B (2:33)

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B (4:18)

Josh, I don't have this in the doc. Maybe we'll throw in for next week. I saw a chart. The aggregate dividend and buyback trend of Japanese stocks has exploded. We spoke about that like maybe a year, a year ago about the reforms that they're making and guess what? It's working.

A (4:36)

We were so, we were so early to that. Like we were talking about these things that they were forcing their companies to come up with like, like a plan to get their stock price appreciably above its book value. And all these companies that are listed on the Nikkei had to fall in line.

B (4:53)

We'll do this next week. It's a good chart.

A (4:55)

Yeah. And they, and they did it and it, and it literally worked. The Japanese stock market has been a bright spot. Okay, first, first things first though. Mag 7 earnings week. So just for catch people up, we've already gotten the Tesla report, so they're not part of this. And the Nvidia report comes at the very end. But Nvidia's biggest customers are all about to report. And Wednesday night, tomorrow night, if you're listening to this live, is Amazon, Meta and Microsoft. Why did they do that? So it's almost too much. Thursday night is Apple Apple.

B (5:34)

I don't know if this is because I'm spending less time on, on the socials, but it felt to me like this earnings quarter for Tesla was got little attention. At least got very little of my attention. I don't, I don't know what happened

A (5:47)

because they're sort of in this transition between like all right, Nobody cares about the cars anymore. Now it's all about robots. But the robots aren't here.

B (5:55)

It's like in Purgatory, kind of.

A (5:57)

It's like. Well, it's like if you are in it for the robots, you're just holding it and waiting. And if you were in it because of, like, cybertruck, you've been gone for a long time. So it's, it's like a stasis. There are people that were like, bowled up on the cars and now companies like, almost going out of its way to let you know that's not what this investment is about anymore. So I think, I just feel like it's all. It's all very anticlimactic. Plus, like, SpaceX is like a thousand times more exciting than Tesla these days, and I'm sure Elon's feeling that too. So I think that's the story with here in the chat, Giancarlo says everyone's waiting for Tesla to merge with SpaceX.

B (6:40)

Yeah.

A (6:40)

Which of course is coming. And I have predicted all of these things that have happened.

B (6:46)

You have been saying that for a while. And it will, you know, I mean, obviously, you know, we do this every week. We spend so much time talking about the, the swings of the market. Stocks go up, stocks go down. Meta. The last time I reported, the Stock was at 668 bucks, whereas of today, 670 bucks. But of course it went from 660 down to 520. But it's literally right where it was last quarter before it reported.

A (7:15)

Yeah. And that's probably the most. That's probably the most sleepy one of the group. Do you agree?

B (7:21)

Like Meta versus I don't know. I would probably say Amazon, although it's been more interesting recently. Yeah, I mean, Apple's not gonna say anything exciting.

A (7:31)

You never know. You never know. A lot of people, A lot of people waiting on. A lot of people waiting on the Siri Upgrade foldable phones. There's some. There's some stuff in the ether with, with Amber, I would imagine boring lately.

B (7:45)

This. I don't know if this is Tim Cook's last earnings call. I don't know when he's officially leaving, but I mean, it's one of his last ones.

A (7:50)

All right, let's do Amazon. Consensus earnings estimate is A$63 on revenue of 177 billion. And if they deliver, that would be a 14% growth rate over last year. I put together some of the storylines, I'll lay them on you, and then you let me know what you're thinking about. Morgan Stanley says AWS is entering an acceleration phase for its AI workload migrations. So this is like regular workloads moving within the cloud from just being plain vanilla to being like AI stuff. And the volumes of that just being much higher for AI, which is likely, they think 38% AWS growth in 2026 and the street is at 26%. So obviously bulls. One other thing that I wanted to bring out. Mark Mahaney is looking at a modest beat on both revenue and earnings, but is worried about Q2. And he's saying that because of, I don't know, I guess like some mixture of capex or whatever. So Amazon, if you remember in February when they did their Q4 report, they put out their guidance for 2026 CapEx and they said 200 billion, which was a 60% jump over 2025. So you know what? Yeah. And people are going to be looking for like, are they sticking to that? And then there's a lot of stuff going on with like proprietary chips and Amazon kind of flexing about Trainium and some of the stuff that they've been building.

B (9:31)

You fled the, the island reversal on Amazon a couple of weeks ago. It's really just amazing how, how fast these stocks move. I mean Amazon had looked like shit for years, going sideways more recently if you zoom in. But even if you zoom out, just like an underperformer relative to the market, relative to its peer group and then you blink and it goes from 210 to 260.

A (9:49)

Put this chart up so you can't see this because we don't have candlesticks. But I did on a previous show show you guys the island reversal. And this is textbook. And it like sometimes they don't always work this simply, but man, did this thing work. And an island reversal is a reverse. It's a reversal pattern. It takes the trend from whatever direction it's in and sends it off in the other direction. And it's a very powerful signal where the seller, in this case, where the sellers are trapped and the buyers take control before, before anybody even knows what's happening. And this made a new all time high. This is my full disclosure now, my second largest position personally.

B (10:35)

What's your biggest Nvidia?

A (10:37)

Nvidia? Nvidia has been back and forth, but now it's back because it had a huge rally recently. And I'm going to stick with Amazon through the earnings. Mahaney might be right. They might give guidance for next quarter that people aren't in love with what are you going to do? This is part of what it means to be a shareholder. Microsoft also tomorrow after the close, $4.07 revenue, $81.37 billion. This is a stock that is in a 35% drawdown from. Well, was from its high. It's since come back a little bit, hasn't gained back what it's lost. Think this is another aggressive capex spender and there's some questions about how tethered they are to OpenAI. It's weird. Like, OpenAI there was bad news about it in the Journal, which we're going to talk about.

B (11:32)

That was weird, the timing of the release today. Like, why? It was like, OpenAI misses internal guidance.

A (11:43)

I don't believe any of this shit.

B (11:44)

So weird story to print.

A (11:46)

Well, they came out and denied it. So the Journal did this thing. The Journal did this thing where they're quoting people that spoke to Sarah Fryer, the cfo, and they're saying, like, that the company is missing its usage targets and it's. And then the company immediately is like, no, nobody said that. Why is there so much smoke around this company?

B (12:10)

Oracle fell 7 or 8% pre market and it did close down 4%, but it closed at the highs of the day.

A (12:18)

Yeah, I don't believe any of these OpenAI stories. I think this company is just surrounded by people making things up. I really do.

B (12:25)

You don't believe any of it?

A (12:26)

No, I don't because they keep denying it. And let's not forget Sam Altman and Elon Musk are in a court battle, and that's this week. And you don't know who's motivated by what. To lie to a journalist. I'm not assuming the journalists are like, making things up. I'm saying, like, people are just like, sourcing them with stuff that is instantly denied by the company. So somebody's lying. Maybe the company's lying. But how would we know?

B (12:58)

One of the pieces of information in that story today was that they raised $120 billion and they expect it to be gone in three years. That sounded. Sounded nuts to me. How do you burn 120 billion dol

A (13:09)

in 3 years back to Microsoft? There's a poly market trade on this where they're pricing in a 94.5% implied probability of a beat. And people are pointing to Azure growth coming in at 37 to 38% or above.

B (13:28)

Well, if AWS is going to be a winner from the.

A (13:31)

You would have to assume they all will. Yeah, you'd have to assume they'll give you the Microsoft chart. I know it's bounced, but this still looks like shit.

B (13:39)

Yeah.

A (13:41)

Versus the Amazon chart I just showed you. It's like two different worlds, right?

B (13:45)

Yeah.

A (13:46)

Okay, Meta again, same day tomorrow after the close. $7.51 in earnings, 55.5 billion in quarterly revenue. That would be 31% ahead of last year. And this stock does not trade like a company that is growing revenue. 31% year over year. Here are the storylines. First, you guys probably remember the year of efficiency, which is when they were firing people and cutting their expenses down from the metaverse and retreating from a lot of ill advised stuff they were doing. Now they're saying Zuckerberg is calling this the era of personal superintelligence. They are touting what AI is doing for their core advertising engine, which as a reminder to the audience is about 97% of the business is advertising. Guidance for ad Click rates is 3 to 5% growth.

B (14:47)

I'm clicking everything, dude, I can't stop. I'm like addicted.

A (14:50)

You're not just clicking, you're purchasing. They love you.

B (14:53)

I can't stop.

A (14:54)

And then they say obviously capex credibility is the big storyline here. So the guidance that they gave was 115 to 135 billion for this year and next year, 142 billion. And if they can justify that with ROI from the ad business, then great. And if they can't, there's going to be some question about the wisdom of their continued spending in this area. There's also some talk about their own chip rollout. They have a 2 nanometer chip that they built with Broadcom. And let's put the chart up real quick just to give you guys, I mean this is in no man's land. There's nothing really to say. There's nothing really to say here. The chart in and of itself would not make you want to be bullish or bearish.

B (15:42)

No, you know what? There's no, there's something to say. Nobody knows. There's a lot of uncertainty in this name. Like a lot. I know and I know that's the nature of investing, but like look at these swings.

A (15:51)

Yeah, I think that's right. Like these are hundred dollar per share swings on a regular basis which equates

B (15:57)

to like liter hundreds of billions of dollars in market cap swing. People are just guessing.

A (16:02)

Yes. Okay, give me Apple chart while I'm talking. Last one. So this will get Thursday. This is the company not spending on AI or not.

B (16:14)

That's the cleanest one.

A (16:15)

Technically I think we Have a cup and handle forming here but we'll see consensus $1.94 per share for the quarter which would be 17% year over year earnings growth and revenue of 109 billion. Tim Cook just announced that he's going to transfer away from the CEO role. He'll stay as chairman. John Ternus will be taking over. We talked about him last week. No need to rehash. Turnus is a product guy, he's an engineer. He's been involved in all of the biggest things Apple has done in the last 25 years or so since he's been there. This would be the first CEO transition since Cook came in from. Oh, Yuvraj94 wants to know how I pronounce nonometer. That's actually the way I said it is. The way is the way that you're supposed to say it. It's not nanometer. So go back to eating crayons. What else was I saying?

B (17:18)

Oh Apple, you just lost a viewer forever.

A (17:21)

It's fine. Apple did have a record breaking Q1 $143.8 billion and China was the bright spot in that report which caught people by surprise. And again back to what I said. It's the least capital intensive AI story. We don't even really know what they're going to do with AI. We know that Siri sucks and needs an upgrade and that they've been failing at delivering that for two years. And so maybe that's the surprise. They might tell us that they have something agentic coming out this summer and people will get very excited for that. So the big number here that analysts care about is services. That's the highest margin business at Apple. 30.4 billion is the expectation. That would be a 14% growth rate. Of these four, which of the ones, which of these are you the most excited to listen to?

B (18:18)

Not Apple. I would say the Microsoft. Honestly it's too much for me. I never really understand what he's saying. It's like too technical probably. I think like the. I think the Zuckerberg one is relatively digestible. Like that's the one that I feel like he speaks plain English. Let me, let me blow your face off your body. You know the chart that we, that we've made showing Apple by various segments.

A (18:42)

Yeah.

B (18:42)

In terms of like the trend on 12 month revenue. So I had chart could update it this morning. $226 billion in revenue for the iPhone over the last 12 months. Ready for this?

A (18:54)

Yeah.

B (18:54)

Put your crayons down. Nvidia crayons down. Nvidia 216 billion. Apple has done more revenue with the iPhone over the last 12 months than Nvidia.

A (19:09)

Really? Wait, wait, say it again. Say it with the time.

B (19:14)

226 for the iPhone. $226 billion in revenue for the iPhone. $216 billion in revenue for Nvidia.

A (19:21)

All of Nvidia.

B (19:22)

All of Nvidia.

A (19:24)

Yeah. What were we talking about the other day? Where the iPad is bigger than Charles Schwab by revenue or something like that?

B (19:29)

Yeah. The iPad's done 29. Schwab did 24. McDonald's, that McDonald's did 27. So services did 113. You said it's looking for 30, so annualized 120. Tesla did $97 billion. Johnson and Johnson did $96 billion. I mean, it's just. It's. It's stupid.

A (19:49)

So you're saying Facebook. Facebook meta is the one that you're most interested in listening to because you understand what he's saying the most. It's like the most straightforward business.

B (19:59)

The Microsoft call is too technical. There's too many different business lines. And Satya is too. He speaks like an engineer. And I don't understand what he's saying. No, he's just open my head. I don't understand. Yeah, the Amazon. Amazon is just. There's a lot of different areas of the business. So for, like, the cleanest story into what's happening right now with big tech, I like meta.

A (20:19)

I think the AWS segment of the Amazon call is probably the highest signal other than Microsoft.

B (20:28)

And.

A (20:29)

Yeah, it's a good point you make. I don't really listen to the Microsoft call. I read the highlights and maybe that's why. And I never really thought about why. I don't like listening to that.

B (20:39)

It's very technical.

A (20:40)

I like the Apple call there. It's just the facts, ma'. Am. Like, they're not freewheeling. They don't. They don't, like, give you off the cuff, really. They're extremely buttoned up. Apple is almost like listening to a bank report. But I just. I personally, as a shareholder, just get so much out of that. But it's not an exciting. It's very rarely an exciting call and almost never an exciting reaction because you know why?

B (21:06)

He thanks. The employees. They speak a lot about their global initiatives. Like, it's boring, right?

A (21:11)

It's ex. It's extraordinarily by the numbers. Yeah. And it's. And it's. It's not. It's. It's not that much Fun. All right, let's talk about earnings in general. You're up now.

B (21:23)

All right, so yeah, there's something special going on here. So Warren Price tweeted a chart that like, I don't know, speaking of technical, this is like way over my head. But the point is this. Throw the chart on. The point is this. Warren said a historic earnings boom is developing estimates growing faster than they did in the mid-90s or late Internet bubbly years only Covid recovery period started greater inflection. But this is the point. The boom is unique because it is not, it is not coming off an EPS drawdown recovery. So we're seeing earnings accelerate and it's, it, it is primarily tech. Next chart please. It's 43% blended and actual. And this, you know, there's a moving target, but holy shit, 43% for technology, almost 14% for the overall index. Gee, I wonder why. Stocks are at an all time high.

A (22:12)

I think if you pull in video and Micron out of that technology earnings growth composite, it's, it's fairly a different picture, but it's still wrong. Come on, next year.

B (22:27)

So coming from, I asked Matt, why are you taking. So this is Tech X, Microsoft, Apple, Nvidia. And I said, why are you taking Microsoft, Apple and Nvidia out of here? And he said it's because it's a Bloomberg. It's a Bloomberg like standard chart. So I said okay, fair enough. But this is without Apple, this is without Nvidia.

A (22:46)

All right, so it's. Wow. Okay.

B (22:47)

It's higher, huh?

A (22:49)

Interesting.

B (22:50)

It's higher. So here's why. It's, it's all about chips.

A (22:54)

How are they, how are they doing this?

B (22:55)

It's all about chips. So Adam was saying like Micron is trading at like 5 times vote earnings. And I was like, wait, what? So I said, Matt, make, make me a chart of Micron and Sanders. Like what the hell's going on here? Next chart please. I mean what would you expect?

A (23:12)

What would you expect 12 month forward earnings per share.

B (23:15)

What would you expect a stock to be doing that? 10x's its revenue. I'm sorry, its earnings. And 50x is its earnings over a 12 month period. Will you expect the stock to go up? I think so.

A (23:28)

So for the people listening, Micron was earning $9 a share in March of 25. And now the forward estimate is for $85 a share. SanDisk is even crazier. They had $2 in earnings per share expected for the forward 12 month period in March of 2025. That's a year ago now. It's at $99. We, we may have never seen anything like this in our lives.

B (23:52)

I've never seen anything like this.

A (23:54)

I don't know that anyone has. I, I really don't. I think the most shocking thing about this is that so few people, if anyone, was able to predict it.

B (24:06)

And you know what's funny? And this is, this is like a good reminder for all of us that in hindsight this seems so obvious. Like not me, the chip thing in particular.

A (24:15)

Oh, oh, oh. What Today? Yeah, Encore told us like she knew it was coming but then thought she must have been wrong, right? That was because no one, because no one else seemed to agree and the stocks weren't working. So she said to herself, I must be totally wrong about this because these stocks are not going up. And then like six months later, it just launched.

B (24:40)

Next chart shows the growth, the growth in forward eps versus the price. And hey, look at that. The market's not stupid. In fact, it's pretty damn smart. So the stocks that are growing their

A (24:49)

earnings the fastest are, have the best

B (24:52)

performance, are going up the most.

A (24:54)

That's usually how it is. It's almost as if it's not a bubble. It's almost as if this is about earnings growth, which is what we all,

B (25:03)

every individual, always has been. Always has been, dude.

A (25:06)

Every investor, like even value investors, even dumpster diving like value guys, they all like, they all kind of proselytize the same sermon to us all about how earnings, earnings, earnings. Well, here it is. Here, this is what you say is important. Now you're gonna say it's a bubble. Cause you don't own these stocks. Not my fault, not my fault. They started rallying off of high valuations. That's what happens sometimes.

B (25:36)

Even value investors. It's not just about the valuation support, obviously that's a, you know, that's a big ingredient. But I remember the pseudonymous guy, Jesse livermore in like 2016 wrote a post for, for O' Shaughnessy Asset Management and it, it honestly blew my mind because he demonstrated the fact that there is an earnings inflection, which is why the value stocks get rerated. It's not magic. Like earnings do trough out and go higher. And that's what it's all about. It's all about earnings.

A (26:05)

If you what's the source of, what's the source of value performance? You're saying it's like it's it earnings for a reason.

B (26:12)

And if the earnings don't turn and they keep going Lower the stock price will follow it.

A (26:17)

That's, it would be obvious, but it's, it's not.

B (26:21)

Well, it's because we, you know, we, we, we, we invest day to day. At least I do. I'm guilty of this. I trade day to day too often. We have a, we have a guest on TCAT this week and we're going to talk about like long term investing. And he said, listen, over the long term, a stock cannot meaningfully diverge from its earnings trajectory. And we're talking like over a 20 year period. If, if, if the business earns 20% compounded, the stock's not going to earn 50. And same thing, if, if a business is, is declining, that's what the stock is going to do. It just works.

A (26:54)

Yeah, right. And we overcomplicate it with all these other factors and we talk about multiple expansion and compression and rerating and you know, because that's in the short term, those things do exist. Yeah, but. Okay, it's a really good point. Give me this chart. This is quarterly results for s and P500 companies year over year. Okay, so I want to call your attention. So it's a 16.1% growth rate this quarter versus the same quarter a year ago. And that's despite the fact that gasoline prices are up, I don't know, 25, 30%. And not only is this not financial engineering because these companies are actually contending with higher input costs and somehow still reporting bigger profits. But revenue is up 9.7%.

B (27:48)

Can't fix that.

A (27:50)

You can't engineer higher revenue unless you're literally recognizing revenue early and committing accounting fraud. This is what's literally going on. Next chart. This is by sector. I'm just showing you S&P 500 companies by sector versus a year ago. What the revenue and earnings growth rate is. And we know technology already, it's a 40 some odd percent earnings growth rate jump over last year. But revenue is like 24%. This is not just like AI driven efficiencies. There's a lot more happening here. Every single sector has revenue growth versus the same quarter last year. And only two sectors have negative earnings growth and those are energy and health care, which you know, we barely pay attention to energy because it's the commodity fluctuating. And I don't fully understand what's going on with health care. But like every sector has revenue growing, which I thought was notable. What are your thoughts?

B (28:57)

I'm wondering why there's such a big gap. Like where's the leverage coming from for materials to have, I don't know, it looks like 10% earnings growth, not even, I mean, revenue and then like 30% earnings growth.

A (29:10)

Yeah, Prices, hedges, same thing with financials. Listen, it's not like so straightforward, like it's not so straightforward in those groups.

B (29:21)

Companies are very, very good at expanding the bottom line.

A (29:26)

Yeah. Let me read this to you. Sales and profit eclipsed Wall street expectations. At Halliburton, the Houston based global oil services company, the energy landscape changed meaningfully in just 60 days. And now companies are racing to invest from Norway and Nigeria to Argentina and Brazil. So that's a company where the price of crude shoots up 30, $40 a barrel and natural gas demand takes off. And all of a sudden there's all these projects that didn't make sense in January that people want to get into in March. And that's the nature of like materials, energy. Some of these sectors is like prices change the reality for fundamentals almost, almost overnight. Anyway, this is important if you are an investor and you think we're in some sort of a tech bubble. Yeah, things are going great for tech stocks. But like I'm showing you, market wide, we're looking at fundamental improvement for both earnings and revenue. It's every sector. In the case of revenue growth, I want to do this permanent portfolio thing. Do you know what the permanent portfolio is?

B (30:38)

In my head I think it's cash stocks, long term bonds and gold. In my head that's what I think of 25% in each.

A (30:47)

25%. Okay. That's the way I learned it.

B (30:50)

But there's other derivations of it. But basically that's it.

A (30:54)

So Michael Hartnett, who is a strategist at Merrill lynch and I think one of the best market market thinkers out there, he has this thing called a sleep like a baby portfolio. Too many words and it's similar. So what he's saying is 25% stocks, 25% long term treasuries. So specific. Okay, 25% commodities, not gold, although that would include gold and then 25% cash and t bills. So almost the same thing. So the permanent portfolio is that except instead of commodities, it's gold. The permanent portfolio came along in the early 80s as a direct response to the inflationary devastation that had been visited upon the investor class in the 1970s. The permanent portfolio was like the solution to that secular bear market which went on from 68 to 82. It was absolutely grueling. You didn't just lose money in absolute terms, but you also lost money in inflation adjusted terms. And so they came up. So Harry Brown, who was a market philosopher, politician, he was like a, he was like a polymath, came up with this idea. And then they built a mutual fund based on it, which still exists. But let's show this tweet from Mike Zaccardi because he's pulling the. He has the Michael Hartnett chart. John, can we get this up? Maybe we won't.

B (32:33)

Then we deleted it.

A (32:35)

Oh, cool.

B (32:37)

No, Char kid recreated it.

A (32:39)

Oh, we. All right, so we did our own. Yeah, I asked, I asked Char kid and Sean to take a whack at this. So this is us taking Hartnett Sleep Like a Baby portfolio. And I think ours is way better, obviously.

B (32:53)

Well, by the way, hold on. So. So Hartnett annualized his 20, 26.

A (32:58)

Yeah.

B (32:58)

So chart kid did the same. Just, just to recreate it. But that's right.

A (33:02)

He's saying like on a year to date basis, it's annualizing a 26, 27% return.

B (33:07)

Yeah.

A (33:07)

And so we're just doing what, what he did to show that it's having a good year. It's having good. My opinion, it's having a good year because we threw oil into the, into the commodities portion of this and stocks have been doing like, Stocks have been doing great.

B (33:24)

The next one shows gold instead of commodities.

A (33:27)

Right. When you go back to the permanent portfolio, it's a much more muted version because you don't have oil in here. So instead of commodities you have gold and just put the first one back. So for those listening, the Sleep Like a Baby portfolio that Hartnett is talking about is up at an annualized rate of 27% and we're a little bit more than a quarter in a month, or maybe we're a quarter in a month through the year. So it's a little bit early to be annualizing things, but I get it.

B (33:58)

So this is a portfolio. So this is a great strategy because if you are, if you don't have the temperament to hold on to stocks and take all the smoke. And let's be honest, it's very difficult obviously in a bear market to do. Not everybody wants all the smoke. Averages 8% in an up year, which is great. Only 5% in a down year. Pretty freaking awesome. The problem is it doesn't protect you from FOMO. So when the market is up 20 and then 19 and then 24, you're like, what am I doing? So you got, it's, it's personality driven like everything else. But it's, it's.

A (34:34)

I'm so glad you, I'M so glad you said that. This concept goes into hibernation in a bull market. People stop talking about it. And then when there's a crash, all of a sudden you start to see the permanent portfolio content come back and

B (34:54)

you could do way worse. It works.

A (34:56)

No, I don't think it's bad. But to your point, it's a permanent portfolio, but there's a trade off. You're not racing the stock market in a bull market. And after five years of a bull market, you'd probably be looking at this thing like, what the hell did I just do?

B (35:10)

Right?

A (35:11)

Look what I just missed out on. Put up the permanent portfolio one. One more time, guys. So when you do it with gold, this is what it really looks like. Not the commodities. So you get what you could. Michael, when you say, like the most important thing here is how many, how few negative years. Yeah, and those negative years are like a lot. The average down year is minus 3%. So the. So you almost can sleep at night with this permanent portfolio, no matter what's going on. Except a runaway bull market, right? Then you're not sleeping at night. Then you're cursing yourself for being such a coward.

B (35:52)

I feel like this is. This is like there's a very type of investor that buys these things, right? It's people that are wary of government debt and whatever. And for those people, like, this is sensible. I understand.

A (36:03)

Put up the hit rate. I love that they did this. They did this at the last minute for us, Char, Kit and Sean. So this is the what, what we want you to understand about this, guys, is that there's a price to be paid if you want something that's permanent and simple to understand. Like 25%. 25%. 20. Right. If you want that. And if you want Sleep Like a Baby, you could have it. But here is the price that you pay and here's what you give up. The SPX. The best year back to 1928 is plus 52%. The best year the Sleep Like a Baby portfolio has ever given you is 27% or half. And the permanent portfolio is 39%, which is actually pretty great. Now you go to these rolling performance periods. The percentage of positive annualized returns for the S and p on a five year basis is 88%. That sounds awesome. Until you remember that 12% of the time you're down. The Sleep Like a Baby and permanent portfolio are more like 95% positive.

B (37:21)

98% is like, that's like you're almost never down.

A (37:23)

I mean, obviously almost never down. So that's the cost, that's the benefit. Anyway, Hartnett saying without getting into like the whole thing, money does grow on Cs. He's saying the four Cs are the key to this year. Curve steepeners in the bond market, consumer cyclical chip stocks and commodities.

B (37:47)

That's too cute.

A (37:48)

Very cute. Not as good.

B (37:50)

What are we doing here?

A (37:51)

Not as cute as Halo. All right, let me just for fun show you. There is an actual mutual fund based on the permanent portfolio. And there's a whole company that exists just to manage it. And this is what they are showing is their target portfolio structure. Give me the pie chart. They have gold, 20%, silver 5. Then they're doing 10% in Swiss franc assets, another 15% in real estate and natural resource stocks. Then aggressive growth stocks is 15% and 35% are dollar assets. So that's their. I guess that's how they actually run. Let me show you. This is the all time performance since inception.

B (38:38)

It's amazing.

A (38:39)

That's 2000% and that seems incredible. It is until I Show you IT vs. The S& P. It's total return. But still the S and P total return of 4000% is 4x. That I'm just.

B (38:54)

Yeah, but you know what? You got it.

A (38:57)

But did you sleep at night?

B (38:58)

Yeah. You did. You really did.

A (39:00)

You did sleep at night.

B (39:01)

You really did. So the. I didn't realize this the. The fund family, it's actually called permanent portfolio family of funds.

A (39:09)

I wonder if somebody else owns that.

B (39:11)

So that particular Strategy has almost $7.4 billion in it. So good for them. They're delivering value to their investors. It's good. Love to see it.

A (39:21)

Jonesy 1289, smart ass is saying hello meter

B (39:29)

go sniff glue. That's good. Okay. All right. Good stuff. All right, let's. Oh, let's do this real quick. So our friend Alex had to add a. Research showed what happens to semiconductors after a momentum thrust.

A (39:47)

And it makes me uncomfortable the way you say thrust.

B (39:52)

Thrust. I really lean into it.

A (39:55)

Yeah. So the average return every. Every letter in that letter.

B (39:59)

Every single letter. The average return after said thrust after 63 days is 12%. Okay.

A (40:06)

Yeah.

B (40:07)

And we're at 29. It's like too much. It's like way too much. It's off the charts.

A (40:13)

Well, today they reversed. Finally.

B (40:15)

Yeah, but, but, but did they. I mean SMH was. SMH was down 3% right.

A (40:23)

After being up 40% in three weeks.

B (40:26)

So in other words, this is going straight up. I never heard this term Before, I'm sure you have the ludicrous list. Josh, you know. You know about this?

A (40:36)

No.

B (40:36)

No.

A (40:37)

What is that?

B (40:38)

So, so bespoke traxis. And I, I, I actually did see somebody else reference it recently. Maybe because they did. One way we have taken tabs on a general level of frothiness in equity markets is a screen for the number of stocks meeting a general criteria. All right, so here we go. Stocks with a market cap above $500 million.

A (40:58)

Check.

B (40:59)

A price to sales ratio above 10x and a doubling in the stock price year over year. At the moment, there are 175 stocks.

A (41:11)

This is like the classier version of the D Gen Dow, correct?

B (41:14)

That's exactly right.

A (41:15)

All right, so out of what's in the list, do we know what's in the list?

B (41:19)

It's. I'm sure it's a lot of semis.

A (41:21)

The point is, the list is now very large because a lot of stocks have done this. 175 stocks are over half a billion. Market cap price to sales above 10 and have doubled. Yeah, I believe it.

B (41:35)

So the collective market cap is at like, 2 trillion. And it looks like it's about, it looks like it's about. No more. 20 trillion. And it's about a quarter of the entire Russell 3000 market cap. Holy shit.

A (41:50)

I mean, it's like every semiconductor, it's every power supply company, every telecom network and component company. You just think of huge categories of stocks where there are tons of tickers and you could picture it.

B (42:10)

It's a party. It's definitely a party.

A (42:12)

It's a party. All right. I wanted to just point out on this semiconductor reversal thing, I asked Sean for this for CNBC today. You know, people buying stocks that are parabolic on, like, the 12th day of a rally. It's almost. I was saying, like, people don't even know how to buy stocks anymore because, like, they never were taught anything. They just opened an app and started trading. Imagine buying a Stock that's up 12 days in a row, betting on 13. Now people are like, yeah, but then they went up six more days. Okay, that's the trades. That's the trade you want to. That's the bet you want to make. I guess you could do it. So we wrote a column for CNBC Pro yesterday morning, Monday morning. And the message was, yeah, these stocks look amazing, but pump the brakes. Here are better entries for microchip technology. Broadcom, Nvidia. Nvidia. I like the entry, actually.

B (43:14)

Yeah, it's good.

A (43:15)

And intel and, like, just the concept of just forget about the price and forget about the shape. And how parabolic just solely on RSI's. Professional investors don't buy stocks with an 84 RSI because what you're buying at that moment is the highest momentum stock in the entire market. And it's never the right entry. It's the thirstiest thing you could do. So we looked at the RSIs of the biggest chip stocks going into the market today. When they all reversed on was an 88 RSI. Can you imagine? No stock should be at 88 except for the day it comes public doubles. STMicro 87 Intel 83AMD 80, Marvell 78 Texas Instruments, which should never have a 76 RSI. 76 Monolithic Power 76 Nvidia 76 Qualcomm 74 Broadcom 74. Then you look at the DRAM stocks, look out something called Kyoxia. You guys could correct me on that. I don't know. Is that a Korean company? I don't know. 81 RSI. Seagate 77, Western Digital 75.

B (44:49)

Dude, hold on. Seagate is up 14% in the after hours last time I checked.

A (44:55)

Buy it now. Hurry up.

B (44:58)

You know what

A (45:01)

percent above it's 200 day. It's all too much.

B (45:05)

Yeah.

A (45:05)

Anyway, if, if you learn nothing else from this time that you've spent with us this evening, like professionals are not buying 85 RSI. It doesn't mean the stock can't go higher. But just like you are putting the odds so far in the wrong direction versus yourself when you do stuff like that, you might win. Sometimes the amount of times you're going to get burned are significantly higher in quantity. Is that a fair statement to make?

B (45:36)

Yeah, that's like taking a fade away shot at half court. You just, you don't. It might go in, but probably not.

A (45:41)

It's wait. It's not impossible to make money. It's probably the wrong move to make.

B (45:47)

I think most of our viewers definitely know that. And I think the people that are buying it in general are like very short term in nature. I don't think anybody's initiating a new long term position.

A (45:58)

I don't know. No, because you know there's a lot of people that will buy a top. They don't know what's the top at the time.

B (46:03)

I know it has to be, it

A (46:04)

turns out to be the top and they're not selling because then that would mean they were wrong and nobody wants that.

B (46:09)

Yeah. So all right, let's do Spotify. So they've got new leadership in there. And on their report they said we are pleased with our performance in Q1.

A (46:24)

No one else is.

B (46:25)

As all of our KPIs met or exceeded guidance, the business added 10 million MAUs versus guidance for 8 million while subscribing. Net additions of 3 million were in line. Revenue was in line with guidance and grew at an accelerated 40% year over year basis. Gross margin exceeded guidance and expanded 133 basis points. Fast forward. Overall we view the business as well positioned to deliver improved growth and margins in 2026 as we reinvest to support our long term potential. You don't want to that when the stock is down like 11% on the

A (46:52)

day they beat the out of this thing and it was already down, it was already in a draw down.

B (46:58)

So it wasn't. It wasn't. It wasn't the worst quarter. They're right. They're right. The problem is it wasn't what they delivered this quarter. It's what they spoke what they guided to next quarter. It's not great, it's just, it's not good and the stock is not growing the way the company's not growing the way that it should be. A lot of problem with the ad supported tier and it's not a cheap stock at all. So you just can't miss like this.

A (47:19)

Biff Grebels points out it's in a 45% drawdown from the summer. I didn't even realize that it's getting. This is reminiscent of what they did with Netflix.

B (47:30)

Yeah.

A (47:31)

And it's very similar type of business. It's about subscribers and spending money on content that you then distribute amongst those subscribers. I mean it doesn't look like a bad quarter. I don't know what the.

B (47:43)

It wasn't a bad.

A (47:44)

I don't know what people thought they would get.

B (47:46)

It wasn't a bad quarter. It's the guide. The guide was bad. The guide was bad.

A (47:50)

I mean it's how it goes. It's, you know, you can't call it a bubble. I'm sorry. You can't say the market's a bubble and then have punishment for companies that miss or make and just don't give strong enough guidance. That's not a bubble.

B (48:06)

This is not a bubble.

A (48:07)

Would be. They're like oh whoops, the guide's a little light this quarter. But don't worry, we'll get them back at the end of the year it'll be a second half story and the stock goes up 20%.

B (48:18)

That's the market's saying, no, we don't believe you.

A (48:20)

It's a very disciplined market, and they are beating up companies that don't do everything exactly perfectly.

B (48:27)

Yep.

A (48:28)

Which brings us to Robinhood.

B (48:30)

Yeah. So Robin Hood is double miss. I feel a little bit better about missing the rally from 70 to 100. The stock is now back at $75. And this is. So we spoke a lot in the first quarter. There was one, I think it was with Farmer Jim actually, where we were talking about, like, the balls have left and the retail participation, like, is out. Like, they are gone. They left the building. And this is the crowd that left the building. So let's go through some of their charts. All right, I want you to focus on the bottom two. So we've got total platform assets down from $322 billion in the previous quarter. $307 billion today. But the problem, Josh, is that they had net deposits of $18 billion. So net deposits of 18. And yet total assets on the platform are down 15.

A (49:27)

How does that happen? People lost money.

B (49:29)

People are not. People are losing money. Which brings me to the next slide. Look at the financial results.

A (49:33)

Because you're doing dumb.

B (49:35)

Look at the financial results. Yeah, net income is down pretty bigly. What does that say? Earnings per share. That can't be right. 605 bucks. Whatever it is, their financial results are going in the wrong direction. All right. Because people are trading less. So transaction based revenue for Crypto was down 39% for the quarter, quarter over quarter, and options based Transactions are down 17%. It's not fun when you're losing money. So the customers chilled out. They'll be back, no doubt, but it was a tough quarter. Now, longer term, you know, Robin's doing a lot of great stuff, but it's. It was a tough quarter. And crypto is a big part of their business, and it's not going great.

A (50:24)

Hey, I'll give you the other side of the story. I think we just heard from Jane street, and I know that Jane Street's not the counterparty for every single Robinhood trade.

B (50:40)

No, you're right. You're right, they are.

A (50:42)

Bloomberg News is able to write financial reporting stories on Jane street because Jane Street, I think, has bonds. And because they have publicly traded bonds, it necessitates a certain amount of SEC filings on the company's financials. But they are effectively a trading shop and a hedge fund. And they are private. But because of that publicly traded bond thing, we get some reporting there. Bloomberg just reported. This is insane. Q4 revenue for Jane Street 15.5 billion with a B total 2025 revenue of 39.6 billion and total 2025 EBITDA of 31 1/2 billion. Jane street made $30 billion in effectively in free cash flow last year.

B (51:38)

And that's more than Walmart, dude.

A (51:41)

That's one of the biggest companies on earth. Nobody can name a single person who works there, let alone the CEO or any of the partners. 99% of people on earth have never heard of it. And those that have don't even know where they're headquartered or what they do. $30 billion in annual cash flow and their counterparties are these numbnuts at Robinhood like taking flyers on crypto shit and zero day options. Like do you honestly think that those levels of trading were sustainable? Like people run out of money at a certain point.

B (52:21)

So I hope springs eternity.

A (52:23)

This is who you're, this is who you're trading against. Like, like la Cosa Nostra of the financial universe. They're killing you. They're eating you. Every time you press buy, they press sell. They love it, keep doing more of it. And it's. Listen, man, when I was coming up, if you were day trading, you were day trading against some other schmuck sitting in their own basement. You couldn't meet each other eye to eye and there was a market maker in the middle. That market maker was barely making any money too. Right. This is a different world now. You are trading against the greatest traders of all time and they're not even human. They're literally software programs designed to relieve you of your, of your holdings.

B (53:07)

I like my chances.

A (53:09)

Still want to do it? All right. Feel, feel free. Anyway, just a. Sorry to just inject a dose of reality. What brings the Robin, what brings the Robinhood trading enthusiasts back to full strength like another, another, Another bubble.

B (53:28)

Dude, they didn't leave entirely like Q1. Transaction based revenue for options was 240. It was 260 this quarter. Equity was stronger. I mean they're so, they're, they're still at it. So higher prices, but they're still, they're still there.

A (53:42)

But they need crypt, they need crypto to. Because that's. I don't know, is it 20, 20% of their.

B (53:51)

It was 1. It was 134 out of 623. But like in Q3 for example, it was 268 out of 730.

A (53:59)

All right, so I think Bitcoin back at 100,000 gets the juices flowing again at Coinbase and Robinhood and nothing really else can substitute for that.

B (54:08)

Agreed.

A (54:09)

So, all right, we'll see if it happens. While I don't. While I don't approve of short term speculation, I love long term speculation. And today's make the Case is about the most speculative stock I own. And nobody should listen to this and think I'm giving them investment advice. This is a long, long, long, long shot bet. I think it will require at least five to 10 years in terms of holding period to justify the amount of risk I'm taking. And that is probably not everyone's cup of tea. But here goes. Talk about Joby. I went to Michael, did you know? I went to the Joby test flight of their evtol. The first run ever from JFK airport to the west side of Manhattan. And it was yesterday at the Blade helicopter lounge on 30th street and 12th Avenue. So this whole thing took place over the Hudson. It sort of looked like the set for like a Spider man set piece, like with big cranes and helicopters in the sky. And then this thing comes in for a landing. And John, give me some. Give me some footage. So I'm standing right underneath this. So Joby bought Blade, which is the helicopter. Taxis, mostly for wealthy people to get to the Hamptons. Look at this thing, dude. Look how smooth. There's a pilot in there. No passengers. The pilot is obviously professional. And they will, I think, be making five of these a month for the foreseeable future. Manufacturing and trying to ramp that up to 50. So there aren't a lot of these on planet Earth just yet. This is the audience and we're all cheering because they successfully landed. Pause this. You see the propellers?

B (56:08)

Yeah.

A (56:09)

Okay, so when the. When the thing is sitting like this and it's about to lift off, that's the position of the propellers. They are perpendicular to the ground. Once it lifts off to its out cruising altitude, those props come forward like a plane. They're parallel to the ground. And then it flies on a fixed wing. And then when it's gonna come in for a landing again, the props will go vertical and it'll lower itself to the ground. The difference between this and a helicopter, four major differences. The obvious one is the sound. This thing is silent. It's like something out of Dune. It's hard to explain how insane it feels to watch that thing land in front of you and it doesn't make a sound. Helicopter sounds like a thunderstorm, especially when you're right under it. You literally have to cover your ears. It's so loud. Two, the propellers themselves. There are six of them on this craft. And they're built. The system is built with double redundancy. You can lose two of those props and fly under four of them. Very, very important for safety. A helicopter is one rotor. If you lose the big rotor, you're going down. No, no other. No ifs, ands or buts. The only question is how fast and are you spinning in a circle in the descent. Terrifying. The third thing is, you know why they don't land helicopters on skyscrapers in New York anymore? Because they were literally blowing jet fuel exhaust into the air conditioning systems of buildings where people were working. Like, they used to take helicopters off of hospitals. Like, this was normal news choppers would take off from, like the roof deck of a building that people were working in. They were blowing exhaust into the AC that people were breathing in.

B (58:11)

I'm laughing at my answer. Wind. Don't ask me scientific questions.

A (58:14)

Okay, Anyway, so these are battery. And the thing about Joby is they're going for vertical integration very much like Tesla once did, like SpaceX does now. Like, they're writing the software, they're training the pilots, they're manufacturing the craft, they're making their own battery packs. Full, full vertical integration. Not cutting any corners, really, thinking through the manufacturing.

B (58:39)

From when is this thing going to be live?

A (58:41)

It is live. You just looked at it. So next month.

B (58:44)

You know what I mean?

A (58:46)

Look at this guy. So next month, the EIPP takes effect. This is the EVTOL chart off EVTOL integration pilot program. By integration, they mean starting to integrate these things in the low earth orbit with, like, airplanes and literally at a federal level, overhauling air traffic control to account for the fact that these are gonna be in the sky later this summer. The taxi, the air taxi service that's partnership with Uber and Joby will be flying in the skies above Dubai in the United Arab Emirates. And it will not be long before these things are happening. Taking flight from New York to the airport. So I think there's a hundred mile range. So the Hamptons might be a little bit of a stretch, or Montauk might be a little bit of a stretch. But how long would you approximate it would take to get from JFK to the west side of Manhattan? Ten minutes by car.

B (59:53)

Oh, forgot about it.

A (59:55)

Two hours. Yeah, gotta be two hours. Let's say charitably, at 2:00am it might be an hour.

B (60:01)

It would be horrendous.

A (60:02)

Seven minutes.

B (60:03)

Yeah.

A (60:04)

Okay, now think about somebody in a car accident who needs to be airlifted to a hospital. This versus a chopper or this versus an ambulance on wheels.

B (60:14)

Get to the Joby.

A (60:17)

Anyway, Joby is one of probably my most speculative holding. I don't think that I wouldn't call it pre revenue because they got $100 million in revenue from buying blade on

B (60:30)

a pre market cap. It's like 8 billion bucks.

A (60:33)

8 billion bucks. It's a really. Look, one of the things with Joby is every time the stock price gets momentum, they do a secondary and I get it, they've raised billions of dollars in cash and they're going to need it because they're burning probably $500 million. And you know these things are going to cost a lot of money to manufacture. That being said, they talk about this guy Joe Ben, who I met yesterday. Do we have that picture? This is the CEO. That's why it's called Joby. There he is. His name is Joe Ben. And they talk about him like, like the guys that work for him talk about him like he's Thomas Edison. Like somebody said to me and another investor in the company, Charterhoff said to me there were like 30 of these guys on earth at any one time. Like the Benjamin Franklins of the world, the Elon Musk's of the world. And they think Joe Ben is one of those guys. The last thing I'll say about this, they've been working on this for like 20 years. It's not like some project that started in 2021. This is a very, very long term vision and they are now like within range of seeing this actually happen in the real world. After decades of solving physics challenges and technological barriers like they are there. So I'm making the case, I'm telling you right now, this is not for the faint of heart. I absolutely think the stock could 10x also. It could go to zero. I just, I won't be the one that knows for sure. So whatever capital I have invested in here, I'm definitely taking a risk. But that is the bull case for Joby Aviation. What are your thoughts?

B (62:14)

I love, first of all, I hope this works out for humanity. I love that you're making the case after a 50% plus drawdown. I would feel way less comfortable if you were promoting.

A (62:22)

Well, I bought more. I bought more recently since it sold off because I don't give a shit.

B (62:26)

So yeah, listen, you said all the right things. You laid out the case. It is highly speculative and I hope it works.

A (62:33)

Yeah, you know what, we'll check back in on this in like five years.

B (62:36)

What kind of deal.

A (62:37)

How smart or stupid I look.

B (62:38)

All right, I've got a mystery chart for you. And this is the smallest stock in the Dow and probably coming out at some point because that's, you know, that's what they do.

A (62:50)

Wait, wait, wait. What is this? This is a Dow component.

B (62:53)

This is the. This is the smallest stock in the Dow. It had a market cap of $275 billion at the peak, and it's now at like 60. There we go. Thank you. Great work.

A (63:02)

What sector? Please give it.

B (63:05)

What sector? Let's say consumer. Discrete.

A (63:11)

Consumer. Consumer to squash. Is it a. Is it a retailer?

B (63:15)

Mm.

A (63:17)

Is it Target? Home Depot?

B (63:20)

Yeah, you're right. Trackish. I suppose it is. I'll give one more clue. Okay, Management up big time.

A (63:30)

I'm seeing guys in the chat say Nike. Is Nike in the Dow? This is in the Dow.

B (63:35)

Yeah, dude, it's 44 stock. It's coming out. It's by. It's by far the smallest name.

A (63:40)

That's unbelievable. What? Yeah, it's 60 billion. Like, could this go private? Could this literally, like, could Nike be. Could Nike be taken private?

B (63:53)

Yes.

A (63:54)

Could Nike get bought by the Saudis?

B (63:56)

Yeah. So I don't know what the shelter structure is or anything like that, but. But that's crazy, dude. Like, what?

A (64:03)

You got to think even might have. Even when Shoe Dog came out the

B (64:06)

book, even though it looks beyond, it looks like death, the floor is not that much lower than $66 billion equity. I'm not buying it.

A (64:16)

But is Nike relevant to people under. Under 20?

B (64:23)

I couldn't tell you.

A (64:24)

Like Nugget. I feel like Nugget wears Air Force ones, but all the.

B (64:28)

All the boys wear Jaws. They all wear Nike sneakers still?

A (64:32)

Yeah. Shit. One thing I noticed is every time they arrest a mass shooter or some, they're wearing Nike tech. I noticed there's a lot of Nike tech whenever somebody's shooting somebody.

B (64:49)

That's enough of that.

A (64:49)

It's not great. All right, shout to Nike. I still love the brand. I still wear a lot of Nike stuff. Maybe I'll take a look at that and catch that falling knife. Guys, thank you so much for watching. Thank you for listening. We love doing the show for you live. So for those of you who join us in the chat, we really appreciate you all coming through each and every week. It adds a lot to the show and we love you for it. I want to remind you guys, tomorrow's Wednesday, which means an all new animal spirits with Michael and Ben. We'll do an ask the compound with Ben and Duncan taking your questions. Send your questions to ask the compoundshowmail.com for the latest in financial fashion, check out idontshop.com where we always have new compound merch just for you. And at the end of this week, I gotta tell you a very, very poignant and special edition, I believe, of the Compounded Friends. I think you're gonna love it and can't wait to bring it to you. All right, that's it from us. Have a great night. Talk to you soon.

C (66:06)

Ritholtz Wealth Management is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Ritholtz Wealth Management and its representatives are properly licensed or exempt from licensure. Nothing on this podcast should be construed as and may not be used in connection with an offer to sell or solicitation of an offer to buy or hold an interest in any security or investment product. Past performance is no guarantee of future results. Investing involves risk and possible loss of principal capital. No advice may be rendered by Ritholtz Wealth Management unless a client service agreement is in place.