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MARKET ANALYSIS & OPPORTUNITIES IN 2024
Recorded: May 21, 2024 Duration: 1:18:31Space Recording
Short Summary
In a recent discussion, Puru unveiled AlphaTarget, a new research firm focused on delivering institutional-grade insights to retail investors, while emphasizing the transformative potential of AI and robotics in the investment landscape. He also discussed Tesla's strategic shift towards robotics, highlighting the significant growth opportunities in this sector.
Full Transcription
Thank you. Good afternoon or good morning over there Puru. How's it going?
Good, thank you. How are you?
I'm doing well. Okay. Sounds like this time it's going to be easy.
Your sound quality is good. Spaces have finally, now they work.
It's two years later, so they work actually
both on desktop and on the phone, which is nice.
They've really gotten their act together.
Do you want to give it just a minute here
as we let people come in?
Yeah, for sure.
Okay, perfect.
We're just going to give it a minute
to the people in the audience.
If you are going to have questions and stuff
that you want me to ask, feel free to drop those into the spaces chat.
If you are so kind, please do share out the space as well so that our audiences can come together and listen in.
It's going to be an exciting one.
I do see you shared out about an hour ago the other one.
If you want to share out the current link, Puru, one of the ways it lets you do that is if you're in the space and you click on the bottom right area there is a little kind of like a comment signal or something like that it'll essentially
take you to the post when i open up the space it makes a post to my timeline and you can
just share that which you know okay yeah there you go you'll just play with me a second no problem
no problem okay so people were excited for this you know i have i've got a guy who's been in my
dms for two years asking me when you would come back and uh he checks in every couple of months and he was very
excited so people people have not forgotten okay i'm just posting this now one second please yeah
yeah take your time all right everybody evan thank you for coming on up should be an exciting one as
we uh dive in here to a few things.
We'll be talking about, of course, the markets,
opportunities in the markets, Alpha Target,
which I'll go ahead and I will pin that
to the top of the space so people can be aware of that as well.
And we'll get started in just a minute.
I see Dylan in the crowd. Thanks for being here.
See Dylan in the crowd.
Thanks for being here.
We'll definitely, I'm sure, talk in video. I think that that's going to be definitely a piece of this.
I see some people already asking about that.
Cool.
All right. Perfect. Okay. Let's go ahead and jump right into it then. So welcome in everybody to our evening's discussion, covering the market and opportunities in 2024, as well as AlphaTarget, which is Puru's research firm, which we'll be diving into here a little bit more.
Just to kick things off, Puru, I'm sure most people that are in the audience are familiar with you, but for those that aren't, can you catch them up on who you are, what you've been doing? It's obviously's obviously been a couple years since we've had a space so it might be good to get a refresher here
okay i mean basically i mean i ran investment management firms here in hong kong uh so i was
the founder of two sfc regulated money management firms here the first one i co-founded two business
partners in 2001 and i stayed there for four years so we grew
pretty rapidly we grew to 150 people working for us and then basically I left for a couple of
reasons from that firm and I set up my own boutique money management firm in 2005 in Hong Kong. And I managed money for family offices, companies, high net worth individuals and so forth.
So we ran different discretionary mandates for them.
I did that for 11 years.
I was also a regular guest on all the media, BBC, CNN, Bloomberg, and CNBC, et cetera.
I had monthly columns that I used to write for magazines and newspapers here in Hong Kong.
So I did all of that for sort of 15, 16 years.
And then in 2016, I basically retired from the business after doing this for 15 years,
running my own firms.
And then my firm was actually acquired by a listed asset management company here in Hong Kong.
So for the last sort of eight years or so, I've just been investing my own money.
I'm just running this Twitter account as a public service, just sharing my ideas, thoughts and stuff like that.
My portfolio holdings for a number of years, I even shared my performance on a monthly basis that I got, you know, attacked by trolls saying that this guy is posting fake performance, you know.
He's a con, he's this and the other.
So I basically decided, you know, I didn't need that kind of grief in my life, especially when I wasn't even, you know, charging anybody anything or running a service.
So I basically stopped all of that a few, I think about two years ago.
And over the years, I've received a number of requests on an ongoing basis from people
from all over the world saying, can you launch some sort of ETF manager money for us?
Can you set up a fund?
And I've always politely declined it. And I said, look, I've done it for 15 years, you know, I'm now 47 years old, I don't really want to go back to that sort of hectic, stressful life and existence any longer. So I thought, you know, long and hard of how I can actually, you know, do something meaningful, or at least try and do something meaningful, you know, to empower investors at a retail level.
Because, you know, since I've been running my own portfolio, I've realized how difficult it is to obtain good quality research and insights if you're a retail investor.
You know, if you run a money management firm, then, you know, you get brokers and stuff and banks throwing their research at you because they want you to basically trade through them and get your
business and commissions and so forth. But if you are, you know, a private investor,
unless, you know, you're managing hundreds of millions or whatever, you know, for different
accounts, for the vast majority of people, it's very hard to get access to good quality research.
So I thought about this long and hard. And I thought, you know, how can I actually do something to basically add value to people? Because obviously on Twitter, you can't
really say much for a variety of reasons. Number one, there's a restriction on the number of
words you can type. And obviously, if you're communicating with such a wide audience,
you know, I've got like 350,000 followers now. So, you know, it's irresponsible on my part to actually say too much about any given company
and so forth.
So I thought, you know, how can I add value and do something to help people and empower
investors?
So I thought about this long and hard and I had a discussion with a few other experienced
investors and so forth and analysts.
So I finally decided to set up AlphaTarget, which will basically be a research firm
which will provide institutional grade,
high quality research,
which is not generally available to retail investors.
So we're gonna basically run a service now,
which would not only cover the research
on the most disruptive companies in the world globally,
we would also give people the tools and the resources
so they can manage their own portfolios,
including sharing our proprietary hedging indicators
with them in real time.
And we will, you know, walk the talk.
So we will invest our own capital in the companies
that we've selected in the portfolio,
which we are doing in any case.
And then when we will make any changes to the portfolios, for example, you know, if we raise
some money because the stocks run up too much, or if something's come down and if we add to a
position, or if a new exciting opportunity comes along, then we will basically inform, we will
invest our own money in it, and then we will send out an alert to our subscribers of our research
so they can actually keep track of what we are doing with our own money.
We will also send out like a monthly report, which will be a comprehensive report,
tens of thousands of words with a deep dive, you know, a succinct SWOT analysis,
sort of deep dive research covering all qualitative and quantitative aspects
of any given company
in our portfolio.
And we will have a,
you know, run through
a research report
on all of those companies
plus a stock market analysis,
hedging indicators and so forth.
We will also produce
weekly updates every Monday
to cover all the news flow
from the prior week.
And I'm very excited about this venture simply because, you know, I'm putting together a
great team.
So I've basically recruited two highly experienced analysts already who've already started working.
There's another person who's the third person who's basically also working, who's also been
recruited and he's going to join us.
And I'm also in talks with a very experienced buy-side analyst who used to run money for a big multi-billion dollar hedge fund in the US.
So we are in sort of advanced discussions now,
and hopefully, I think more likely than not, he will also come on board and join the firm.
So very excited.
We're really looking forward to providing high quality research, which people can actually rely on
and use as a tool to manage their own portfolios. Very cool. So this is a really unique opportunity.
If you're in the audience, listen in as we'll talk a little bit more about AlphaTarget, which
is going to, I suppose, democratize that access to institutional grade research for the everyday investor.
Now let's talk a little bit about the market, right?
So obviously you have a unique approach to investing and you're translating that over
into this firm with your research.
But let's talk about the approach first.
How has your approach changed over the last couple of years within the market?
And perhaps you give us an update on your current portfolio and why it is as it stands.
Yeah, for sure.
I mean, basically, one of the biggest thing of revelations for me, you know, over the
last two years is being that, you know, how crazy the markets can become.
So you know, when things are, you know, euphoric and everybody's jumping up and down and everyone is, you know, thinking, wow, you know, everything's great.
Then stocks go up a lot more these days than they used to 10 years ago, 15 years ago, you know.
And then the valuations just get chucked out of the window.
Nobody really cares about the valuations.
Stocks move up and down a lot these days.
So the volatility has become
insane. If you have great earnings, the stock goes up 15-20% within a couple of minutes after
market or pre-market. Similarly, if there is a slight disappointment or miss in the earnings,
the stock goes down 15-20-30% minutes i mean this sort of move used to happen
over a period of months several years ago so everything has become super fast and turbocharged
because of technology and access to information you know and also because of the discount brokers
and the fact that people can just press buy and sell buttons and trade themselves as opposed to
you know calling a broker a human being and and paying 1% commission. Those days are long gone.
So because of technology and how quickly information is now available
and how quickly it travels,
the markets have become very volatile, very, very quick.
And the biggest thing has been,
if you see what's happened with all the growth stocks
over the last three, four years or so,
first of all, they went, you know, parabolic.
They went up, you know, 5X, 10X within 15 months or so
because of QE and zero interest rates.
And then when the Fed changed its tune,
then these stocks came down 70%, 80%, 90%.
So one thing is clear, and which has always been clear in my mind,
it became even clearer to me,
that this buy and hold for the long term is all nonsense. You know, this only works in theory. And again,
you know, I've been pointing this out repeatedly. If you look at the history of the stock markets,
forget about individual stocks for a minute. If you look at the history of the stock markets
globally, there is no stock market in the world which has gone up consistently over a period of time, not one.
So most people don't realize that stock markets in general, they go through secular bull markets
and bear markets.
So when you have a secular bull market, like in the US, for example, from sort of 1980,
81, 82 to 2018 year run where everything went up several X, then people get super excited and they think that these times are going to last forever.
And then, you know, you have a nasty secular bear market.
I mean, just to refresh the listener's memory, because, you know, I've been doing this professionally for 25 years and I've been around the block.
So in 2000, the S&P in March 2000 was at $1,550.
In 2003, the S&P went down to 750.
So it basically lost half of its value.
The NASDAQ went down 80%, 90%.
A number of these high-flying growth stocks went down 80% to 90%.
And then we had another rally because back then Greenspan basically lowered interest rates to zero to try and reignite another bubble, which he succeeded.
There was a massive housing bubble and a subsequent crash.
So, you know, we had zero interest rates
and then we had another party.
Stocks went up from 2003 until 2006, 2007, October 2007.
The S&P doubled, went back to 1500, 1550.
And then basically the global financial crisis hit.
And then the S&P fell from 1550 and then basically the global financial crisis hit and then the s p fell from
1550 to 666 i still remember the number 666 in march 2009 so that was a huge decline and then
you know it took 13 years in total for the s p to break to a new high you know if i'm not making
this up anybody can check this you know 2000 was the peak and then the smb decisively broke about the 1550 level 13 years later and those who basically buying
bought and held without any risk management without any hedges in place had a very painful 13 year
period because you know they saw their portfolio go down more than 50 on two occasions and not a
lot of progress and this is not the first time this has happened in the US. Previously we had a similar secular bear market from 1968 in inflation adjusted terms
to 1982 so it took 14 years for the indices to break the new highs and then we also had you know
30, 40, 50 percent declines. One 50 percent hit and then another 30 odd percent decline in that
decade so you, this notion that
anybody can just buy and hold stocks forever and just everything will be great and it's a land of
milk and honey. That's not how it works, unfortunately. And, you know, we are now in a
position, if you look at the US, the US has been running for the last 14, 15 years. And, you know,
valuations are quite stretched in America. and if you look at the emerging markets
the emerging markets have been in the secular bear market since 2011 some of them haven't gone
up at all since 2007 or 8 so it's been a long 15 year stretch for the emerging markets where
they've basically struggled and investors there haven't made any money at all and japan has been
in a drawdown you know for 30 years it's just recently broken out to a new high.
Europe has been flat more or less for the last 15 years or so that this idea that basically
gets thrown around a lot on financial Twitter that, you know, you can just buy and hold
and everything will work out just fine.
It doesn't work that way in reality.
And, you know, if you just buy and hold, especially a portfolio of growth stocks with
no risk management in place, no hedges in place, no exit strategy, when to buy, when to sell, you'd be really flying in the dark, you know, without an altimeter.
You really don't have a clue what you're doing.
And, you know, you will get creamed.
Like, you know, most of the growth stocks went down 70, 80, 90 percent.
Anybody who just sat through that drawdown basically had a horrendous drawdown
and it's going to take them years to recover so you know these are some of the things which have
really been cemented in my brain even more looking at the craziness of the markets over the last two
or three years that you know unless you are an etf investor if you are buying indices for a 15 20
year period you can buy and hold or if you don't
care about money you've got you know hundreds of millions of dollars or tens of millions of dollars
and you know you don't care if the portfolio goes down 50 60 percent and doesn't do anything for 10
12 15 years then buy and hold works for you and you know if you are young and if you're investing
every month or every quarter into your pot and your pot isn't
very big, then buy and hold also works because you have time on your side. But if you are
in your 50s or 60s or 70s and the vast majority of your net worth is actually invested in stocks
and you don't have any money coming in, buy and hold doesn't work and it will basically lead to
financial ruin. I can guarantee you that that is that is a pretty passionate uh thought there right there on buy and hold and i do hear
the examples that you were saying where if you're young and you're just putting it into broad-based
etfs over time then it's a very different situation than if you're you know a little
bit later in life and you're trying to invest a significant sum of money.
So talk to me, understanding that buy and hold
can be a tough situation for people
that don't have time on their side,
don't have some of these broad-based index funds.
What is appealing to you as a more strategic investor
in a market like this, which is at all-time highs
and which you seem to have, I think, put into words here, don't believe that this can continue for who knows how much
longer. How do you position yourself to capture more of this upside? Because we could see
Nvidia rip tomorrow, right? The whole market could rip up another 10, 20%. We could also
see a pullback. So how do you position yourself?
Well, I have done extensive research and studying on how the stock market has performed.
You know, over the last several decades, I've spent over a decade studying the history of the stock market in the US and seeing what works and what has powered those gains.
Because everybody loves to talk about that 10% annualized return from the S&P going back decades.
Most people don't realize that the vast majority of those returns
have actually come from a handful of companies.
So, you know, I can't remember the percentage at the top of my head,
so I don't want to give misleading information.
But, you know, a very small percentage of equities
at any given point in time have actually powered
the vast majority of the returns at the index level and a number
of companies have actually underperformed and I did actually share some statistics several
months ago on my timeline which basically said that you know I think half of the companies
don't even make it as standalone companies after you know 15 or 20 year period so you
have to be super selective and careful of what you actually own. And I have
no problem with buying and holding, but you have to buy and hold and verify. You can't just blindly
say, well, I'm investing in this company. And no matter what happens, I love this company. I love
the management. You know, the company doesn't love you back. The company doesn't know that you own
the stock and management teams cheat. They become know incapable the good people leave the smart
people leave the management keeps turning competitors come along uh you know new product
lines lines are developed the disruptors themselves get disrupted over time so this is
a game for you know passive investors if you're going to invest in individual companies
you have to have the research and the knowledge and the insights
to keep on top of your holdings and watch them like a hawk if you want to invest and make your
10 or 8 or 10 annualized you know without any headache or without any hard work then you can
simply go and buy the qqq or the s p or a broad-based index tracker for the very long term
and just shut your eyes and say
okay if it goes down 40 50 i don't really care but if you are after a higher return and if you
have you know the inclination some sort of knowledge and the hunger to try and do better
then you know certainly that's possible by investing in businesses because the stock market
really is an average of companies
right so you have 500 companies in the S&P some of them are great companies some of them are mediocre
companies and some of them are poor companies so if you invest in the great companies and if those
companies are basically stable they generate a lot of free cash flow and they basically are stable
throughout the business cycle then your returns are going to basically are stable throughout the business cycle, then your returns
are going to basically be better than the index. It's just common sense because the great companies
will outperform the average, which is the index. On the other hand, if you basically invest in some
duds or if you basically invest in bad businesses, then your return as an investor is going to be
inferior than the average or the indices so for the vast
majority of people if they don't have the time or inclination just buy a diversified basket of ETFs
and I'd just like to mention you know I'm not a registered investment advisor or money manager
any longer so people should take my you know opinion with a pinch of salt is just my two cents
I'm not you know giving any personal investment advice to anybody
because I don't know who's listening
and what their personal circumstances are.
But you can certainly try and outperform the indices
by investing in great companies.
So if you look at the last 20, 30 years,
a lot of companies have delivered mind boggling returns.
And those generally have come from the disruptive companies.
So if you look at the likes of Amazon or Search in Google or Meta or the cloud names or the
software companies, Adobe, ServiceNow, Salesforce and so forth. And even in the non-tech space in
the offline economy, you look at good restaurant brands, Chipotle, if you look at, you know, even good old McDonald's continues to outperform the index. So you have to own the right businesses. So for my part, you know, what we are, I've been doing for a number of years and what we will be focusing on at AlphaTarget, we are going to basically, you know, research and screen through and scan thousands of public companies available globally and try and find the most promising, rapidly growing disruptive businesses,
which we feel are run by exceptional management teams with long runways and where we think that there is a defensible competitive advantage.
And then we are going to basically run a concentrated portfolio of maybe 15 to 18 such businesses, invest our own capital,
and use stage analysis, which is a form of trend-following technical analysis,
to time the entries and exits.
Because one of the things which most people don't realize is that stocks usually,
or not usually, they always go up in a stage two uptrend.
They peak in the stage three distribution phase
where you know they go zigzag zigzag and then sellers basically overwhelm the
buyers and then you have the stage four decline where the sellers are in control
and buyers basically give up and throw in the towel so if you are going to take
anything away from this you know spaces is this that you never ever want to own any stock in a stage four decline and
by a stage four decline i mean when the moving average the long-term moving average has rolled
over and is pointing downwards and it's trending downwards and the price is below that declining
moving average and also trending lower that's where you lose 40 50 60 70 percent of your money in your
portfolio conversely if you invest in a stage two uptrend which is when the price has just broken
out of a lengthy multi-month consolidation phase which is stage one and the price then rips higher
ideally on higher volume above the decline on now the moving average has rolled up it has basically bottomed
and it's now trending higher so the price is now above that that's when you make your money because
in a stage two uptrend price basically makes a series of uh you know higher highs and higher
lows and then the moving average basically trails that and it points or trends upwards and that's
where you make your money as an investor or as a trader i have yet to come across any investor or trader who has made money
in stage four or stage three it doesn't exist so you know the whole game is to basically try and buy
stocks early on during the advanced phase which is stage two and then basically riding them until
the end or towards the end of the stage two.
And when you see that the dynamics of the stock have changed
and then distribution is coming in, the stock is refusing to make a new high.
Even on great news, it doesn't go higher.
That is usually a time to be on high alert
because once the best has been discounted,
stocks peak and they basically tank.
And stocks don't peak when the news has become bad stock
basically peak in advance of the news so the stock market moves six to nine months before
the real economy and the news becomes obvious so you know like coming back to your nvidia example
as one of your listeners basically is interested in nvidia has had a huge run, it's gone from 100 to sort of 900, it's gone up 9x or 8 or 9x in the last 18 months.
And Nvidia, although is the darling of the AI move, it is not a recurring revenue software business.
It is a cyclical, okay?
And the chips business is notoriously cyclical.
So when people say, well, look, look, look, you know, NVIDIA's earnings
are still reasonable.
It's only trading at 30 times earnings.
One thing I've learned as an investor
doing this professionally for 25 years
is that, you know,
cyclicals appear cheap near the tops.
The time to buy cyclicals
is when they are basically hated,
when they are unprofitable
and they are trading at very high multiples.
That's when you buy a cyclical. And when the valuation becomes very low and cheap and they appear cheap
that's when basically these cyclicals are at peak earnings for the cycle and the smart money is now
basically lightening up and you know the retail punters are buying in because you know if the
outlook for this business is so amazing for the next 12 to 18 months or 24 months,
then why is the PE cheap? Why isn't the big money piling in? Why aren't they paying a 50 or 100
times earnings multiple? So a PE multiple at peak earnings or around peak earnings after this huge
capex move because of the data center buildup, because of AI by these big mega tech companies.
This is not a sustainable run. Sure, in the long run, NVIDIA will do great. But at some point,
and I don't know when, and neither does anybody else, at some point, there are going to be
violent pullbacks, especially when the first wave of this data center build out is over.
At some point, as soon as there is any whiff of bad news
or slowdown, you know, that these companies have slowed down
or they are not going to build their AI data centers
as fast as they were before,
or they are taking a wait and see approach
to try and monetize their current infrastructure,
this stock is going to go down hard.
I mean, I wish I could tell you when.
I just don't know.
I mean, for me, I've lightened up on my position. I've cut back on 40%. If we do have another big rally, you know,
towards maybe, you know, if this thing runs for another 12 months or so, at some point,
I will be looking out of caching everything because I don't want to be losing 50, 60%
when this thing does turn. And because it is a cyclical, it will turn because these companies cannot keep buying,
you know, these GPUs and these chips forever in this space.
There is bound to be a slowdown at some point.
Yeah, there's definitely going to be something
that has to happen with the market.
If you had to give kind of your best guess into it
to somebody, let's say there's people always ask me,
I'm sure you get this question, people that aren't investors, right?
They go, why is the market at all time highs right now?
Why is crypto at all time highs?
Why is everything continuing to run?
What is going so right in this market?
Do you think this is something which is a mistake?
Is this a bubble in your eyes?
You were kind of talking about some of the bubbles early in the 2000s.
And why would it be from your perspective?
And if so, you know, I guess I hinted at this a little bit earlier.
Even if something is a bubble, if you're an active investor, there's still ways to participate.
So maybe I'll just pause there and get your thoughts on those few questions.
Yeah, for sure.
I mean, the stock market isn't cheap by any historical evaluation measurement.
The stock market isn't cheap by any historical evaluation measurement.
However, the market has been expensive for the last 15, 20 years,
you know, since the crash of the global financial crisis.
Equities in the U.S. have been sought after by investors all over the world.
And I don't blame them, you know, because if you look at the world around today,
where are you going to invest?
Are you really going to invest in Russia? I don't think so. Are you going to
invest in China with what's going on, you know, with the politics and the grab, you
know, of the political situation and the corporate governance concerns people have? So, you know,
are people going to invest in China with their worsening relationships with the US, which
is the world's biggest economy?
I don't think so. You know, Europe has been a mess for a long time. Japan has been dead money for,
you know, 30, 35 years. It's now had some sort of a resurgence now because of some massive changes taking place in Japan. So, you know, if you have this situation where the US has been, you know,
the center of all the innovation, and we are now in the digital era.
We've been in the internet era for 20 plus years. And now we are moving to the AI era. And which
country basically dominates in this area is the United States. Most of the innovation happens in
the US even now. And that's why investors are voting with their cash and they're saying you know what
we would rather pay up for excellent businesses in an excellent economy which is governed you know
well rather than trying to look for bargains you know in countries or in jurisdictions where we
are not certain about the corporate governance or the political governance where things could blow
up or laws could change or anything can happen overnight and we'd end up losing a lot of money.
So is the US expensive? Yes. Is it justifiable? To some extent, yes.
So the question really is, you know, what has been priced in?
And I think if you see what the indices have done over the last 12 to 15 months, we've had this huge run-up in the mega caps.
So, you know, the gains we've seen at the index level have been powered largely by the mega caps, the techs.
If you look at the Russell 2000, the IWM, if you look at the Russell 2000 growth, which is IWO,
if you look at some of the other indices, they're all sort of flat.
They're not near their all-time highs. A lot of the growth stocks are still down on their knees simply because the Fed has been doing QT.
The interest rates are, you know, about 500 basis points, 525 basis points, so somewhere in that region. And the monetary conditions have been fairly tight. And that's why, you know, the money
has been flowing into the safest areas, which is
these days, the megatechs, because they are cash rich, highly dominant companies at the forefront
of AI, and they are going to benefit from this AI, because they have the resources to compete.
They have the data, they have built out their data centers and the infrastructure. If you're a
startup, it's very difficult to spend you know billions and billions
of dollars building out your infrastructure which you will need for the ai and you don't have the
data so you know with this uh emergence of ai i think you know the mega caps the mega tech companies
have become even stronger and i think you know ai is a game changer. It will basically disrupt pretty much every industry in the world.
I don't think this is a passing fad.
I think it's a mega shift in, you know, the tech space.
First, we had the internet revolution.
You know, then we had mobile when the iPhone was announced by Steve Jobs many, many years ago.
the iPhone was announced by Steve Jobs many, many years ago.
Then we had cloud computing, where, you know,
the workloads gradually started moving to the cloud from on-prem.
And now we have the AI era.
And so far, if you look at, you know, what's happened and what's worked,
it's been these AI-related plays, which is the FAANG stocks,
the NVIDIAs of this world because of the infrastructure build-out.
But the participation hasn't really filtered through to the rest of the market, for sure.
You know, many companies have gone to all-time highs, but still a large section of the market
is still, you know, pretty weak and nowhere near its all-time high.
So it is a bifurcated market.
It has been like that for a while.
And I think, you know, if the Fed basically starts
cutting rates later this year, then, you know, you will see a big broadening out of the rally
and these high growth stocks, which have been really, you know, put under the pump because of
high interest rates and QT are going to really start to shine because they've been building
massive bases for the last two years or so, two and a half years. And history shows that whenever, you know, the stocks of amazing companies go sideways for such a long period of time,
for whatever reason, as soon as those situation, basically the conditions change, these stocks go ballistic.
So I still think that, you know, with the slowdown or in the taper in QT, which is starting in June,
the Fed has basically reduced the QT every month.
So they're going to be easing monetary conditions starting June.
And then if they start cutting rates, you know, when the economy weakens
and if the unemployment starts to pick up,
I think interest rates are going to come down.
And that is going to basically, in my opinion,
ignite a big rally in these high growth stocks,
which have basically been dead money for the last two and a half years.
And if you look at the valuations now, the valuations are not overly egregious or expensive.
So if you look at a stock like Zscaler, which I basically own shares of,
it's now trading at 10 or 11 times revenue, which isn't a lot.
A lot of these companies, which I'm actually investing in,
we are focusing on at AlphaTarget,
they are not currently GAAP profitable,
but they have a lot of free cash flow generation.
So their free cash flow margins are 25, 30, 35, 40%.
You know, Monday.com, which is another portfolio holding,
announced 41% free cash flow margins,
and their free cash flows are growing
like crazy. So, you know, in the long run, statistics have shown that, you know, business
growth or the growth in revenues, free cash flows and so forth, this has been responsible for the
vast majority of returns for shareholders and investors. It's not changes in valuations. You
know, valuations have a big impact in stock
prices, performance and movements over a one-year period. But if you have like a two, three, four,
five-year timeframe, then the changes in valuations don't really mean much. What drives
stocks over the long run is business growth and durable business growth. So those are the sort of
areas that we are focusing on at Alpha Target. And, you know, we are of the view that if
interest rates start to come down and monetary conditions ease, then, you know, you are going
to see a strong rally in the back half this year. All right. I got a question and then I'm going to
see if my co-host Doc Mark uses any questions, but I'm actually going to ask a question for him
first, and that is Apple.
Really want to get your thoughts here on Apple, which for so long was the market leader, right?
Was the top stock.
Seems to have taken a backseat first to Tesla, then to NVIDIA.
And at this point, Apple's being hit with accusations of they don't innovate, right?
It's just the same phone coming out.
And there's a stock that continues to turn pretty much to all-time highs, but people
don't seem as excited about.
What's your thoughts on Apple here?
Well, Apple, in my opinion, is no longer a growth company, because if you look at their
revenue growth rates year over year, they're not growing at a very fast pace.
You know, Apple has transitioned into what Peter Lynch used to call a stalwart, which
is basically a big,
mature blue chip with a strong balance sheet.
It's not going to set the world on fire.
It's not going to grow 20, 30% a year unless they come up with something really world-changing.
They're already too big.
I mean, their focus, I think, now is just to maintain the fortress that they've built and basically to keep compounding their cash flows and their earnings per share through share buybacks and dividends and stuff like that.
So it's a mature company. It's not an exciting growth company. It was 20 years ago.
I mean, some of the other names also, you know, in the FANG space, they're no longer growing at 20, 30, 40% a year like they did, you know, in the 2000s.
So these companies were yesterday's, you know, winners in terms of their growth rates.
They were the secular compounders from the last 15, 20 years.
But, you know, if you're looking at outsized returns as an investor, you're not going to get, you know, 20, 30% annualized from owning these
shares because the whole world knows them by now.
And, you know, their revenue base is already so large, it's going to be very hard for them
to keep growing at a very high pace.
You know, it's just mathematically not possible.
So that's why I think investors, in my opinion anyway, you know, if they're looking at higher
returns, really need to, you need to dig deep and do the research
in the next generation, younger growth stocks, which is what we are focusing on.
Got it.
And then I suppose in a not so dissimilar vein, but maybe one that is continuing to really
expand now, we have NVIDIA earnings tomorrow.
What's your expectations going into earnings?
Well, I think, you know, it all comes down to what the company guides.
And I think what the street or the big institutional players really read between the lines, because
I would be stunned if NVIDIA doesn't beat estimates tomorrow, because, you know, there's
just so much momentum in the business. And if you see what the big FANG stocks have said
in their earnings releases and their earnings goals,
that they are still going ahead full steam
with their CapEx build for the data centers for the AI space.
So I think the earnings are likely to be good and strong,
but I think the big buy-side analysts
and the institutions are going to be looking more carefully
at what the company says over the next 12 to 18 months
in terms of guidance and where we are in the cycle
because I think everybody is trying to figure out
where we are in this capex cycle,
how long is it going to go on for,
is it going to go on until the end of the year,
is it going to go on for 12 months, 15 months? And I think that's where the question mark is. And if
NVIDIA somehow sends the message that, you know, there is even a whiff of a slowdown in their future
orders, or some of these big buyers are pulling back, the stock's going to not react very well.
On the other hand, you know know if everything is fine and nvidia
still comes out and raises their guidance for 2024 and says you know business is still strong
for as far as the eye can see we could have a little bit of a pop but it's just very difficult
to know what the stock's going to do you know as you know these days stocks move up and down 15
within minutes and then they reverse very quickly during the main session. So I think that the risk reward in NVIDIA at these levels is not very favorable.
I've reduced my position by 40%.
And, you know, if we do get a big sell-off in NVIDIA,
I'll probably establish a full position again.
If it goes up, I'm not going to chase it.
In fact, if it keeps going higher and higher,
at some point I'll be looking at cashing in all my chips
and moving to the sidelines before, you looking at cashing in all my chips and moving
to the sidelines before we get the stage three top and stage four decline.
Got it. And I'm going to throw one more question here, then Evan, I'll bring you in.
And that is a stock that I believe you're currently long. I actually thought this was
really interesting. I saw your bullet thesis for it. It made sense to me, which was Duolingo,
if you could break down your thesis
there yeah for sure i mean duolingo i first basically was recommended this by my teenage
children believe it or not you know they said to me oh do you know what duolingo is i said no
yeah they said oh you boomer i said look i'm not a boom i'm not that old but they still you know
said you must know what duolingo is that. So I said, okay.
So I basically played around with it for a few months.
And my kids said to me, they said, oh, we've been using this.
And all our friends and stuff use this these days.
So I played around on the app just to try and learn a little bit of Italian and French.
So I spent a few weeks on it.
And I was amazed at how addictive it was and how interesting it was and how good it good it was so i just looked at the numbers then so i looked at the product first and then you know
i spoke to people and everybody i spoke to was raving about duolingo so i did the homework and
i looked at the company found out about the founder louis uh von and looked at his background
where he came from what he, his history and everything else.
And then saw what the company was doing in terms of financials and the growth rates
and how quickly the user base was growing and so forth.
So I became interested in the business.
I invested in the company.
The stock's done well.
It's come off a little bit based on the AI fears because of the translation features which AI LLMs and stuff will introduce later on.
But I think the stock, in my opinion, is probably close to near-term bottom.
It's near its recent lows, which were recorded early this year.
In terms of the business,
would I say, is it a super high conviction holding for me given what's happening in the AI space?
Probably not.
I would say it's a medium to high conviction.
It's not like a slam dunk,
like a snowflake or a Mercado Libre
where I know for sure that five years from now
the companies are going to still be around and thriving.
So Duolingo, I would say, is a mid to sort of high range conviction, and I'm watching it more
closely than I am with some of the other holdings. But I still think that the AI fears, at least for
the near term, are overblown simply because just because an app or a service can basically translate
something instantaneously in human language
doesn't necessarily mean people all over the world are going to stop learning new languages.
I mean, if you are, you know, an American, for example, and your native language is English,
and if you want to go and learn, if you want to go and live in South America,
or if you want to go and live in Spain, you know, or somewhere in Europe,
you would need the local language. And you're not going to walk around with your mobile phone live in Spain, you know, or somewhere in Europe, you would need the local language.
And you're not going to walk around with your mobile phone in your hand,
you know, asking for prompts from chat GPT to have conversations with people.
That's not how humans work.
You know, to have deep, meaningful conversations,
both in the business world and also at a personal level,
you need the local language.
And I think people, a lot of people are naturally curious
and they like to learn languages, interact with people.
So I don't think translation services are going to change
or totally damage Duolingo.
You know, we've had translation, Google Translate
for a long time.
And that hasn't stopped people from learning new languages.
I think people enjoy learning new languages
and interacting with different people
from different cultures and so forth.
So it's not, you know, I wouldn't say that this is a slam dunk conviction for me.
It is a mid to high somewhere in that range.
And I'm watching it closely.
But I still think that the CEO is a genius.
And what he's built reminds me somewhat of what Match.com built on the dating side of things.
You know, it's a consumer app.
It's growing like a wheel
a weed people like it the metrics are very good uh the free cash flow generation is there the
revenue growth is that i can't really fold the company on any of the operating metrics at this
stage anyway yeah i'm a big fan of it as well i do use duolingo every single day and i think that
one they actually are using AI inside their app.
They have some AI features as well, which is cool that they're integrating that.
Number two, I don't really think I agree with you that other companies having an AI product
is not going to be the reason that people don't try to learn a language.
The reason that I use Duolingo is because I'm moving to Puerto Rico.
And in Puerto Rico, everybody pretty much speaks English, but they like it if you could speak
Spanish, right? It's helpful. And there's certain areas where you are just going to want to speak
Spanish. And like me taking out my phone and using that to translate does not make them happy,
right? Like I'm learning it to be able to engage with the culture. And in fact, one of the biggest
reasons that I actually tried to learn it, and this will completely disprove people's thesis
of other AIs is my second night in Puerto Rico. I ended up in the emergency room taking care of my
girlfriend. Yes. Second night. And we're in there and the nurses do not speak a lick of English.
And they hand me the paperwork and it's all in spanish
i don't speak any spanish and they're just yelling at me they only know one word in english sign
sign sign sign right and there's the other i'm like i'm like oh my gosh what am i signing so i
take out my google translate but guess what there's no service so all of a sudden my google
translate's useless right because i just didn't have it in my brain.
So for me, in that moment, I was like, I got to learn the language.
I can't actually count on a separate app.
So I completely agree with you there.
All right, Evan, do you want to throw a question or two into the mix?
Yeah, I think you've done a great so far on this, a great job on the Spaces Wolf.
So I'm good to just hang out and chill back and prove I've appreciated the conversation here.
Duolungo is definitely an interesting one.
I said that weird and I know it, but I'm just going to keep moving
on. We'll see how all these
kind of LLMs,
small LLMs on your phone, ends up changing
that stuff, but still
a little bit a long way from that one. You did mention this
stock a little bit while you were talking.
Another major company that reports earnings
tomorrow that's going a little bit under the radar because it's not, his name is not NVIDIA,
but I would love to hear your thoughts on Snowflake. I know it's a name that you own.
I've seen you tweet about it a little bit, but I would just love to hear your thoughts
around Snowflake, kind of those numbers we have tomorrow. It's obviously a big change
there with a new CEO. Hopefully some sandbag numbers that they can come in and beat.
We'll see that tomorrow.
But I would love to get your thoughts on Snowflake from the perspective of earnings tomorrow.
And then just in general, your thoughts on the company.
Well, I think Snowflake is a dominant business and I think it's going to do very well over
the long run simply because of what it does, the data stuff, data warehousing, data lakes and so forth,
and data analytics. And also AI, I think, is going to benefit Snowflake. And if you look at
the new CEO's background, he has an AI background. I mean, he scales Google's business
significantly at his time as Google. And I think Frank Slootman stepping down is probably the right
thing for Snowflake at this juncture because Frank Slootman is not an AI specialist. I
mean, he's a very strong executive, but the new guy who's joined, the Indian fella, he
has a very strong product background. So I think he's been brought on to basically, you know, to basically, you know, lead the innovation in Snowflake at the AI level.
And people tend to forget that Snowflake is also a consumption based model, pricing model.
So, you know, because of the slowdown and the tight monetary policy, most of these software companies which are consumption or usage based are actually going through a sort of a business slowdown.
You know, if you look at Datadog, you look at Confluent, you look at Snowflake, all these companies, their growth rates have come down because usage has come down.
I mean, we've come down from peak usage during the COVID pandemic where everything was booming for these companies because of, know the drive towards digitalization at the enterprise level and then you had very loose
monetary conditions so everything was working the economy was booming so we're not at that phase of
the cycle right now we are at a sub phase of the cycle where things are tight money is tight the
business is not as fast and robust and not growing as fast as it was before.
So multiples have contracted.
And if my worldview is correct, I think if the economy basically holds up and if the Fed starts easing,
then the usage rates of these software usage consumption-based companies are going to accelerate in the future.
And the multiples have come down enough now
because of tight minority conditions and high interest rates
that if things basically pan out, as I think they will,
then the shareholders are probably going to capture
all of the business growth, if not most of the business growth.
Because, you know, if you buy a company
which is creating a very rich multiple,
even if the business grows because of multiple contraction over a number of years, shareholders don't actually
capture the entire business growth. But if the starting valuation is low or reasonable, and if
the business then compounds at 20, 30% a year for a number of years, then if the multiple remains
more or less the same or even contracts a little bit, then shareholders are able to capture nearly all of the business growth, which is an ideal scenario.
I mean, ideally, you want to buy into great companies when they are super cheap, because then you benefit not only from the business growth, but also from multiple expansion.
But that's very hard to do unless you are in an outright nasty bear market or in a nasty crash of some sort.
you are in an outright nasty bear market
or in a nasty crash of some sort.
Generally, if you invest in solid, durable companies
and you pay a reasonable multiple,
or even if you overpay a little bit,
you do just fine over the long run.
What you want to avoid is overpaying silly amounts
of money, multiples for fast going companies
because then you get smashed.
So coming back to your Snowflake question, I think the near-term guidance may actually
prove to be too conservative. I think the company did that to make it easy for the new CEO to
transition into his new role. So shareholders don't get disappointed by him. I would be very surprised if Snowflake doesn't actually beat and raise during this upcoming earnings release.
And I think if you look at the chart also of the stock, I mean, the stock appears to be forming some sort of a bottom.
So I wouldn't be surprised at all, you know, if we do get some excitement after the Snowflake earnings.
If anything, even if there is not much
excitement, I'd be very surprised if the stock goes much lower from here. Appreciate the thoughts.
All right, I will jump back in. I feel like there's one stock that we haven't talked a lot
about and you have posted recently about, which Tesla and we had a conversation about Tesla earlier today and while other
stocks are setting all-time highs and multi trillion dollar valuations Tesla
has definitely lagged what's your thoughts on it well Tesla is a cyclical
I've been saying for years and people didn't believe me now they can see it
with their own eyes I mean you look at the year-over-year growth rates of Tesla
you know they're not growing at 30% anymore you know their business is
struggling because of our interest rates it's's an auto OEM. You know, it is, yes, it is an
innovative technology company with its pies in many, many different, you know, its fingers in
many, many different pies. They've got, you know, the auto side, you've got the energy storage
business, the battery business, the supercharger business. Then you've got the AI side. They are sitting on a huge amount of data. You have the full set driving, autonomous driving,
robotaxi optionality. And then the thing which really excites me with Tesla is actually the
Optimus, the humanoid robot business division, because I think that has the potential to actually
become far bigger than all the other businesses put together. And I think that has the potential to actually become far bigger than all
the other businesses put together and I think you know at the moment the street is worried
investors are worried about Tesla they're valuing it as an auto OEM the business results haven't
been great because of you know the slowdown in the auto business due to high interest rates
and this is a completely normal cyclical drawdown in the industry. I don't think
the world is going back to petrol cars. If anything, I think the transition towards EVs
is going to accelerate in the future because the costs of producing these things are going down.
If you look at what's happening in China, I mean, they've come out with a $25,000 or $30,000 EV
already, BYD. And I think the prices of these EVs are going to go down,
as what happens with any new technology.
The price goes cheaper and cheaper and cheaper.
And then you're going to have the S-curve adoption for EVs.
And it just makes sense.
I mean, the fact that we still burn fuel and pollute the environment
is nuts in today's day and age,
where you can actually generate the power you need from solar energy in a renewable, much more sustainable manner.
So I think EVs are going to stick around and they're going to become more popular.
I don't think this is the end of the EV transition.
We have a long runway ahead.
I think Tesla is the leader, at least in the Western world in this space.
BYD is a big, formidable competitor in China.
But if you have protectionism in America, like you're seeing now,
you know, Biden talking about imposing hefty tariffs
on Chinese EV imports and so forth,
then I think Tesla is going to have some sort of, you know,
protection in the Western world at least, you know, to continue to grow.
And I think Tesla is
also going to come up with cheaper models over time. They're working on it now. But I think the
real reason why I've invested in Tesla and why it interests me is the robotaxi opportunity and much
more importantly, the robotics as a service RAS opportunity. I think, you know, FSD has been very painful for Tesla shareholders because Elon,
I think, wrongly has been promising full autonomy for 10 years now, and he's basically dented
his reputation and credibility somewhat because of that. But most people don't realize how
difficult full autonomy is. You know, full autonomy is not easy because you have to,
you know, factor into, take into account a factor in
every possible eventuality. And you have regulatory hurdles that you have to jump over
and you have insurance hurdles. Also, you know, if you have a crash and imagine if there's a human
driver and if you have a fully autonomous Tesla, if somebody dies, who do you think is going to
cover the insurance? So, you know, these are some of the questions which the insurance companies
must be asking themselves now.
And the regulators must be thinking also very carefully
before unleashing this technology, you know,
in the wide open space,
because if there are fatalities and accidents and so forth,
you know, who's going to take responsibility,
both, you know, morally and legally and financially.
So, you know, this is a long process.
I think personally, full autonomy
is still several years out, maybe seven or eight years out. Maybe that's a 2030 story. But I think
Tesla has a real opportunity here to monetize its humanoid robot robotics, you know, segment,
simply because, you know, if you have an army of robots working in a factory,
even if they kill each other, they're not going to kill human beings on streets,
you know, not at this stage anyway, you know, so you don't have the regulatory overhang,
you don't have the insurance issues to worry about.
And I think, you know, Tesla has the capability and the CapEx capability. If they want, they can raise capital from existing shareholders or, you know,
borrow from the bond market.
And I think investors will fund this because I think the economics, the unit economics of this business are likely to be pretty impressive because, you know, it's not going to take them much to build a bot.
all over the world and charge them, you know, an hourly rate, for instance, or a daily rate,
which is 30 or 40% of what the labor costs are for a human being.
If you are a factory owner or if you own a big organization and suddenly you can cut
back on your human resources costs by 50 or 60%, or you don't have to then suddenly worry,
have to worry about, you know, human behavior or sick leave or annual leave
or, you know, women getting pregnant
and going away and, you know,
not turning up to the office for three months
or four months or whatever,
maternity leave, paternity leave.
And, you know, I have nothing against
women getting pregnant and taking time off.
I'm just giving you an example
of how a business owner might think.
Suddenly, if you can cut your human resources costs
by 50, 60% and eliminate all these issues
which come with human beings, who wouldn't do it?
I mean, most companies would jump at the opportunity.
You can see that happening already.
If you go to McDonald's or any other stores
around in the fast food space,
you can see that the ordering machines
have already taken over.
You have a massive,
gigantic screen. You just place your order there. You don't have a human being taking
orders anymore. In Hong Kong, you have juice bars and coffee shops and milkshake bars,
which actually are run 100% by robots. So you go there, you place your order on a screen,
you stand and you watch as the robot basically dances around with its robotic arms, puts together your order, it comes out on a conveyor belt, and you're good to go.
You don't have human beings.
So I think that is a big opportunity.
And I can see a world where these robots are going to displace human beings, and at least initially for the repetitive, dangerous, mundane tasks,
which nobody wants to do.
And also there is a labor shortage, don't forget, in the Western world.
So this is a big opportunity.
And eventually, you know, just like people nowadays, you know,
walk around with computers in their pockets, which are the smartphones,
I can see or imagine a world, you know, five, seven years out,
where everybody has a little, you know, family robot initially to help out with the family chores, you know, vacuuming, mopping, cleaning the windows, cutting your vegetables and stuff like that, ironing your clothes.
And eventually, you know, just like any technology, people would maybe even want one per person.
People would maybe even want one per person.
You know, when computers came along,
people used to have one desktop in a family
and then the smartphones came
and then people had their own, you know, smartphones.
Everyone had their own computer.
Now everybody has two or three devices,
you know, a desktop, a laptop, an iPad, a phone.
So it could be, you know, in the future
where people have their own robots.
And, you know, if tesla sells those
robots to those households i think the opportunity on the commercial side is so enormous because the
gross margins on this business are going to be massive and this is going to generate a very high
margin uh you know recurring revenue business because know, the cost of upkeeping these and maintaining these robots is not going to be very high. And yet, companies are going to be happy to
pay the prices at a 20 or 30 or even 40, 50% of the cost when compared to human resources or labor
costs, because it'll be cheaper for them. And they can work them, you know, 24 seven, they don't have
to pay or worry about overtime, or, you know, lawsuits from, you know, 24-7. They don't have to pay or worry about overtime or, you know, lawsuits from, you know,
human resources, lawyers, and so forth.
So I think, you know, this has the potential at least
to be a ginormous business down the road,
and that's why I've invested in this.
And if, you know, if we get full autonomy
and a robotaxi fleet or, you know,
significant revenues from services on the FSD side,
all well and good, you know, that's the cherry on the cake.
But I'm primarily invested in Tesla for the robotics opportunity.
Yeah, Evan, do you want to comment on that?
Because when we do Tesla spaces, that seems to be the thing that you're very, very focused on.
No, I think it's an interesting one.
I'm very excited by the FSD aspect of it.
I still struggle to get my head around the whole robotics AGI version of it.
But kind of the more use case in a factory,
I've kind of seen Amazon invest heavily in this area as well.
It's something that I very much could get my head around over the next couple of years.
So my question would be around some of the other companies that you think might be
kind of implementing those robots. I mean, Amazon is the one that comes first to my mind,
both with implementing the robots, but also a company that could use them heavily in their
warehouses with a lot of repetitive tasks. At least the first version of these robots that are
kind of, well, the first versions have probably been out there for a while, but I'm not talking about the AGI can do anything robot,
but more the factory workers ones.
What kind of other companies are interesting for you in that area?
Amazon is the first one that comes to mind,
but I wonder if it's kind of just, I don't know,
too big to be able to single out for that specific part of it.
I mean, Boston Dynamics is a company which I've been watching closely.
It's majority owned.
I think 80% it's owned by Hyundai Motors
in Korea. SoftBank, if I'm not mistaken, I may be wrong, but last time I checked, SoftBank owned 20%.
So they are also a pioneer in the robotics space, Boston Dynamics. And then there are a number of
startups in the private markets, which are also developing or have developed their own
which are also developing or have developed their own humanoid robots.
Aptronic is one.
There's a few other ones as well.
So this industry is going to be massive, Evan.
I don't think this is going to be a small industry.
So I think it's not a winner-take-all market.
I think there will be several players.
But I think where Tesla has an advantage is that they have the scale
and they have access to capital that they have the scale and
they have access to capital and they have the manufacturing prowess and they've got the mad
genius at the helm running this company. So, you know, it's going to be very difficult, not
impossible, but it's going to be much harder for the startups to compete in this space simply
because they don't have access to the capital. They don't have the existing manufacturing base
and their brand, you brand. So over time,
do I see multiple winners in this space? Absolutely. Will Tesla walk away with the
entire market? Absolutely not. But if the market is worth several tens of trillions of dollars,
then Tesla could definitely get a big chunk of that pie and it's going to be very nice, juicy, high margin recovering revenue.
What do you think needs to happen for the market to start maybe pricing in that possibility? Do
the robots and everything like that need their own chat GBT moment where the market goes from
not thinking AI is real or anywhere close to maybe starting to price it in uh what are you kind of looking for for the
market to start kind of i'll say respect uh tesla's uh optimist project but really just start kind of
price it into their models well i think they will have to produce uh or strike some sort of
commercial deal with one of the companies to actually show that they have a viable product
which actually works and does their tasks which it would basically need to do to
demand or command that sort of recurring revenues from these big companies. So, as I said, FSD to me
is more difficult to wrap my head around, at least in the near term, because of the regulatory and
insurance risks I just highlighted. I think that's a more longer term story. I do think that robotics are likely to basically commercialize within the next couple of years, two to three years. I think the market has started to whiff, you know, get a whiff of this. And that's why Tesla stock has bounced a little bit over the last few weeks. And I think there's a lot of anticipation now with what Elon Musk is going to discuss when he unleashes or unveils the robot taxi venture later this year.
So, you know, these are some of the things to keep in mind.
You know, I still think that Tesla has the potential to maybe, you know, be a six or eight bagger over the next eight to 10 years, simply because if their
robotics as a service business division commercializes and scales, and you have FSD being licensed,
and eventually their own robotaxi freeze down the road, this is not going to be a 15 or
This is not going to be a 15 or 17 or 18% gross margin business.
17 or 18% gross margin business.
This is going to be a very high gross margin, high operating margin,
recovering revenue business.
And I think at that point, or even before that,
when the market gets whiff of it,
Tesla's stock is going to start to re-rate.
Hey, I'm looking forward to it. I'm for it.
Tesla's the top five holding for me likewise i appreciate
appreciate it okay cool puru we've been running over an hour here and i know that the plan is to
do these monthly so probably don't need to keep you too much longer on here since we'll be running
them more often but i did give one to give you a chance there are a lot of people in here that
were not in here in the beginning of the space could you for one more time maybe give you a chance there are a lot of people in here that were not in here in the beginning of the space right could you for one more time maybe give us a few minutes on alpha target and what you want
people to be paying attention to there yeah for sure i mean alpha target uh has been i mean the
reason why i've set this up and basically come out of retirement the motivation behind this has been
you know the countless requests that i've received over the last few years from followers
from all over the world, asking me to do something for them, you know, launch an ETF or manage their
money or, you know, provide some sort of research service. So I thought about this long and hard,
you know, I'm mindful of the fact that, you know, we don't want to, you know, we have to tread a fine line here because we want to, you know, give retail investors access to high quality research offering, which is, you know, at par with institutional grade research or slightly below it.
Because obviously we don't want to get too granular and complicated and confuse people who are not investment professionals.
and confuse people who are not investment professionals.
But we want to produce a very high quality service
where we research and find the most promising,
disruptive, rapidly growing companies.
We invest our own capital in those companies.
We share our investment holdings with our subscribers.
We publish in-depth, high quality research,
both qualitative, quantitative and technical research on those holdings, which will be available in the form of monthly reports on our website.
And then we will basically give people the tools and empower people to basically invest their own money.
So we will share our proprietary hedging indicators, which I have formulated after months and months of back
testing on a quant software.
So we will share those signals with our subscribers in real time.
So they can basically see when the market is in an uptrend, when it is in a downtrend.
And then they will know when we are hedging our portfolio, when we are removing the hedges.
And then investors and subscribers can then decide
for themselves whether they want to do that or not themselves. That's going to be entirely up
to them. When we buy and sell into new companies, we will send out alerts and a full write-up,
you know, a big equity research report saying we're investing in this company, and these are
the reasons why. These are some of the risks. this is what the operating metrics look like, this is what the financials look like, this is what the
technical picture is, this is the management team, these are the top shareholders, this is the
company's overview, this is the competitive advantage or advantages of this company, this is
why the competitors can't compete with this company. So it's going to be a comprehensive
offering and then in order to keep people up to date with the holdings and with what is happening
in the markets and in the company side and the industries, we will also put out weekly
updates, which subscribers will receive on every Monday, which will basically cover a brief
overview of what's happened in the stock market over the last week or so.
What is happening at the Fed?
You know, what is there any company news flow from any of the portfolio companies?
Has any of the competitors announced anything which has basically caught our attention?
And when the companies release their earnings, then our analysts will put together analyst
research notes, a full summary with our interpretation of these companies
earnings releases and we will share all of that on a on a monday morning so it's going to be a full
offering it's not just like a deep dive a month run by you know some sub stack writer sitting
at home or whatever it's going to be a team of dedicated investment professionals.
And we are also going to subscribe. We've already subscribed to institutional grade data feeds and also institutional quality research, which is not cheap. So if any retail investor
tries to do this themselves, the cost of doing this is going to be tens of thousands of US
dollars a year. And we are going to offer this at a reasonable price point. We're not going to be tens of thousands of US dollars a year. And we are going to offer this at a reasonable price point.
We're not going to be priced at the sub stack level,
but we are still going to, you know,
give it at a reasonable cheap price point,
which is so, you know,
it's affordable and accessible to the vast majority of people.
So we haven't really finalized the exact price point yet,
but we've actually had discussions with a number of people and we have a fairly good idea of what the price point will be.
It's not going to be, you know, over expensive because as I said, the reason I've done this,
the mission of the company is to actually empower investors at the retail level and
give them something which is not normally accessible to them.
You know, if you look at some of the other offerings at the retail level,
you know, a lot of these guys and services do good research. You know, they have very good deep dives and stuff, but there is no portfolio management angle. There is no risk management
strategy. Nobody tells the subscribers when to buy, when to sell. There is no technical analysis.
There is no hedging and so forth. So, you know, what i'm trying to do is give people the tools
and the information and the knowledge so they can actually you know find a good resource or a good
source where they can actually you know come in they can see that we've done our homework you know
our team of analysts has done the homework we've selected the very best companies we can find and
we've invested our own capital in those companies.
And they will know that, you know, when they subscribe to our research, they will know that our own skin is in the game.
And when we make any changes to our portfolios, we will share those details with them in real time.
So, you know, they're not going to be left hanging to dry if we make changes to our portfolio.
When the stock runs up too much, we will send out an
alert saying, look, we've raised some cash in the account. If the stock comes down too much,
we think it's become cheap. If we are adding, we will again send an alert saying, look,
the stock's come down. We think the valuation is low. The stock looks attractive. Technically,
we are adding to our position. So it's going to be a portfolio management tool. Hopefully,
it will give people at the retail level the confidence and the knowledge and
the resources of how to do it themselves so they can actually run their own portfolios
from the comfort of their own home rather than giving their money to some advisors or
managers who underperform the index and they pay through their nose for it.
Just to give you an example, guys, if somebody has a $200,000 portfolio, and if they are paying, you know, one and a half
percent to a manager or one percent, you know, that's two, $3,000. If you're managing a million
dollar portfolio, one percent is $10,000 a year. One and a half percent is $15,000 a year. We're
not going to charge, you know, at such levels. We're not going to charge at such levels.
We are going to make it affordable for people.
Come in maybe around the $100 mark per month
or $1,000 or something along those lines.
I'm not sure.
I mean, I know I can charge more.
I know similar services in the market
with people who basically have the same level of experience
that I have or even less.
Some of them are charging $2,000 or four thousand US dollars a year for a similar service.
But, you know, as I said, money is not the only motivation why I'm setting up this business.
You know, I'm doing it genuinely to sort of empower investors at the retail level.
So if I have to price it lower at, you know, a thousand dollars US or a hundred a month
price point, and then so
be it, you know, if the word spreads around and everything else, and if you're doing a
good job, the business will take care of itself.
But you know, I mean, we had a few comments before people were saying, you know, but you
know, this sub stack writer sells it for $20 or $50 a month, you know.
But the thing is, you know, you have to also look at who's publishing the research you know we're going to have our own dedicated world-class website and we're investing
a significant amount of resources in building this platform properly you know websites software
ip international property and putting together a world-class team of analysts from different
you know genres different aspects of the business,
qualitative as well as quantitative.
I mean, one lady who has joined us now, she's Malaysian.
She used to work at Citibank Malaysia.
She's worked at Brokers before,
brokerage firm as a sell side analyst
who was basically affiliated with Jefferies.
And she knows how to do the quantitative modeling
and so forth.
And we've got two guys who have already signed up.
One is, you know, Steve Symington.
He worked at the Motley Fool for a number of years.
He worked as a lead advisor at Seven Investing.
I mean, this guy has been working as an analyst for over 10 years.
I mean, I'm very happy he's now part of the team.
He does exceptional
qualitative research. And I've also, you know, recruited another guy who's deeply knowledgeable
in the tech space. And he is also a very experienced analyst. He's going to join us
a few weeks later. And as I said, I'm in talks with another buy side analyst from a massive
hedge fund. He's just retired from the hedge fund. He's 15 years of
experience. He used to write institutional grade buy side research reports for his multi-billion
dollar hedge fund. And he used to also be an act portfolio manager running his part of the portfolio.
So we're putting together a very high class team. You know, for me, I've been in the business for
25 years as a professional money manager, 15 years, founder of two SFC regulated money management firms and so forth.
So, you know,
we are going to provide something truly different and hopefully useful for
our subscribers. So, you know,
obviously we're not going to price it at the same level as a sub stack writer
who does a deep dive at 20 or 30 US dollars a month. We have, you know,
overheads to cover and we have to
price it according to what we are offering and i do believe we're going to offer something truly useful and it's not going to be overly expensive it will be within reach for most
people with say a hundred thousand dollar portfolio or higher i love it i appreciate it
wolf I love it, Puru. I appreciate it. Wolf.
Hello?
Yeah, I got you.
Wolf was having some connectivity issues there.
I was thinking he would be able to hear me, but no, I heard all that.
I think everyone down below did, Puru. We really appreciate you coming on here. This was thinking he would be able to hear me, but no, I heard all that. I think everyone down below did.
Puru, we really appreciate you coming on here.
This was a really great conversation.
And just as I said that,
I just got a notification at the top saying they're having some connectivity issues.
But this was a really great time.
I learned a lot.
I really enjoyed these.
And it's really nice to hear
that you guys might be doing this as a monthly thing.
I mentioned to Gav that I'm going to do this as a monthly thing. I mean, I mentioned to Gab
that I'm gonna do this every couple of months.
So not monthly, it's gonna be every two or three months.
But that's pinned up in the nest above.
So if anyone wants to go in and see more about AlphaTarget,
some of the stuff that Pruvi is working on,
that is pinned up there
and you guys should definitely go in and check it out.
And I know-
I mean, we're hoping to launch the website towards the end of the month.
So I will basically confirm the exact date.
Very exciting.
I'm just discussing the exact launch date with the web developers in London who basically
spent several months putting up this website.
So hopefully it would be a fantastic website and a fantastic offering which people would
benefit from.
That must be fun being in Hong Kong and then dealing with people in England and then talking
with people on the East Coast. It must be fun.
It's not really fun because the time difference. They call me at 11 o'clock at midnight my time.
I'm sleeping like an owl these days.
Totally fair.
Well, Puru, thanks so much for taking the time,
spending it with us.
I think everyone got a lot of education out of this.
I always enjoy listening to you speak.
A lot of wisdom there for us to pick up on.
Looking forward to the next one.
We'll talk with you in the DMs.
All right.
Thank you very much, guys.
Always a pleasure.
And thank you, everybody, for tuning in.
I hope you found it useful.
Have a great rest of your day, Puru, over over there to everyone else on east coast with us
tomorrow i believe uh evan will be having a space in the morning that people can hop in and check
out i think so and there'll be some live trading and we'll have some more stuff midday that i'll
be a part of as well so thanks again everybody have a great evening take care thank you very
much guys all the best. Appreciate you guys.
Great talk.
See you all later. Thank you.
