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INVESTING WITH THE BOYS
Recorded: March 28, 2025 Duration: 1:00:12Space Recording
Short Summary
Market sentiment is currently bearish, with discussions highlighting significant declines in portfolio performance and investor confidence. Despite this, there are indications of potential growth opportunities as investors adapt their strategies to navigate the volatile landscape.
Full Transcription
Thank you. What is up everyone? Happy Friday. Well, it's Friday. I don't know about happy for some of
our portfolios right now.
Sorry about the slight delay there. This time zone thing is still throwing me sideways. That
is all on me. The boys are ready to go. That is on me. I was looking at the wrong clock. I have
three time zones over here on my desk. So hey, but we're here. It's investing with the boys.
I am excited for this hour. They're ready to go. I was to hold up, but we're here. It's Investing with the Boys. I am excited for this hour. They're ready to go.
I was to hold up, but here we go. Let's kick it off. Over to you guys.
Yeah, we can kick it off. I'll start, obviously, a little light and let people kind of come into the chat.
So we don't have to repeat ourselves at all. But obviously an ugly day, ugly end of the week.
I mean, just about ugly everything.
And I think this is a very important part of investing,
which is to be just to have no bias when you enter.
You know, when you're in the chop period,
it's important to just be open to any possible outcome.
And so, you know, I think I was pretty vocal when we saw the, you know, FOMC meeting.
We saw the report come out and the report was as bad as it could have been.
as bad as it could have been, yet the market ripped to the upside.
Yet the market ripped to the upside.
You know, I figured that basically gave us a green light for a tradable bottom.
And I wasn't necessarily sure or not if that would turn out to be the bottom of the correction.
I think the bottom of the correction is more contingent upon these, you know, what is the end result of the tariffs?
And so we got over the weekend some headlines around Trump is planning to walk back a lot
of this tough tariff talk.
You know, it felt like to me, so we got the FOMC ripper on bad news.
Okay, that's a good sign that we might have just seen a bottom.
And then you get, you know, the real fear in this market, which is tariffs, basically getting walked back.
So for me, it felt very constructive to the long side.
And then, you know, obviously, everyone and their mother could see on the spy daily chart
that you from the bottom uh from the 550 level we basically had like this slow walk up with light
volume and it totally looked like a bear flag you know but bear flags are bear flags until they're
invalidated or validated right so like one way or another,
you know, it could have also been the beginning of a recovery. It could, you know, a lot of these technical patterns are just patterns. It's just something to keep an eye on. It doesn't mean that
it has to play out. And so, you know, for the time being, okay, you know, bad news is priced in.
It might, we might've priced in too much bad news, especially given the
walk back in the tariffs. So yeah, upside looks very good. And then Monday we had that
gap up and it's like, okay, this was right. And so I had gone from a little bit more cautious
to a lot more bullish. And I was willing to be open to, hey, we could easily put in a lower
high and go lower because
that was a bottom, not the bottom.
We're still in the downtrend.
Of course, of course.
Right.
But you kind of trade the price action in front of you.
And to me, I spend a lot of time sitting down and thinking about price action.
I think about the news, the headlines, what it's going to impact, what are the financial
and economic impacts of tariffs, FOMC forecasts, et cetera, et
cetera. So, you know, I sit there and I think I'm like, okay, look, we might be a little
bit constructive here because we just priced in a ton of downside for a lot of names.
I mean, you know, mags went into a bear market, you know, the S&P is down in correction territory,
but many individual names are down 50%.
So, you know, I felt constructive going to that. Of course, always open to other possibilities.
And so Wednesday we had an ugly candle, very ugly.
And, you know, I had a friend basically say to me,
Hey, I think this is fine.
I think, you know, it's a low volume pullback
in this kind of short-term uptrend that we're in.
And then I'm like, dude, that like low volume pullback phrase is not the way to look at this.
You're lacking the context of, and again, if you pay attention to charts and price selection, which is very important in this shop.
There's two things that happened.
One, we peaked over
the 200-day and rejected hard. So there's multiple types of rejections. There are soft rejections,
which means, okay, maybe we'll, you know, come back in a couple of days and try again.
This was a big rejection because we just fell right down. And also the low volume pullback,
it doesn't really apply because the body of that red candle was so deep.
What that really signaled to me was a lack of liquidity in this market.
So we were going up on low liquidity because a quote unquote low volume sell day was able to take us so far down.
It basically retraced multiple days of progress so that to me
says people are still willing to sell the rips in this market and there's not enough liquidity to
absorb those uh sellings so i immediately got more defensive you know uh we should probably pin you
know let me pin our uh episode from today because it just dropped and I give a lot more commentary on this. So I just shared the episode in the nest. If
you're interested, we recorded that Wednesday night. So, you know, I talk about on that
episode how, you know, I was 110% long going into Wednesday and I have been, you know,
a little bit of snip, snap, snip, snap in terms of positioning. That's the office meme,
because that's what this market's been. It's been chop. It's been drive you crazy. Anyone who says
it's easy to trade this market is lying to you. You know, let's see their, you know, audited P&L.
It's been a tough market. And so I've been very nimble and I protect my portfolio at all costs.
So while I was very positioned to the upside, I immediately went from 110% long.
I cut 30% of long exposure on Wednesday.
And I shorted SMH with 20% of my portfolio.
So I went from net long 110% to net long 60%.
And then yesterday, I also added another 20% short exposure.
So here's the thing. On Wednesday, we didn't get the auto tariff
news until after market close. When we got that auto tariff news, I'm like, yo, that is serious.
This is no longer playing games. That can actually send us into a recession, which is why I got even
more defensive yesterday. Because because again i went from 110
to 60 net long exposure wednesday that's before the tariff news after the tariff news i'm like dude
this is bad um so now there's going to be follow through on this sell-off so yeah so uh shorted
more yesterday uh now i am 40 net long i really wanted to get closer to market neutral look we haven't necessarily um you know
broken through the lows of march 11 march 4 uh generally speaking but look you don't have a lot
going for you in this market and the problem is you know i think we're in a tough spot and i think
trump is in a tough spot and he basically somewhat caused it himself.
But I do think that there is some good intention in what he's trying to do.
It's kind of like short term pain for long term gain.
The market called him on his bluff early on about the tough stance on tariffs when he
says maybe we'll just do reciprocal.
Maybe we'll just walk some of this back. But the problem when the market calls BS on him is that the tenure starts spiking again.
And your entire goal was to get the tenure down. And now you lack credibility as a president and
all the policies you're saying. So nobody's going to believe you anymore. People were
coining the phrase, the boy who cried wolf. And so for him to not lose credibility, he needs to take a tough stance on tariffs,
which is why I feel that they're actually going to go through to some material degree.
And if these auto tariffs go through, I mean, it will devastate that sector, which is a big part
of GDP. So that alone could more or less slow GDP growth potentially to
negative territory. And then you have a potential uptick in unemployment when a lot of jobs are
lost in that sector. So yeah, I mean, I think it's a be very cautious kind of market. The
economic backdrop is not in your favor. And so I remain, I try to, I'm trying
to remain as market neutral as I can. And, you know, if we rip, which I don't really see the
catalyst right now, other than you could argue maybe positioning, but again, oversold is not
bullish, it's bearish. And it can also, you know, oversold can become more oversold and all that kind of thing so
um yeah just you know there's a lot of data flowing around there's a lot of different charts
and people can just try to uh support their you know their thesis with whatever data fits kind of
their narrative but in the meantime um yeah these you know these tariffs definitely have economic impact. And if people are sitting here saying, yeah, I mean, these Mag 7 are really cheap right
now. It's like, yeah, if their earnings hold up, they're cheap.
And so I think that's kind of what people aren't really pricing in right now is that are these
really trading at 20 times earnings or is their revenue going to fall 10%, which is going to be
a 50% hit to earnings, which means that these things are trading at 30 times earnings or are you know is their revenue going to fall 10 which is going to be a 50 hit to earnings
uh which means that these things are trading at 30 times earnings or 40 times earnings right like
i i think you just got to remain open to the possibilities because we are still
in very uncertain waters now i'm not calling for some deep recession or whatever but it's like
anyone who's saying or claiming that they have some sort of clarity of what the next 12 months
look like, they're lying. And I think the best thing you could do right now is just to be cautious,
don't overplay anything and, you know, feel high conviction in what you own. And I've been talking
about being cautious for the last month and a half. You know, so we saw a lot of these names
get to evaluations that make absolutely zero sense. And the consumers at all, you know, all time highs, unemployment, full employment.
Like what happens if you see any sort of cracks in any of that data?
You know, everything's priced for perfection.
I mean, you know, again, and there's the whole other side.
Last point I'll make before I pass to Sam and we talk about it a good amount.
The last 20 minutes of our episode is like, you know, people are sitting here
quoting all sorts of,
oh, NVIDIA is so cheap.
Look at the growth, blah, blah, blah.
Have people forgotten how to invest in cyclicals?
You don't buy cyclicals
when they look cheap on peak earnings.
You buy them when they're depressed.
You buy them on depressed earnings
and high multiples.
So I'd rather buy NVIDIA 100 times earnings.
People are like, well, what are you talking about? That's expensive. I'm like, no,
that typically means that the stock's out of favor and the earnings are very low. So I think
cheap is based on the numbers we have today, but the numbers today don't necessarily have to mean
the numbers tomorrow. And if you're wondering like, well, I don't know about that. It's like,
well, look, the price action is telling you that because, you know, we had the deep seek scare.
Was it just a scare?
I don't know.
And then everyone sees the Microsoft Mag7 report, the hyperscalers report, insane CapEx numbers, right?
And what happens?
NVIDIA is lower after that reassurance that their revenue will be there.
After they said the biggest possible numbers they could have,
the price actually went lower than the DeepSeek news.
So was that just a scare?
Or is it like the market is not believing these CapEx numbers?
And just as early as Wednesday, we saw that news that, you know,
Microsoft is going to pull back their data center spend
in concerns of oversupply.
And what happens when one of these guys starts
scaling back their spend, the other ones can follow suit. So, you know, exactly how this
whole thing started, which was, oh, you're going to spend, you know, 20 billion, we're going to
spend 30, we're going to spend 40, blah, blah, blah. Now we're getting to 100 billion each.
As soon as, you know, one of them pulls back, it's the same domino effect in reverse.
And those revenues
uh those that spending is someone else's revenues those revenues are someone's profits and of course
you know profits aren't at 100 of revenue so when you lose a little bit of revenue you lose a lot
more profits and that's how multiples end up uh expanding moving forward so um i'm not trying to
scare people i'm not trying to say these things, but it's like, dude, be realistic.
Like, you know, I'm seeing all these takes on Twitter.
It's like, have we already forgotten how 2021 went, how 2022 went?
Like, I'm not calling for 2022.
In the episode, I even say, and Sam, I see your hands, I'll pass it to you.
But I say, you know, we're not at the same place as 2021 going into 2022.
We are at, you know, federal funds rate is four and a quarter.
We used to be 0% then headed into the fastest rate hike cycle in history.
OK, we had M1 supply crazy high and then went straight down.
We're at a point where we are now coming out of QT, probably headed into QE.
So there are things that can happen if we do have a lot of pain in the market.
And if we start to see inflation roll over and economic data come in too slow,
we can cut rates, we could do QE.
So it's a very different scenario than where we were in 2021 going to 2022.
So I don't foresee that we're going to have as deep of some sort of recession
or bear market or whatever, because we have the tools in place
and we're not at 9% inflation. We're at 2.5 to 3%, much more normal levels. Yes, it's sticky,
but again, it's not the same situation. So I'm not full on bearish. I'm just trying to be cautious
and survive this chop, which is I think the best thing you could do. And anyone who was like,
you got to buy this dip. How are they feeling now?
Right. Like, and, you know, I've tried buying the dips and I've tried trading the bounces and guess what, when the bounces don't bounce, what am I doing?
I'm cutting a lot of that exposure that I added for paper cuts rather than
constantly holding and doubling down all the way down because we don't know.
Right. And I think some math that some people need to understand is, you know,
if the max drawdown of your favorite stock is going to end up being 70 percent.
And like, let's say we're right now down 50 percent.
That extra 20 percent doesn't sound like a lot.
But if you buy it when it's down 50 and it goes to down 70, you're down 40 percent on your investment.
So those are not small numbers that will really hurt you.
So just be aware of how math works.
Sam, I'll pass to you because I talk a lot.
Yeah, it's all good.
Those are actually really good points.
The way that I kind of look at this in terms of a more longer-term investor is I am buying the dips, not in massive tranches, but taking my time, going slowly. I mean, I don't necessarily think that there is any clarity in terms of a trend in the market.
But even from a long-term perspective, if you go back to 2022, when the market was falling pretty nastily, along with those bear market rallies, there are people who got murdered
along the way down. If there's one thing that you can learn from that situation is never go
heavy too quickly if your timeframe is quite a bit longer. Mostly because generally speaking,
you know, the market is likely going to be higher in 10, 20 years. And even then, you know,
from a micro perspective,
like things can change with the company in terms of investing in a specific individual company,
because stock picking is certainly hard. But, you know, keeping an eye on companies,
listening to the earnings calls, keeping a brush with their news and stuff, you know,
that stuff matters. But macro really is what matters, what will move the market, you know,
regardless if, let's say, Amazon posts a crazy quarter
and the market's down like 2%,
that doesn't mean that the market's going to recover from that.
And it's very possible that Amazon might even fade that,
that speaking.
I mean, that is a mega cap, so it's kind of hard to even say that.
But we've seen countless earnings post really good numbers.
For example, Micron actually had really good earnings
and they completely faded that earnings
next day.
Rocket Lab had amazing news signing a multi-billion dollar contract and that pretty much faded
the whole day.
And then you have it on the downside where the market's going down and then you get negative
negative catalysts like AppLovin, which I'd like to discuss a little bit later on with Shai,
catalysts like AppLovin, which I'd like to discuss a little bit later on with Shai.
AppLovin gets a third short report, but not from a small shot. But I would actually say Muddy Waters
is somewhat reputable. I wouldn't say that they're as small as the other shots. But when Muddy Waters
puts out a report, and I went through that report, it is not something you want to ignore, especially
given that it's a third one coming out. But that move yesterday, Apple 11 lost $30 billion of its market cap, which is about 23% yesterday in the intraday low.
Today, obviously, it's going to be green because, I mean, when you're down 23%, there has to be a considerable additional catalyst once that certainty is pressing the market.
rest of the market but i made a holder of apple oven but going to keep that monitor but that set
But I made a holder of Apple 11, but going to keep that monitor.
aside uh when it comes to buying certain companies especially on this downfall this massive uh i
focus more on the high conviction and the lower risk opportunities and then once the trend starts
to set itself that's when i start to get a bit more i want to say aggressive in my ads but that's
when i start to venture out to more of the medium, higher risk stuff,
like speculative stuff.
But right now, if you buy Nebius, because I own Nebius, but it's a very small position.
It's a speculative position.
And that's how I size that position as far as the risk manager goes.
If you bought yesterday, hoping that, hey, look, Nebius is up.
It's up.
It's on a red day yesterday.
It's up like 2%, right? And they started down.
If you kind of chase that momentum from even a long-term perspective, you completely got obliterated today.
Setting that aside with regards to the CoreWeave IPO, I think all three of us are kind of not a fan of CoreWeave's bearish IPO, especially in this environment. This is like, this is like the worst day to go IPO.
Like of all days, like this reminds me of like 2021 when certain companies that I liked went
IPO and they just got slaughtered, like never recovering from the all time highs. Like Core
Weave, I'm not saying they're never going to recover. I'm saying like, this is the worst day
to go heavy, especially with this speculative position with, I would even say core weave
is a speculative position, right? They're burning a lot of cash and they're not exactly
in the favor of environment to be expanding at astronomical rates and so on. You know,
not trying to diss core weave shareholders, you know, but for me, it's just not for me. But
that being said, like, this is not the environment where you want to go heavy,
especially with speculative positions, you know,
and as much as a, as much as an ACT space mobile, I wouldn't say like, I'm a super bowl, but it is a
very interesting story. I think it's going to be trading a lot higher, probably in like five or 10
years from now, I kept the position small. And I felt like, oh, man, maybe I should have sized
bigger when it ran up like 15% after I bought it. And I look at it, I'm just like, oh man, maybe I should have sized it bigger when it ran up like 15% after I bought it.
And I look at it today, I'm just like, oh, well now I can add just a little bit today or a little bit today if I want to.
I haven't though, but I'm just saying like, you got to be candid with your ads.
Like I don't, I've, I called, I have to admit, I called the bottom like 5% up.
Right.
And I was dead wrong.
But did I go heavy on that bottom call?
No, not really. I actually still had cash when I called that. So, you know, with that being said, I mean,
short term wise, like, you're probably getting chopped up and obliterated in these massive VIX
20 plus situations. I mean, I used to trade the futures before and, and these typical environments,
I would not size big i would size small
and i would widen my stop losses because of the volatility but at the same time even as a long-term
investor you can kind of you can kind of uh project that mentality but much more long-term
perspective but more focused on fundamentals but at the same time man i mean everyone's waiting for
april 2nd they're waiting for that day to come. And when that day comes, and Stock Talk was saying yesterday, I'm not going to take credit
for this, but he had me thinking. When that day comes, unless there's like a material negative
news that comes out that the market doesn't know about, I can't see how that day would be a negative
catalyst in terms of market price action. Because a lot of that is being priced in today. I'm not
saying we're going to bounce on April 2nd, but if there is no market hates uncertainty, right?
And if you introduce uncertainty on a macro or a micro level, that is going to introduce volatility in the up or down direction.
And then when the price is discovering where the valuation is at of the said underlying, that's when price is going to start to base out.
And right now, it does not look like
we're basing out. It does not look like a safe environment. But with that being said, you know,
do you, well, actually you got your hand up. I'll let you go ahead, man.
No, I'm, look, it's so funny because I just checked our comments and there's people who
are just saying buy, buy, buy, because we're sounding cautious. By the way, I'm cautious.
I'm not bearish. I still have 80% long exposure exposure i just have offset that with hedges and i i think it's just funny that people are
immediately associating that every every dip is a buy because that's what they've been conditioned
to for the last three corrections four corrections in the last two years of this bull market but it's
like you know look at today's price action i don't think you can spin this in any way, shape or form as bullish.
So, you know, I just think that that's exactly the problem is that everyone is thinking, oh, people are bearish.
Time to buy the dip because they're so bearish.
Like, can we bounce?
Bounce? Sure, we can bounce.
Sure, we can bounce.
And I honestly think that, you know, I expect for price action wise,
like let's say, you know, there's been a clear bear flag on the daily for SPY.
I think we can bounce and we can retest that today's breakout of that bear flag to the downside.
If you retest that, that's like the most bearish thing, because I think you fail there.
And again, we failed at the 200 day.
A lot of these moving averages are now beginning to roll over
and they're headed down.
Maybe the index doesn't have a death cross on it yet,
which is when the 50 day crosses over the 200 day
to the downside, but many of your favorite names do.
SMH does, Microsoft does.
And you know what happens in markets is that the individual names in pullbacks end up moving before the index.
They end up pulling.
They end up bottoming before the indexes in pullback.
So you're not even seeing any of those names bottom at this point.
And so it's just like, you know, I don't know. I'm just saying
it's be open mind. Be nimble. It's not like you don't have to be the hero. I don't get that. Like
if you buy, you know, when spy reclaims the 200 day retests, it pushes higher, you know,
spies now at 580. Is gonna be the end of the world
that you missed the first few percent if it means that the bull market's gonna continue to 640 or
700 or beyond no it's not gonna matter so you know i think a lot of great traders will say you know
under the 50 days risk off and it's just it's not about being necessarily bearish it's just being
open to any possible scenario and i will say that the price action for the last two weeks, since we hit that 550 low is bearish,
not bullish. And anytime we tried to rally, it got sold and it didn't take a lot of volume to
sell it down. So the people buying we've seen in the flows is retail and institutions are not
buying this dip because they were the ones degrossing to begin with. You think that we could just move straight down on SPY and all these big, these
mega caps because retail was selling it? I just find it pretty funny that the small guys think
they're always going to win the battle, but I think you're just buying their bags basically,
and you're giving them exit liquidity for now.
So until the market turns and then they'll buy it up with you.
And so, like, I'm not saying that we can't bounce.
I'm not saying that we can't go higher.
But, you know, you'll know when that day is.
It's not today.
Yeah.
I mean, I don't think I'm expecting any type of saving grace.
You know, because Trump was talking earlier today,
and I'm pretty sure a lot of people expected some sort of stick save
to bring the market back up, and that just didn't happen.
You know, it's interesting because –
Sorry, I was just going to say, look at the SPY weekly chart right now.
I mean, it's slashed right through the 50 week we are like last week
we rejected and closed just below it we tried to reclaim it this week and rejected hard this is our
lowest weekly close since like august basically that august sell-off more or less around that
area so it's like we just undid you know six seven months of price action in like three weeks
and people are like yeah this is bullish okay dude for sure well i mean i wouldn't really assume
you know what people in the comments are are attributing to um you know that that that's
their that's people's prerogative and i don't think i think interpreting you know where they're
coming from you know for example one of the one of the guys said bye bye bye like
give me anything you know and even so some people's long-term time frame let's hope you
might have a much longer term time frame where they're just buying sb 500 and yeah i mean it
probably is better odds to buy now than it was a month ago. And if you're someone who's like a 401k, like if I'm buying my 401k, I'm not going to be like, oh, crap, the market's going down.
Stop my contribution to my 401k.
It's like, no, if my daughter has a 529, which is the investment vehicle for college, and she is six years old and my son, too, he's three years old.
And I started both of those as soon as they were born and honestly i just kept putting money in it every single week and i never looked back
and i'm happy i did even in the worst times of 2022 so you know it really depends on like
what you're looking at the time frame and so 100 i i want to clarify that and i think we can
jump to shy get his comments but uh real quick just want to say like. And I think we can jump to Shai, get his comments. But real quick, just want to say like, totally, it is about time horizons.
And, you know, I even mentioned that we had a segment on this in the podcast and how we're
managing portfolios and how we're thinking about stuff.
And it's like everyone's finance journey, everyone's investing journey is for sure personal
and it should be.
It is about your goals.
And I say in that episode, I say, if you are just a
long-term investor, you're buying, you should be DCAing every two weeks, not even caring,
paying attention. Sure. If you like stock picking, put a portion of your portfolio into
individual stocks and keep up with them and start DCAing into those names, especially if they're
down a lot and maybe it goes down further, but who cares? Because you don't need that money for 20, 30,
40 years. Again, I agree with that. I just feel like if people are listening to FinTwitch spaces
on a daily basis, you know, yes, maybe a portion of their assets are that and then a portion of
their assets are trying to make more money. And so like, it's just really important to look in the mirror and be honest with yourself
and know what you're trying to do.
Because I see oftentimes, and I was one of these people in past cycles
where I'm like, no, no, I'm a long-term investor.
You say that to yourself when your portfolio is down 50%.
It's a fun thing to say in theory, but when you're really hurting
and feel like vomiting every day and it really hurts
and you can't get that money back that you had three, six months ago, just be very honest with yourself who you are.
And I'm not trying to scare you. I'm just saying I've been through it.
And so people need to really think about if your portfolio got cut by 40%, would you be okay?
And would everything be all right in your life?
And if it is, then perfect. Great. Keep DCAing. No problem.
But if you wouldn't, then don't try to fool yourself yeah uh so let's um let's bring m back on here uh m did you want
to uh did you want to talk about anything or interject anything l you
yo yo can you guys hear me there's, there's Shai, I just got Shai back.
Awesome, yeah, weird technical difficulties.
You guys are spitting some absolute fire.
I kind of have some rebuttals for a lot of the content you guys said.
Should I start with CoreWeave or should I start with Microsoft?
Ooh, I like the Microsoft angle, but I mean, obviously CoreWeave is a hot topic today, so either or.
All right, let me do a quick take on Microsoft. I think there's a mis... Logical and I are on different sides of the aisle on what's happening to Microsoft on
delaying their AI infrastructure spending.
There could be a half-glass empty view of it for AI where CapEx is plateauing, supply
is now exceeding the demand, and they're readjusting.
For me, I believe that Microsoft is not pulling back
because of anything related to AI demand.
I think it's like AI demand is not slowing down.
I do truly believe it's the industry struggling to absorb
NVIDIA's acceleration that we got preview of
on the GTC event last week,
where they start talking about like what the next innovation of the latest and
greatest chips going to be starting in 2027 like the nvidia the ruben architecture like that alone
is going to be a 570 or 600 gpu rack consuming over 600 kilowatts of power like that's going to
be a total reset on how data centers are going to have to be designed. And already currently,
right now, the reality is a lot of these data centers are already pushing the boundaries with
the GP200s. But I think to crank the power requirements for that NVIDIA Rubin architecture
is going to be substantial. So I think that's why Microsoft's pointing back. Their data expansion strategy really wasn't built for the kind of power density NVIDIA
is now requiring.
So they're not abandoning the AI investment.
I think they're just hitting pause and reassessing how to scale efficiently without running into
those cooling bottlenecks or that energy constraint issues that a lot of the cloud service providers called out
even this most recent earnings cycle
where a lot of the reasons the AI workloads were weak
across the board was energy constraints,
compute constraints.
So I think there's reassessing,
but I could be wrong.
We'll see next six to 12 months.
So that's my Microsoft bits.
CoreWeave, this is not a real real company it should not be a standalone company i'm not going to be hold i have not been holding back on core weave
publicly on my twitter uh i think this is just one of those absolute financial fuckeries that's
happening that's going to be caught that's going to cause retailers to hold the bag. And the reason I say that is,
this is, honestly, there's one line that you need to know about why CoreWeave is not a buy,
buy, buy. It's actually a state the F away from me, is they're the most fragile IPOs I've seen
in quite some time. They solely rely on one supplier, NVIDIA. They solely rely
on one customer, Microsoft Azure, which is 64% of their revenue. And the only reason they're able to
get this 30 bill valuation or even go IPO in a matter of like less than two years since
they started really capitalizing on AI is there was a GPU shortage.
And I think we can all on this panel agree that is short lived.
That's not going to be a permanent thing.
So that's part one.
Shai, what are your thoughts real quick on the GPU shortage?
I saw Sam Altman's tweet or whatever saying there's a GPU shortage still.
What are your thoughts on that?
Oh, I think anything you hear Sam say say take a good grain of salt he is an absolute he's a
what's that phrase uh snake salesman like snake salesman he is not he do not listen to what he's
saying don't trust what he's saying he i think some of the reasons opening i would never go
public in the stock market is because he doesn't want to reveal what's under the hood because he is not – he should not be a CEO of a first mover AI company like OpenAI.
But yeah, Sam, what were you going to say?
Well, I mean I was going to say this actually – it's not just Sam Allen, but it goes like when you're reading like an earnings presentation or you're listening to commentary from let say, a company that is talking about the total
addressable market, man, you can never take that. You got to take that to grain and salt.
When they measure their TAM, if you're not going to read the fine print, at least don't take it
seriously. Don't be like, oh, well, this is a potential... Because at the end of the day,
they are trying to sell their own business. They're trying to sell their image and stuff.
So that's a prerogative when it comes to that. I'm not saying that companies would lie about it,
but obviously Sam Altman, he can't not say that.
I feel like if he does not say that,
then it just will not look good
that he's not addressing any of this.
I mean, it was mostly attributed
to the heightened usage of the image generation,
which uses a lot of compute
in order to generate those images
with ChatTBT, Grok, and so on. And I don't think anyone who's constructed LMs will ever tell you
that it's not. That takes a lot more compute than running a query on just asking chat,
TBT a question. Regardless, I think he's probably right, dude. I don't think that he,
to the degree of how much of a shortage there is, is probably what the real
question is. But as far as being short on compute, I mean, we've always been short on compute for
years. Like that's the reason my hyperscalers are expanding. And that's the reason my hyperscalers
are always putting CapEx into their businesses for that very reason, because you always have
to plan for the future. And when you think of about 10%, 90% of the world is not on the cloud
yet, or 90% of IT infrastructure is not on the cloud yet, which is just what all the CEOs have
said. But regardless, you know, take that with a grain of salt. But what I'm saying is that
cloud expansion is always going to happen. You will always have demand no matter what.
There's not going to be a single day and working in IT infrastructure, there's not going to be a
single day where it's like, you know what, this cloud stuff isn't working at all.
Let's bring all of our systems on-prem because then you have to re-strategize your entire hiring process.
And then you need to start hiring more on the data set aside.
But at the same day, what I'm trying to say is there is truth to what he's saying.
But the degree of how much GPUpu demand there is that is the question
no i agree i think the present reality there is obviously compute demand a shortage like you heard
it from across the big tech the hyperscalers they all said the same rhetoric and regarding
real quick on sam like what he's guys, like a lot of times the content
that comes out of these kind of, not icons, like these public figures that are in the
face of really big structural themes, they say a specific rhetoric that they're required
to do so.
And they change that rhetoric whenever the PR team tells them to.
Like it's very superficial.
But regarding the core weave i
think um i was losing my train of thought we digressed a bit yeah i mean end of the day uh
they are the absolute middleman i think the i think the narrative that core weave is going to
be this fourth hyperscaler is violently misleading it's not going to be at all.
And you're seeing like NVIDIA
having an anchor core reader
of $40 a share today
was a window into a deeper
and much bigger issue
that's going to be had for CoreWeave
the next couple quarterly earnings reports for them
because now you're going to have to see
how much in the weeds is NVIDIA.
Because this kind of arrangement
might work in the short term,
especially when the market is somewhat frothy
over anything error-related.
It is, so I'm a massive AI bull,
but there's some pockets of it that's very frothy.
But in the longer term,
this is starting to look more and more,
this is starting to look less and less like a partnership
and more like some kind of feedback loop designed to artificially strengthen whatever demand optics that Corwee is trying to do right now.
And they should not be a standalone company.
I really don't think they should be.
But they're capitalizing in the moment.
Kudos for them.
The insider's already sold.
The insider's made their money.
And I really was unfortunate reading that 10% of the shares are owned by retail uh on this core we've ipo uh that's a little alarming
and i think there's gonna be some people holding the bag so i um yeah i just wanted to i was
listening to the compound of friends and a couple things that they mentioned like uh from the s1 was
that uh and that's the fcc filing when you're gonna go public you list all your
risks and all that stuff um yeah as you mentioned all three founders had cashed out majority of
their shares between 2023 to 2024 um so they have barely any skin in the game and then uh microsoft
is 64 of their revenue and there was some news news out in the last month where they were starting to pause
that partnership a little bit or press on the brakes a little bit. So that's already a big
risk. And then, oh, I don't even know if this is a capital. I'm assuming this is probably a capital
intensive business, but I haven't looked too deep into it just considering that they're based on,
it's definitely not asset light. It's very capital intensive and it's very depreciating.
So there you go. It's really messed up.
It's horrible, right?
Like this thing can work extremely badly in their favor.
And like, yeah, I mean, if you wanted a sign of the top and they want to think like when people buy IPOs, there's just something you got to think about.
Why would someone sell you something that's a good deal for you, the buyer? They're you something that's a good deal for you the buyer they're selling something that's a good deal for them the seller so you
know typical rule is don't buy ipos because they're going to price them at like very difficult
you know valuations to make any money sorry what are you saying no so i do have a golden rule with
ipos that has burned me in the most more recently but I need to wait six months,
regardless of the IPO,
for me to invest a position in it.
I need to have two full quarterly earnings reports to see how the management,
what the management style is
when they're a publicly traded company,
get more of a glimpse into what's actually under the hood.
Obviously, that burned me with Reddit,
that burned me with Estera Labs,
that burned me with Rubrik.
Well, what did Reddit IPO at? Actually, that burned me with Reddit. That burned me with Stereo Labs. That burned me with Rubrik.
Well, what did Reddit IPO at?
Way less.
I think I want to say 30.
Much less than 20.
Yeah, 20 to 30.
You bought the Rubrik IPO?
No, no, no. I didn't because of my rule.
And then it just kind of took off.
Now I got – that's my newest question now.
But I do have a question for you, Sam, because I think there is some secondary news that dropped this week that I think is getting pushed under the rug a bit.
And Shock does not talk about more.
Where NVIDIA is acquiring Leptin AI, which is a GPU rental company.
So this is counterintuitive to their partnership with CoreWeave.
And also it's kind of making me a little nervous for Nebius
because I do own a position in Nebius in my small cap portfolio.
And the reason, I just don't understand why NVIDIA is trying to do this because
what?
Did the market just drop 5%?
I didn't know.
No, I didn't know you bought Nebius.
What's going on? Oh, yeah. No,'t know that, man. I didn't know. No, I didn't know you bought Nebius. What's going on?
Oh, yeah.
No, as a spec, I know about Nebius.
It's a down the center, straight AI infrastructure player, but it's only my small caps, my very
specular.
But I do want to call out like, this is my thought process on this Nvidia acquisition
for Leptin.
How am I affecting Nebius?
Because now I'm getting more bearish on my position on Nebius, where up until now, like Nvidia was purely just a supplier to Nebius because now i'm getting more bearish on my position on nebius where up until now like
nvidia was purely just a supplier to nebius they sold the gpos and nebius just did all the hard
work they deployed it they monetized the infrastructure layer through whatever ad
value search they wanted to do so like this model worked because there was a clear line in the sand
on what in what nvidia was going to create and what Nebius was going to do.
NVIDIA built the hardware
and they have the core software stack,
via CUDA, TensorRT.
But companies like CoreWeave and Nebius,
they build a localized
and like optimized cloud offerings
to cater to specific like data privacy needs,
regulatory issues, like latency,
like that kind of stuff.
But NVIDIA acquiring Leptin AI, I think that might be signaling that they no longer see itself like solely as a supplier.
Like they want to own the full user facing compute layer.
And that's the case.
That's exactly the space that Nebius is trying to win.
And that's exactly kind of the angle that CoreWeave is trying to do.
So now all of a sudden, both these companies are handcuffed to what NVIDIA decides to do.
And I think NVIDIA might have just gave us a pre-read on what their future strategy might be.
And I know like Leptin isn't just a reseller, like they do essentially lightweight GPU cloud wrapping, but it's still
a business model that overlaps the GPU cloud directly with Nebius and CoreWeave. They abstract
away from all the managing infrastructure and give the developers who want to capitalize on the AI
theme clean, affordable access to the NVIDIA GPUs in the cloud. So now I think this is a lot more threatening to both of those core even Nebius'
thesis. And now the thesis is becoming a lot noisier than I anticipated when I started the
position. And in this macro pullback we're experiencing right now, this is kind of the
perfect time to reallocate your lower conviction, noisy positions to the high conviction,
clear winners that are just getting
pulled back due to the macro environments and because those kind of names they rarely pull
back and when they do it's because it's something that's out of the business control but for like a
nebius they're the thesis i don't know if the thesis is cracking but it's getting a lot noisier
and nvidia's acquisition is somewhat alarming i don't know sam what do you think about everything i just said do you think i'm just tin hat theory is way too aggressive i'm being
too pessimistic here's some of your thoughts dude anything i think all of us been wearing
freaking tin hats for the last four months but i didn't know you bought nevius because i i thought
that you were generally bearish on the entire data center or GPU rental expansion industry.
I mean, first, let me just address the thoughts that I have on the Leptin AI.
You know, it's funny.
Every time I see Leptin AI, I think like, they bought Leptin tea or something?
Like I think like this would be some sweetened iced tea or something.
But yeah, so NVIDIA is looking to acquire leptin AI for hundreds of billions,
hundreds of millions of dollars, like definitely not a cheap company. It's Nvidia,
it's probably not that big of a deal. But when you think of CoreWeave versus leptin AI, CoreWeave
mostly focuses on offering like GPU compute centered around AI and machine learning models to its clients. So they're basically leasing data center compute,
right? Leptin AI focuses more, they do the rental with GPUs, but it's more geared toward creating
a development environment for people who are trading LLMs or providing open source LLM models
to developers and companies. It's actually kind of similar to one of the businesses that
Nebius has. This is a reason why I like Nebius because Nebius is pretty well diversified when
it comes to multiple businesses that they have. I think there's like five businesses under their
umbrella. And even though Nebius, the core business actually has 80% of its revenue contributing to
its full revenue and last quarter they grew up 400% and 600% growth on
their core business. Don't get me wrong. The core business is really primed at actually building the
data centers. That is a clear difference between CoreWeave versus Nebius because Nebius is actually
building these data centers and scaling them out. Right now they're building 22 000 blackwell power data set
sorry not 22 000 blackwell gpus in two different data centers in the us as well as paris france
and they're continuing to expand on data center space but it's not just focused on the us it's
focused globally around the entire world but right now it's just europe and the us and for me just
want to just want to state i do do have a position in Nebius
and it is a small position, very small position, way less than 1% of portfolio. But when I bought
it, I bought it with the intention that this can either go to zero or it could be like a 10 bagger
maybe in a few years. And it's so small that I don't think it'll make a difference if I even
added it to my highest conviction position in Amazon.
But with that being said, Nebbi is pretty satisfied, and there are other businesses,
including Avri, which actually has multiple contracts in Uber, and actually investing their autonomous driving system as well as the robotics system for delivering food.
delivering food.
They actually have a trial going on in one of the universities in the country.
They actually have a trial going on in one of the universities in the country.
Kind of what was very interesting for me.
I did see a lot of runway for it in spite of this GPU demand is slowing down and so on.
I think that doing the whole end-to-end platform of providing the data center to their clients
is a bit different than the core we
even left in AI story.
With that being said, though, they are, NVIDIA is selling GPUs to them.
But the good part is that when you buy these GPUs, especially in hyperscalers, like if
Microsoft is like, I'm going to buy a ton of GPUs, like thousands of GPUs, like NVIDIA
is going to be like, okay, cool.
When can you pick it up?
But like, if you're like some small company, you know, where it's like, Hey, I want to buy a ton of GPUs, like thousands of GPUs. And basically be like, okay, cool. When can you pick it up? But like, if you're like some small company, you know, where it's like,
Hey, I want to buy like five GPUs or something.
It's like, you got to go on the waiting list, buddy.
Like, think about it.
Like you were waiting in line to go into a club and then you're like
standing in line waiting there for like two hours, go to the club.
And then you see like this limo pull up and go in into the club ahead of you.
They didn't have to wait or anything.
I'm not saying that's Nebius, but Nebius has the backdoor pass to get into the club
because Nvidia actually does own a portion of Nebius.
So with that being said, I think it's quite a different story when I think of these three
companies, but as a whole, I think Nebius is really different from Corvium, Left AI,
which they rent the GPUs.
Nebius actually builds out the entire data center.
Did you guys catch that?
Was I lagging?
You were lagging a bit,
but no, we caught like 99% of that, so we're good.
But I have just really no comments on Nebius
or anything like that.
I'm staying away from all the data center names for now.
So I know Shai probably has more, but I don't know.
It sounds like.
My only trade on top, Bistair Labs, I think networking.
Don't, this is not financial advice.
Dude, let's go.
But this is not financial advice.
But I think that there's pockets of the data center theme that will be on fire and will
continue to go on fire once AI trained data becomes cheaper and cheaper.
The names that come to mind obviously is Broadcom.
That's a goat.
The really interesting disruptor that's early in what I think they can become is a stair labs.
Marvell is very customer specifically.
Marvell might have some customer concentration risk.
But yeah, pass back to you is logical logical but i want to add that real quick i mean um look i get it right
like there's going to be winners and losers it's not like there's always going to be a bull market
somewhere which is fair um it just yeah i don't think you necessarily need to be the first person
to buy i don't think you need to be the um first person to buy. I don't think you need to be the, um, the person like you don't need to, you can wait to, you know, for some of
these technicals to, to get in better shape. You can wait for some of this broad selling to slow
down a bit. It's okay. If you, you know, you don't buy a lab at 60, you buy it at 70 on the way up.
It's not a big deal, right? You're like, Oh yeah, you missed 15%. Okay. Whatever. But maybe I've
saved myself from minus 30%
because it could have actually gone from 60 to 40 or something, you know?
So that's all I'm saying.
And again, that stock is still very expensive, right?
Like, I understand that there's like a long-term path, et cetera,
but that's also contingent upon their customers,
like Amazon, continuing to spend the way they are.
And if, again, these hyperscalers decide to pair back any of
their spend, then especially to save their own stocks, because that's what happens in years of
efficiency, just like we saw with Meta back in 22 with the metaverse, then just, you know, just
remember that like a lot of these guys, the hyperscalers are their lifeline. And if the
hyperscalers pair back anything
to save their own selves,
then there's going to be casualties.
So I get it.
Long-term, it makes sense.
I don't know when the right time to buy is.
You can obviously DCA some of those names,
but any new longs I'm being very cautious of.
I actually tried to take a new long today
and I got absolutely smoked. I basically fell fell as soon as like i bought it uh it's another biotech commercial
stage biotech company called harrow h-r-o-w uh that is an absolutely ugly candle i didn't check
the rest of the day if it recovered at all i highly doubt it um yeah oh nope definitely
lows of the day so yeah i thought you know those earnings were pretty good, but, um, I guess there's
something in that report that, uh, basically sold this thing off.
Uh, so yeah, I'm missing something.
I rushed into it.
It is what it is.
Again, I don't, I don't make perfect trades either.
It is, it happens.
Um, which sucks, but, uh, yeah, I mean, other than that, like for me, I've, you know, I
told you guys and I've been pounding the table on it.
The only thing is that I've actually been increasing a lot and majority of my portfolio.
I actually I actually trim more Magnite today.
It broke the lows of the recent sell off.
So I had to I had to just out of risk management trim a little bit more, which really sucks.
But I've been adding to my biotech positions.
There's a lot of good names there.
And again, if the risk to this economy is a consumer slowdown, then I want to be positioned
in places that are not going to be impacted by a consumer or economic slowdown.
And yeah, I mean, end of the day, these, you know,
their spending has nothing to do with, you know, the strength of the consumer. It has to do with,
you know, if you need medicine, you're going to get it. And if like, let's say we're talking
about clinical stage companies, you know, it's really not even about revenue for them at this
point. It's just about progressing through their trials. A of these uh clinical stage companies are trading at like
you know near zero enterprise value one of the names that i own actually trades at a negative
enterprise value that means that they have more cash on the balance sheet than their market cap
today um obviously these are cash burning companies so it's not that simple of an equation but
basically the upside in many of these names are being priced at zero or less than zero.
And for clinical stage biotechs, I don't buy phase ones or phase twos.
I only buy the names that are within a year of having phase three data.
Because then, and again, I only sized those at about one to 2%.
Lately I've been kind of upping them as they've been selling off harder
Because the sell-offs have not been news driven. It's just been part of the broader market sell-off and you know, I do think that
Yes, you know, every stock will get crushed and it's the funny part to me that you know, people are delusional that they think oh
No, my but my stocks are good
Everyone's stocks get crushed.
I'm, I'm still getting crushed today on my lungs.
That's just like, even if my shorts are working as somewhat of a hedge, like,
like, you know, my lungs are getting crushed worse because I have high beta,
short, uh, high beta lungs.
And so, you know, markets down, you know, spies down 2%, but a lot of these
holdings are down, you know, four or five, 6%.
So overall, you know four five six percent so overall
you know i'm still getting really hurt today um but i think you know some of the biotechs are
looking still pretty good i think that they actually bounced back decently um xbi today
outperformed uh basically every other major index yeah they did xbi down 1.3 spy close down two percent queues down 2.6 percent so xpi decent relative uh
outperformance today um let me see spray ars pharmaceuticals down only one percent today
psnl personalis actually doubled down on that stock today close near the highs of the day
positive performance plus one percent today rapid micro bio systems closed at minus point four
percent basically recovered at
the end of the day to the highs of the day um regenx bio that's the that's the uh clinical
stage biotech that is um trading below the cash on the balance sheet that closed uh down just one
percent i mean there's definitely outperformance and yeah so uh another one bank of columbia i
talk about how I'm
long Latin America, if you if anyone's interested in things that I own, my portfolio, I updated every
few days, honestly, and I have it in my pin tweet in my portfolio, my profile. So you can always
go look at what I own. Yeah, I added to a few more Latin American holdings today, like Paxiguro and Stoneco. I think that, you know, Brazil and Latin America, like Colombia, Chile, they're probably going to do well.
So I like that they're not, you know, you can hold those things and not be exposed to the U.S. consumer.
You know, Nubank, pretty ugly day today, if I might add.
So I didn't add to that today.
I think the chart still looks pretty ugly.
I'd rather add to that once it can reclaim some levels.
But I do own that one as well.
So, yeah, yeah, I think I'm just basically trying to focus on places that
I feel pretty strongly about the fundamental value is there.
I don't think that they will get disturbed by any sort of economic slowdown.
And I do like the latin
america holdings but you know it's maybe 15 or so of my overall portfolio whereas biotechs are
creeping up to about 50 of my portfolio uh and i feel pretty comfortable there and i just keep
finding better and better opportunities and they're trading extremely cheap valuations so
you know i've been banging the drum on that for some time and, you know, we'll see. I think that we talk about how there's, you know, a bull market somewhere
always. And, you know, back in 2022, when you had a spy queues, everything growth stocks down,
you had a very big rip in energy stocks that whole year. So I'm just hoping that maybe it's biotech's turn finally.
I think we've been saying that for a little bit too long
if you've been in the space, which really sucks.
But, you know, if you go back to 08,
which was a great financial crisis,
biotech actually vastly outperformed the S&P 500.
XBI vastly outperformed it over the next few years so like going from 08 to 2015
uh biotech for the place to be uh they had a much more shallow drawdown of only 30 percent
at the index level around there versus you know spy being done like what 50 um during the gfc
and uh yeah i mean again when you have economic slow, that's one place that's not going to be as impacted and the valuations are down in the dumps.
But, you know, that hasn't been a thesis to get this sector going quite yet.
But if people are looking for places to allocate outside of what has been working, I think that you're going to get basically huge bargains here.
And, you know, XBI has been in a severe bear market since february 2021
today it is march 2025 we are still over 50 below the xbi highs in february 2021
so clearly being that sold off is not bullish um but at some point i feel like you know
you know what's the upside versus downside risk? And from a fundamental perspective, I feel like there's good value for me here and I can justify that.
because we started a little bit late.
Apologize for that.
But let's all have a wonderful and safe weekend
and close that app.
Don't look at your portfolio
unless, of course, you're short the market.
But yeah, let's see what happens next week
to another one.
And I'll just say closing thoughts,
our episode that dropped this morning,
we recorded it Wednesday night.
If you're not already following Investing with the Boys
and you like these conversations, keep up to date with us. We're dropping
weekly episodes on the pod and we won't say what, but soon we're going to start
getting some really interesting guests on and I think it'll be really fun for everyone.
So stay tuned for that and yeah, appreciate all
of you listening. So have a nice weekend.
Thanks, guys.
Enjoyed it as always, boys.
It's, yeah, market just closed a few minutes ago.
It's not pretty.
Don't look at it.
Have conviction and stick to your plan.
Have a plan, I think, is what I always take away when I hear Sam logical and shy.
Talk, do your research, have a plan, be ready.
Thanks for the boys.
Make sure you check out that investing with the boys account that we had up here on stage.
There's a pinned tweet up there as well from them.
Check out that episode.
I'll definitely be watching it when I wake up every Saturday morning, do some stuff around the house.
It's the thing that I throw on in my background.
So appreciate everyone.
Hope you guys have a great weekend and we'll be back right here on Wolf Financial with a whole bunch of spaces again next week.
Take care all. Thank you.
