the illicit market and coming up with strategies to either, in a friendly way, transition those people over without having to use law enforcement to go in and kick down doors, or the other way to do it is rationalizing the tax structure a little bit."
I think some of the more progressive states are saying year-one taxes are going to be relatively low. Year two, three, and four they start to ramp up a little bit. So they're looking to get that bolus of illicit market to transition to legal early on and then start to slowly ramp the taxes on it. So states that have done that – and again, I don't know all of them off the top of my head right now, but there's probably half of them are doing it that way and half of them are just looking for tax money right now. So I think that's going to be a work in progress over the next three, four, five years.
Dan Ferris: I know people, Tom, who – I'm 60, so folks around my age and even some younger, who think it's a really bad idea to legalize marijuana. They buy the whole gateway drug sort of idea and they think it's really going to go horribly wrong for society. Do you care about that at all? I mean, you have kids, right?
Tom Carroll: I do care about that, and I've written ad nauseam about this as well. There's the stigma of the war on drugs that's been pounded into people's heads, in particular our generation and our parents. And so that continues to have this stranglehold on the mindset of people when it comes to cannabis and marijuana in this country. But I guess when I have that conversation with people, you know, at a restaurant or talking with friends, I always say, "Well let's look at some other things out there. Let's look at alcohol."
Nobody cares too much about alcohol. You don't see nearly as much pushback. And this is the easy one to go to, right? But alcohol is way worse on your body than cannabis is from a physiological standpoint. Not that cannabis doesn't have problems. Cannabis can be really bad if it's overused as your brain is still developing, as you're a teenager.
I have a good friend whose son was involved and was in a full-on psychosis basically. He was in the hospital for a couple weeks just getting his brain back in shape. Nothing was impaired, he didn't have brain damage. He just had to have the compound cleared from his system.
So he's going to be a candidate that probably doesn't use cannabis for his life. Just like there's a lot of people that don't use alcohol in their lives, because from a physiological standpoint they are susceptible to abusing it and having it impair them. So I think there's a lot more stuff out there, vices that the government regulates and says is OK that's worse than cannabis. And I'm answering it from a recreational standpoint. From a medical standpoint, which I think could be even bigger than recreational longer term, legalizing it gives us this new weapon to fight all kinds of maladies that there's massive anecdotal evidence about already.
In particular, mental health. If you listen to mainstream media right now, one of the popular health care topics is, gosh, mental health, it's just a big problem in this country right now, exacerbated by COVID-19, and shutdowns, and restrictions. I mean, I saw it directly impact my oldest daughter in a big way. So cannabis has been shown to help considerably with a number of – like post-traumatic stress disorder, anxiety disorders, and the like. And I think the more and more that we look into that, under a structured, guided, with-a-physician type of construct, I think we're just going to learn a tremendous amount more about cannabis and its positive medical impact on the human body.
Dan Ferris: Hear, hear.
Tom Carroll: Long answer. But again, I can say that 10 times in a row, but if you've got somebody who says, "Nope, marijuana, it's a drug. Reefer madness," The whole thing, you're not going to change people's minds. [Laughs]
Dan Ferris: Yeah. But none of those people are going to live forever and things change, you know?
Tom Carroll: Right. And we're transitioning out, yeah.
Dan Ferris: Yep. So, you know, we could talk about – gosh, we could probably do a whole podcast about health benefits, but let's move on a little bit. Because the thing that I personally am most curious about, and I've done zero work on it, are like what types of businesses are there? What are the different types of businesses that you're investing in? Because when I hear cannabis, I think to myself, you know, agricultural product and selling it retail. I don't know. Where's the good business model in all of this? And which ones are you most interested in, and which ones are you least interested in?
Tom Carroll: So, my charge as the cannabis capitalist, writing this newsletter, has been to focus primarily on the breadth and depth of legal cannabis companies and stocks that are out there today. So the types of businesses that we've focused on so far have been primarily the cultivators, the companies that are building grow facilities, investing in all the hydroponic growing equipment that's necessary, and growing really top-quality plants. Those companies are then processing the flowers and the plants into oils, into different types of things that can go into the manufacturing of all kinds of different things as opposed to just smokable dried flower. And then you have the retailers out there that are taking all these products and selling it like any other retail store would, and following different models.
In Maryland, the dispensary model is very much like a pharmacy versus other places where you might have the experience like you're walking into an Apple store. One of my favorite stocks right now and I think for next year – I'll talk about it – is a little company called MariMed, ticker MRMD. And their retail experience is really interesting. It's really welcoming. You know, you walk into an Apple store and there's typically somebody there to greet you. "How are you doing? What can I help you with today?" And then there's all these open tables with products.
It's not like it's a secret behind the curtain, you've got to figure out what's back there. And there's somebody there that can walk you through the different products and is educated on them. So the retail environment is really great as well. We've also invested in some distributors. So one of our best stock picks of last year was a company called GrowGeneration, which we've since sold because it went up a lot. [Laughs] Success.
So it had some structural changes with it in the way that the world is evolving. So they sell – they run hydroponic stores, basically. So they're a retail footprint, but they sell everything that a cultivator needs to grow good-quality plants. So I like to call them – they're like the Home Depot for the cannabis industry. And then even a little upstream from a GrowGeneration, you have a company called Hydrofarm, which actually is in the portfolio right now. Hydrofarm owns all of the brands and the products that then sell to the GrowGeneration stores to then get resold to the ultimate consumer, the ultimate cultivator.
So you've got some distribution companies out there. The fun thing about those is that they don't touch the plant, so they're traded in the United States. So it really opens up access to U.S. investors to buying their stocks, which is interesting. So if investors don't want to touch the plant for whatever reason, or don't want to own a stock of a plant-touching company, they could buy GrowGeneration, they could buy Hydrofarm, and benefit from the growth of the industry, but do it with a company that doesn't actually touch the plant. We're also starting –
Dan Ferris: I just want –
Tom Carroll: Yeah, go ahead, go ahead.
Dan Ferris: I just wanted to touch on one point, which may or may not be fairly obvious. Do you believe that there's just no way this stuff is going to trade on an exchange in the U.S. until there's legalization at the federal level? Is that what the SEC – is that their position?
Tom Carroll: I don't think that happens. I think that – remember we talked about the SAFE Banking Act getting kicked out of the NDAA this year? I think that next year that's what the Senate's going to start with. They're going to start with the SAFE Banking Act, then they're going to try to get it done before the midterms. But I think it's not just going to be access to banking federally. I think it's going to be access to banking, but I think it's also going to be more comprehensive.
Again, because they kicked it down the road, expectations have increased on the part of congressional supporters. So I think we also may have a provision in there that says besides safe banking you can also feel free to trade on the Nasdaq or the New York Stock Exchange if you meet the criteria, the listing criteria of those exchanges. So I think that's – they could go a step further and say – there's something called the IRS 280E, and not to get too technical on it, but it basically says – look, if you traffic a federally legal product, you don't get to take all of the tax deductions that are open to any other small business. So that's also something that could be included in the rules for cannabis companies next year. And next year's not that far away. [Laughs] We're getting close.
Dan Ferris: Yeah. Next year's pretty close.
Tom Carroll: So you're actually referring to what I think could be an absolutely huge catalyst for these stocks in the next six months.
Dan Ferris: Yeah, because it seems like as soon as they're exchange traded in the U.S., depending on corporate policies, then they become fair game for all the ETFs and institutional portfolios.
Tom Carroll: That's exactly right. So right now, only about 4% of cannabis stocks in the United States have institutional ownership. And those tend to be small hedge funds. Now that 4% doesn't go to 100% or 80%, it probably goes to 20% or 30%, but that's a big increase in magnitude of institutional "smart money" that has longer time horizons to hold these names. Of course, that begs the question, "Well Tom, what do you think? What do you think is the probability of that? "
And honestly my gut says that it's probably not going to get done next year. And I don't know, maybe I've been beaten down too much for the last three, four, five years, but I feel like certainly the heat is turned up on the Senate. The SAFE Banking Act, and the issue of 280E, and the issue of not being able to be traded on U.S. exchanges, that's all out there, it's been argued about for a number of years.
The Senate now has this issue turned up on them. End of the day, what kind of confidence do I have? Not very much at all. So I think it would be – my sense is probably, call it, 20% probability that it gets done next year. If not, it's going to be in 2023. If we didn't have midterms next year I'd be a lot more confident, but we've got midterms next year and that's where all these knuckleheads are going to be focused.
Dan Ferris: Yeah. Meantime, you're getting a bunch of really good businesses at cheap prices. Like I said before, cannabis is a value play. It went from a bubble to a value play.
Tom Carroll: Yeah. I look at it a couple different ways. I mean, kind of high level, I have the North American Cannabis Index mapped out over the last three years and I go around it, I pick high spots and low spots and calculate what the price-to-sales multiples of a group of leading cannabis stocks was at the time. And right now, the group is trading, at least on a price-to-sales multiple, cheaper than it ever has in the last three years, even more cheaply than the very bottom of the COVID-19 market meltdown.
Dan Ferris: Wow.
Tom Carroll: It's almost like when you look at charts and you say, "Gosh, if I only had bought this stock right there, 18 months ago when it was at its low." It's kind of like you can do that today. You can look back and you can say the stocks are cheaper today than they were right then. So I can go back and buy these stocks at that point right now. Very interesting. And then if you dive into the numbers a little more, and these things are trading on average about 2 times price-to-sales, looking at 2022 expectations, and enterprise value EBITDA is about 7 times.
And these companies are growing. Revenue's growing 85% on average in 2021. Earnings are growing over 100% this year, if you look at it in aggregation. So you're paying 2 times sales for a company growing revenue 85% this year. I mean, I think that's unbelievable.
Dan Ferris: Yeah it is. And I'm just looking at – I mean, there are a lot of cannabis ETFs, but I'm looking at the one that I call MSOS. The ticker is M-S-O-S. And basically, it has roundtripped back to October of 2020, which is not that long ago. I watch a lot of cyclical stocks in the work that we do in Extreme Value and just for my own purposes, and you have to wait longer than 14 months usually to get this kind of wonderful roundtrip during which the industry fundamentals improve pretty dramatically, like quite a bit, right? It's incredible.
Tom Carroll: Yeah. I mean, that's what you're saying. They've roundtripped. The stocks and the index, MSOS in particular, has come down. But at the same time, revenue and earnings growth have just gotten better.
Dan Ferris: Yeah. So it's roundtripped in price, just in share price on this ETF, so the fundamentals have improved. So it's a better deal now than it was 14 months ago. Yeah. Man, I'll tell you what, I love this trade all day long. It's like – and I think it's partially because as a value guy I've been so desperate for something this attractive, like–
Tom Carroll: In this market, right?
Dan Ferris: Yeah, Yeah. It's like the only other thing that I'm this excited about is like silver stocks. And frankly, we know the deal there, right? It's highly cyclical. It's not like cannabis.
It doesn't have this, it looks like, substantial runway ahead of it where we can expect regulatory improvement and people get the business models worked out, et cetera, all the learning that'll happen. It's just a gorgeous opportunity. And nobody covers it better than you do in Cannabis Capitalist.
Tom Carroll: Thank you. I'm not sure that's true, [laughs] but thank you. Actually, you just reminded me, you and I are kind of on the table on this thing, but also in the last month I've heard from two major, well-known investors out there that have put out short notes on why they think this is the greatest thing ever. So I think it's starting to – and one of my predictions over the next six months is you're going to hear more of those types of investors coming out and saying, "Hey, everybody pay attention to this. It's too good not to pay attention to right now."
Dan Ferris: Yeah. And nobody is paying attention, like Wall Street Journal, Financial Times, Twitter. I don't see anybody talking about it anymore.
Tom Carroll: Yeah. Yep, the catalysts tend to come around – you know, the noise around what the federal government's doing about the rules. And so as that heats up again I think this group starts to work again. Although I guess in the last probably month I think they've probably – it looks like they're starting to go a little more sideways as opposed to down, get a little traction. This month I think, especially after the way the stocks have traded this year, I think a lot of tax loss selling happening. So, as we look into January, I think things start to turn around or at least not go down anymore. It's crazy.
Dan Ferris: Yeah. No, that sounds – that same thing – I mentioned mining stocks. Same thing happens with those. You know, the time to load up on them is during this very moment when people are selling off to get a little bit off on their taxes. I don't know how it works in Canada, but in the United States, you don't get a big break. You've got to spread it over a period of time.
Anyway, so Tom, wait a minute. Let's list – you mentioned a couple different names. Let's just mention those real quick again. You mentioned GrowGeneration. What's the ticker on that?
Tom Carroll: G-R-W-G.
Dan Ferris: OK. G-R-W-G. And let's see, the first one that you mentioned, MariMed? M-R-M-D, is that right?
Tom Carroll: Yes. It's a small – we just wrote about that last month. Really neat story. And that's a 75-cent stock. That's not a stock that would normally catch my eye, but there's some unique characteristics about it that have given me some nice access to the management team and to some real deep understanding about it. I think it could be the best stock in our portfolio next year.
Dan Ferris: So Tom, it's time for my big final question. It's the same final question I ask every single podcast guest. No matter what the topic is, the final question's always the same. And it is simply – if you could leave our listener with one thought today, what would it be?
Tom Carroll: A thought as it relates to cannabis. And this is something I tell all my friends right now, because I've met with a lot of friends over the last month, right? It's the holiday season, seeing people I haven't seen in a while. You must own some of these stocks. Right now.
If you don't want to own just one of them or a handful of them, buy MSOS. You already mentioned it, Dan. It is the only cannabis ETF that is able to capture synthetically the price changes of the U.S. cultivators. Those are the companies you want to own. They have the best revenue, the best earnings, the best management teams, the best balance sheets.
Dan Ferris: Boom.
Tom Carroll: That's what I would leave you with. If you don't want to own that and you want to play around with it, I'd say pick five stocks out of the 14 or 15 good ones out there and mix some blue-chip cannabis names with a couple potential high flyers. Put them away, ignore the volatility, and when you wake up in two years, they're all going to be five baggers.
Dan Ferris: Awesome. That is an excellent final thought. [Laughs] I hope everybody takes you up on it. Alright, Tom. Thanks a lot for being here, man. The time went way too fast. We'll have to do it again soon.
Tom Carroll: I will come on your show whenever you like, sir.
Dan Ferris: Alright. Great. Glad to hear it.
Tom Carroll: We'll talk about cars again.
Dan Ferris: Yeah. Yeah, we'll talk more about cars. [Laughs] Alright, Tom. Thanks a lot.
Tom Carroll: You bet. Bye-bye.
Dan Ferris: Bye.
Wow, always good to talk with Tom. Like I said, I don't know anyone who knows as much about the cannabis industry as he does. He's been actually covering it for years. He's been covering it for Stansberry for a few years, but he's been on to that story for years and years, since the very beginning days. So he tends to sort of have a really, really well-developed view.
So when he tells me that I don't need to worry about the Feds kicking in your doors, I take it more seriously than if someone else had said it. Anyway, you know, I hope you take his advice. I think it's – like I said, cannabis and silver stocks are like the most attractive thing out there to me as a value guy right now. And Tom is like the one guy I need to hear from about cannabis. Alright, let's take a look at the mailbag. Let's do it right now.
Back in October, Marc Chaikin and I talked extensively here on the show about a special event he was hosting focusing on his Power Gauge system that we discussed. Well he really wants you to have an opportunity to check out the system, and he's even giving away a free recommendation with it. According to Marc's Power Gauge software, the stock Mimecast, MIME is the ticker symbol, could make you a lot of money. It's a little-known company. If you act today, Marc says it could make you a lot of money.
Now if you've never heard of his Power Gauge system, it gives you the chance to double your money by predicting tomorrow's Wall Street stock ratings today in any kind of market. Last year alone, it pointed to Riot Blockchain before it shot up 10,090% in 11 months, Digital Turbine before it shot up 789% in 8 months, Overstock.com before it shot up 1,050% in 4 months, and many more. It's been so successful, Marc once charged his former clients $5,000 a month just to see the output from the system. But today he's turning his back on all of that.
He's turning his back on Wall Street for the first time ever and sharing a way to claim free access to the system. Just go online to 2021TradingSystem.com. That website again is 2021TradingSystem.com, 2021TradingSystem.com. Check it out.
In the mailbag each week, you and I have an honest conversation about investing or whatever is on your mind. Send questions, comments, and politely worded criticisms to [email protected]. I read as many e-mails as time allows, and I respond to as many as possible. Or you can call the listener feedback line at 800-381-2357. Tell us what's on your mind and hear your voice on the show.
Alright, I love the mailbag. Can you tell? I always get excited. Let's talk about Greg D.'s question. It's a very good one, but I think there's a simple answer for it.
Greg D. says, "Enjoy much of what you have to say and many of your guests. Keep up the good work in 2022. Merry Christmas. FYI, I'm still holding many of your world dominators – BDX, JNJ, EXPD, SYY –" I recommended those stocks many years ago, but I'm glad you're still holding them, Greg. That was the smart thing to do.
Greg continues. He says, "I've seen several stories lately saying that Chinese businesses whose stocks are traded on U.S. exchanges will be delisted over the near term. Is this accurate? Is it time to move on from stocks like Tencent and IXN, the global tech ETF?"
Let me put it to you this way, Greg. This is a good question for your broker, first of all. Second of all, stocks like DiDi, the ride-sharing app, said it was going to delist recently, just within the last couple of weeks here. But you named Tencent. Tencent doesn't trade on a U.S. exchange. It trades over the counter.
And you included the symbol TCEHY. Those five ticker symbols, that shows you it trades over the counter anyway. I think it's like 500,000 shares a day. It's pretty liquid. So, unless they ban all trading of any U.S. stocks from the United States, I think stocks like DiDi and other things not trading on the New York Stock Exchange or the Nasdaq, I don't think this will be a big deal.
And as far as the IXN goes, that's an ETF. So, the question then becomes – what will they do about – you know, if they're holding Tencent already, it doesn't trade on a U.S. exchange already. So maybe it won't be a big problem. My sense of this, my guess – it's purely a guess – is that if a stock is large and liquid and there maintains plenty of demand among U.S. investors after it's delisted from the NYSE, then it'll trade over the counter. And as we speak, DiDi is still trading on the exchange, so I don't know when that's going to delist.
But it's a good question, something that you should ask and think about. But ask your broker, too. They're the ones to ask.
Next is Marcus S. Marcus S. says, "Love the show, but I must admit as I am new to investing, 90% of the stuff you talk about goes right over my head. I love the fact that you talked about studying and learning before jumping in. Is there any chance that somewhere you could publish a list of great books you recommend reading? Perhaps recommend a book a week in the podcast."
And many thanks, Marcus S. As Marcus mentions, Where are the Customers' Yachts and Devil Take the Hindmost. Must, must read, especially Devil Take the Hindmost. It is the must-read history of financial speculation by Edward Chancellor. It can't be beat. Marcus, there's another book called The Elements of Investing by Charles Ellis and Burton Malkiel, and you can read anything by those other two as well.
But definitely read The Elements of Investing. It's the only book I've read that starts with the appropriate first topic for novice investors, which is saving. Saving money. Not spending today and investing for the future. It's an extremely important skill. It builds a muscle that you will use throughout your investing career.
It is essential. It is the one place you must begin when you think about how to succeed as an investor. Very good question, Marcus. I really should put a list on the website. Maybe I'll do that if I'm not so lazy next year. But it won't appear this year. This year's done. Maybe I'll get to it. Thank you, Marcus.
Last up this week is Tom B. And Tom B. says – he's quoting me here, and he says, "Be confident, be patient, hold your cash proudly." And then he says, "I'm in full agreement, Dan, but how can we be confident with holding a large amount of cash in a bank over FDIC insurance or a brokerage account? Any thoughts to share on how to be in cash as safely as possible these days? Love your show. Tom B."
Thank you, Tom. Yeah. So FDIC insurance covers you up to $250,000. The only want to get covered is to not have more than that, right? And your brokerage account is covered by something called SIPC, that I don't completely understand. But I think FDIC insurance is – you know, when brokers fail, money gets tied up. And when banks fail I think it's an easier process when your account is insured by the FDIC versus whatever's going on with the brokers.
So I believe – it is my belief that that is the safest way to hold cash. And I would ask these questions of your bank and your brokerage firm. Ask them about this, they will tell you. They will tell you exactly what will happen if they fail, or maybe they'll steer you towards someplace where you can find out exactly what will happen. I don't know the whole process off the top of my head at all. But it's a good question and you should think about it. And that's it. That's another mailbag.
That's another episode of the Stansberry Investor Hour. I hope you enjoyed it as much as I did. We provide a transcript for every episode. Just go to www.InvestorHour.com, click on the episode you want, scroll all the way down, click on the word "transcript," and enjoy. If you liked this episode and know anybody who might enjoy it also, tell them to check it out on their podcast app or at InvestorHour.com.
And do me a favor. Subscribe to the show on iTunes, Google Play, or wherever you listen to podcasts. And while you're there, help us grow with a rate and a review. Follow us on Facebook and Instagram. Our handle is @investorhour. On Twitter, our handle is @investor_hour.
Have a guest you want me to interview? Drop me a note at [email protected] or call the feedback line, 800-381-2357. Tell me what's on your mind and hear your voice on the show. Until next week, I'm Dan Ferris. Thanks for listening.
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