Joel Greenblatt's Magic Formula has a peculiar genius: it finds companies making real money when everyone else chases dreams. This week, as software stocks shed nearly $1 trillion on fears that AI might render them obsolete, Greenblatt's approach feels almost radical—what if we invested in businesses with actual earnings, solid balance sheets, and reasonable prices?

The video explores three such companies: HP Inc, Crocs, and Abercrombie & Fitch. While markets panic about tomorrow's disruptions, these stocks offer something simpler: real profits at fair prices.

Sometimes the best move in uncertain times is owning good businesses that don't cost too much.

In turbulent markets, value investors search for companies that can weather any storm. This week's video examines three stocks emerging from Joel Greenblatt's legendary Magic Formula: HP Inc with its 6% dividend yield, Crocs with a remarkable 720% decade-long return, and Abercrombie & Fitch's stunning turnaround.

The analysis cuts through market noise to examine what truly matters—financial health, sustainable growth, and whether current prices reflect genuine value or temporary fear. When panic creates opportunity, these three names deserve your attention.

The question isn't whether bargains exist in this market. It's whether you're positioned to recognize them.

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1. Software Stocks Crater on AI Disruption Fears

Nearly $1 trillion vanished from software stocks in seven days as investors confronted an uncomfortable truth: the same AI technology they'd celebrated might devour the companies they own. New automation tools from Anthropic sparked the selloff, with enterprise like ServiceNow and Salesforce plummeting 25-35% this year. JPMorgan called it "sentenced before trial," yet the fear persists—can legacy software survive when AI agents build applications in seconds?

2. Alphabet Announces Shocking $185 Billion AI Spending Plan

Google's parent company stunned Wall Street by revealing capital expenditures potentially reaching $185 billion in 2026—double last year's outlay and far beyond the $120 billion analysts expected. The message is clear: tech giants are betting the future on AI infrastructure, consequences be damned. While Alphabet can afford this, the real question is whether these investments will generate returns or simply prove that even the smartest companies can overpay for tomorrow's promise.

3. Uber Beats Revenue Expectations But Stock Tumbles

Uber delivered what looked like victory—revenue up 20% to $14.4 billion, record free cash flow, 200 million monthly users—yet investors sold anyway. The 5% stock decline revealed a deeper anxiety: softer profit guidance and moderating growth forecasts matter more than yesterday's wins. CEO Dara Khosrowshahi's vision to dominate autonomous vehicle rides sounds ambitious, but markets reward execution over aspiration. Sometimes even good isn't good enough.

4. S&P 500 CAPE Ratio Hits Dot-Com Crash Levels

History whispered a warning this month: the market's cyclically adjusted price-to-earnings ratio reached 39.9, matching levels last seen in October 2000 before the dot-com collapse. When valuations previously exceeded 39, the S&P 500 averaged 20% declines over the following two years. This doesn't guarantee catastrophe—AI may justify today's prices—but it does suggest the market has priced in considerable perfection, leaving little room for disappointment.

5. Retail Investors Buy Microsoft Dip, Sell Meta Rally

The crowd got interesting in January, the strongest retail trading month on record. JPMorgan's data revealed individual investors buying Microsoft aggressively after its 10% post-earnings stumble while selling Meta into its rally. This disciplined rotation—purchasing quality on weakness, harvesting gains on strength—suggests retail traders may be maturing beyond meme-stock mania. Whether this marks genuine evolution or temporary sanity before the next frenzy remains the billion-dollar question.

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