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- [00:00]
A
What's freaking me out about the broader indices is the dollar is getting stronger. Like the. This is the trade that absolutely mulched my P and L again and again. As an oil trader, I'd have some bull trade, some idiosyncratic thesis, then the dollar would strengthen a bunch, and it wouldn't matter. I would just get. I would get dildoed. Never underestimate just how terrifying a rallying DXY can be for your assets, because, let's face it, at the end of the day, you were. We're all patting ourselves on the back here, but we're really just short dollars. Cash is trash. You get long freaking DRAM modules, you get long spy, you get long biotech ETFs that I've never heard of. You're making 15% a day or every two weeks. Like, it's. It's all a short dollar trade with various degrees of.
- [01:04]
B
Jonah, what's going on? Just yelled into the microphone for all those listeners that just hopped on. Hopefully your eardrums burst.
- [01:13]
A
Nice to see you, Avi. At some point, I want to get an explanation of what that artwork is in the background behind you.
- [01:20]
B
I. You know what? I. I think I talked about it. I think I talked about it on. On the Friday live stream that I did. Like, the 30 minutes where I just talked straight at the camera and somehow had to keep coming up with more topics to talk about. That was. Actually. It gave me so much respect for streamers. I'm like, it's kind of hard to just talk out of camera with no feedback from other people. It's kind of crazy. But, yeah, I mean, it gave me a lot of respect for the people that managed to just gab and yap. And it also made me realize that sometimes you just need to say words, and the words don't even need to make sense, and people still listen because they just put it on in the background and they're, like, kind of just, like, hanging out with you, and then they ask questions, and then you kind of just banter with them and you have fun. Kind of like what we're doing right now. But it's so much better. I'll be honest. Like, it's. I'll get better at it, but it's. It's so much more enjoyable with you. It's. It's a very enjoyable experience. Having a good. A good counterpart.
- [02:22]
A
Yeah, I feel the same way. I could never just. I could never stream solo. It feels impossible. I mean, I. The guys that do it, from Ben Shapiro and Megan Kelly, whatever Those types of just Tucker Carlson don't like him. But respect for just sitting there and talking to the screen for an hour. It's hard to do that multiple times a week. I would say.
- [02:45]
B
Well sorry, sorry I cut you off.
- [02:48]
A
No, no, I was just going to say I think what I like about our dialogue is that it's the dialogue we were having before we were recording it. Right. Like we're just talking markets here. I think right now what's bothering me about markets I am like I've traded the recent price action pretty well. I am now sitting, you know, Portco Port portfolio, all time highs. I, I'm starting to lose a bit of confidence in my equities positions. Like just, I'm just wondering is it really, is it time to diversify into something else? Not because I can identify a reason why I should. In fact it's probably still just going to keep running. But it's the gut that's tingling. It's that weird gut feeling that's kind of like oh man, I should really trade around this position some. This went, this ran way harder, way faster and way longer than, than I ever would have expected.
- [03:50]
B
You know what, I can't, I can articulate it in a bunch of different ways but as a trader tell you a story like what makes a good analyst versus what makes a good PM is, is an analyst can collect
- [04:07]
A
a
- [04:07]
B
hundred pages of evidence. They can tell you exactly why the 10 year is doing what the 10 year is, why the inflation break evens are where they are, why Intel's going up, why BlackBerry Q&X is driving the stock higher. They can tell you every single little factoid that you need to know about the market but they can't figure out what actually matters. Like what, what is the core driver of the price? What is really sending us higher? Who's buying? Why are they buying? That's the number one thing that you need to think about when you're a trader, when you're an investor. What you need to think about when you have a long term time horizon is whether the company that you own is a good company, whether the fundamentals are sound, whether over the next five years it's going to grow or not and whether the expectations of that company right now are low enough so that that growth is actually baked into price. And that's obviously an important part of company. A company can grow 30x but if they're priced at 50x growth then obviously they're not going to do well. So right now our job, me and Jonah is To try to figure out, well, what has been driving the market and is that dynamic coming to a close? Right. And what's been driving, I think the market is there was a period of time where every day you would wake up and there was a new frontier model that was released that was absolutely crushing things. Right? And what was happening is that people were joking about how Anthropic was going to take away jobs from everybody. Like every week. Anthropic had like, we're doing Claude for finance, we're doing Claude for this, we're doing Claude for that. And everybody is going, man, AI is like totally going to take over the world. Massive amounts of capex are plowed in, massive amounts of forward purchases from Google to, to AMD and Micron and Nvidia selling chips like crazy. And that is still happening, but it seems like that is kind of now at least baked in to the expectations. Right? The expectations have risen to the point where I don't want to say that we're fairly valued because my, my conversation or our conversation and take on the previous podcast was very specific. It was that the hyperscalers led the rally. Then memory follows and now it's about what is actually being impacted by the markets or what is actually being impacted by AI. And that's going to be where the value is now. And I think we're sort of seeing that, I mean, with intel, intel gyrating like crazy, Micron blow off top, you had 1200, you're back down at about a thousand, you're seeing memory start to compress because the forward expectations have been baked into the price. And so it's like the question is, I had a substantial portion of my net worth in intel, both because of allocation, but also because it grew so much. And so the question is, in a single name stock, do I still want to hold that much exposure in single name stocks to memory, or is that the risk of downside much higher than it was two months ago? And the answer to that is is yes. And you're seeing, you're seeing our thesis play out a little bit when you look at biotech. Biotech's done very well since we first talked about it. I think ARCG is up 15, maybe 20% since I mentioned it on the podcast.
- [07:37]
A
That was a week ago.
- [07:38]
B
That was two weeks ago.
- [07:39]
A
Two weeks ago.
- [07:40]
B
Two weeks ago we talked about biotech. Biotech's up, I think 15, 20% across the board on a lot of these names, some even more. The, the, the BLLN is up, like billing to one is up a ton, I think on another 20%. And I, I'm actually still very bullish on these names. I'm not, I'm not selling out of them, but I am reducing intel, right? I'm reducing Micron. I'm, you know, I was, I was bullish on Micron into the earnings. I said that it was very likely that Micron was going to be. Basically what, what had happened is you always have to think about flows, right? Because now, now we're no longer in the fundamentals game when it comes to, when it comes to these stocks, we're in the flows game. So a day before, what had happened is The Nasdaq was down 3% and there was clear degrossing across the board in all of the top memory names. And so heading into earnings, I think there was, there was a much likely, it was more likely that there would be asymmetry to the upside, which is what happened. And I tweeted it out prior to the, prior to the earnings we went up, but now we're back down. And when you retrace a move like that, generally I think that's, that's probably a bad sign for things to come. It means that people are willing to take, take profit on these things even though that Micron massively crushed earnings. So my view right now is again, like, look for the things where AI, like what, what are the downstream things that are going to benefit? I mean, I've talked about this on previous podcasts, but Reddit is a Great. Reddit's up 10% today. It's trading at 191. We talked about this at 1160 and that's been Reddit. I mean, Reddit has all the data. Like you go, you go to Claude, you go to OpenAI, you ask or you go to ChatGPT, you ask, hey, like, what, what's happening? Like, what restaurant should I go to? I, I use Chat GPT to talk about TV shows. It always pulls from Reddit, like negotiate, like talking about fan theories about House of Dragon with chat GPT, it's fun and it's like always pulling from Reddit, right? And that like Reddit is licensing out its data to these things and that's obviously going to be very, very good for. So the question is again, like, what are the downstream effects of AI going to be now that's where you probably need to park your money. And I'm not sitting here saying, like, I, Joan and I are not these omniscient. I mean, you know that we get Told a lot how wrong we are, but you know, we're on a decent amount and it's like, let's talk about the frameworks for how you should approach the market. And one, one of them is, you know, how, how heavy and like how heavy in indexes should you be versus how heavy in single name stocks? Right. And when there's a ton of dispersion in the market and when there's secular growth happening and it's we and you think it's underpriced, you can probably move over to single name stocks and, and be pretty happy about that. And what I'm saying right now is not go short the market. I'm saying that regime maybe is coming to a close right? Or, or is coming to a close that regime where when you look at my portfolio like I hold 20% in an index and 80 in all these random single name stocks. Like maybe what you need to do is you just need to go back to the index and just wait it out. And time in the market beats timing the market. Go back to the indexes. That, that's, that's my, that's my general take on the market right now. Is, is that weird little ball tingling gut feeling, hey, like are we, are we overheated? Right?
- [10:56]
A
Yeah, I mean I have a lot of takes on what you said. I, I have a large index position because it's something that, that has been smooth enough that you can trade with leverage and something where you can invest a fortune and feel just fine. Right. So it's that position that I'm getting a little worried about. So one thing that you said that resonates with me is when you're starting to get a little bit worried about something when the gut feeling is tingling, don't just sell. Like, don't sell for cash. Cash is still trash. Your advice is kind of rotate, right, rotate into something that makes you feel better. I'm wondering what to rotate my, some of my index position into because it's become substantial. So you know, I've been buying on the way up with leverage and now I'm like, I don't know what to do. So basically there's also before we get to that, like what do you rotate into? There's sort of another thing you said that I just want to maybe debate with you. I don't have a strong view on this, but you said that fundamentals are kind of done for now in the stock market and we're trading on flows or maybe just in the micron, you know, Sandisk world of white hot AI stocks.
- [12:09]
B
That's what I'm talking about specifically.
- [12:11]
A
I, I actually it. When you see price action like this, it normally means what you said, right? Like when you see it in crypto markets, it means that people have thrown. Does this project make money? Is this project ever going to get used to the wind? And they're just trading on fomo. They're trading dollar sign ansom. Right. Because they think other people will buy it from them. I don't think we're actually quite there yet with Micron and SanDisk and the, the white hot AI stocks. And I'll tell you why I think we're still in fundamental, squarely in fundamental zone with those. It goes back to who's got the money. Right. The real big allocators are the, you know, the blackrocks, the vanguards that run the index funds, but also, you know, passive money managers. And passive money managers get fired for deviating from the herd and being wrong. So they basically index a lot of their positions to analyst recommendations. They're not going to make a bold call because they don't get rewarded the way that hedge fund managers do. Passive money is where the trillions are. Hedge funds are just little spits in the ocean by comparison. So passive guys index their trillions to analyst recommendations. Similarly, equity analysts, it's selection bias. The ones who made the bold calls got fired when they were wrong. And the ones who sort of hedge and wedge and make qualified statements and say belarish things that are, you know, right. Whether the market goes up or down. Those are the sort of weaselly guys who have craft and gals who have crafted careers for themselves in like sell side equity research. Right.
- [13:51]
B
I'm sorry, that was. I love how you realized that you needed gender equality for your insult. Yeah. Like these Weasley guys. And they're girls. They're Weasley girls as well. Like you can't donate. Don't, don't, don't be sexist against the girls. Girls can be Weasley.
- [14:08]
A
Like there was that lady. There was the one who called the crash. She was a, she made a bold call. Was it Meg Whitman? No. Or is that the CEO of hp?
- [14:17]
B
Meg, Meg Whitman.
- [14:17]
A
No, no, no. There was, there was one lady who made like a really bold call on a bearish call in 2008 and she was dead. Right. And she was, became famous, set up her own firm and then she tried to make another bold call or two and she's just been written off into irrelevance. Meanwhile, the, the hedgers and the wedgers of the equity analysis world are still sticking around making kind of like milquetoast middle of the bell curve calls. And so where I'm going with all of this Avi, is to say that the people who are the analysts for micron stock, for SanDisk stock, for Samsung, for SK Hynix, even though they're projecting whatever double digit percentage, compound annual or compound quarterly over quarter, quarter over quarter growth in these companies earnings because of the incentive structure, they're just going to miss and miss and miss. And Micron and sandisk are just going to keep smashing analyst expectations precisely because the analyst community is disincentivized from making the bold call even when it's correct. So what I'm saying here is you have a fundamental trade. As a thousand x podcast listener, as a retail investor, you can literally just ride this stuff while it beats expectations quarter after quarter. Because the entire market structure, the entire capital market system around these stocks is set up to misprice extreme events like AI demand absolutely blowing through a DRAM bottleneck. Right. So I do think that you can actually profit from the fundamentals in ways that like huge pools of capital just can't because you, you can make a bold call in your pa. So I think for now we're in fundamentals territory. I don't think these things are trading at like crazy, you know, impossible to ever achieve, like Tezos in 2017 or some meme coin. We're not there yet. We will get there. So I think it's probably still a good idea to hang on to those. Now in terms of what to rotate.
- [16:18]
B
Can I make a, I need to make a point there that's important because I disagree with it. And it's that fundament, your dynamic that you just outlined basically says that earnings are going to consistently underprice what is actually happening. And I actually, I 100% agree with that. That's true. And that's been happening over and over.
- [16:39]
A
And earnings expectations.
- [16:40]
B
Yeah, sorry, earnings. Earnings are going to continuously beat earnings expectations specifically because of the way the incentive structure that you just outlined exists in the world of finance. That doesn't, that doesn't mean that flows are not what's driving price. Example, Micron beats earnings massively. It goes up 15% and then it goes right back down. And so what happens is that your dynamic played out. People underestimated the fact that they were going to crush earnings. Everyone got very excited that they crushed earnings. But then people basically had made so much money on Micron that they took that liquidity and sent it straight back down. And so I think that both of these things can be true where there's probably a trend. Just when you're looking to trade the markets, you always got to look for edge. And you just kind of gave me a thought of what edge is. Basically, if a stock is down into earnings, buy it because of that dynamic that you outlined. But it doesn't necessarily mean that it's going to be up in a month. I guess that's what I would say.
- [17:49]
A
Okay, so I think we're, I agree with you. You know, it's an important point you made and you know, you're right. But maybe we're triangulating an important fact here, which is I just, while you were talking, I just went and checked. Micron is trading at seven and a half times forward earnings right now. This is not bubble territory. So the price action is important to watch. Like, I'm not saying that technicals don't matter here or that flows don't matter. I'm just saying we're not at the point where fundamentals don't matter. Fundamentals matter a lot. So since just look at price to forward earnings, Micron is very much tethered to reality. This is not a crazy situation yet in terms of just fundamental analysis world. So when you get the big pullback
- [18:32]
B
as, as everybody, like, like MU is down from its peak right now, if I'm looking at the chart, we're down 16%. Like it's down 8, 8% today. Intel's down also 8% today.
- [18:49]
A
Lift. I mean honestly, there's. SpaceX is down 5%. SpaceX is down 5%. You know, honestly, like, I think it's, I think this is a good time to YOLO into a little bit of Micron here for a trade on this pullback. You see my point? I'm just talking about like, okay, if price to forward earnings were infinity like it is for every crypto token, maybe you hold off. But like Micron's still in fundamental reality and there's still a ridiculous shortage. Now the leading indicator, again, DRAM is just a commodity just like crude oil. My wheelhouse, the leading indicator for every commodity is the price of the fully assembled product, right? So for crude oil, demand is notoriously hard to model. You usually want to look at societies, just global GDP growth, demand for transportation, that sort of thing. Because at the end of the day, the finished product for which the major input is crude oil is travel, right? Movement, planes, trains, automobiles. So you look at that here. The finished product is the server. It's really the server rack that's driving this. Computing has not gone to the edge yet. We're not looking at like humanoid robot prices here. You really want to look at like, what a fully kitted out, standard Nvidia GB200 server rack is priced at roughly seven and a half million on the high end. That's up from like $3 million a couple years ago. And it's probably going to go higher. There's no, there's no shortage of demand for those things. So to me, I just think Micron is going to keep squeezing and you should use these pullbacks as an attempt to buy in. And you should probably track the server rack price. You can use Claude to help you out or chatgpt or maybe your favorite Chinese model to figure it out. Back to the index point, though. What's worrying me a lot, Avi, what's freaking me out, not about this particular segment that's getting squeezed for idiosyncratic reasons. What's freaking me out about the broader indices is the dollar is getting stronger. Like the, this is the trade that absolutely mulched my PNL again and again. As an oil trader, I'd have some bull trade, some idiosyncratic thesis, then the dollar would strengthen a bunch and it wouldn't matter. I would just get, I would get dildoed. So basically like this is, this is happening again now, the dollar is strengthening. And you know, to your point about what's driving the market, let's, let's just pull way back and look at M2 money supply ripping like there's no tomorrow. We've been talking about it on this podcast for, you know, for four years. Any sort of slowdown in the profligacy of our central bankers and Treasury Department executive officials is going to result in a big asset problem. There's also going to be probably some headwinds coming from just the rates situation, the trajectory having gone from cuts to hikes. Never underestimate just how terrifying a rallying DXY can be for your assets. Because let's face it, this is the end of my rant. By the way, at the, you know, at the end of the day, we're all patting ourselves on the back here, but we're really just short dollars. Cash is trash. You get long, you get long fricking DRAM modules, you get long spy, you get long biotech ETFs that I've never heard of. You're making 15% a day or two every two weeks like it's, it's All a short dollar trade with various degrees of beta.
- [22:23]
B
I think that's probably true for a lot of, a lot of other assets. But one thing that our friend, a friend of the show Capital Flows has pointed out is that as, as the yen, as the yen is collapsing, people are the trade, the trade is basically you borrow, you borrow yen, you put, you put it into dollars because you get, you get that, you get that interest rate spread. And that I think is maybe what's driving. And rates are still reasonably high and that's what's driving the dollar higher. But that doesn't necessarily mean that we're not going to see continued growth from AI and continued impact on our economy from AI. So I think the dollar is a lot more scary when the economy is being driven by Fed liquidity. And right now it's not right. The borrowing because rates are high, the marginal impact of a rate change right now or dollars becoming more expensive is a lot less impactful to the markets than a DXY going up in 2021 or 2022 when rates are low, right, the marginal impact is going to be a lot higher. Just thinking about where the flows are coming from. If people, if people are borrowing a ton of money, just, I'll make this really simple for, for the people, for the people at home. If the core driver of the markets is that people are borrowing capital to put into indexes or to put into single name stocks, then the dollar going higher is obviously bad for the market. Rates going higher is obviously bad for the market. The core driver is that money is quite literally being made right now because of advancements in tech, then it doesn't matter as much. And that's kind of what's like money is just being made right now and so it matters a little bit less. But you know what, it's really bad for bitcoin and this is actually why I am. I went on Pump's podcast, Shout out to Pomp. He's got such a great studio. He made me look hot. I don't know how, but it was pretty great.
- [24:34]
A
Thanks.
- [24:34]
B
Thanks for all the, thanks for all the compliments on that pod and all the hate as well. I got a lot of hate. I got a lot of hate from the bitcoiners. The people that like bitcoin really didn't like that pod.
- [24:46]
A
Who can hate?
- [24:46]
B
Because I said, because I said I haven't been super constructive on bitcoin as a long term hold is like a true long term hold for a while. Obviously I'm constructive on trading on a trading basis. And. But we've talked about this on the pod. I mean we've disagreed openly on this. Is. Is that I'm just less convinced, especially with the prominence of sailor in the asset, with the fact that it's co opted by Wall street banks now and owned that it doesn't exist outside the system in the same way that it did before. And that when you have a market where there are real things happening, it's less important to apply your money into. Into bitcoin because you want to be invested where real, where real growth is occurring.
- [25:29]
A
I agree with you short term. But why, why does that like short term? I've been saying the same as you. There's no disagreement. But over the long term. What. Why would we. I'm so bullish. Are you not? That that would, that would be interesting to me.
- [25:40]
B
I guess, you know, it's. Let's define terms. Right. So the terms are over the next 10 years. Am I bullish on bitcoin? That actually is really just comes down to one question. And will the bitcoiners manage to solve their quantum issue? That's really what it comes down to. And right now we're not seeing a ton of product like the concept of bitcoin obviously I think is extremely valuable, but that's why zcash has been doing so well is because it sort of presents a solution for all the problems that people are very annoyed with bitcoin about, which is now it's fully traceable by the system. It is owned effective. Like the future of bitcoin is owned by one man in many ways. And it does have this quantum issue that's coming up. And zcash obviously doesn't have these things. And that's why I think people are. That's why zcash is doing well relative to btc. And so the concept of a non sovereign digital currency will always be valuable. That in my mind will always be valuable. I'm just seeing that bitcoin sort of falling behind. And so people got very mad about that take on the podcast. But really to go back to defining the terms, it's. I just think that right now crypto is not necessarily the right place to park all of your capital. Right. When. When you. When I think about.
- [27:01]
A
Well, it hasn't been. It hasn't been for a long time like we've been. We went from being all in on bitcoin at the beginning of this podcast, you know.
- [27:09]
B
Yeah. I mean when we first started recording
- [27:11]
A
this, we were, we were all in. And then it was like 50, 40, 30, 20 and now like whatever, who cares? But like over a 10 year period. Let me just put this, put the ball back in your court. Like Quantum can hack into your JP Morgan account too. Like they'll have to update RSA encryption to be post quantum. And the same thing will, the same problem will happen with Bitcoin. So let's say that Bitcoin gets hacked and goes to zero. The devs won't just be like well shucks, guess we're all broke and retarded now looking. They'll probably just fork it like they've forked it before for various bitcoin cash bch the previous forks and just be like, all right, here's a post quantum one with everybody's holdings, kind of like back to where they saved the game before the quantum hack. Like let's just revert to the last saved point where we were alive. Why wouldn't that happen to me? I would assign like an overwhelmingly massive probability of that happening. So that's my take on Quantum. Of course, of course they're going to revert to the saved game where Quantum hasn't destroyed all their value with a little post quantum trigger in the encryption. And then post Quantum patch in the encryption, sorry. And then as for the rest of it, the non sovereign currency, you look at what's going on in the world today in terms of polarization, multipolar world, the rise of socialism, the rise of like asset seizures. Nothing is more portable than Bitcoin. And the like the crazy thing about socialism is that for, or, or just, you know, socialism and capitalism in democratic governments is that the, the proven way to buy people's votes and buy people's, you know, buy in basically without actually without violence is just to promise them stuff, to print money, to give them free beer, free housing, free, you know, capped rent. So like the capitalists do it, the communists do it. Like to me it's just a one way trade for Bitcoin over the long run. The problem as you identified is that in the short run we have one guy who controls the market now that's unsustainable. He's going to blow up, mark my words. And then whoever's alive to pick up the pieces is going to have a really freaking epic run, in my opinion.
- [29:35]
B
Yeah, I mean we should talk about that in a second. As to, you know, what, what's happening with the microstrategy complex right now, which I think that we probably get a bounce because of what he's done, but inevitably it sets us up for actually a larger problem where he's transformed himself into, as people have noted on Twitter, into a hedge fund. But I guess when I say on the longer term, I mean a really bad hedge fund, a really terrible hedge fund over the next year, two years, which ironically kind of lines up with the four year cycle basically until the, until the, until the AI real world trade is over, until the robotics trade is over, until the biotech trade is over, until all these other things die down, I just don't think that there's place for bitcoin in the market as something that's going to massively outperform. I mean if bitcoin goes back to all time highs now, it is still radically underperform memory stocks from. Right. It's like there might be a period
- [30:27]
A
that's not a fair, that's not a fair comparison. Of course, if bitcoin goes, if, if anything goes back to like over the
- [30:34]
B
next two to three years, what would I rather put in my portfolio and hold and just close my eyes on? And it's the biotech etf, it's nasdaq, it's. Over the last five years NASDAQ has done better than btc. Right.
- [30:46]
A
Well, you don't have to have only one thing in your portfolio. Like I think in much the same way as there were people who had gold for 10 years of nothing and then suddenly at 5x like you can have some bitcoin too because bitcoin is probably going to 50x from the lows after Sailor's done blowing up. You know, you don't need to be all in.
- [31:04]
B
Yeah, I just, I caution against the people that are. There's that meme that I've posted before. It's like the bird stuck in the cage, but there are only two bars and the entire rest of the cage, there are no bars. And you can just like turn around and walk out of the cage. Yeah, just walk out of the cage. Guys, like stop being so obsessed with crypto. You can trade other things, you probably should be allocated to other things. And that's really, that's really the core of it is that obviously you can have some allocation to btc, but just don't, don't make it your person. I think I tweeted three things. Don't make it your personality, don't make it your entire portfolio and don't, and don't, don't forget to look elsewhere. That's.
- [31:44]
A
I couldn't agree more. Like, I think, honestly I think that's a beautiful way of Articulating it, the, and the, and sort of the amazing market setup that we're being handed here just by Saylor and the broader macro backdrop is that you shouldn't hold a lot of bitcoin, but you don't have to. Right. Like, whenever Saylor's done blowing up whatever little piece of your portfolio you're holding in bitcoin, you know, let's say it trades down to 30k, 20k. Let's say it trades down to Covid levels. I still think it's going to a million dollars. As they print more money and try to take away your private assets. That's sort of an inexorable super trend. I think that little bit of bitcoin might be the best portfolio hedge of all time, and it may generate a fantastic return. Now, timing that and living off of it the way that you would have in previous cycles is impossible. And I completely agree with you, but you don't need to.
- [32:40]
B
I want to check up on a trade that I talked about two weeks. Let's. I think it's a month ago at this point when I talked about the hood, like Hood btc. That trade has done very well, actually. And the reason that it's done well, it's kind of for the reasons that we outlined on the. Let's, let's, let's, let's, let's take a look at this. Let's take a look at this chart.
- [33:04]
A
This is the back slap segment of the Thousand X podcast. It's, it's, it's the back slap ball pit where we all just hop in, congratulate each other.
- [33:15]
B
Yeah, let's, let's.
- [33:17]
A
Good trade, Andy.
- [33:18]
B
Let's look at, let's look at from June 1st to today. So over the last month, Hood's up 20%, it's going to continue to rip, and bitcoin is. Bitcoin is. Wow. Oh, bitcoin's really down since then. I didn't even realize, like, bitcoin's down, Bitcoin's down 20% while hood is up 20%. So you would have made some great money following that trade. I mean, I'm still kind of, I'm not short bitcoin, but I'm still in the long hood trade. And the reasoning is if you think crypto is coming back in a meaningful way, if you're bullish on crypto, Hood is going to benefit massively, but they also benefit massively from prediction markets and they also benefit massively from options trading. They also are growing their revenue streams outside of crypto substantially every week, every month, every quarter, quarter over quarter. And they had lock, they have now, they now have lock in from the Trump accounts. And not only that, it looks like in like a twist, Micron is actually contributing $250 million to these Trump accounts. And so Trump is getting American companies to contribute, to contribute to these Trump accounts. Right. And that's a big boon for Robinhood. And so I'm sitting here thinking, hey, Robinhood's going to do ridiculously well over the next few months, over the next year. I mean, we could probably see all time highs. And that is my pure play expression for the market, right? For the crypto market specifically. And then other than that, you know, obviously like I'm still with you on, on memory. Like, I, I don't, I don't think it's over yet. And I think that there's still going to be like in, in six months we're gonna, we're gonna be higher. But I'm just like, okay, maybe, you know, we're, we're, we're go, we're going down the curve a bit now. We're going down the curve. So that's, that's really probably my, my, like top three things I'm looking at right now is I'm looking at Robinhood, I'm looking at the downstream effects of AI, like biotech and like Reddit as well. And then I still, I still hold my, I still hold my intel. But what, what kind of, what kind of bothered me just about intel because I got some new information on Monday, right? Like the thing, the thing sells off all the way down to 118 and then it just absolutely rips to all time highs up 20% in basically two days. And then it sells off again. And it wasn't that volatile before. Like it, you know, we were, we, we, we weren't seeing these types of crazy 20% gyrating moves. And to me, when volatility goes up that much, you have to start to get a little bit nervous about something because if, you know, if, if a stock's volume goes up, by definition you should hold less of it generally. Yeah, so that's, that's, that's the only issue that I have with memory stocks right now is that they're really gyrating like, like kind of crazy. And that's, that's new information that I didn't really have a week ago. And so I have to, you know, work that into my mental model, unfortunately.
- [36:42]
A
I mean, the way that a CTA will do it A CTA is called a Commodity Trading Advisor. It's basically a trend following fund. They try to keep their daily P and L variance sort of constant in percentage space. So what they will do is they will, even if the, even if it's just up only every single day, they obviously are max long because you know the spot price is above all of their sort of trending, moving, average type indicators. They'll be max long. But if the up moves become larger and larger, they will, they'll sell just to keep their P and L variance somewhat constant. And that is probably one of the most important reasons for people to manage their risk in these white hot AI stocks. Like even if it's going your way, the right thing to do is to not sell all of it or even a third of it or even a quarter of your position. But just try to say like, hey, if you know the average P L of this position was $350 six months ago. That was the daily variance of the position and now it's like 3, $500. Maybe I should try to like peel a little bit off here and trade around the position. It's, it's good practice and it helps you, helps helps you take profits and buy low and sell high in general.
- [38:00]
B
I, and everybody knows the most important thing to do is take profits because you can't pay yourself unless you, unless you take profits. Now, now this is, I think the reason that we're having these conversations right now is because things have gone up just so much in the last basically year to date. I mean this is the best, one of the best quarters ever for NASDAQ, you know, went up, it went up 20%. And so again this is like this, this is really, it's, it says NASDAQ Composite closed up Q2 19.6%. Strongest quarter since Q2, 2020. That's pretty nuts. On the year we're still, you know, we're at quote unquote reasonable levels. We're up 13%. But again this is, this is all about single name stocks. Like hey, like how, how heavy do you want to be in those names versus how heavy do you want to be in the indexes? And I mean what I'm looking for now is I've held a lot of these positions for a few months and I'm basically looking to allocate to things that I feel super comfortable holding for the, for the, for this quarter as well. And my, my goal for a lot of these, especially for the biotech positions and also for, for the index fund positions Is like, basically, like, I hope that I don't have to sell these for a year. Like, I hope that I don't have to sell Robinhood for a year and that we just, like, I can just close my eyes and forget it at this point. Because what I'm also hopeful for is that if we do get, if we do get some fear in the market, right, if we get some sort of cleanse, maybe the Iran war starts up again. Doesn't seem like that's going to happen or impact the market.
- [39:47]
A
It was always a fade, Avi.
- [39:48]
B
It was always a fade. But like, but like, I'm like hopeful that we get some sort of large pullback in the markets and then you can just buy and quite literally forget about every. Like, if I can buy intel at $80 again, I will just buy it and literally not think about it for a year. That would be, that would be great. Like, I would love to be able to do that.
- [40:10]
A
I mean, let me ask you a question, Abby. Are you trying to shoot the moon with every single one of your positions or is anything like a defensive preserve wealth portfolio diversification thing for you?
- [40:21]
B
Well, right now it's the cash is the cash is the portfolio diversification part. Okay, the cash and the index fund. Right.
- [40:27]
A
I have no cash.
- [40:28]
B
No cash.
- [40:28]
A
I have no cash. I'm levered long, but probably in a lot of safer stuff than you are. One thing I, I've been looking outside the box trying to think what to diversify into and basically like, I, I had sort of an epiphany, so I did a little bit of travel. Anybody who listened to last week's thousand expod knows that I went to Israel last week. And you know, when you get outside of your bubble, when you go and see new things, you get new investment ideas. So like a crazy idea that I hadn't considered at all until last week was what if I sold out some of the equities positions that have been running for a while and bought a place in Israel? And the reason why, like a real estate, Right.
- [41:16]
B
You want to buy real estate in a place that is constantly in war.
- [41:20]
A
Yeah, but it's gone up. So it's been going up like the
- [41:23]
B
stock market in Israel has gone up.
- [41:25]
A
It took a little pause in Shekel denominated terms when the war kicked off, but the shekel rallied 40 or 50% versus the dollar over that period of time because of capital inflows. So what I'm realizing, Avi, is there are other megatrends besides AI and one of those Mega trends. I toured a couple of apartments in Tel Aviv and Jerusalem last week and what I realized is anti Semitism is just a secular trend in society. And a lot of Jews around the world, maybe we don't really feel it that much in America. I certainly don't in la. Maybe you're starting to in New York. But when I was in London I felt it big time. And I'm sure the Canadian Jews and the other Jews, you know, from other, from like France feel it as well. It's like, wow, I'm not welcome here anymore. And the first thing they do is they go and buy a spot in Israel. So you know, I'm not like here to talk about Judaism or antisemitism. I'm here to talk markets and money. But I was just thinking like maybe some advice for the average listener isn't go to Israel and buy an apartment. It's more like get out of your little bubble that you're in looking at markets and clickable things. There are all kinds of megatrends. Society is changing more now than I think it ever has in my lifetime. And there's a lot of mega trends that, that are pretty easy to jump on. So you know, we can all hop on the DRAM bandwagon. That's pretty easy. You just click buy Micron stock on Robin Hood. You can click buy Robin Hood Robin Hood stock because more people are click buying Micron stock on Robin Hood. But you know, also like if you want to, if you want to get super levered long something, nothing's better than property. Especially in a place where, you know, there's like millions of successful people from all over the world literally fleeing their countries and pouring assets into this one little small patch of land. You know, it's, it's just, just trying to think outside the box here as I, as I look for diversification but also for outsized return.
- [43:30]
B
Yeah, I think that's fair. I think that there's, I mean we'll, we're probably going to see it. We've already seen it in San Francisco real estate. I mean this has been talked about ad nauseam. But the, the winnings from all of the AI Gold rush are just plowing into sf. I mean it's nuts. I've got a friend that's moving out there that like keep trying to buy a place and everything just keeps getting bid up like $2 million over asking or like 40 plus from asking. It's so ridiculous. But yeah, I think that, that, that's probably, I mean maybe, maybe you Wanna. You wanna start. Look at, like, you know, as we talked about with the. The cars. Maybe you wanna start buying. Buying used Ferraris. I mean, the Ferrari Mondial, it's like a $80,000 car. I don't know. Maybe. Maybe that's the next play.
- [44:16]
A
Maybe.
- [44:16]
B
Maybe it all flows down into cars. Now, Jonah, I don't know. But it's like, what are the wealthy people gonna buy now, right?
- [44:25]
A
I guess that's real estate.
- [44:26]
B
Real estate. Real estate's always a good one.
- [44:30]
A
Real estate's been daddied by high interest rates, but there's really no better market for getting long with leverage. You know, you can. You can buy someplace with a 20%, 25%, sorry, 75% LTV loan and just ride the tiger. I wouldn't do that in San Francisco. But, you know, maybe Austin, Texas. Maybe Los Angeles. I don't know. Where's all this wealth going to go, Avi? It's. There's a lot of it getting generated.
- [44:57]
B
It's a good question. I mean, and you also have to go to places that aren't going to build because that's why SF real estate is going up so much.
- [45:04]
A
Yeah, it's small.
- [45:06]
B
Right. You can't build there, whereas Austin, you can just build a ton. And Miami, it's like putting up a new condo building every 30 seconds. So it's really the. I mean, I don't know. That's why we're interviewing. If you tune in, in a few weeks, you're going to hear an interview with AJ Scaramucci, who's raising a fund for collectibles, and he's buying things like dinosaur skeletons, which is kind of sick.
- [45:31]
A
That is crazy.
- [45:32]
B
It's gonna. I mean, that, like, you know, you saw Ken Griffin, like, I think it was two years ago now, maybe a
- [45:37]
A
year ago, by crazy dinosaur, like Stegosaurus
- [45:40]
B
skeleton, which is kind of sick.
- [45:42]
A
Buddy of mine. Buddy of mine works at Citadel, and apparently he, like, shows it off at company parties and lends it to museums and stuff and rents them out. It's pretty cool.
- [45:51]
B
That's actually dope. I'm also trying to get in touch with this guy. I mean, I already got in touch with him, but trying to schedule an interview with this guy that has gotten really into Roman coins. So maybe just like, pick your autistic little niche that you're really interested in and see if you can make money on it.
- [46:07]
A
There are definitely huge benefits to knowing a niche better than anybody else. And honestly, that was like your. Your trajectory in crypto. You mastered that niche before everybody else sort of caught onto it. I had my little moment in oil, you know, I had. Where I knew more than the average guy.
- [46:28]
B
This is, this is what, this is what the financialization of the world is leading to is that if you generate deep knowledge in a specific subset of an area, you can end up making a lot of money. I mean, and this has kind of been true throughout history, but is really true now more than ever. If you're best in class at something you will do well, you have to be, you have to get some somehow into the top 1% of whatever sector that you've decided to be the best in. But like, if you're the, if you're the number one collector of elephants, like elephant statues in the world, or you're like the number one collector of Roman coins, or you know everything there is to know about Archaeopteryx, which is a. The first flight, the first feathered dinosaur, first dinosaur with flight, like the missing link between dinosaurs and birds. If you're like the world's foremost expert on the Titanic or pick any random thing, you can generate a niche audience for yourself. And probably if you're genuinely the best at, if you're the best break dancer in the world and you just post videos on TikTok, you'll do well at this point in the entire world. So you kind of. Just one thing that I've been thinking about is like, people ask me for advice. Like, you know, 22 year olds that just get out of college will ask me for advice. I'm like, pick something that you're genuinely passionate about because you can't, you can't replace passion. Passion is something that you just, you feel and other people can see it and you can't really replace it. You just have to.
- [48:01]
A
I hated that advice. That's every single.
- [48:04]
B
But it's true now. It's true now more than ever. It like wasn't true before because you could not make money being an underwater basket weaver 20 years ago. But like today you can make money being an underwater basket weaver because you'll generate an audience of like 15,000 people on TikTok that'll love your stuff. And then you can go live and stream yourself underwater basket weaving and people will pay you like $3 because they're like, oh, that's so sick. Right? And so it's actually because of social media. Social media hasn't allowed the monetization of hobbies. And so I actually think that it's much better advice today than it was 20 years ago, like 20 years ago is actually horrible advice because there's some things that you just couldn't make money on.
- [48:40]
A
I mean, honestly, it was like it had become such a meme 20 years ago, which is crazy because I graduated 20 years ago. 19 years ago, my graduation speech was Matthew Fox, the star of this TV show called Lost, which I don't know if any. If you've heard of it, it's probably.
- [48:55]
B
Wait, what?
- [48:56]
A
It's before your time. Yeah.
- [48:58]
B
No, it's not. I know Lost, but like, what?
- [49:01]
A
Yeah, so Matthew Fox, the star of Lost, went to Columbia. And Columbia has this rule where, unlike Harvard, where they'll just accept any graduation speaker based on his level of success, including Bill Clinton, Columbia only takes graduation speakers who went to Columbia or whose children go to Columbia. So usually.
- [49:22]
B
So you. One day you'll be able to get up there and have a speech.
- [49:25]
A
No, I don't think they'd let me in that, that place anymore. It's too, it's too, too different than it used to be. But basically, the streetwear.
- [49:34]
B
Sophia, you'll be fine.
- [49:35]
A
Yeah, I'll just throw one of those on. I got a few in my closet over there. Yeah, basically my Hamas headbands are neatly folded and clean in the drawer next to my caffes. But yeah, basically that Matthew Fox's speech was like, do what you love. Like, I went for a finance interview and I didn't like the idea of working in some office building in finance. Meanwhile, all of us were going into finance because it was 07 and he's like. And so I decided to just like, be really, really ridiculously good looking and move to LA and instantly get hired to star in movies and TV shows and you should too, follow your dreams. And I was just sitting there thinking to myself in the audience, I was like, you, Matthew Fox. Like, first of all, first of all, like, if I moved to LA and tried to get into movies, it probably, like, wouldn't work out for me the way that it worked out for you because you're a stunningly handsome guy. I guess that that was the era when Jonah Hill, the fat Jonah, rose to start up.
- [50:35]
B
But whatever, Jonah, don't sell yourself short. We're both, we're both sex symbols here, right?
- [50:39]
A
I know we're both sex symbols, but, like, at the time I was just this goofy college grad. I was like, I hate you, Matthew Fox. And then the second part of that advice that bugged me out was like, at the time I was thinking like, man, what is following my dream? What Do I want to do? I was like, well, I like getting drunk. I like going out in New York. Should I become, like a nightlife entrepreneur? Like, no, I'm going to go into finance because there's a lot of interesting stuff and I'd like to be able to afford a rent check and not, you know, go bankrupt. I don't have anybody, like, propping me up here. So, yeah, that advice always effed with me. So now that you're giving it to people, I'm kind of like, huh, what would I think if I were listening to this podcast? I just think.
- [51:20]
B
I just think that the world has changed, right? I mean, if you, like, there. There's going to be. They're going to be less meaningful jobs out there for a large subset of people. And you have to think about, in the world of AI, what's going to be a big value add. And it's really only the sector of things that people care if a human is doing it right. So do you care if you're watching a TV show? Like, you care that the actors are human? If you're getting served at a restaurant, maybe you care that the servers are human. If you're, like, watching TikTok content, maybe you care that the content is produced by human. If you're watching financial media, maybe you care that, you know, it's being filtered by a human, and then everything else might get taken away. So I think, like, following, probably everybody's going to have to be a content creator in the future in some way where they're going to have to showcase themselves. And I'm just, I'm thinking like 20 years down the line, but you kind of have to showcase yourself as a human or you're part of the elite, elite that is leveraging these AI tools to, like, push forward humanity in many ways. So, like, you kind of. You kind of need to pick your niche. But I just think that, like, that, that era, that world of, you know, you find. You find a. You find a job in finance or you find a job in law, and you make your. You. You build a career and you make your way to the top. One percent is kind of. It's dying now. And that's. I mean, you're seeing it with us in many ways, right? Like, why are we, why do we host a podcast? Why am I here talking to you instead of building a hedge fund? Because I could, I could go out there right now and I could raise money for a hedge fund and I could just go run that. I've been offered capital from some people to do it. And I actively don't want to because I actually think that this is the highest ROI in the world of, in the new world of AI. Like this, like this, being a real human on your screens talking to you is going to be infinitely more valuable in five years than managing than starting a hedge fund now at least, I mean, you know, if I'd started it 10 years ago, that would be in a different story, but today at least. Right? So it's like, I think that I also tend to agree with you, like the follow your passion advice 10 years ago, 15 years ago, probably not the best advice. But maybe it is today because again, I've seen a lot of people generate large audiences for themselves and make a ton of money doing the absolute weirdest shit.
- [53:41]
A
Yeah, you don't actually have to be Matthew Fox anymore to have an audience. You don't need to have the backing of Paramount Pictures or Whoever, you know, J.J. abrams, some huge director. You, you can literally just have interesting ideas or have an interesting thesis. And to me, well, one thing I would say is do something. Don't just bet on, don't just ride the wave. Like, I, I know there's a lot of talk in Silicon Valley of like universal basic income or universal high income. You know, just personally having spent some time off from work, it was relatively unfulfilling professionally, I would highly recommend that, you know, you, even if you don't know exactly what you want to do, even if you've made a lot of money, even if you're, you know, sitting on this podcast, you just, you know, you're an employee at Anthropic trying to learn how to trade, and you just crush it and suddenly you're wealthier than, than you ever imagined you'd be. I would recommend not taking like one to two years off. I would try to take like a month to three months, just, you know, as a breather. If you've just come into some liquidity and then just push and push and pivot and iterate until you find something you like doing day to day. I, I personally, you know, you can learn from my mistakes. I spent way too much time not working. It was, it was not a good idea. Definitely recommend just getting in the game and trying anything. And even if it doesn't work, just meet people and pivot and learn. You learn more from doing than from, from sitting and watching on the sidelines.
- [55:13]
B
That's a great place to wrap. I think for today. You learn more by doing. Don't sit on the sidelines get after it. Guys, thank you for tuning in today. We appreciate you as always. Sign up for the terminal. It's the QR code over there. I'll be tweeting about it later today. But basically we built an amazing research terminal for you guys. I think you guys will really enjoy using it. We've got a couple hundred subscribers now. The team could be super enthused by it. Hopefully you soon. So go ahead, sign up for that terminal. Let us know what you think. And thank you. Thank you for tuning in as always. We'll catch you. I'll catch you on Friday. I'll be talking to you on Friday.
- [55:54]
A
Great talking to you. Avi Feldman. Good stuff. Nothing, as said on the Thousand X podcast, is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of one KX Media. Our hosts, guests and the one KX team may hold positions in the company's funds or projects discussed.