What The Disputed 1876 Election Teaches Us About Today’s Markets And Policy

December 15, 2025 | Season 7 | Episode 46

We connect the fiercely contested 1876 election to today’s fractured politics and market structure, then pivot to concrete year-end tax moves, the Fed’s latest actions, and where real bubbles may be forming. We close with a pragmatic look at Barron’s 2026 stock ideas, sector rotations, and a measured quantum bet.

• lessons from the Tilden–Hayes standoff and the end of Reconstruction
• parallels between historic legitimacy fights and modern institutional strain
• year-end tax tactics to avoid income cliffs and Medicare IRMAA
• Fed rate cut, T-bill purchases, and a steeper yield curve
• bubble watch shifting from public IPOs to private credit and AI builds
• economic calendar preview for jobs, retail sales, and CPI
• Barron’s 2026 outlook and ten stock ideas across sectors
• rotations toward financials, industrials, healthcare, and small caps
• Disney, Amazon, and Visa value cases amid AI adoption
• quantum exposure through IBM with downside protection

This podcast is available on most platforms, including Apple Podcasts and Spotify. For more information, please visit our website at www.heroldlantern.com

** For informational and educational purposes only, not intended as investment advice. Views and opinions are subject to change without notice. 

For full disclosures, ADVs, and CRS Forms, please visit https://heroldlantern.com/disclosure **

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Transcript

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Opening And Weekend News

Alan Eppers 0:00

And now introducing Mr. Keith Lanton

Keith Lanton 0:02

Good morning. Today is Monday, December 15th, officially halfway through the month of December, last month of the year, as we race into year end of 2025, which has been another solid year in financial markets, both at domestically and internationally, and a lot to talk about what we have to look forward to in 2026, and we'll be talking about that, talking about the news over the weekend, last night with the first night of Hanukkah, and we had a tragic event in the Bondi Beach in Australia over the weekend with mass shooting, also, of course, here in the United States, horrible mass shooting at Brown University, and it appears that the suspect is at large. And also over the weekend we had what appears to be a homicide of well-known actor and director Rob Reiner. So lots of sad events here over the weekend with respect to violence. Of course, violence continues in Russia and Ukraine as well, though Trump administration reporting some progress on the peace talks front there, so hopefully some optimism. So a lot to talk about as we approach year end.

Why 1876 Still Matters

Keith Lanton 1:19

This morning, going to take us back to a period that lots of us who went to school, whether it be high school or college and studied American history, this is a period that got a lot less attention, and I think still gets less attention than a lot of other periods in American history, and this has to do with the period in about 1875 to 1880 in the United States, post-Civil War. I'm gonna talk about that period because I think a lot of us that are living in the times of today think that the fractured nature of the political system, some of the politics that we are seeing, that they are unprecedented, that we've never seen them before. And as I like to point out, that we oftentimes think that things that we are seeing that we haven't seen in our lifetimes are things that never happened before. And again, things don't happen exactly the same, but there are lots of similarities because humans are human. So I'm gonna take us back to the mid-1870s and talk about two presidential elections, the election in 1876 and 1880. Then we're gonna talk about a couple of last-minute things that we've talked about before, but since we're at December 15th, things that you could potentially do to pay perhaps lower your tax bill. These are very important for those who are on the bubble of some social programs here in the United States. perhaps has to do with qualifying for Social Security and Medicare and pushing yourself into a higher higher payment for for Medicare services because your adjusted gross income goes above a certain amount, or perhaps you start to lose out on things like write-offs of for for tips or overtime, which are kicking in this year, or perhaps you start losing out for other other benefits like the standard deduction. If you're over 65 years old and your income goes too high, you could lose this bonus deduction. So perhaps some actions you can take, it really depends. Lots of news that we're gonna talk about this morning. We can talk about the financial markets going into 2026. Barons gave us their 10 picks, and I think that they were pretty insightful. some some some ideas there that I think are good ideas, stocks that haven't worked out in 2025 that perhaps could shine in 2026. I think it's a good list to talk about and to review. And then if we have time, we'll talk about a few other individual ideas as well. But first going to take us back here to 1876.

The Disputed Tilden–Hayes Election

Keith Lanton 3:42

Election in 1876, , perhaps a handful know who ran in 1876, but it was Samuel Tilden ran against Ruther B. Hayes, who actually was the victor in the in that election in 1876. And what you may or may not know is at the end of the day of election day in 1876, no clear winner emerged because the outcomes in South Carolina, Florida, heard that before, and Louisiana were unclear. And get this both parties, Republicans and Democrats, claimed victory in those states, but Republicans controlled what were called returning boards that would determine the official electoral votes. So these are the boards that are gonna decide which votes are the good votes. And what happened is both Republicans and Democrats rushed to those three states to watch and try to influence, influence the counting of the votes. The returning boards determined which votes to count and could throw out votes if they deemed them fraudulent. The returning boards in all three states argued that fraud, intimidation, and violence in certain invalidated votes, and they threw out enough Democratic votes for Ruther B. Hayes to win. All three returning boards awarded their states' electoral votes to Ruther B. Hayes. In fact, going into the determination of these three states of of who would emerge victorious, we had Ruther B. Hayes trailing Tilden 184 to 165. And do you know how many electoral votes you need in order to win? 185. So before this returning board, or we could call it today a recount, we had the Democrat with 184 votes, the Republican with 165 votes, three states to to recount the ballots, and all that the Democrat needed was one of those electoral votes, and yet the Republican emerged victorious. And what happens, and everybody had to go back and look here in 1875, 1876, what happens when you are uncertain about the votes? The Constitution stipulates that the electoral votes will be directed to the president of the Senate, who at that time was a Republican, his name was Thomas Ferry. And Republicans argued that he had the right to decide which votes to count. Democrats disagreed and argued that the Democratic majority in Congress should decide, and a compromise was reached. Now imagine this.

The Electoral Commission And Compromise

Keith Lanton 6:07

A compromise was reached, imagine this, you know, we think we live in unprecedented times, and what happened is on January 29th, 1877, they established a commission, an electoral commission, to decide on the validity of the votes. And this commission was comprised of five senators, three Republicans and two Democrats, five representatives, three Democrats and two Republicans, and five Supreme Court justices, two Republicans, two Democrats, and an independent. But what happened, and you can imagine the scandal today, is the independent recused themselves and was replaced with a Republican. And what happened at the end of the day is the Commission voted eight to seven, because you can see there were eight Republicans, seven Democrats. You can see that this could create lots of lots of angst in the country, just as we experienced here recently with some of the elections in the United States. And the commission voted eight to seven to ward the electoral votes from South Carolina, Florida, and Louisiana to Ruther B. Hayes. But the Democrats still were steaming, obviously, and they threatened to prevent the count of the electoral votes and delay the resolution of the election with adjournments and filibusters. Again, I think we live in unprecedented times, crazy stuff going on. Imagine the uncertainty that was taking place here in the 1870s. So, with the threat of delay, Democrats hoped to win some concessions from Republicans, and two issues interested Democrats. The Democrats, remember here we're just off the Civil War. Civil War was in 18 sixty-five conclusion. Here we are in 1876. The Republicans, obviously, the Party of Lincoln were the party that was most associated with the North. Democrats were more heavily in the South. And what the Democrats wanted is they wanted to restore their control of their state governments in the South, and they also wanted to remove federal troops from the South. And ultimately, in order to win the election and to win the peace, Rutherford V. Hayes agreed, but he said that the Democrats in the South must uphold to ensuring that the newly freed slaves would be permitted to continue to vote freely. Keep in mind the Republicans wanted the African Americans to be able to vote freely, obviously, because they were much more

End Of Reconstruction And Aftershocks

Keith Lanton 8:36

likely to vote Republican. The Democrats made promises that that this would in fact take place. And once the Democrats agreed, Hayes pulled the remaining federal troops out of the South, and some would argue that that was the end of Reconstruction and the beginning of a period in American history as a result of this compromise that led to African Americans in this country having a difficult time, let's call it, , to be able to vote in, particularly in southern areas, for a extended period of time, certainly a very significant event in American history and had lots of influence. And all this was the result of this very contested election, the compromises that were were made, and we can see that despite the fact that we live in certainly very bifurcated times, take a look back to 1876, and you can see that there certainly were perhaps even greater bifurcation in the country at that point, and we will talk a little bit perhaps next week about the 1880 election and some of the themes that took place then on the heels of this election, because one of the things that Rutherby Hayes did also promise was that he would not run again in 1880. So, with that context of our history, we will transition back to where we are today. Certainly, certainly we have our differences, but optimistically those differences should be overcomable and relative to the situation in the late 1800s, hopefully we can see that that we've had times like this before. But where are we today, December 15th? We mentioned what you can do in order to get your taxes down before year end, perhaps if you are close to a bubble, in other words, close to a situation that will push your income into a place where you may have to pay more money just because you went over by a dollar, two dollars, or five dollars, a hundred dollars. So, what you could potentially do if you're still working and you haven't maxed out your retirement contributions, well, you can still contribute to your tax-deferred retirement account, perhaps put the big chunk

Returning To Today’s Divides

Keith Lanton 10:45

of upcoming money into your 401k plan or fund a retirement account if you need to get that income down. That's if you're still working. If you if you're not working, perhaps you can make charitable contributions depending on how you itemize your taxes, that may be able to drive your income lower. And of course, we've talked a lot about taking a look at your capital gains. Perhaps you can generate capital losses of a few thousand dollars, offset any capital gains you have, or if if you need to get your income even lower, you get to take up to $3,000 in losses if you are able to capture those losses. That could also drive your adjusted gross income down. Now, this morning we take a look at financial markets. SP 500's up a little over 16% year to date. So even though some international markets beating us here in the United States, we've had three years of truly impressive returns here in the United States. Last week we saw a rotation out of big tech, and we saw some weakness in financial markets despite this despite the fact that the Federal

Year-End Tax Threshold Tactics

Keith Lanton 11:54

Reserve last week on Wednesday cut the Fed funds rate by one quarter of 1%. And arguably, perhaps more importantly, and this perhaps did not get enough attention, is what the Federal Reserve announced is that they are going to purchase $40 billion a month in treasury bills. Now, they're calling this reverse market purchases, they're not calling this quantitative easing. Economists have some different views on whether or not purchasing treasuries is a form of quantitative easing. But you can certainly argue that by purchasing treasuries, that the Federal Reserve is injecting money into the monetary system and they are pushing down short-term interest rates because they are purchasing treasury bills. Treasury bills are are treasuries that have maturities of less than one year. The Treasury, by purchasing forty billion dollars a month in treasury bills, well that's that comes to almost half a trillion dollars, , will be buying up the vast majority of Treasury issuance, over 50%. And what this does is it it dwindles the supply of treasury bills, which what they perhaps hope is that it encourages the purchases of other treasury securities that have longer maturities and potentially push down interest rates. But what this move did, at least in the short term, is it pushed down short-term interest rates, knowing that the Treasury was going to be a buyer of these short-term treasury bills and there was going to be less supply of treasury bills. And therefore you would think that the secondary effect would be to push down interest rates across the board because now there'll be potentially greater interest in buying longer-term treasuries. But there is an offsetting factor that we saw last week, and that is the concern that by engaging in quantitative easing on top of lowering short-term interest rates, that perhaps you will stoke inflation because you're putting more money into the monetary system, you're reducing interest rates, and therefore what we saw last week is we saw the 10-year treasury yield increase to 420 despite these actions, because arguably, at least last week, the market weighed these factors and said to itself, we are more concerned about

Markets, Fed Moves, And Yield Curve

Keith Lanton 14:00

inflation than we are about the increased demand for purchases because of these policies. And at least last week market voted to have longer-term rates move higher, even if shorter-term rates move lower. What this does cause is a steepening of the yield curve. Why does it get steeper? Well, think on the left-hand side you've got lower short-term rates, and on the right hand side you've got higher long-term rates. So lower short-term rates, higher long-term rates. And if you're thinking about a if you're thinking about a graph, that means that the line is sloping upwards to the right, and that is a positively sloped yield curve. How did the market react? Financial markets were volatile up on Thursday, down on up on Wednesday after the announcement, down later in the week. And at the end of the day, we saw the S P 500 close out the week down a little over 1%, NASDAQ down 1.7%. Some other new news in the NASDAQ was that Oracle had earnings in the market, becoming increasingly concerned with some of the AI stocks taking on debt, especially Oracle, which doesn't have the cash flow of the other Mag 7 type stocks, although Oracle is not a Mag 7 stock. And we did see rotation, which Barons and others suggest is healthy. We saw rotation into industrials, financials, healthcare, and the Dow was up 1%, , although a little bit of weakness on Friday kept the Dow just from reaching a record all-time high. Now, financial markets continuing to push higher in general. Baron's out over the weekend with some positive commentary about the markets and the direction of the markets, but one of the factors that we also have to contend with is concerns that we are seeing lots of euphoria, enthusiasm for financial markets, and that has led some to be concerned. We've had talk of things like asset bubbles. some would say when the more talk you get about a bubble, the more you're watching for a bubble to grow, the less likely it is to burst. What we are not seeing, though, is we are not seeing a surge of initial public offerings here in the United States. And some would suggest that if you want to look for bubbles or you want to look for asset inflation, well, don't look so much in the public markets, look in the private markets. So if you want to keep your eye on things that may be warning signs, look at what's going on in the private markets. Since 2024, 362 billion has gone into AI and energy startups. In November alone, there were 14 venture capital rounds of half a billion dollars or more. Much of that data center build out is being funded by private credit, like we see in the meta blue owl deal. If you want to look at an asset manager, PIMCO has a lot of data tied, a lot of debt tied to data centers. So everyone is looking for signs of a bubble in the stock market. It may be lurking elsewhere. Again, this is a situation of rhyming, not an exact replica. So 25 years ago, when we had a bubble in technology stocks, it was in the public markets. You want to keep a close eye on what is going on in private markets. So keep an eye on our equity funding rounds and valuations still growing quickly every month. Are we seeing more blockbuster credit deals for large data centers, or is that slowing? And two tests will likely come in in the next six to twelve months, and that is SpaceX and OpenAI, which are expected both to exit the private markets and come to the public markets with valuations that may exceed one trillion dollars. And that would potentially be the beginning of the private market, arguably the private market bubble, depending on your viewpoint, seeping into the public markets, and that would be another moment to ensure that you are on your toes. So, speaking of the

Bubble Watch: Public vs Private

Keith Lanton 17:55

markets, let's take a look at what is specifically taking place this morning. We are seeing futures move to the upside here in the United States. Dow futures are up about 230, SP futures 34, Nasdaq futures up 145. Put that in perspective, everything's up about half of 1%, give or take a little bit. Citigroup out saying they see robust earnings growth for 2026, and they saying that earnings growth they expect 13% next year. This morning, commodities continuing to roar. Gold up near a record high, copper clawing back its losses from Friday's steep drop, silver up again. Year-to-date, gold's up about 65%, silver up more than 100% or a double. Other very significant news this morning is we continue to see weakness in China. We talked a lot last week about the Chinese economy, and it continues to sputter. Investments slumped further, retail spales expanded at their weakest pace ever, excluding the crash caused by COVID. This is all further evidence that China is relying on foreign demand to propel growth, which certainly risks further inflaming tensions with the rest of the world. Over the weekend, National Economic Council heard Kevin Hassett, , who is one of the leading contenders to be the president of the Federal Reserve, say he would consider Donald Trump's policy opinions if picked to lead the Fed, but that the central bank's interest rate decisions would remain independent. Perhaps that's why this week we heard some more commentary that perhaps President Trump is no longer leaning towards Mr. Hassett, might be leaning towards another Kevin, Kevin Walsh. We'll see. We'll also hear more of of his views. Also, this morning we got news that Roomba, which the Biden administration denied merging with Amazon a couple of years ago, well, Roomba left to its own devices, has filed for bankruptcy, and they are proposing handing over control. Of the company to its main Chinese supplier.

Futures, Commodities, And China Weakness

Keith Lanton 20:03

The stock is down more than 80% in pre-market trading. Paramount Skydance, which is in bidding war with Netflix to take control of Warner Brothers Discovery, said that they have secured investors from the Middle East for a Warner Brothers Discovery bid that, according to the New York Post. Intel this morning up about 1.5%. It's in talks to acquire Sambanova, which is an AI chip company, that according to Bloomberg. And other news this morning, over the weekend, ISIS killed two U.S. Army soldiers and a civilian in Syria. President Trump has vowed to retaliate against the Islamic State. Reuters reporting that the European Union is expected to reverse the 2035 ban on sales of new combustion engine cars tomorrow. This news certainly something you want to keep an eye on. U.S.D.A has confirmed a highly pathogenic avian influenza in a dairy herd in Wisconsin. Bloomberg reporting that the U.S. and Mexico have settled their water dispute. Venezuelan opposition leader Maria Machado said in an interview she was absolutely supportive of President Trump's increased pressure campaign against the Maduro regime, according to CBS News. And according to Axios, former Vice President Kamala Harris is preparing to run for president again in 2028. So what do we got going on this week? Big event tomorrow, Tuesday. Typically, this is a number we see on Friday, but we are getting the Bureau of Labor Statistics releasing the jobs report for November, along with a partial October data that was delayed by the government shutdown. Economists are looking for a 50,000 increase in non-farm payrolls in November. That was after a gain of 119,000 in September. We'll get some data for October, but a lot of October will just be skipped. Unemployment rate expects to remain unchanged at 4.4%. Jobs growth has been slowing, so this will certainly be a number that financial markets will be keeping an eye on. The Fed will be keeping an eye on, so big data release tomorrow with respects to the jobs report. Also, we get retail sales for October.

Policy And Geopolitics Rundown

Keith Lanton 22:30

This is another meaningful gauge of the health of the economy. We're looking for that to increase two-tenths of one percent, which would match September's gain. If you take autos out, we're looking for that number to be up three-tenths of one percent. And then on Thursday, we get another big economic report. Bureau of Labor Statistics releasing the consumer price index for November. Looking for that to be up 3.1% from last year. Core CPI leaves out volatile food and energy expected to rise 3%. This would be in line with the same readings we saw in September. Also, again here, no data for October because of the government shutdown. So lots of data this week, something we haven't seen in some time. Government shutdown gave us a little bit of a break. So heading back to Barron's, heading into 2026. Barron's cautiously optimistic, , saying that the stock market rally can keep going into 2026, and they talk about what to buy now, and we'll talk about their top 10 picks for 2026. Talking about going forward, they point out that analysts have increased SP 500 profit estimates with fourth quarter year-over-year growth rising from 7.7 to 8.2%. The big debate in 2026 is whether or not artificial intelligence will keep the markets happy. We don't know the answer to that, but Barron's saying they do see bargains below the AI surface and building blocks for another good year in stocks and bonds. And that seems like a tall order given the strong performance in 2023 and 24

Jobs, Retail, And CPI Preview

Keith Lanton 24:10

and 25. What's next in the market, they say hinges on several factors, including U.S. economic growth, Federal Reserve interest rate cuts, and the uncertain policies of President Trump. None, of course, are sure bets. There's certainly still a bear case out there that valuations are stretched, leaving little room for error. If companies aren't able to hit the profit growth measures, which markets are expecting profit growth in the neighborhood of 14%. If you're looking at the bearish narrative, though, some suggest the bearish narrative has more headwinds than the bullish narrative has tailwinds. The headwinds for the bearish narrative are that we both have fiscal policy as a result of the big beautiful bill, and monetary policy as a result of Federal Reserve considering possibly cutting rates. So there certainly seems more likely than a rise in rates. So when you've got favorable fiscal policy, big beautiful bill kicking in, monetary policy, typically that's supportive of financial markets. Another positive they say is that the bull market is spreading beyond big tech. While tech has been the standout sector, financials, industrials, healthcare are starting to fire on more cylinders, seeing gains of 10 to 20%. And health and small cap stocks are also picking up as well. They're up 14% year to date. They think those sectors can continue to move higher and perhaps be the engine of growth going forward. Goldman Sachs Strategia CD SP 500 at the 7600 at the end of last year, put some perspective. Right now we're at about 6927. Morgan Stanley's got a 7,800 target. Ed Yardini, long-term bull and head of Yardini Research, see 7,700 within reach. And keep in mind he has gone to neutral on the Mag 7, so he thinks the rest of the market can pick up the slack. Much will depend on AI continuing to fuel trillions in capital trillions in capital

Barron’s 2026 Outlook Setup

Keith Lanton 26:05

expenditures. Gartner Research predicting in September that global AI spending will top 2 trillion next year. That's higher than this year's $1.5 trillion. But as we've seen from results recently from Oracle, that doesn't mean it will be smooth sailing for AI. One way to hedge your bets with respect to AI is to shift from the AI arms dealers to the adopters, companies in retail, finance, and other parts of the economy. All right, let's move on to Barron's top 10 stocks. Last year, Barron's top 10 stocks, which they came out with in mid-December, were up 28% year over year, that's from mid-December to mid-December, versus the S P 500, which over that same time period was up 15%. They did have one big loser, and that was Moderna, which fell about 30%. So great performance in 2025. Caveat is 2024. They lagged the market significantly with their top 10. So keep that in mind as we discuss the 2026 top 10 picks from Barons, which have an emphasis on more value-oriented companies. First one, however, some would suggest is not as much value-oriented, and that is Amazon. Barron's saying that Meta surge in 23, NVIDIA in 24, 2025 seems to have belonged to Alphabet, and they are suggesting that 2026, it could be Amazon's turn among the Mag 7. Amazon's around $232 a share. It's up only 6% only, 6% this year. It's trading around 29 times 2026 earnings of $8 a share, which is a fairly conservative number. It includes stock compensation. If you compare it to slower growing Walmart, Walmart's at 38 times forward earnings, Amazon at 29 times forward earnings. Amazon, though, is spending a lot of money, but Barron's suggesting

AI Spend, Rotations, And Risks

Keith Lanton 28:05

they are getting results. They have 40% market share of US e-commerce. They have Amazon Web Services growing revenue at 20% last quarter, fastest in 11 quarters. They also have a super lucrative ad platform which generates $75 billion a year in revenue, and it has promising new businesses like pharmaceuticals, satellite services, Alexa Plus, Zooks, it's Robo Taxi Service. Next up on the list, and this is an alphabetical list, by the way, is Bristol Meyer Squib suggesting it could be the pharmaceutical turnaround story of 2026, and this is despite the fact that it has major patent expirations, but they say that the stock, which is trading at just eight times 2026 earnings, giving it along with five, so the lowest PE in the drug sector, and Bristol giving a margin of safety with a 4.9% dividend yield, which they say is also safe from a reduction. At the current price, they say investors are paying little for Bristol Myers' pipeline, which includes Cobenephy, a schizophrenia drug being trusted as a treatment for psychosis among Alzheimer's patients, and Milvexian, a treatment of arterial fibrillation and strokes. We've covered A and B. Next up we're going to see, and , we're hitting perhaps the one of the cheapest stocks in the entire market, and that is Comcast, and that's from a PE basis. Comcast, we've talked about this last week in a separate article. 5% dividend yield, trading at six times forward earnings. Comcast has been using their cash flow at these low prices to buy back their stock. They bought back 5% over the past 12 months. Nevertheless, the shares are down almost 30% from where they were a decade ago, stocks trading around 27, and that's because Comcast's cable and broadband business, which is the largest in the country, has been slowly shrinking. But Baron's suggesting that Comcast is gonna have to pivot. That CEO and controlling shareholder Brian Roberts has been viewed as an empire builder, and they're suggesting he's

Barron’s Top Picks: Amazon To Comcast

Keith Lanton 30:15

gonna have to be think of himself a little bit differently, and perhaps that will benefit the stock price. They quote an analyst from Moffat Nathanson, who feels that investors are overly pro pessimistic on the stock and broadband, and he has a buy rating and an admittedly optimistic target of 53 on the stock, stocks 27. Barron's pointing out even if the stock were to get to 40, most investors would be elated. Next up is XOM, ExxonMobil, global standard in the global energy business. Recently gave a five-year corporate plan to highlight its strength. Exxon now sees 13% plus annual compounded growth and earnings per share through $10,030, up from the prior target of about 10%, and that's as long as oil stays at or near $65 a barrel. Currently it's around $61 a barrel. Next we have Fairfax Financial. We've talked about this one several months ago. The symbol is FRFHF. That's the U.S. shares that trades in Canada, and they are a mini Berkshire Hathaway. And they are suggesting that that Fairfax at the current valuation, perhaps with Warren Buffett step into the sidelines, that the Toronto-based property and casualty insurer with a business model similar to Berkshire will have results that outpace Berkshires. If you're looking backwards, they have an excellent investment record, phenomenal long-term performance under founder and chairman Prem Watza. They are targeting 10% annual growth in book value against Berkshire, which is targeting single-digit growth. And the potential to grow, just given the scale, perhaps a greater potential runway for Fairfax versus Berkshare, where Fairfax has a market value of $40 billion, Berkshire $1.1 trillion. Berkshire is trading at a price to book of $1.5, so is Fairfax, but Fairfax has some investments that are below market value, so the price to book is probably closer to $1.25. They have an excellent portfolio of indie investments, such as a controlling stake in the Bangalore airport, and they have a Berkshare alumnus, David Sokel, who was once viewed as a successor to Buffett. He runs a container ship business that Fairfax owns 43% of. Stock trades mainly in Canada, but has those thinly traded U.S. shares. Next up, Flutter Entertainment. Flutter Entertainment is the global leader in online sports betting. Stocks down by about a third since August on worries about Khalsi and Polymarket, those companies that allow you to make bets on you know black or white type of situations, and this is called prediction markets. Many Wall Street analysts think that prediction markets are not something that fanDuels should be as worried about, given that they have a 40% market share of the traditional gaming market, and they have a 50-50 prediction market joint venture with financial exchange leader CME group that rolls out by year end. Next up is MSG, Madison Square Garden, which has been a perennial laggard, and this is because the company is owned by James Dolan, and he has

Energy, Fairfax, And Flutter

Keith Lanton 33:30

said he is not interested in selling the company, and that has led to a significant discount. When I say the company is not interested in selling any of his sports franchises or unlocking value of his sports franchises. So stock has a market cap of $5.3 billion. The MSG owns the Knicks and the Rangers, some suggesting the Knicks are the most valuable franchise in basketball. LA Lakers, which arguably close to or maybe the most valuable franchise, recently sold for $10 billion. So the Knicks alone are probably worth $10 billion. On top of that, you got the Rangers, maybe worth another $3 billion. So the two together, you know, reasonable estimate, $13 billion, stocks trading roughly at a $5 billion market capitalization, big discount. The question is, is how do you unlock that discount if the controlling shareholder is not interested in doing anything to do so? But some say, John Boyer in particular, that there may be an incentive coming up because the tax law change in 2027 will penalize owners of public sports teams, which potentially could pressure the Dolans to take some action. Next up, we got SL Green, SLG, yielding about 6.9%. This is one of the largest commercial landlords in Manhattan. In fact, Herald and Lantern Investments is in discussions to take a lease in one of SL Green's buildings. Stocks down 35% this year, reflecting the fact that they have a decent amount of leverage and also concerns that the Democratic Socialist Zohan Mandami is the incoming mayor, not viewed as exactly business friendly, but some suggesting that the net asset value of the assets here could be somewhere in the neighborhood of $70 per share. The stock is trading around $44 per share, which creates a significant valuation gap and a compelling opportunity, some would say, for SL Green. And if they say if the stock doesn't move, well perhaps you'll have some activist or private equity investors get involved and perhaps encourage some more activity. I'll round out the last two Visa, Barron's suggesting that the demise of Visa has been greatly exaggerated with buy now, pay later, stable coins, cryptocurrencies all suggesting that perhaps Visa's moat is is getting smaller, but Barron's suggesting that the Visa has dodged challenges in the past, continuing to generate some of the most consistent double-digit earnings growth among megacap companies, and it has even become a leader in stable coins. And finally, the last pick here is Disney DIS.

Sports Assets, REITs, And Visa

Keith Lanton 36:10

So while Netflix and Paramount Skydance are prepared to pay a steep price for Warner Brothers movie, TV, and streaming business, Disney shares have continued to languish even though they have some of the best assets in streaming. So, what would be the value of those Disney assets, both at Hulu, ESPN, Disney Plus, given how much you see Paramount Skydance and Netflix being willing to pay for MSG? So Barron suggesting the stock, which is now around $110 a share, that things are looking up. In fact, Disney's projecting double digit earnings growth on top of their valuable assets and the cruise ship business, the theme park business, the streaming business, and the stock is valued at 16 times earnings. So Barron's suggesting risk reward looking really attractive. And finally, I'll mention one of the stock not in this top 10 list that Barron's ran a big article on, , suggesting that if you want to bet on the quantum computing trade, which they are suggesting is certainly something that may or may not work out, they suggest that the company that you might want to think about is not some of these smaller companies, but one that you've probably heard of over the years called IBM, saying that quantum, if it if it's successful in there, not suggesting that quantum that is going to be successful in the near term. There's lots of uncertainties, but suggesting that if someone were to figure out how to do it right in quantum, that it has a good chance of being IBM. IBM has p sold two 25 systems with a hundred logical qubits. Put that in perspective, the number two competitor who sold the second most systems with this level of sophistication is Google, who has sold two of these systems. You also may be familiar with some of the startups in this space like D-Wave, Reggetti, and IonQ. While Barons is not saying that you know that they can't have tremendous breakthroughs, but they are certainly up against the resources of a IBM and a Alphabet or Google who has been at this a lot longer and has a lot larger pocketbook in order to continue to fund these this this quest to achieve success in quantum computing, which is far from a certainty once you get into the complexities and what it takes in order to build a quantum computer, but suggesting that that IBM may be a way to participate in that success if it were to happen.

Disney’s Value Case

Keith Lanton 38:40

And if it were not to happen, this the suggestion here is that IBM has lots of other good and valuable businesses, so the downside would be measured. That's everything I've got.

Alan Eppers 38:49

Thank you for listening to Mr. Keith Lanton. This podcast is available on most platforms, including Apple Podcasts and Spotify. For more information, please visit our website at www.heroldlantern.com.

Sophie Cohen 39:09

Opinions expressed here and are subject to change and not necessarily the opinion of the firm. Test performance is no guarantee of future results. The information presented to informational purposes only for most investment goals.