On a recent Twitter Spaces event hosted by renowned fund manager George Noble, our CEO, David Trainer, joined a wide-ranging and dynamic discussion on stock market narratives, forensic accounting, and the dangers of relying on Wall Street’s sell-side spin.
The conversation, which included veteran analysts, short sellers, and fundamental purists, offered a sharp contrast between objective, data-driven research and hype-fueled investing. For those who couldn’t tune in live, here’s a breakdown of key moments and insights from the discussion.
Cracking the Code on Earnings Quality
David opened with a simple but bold assertion:
“We’ve cracked the code on how to read through all the corporate filings... to pull out a more robust and superior measure of earnings.”
Backed by peer-reviewed research from Harvard Business School and MIT Sloan, David explained how New Constructs’ proprietary machine learning system analyzes 10-Ks, 10-Qs, and footnotes to uncover accounting distortions that Wall Street misses—or ignores.
Independent Validation: Bloomberg, Harvard, and the Numbers
George Noble highlighted that New Constructs isn’t just theory—it’s proven:
“The performance of your very attractive stocks index beat the market by 80% over five years. That’s top 1% performance.”
David elaborated on our Bloomberg-listed indices and our consistent outperformance. These indices rebalance quarterly and include only companies with the strongest fundamental risk/reward profiles—based on core earnings, ROIC, and valuation.
Trust and Transparency in a Broken System
Reflecting on his early career on Wall Street, David didn’t mince words:
“Wall Street had completely been taken over by its lust for money. There was no integrity left.”
He described how some research analysts knowingly published lowball earnings estimates to help their banking clients “beat” expectations. Internally, they shared higher estimates with institutional clients. “That’s two sets of books,” David said.
Tesla, GameStop, and the Power of Reverse DCF
No conversation about modern market distortions is complete without Tesla, and David took the topic head-on. Using New Constructs’ Reverse DCF model, he broke down the math:
“To justify $250 per share, Tesla would need margins higher than any auto company in history and revenue of $1.4 trillion by 2035—more than the entire global EV market.”
Similarly, David detailed how we recommended GameStop as a long in 2018 based on its undervaluation—and then closed the position near $197 in January 2021, right before its historic meme-fueled collapse.
From Harvard Lectures to Helping Retail Investors
David emphasized that our mission isn’t to put our models behind a paywall for institutions only:
“We’ve got subscriptions as low as $10/month. This isn’t for Wall Street insiders. It’s for everyone.”
New Constructs regularly contributes to investor education through guest lectures at Harvard Business School, and free reports on zombie stocks, earnings distortions, and misleading non-GAAP metrics.
The Elephant in the Room: Adjusted Earnings and Stock-Based Compensation
George called out the industry-wide abuse of adjusted earnings:
“It’s a complete scam. They exclude stock comp as if it’s not a real expense. Of course it is!”
David agreed and shared how New Constructs was ahead of the curve:
“Even before the rules changed, we were modeling stock-based compensation buried in the footnotes. In many cases, those expenses were 200-300% of reported revenue!”
Conclusion: In Defense of Capital Market Integrity
David made it clear why this work matters:
“If people can’t allocate capital to its highest and best use, capitalism fails. That’s why we built this—to preserve the integrity of our markets.”
George closed with a fitting summary:
“David, this was magical. So many Spaces are superficial. I think I speak for everyone—we actually learned something tonight.”
This article was originally published on May 21, 2025.
Disclosure: David Trainer, Kyle Guske II, and Hakan Salt receive no compensation to write about any specific stock, sector, style, or theme.
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