Constructing Bubbles with David Trainer

This week we’re going to keep on pricking bubbles with a fellow cynic of the sycophants and stenographers. Here to help us is David Trainer of New Constructs, whose company makes “robo-adjustments” to the reported accounts of 1000s of listed companies and tries to unearth the real financials behind the content marketing from company investor relations teams.

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In this episode of Bubble Trouble, guest David Trainor, the founder of New Constructs, delves into his background in economics and statistics, his time at Credit Suisse, and his perspective on market bubbles and financial accountability. The discussion ranges from the detrimental effects of rapid, superficial analysis and reporting pervasive in today's investment industry, to the importance of rigorous fundamental analysis in discerning true business value. The conversation also touches on companies' strategic overstatement of profits, the ill-effects of unchecked capital allocation, and the role of artificial intelligence in future financial analytics. As the founder of New Constructs, David highlights how his company is helping investors uncover the real financial situation behind companies' reported accounts.

00:00 Introduction

00:57 Part One

01:02 Guest Introduction: David Trainor

01:26 Understanding New Constructs

02:22 The Cynicism in Wall Street

03:02 David's Backstory and the Tech Bubble

04:11 The Role of Accounting in Business

05:37 The Reality of Wall Street

07:42 The Boy Who Cried Wolf: A Market Perspective

08:27 The Intentionality of Market Bubbles

15:44 The Impact of Algorithmic Trading

18:28 The Difference Between Investing and Speculating

23:49 The Challenge of Limited Company Disclosure

26:12 Part Two

27:34 Discussing the Spectrum of Corporate Ethics

27:42 Highlighting Notorious Corporate Scandals

28:05 Elon Musk: Genius or Snake Oil Salesman?

28:46 The Reality of Earnings Distortion

29:09 The Unsettling Truth About CFOs and Wall Street Analysts

29:40 The Role of Investor Relations Firms

30:37 The Problem with Superficial Analysis

33:43 The Art of Investing: A Touchy Feely Approach

35:55 The Role of AI in the Future of Financial Analysis

47:18 The Dangers of Overstating Profits and Zombie Stocks

50:57 Closing Thoughts and Future Predictions

50:59 Credits

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