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What is the "Dow Jones"? - YouTube
Channel: ClayTrader
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what is the Dow Jones Industrial Average
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I'm clay let me explain there are many
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names for but it's official name is Dow
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Jones Industrial Average but if you want
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to kind of sound hip if you want to be
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like one of the cool kids then you just
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call the Dow Jones so what exactly is
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the Dow Jones well the Dow Jones is
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essentially the stock market and where
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did all this come from well a quick
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quick quick history lesson Charles Dow
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and then his business partner Edward
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Jones have ever heard of Edward Jones
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the investment advisory but I actually
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learned about that I don't where that
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was a connection but Charles Dow and
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then Edwards Jones they were business
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partners they combined to do all this
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and it all happened in 1896 no it's not
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there we go
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here's your history lesson this all
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started in 1896 and again this is
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basically if somebody's talking about
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the stock market there are more than
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likely talking about the Dow Jones which
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again it's the Dow Jones Industrial
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Average so stock market for the most
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part if people are talking about that
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they are talking about the Dow Jones and
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then as we just discussed the Dow Jones
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is its official name up there so what
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actually is this well what's the purpose
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of it it's a way to pretty much gauge
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the health or lack thereof of an entire
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economy so if the stock market if the
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Dow Jones is doing well then you know
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from a general at now there's definitely
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nooks and crannies all of this but from
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a general framework perspective that
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implies oh then that the country's
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economy is doing well now if the Dow
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Jones if the stock market oh man the
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stock market the Dow Jones all it's
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doing so bad that would imply that the
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economy is just doing bad as a whole now
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what actually makes up the Dow Jones
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well there are thirty companies that go
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into making this up so again we'll call
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it just the Dow and these thirty
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companies are companies that you've
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heard of I'm not gonna list them all but
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Nikes in it and just pretty much Procter
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& Gamble so that doesn't mean much but
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you know have you ever used deodorant
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shampoo stuff like that that's Procter &
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Gamble just big ExxonMobil you know
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there's a gas company
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lots of big-name companies that you've
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heard of they are making this up and the
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reason they're using big name companies
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was because the logic goes well those
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big companies if they're all doing well
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well then as a whole the Dow Jones is
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going to do well which would then
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reflect and make it at least make sense
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that okay the overall economy is doing
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well so you have thirty companies now
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the one thing to note with this is these
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thirty companies so right here these are
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not always the same companies these can
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change so over time these companies have
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you know the different ones have come in
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and gone all the time I had one of the
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most companies that was you know taken
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out of the Dow Jones with General
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Electric General Electric has really
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gone through a rough patch and as a
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recording of this video was still going
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through a rough patch so they were taken
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out and I think Walgreens would replace
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them and think about it Walgreens they
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were like on the corner of every street
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out there it seems like so they'll get a
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big company and it you know it's it's
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logical to think well if Walgreens is
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doing well then the economy as a whole
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is probably doing well if Walgreens is
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doing very very poorly then yeah maybe
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the economy isn't doing so good but that
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is how those 30 companies are made up
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they can change so it's not always the
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30 and yep for the most part they stay
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the same but over time companies drop
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out and new companies are added back in
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now as far as you know how does this
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calculation work how does the number so
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a lot of people say well what are the
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Dow Jones do today what are the markets
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do today all the markets were down a
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hundred points most times they referring
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to the Dow Jones was down a hundred
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points but how is that calculation all
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made well I'm not going to get into the
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nooks and crannies and go through every
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single calculation but just understand
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this and this is probably I think the
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easiest way to look at it so the higher
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value a company has or in other words
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you know
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the bigger a company is so uh you know
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Clay's little lemonade stand on the
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corner versus Apple you know Apple is
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much more valuable than my little
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lemonade stand right they're gonna have
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much more you know effect on things
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because they are a much bigger company
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so the higher value means the higher
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influence meaning if one of the highest
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value companies of the 30 has a really
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really good day
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then the Dow Jones as a whole is gonna
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have a good day
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whereas let's say that maybe the top
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five really biggest ones of the day did
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terrible terrible terrible but they were
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still the five biggest even though the
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25 other companies may have still done
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well it's still possible for the Dow
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Jones have actually shown you know a day
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that you know lost some you you know
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that the the market as a whole was down
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so that's how it reflects is just the
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higher value the bigger the companies
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the higher influence it has on the
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number that the Dow Jones is giving you
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and again this number is just you know
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based on all these company's values to
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put together but at the core like I said
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as far as the just the top down general
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framework just understand that the
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higher value companies have higher
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influence on that Dow Jones number so
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that is what this is the Dow Jones is
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just the stock market and the stock
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market is just a way to give a broad
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sense of the health of an economy or
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economy is struggling you would expect
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the stock market to also be struggling
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that's not a perfect correlation but
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that's like I said the general premise
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of how this all works and thirty
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companies in the Dow they can always be
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changing and a higher value companies
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the bigger companies are gonna affect
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the Dow Jones the most each and every
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day so that is how it works and that is
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what the Dow Jones is and what people
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are referring to when they talk about
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the stock market and whether or not oh
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wow you know the stock market had a
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rough day today this is what they're all
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referring to right there first off
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thanks so much for watching the entire
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video real quick before you go I want to
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invite you to a live webinar web class
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training workshop online event whatever
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you want to call it but it will be me
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live revealing to you what I discovered
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that has allowed me to transform myself
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from being an employee to be
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my own boss including how I had only one
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losing day out of 73 days in total I'm
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going to cover three keys that have
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helped me unlock profitable consistency
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within the markets the first key is
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super-weird but in a productive type of
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way the second key is super awesome
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because it quite literally is wired into
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our DNA as humans making it very easy to
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use but in a cruel way this becomes a
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pitfall for many traders I'll explain it
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all though including how to avoid the
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pitfall that it creates for some and
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yeah the third key when you hear it
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sounds way to get way too good to be
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true
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but it's not and I'll show you how it
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all works then at the end I open it up
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for a question-and-answer session that
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is again totally live even if you can't
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make the live session please still sign
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up as it will be recorded and you can go
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back and watch the replay then I will
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send you click the image on the screen
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or click the link down in the
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description box so you can get the date
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and time and claim your spot which I
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should note is limited due to the fact
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that this truly is a live event if you
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have any questions let me know if not
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I'll be seeing you soon
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