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STOCK MARKET TALK
Recorded: July 28, 2025 Duration: 2:01:15Space Recording
Short Summary
In a dynamic discussion, participants explored the implications of recent market trends, particularly focusing on the impact of AI on productivity and growth across various sectors. The conversation highlighted the resilience of major tech stocks, the strategic importance of partnerships, and the potential for significant shifts in market sentiment as earnings season unfolds.
Full Transcription
Thank you. you
yo hello hello can you hear me what's up i gotcha how we doing i'm excited for uh this spaces today
how's it been for you feels like a little bit of a slower day in between which kind of makes sense this is a crazy week just of these earnings and then macro events and then blah blah blah
but all of it's like wednesday thursday friday kind of earnings tuesday too so it kind of makes
sense for this to be a little bit of a slower monday is that what we're seeing on this intraday
yeah we had the gap up you know we talked about this on the stream last night. Talked about it a little bit Friday.
Gap up and fade.
But we're still, I mean, QQQ never even went red on the day.
So the NASDAQ has stayed above the closing price from Friday.
S&P slightly red here, just under the closing price. But nothing really so exciting.
NVIDIA, new all-time high right now.
Oh, very nice.
You can make little statistics go in your favor.
Nvidia is closer to $4.5 trillion than $4 trillion right now.
And I bet you saw, oh, I wouldn't put money on it,
but it feels like S&P 500 wouldn't pass it to eke out that 0.01% up headline
so I can come out and say, new all-time high closing price for the S&P 500.
That feels like this type of market. Very possible. Very close. What's up, Scott?
Hey, you got to give the financial pundit something to say, right? So why not go a little
bit tiny? It feels like that we've been talking over these last couple of weeks, like exhaustion,
like we're not quite bearish, but like, like I'm still
feeling that the bullish, like there's been a lot of days where we've started off strong,
dropped off. And then you're like, you could be like, Hey, is this the day? And then we've come
back to be about even that feels like a theme over this past week. Um, yeah, yeah. So that's
the trend really, you know, the trend is not changed has not changed. We've been above the 8-21 day pretty much since April, and a bunch of times there was a little test on May 23 on June 21st spies opened up at 631 and if you didn't you know use a tier system it kind of hurt a little bit when
it went down the next day to 626 so you're talking about like a five dollar range so you know these
ranges are kind of still happening but the slow grind is happening also and again I think traders
have like one foot in the door, one foot out the door.
You know, how do you how do you adjust?
So for every single thing, everything, single earnings report, if you played pretty much an option trade long, you lost.
And then all you had to do is wait till after.
So that, you know, so is that going to change now?
Now everyone's saying, hey, you don't have to be in Amazon because you could buy it after.
Look what happened to Netflix. You don't have to be in Amazon because you could buy it after. Look what happened to Netflix.
You don't have to be in Google.
You could buy it after.
It topped out that day.
Or, hey, look at the banks.
JP Morgan and Goldman Sachs were sold on earnings.
And then three days later, they regrouped and they went.
Look at Tesla.
You didn't have to own Tesla into the print.
You had to own it three hours later.
So it's just funny. Every little week or two weeks is a different
type of, you know, situation until it's not. You know, I'm trying to stick with the trend also,
but I'm also, I'm paying a little bit, you know, to be a little proactive. I think last week I
said that I started buying a little bit of UVXY calls for, for August. Yeah. I mean, we have the
VIX at 15 right now.
Yeah, and I'm losing a little bit of money,
but I don't mind nibbling a little bit of calls on the bid
every few days with a little bit of like,
just literally just started last week.
So I'm buying the September 1922 in the August 22nd 20s.
So if between now and August 22nd 20s so if between now and and uh you know August 22nd something happens
that we're not looking at that always usually happens in August you know I'll be there for it
and same thing for September and it'll help me with my leftover swings that haven't violated the
trend so because sometimes you know you get the day out of nowhere you weren't expecting and
you know and and that just hurts if you're sitting in 10, 14, 16 positions without any protection.
So anyway, for now, you know, the first time I started doing it last week,
I'm still trying to be opportunistic.
I'm trying to limit my bleed.
The last two days or so, the last two sessions, you know,
like holding 25% of a bunch of things that already worked definitely hurt a little bit, you know.
So I'm trying to say, hey, what do I not need to sit on through this week?
Because this week is going to be very volatile.
And I want to be able to play the ranges.
I want to have clarity.
I want to be able to take advantage of some of the moves.
But if you're too spread out and you're in second and third and fourth tier names,
which were all working the past few weeks,
you're not going to be able to see the action.
You know what else? Hmm? I'm sorry. I started keeping the point you made before is just how much is going on. Every single one of those different themes has a direct catalyst,
either they're reporting or a company that is very similar to them is probably going to be
reporting this week. And then you have all this macro stuff that if you have too much going on,
you're going to miss a big headline that's going to impact your company this week. Exactly. So during this, you know, know what
you own and why. I feel like my best option trade last week wasn't trading Google into numbers. It
was trading Amazon thinking it was a cheaper way to play Google. As we spoke about that on Monday
saying, hey, if Google's great, it'll go up. If Google's not great, you could probably buy,
you know, buy it on the, you know, buy the dip in the options and and they'll need somewhere to go.
So that kind of worked. But again, like you said, yeah, there's a different theme for everything.
That's why I'm like I'm taking I'm buying a little bit of the XBIs thinking that, hey, if if the Fed's dovish or a little bit more dovish, it does a surprise rate cut.
You know, maybe XBI could trigger over 88, 89, but that's like just a thesis.
You know, maybe XBI could trigger over 88, 89. But that's like just a thesis.
Last week, I started buying the XLE or not a thesis, a concept.
I started buying the XLE.
Everyone's been pointing to the two-year range that has been just, you know, been in place.
And at some point, money will rotate here.
So I figured I can go out to mid-August and buy the 88s or 89s.
And then those are the only two things i'm kind of like
anticipating and if it doesn't happen i'll you know risk is premium paid and the rest i'm going
to trade the action and stick with trades that have a reason for like i bought nvidia last week
thinking hey if we're going to go up it'll get above 175 and you know it's actually going on so
that's kind of cool and i'm trying to stick with some of the second and third tier names but there's
like a bleed there and it's kind of i'm like trying to think that it's just not worth it
the drone names had a decent move and now they're just like dribbling lower i think i have to wait
now um the quantum names had a move it looks like they're consolidating but they're kind of dribbling
lower um if you're in there for years it's fine but if you were in it for a trade to hold up and
make a new high and be fun and momentum just doesn't seem like it's there yet so i'm trying to trying to limit the
ones i'm anticipating and then just go with the reaction but if i have too many things i'm
anticipating i won't be able to see what i can react to when the trade gets busier come wednesday
thursday friday because it will get busier i think i'm also watching these trade deals pretty closely.
Like part of the trade deal with Europe yesterday highlighted was defense.
You know, if in a couple of weeks ago,
this is probably something that would have pushed up a lot of those U S drone
makers and defense names like that.
You know,
Boeing is one that feels like it's in every single one of these deals.
And obviously that deadline that alleged alleged deadline, we'll say,
is August 1st, which is this Friday.
So in the backdrop of all these earnings and macro,
we also have trade talks coming into it,
which are impacting public people.
And obviously the China one seems to be getting delayed,
and a lot of them don't matter,
but there are still countries like Canada, Mexico, India.
We haven't heard that much from.
South Korea, too.
I mean, we saw that Tesla Samsung deal obviously
it's a little less than some others but there are still some companies and some industries that
we'll be watching this week as well yeah so far there's every time we've had a deal they've
they've sold you know you've kind of been up into it and then they sold some strength it was a way
to just trade around positions so that continues to work like this morning I came in I got converted
I was I was short spy premium into Friday.
And then this morning, you know, I shorted more spy premium for today and tomorrow.
Not for Wednesday, Thursday, Friday.
I don't want to get caught if all of a sudden there's some crazy volatility and I'm caught in a pain trade.
But coming in today, I'm like, you know what?
I could, you know, up for tomorrow because there's no real big news between today and tomorrow. If we sold the news today, I could call 639 calls for the spies and collect, 638s and collect, add to the spies that I'm short.
And that helped me fund some things that I'm kind of at concept play with, which is the XLE, the XBI, and some of the other things I'm kind of thinking could still have a move.
But, you know, might bleed today and tomorrow.
So I can cover that bleed by being short the spy premium, you know, these two days, which typically you come in anyway, you know, bleed today and tomorrow so i can cover that bleed by being short despite premium
you know these two days which typically you you come in anyway you know before the fed on that
wednesday 250 billion dollars per year purchases from the eu it sounded like they were when i was
listening to it sound like the the base expectation before it would have been about 100 billion so
expectation before it would have been about a hundred billion so allegedly
150 billion dollars of incremental LNG stuff going over to Europe allegedly I
don't know we'll see for the next three years I mean allegedly big words so that
and even in the words they were saying it they were when they were clarifying it
was like hey listen for the rest of his term this is what's happening they're
not committing to anything past that we'll see if that becomes a problem in a year or two.
There's always a problem somewhere.
If all you're looking for is problem,
not saying you are in general, it's just, you know, it's funny.
Everyone's been talking about the V, the V, the V.
Nobody trusts the market, this and that.
But I've been on the spaces with you guys for like three months
and there's a lot of people making a lot of money,
you know, being tactical and finding the leadership
and using technicals versus whether you like Trump or not.
The market, you know, ever since the low there has acted very well.
Technically, there hasn't been that much predatory action.
Like I hate predatory action when, you know, you close in the dead lows and then you gap up and you squeeze every short there is or, you know, something looks strong.
And then, you know, you think you could hold it and it's going to break out.
you think you could hold it and it's going to break out and then, you know,
And then, you know, they gap it down.
they, they gap it down. They don't give you a way out. But, you know,
They don't give you a way out.
if you really look at the trend and the spies and the views,
like there really hasn't been that many surprises that,
that trap traders, you know, that, that hurt, you know,
sometimes you get that, you know, in, in trends and it's a harder trend,
but this one has been pretty methodical. Um,
so I do think there's a lot of traders.
I know a lot of traders on the alpha team and guys that I heard here on Twitter and stuff, they're at the highs of their year.
Whereas you read over the weekend how the hedge funds are the shortest they've ever been in the
S&P cash. I don't know if that's true, but if they are, they're not doing so well for their
2.20 or their 1.25 and 20. So also don't believe everything you hear. It's, I guess that's, uh, also a little
bit of a, you know, take a take on that. Uh, and then I was just, you know, as far as, you know,
what I'm like something, what am I playing so far for this week? I don't have options on for
earnings yet. Like I've been doing really well with options in, you know, the pre-trade move,
you know, I, the only thing I did so far for, you know, for a trade was at a Tesla call spread on last week that didn't work.
But then you made more money playing it above 310 the day after into the gap where, you know, you could have made it back.
So there still seems like there's more in control money than having to worry about paying the crazy, you know, premiums that these option guys are making you do for earnings.
I have a little Apple options. That's what I have on because the premiums are nothing. It's still in the base.
It feels like everyone kind of hates it still. And maybe there's that, you know, upside option.
We're talking some calls. Yeah, I have the 220 calls. I like this guy. They're pretty cheap.
I started nibbling a little bit last week the stock
itself is horrible to trade we caught that one trade when we're all on here like at like three
o'clock when i'm going through two two or three and give you a four day trade and it's been
bouncing off at like 215 214 level like four times now five times now it's been tough like anytime
you look good you had to sell it anytime look bad you had to buy it but It didn't kind of look bad. You had to buy it, but, but still in this range between like two 11 and two 15, two 16. So it's keeping me a little bit, um, yeah, a little bit engaged.
You know, one thing with Apple too, is this kind of theme of exhaustion in the market and Apple
going up have happened at the same time in points in this kind of recentish market. Like
if you look back a couple of years ago, people would have told you the market's only going up
if Apple's going up or, and vice vice versa and that's definitely changed a little bit
over this this last week so okay or in general in favor of it happening yeah last couple years
yeah apple put its apple put its high in um in december you know and then it's done lower high
low i went you know the high was what 260 and then 248 and 225 So Apple's right at an apex right now and it's lagged.
You know, I like to play Apple when it's leading and it's definitely, like you said, it's definitely not leading right now.
It's, you know, it's just sometimes it's a headwind and sometimes it's been all right.
So the question is, you know, can they get the flows?
Same thing for Tesla.
The market's great when Tesla leads the market.
It hasn't led the market.
But, you know, so you can't short other things
because those things aren't doing that.
Like the past few weeks, Amazon and Google did some heavy lifting.
Meta's done some heavy lifting.
Netflix prior to the print did heavy lifting.
Obviously, NVIDIA and some of the semis have been great.
So, again, things change.
AMD.
AMD's been an animal.
It filled that gap today.
Yeah, yeah, yeah.
AMD has been an animal. SM filled that gap today. Yeah, yeah, yeah. AMD has been an animal.
SMCI gave a decent trade look.
I think we were talking about that last week.
If it gets above 52.10, it's at 59 and change.
Some guys are watching ARM.
They think ARM could be the next semi to make a nice move,
so maybe put ARM on your radar.
But I think it's more of an option trade because earnings are coming out.
I think earnings are coming out soon, so you have to be a little careful. There's lots of things to do. I think it's more of an option trade because earnings are coming out. I think earnings are coming out soon, so you have to be a little careful.
There's lots of things to do.
I think it's Wednesday or Thursday.
Arm is this week for sure.
Yeah, I think when's Arm? Arm is July 30th.
Yeah, so it's this week.
It is this week.
So as boring as today is and as easy it is to overtrade,
there's been a lot going on leading into today. And then don't get lulled to sleep today, tomorrow, because Wednesday through
Friday could get a lot more volatile and everyone's going to have an opinion on which way it's going
to go. And at this point, you don't want to get full sleep when the RSI and the spies is the way
it is right now into almost August. But again,
I can see people saying, oh, we're going to, you know, August is a bad month. I'm just going to
get short the spies short of this premium. And then if for some reason, you know, Powell cuts
rates or something happens where inflation is tame and they want to take these things,
they could definitely blow the doors off for shorts one more time. And this move can go to
the first week in August instead of to the Friday so
again have multiple plans when you're coming into a point in a tape where shorts are on their toes
and longs kind of are one foot in one foot out the door you know now that we're uh I also pass
along now that we're at the week of Jeromeell week being here we haven't really talked about that much there's open doors the rock the rkt had a little bit of a run
there's kind of rate cup theme names i've started to perk up a little bit and they're obviously
don't think it's going to happen at this one but i wonder if they're thinking we're going to get a
signaling that hey rate cuts might be coming feels like that might be too early.
And where it might actually be a prudent place would be the Jackson Hole meeting coming after this, where we can get that step change.
But I'm curious to see that theme kind of play out a little bit this week,
the people betting, not that we're going to get a rate cut this week,
but that we're going to get signaling that the rate cut is close.
And there's a couple of specific stocks that would probably move pretty
aggressively off of that one.
Well, they did last week.
I feel like RKT.
Yeah, they did.
They did.
They came back a time.
Yeah.
It shouldn't have come back as far if it was going to be, you know,
so great.
I think, I don't know.
It's going to be interesting to see what happens.
I feel like the street's still pricing in 42 basis points of cuts.
So it's not like, so people think he's going to cut.
No one really thinks it's going to be this Wednesday.
So if he does do a quarter, like maybe Trump was really in his ear when they were hanging out with their hard hats on last week and said, hey, you better just do a quarter.
And maybe, I don't know, maybe he does it.
And that would probably give the market a knee-jerk reaction, I guess higher.
But then who knows
if it holds.
And that would help the small caps and the XBI and some of those groups that have been
a little bit less loved.
So I don't know either at this point.
But it's hard for them to cut rates when you have the S&P and the NASDAQ sitting at all-time
highs.
Usually, you start cutting rates when you're in like 3% to 5% off the highs or more, or at least talk about it. And then when you talk about it, you can draw the
market up. But up here, it still feels odd that they would do anything.
The Fed independence people would be pretty loud if they were ending up cutting this week.
And they wouldn't be as loud if they left the door open and said,
Powell's way is telling you he's going to do something before he does it and then probably doing it so yeah um it would probably look worse and i agree with you you'd probably get that spike
up and then a lot of loud noise yeah let's um why don't you go around the horn and see if anyone has
any conviction on some of their earnings plays this week because analogical is usually good with that stuff for me i'm really um i've lost some conviction and i'm just trying to
you know stack some days and not have some bleed as we enter this last week of what could be you
know the squeeze of the squeezes or all of a sudden you know volatility hits and that's a
what everyone's like well we you should have seen the summer top coming, which
hasn't shown itself yet.
Yeah, I mean, I think
it's fair to be cautious
just because in the last two
years of this bull run, we've seen
July to August, July
to October kind of pullback.
But I think you could recall
back to the Trump first presidency,
I believe in, was it 2017, the vol got sub-TED.
So, I mean, you could just end up having this low vol regime
where the market just keeps on grinding higher.
Look, the setup here is perfect.
I don't think we're as extended as people think we are.
I actually think that these companies are going to continue to do really well.
I mean, the numbers we've seen so far, the reactions have been, in my view,
after this big run-up in names like Netflix and Google,
the numbers have been good enough where we didn't give a lot back.
So, you know, I like to see that kind of stability.
It gives the market backdrop a little bit more stability. But that's not where you're going to get the big alpha at this point um i'm not saying
i'm bearish the large caps definitely not i'm just not one to waste my time in the large caps
and so when i look across this market i'm as long as i've ever been and i am extremely bullish on the names that
i own and i feel that if anything there is a big re-rating coming for names that are not typical
household names because you know everybody is basically sharing the same chart of oh well you
know the bull market you know know, is very narrow,
and there's not a lot of broad participation. Look at the percent of stocks below their 200 day,
blah, blah, blah. And every single time somebody posts something like that in an uptrend,
I say to myself, well, that's opportunity. And that means that this market has a lot
more to go. Because unless you're thinking that this is the end of the bull market,
then I'd expect broader participation, which is where I'm spending a lot of my time. And I'm basically headed into here's something that people need to think about.
Every trader loved the strong stock. I made a post about this. Every trader loves a strong
stock, which means that, you know, the price action has been strong it's it's riding these 90 mas it's well above its moving averages it's above
the 200 day moving averages but guess what while traders love strong technicals you know who doesn't
love strong technicals in those kind of circumstances it's the earnings reactions and the catalyst
so you have a binary event coming up. And we know, it's stock talk
mentions this all the time is like, look left on the price action. Did we already price in a strong
earnings report? And I could argue that in a lot of cases, the price action has led to these assets
trading at premium valuations. And so they have to beat and raise to even maintain the price that they've gotten to.
I think people forget that when we buy a stock at a specific price, there is an associated
market cap and thus valuation associated with it.
So for me, headed into earnings, the things that I'm paying attention to are the ones
that have favorable valuations.
And those are typically names that have weak price action leading up into this moment.
So if I believe in the strength of the fundamentals and I'm heading into an earnings print with a very strong valuation for the strength and quality of a business, then that's where, as I said earlier, I'm as long as I've ever been.
And so I'm not backing down and I'm not really too concerned headed into earnings
because the names I own, I don't think they're stretched at all. If anything, I think they're
underextended. And I think that we haven't even started the bull run in a lot of names.
So that's where I'm focusing my time, as I always do, is the fundamentals. So I lean probably 70%
fundamentals, 30% technical, but heading into earnings, I'm way more of a fundamentals guy,
because at the end of the day, if you're going to tell me that these companies are going to put up
really good results, say even inline results, but they're trading at basement valuations,
like there are software companies trading for very cheap, I can name you several.
And they're all coming off of, in my view, you know, bottoming processes. You know,
you can look at GitLab, you can look at Braing processes. You could look at GitLab.
You could look at Braze software.
You could look at Amplitude.
You could look at Okta.
You could look at Bill Holdings.
You could look at DigitalOcean.
Most of these names, by the way, recently have had pretty strong bullish options activity.
So to me, that seems like somebody feels good headed into this earnings season. And when I look at a lot of these names, like go look at the chart on Bill.
Bill has had nonstop put selling call buying for September and January. The stock trades at 15
times EBIT. Now it's not a super fast grower. It's more of like a GARP stock, which means
growth at a reasonable price. But there's a of this mid-cap software that is just trading at extremely reasonable valuations um i think that
there's a catch-up trade to be had i think that that's probably where the alpha remains i think
people forget that really you know you could buy a you know a stock that's expensive and watch it
get overpriced that's fine that's one strategy. Another one is to buy what I think would be a
cheap stock relative for its fundamentals and watch it get re-rated back towards fair valuation.
And to me, that's a much easier game to play because I don't need to hope that a stock can
get to a more extreme or stretched valuation. So that's where I'm focused. I mean, look at Okta.
I mean, that thing's been pretty strong. It undercut and rallied uh below right below the 200 day they kept slamming calls they slammed
the november's recently slammed a little bit more on another strike i forgot which one but
yeah i mean so the the mid-cap software seems like an um i wouldn't say easy but i would say
a fairly obvious um place where there's value i've think Scott mentioned the XVI and biotech.
We had a good amount of more biotech data and individual names basically showing a lot of
strength today. We've been seeing that for the last week or few weeks, I should say. We're getting
more data. Basically, what I've been saying is the xbi has been in a bear market
for four plus years it has not entered the bull market yet so for me um that's where i'm shopping
i'm shopping in the fundamentally under extended and undervalued and i'm waiting for broader
participation in this market and rotation and you know people can look at these
stocks and say dude these look like crap or whatever but i think actually most of them are
starting to show you know basically patterns of bottoming um a couple of my favorite biotechs are
don d-a-w-n and s-n-d-x syndax pharmaceuticals a lot of interesting stuff with that. Syndax actually seen a lot of bullish call activity recently.
These are very, very, very cheap stocks.
I mean, extremely cheap.
And so at some point you can, you know,
and while I still think from a technical analysis standpoint,
they are definitely showing signs of bottoming.
But from a fundamental valuation perspective, these stocks are just far too cheap.
So if they post anywhere near inline results,
if there's any sort of sentiment shift
into some of these other sectors that have not gotten any love,
I think what's very key for people to understand is that
valuation is all based on sentiment.
Because people like certain AI related companies, then they're going to
bid up those stocks to extreme valuations. That's all it means when a stock's price goes up.
The valuation is higher, and it's because it's reflecting a brighter future. I think right now,
the fundamentals for many of these stocks are extremely good, but the valuations are low because nobody cares.
So I'd like to be fishing in a place where nobody cares and watch as the sentiment inflects the
positive, because that's a much easier game to play. Eventually, you can't ignore fundamentals
because, you know, I think, you know, there's great things about trading, but people forget
that we're buying businesses. And when you buy shares in a company you're buying equity and a percent ownership of that business
so eventually those cash flows are important and you know at some cheap level of whatever that
level is at some cheap level of fundamentals and valuation you know you can argue that it's worth
something to it at a minimum private equity or some sort of bigger conglomerate to buy them out.
So I think people do pay attention to fundamentals.
And that's just, as we head into earnings, a much easier place to pay attention.
So they could prove to be extremely cheap.
Can I say something?
Yeah, of course.
First of all, I think you're exactly right.
Except for what you do, it takes a lot of work and a lot of research so it's not for everyone you know typically like i like to trade
the names that are in play that are trending and i trade them up until earnings but i do exactly
what you say i look at where they came from where they are and i say is this trade worth it into
numbers is it overextended is there too much premium in these options and i sometimes skip it
like i traded google all the way to the print.
I'm like, it's not worth it.
I traded Netflix all the way to the print.
I'm like, it's not worth it.
You know, Amazon, I'm not sure.
But for someone like Logical who does his homework that looks at a biotech stock that
people have left for dead, sometimes that earnings or the conference is a catalyst to
wake everyone up and say, hey, you guys left this for dead.
And this is exciting stuff going on.
And that event could be the trigger to start a whole new move with a big gap up that doesn't fill the gap.
And then you start a whole new trend.
So, you know, during earnings season, it's very exciting for guys that do their homework and accumulate names that they're fundamentally familiar with.
And then sometimes if they're ahead of the street,
that's how you make real money.
Being a name that people left for dead
and then all of a sudden, you know,
they come out with their report card
and it's better than everyone thought.
Like it could be even in the software.
Software has been kind of left for dead.
So an earning season can wake them up.
So if you think you could do your homework
and you're smart enough to get in there prior
and then all of a sudden they come out and surprise, you're ahead of the game.
And, you know, I would do that with options, though, if you're a trader.
Like for, you know, for guys that need to be right this week, otherwise they're not getting a paycheck in August for what they did in July.
There's a way to go about it because you could think that, you know, everything there is about a company and maybe they don't want to talk about it until the next quarter.
And you get, you know, and anything could always happen during earnings season.
So if you're in these things for quarters and years, you know, and then you want to get really paid on them when they go, that's different than saying, hey, I think they're going to, you know, talk really positively and go this quarter versus next quarter.
And if it doesn't and you just blindly buy
it and you're trying to get paid for for the prior month then it's just trickier but um you know
there's definitely both sides of the coin and both sides could work out well you just have to know
you play on one side or the other or do you do a hybrid based on the amount of years you have in
the business it takes a lot of years in the business to do a little bit of everything
yeah and you know, I will say
when you're buying the things that are left for dead one, again, you have that valuation
in your perspective, in your, um, I guess it's your advantage because you're paying a cheap
multiple. Um, so you're not only getting earnings expansion, but you're getting potentially
multiple expansion, which is, you know, that stock price going higher if investors start
piling in. Um, so that's the sentiment shifting, right? Because these are good results.
And also when you're buying stocks that are, I guess, a little bit more off the radar,
the IVs are much lower. So when you're talking about buying options headed into earnings,
a lot of these names are trading at 50%, maybe 60%. Some names I even have at 40%
IV, and they're extremely cheap. So a couple of names that I'm interested in this week.
I have a lot of earnings tomorrow. I'm looking at, I saw Repligen, R-G-E-N. It's a biohealthcare name.
The bioprocessing names have been popping on earnings.
We've seen it already.
Some moves like 20% up for like Western Pharmaceuticals,
50% move for MedP last week.
This name has been basically consolidating
for the last five years.
And I saw some interesting call options
and size come in for the August.
That's extremely,
extremely low IV.
What did you say, R-E-G-N?
R-G-E-N.
Yeah, that was an old school favorite also
back last summer at this point,
you know, when it corrected.
That's definitely tight.
Looks pretty good technically too
if they come out with something good.
Yeah, I mean, I'm getting,
I'm getting a little bit crushed so far on these calls,
but I always try to pick up shares and then add some calls on top.
So RGEN I'm looking forward to.
I'm looking forward to, I know these are going to sound ridiculous,
Lending Club, LC.
I've talked about it several times on these spaces.
Fundamentally speaking, the stock is cheap.
Technically speaking, the chart is beautiful.
What are those symbols?
LC, a lending club. And all the lenders have been posting great numbers like Pagaya Technology PGY ripped like 30% on earnings 3X volume. So I know that the lending side is probably
going to do good. They're probably going to see a nice tailwind if we get rate cuts.
But the chart looks beautiful.
It's above the 200-day now.
And this is a name I've been following for years.
Talked about it several times on these spaces.
It fell on recent earnings, the last earnings, because we thought we were headed into a tariff-induced recession.
So the company, this is a fundamental nugget for people because I do follow these companies very closely.
The reason the stock fell is they missed on earnings because they took, if you know about bank stocks and lenders,
they basically have something called provisions for losses.
And they allocated more provisions for losses because they thought they were going to endure an economic downturn,
which ended up being a headwind to their EPS.
But now with no recession in sight, they can probably unwind that. And what was a headwind
can potentially become a tailwind. And I think they can print a massive beat. So LC is an
interesting one. And then I have a lot tomorrow. So Argen, LC, and another one is Teradyne, T-E-R. There was some research that
came out maybe a month ago. It's been getting downgraded, but a couple of the guys that are
really smart on here, Hunterbrook Media, Citrini Research, they did some joins.
By the way, did something just come out on XBI itself, or is it just like an air pocket? It
looks like they just got hit pretty fast let me see
oh good good question no idea um trump administration weighs uh overhaul of patent system to raise revenue so probably bad for the it means they're going to cost more money for these
small pharmaceutical companies to try to get a patent and to do their stuff sounds pretty stupid
for them to be honest why would you add more hurdles when Chinese biotech
is starting to crush America?
Really dumb? Whatever.
Anyways, yeah, I mean, in biotechs,
I don't buy XBI. I focus on
individual names. That's how you get big
pops like Nectar Therapeutics
this year, ABVX,
which was last week my biggest
winner ever in my career.
I was up 500 500 nearly on that one
excellent um so i named lc and uh arjen there's also ter um for tomorrow i just want to see if
they're going to talk at all about their partnership with amazon um because i think that's not very well
known uh basically like i was mentioning hunter brobrook Media and Citrini Research,
I want to give those guys all the flowers.
You know, obviously, hoping that they are right.
I mean, their research was pretty compelling
that Teradyne's been basically providing Amazon
with a lot of their robots.
robots. So if they end up, you know, getting re-rated from like this legacy, you know,
So if they end up, you know,
getting re-rated from like this legacy, you know,
you know, name to this Amazon partnered, you know, robotics name, I think that the re-rate
can happen pretty, pretty quickly and pretty aggressively. So those are a few that I'm
looking forward to and they all report tomorrow, but we'll, we'll see how things go. But yeah,
and they all report tomorrow.
We'll see how things go.
Names like that,
they're sitting at 40%, 50%
IV on the calls.
I think it's worth a swing.
It's worth a punt.
We'll see. I'm going to ride with you with LC.
I'm going to buy the August 15, $14
calls. Which calls would you say go with?
They don't have weeklies,
and the earnings are tomorrow.
The August 15s?
I'm going to be honest with you. I don't have anything short-dated earnings are tomorrow so the august 15th i'm gonna be honest with you i don't have anything short dated i have you know this is a name that i prefer to play in
shares but i've always liked the a little bit longer dated calls i'm i've been in the january
26 12 calls i mean i bought them at when the stock was at 10 bucks though so now they're in the money
so i'm just going to continue to ride those. It's an interesting one. I honestly feel like I could easily layer a little bit more
into some of these. Let me look it up. Give me a second.
Let's see. Look, I mean, I'm just a very, I'm a pretty conservative guy. This is the kind of
stock that can go up 10% on earnings. I wouldn't say it's going to go up. And it's like pricing an 81% IV.
So I don't know.
It's a tough one.
Like, I just don't like short dated stuff.
I think they could have a big beat.
Could it go to 15?
Yeah, it can go to 15.
But, you know, that'll leave you with a double on the 14s.
It's, you know, I don't know how to...
Maybe this one is not as good on a short-term basis.
Well, it's got a catalyst.
And if they missed last time and they read and they kind of didn't have to take the best.
They missed last two, by the way.
Yeah, exactly.
No, I'm in full agreement with you.
I mean, I really like this stock.
It's tough for me to say which, you know, stocks or whatever.
Sure, I won't hold you to it.
It's good to have fresh ideas.
It's a good idea.
Yeah, yeah.
Yeah, exactly.
And, you know, this Terodyne one you know i'm sitting
in january 26 calls as well but man maybe it is worth uh taking a swing just in case but
in case you know but the thing is like you are it's a bit speculative in the nature of like the
research is good but they haven't really talked about it is this earnings going to be the one
where they talk about it because you know the the research was pretty compelling that they are, in fact, providing Amazon with these robots.
So we'll see what happens on the call tomorrow, I guess.
Anyways, those are the three for this week.
I have way, way more names reporting in the next two weeks.
Those are going to be a lot more interesting.
My favorite name right now in this earning season is Pubmatic, P-U-B-M.
I think that one's reporting on August 11th. The small caps
typically report a little bit later. And so yeah, Pubmatic is my largest position. It's been curling
and consolidating just below this 200 day. You could see the pattern is really nice. The monthly
is showing this kind of Morningstar reversal candles, just like we saw in the SPY a couple
months ago. And if you look at the daily, it's
just been climbing perfectly. Now it's smushed between the 50-day, the 200-day. It's been riding
the 9 and 21 EMAs perfectly. It's just consolidating right there, boiling right under the 200-day. I
like that setup a lot. And I know about this company more than 99.9% of people studied
it for four years. They are basically, this is an interesting setup. Four quarters ago,
so last Q2, they had a big miss, stocks fell 30% because one of their large DSP customers on their
platform changed their bidding strategy. And it basically caused this kind of surprise downside miss.
But what happens four quarters later is that now we have lapped four quarters since that change.
So now we have a normalized EPS trend.
And so if you don't dig into the earnings calls, then you wouldn't have seen the management commentary,
which basically said, you know, without that, we'd actually be growing revenues 20% this quarter.
So, you know, and I think their guide basically assumed that they're going to continue to have
this headwind, but we know that they're lapping that now and, you know, the devil's in details
on that one. So I really like the setup for PUBM. And again, I've talked about Magnite having that really big tailwind from the Google
antitrust ruling a couple months ago.
Everyone has rewarded Magnite, but nobody has rewarded Pubmatic.
Pubmatic is actually arguably going to get a much larger impact from the Google ruling
because it is a much smaller company and
they get more of their revenues from desktop ad revenues, which is where display revenues or
display ads, which is where Google is going to be hit the hardest. So as a percentage of total
revenue, Pubmatic is going to see the biggest effect. The Google stuff will take like a year
or so to play out though, through the appeals court, et cetera. But I mean, the DOJ's case was pretty tight and I don't think that they're gonna, I don't
think they're gonna give up a lot.
So I expect it to go through.
That's a longer term thing.
But in the short term on this earnings call, I think that the earnings are gonna probably
surprise people or at least the, the guides should.
And this stock is trading at five times adjusted EBITDA.
This is what I'm
talking about. I mean, I know a lot of people on here are like, I'm so bearish this market. Look
how, look at these stocks. They're trading not even on fundamentals. Yeah. It's because you're
looking at the same 50 stocks. And of course, everybody looks at the same 50 stocks. They buy
the same 50 stocks. The stock's price goes up and it's even more overvalued. It's very simple.
But these other stocks are extremely under-owned. And when something is under-owned, the price isn't higher, it's lower. And when the price is lower, that reflects the
lower valuation. I mean, that's just my setup. Logical pulling a stock charge today with a rant.
I love it. Yeah, no, I'll leave it to him for that one. But I just am trying to push back a
little bit about the people talking about the lack of participation in this market. Well,
then here's the two outcomes, right? Either this market is extremely narrow, which means that it's extremely
unhealthy and the bull market's over and we're all going to roll over or the other option, which is
the other stocks start participating. Maybe we see rotation, maybe we see consolidation
as the large caps, they basically chug along slower
and they grow into the valuations that they've gotten so far.
We start seeing that overall multiple basically stay flat
while the market chugs higher.
And that's because you're seeing rotation
into these undervalued names.
So that's how math works.
And I'm just, I have a background in math,
so I feel pretty comfortable with the numbers.
I'm going to jump in here for a minute
again i don't then i do have to run a comment i don't think the market these big cap names have
to stop going and i'm i'm not trying to say we're not going to simple rotation some other names i
know what you do logical but i mean look what's going on here today i mean nvidia another new
all-time highs abgo new all-time highs today um i traded i'm still in some smci i caught that on the open you
have dell breaking to the upside a and d with a monster move i mean they're coming they're buying
these names back the one that the only name i the one i took a loss on i got out of it today after
holding calls for two days was google because i don't know why they just hate that name they
just freaking hate that name i bought the calls after uh earnings into the lows i just think it
went from 172 and a half to 197. you probably just need a few more days same look at look what the banks did
the banks you know sold down a little bit on numbers and then a week later they regrouped so
i just think you know yeah i hear you though i listened to that call though i you know there
was nothing i didn't like on that report i mean i looked at the guidance was great but they sold it anyway um i just i think these big names can lead and you know to everybody's point seasonality
is here but it doesn't mean we have to sell off we can go sideways we can still grind up
this market has a lot of people that are just caught outside of it and they look for every
little dip to buy into right now and until until something rattles it. Mike, I was just, you know,
I was listening to a podcast
and they were saying how
I think it's like the top five,
three or five,
I think it's probably the top five stocks
are the equal size of the bottom 411
in the S&P 500.
Yeah.
So I guess what I'm,
yeah, so I guess like,
I think people's brains like,
you really can't comprehend
that level of like skewedness to the
to the largest caps and so when you're seeing you know all these people talking about oh well
you know the SMPs that historical very expensive valuation which I agree for and I think we've made
several you know points why who cares because today's market is very different than the prior
markets we have businesses with much higher operating margins, much larger, much higher growth, much more globally diversified revenues.
And then on top of that, you have the fiscal side.
These guys are buying $1,000 worth of S&P 500 for every newborn.
There's just like more support for this.
So why shouldn't the market trade at a higher multiple?
They're doing the biggest tax cuts in history.
They're doing the highest deficit spending at the fiscal level.
And you have all the retirement money constantly going into the markets.
And so let's take a step back from all of those reasons why-
And all babies getting $1,000.
Yeah, I said that.
So here's the thing, right?
Like, forget all that, right?
That's why we should trade at a higher multiple.
Better businesses today, it's more top-heavy, et cetera.
But again, I think the reason why people don't get,
like, they're like, oh, well, you know,
the market's so expensive.
Well, yeah, the market's so expensive
because the biggest stocks are pretty expensive,
though arguably they should be.
But what happens when, you know,
these things maybe take a pause or consolidate
or kind of chop around?
And maybe they start staying at a static multiple instead of an expanding one.
Well, they did.
Well, logical.
First of all, both guys, like NVIDIA just made the new high.
It was in the same spot a year ago prior to that breakout above 150.
So it took four quarters to bring the multiples down for NVIDIA.
Yeah, exactly.
So why can't that happen again?
And then instead, maybe the forward,
maybe the forward returns on a name like Nvidia
ends up being choppier or lower on a forward basis.
Well, but I mean, look at the news today on Nvidia
that they cannot meet demand for the China AI chips
that they get to sell.
And then you had AMD today coming out
and they raised the price of their chips by $10,000
from 15 to 25, which
is a huge increase, which means they're finally starting to get demand on their AI chips.
And I think which H, go ahead.
I was just listening to a podcast that said the last like two months, including June was
the highest dollar amount ever sold out of Nvidia.
So the thing is that you have like this very real kind of headwind for the stock, which
is people try to sell it down.
And it's still holding up pretty nicely. I guess what I'm trying to say is that maybe you get people finally ringing the register and new entrance in but that ends up being a net
zero effect and that's how you get your kind of like choppy returns moving forward i guess the
point i'm trying to make is that but those earnings are going to continue to accelerate
just like scott said for the last four quarters and so all of a sudden the multiple ends up
shrinking for these guys um so if you have a shrinking at the top five, top seven names, and then you have a rising for
the bottom 400 names, then you kind of end up with a static multiple of 25. You know, there is an
outcome where that can be the case. And all of a sudden, you're just you're not seeing the S&P 500
hit 30 times earnings anymore. You're just kind of seeing it stay where it is,
but there's more participation.
And again, we know right now
there is very little participation in this market.
So yeah, I don't know.
I think you have to be in one of two camps.
You think this market rally is over
and it's a bear market next,
or you think that we can continue to chug along here?
And I'm on a lot.
By the way, it also doesn't have to be a bear market.
You could just pull back to the 21 day or the 50 day in the s p of the q's yeah yeah yeah and jp morgan yeah jp morgan this
morning with something that my room and i've been talking about since last week when you have a move
like this in the spy that we've seen the last couple months a year later we're always up and
it's an average of 20 you know so you know i i'm not looking... Bear market would be a huge
turn in this market. I agree with you, Scott.
If we get anything, it's a pullback. We're not going into a bear
market here off of this.
Not unless there's something really bad.
And I think we all agree to that.
Something just
takes us all completely off guard.
And even in that
scenario, I feel like it'll still end up being a pullback
to the 21 ema because
nothing ever happens right and i think we're all in the same boat with that like i'm not saying
pullbacks won't happen right like but you know i think there's just only two types of markets in
the world there's bull markets and bear markets like i'm not even talking about pullbacks and
volatility etc i'm just talking simply about and i know you guys like try to optimize on kind of a
shorter time frame there so it makes sense that you're you know you're kind of thinking about that
um but for the people in this who are listening to this and generally have,
you know, 12 plus months looking out, I mean,
I'd expect that we're still in a bull market 12 months from now.
I don't disagree. You know, I definitely don't, I don't disagree. You know,
I go on the weekends, I show like seven different accounts, you know,
I have a 401k I put every single month. I won't even look at it. You you know I have a 529 for my son as a sophomore I might have to start looking
soon you know the blood in the street had two in the whole buys which was you
know cash account or when markets and turmoil happen you know then you know
other stuff and then that's that's long term which some of you guys have and
then there's the trade for a living accounts where you have a you know you
have a day trading account for one thing are volatile ability in 21 days and you don't want to have a lot of risk on.
That was February, March.
And then you have your swing account for when they reclaim the 8 and 21 day or the 9 and 21 or the 50 day would reuse, which happened late April.
We've been in that trend since late April or early May.
in that trend since late April, early May.
So that's multiple months of, even as a professional trader,
being able to have a portfolio approach on and massage positions
and then use your day trading rules to add cash flow.
So it's all different ways, all different ways.
And over the last 50 years, historically, the bull market does win,
except for when you are caught in that two to five percent
decline that happens with three days left in a month and you happen to be too long so you have
to you know know know what to look for and how to look for it for if that were to happen
so but again there's you know you guys you could also play Nvidia and position into some of these
mid caps that you're talking about logical it's not It doesn't have to be a bull market or a bear market.
It could be just what's in play during this sequence.
So I'm trying to find the next sequence, which I think could be the XLE, perhaps,
in the next two to three.
That could just be an easier trade than the Qs from here up.
Look at Dell, Scott.
Dell's in this big gap that it has from
six months ago. It just went, just pushed
into it here again today. It's highs of the
day right now. This thing has a
big hole in the chart all the way up to
141. That's a rotation
name. This name has not been leading the markets.
It hasn't come back up. There's just
plenty out there that you can rotate
to and still stick with the
AI theme. Dell is a big benefactor like SMCI and HP of these of the AI selling their
servers yeah there's a lot of good noise there's just so much out there you could do the same
thing with IBM IBM you know what if you took it into earnings you got you got you know you lost
money option guys made whatever if you now you look at 252.75 was the bottom from a bunch of
days ago you could be in and then maybe this fills the gap and make cash flow so as you know there's
lots of different types of patterns if you know how to use them and quantify your risk that's that's
all it is you know look at it look at tesla tesla came out if you took it long into the print you
got hurt but if you waited after and said hey you know what the earnings gap starts at 310 i'm going
to play it thereafter right now you know tesla's 326. That's 16 points higher to fill the gap.
Just to trade in the life of being an active prop trader in the market or someone who can do that
and have a real job. I'm not saying we're not having a real job. I'm not sure what's going on
with Snap, but they're buying the hell out of the March 9 calls. I'm sorry, the March 9 calls for next year.
March? Come on.
That's like...
I know.
And I hate the name.
Well, if they're doing that, then maybe they want to disguise themselves
and something might be good this quarter on August 6th
because Snap's been left for dead.
So maybe there's something there.
Good luck.
Maybe it's a spread that they're legging themselves into
and they're trying to be sneaky about it.
I'll tell you, my son is a sophomore.
He snaps it up, you know.
Oh, they love, the kids love Snap.
I agree.
Maybe the CEO won't shoot himself in the foot
for the first time and lower guidance afterwards.
Beating lower, beating lower. That's all he does.
You know, so maybe somebody talks some sense into him.
The calls are probably cheap for this quarter.
Plus, sometimes you could play it into meta because if meta's good, they'll extrapolate it out to snaps.
You know, maybe their advertising or whatever it is is better.
Hmm.
Anyway, that's a lot.
I call Snap like a lotto play.
It's on everyone's do not touch list.
And this would probably be like a logical play, you know,
who did his homework, says, I see the MAUs, I see the VZAUs,
I see all this stuff and the interaction.
People hate it because –
I just saw – I'm sorry.
Are you guys bringing up Snap because I just saw a bunch of calls come in for that?
Yeah.
Yeah, that's what I was bringing up.
Logical, they're buying the hell out of the March 9 calls.
Yep, just saw that.
You guys use the same service?
And it's hard.
It's easy to see this stuff.
When it gets this big, Scott, it just sticks out like a sore thumb.
All right.
So I would say then if that's the case, then, you know, it's worth the lotto play to buy the ones for this quarter just in case it's used as a catalyst and then starts a move because it's still down here in no man's land.
Recent high was, what, 1041?
If you want to play lottos, you know, buy the 11s or the 12s.
You know, and then there's a whole void up until 17, but I don't even know what they could say to do that.
But maybe something.
I promised my entire community that I would not play Snap Calls ever again.
And I might have to do it again.
Don't do it.
Depends on the setup, man.
That's all that matters.
Every quarter.
Yeah, no.
When you have a stock left for dead going into earnings that's a better setup
than a stock that's rallied for nine months at all-time highs right into the print you know
that's how you can get hurt yeah it's again like even like google who put up like 31 cloud growth
acceleration and netflix which put up just straight you know bonkers numbers i mean
yeah but they already went up to reflect the strong results so it's priced in
like apple you know is priced for nothing it's sitting smack in the middle of its six-month
range very very tight some people you know it's just they love it and hate it you know maybe you
know buffett created a a negative halo around it or love it and hate it you know maybe you know buffett created
a negative halo around it or a little bit of black clouds because maybe you want to raise some
liquidity for his younger managers um but maybe this you know there's all that snap flow
hmm sorry i'm just posting the snap flow from my room you got yeah just a lot of these coming in
all on the ask and above ass, too, for the most part.
Interesting.
Not enough to get me involved in it, but interesting.
When do they report?
Next week, not this week.
So August 8th would be in there.
On the 5th.
5th, yeah.
August 8th.
I'll wait for after.
Yeah, that's what's been working, I guess.
What do you guys think of Reddit and AppLov?
And the kind of like bit of they're like battle battleground stocks right now that at least
you know there's a bull bear debate so if you get on the right side of it that could be a bigger move
for options I mean I think reddit's sorry go ahead no Mike you go ahead and then we'll go to logic
I think reddit's chart looks really nice going to earnings this week I like the curl it has on it
there I can't quite figure out APP, Scott. I don't tend
to trade that name well and I stay away from it.
Yeah, it's tight too.
APP, you know,
the chart looks just like Reddit. Very,
very, very tight. You know, they've
pulled in from highs. It's been rebuilding. It just
depends on, I guess, what the numbers are going to be.
Meanwhile, look at the Spies
coming back up.
Just a day in the life life I hope that people come out
Scott was asking about
F-loving
or Reddit
yeah
Reddit is a great company man because they have
like 90% gross margins which is basically
unheard of maybe even 91%
that was definitely a buy at like the 100 area.
I don't know.
It's a bull market, man.
This thing can keep going,
and they're very early in their ad monetization story.
I mean, when I was talking about it
on the spaces last year,
I think it was trading at like,
was it at 70?
I think it was at 70 last year,
and then it went straight to 200.
Sold out of it around 160,
something like that.
And then it obviously went to 220.
But yeah, so could it do that again?
Yeah, probably.
But I think it's possible that the thing that people need to be thinking about is their user growth.
So they were posting just straight insane numbers, like 50%, 60% increase in daily active unique users. But a lot of that
had to do with their international expansion. So, you know, what happens once that growth starts to
get a little bit more saturated, etc. But I think the ad opportunity is still very, I mean, you're
being able to buy a platform, right, which is really interesting. So yeah, I still think it
could very well be a great stock to own um longer term i've
always said 50 billion for that stock makes a ton of sense um i have to jump but i agree you know
just so you guys know i had a i had valve surgery like two years ago actually a year ago and you
know red it's not just about stock boards it's like you could have got so much research on
mitral valves and this and that like there's groups and there's communities and there's support.
There's a lot that goes on in Reddit that people don't know about.
So I do think long-term this stock is going to be on the go-to list.
It's just a matter of, you know, the tight setup for this report.
That's sort of fair.
But I think what we are seeing is that it's a strong economy
and the ad names have been posting great numbers,
which should just be a decent read-through across the board.
So hopefully we see that. As long as you don't see it slow down in the economy. All right. See numbers, which should just be a decent read through across the board. So hopefully we see that. And so I don't get a little done in the economy.
All right. See you, Scott. Appreciate you.
Appreciate you, Scott. Take care. Logical. Before I saw Ali singing out with us,
we'll get over to her.
Go for it. I'm good, man. I talked a lot.
Well, I was going to, I wanted to ask you, it's on the subject. So it came up on our live stream,
me and Evan last night. People are talking about that Zeta. Have you dove into the Zeta name?
And it seems to be in that ad tech space.
Oh, God, man.
I freaking, I don't even know what to say about that name.
I mean, that thing had a short report at 37.
It got back down to like literally 14 bucks.
The chart looked beautiful.
I saw big calls come in for September on the 1250s.
I ended up joining them.
Of course, the bottom fell out of that little range and it went down to 12. It was down to the 50 days, so it wasn't too alarming. But I said,
I don't have enough conviction to hold this because I'm just on so much leverage.
So I ended up cutting it and watched it immediately rip to 16 bucks right after that.
So it's a little bit of a painful one for me to look at. That said, I mean, based on the
fundamentals, it looks extremely cheap. I think the stock could be much higher, assuming that
short report,
from what I understand, they've refuted it and is debunked. That said, I just can't build conviction around this name because I don't know enough about their business. I mean,
they're growing really fast. They have big revenue numbers. So I mean, I think it looks good.
Generally, though, I know it's a very heavily retail owned stock borderline somewhat
culty i try to stay away from those because the price actually gets too volatile and too noisy
um so i i'm steering clear of it and just mostly because i don't know enough about the business
like okay what are they actually doing i don't quite understand um how they're differentiated
and all that stuff so um yeah i'm I'm just taking a step back from that
and trying to focus on the names
that I'm a little bit more in tune with.
And there's our market close.
Appreciate that rundown.
Logical officially closing,
SPY closed down 0.03%. And the SM or I mean I'm sorry QQQ the
NASDAQ up 0.3% small caps down 0.10% over on the Russell looks like the Dow was a little bit red
today as well the video closing at a new all-time high as well today Ali great to have you up here
I know you've been listening in on
the conversation first. Wanted to see if there was any pieces that you heard that maybe you
wanted to chime in on. Yeah. I just think that the general conversation about overstretched
positioning, whether or not certain stocks are overvalued or if the market in general is
overvalued, that's been something I had my eye on and I published a story over the weekend about just this and what different indicators you can look at to show whether or not we are
getting a little too optimistic. And Citi has a great one. It's called the Levkovich Index,
if you guys haven't heard of that. But it tracks market sentiment and it's based on hard data like
margin levels, short interest, options, pricing. And it's been in this euphoria territory for a decent amount of time.
Now, if you look back in history of the chart,
stocks can really trade at these levels for an extended period of time.
But that means that the risk to the downside are even more pronounced there
because every time you have this uptick in sentiment,
that just increases the downside risk if the
positive story breaks. So obviously right now we've gotten a lot of great news on the trade front.
It seems to be that 15% tariff baseline is something that President Trump wants to continue
to hold. The EU trade deal was a big one. And you're seeing Wall Street strategists really
chase markets higher. We had Oppenheimer now at a straight
high of 7,100 for the S&P 500, and that comes off of that positive trade news. Basically,
we've reached peak uncertainty at this point, and stocks could just chuck along higher from here.
But at the same time, we've also seen a lot of speculative trading. The meme stock activity
raised some eyebrows last week, and we've seen that resurgence in trading volume. So
what does that mean when it comes to hedging activity? So those are all potential risks to
the market. And then I spoke with a few strategists at Citi, and they were telling me that
a big thing that could really derail this rally would include a weaker consumer backdrop,
AI letdown. We haven't seen that so far, but as earnings start
to trickle in, both from these big tech hyperscalers, along with the more consumer facing
companies, what more color are we going to see on this market? Because sometimes when you're
at levels that are so high and there's so much optimism, when things get a little sour,
sometimes people forget that there is downside. And that's when you can see a lot of this panic
and sort of this bubble activity that we've been debating. And I know the bubble word is a taboo
word, but the difference though this time around from the dot-com bubble or even what we saw in
2021 is that we're not too detached from the fundamentals this time in terms
of the earnings growth. And to that point, we've seen more companies come out with more conviction
that over the coming year, coming two years, that earnings are going to be higher. And that's huge
after what we saw in the first quarter. So I just have my eye on all the optimism and momentum that's in markets right now.
Of course, a lot of that is cautious optimism, but it just feels like there's very little that can derail this rally. And when I look at a week like this week, obviously everyone keeps saying
it's the biggest week and in a lot of ways it is. But a part of me wonders if the story is really
going to change after this week, or are we just going to
keep seeing the same things? Will the hyperscalers still report strong earnings? Will the labor
market still be mostly cool? And on the Fed side, we're not going to be seeing any cuts there.
So I wonder if at the end of this week, we're just kind of in the same position that we've been
over the past month or so. So
yeah, just a few things on my mind. I had a quick thought to add there to Ali's.
You know, I was thinking about this actually, I made a post about it. You know, I wrote,
how many people's heads will explode if it turns out this is 1998 and not 2000, right?
how many people's heads will explode if it turns out this is 1998 and not 2000,
And this thing goes on for two more years.
I don't think people can understand or comprehend what that would look like.
But another thought after that I had as a follow-up is, you know, back in 2000,
which is what everyone wants to compare this to, is a big difference.
And the big difference is we have the infrastructure today to implement
and immediately you know see the efficiencies from ai whereas you know in 1999 amazon was um you know
ipo-ing but i didn't make my first order until 2012 right like so there's like this thing where
i'm using ai right now in my work i use it every day in my life. And I don't think, you know,
while maybe somebody looked up, you know,
something on the interwebs back in 2000,
I don't think we were using it at such large scale
and seeing the efficiencies immediately.
I mean, there are reports that, you know,
first to third year law associates are, you know,
in much less demand now because of the AI tools.
We know that software engineers probably don't need to,
we don't need to have as many of them
because two people can do the work of five
given the level of coding we can do via cursor.
So I'm just, I think what happens
if the fundamentals outpace the bubble?
What happens if we never see a bubble?
I don't know, it's tough to say that we're in a bubble.
I mean, maybe you can argue we're in a bubble today, but looking at the forward 12, 24 months, I mean, the level at
which this technology is accelerating and that we're implementing it, what if it never bubbles?
I mean, that's a pretty crazy thought. I think people's heads will explode.
Yeah. And even when we talk about GDP growth and just the overall health of the economy,
I don't think these productivity gains are being
appropriately reflected right now. And if you think about it too, I've heard that there's
different cohorts of occupations, right? Whether it be lawyers or writers that don't want to admit
just how much they are using AI in their everyday life. So what about those sort of under the radar productivity gains?
Like, I don't even think we've scratched the surface on how much this is going to help things
on that front that obviously trickles through into GDP, that trickles through into earnings,
and it has this ripple effect that everyone that I've spoken with have said we're in the early
innings of AI, and we've only not even gotten to the point where
we can really start to see how much that's helping every day tasks along with the bottom line of a
lot of these companies too. That piece is very interesting to both of your points there. A lot
of people, I hear them make the argument that, well, AI is going to eliminate jobs.
And I've heard both sides of that argument.
But the one thing that people don't really mention is kind of what you just brought up
there was a lot of people are using AI now, today, and it's making them more productive
in their current jobs.
They have more output with less to equal effort.
Can I give you an actual real world example?
Yeah, please.
Okay.
I am a data scientist.
I am an analyst, et cetera, et cetera.
I've been working in this field for 10 years.
I write SQL all day long.
I write Python, et cetera.
And for example, like right now, just this weekend, I've been putting in some extra work, uh, work and, um, building out this like Tableau dashboard.
And I'm not like a business intelligence analyst or what they call a BI analyst.
Like to my core, I'm more of like, I like to do one-off ad hoc analyses and stuff like that.
Um, but like, so I'm not a big power user of Tableau.
Let me tell you though, I'm making some pretty, pretty complicated, uh, interactive charts.
And I just keep explaining.
And we have like a ChatGPT enterprise at my work.
So it's encouraged to use AI.
And I just keep typing in my questions to ChatGPT.
And it's like, oh, you want to do this?
Yeah, do this.
And it's like extremely complicated results
where like to the point where like,
I'm looking at like other analysts
and how they've done it in the past
and kind of a similar workflow.
And there's like extremely complicated,
like ChatGPT is coming up like these extremely elegant solutions to like um it's just crazy like
this is happening in real time i've developed like a dashboard that you know should have probably
taken me two weeks probably took me two days um so uh and that's just you know one thing in my
master's program you know there's a lot of things where like, I'm working on a, you know, some sort of classification model in this machine learning analyses. And I'm basically saying, like, look, here's my data on diabetes, like, here's my data set 100 gigabytes worth of patient data, you can find it online publicly, here it is. Here's the CSV. Look through this data,
you know, clean it, do whatever.
I can say like,
I can literally say very technical words like,
please run me a K-fold cross-salidation
on an SDM classification model.
Find me the optimal K.
Print out the AUC curve
as well as like the F1 recall
precision and accuracy scores.
Pick the, you know,
compare several different models, decision trees with XGB boosting. Pick the, you know, compare several different models,
decision trees with XGB boosting.
I mean, you could look at each other and it's like, okay.
And just freaking does it.
And it's like, do you want me to modify your files?
Yes.
Okay, done.
Okay, cool.
I just don't think.
When people say this is a bubble, I don't,
I think they have unintelligent opinions.
Yeah, there you go.
That's a perfect real world example of that.
And I feel like it hasn't been mentioned enough.
I hear too many people talking about the effect it'll have on jobs and stuff like that.
But I mean, if you have a small office or even a medium-sized office and you've got
10 employees that are now using AI and it makes them that much more productive, they can process that much more things in a day.
It just seems solid to me.
I don't know.
Sam, saw you jumped up on here.
I wanted to give you a chance to jump in the conversation here before we go over to Stock Talk.
I like how it's before we get to Stock Talk because if you don't get your word in, Stock Talk is cool. I like how it's before we get to StockTalk, because if you don't get your word in,
no, StockTalk is cool. I like the guy. I was actually just talking StockTalk the other day that I've been doing much more deep diving into Genie, Tigger Semble, G-E-N-I. And along with
this conversation, as far as the AI capabilities of just taking video, like real-time video during
sports and being able to convert that into a quantifiable data.
This is just another addition and complimentary to exactly what AI is going to be doing. Like I
totally understand what logical and Ali are saying, especially a logical, you know, data scientists,
honestly, we, I've worked with a lot of data scientists before and you, I just don't understand
how they're able to take in all those, all those metrics, all those figures,
able to push it out through all these specific processes and able to come out
with formulas and data and whatever.
Like I never understood exactly how to process that myriad of data.
But, you know,
nevertheless working in IT and working as software engineer for over 10 years,
like I've just accepted that, you know, they're,
they're just good at the job for whatever reason. That's just how it is. And to be able to hear, you know,
firsthand that you have someone who's able to take a job that usually takes like 14 people
in order to pump out a project to create an entire model, to take all this data that doing it in two
days is pretty fantastic. And I even have to say from my firsthand experience that a lot of the
one-off scripts that I do build build that makes configuring and managing entire environments that are built in AWS, Azure, as well as Google GCP, it's a lot easier to build these using ChatGPT because we also have that in our enterprise.
And I'm sure a lot of other people have it as well.
It's a very fast-growing product, especially when you think about the enterprise at scale, like this is the reason why the valuation is getting pumped up
for the private markets of chat GBT. And I agree, I think we're very early in this game, but the
thing is that in order to expand evaluations, you really need excess liquidity pumped into the
system. And that is exactly what we're having today. Like, it is very difficult
to argue that we're going to reach a top in the market, like a long term top in the market, when
we are just printing dollars from a fiscal perspective, and almost every single country
around the world is printing dollars or whatever their current whatever the currency is in their
country. That is just going to continue to happen. Even today, we even heard,
well, this has actually been said for a while, but it became like very public knowledge on social media today that at the end of September, the Treasury is going to run off their entire
balance sheet and they're going to be selling out more Treasuries to refill that balance sheet to
$800 billion. And that is just the way it's going to go. The spending is going to go up. We even saw
these deals with the EU this weekend. The EU has agreed to spend $750 billion in energy and an additional
$600 billion and also agreed to buy chips. Reading headlines like that, taking a closer look at the
price action today, okay, it looked like maybe a lot of it was price day, but at the same time,
to be overall bearish this entire theme of AI, not even just from the AI perspective,
but also from someone who works in technology as well, this is changing the way things work
left and right. And it's not even just that, hey, can you guys come up with this really cool AI
application? It's like, no, you need to come up with some sort of way to integrate AI into your
job. Otherwise, you're going to be gone. And that is pretty much the theme
that is being put around
a lot of these mega cap companies as well,
is that you better learn how to use it.
Otherwise, you're going to get cut.
And I'm sorry to sound like very ruthless and stuff,
but when someone basically,
when I see the writing on the wall,
I learn it.
I have to learn it.
And I'm fortunate enough
to even try to learn it ahead of time
before that writing was written on the wall. But at the same time is that if you're if you're seeing this for the mega caps, we haven't even seen the scalability as your entire company, which means higher earnings.
And if that continues to happen with, of course, there's a lot that's not priced into the market,
then you're going to see multiples expand. It's just how it is. And the multiples that are
expanding are not based on multiples three or four years from now. I'm not saying the market's
going to continue running for the next three or four years to perpetuity. What I'm saying is that a lot of this stuff is not necessarily priced into a lot of the
companies, especially a lot of software companies that are trading very cheaply with their cohorts
trading at crazy multiples at this point.
But then at the same time, when you kind of look at the efficiency that's going to be
at scale, especially for ServiceNow and Snowflake and MongoDB, maybe
there's a bid price in here that a lot of people have not necessarily thought about,
which is further reduce headcount, further efficiency, reduce operating expenses and
increased earnings. Maybe that is the reason why we're seeing a lot of the front running.
Now, with that being said, with the short-term market movements, it's kind of difficult to
exactly forecast what's going to happen in the next couple of weeks, maybe the next couple of quarters.
Who knows?
But all I can say is that I can confidently say with the type of technology that I'm seeing today and being applied to different verticals in every single company, not just in IT as a coder, not just in business intelligence, or not just in data scientists with with logical saying it is being
applied across the board you need to learn this otherwise you're going to be phased out just like
everyone learned how to type on a computer just like everyone learned how to use a microsoft office
this is something you need to learn and it's probably not going to end with chatbots it's
probably going to go on a lot further than that so and that's really just all my input on it yeah yeah i just sorry go on ali go ahead no i talked about it i was just gonna say i i totally
agree with the ripple effect that we could see beyond the hyperscalers i i thought it was really
interesting google's results how investors reacted where at first you saw this dip because and it
seemed like that was due to the capex spending and that was a little
surprising to me at first because wouldn't you want to keep spending aggressively on ai and then
it seems like that those losses reversed and we had the gains and and this report was praised and
and and also the fact that search did so well uh because heading into the report there were
a lot of concerns that chat gpt and all these ai models were going to heading into the report, there were a lot of concerns that chat GPT
and all these AI models were going to eat into the search engine business, but we did
not see that. So at what point does AI become too good that some of these core business
strategies of the companies that are utilizing it so much, at what point does that start
to compete with each other? So I'm curious to see
how that continues to evolve and then how investors react to some of these changes,
because we saw an initial dip there at an after hours trading when they reported and
we had that boost to CapEx spend. Then we got over it, but I wonder what really investors are
looking for down the line when it comes to these various companies and ultimately what they're spending and how they're utilizing AI.
I'm in full agreement with everything that was said.
And also, again, what happens?
Again, we trade up premium multiples because the names Microsoft, you know, have 45% operating margins.
What happens if they're able to expand out to 50% or more?
I mean, these are just insane businesses.
And then you haven't even seen the real effect on operating expenses to smaller companies that have less of a scale, right?
And so those headcount numbers can be much more significant as an operating expense
to a smaller company with a smaller revenue base. So there's just a lot that we haven't seen,
according to that, you know, ripple effect. And, you know, based on the macro, by the way,
you know, because people are talking about, oh, we're going to, you know, employment's going to
give up. Okay, this was just posted by one of the best macro accounts final u.s federal payroll tax collection data for july uh it was
up 7.4 percent year over year so you know when you have this record level of fiscal deficit
uh spending you it's very difficult to see a recession so yeah i think that would be like a
recession would be like the real thing but it's like you're just not going to see it at this level of government spending.
So I don't know what these I don't know what bears are thinking they're going to hang their
hat on.
Look, if we went back to we're not going back to the tariff stuff.
And also another thing, you know, people are very good at misjudging things because they
think they use like this recency bias of like, oh, the market was just down 20 percent.
We're going to head right back to those lows. That happened all of 2023. Shoot, I was even
bearish for some parts of 2023 because I was like, oh, when the banks collapsed, I'm like,
oh, maybe, you know, this is going to be, you know, we're going to head right back to the lows.
It's not going to hold up. But you know what? It just went higher. And so we just had a pretty
big drawdown. And I mean, people can say, oh, it's only 20% and we recovered it. So yeah,
we recovered it because we yeah, we recovered it
because we walked back all those tariffs
and those economic impacts.
And also it wasn't just 20%
because there were many individual names
that were down 50, 60, 70%
in a two month period.
But yeah, nobody mentions all those details.
Of course not.
Let's do it. Stock let's go no the nice little warm-up i'm ready all right 40 40 minutes i come back and i get my rant here
we go no i'm not gonna i'm not gonna have a crazy round today um i think there's a lot of
interesting stuff that everyone was talking about um You know, I've been chilling these last couple of weeks.
Took a little bit of a drawdown on the portfolio today,
which actually got a lot better by the close.
Centris Energy, which I talk about a lot, it's my biggest position by weighting,
was down like 6%, I think, this morning and closed down just 0.6%.
So that's a big difference.
But yeah, I recovered nicely. I'm still up. What's my
performance at right now? So as of today's close, I'm still at 153% year to date versus about almost
less than 9% for the S&P 500. So yeah, am I at the highs? No, I posted, I think my last portfolio
return I posted was at 161. So I'm a little bit off the highs, but I'm still obviously massively outperforming the market.
I'm, look, there's going to be red days for stocks.
I think every time we get red days, people really feel the need to deliver a new narrative
or to stand behind a new narrative in the market.
I frankly don't feel that way.
I think stocks that doubled can have minus 5% days and it's not a big deal.
And we've had a couple of those in the last few weeks.
And I think a lot of times when you get the stoppage of momentum,
I think people view it as like tea leaves in the market to say,
leaves in the market to say, okay, you know, you're seeing a slowdown or stoppage in momentum,
okay, you're seeing a slowdown or stoppage in momentum,
you know, some early signs of mechanical rotation into neglected areas of the market. Like,
you know, that's a reason to get out of market leading names. I just don't agree with that.
You know, I've traded relatively the same basket, same basket, not the same stocks, but the same
style of stocks for well over a decade every single year.
And every time we come into earnings season, any earnings season, it doesn't have to be on a year where there's particularly relevant macroeconomic things happening in the background.
Anytime you come into an earnings season where stocks have made monumental moves like they have off the lows in April, right, where many stocks have
doubled or tripled, you're going to see stalling in momentum. I don't think that's a consequence,
though, of narrative change. And I think that's where the mischaracterization happens.
I think that's simply a consequence of impending earnings.
And the reason that slows momentum is because momentum stocks are often detached from direct fundamental relevance.
They're not going up because their earnings are going up now.
They're going up because something happened that might drive their earnings higher in the future, whether that's this year or next year or five
years from now, depending on the type of stock you're looking at. People have different
levels of willingness to speculate further and further out. But that's generally the principle,
right? Momentum and market-leading stocks go up a lot intra-quarter, not because their earnings
are going up, but because something is changing or a narrative is changing in the background that is driving higher interest in
the stock, which leads to multiple expansion, which leads to the stock going higher.
Now, what a lot of people say is, okay, and I think Logical referenced this earlier,
what I say a lot going into earnings season is look left. And what that means is that
you should look at how the stock has performed
in the prior three months headed into the report, right? So from the last earnings report, what has
it done going into this earnings report? And you should ask yourself, like, what are the expectations
for the name going into the print? Now, I think where people struggle with that is largely an inability to distinguish price appreciation without accumulation from price appreciation with accumulation.
Now, those are two very different things.
A lot of stocks from the April lows have doubled on very low volume.
And those names to me are the highest risk names going into any earnings season because you have a double whammy.
You have price that's gone up substantially from the prior earnings. Right.
Which means the multiples also expanded, generally speaking, from the prior earnings.
And you also have a lack of institutional accumulation to hold up the stock in the case of a bad report.
of institutional accumulation to hold up the stock in the case of a bad report, right?
A lot of times what you'll see is stocks that are extended in price heading into an
earning season, let's say stocks up 50% in the past three months, but there's major signs
of accumulation on the chart.
So all of the upward movement in the price action is the high volume movement and all
the downward movement in the price action is a low volume movement.
That's accumulation 101. Now, that doesn't explain all of VPA. If you want to learn volume
price analysis, I always reference this, but go read Anna Colling's book. She's great.
No sponsorship for me, but it's a great book. But if you read that book and you get down to
the basics of VPA, that is what accumulation is in essence, high volume buying, low volume selling.
Now, if you have a stock that's gone up a lot
and does not have signs of accumulation or worse, has signs of distribution instead,
which means every red day the stock has, the sell volume is high, the green day's the sell volume
is low. If you have signs of distribution or a lack of accumulation combined with price
appreciation headed into an earnings print, the odds are very low that that stock is going to perform. They're just flat out low that the stock is going to
perform. It doesn't mean it's going to go down, but the idea that you're going to get an earnings
boost from a stock that lacks accumulation, whose price has gone up a lot since the prior quarter,
and doesn't have any fundamental change, is very, very, very low. So being able to distinguish that
going into earnings season is important because there
are stocks, market-leading stocks, that go up a lot from the prior report, that get accumulated
by institutions, that then proceed to continue to go higher following their earnings reports,
even though the expectations are at nosebleed level.
And that's just kind of the pinwheel of speculation where the hottest industries receive the most
speculation and as a result of receiving the most speculation the hottest industries receive the
most multiple expansion as a result of receiving the most multiple expansion their ability to raise
capital and remain competitive and versus peers also strengthens and so it's like a self-feeding
but as i mentioned earlier there are stocks that don't see that benefit because
they haven't been accumulated and that they don't have the same narrative power that a lot of other
names have. So I don't think it's quite time yet to abandon the market leaders. And I still have a
lot of market leaders in my portfolio. I have shortened my position count over the last few
weeks. That's one thing I have done. I'm under 20 positions now. I'd like to be at 15 or under 15 by the end of the quarter.
I generally do this. I did this last year too. I think last year, beginning of the year,
I had like 23 positions by the end of the year. I had like 13. That's just how I operate. I like
to trim the book, not even trim the book. It's not even, I think a lot of people misinterpret it as like, oh, are you taking profits on a lot of stuff?
Like, yeah, on some stuff, you know, if I close a trade and it's in the green, that's taking profits technically.
But that's not the intention of it.
The intention of it is to hone my conviction around a very small basket of names, generate additional buying power.
And then when the new year starts, see what the market backdrop looks like, see what the available catalysts are, see what the themes of interest are, and then build the book for that
year accordingly. So that's how I play the game. Now, everyone plays the game differently. But for
me, I don't go into an earnings season and say, well, I'm in a handful of market leading stocks.
They've gone up a lot since the last quarter. They might go down on earnings, so I'm going to
sell them. No, I don't do that. I didn't do that last year either. And I posted a 260% return last year.
I held all of my market leading names through all of the earnings. I held Robinhood through
every earnings last year, and it kept going up and up and up. If I'd looked at Robinhood and said,
well, Robinhood's up 50%, you know, going into this Q2 report last year, you know, I should sell
it because it's up a lot and Robinhood probably can't post the fundamentals to support that.
Well, frankly speaking, I don't think they've posted the fundamentals to support that, but the stock still tripled from Q2 of last year.
So I don't think you have to post these enormously impressive fundamental numbers if you're a market-leading stock,
as long as the narrative is still there in the backdrop
and as long as the narrative has support.
And I think in some of these industries it does.
I think in others it doesn't.
Like, you know, one category specifically, SMRs, small modular reactors,
not just the stock SMR, but NNE, SMR, Oclo.
Like these stocks are all zero-revenue stocks.
That's why I'm not in any of them.
I mean, I'm in GSRT, but that's an entirely different risk parameter. But in the public post IPO, SMR stocks, I'm not in any of
them anymore. I traded SMR earlier this year from like 18 to 36, doubled my money, got out of it.
It's gone higher since then, obviously. But I don't own any of these because I don't know where
the benchmark is for the valuation on zero revenue companies.
You know, and that's going to be the tricky part this earnings season,
because a lot of the momentum stuff that has has doubled or tripled from the lows doesn't.
Not only do they not have earnings, a lot of them don't even have revenue.
You know, and if they do, they have like a couple hundred K or a couple million dollars of revenue trading at like multi-billion dollar market caps. That's insanity to me. I mean, I'm not a PE ratio
guy, but I'm not going to hold stocks like that. I'll trade them and I don't care. I'll trade
anything that has a pulse. For trading purposes, if I'm trading something for a week or a couple
of weeks, I really don't care about the fundamentals. But if I'm swing trading something or if I'm investing in something that I obviously do care, I'm not going to own a
stock that's trading at, you know, 50,000 times revenue. Like it's just ridiculous. So yeah,
there's a lot of those names out there that I think will get crushed this earning season. I
am not too worried about any of my names personally. I like all of my names. Um,
I have tighter baskets now.
Like I scrolled through my portfolio today and I was like, maybe I'll take some trim somewhere.
And I like went through and I was like, dude, this is all high conviction stuff.
So yeah, I didn't touch anything.
I do have enough buying power available now that I could take another significant position.
But I do have a couple of positions on the table right now
that are not decided yet.
You know, one of them is Materion,
which I took last week,
broke out of the 200-day,
confirmed the 200-day breakout.
They have earnings on the 30th, Wednesday morning.
So I'm going to head into that report
with a very little buffer on that position.
I think I have like a 6% buffer on that position.
I entered 89.97 Friday morning or Thursday evening.
I forgot what it was.
And now the stock's 93, 94.
Today's close.
I'm up like 5% or 6% on the stock.
What I'm going to do is I'm going to de-risk that stock headed into earnings
either one of two ways.
I'm either going to cut half the equity because it's in the profits.
I don't have to take a loss on it and worry about a wash sale or anything. I mean,
they're going to cut half the equity and then take half the equity into the report. Report's good,
resize up the position post-report, or I'm just going to go into the report with the equity I
have right now and just get puts to cover the downside risk. So I'm going to do one of those
two things tomorrow. I'll figure it out. I'll decide what I end up doing. But that's sort of how I like to de risk positions into an earnings if I have a
close cost basis, right? Like I'm not buying puts on every stock I have going into earnings,
right? I'm not doing that like out of principle or anything. I am buying puts or protecting positions where I have less of a cost basis advantage.
Right.
So in a stock, like in most of my positions, I'm up big in the ones that I'm currently holding.
Right.
Because the losers I've cut along the way, I don't bag hold.
So, you know, when a stock doesn't work for me or goes down after I buy it, I just cut it and get it out of the way.
It's not like I only pick winners.
No one does but at the current time the stocks have my portfolio have all been positions
that I've owned for a while and have built a cushion on so I have more flexibility and position
management from that perspective so there are a couple like materion where I don't have that
cushion and so I have to be tighter with my risk controls. Does that sometimes mean that I'm going to like, you know, let's say, let's say tomorrow I decide,
okay, I'm going to de-risk by selling half instead of buying puts. And then I go into the print and
the print's great. Right. And the stock goes up a bunch. Am I going to be annoyed by that? Yeah,
I might be a little annoyed by that, but it's fine because that's just the principles of risk
management. You know, a lot of people don't realize this, but once you commit to managing risk,
you are also committing to giving back some of that upside potential to the market.
That's part of the game, right?
If you want to capture maximum fully leveraged upside all the time, then you're never going
to be managing risk.
And drawdowns in the market are going to destroy you if you operate that way at all times. If you're constantly 200% long,
on margin, with options, balls to the wall long, 24-7, it'll work for you really well in the early
stages of a bull market or the highly volatile stages of a bull market. Like if you've been doing that since late April, you're probably dancing.
But when the markets chop or pull back, that sort of exposure will kill you on theta decay
alone or just on like a slow 1%, 2% bleed out over a week or two week period in a handful
of individual names.
That can also kill you if you're highly leveraged.
So I try to avoid doing that going into earnings season. full of individual names that can also kill you if you're if you're highly leveraged so
i try to avoid doing that going into earnings season i try to stabilize my leverage stabilize my position count give me the flexibility to do that but it's really cost-based advantages that
dictate to me which stocks i'm willing to hold in size into earnings versus which stocks i'm willing
not to because the the truth about owning stocks over a multi-year basis,
or even a multi-month basis, is that you must be okay with earnings volatility.
If you attempt to manicure your portfolio in a way that you think is helping you avoid earnings
volatility, right? If you manicure your portfolio in that way, you're never going to hold anything.
Right. If you manicure your portfolio in that way, you're never going to hold anything.
Because you're always going to be scared of this impending earnings risk for good, well-performing stocks.
Right. If you if you adopt that philosophy, you'll constantly be selling stocks that did well into their earnings season out of fear of a minus 10 or minus 20% move. And what's going to end up happening is there are going to be Robin Hoods in that mix where they don't go down on earnings. And for
four quarters in a row, they just go up 20% every quarter. And before you know it, the stock has
doubled, right? Robin is just an example of that. But there are many examples of this over the last
few years of the market. As you guys know, Palantir is another example of that, where in spite of it
being expensive, in spite of it going up so much in earnings reports, just went higher and higher and higher.
Now it's in whatever the 150s or whatever it is.
So there are going to be stocks like that that defy gravity is the way I like to put it.
And if you want to own those stocks over a multi-month or multi-year period,
you cannot adopt that philosophy of the stock is extended into earnings.
Because again, then you'll never own anything.
You'll just sell every market-leading stock into earnings and then hope it goes down and there'll be many that don't and never turn back.
And that's a hard part of equity trading and stock picking, but it's also a reality.
You have to be able to distinguish your positions by conviction. You have to be able to say, I am willing to sit through a 15% drawdown on earnings in this name,
as long as the technical structure holds intact, as long as the story hasn't changed on the earnings.
I'm okay with sitting through that.
In fact, I may even want to buy the dip on that because I want to build into this position
because I have conviction in this position.
That's what it takes to be a real investor and real swing trader.
The buying stuff is easy.
Buying stocks is an easy thing.
You just click of a button, you know, stock goes up, you think you're a genius.
What makes or breaks great investors and traders,
and what differentiates them from the average ones,
the average ones is your ability to hold, not to buy. And I know that sounds like I'm taking on the
is your ability to hold, not to buy.
Bitcoin, you know, eight hodl philosophy over here and telling people to just ape into everything
and hold it forever. No, but your high conviction positions, you frankly should treat that way.
And if I had to give any credit for my performance over the last several years,
my ability to consistently outperform the market, I would give my credit to that philosophy.
This philosophy of holding and keeping winning stocks.
Like if I didn't hold and keep Tesla and Amazon from 2015, 2016, if I didn't hold and keep Robinhood from 2023, if I didn't hold and keep Nebius and Centris energy from earlier this year my portfolio performance would look a lot different you know and that's like five or six stocks over five or
six years that have made all the difference and you know not everyone operates that way there are
scalpers out there there's short-term traders out there and those people who are looking for
you know windows of opportunity in the market that they can seize and you know move on to the
next one.
And if you're one of those people, that's great.
It makes your life easier during earnings season because you don't have to worry about
any of this nonsense.
But if you are somebody that wants to build a portfolio of stocks that you keep for months
or years, then you have to think this way.
You cannot think like, oh, my stock's up 30% of the prior report.
It might get crushed.
I should get out because then you won't be able to ever invest in anything.
So that's that's my thinking on on where we are in the markets.
And look, I am willing to be cautious up here for multiple reasons.
I'm willing to be cautious up here for the stall in momentum.
I'm willing to be cautious up here for continued turbulence and trade relations.
We still don't know, even though we know
tariffs are likely to come in that 15 to 20 percent range. We still don't know what the
real economy impacts of those tariffs will be once they go into effect on August 1st,
which is the end of this week. And so that remains to be determined. We also don't know
what the impact of that will be on global trade volumes. We don't know what the impact of that
will be on global growth. So all of these know what the impact of that'll be on global growth.
So all of these numbers remain question marks.
And so, yeah, I'm willing to be cautious up here.
But technically speaking, I just see no reason to be yet.
And again, as I always say, that can change rapidly. That can change in a week.
That can change in a month.
That can change in three weeks.
But currently, I mean, anyone can do this.
You just pull up the S&P 500 chart,
like show me where the panic is.
Show me where the unwind is.
Show me where the breakdown is,
because I don't see it.
And maybe I'm blind,
but like I'm looking at a chart that looks very strong.
Extended?
Yeah, maybe a bit.
You know, could you use a pullback into the nine
or the 21 EMA?
Yeah, great.
That'd be awesome.
But when are we going to get it?
I don't know
and you know the the the idea of everyone's sort of chasing this impending correction and trying
to figure out when it's going to happen i get why people want to do that because everyone wants to
catch the bottom or get out on top right in fact i think it's probably more of the latter people
want to get out on top right they want to get out before the selling starts and be like haha
told you so.
I just don't concern myself with that.
Like, I'm okay with taking a drawdown of the portfolio if the market wants to correct for three weeks.
And I'll reposition myself accordingly if I need to on some individual names if they break down.
Key phrase being if they break down.
But you can handle those.
You can cross those bridges when you come to them, proverbially speaking, if you're worried about that, if you're worried about a market correction.
This idea that you have to prepare for a market correction or ready your portfolio for a market correction that you think might happen, just flat out, I think that's crazy.
I think it's absolutely crazy.
I think it's absolutely crazy.
And, you know, my goat, Peter Lynch, has an amazing quote about this,
where he says far more money has been lost by investors preparing for
and anticipating corrections than has ever been lost in the corrections themselves.
Right?
Like, would you have rather sat through the deep seek sell-off earlier this year? Would you have rather sat through that
or sat on the sidelines for the last five years? Ask yourself that question, because
I imagine most of you would have said being on the sidelines for the past five years
would have been worse. I would agree with that. Markets have gone up a lot. I mean,
the NASDAQ has more than doubled over that period. So it's the S&P 500. If a 20% correction in the
indexes over a few months that led to a V-shaped recovery, I mean, if that's your reason to get
out of the markets or if that's the reason to stay out of the markets, you probably encounter
those reasons frequently.
Right. If somebody was like, look at the deep seek sell off or the tear sell up earlier this year and goes,
I don't really want to be in markets because of that.
They probably would have said that last year, the year before during the banks.
Right. The year before that, during the inflation scare, all of those were better reasons to be worried than DeepSeek or even the
tariffs, frankly. And, you know, if you were worried about all of those things, you'd have
been on the sidelines in 2020 and 2021 and 2022 and 2023 and 2024. Maybe in 2022, you would have
been happy about it. But you look, zoom out and look at the market over that period, you're like,
wow, I just missed, you know, the biggest index in the world doubling.
And in the meanwhile, a lot of individual stocks went up five, six, seven, 800%, some 1,000 plus
percent in that period, many 1,000 plus percent in that period, actually. So you just have to decide
what you want from the markets. You have to decide like who you are, what your risk tolerance is
like, like what your personality
around risk is like. If you're weak stomached, you probably shouldn't be sizing into massive
positions that you hold for months and years. If you're fickle and you're one of those instant
gratification people who likes to scalp or day trade, you probably have a little bit of an edge
heading into an earnings season because you don't have to worry about overnight holds that might be down 20
or 30%. But all of this is to say that you have to decide what type of investor or trader you
want to be. And you have to base that on your ability to handle those things psychologically.
I have a lot of members in our community who are like, oh, I want to do, I want to do what you do exactly. I want to do exactly your process.
And even for the people I've helped to try to do that, many of them, it comes down to like,
do you have the psychological fitness to do it? Do you have the psychological fitness to sit
through 15 or 20% drawdowns on six or seven figure positions. Like that takes a lot of, not even
just balls, but that takes a lot of, of, of grit to be able to sit through, through those kind of
drawdowns, just willy nilly, right. Nothing's happening to the stock, but it's down 5% on a day.
You know, that can, that can shake some people out, not even some people that shakes a lot of
people out of the markets, you know, just that tiny bit of volatility. So yeah, you have to decide who you are in terms of your personality and the types
of stocks and types of industries you like, what your risk tolerance is like, how suitable you are
to undertake risk, how willing you are to hold through 10 or 15% drawdowns. You know, what types
of themes and secular narratives do you believe in over the next 10 or 15 years?
Why is that important? Because when you personally believe in those themes and ideas and narratives,
it makes it much easier to hold through volatility because in the back of your mind, you're reminding yourself,
hey, in the next four or five years, next 10 years, I think this is going to become a bigger industry
or this is going to see even more tailwinds than it has today. And that drives confidence. And, you know, an increase in
confidence increases your ability to manage positions effectively. And that's just like
universally true, in my opinion. So, yeah, you have to make those decisions and sort of climb
down the ladder from there. But as far as my portfolio goes, as far as the individual stocks
go, like I said, not concerned about anything.
I don't have too much more reporting into the end of this week.
We have Riot, Huntington Ingalls, Amazon, Materion, Robinhood this week.
So a couple of positions there.
Obviously, Robinhood and Amazon are pretty big weightings for me. So I will be paying a lot of attention to those reports this week, and I'm sure we'll cover them here as well.
And then next week, I have a lot of positions reporting.
I have Centris Energy reporting.
I have Magnite, Genius, Joby, NBIS, Warby Parker.
So next week, you know, we got plenty of stuff on the table,
um, for me, uh, in terms of earnings on my existing position. So I'm going to wait really
until the seventh is when I think the seventh is when most of my earnings are over. Yeah.
The seventh is like pretty much when my full portfolio is done reporting. Uh, depends on
when Kratos goes, I guess, cause Kratos, I'm seeing 8.5 to 8.11,
but I don't have the exact date.
But depending on when they go,
I should be done with my earnings by the 7th.
And then what I'll do is I'll look back
at the positions post-earnings and be like,
hey, what held up?
What still looks good technically?
And what might've broken down?
And the stuff that doesn't look good anymore to me,
technically or structurally,
or maybe they said something bad on their earnings call, I'll cut the positions and move on.
You know, I don't have like an emotional connection to most of the stocks that I own,
maybe a handful of them, but to most of them, I don't. And so if they're not performing,
or if the technical structure breaks down on earnings, or if I hear something on the call,
I don't like, I will be out.
It's that simple.
So, yeah, we'll see how it goes over the next few weeks.
But not adding anything new here.
Haven't added anything new in a few weeks.
I've done more trimming than adding.
And once we're done with all these stocks reporting, I'll look back, reconfigure the portfolio if needed maybe reduce
some positions and then go from there and at the same time i also have like i said buying power to
add a few new positions so i am monitoring these reports that are passed on my desk day by day
and seeing if anything jumps out as me is a particularly interesting opportunity
you know one of the names um that i Logical currently still owns this, but Amplitude,
ANPL, I've been looking at that name recently.
I like the chart on that.
I think they report earnings on the 6th.
So, you know, if I'm interested in something pre-earnings, I know a lot of people like
to take positions into the earnings.
I don't like to do that.
I'll wait till after, you know, even if that means I miss a 10 or 12% move or whatever.
But yeah, I'm going to wait till after and see.
That's one.
There's like six or seven others that I have marked that I don't own currently that I'm
going to be looking at the earnings reports for and seeing if they're interesting to me.
But I have all the flexibility in the world right now.
I have performance flexibility.
It's still up over 150% year to date.
I have cost basis flexibility on pretty much every stock I own.
I have narrative flexibility because I have exposure to multiple baskets.
I have exposure to data center, nuclear tech, fintech, everything I want exposure to I have.
So, yeah, I'm sort of sitting pretty and I don't really feel the need to do much until after this earnings season.
And if August 1st is going to be this moment where, you know, the tariffs go into effect and we sort of get this sell the news sort of reaction from the markets,
the news sort of reaction from the markets which I think is very possible
then I'll be ready for it in terms of having those names marked that I may
want to pick up if we do head for another sell-off but I think the biggest
risk in the markets remains tariffs as I have been saying I know a lot of people
think that we're moving on to other things I think even at the 15 to 20%
level the biggest risk is still tariffs. And the reason for that is because people think that's a small number.
And, you know, it is a smaller number than we expected, but it will have real economic impact.
You know, there will be a reshuffling in available industry, if you will.
You know, there was a lot of talk this morning about the cosmetics industry and how, you know, South Korean cosmetics have become increasingly popular in the United States over the last few years, as have like Japanese cosmetics and other Asian cosmetics.
And, you know, that's going to those are going to see a 15 percent tariff pretty much across the board.
Same thing with automobiles.
Same thing with steel.
It's looking like the UK said
they're not sure if they're going to be able to get the steel exemption from the United States
this morning. You know, with regard to China, it looks like we're willing to halt export controls,
but the Democrats don't want to do it. And Trump's pissed about that because he thinks that'll
prevent a deal from getting done. And the Democrats think
that China should still be restrained on chips, which was frankly a bipartisan issue. But now
Trump obviously wants to get the deal done with China, so he wants to lift those controls.
So there's a bunch of unknowns still with regard to the semiconductor industry, with regard to the
automotive industry, with regard to the cosmetics industry, with regard to the apparel industry.
These are all very consumer facing
industry, right? Like when you think about automobiles and cosmetics and apparel, you're
not thinking about B2B. You're not thinking about, I mean, there is B2B interactions. There are
commercial interactions, but that's not what you're thinking about, right? When I bring up those
industries, what are most people thinking about? Consumer facing, right? People are thinking about
car dealerships. People are thinking about Alt Beauty and, you know, these, whatever the other makeup stores are where these girls go.
And, you know, people are thinking about apparel, retail, Nike, Lululemon, you know,
that's what people are thinking about. And rightfully so, because the American economy
is 65 to 70% consumer and retail activity.
We are a consumer and we're a services and retail driven economy.
And so it makes sense to think about those industries with broader relevance because they do have broader relevance. The price point of consumption does have relevance to retail sales activity.
does have relevance to retail sales activity.
And it's often something that's overlooked or not really considered,
but it's going to have to be baked into the equation over the next six months.
You're going to see shifting to alternate suppliers.
You're going to see different pricing power metrics for U.S.-based producers of cosmetics and of apparel and of automobiles.
You're going to see probably higher
levels of government incentive tailwinds to those same players. You're going to see
companies that are used to facing the U.S. consumer base, right? Companies like Samsung and
like South Korean makeup companies and, you know, Mercedes Benz and all of these international companies that have made a
habit of selling to the American consumer of the past decade will now need to adjust either by way
of price or by way of manufacturing investment in the United States. Both of those things impact
the balance sheet. Both of those things impact CapEx and margins and overall volume of
sales. And all of those things collectively obviously impact the earnings and the multiple
and the price of these stocks. So, you know, the economy is a very interconnected thing.
And things that seem small at face value could actually be much bigger under the surface. And
I think tariffs are one of the examples of that. Now, would I have loved if the whole world got sub 10% tariffs and
we could just brush this off? Yes, but that doesn't look like where we're landing. It looks
like we're landing in that 15 to 20% zone. And I do think it's material. Do I think it's dynamite,
TNT, world economy exploding level potential, like 40% tariffs? No. 40% tariffs would shut down global
trade. 15% to 20% probably won't do that, but they will lead to a massive level of deferment
between people who are used to selling into the U.S. markets, sort of deferring to other players
to letting them do so, or by way of partnership, where some of these international companies either
partner with U.S.-based companies or make U.S. investments to forego those tariffs.
But the economy will have to adjust to it, is my bottom line.
And we don't know what that adjustment will look like.
We don't know what the impact of that adjustment will be on retail sales.
We don't know what the impact of that adjustment will be on employment.
We don't know what the impact of that adjustment will be on employment we don't know what the impact of that adjustment will be on on really any macro factors and as a consequence of
that you have to stay on your toes and say hey something could happen but you know we don't know
exactly what and if it does what type of time frame do you think because like obviously most
of the major countries we have like a deal in place with, except for China that I think they're still working on.
I saw a note on that today.
But do you think we wait for the economic data to come in in September, October before we realize the effects of it?
How do you think they're going to try to start pricing it now?
But I'm just curious if you have any type of idea of what timeline that looks like.
Yeah, I don't.
I thought, frankly speaking, the China deal was done.
I was surprised to see us back at the negotiating table.
I thought for all intents and purposes it was done.
My thinking is with China is that obviously it's the most important deal to get done.
My thinking is with China is that obviously it's the most important deal to get done.
But I also think we don't have the amount of leverage that we had with the European Union, for example, where the European Union basically just fell at our feet.
And like, I mean, I don't even know if the European Union negotiated, frankly, based on that press conference and based on what trump announced like i don't know if he just like walked into the room and was like yeah you guys are going to give us a trillion dollars and you know we're
gonna have 15 tariff on autos and that's it like it just seems like he dictated last day of the
month at the car dealership right he just walks in and he's like yeah you gotta get your end of
month sales and like let me exploit you but yeah i don't know what happened with the EU. I don't know if they have, I don't know, some kind of blackmail on them or something.
But that was a crazy thing this weekend with the EU. They folded.
So my thing is, is China's not going to fold.
China's not going to just roll over and be like, yeah, you can have whatever you want.
And we already know this, guys, because we know this because of the news flow on this.
Right.
Like we know that China is using rare earth metals.
We know this to be a fact.
The administration has confirmed it.
Pretty much every major news outlet has confirmed this, that China is playing the we have rare earth metals game.
You don't have them and won't have them until 2028 on a commercial scale.
Like people are talking about this MP materials deal.
It's a great deal for MP materials.
Look at me wrong.
I'm not talking shit about MP materials,
but it's going to take them till 2028 or 2029 to be commercialized.
Like what do you do with the magnets and rare earth metals that you need in
between now and then you,
you still need to get them from China.
There's no other supplier,
none. There's no other supplier. None.
There's no other supplier at scale
for like seven out of nine rare earth metals that we need.
So you sort of have to shrug your shoulders
of the United States and say,
well, okay, yeah, that is our pain point.
What do you want?
And China wants less chip controls, right?
Like the negotiation between China and the United States is that
everything else is, is sort of irrelevant nuance. It's, we want chips. You are not letting us get
your chips. Your chips are the best in the world. We need them for AI. You need rare earth metals
for your military and your semiconductor industry, which is now becoming a more burgeoning industry in the United States with the TSMC fabs opening in Arizona, with the Samsung fab opening in Texas.
The United States is poised to become a major manufacturer of semiconductors in the next decade,
a major manufacturer, maybe the world's biggest behind TSMC. And as we are poised to do this,
we need the materials to enable that production domestically.
And rare earths are an enormous part of that. And so we're sort of stuck between a rock and
a hard place where, yes, we have leverage over China, but they have leverage over us as well.
And that is what makes this situation unique compared to, for example, the United Kingdom.
The United Kingdom has no leverage over the United
States. And the United States has a tremendous amount of leverage over the United Kingdom.
That's why we were able to force a deal there. Canada, okay? Canada, I don't know, Trump just
doesn't like them, I guess. But Canada has no leverage. Like, yeah, they have some gas and
electricity leverage that they could really pull if they want to make a pain point out of it. But
I think they know that Trump's response would be twofold and it's not worth attempting to do
that. So I think that's why the Canadians have not retaliated. But the Canadians have no leverage.
The Mexicans have maybe even the least leverage of all.
Stuck, would you say that there's a third component of that with China, though, that
we don't have to necessarily make some type of amazing bill.
I mean, yeah, the amount of wins across the board and just what we're trying to do here, it's not like we're coming from a desperation spot either.
Yes, you're right. You're right. at this to your point and saying, well, the EU just fell to their knees in front of the
United States, as did the United Kingdom, as did Chile this morning.
I don't know if people saw the statement from Chile this morning, not a big country
or not a big economic country, but they came out this morning and said, we have, we will
not dare retaliate was the words they use.
We won't dare retaliate to U.S.
terrorists because they know what the consequences are.
They know that the White House is going to be petty about it and say, OK, you want to retaliate? Here's 30 percent more. And
that would destroy the Chilean economy as it would destroy the Mexican economy, as it would destroy
many economies south of the United States on our side of the hemisphere. So
again, I love I always bring up this Tina argument, there is no alternative, but one thing that Trump has done an effective job of in these trade negotiations, and I have been very, tried to be very even handed throughout this.
For those of you that have listened to the show, I was very, very critical of the tariff policy.
When it first came out, I'm still frankly critical of it, but not as critical because the numbers are much lower.
critical of it, but not as critical because the numbers are much lower. But I will give credit
where credit is due. And I think one thing that Trump has done effectively in these trade
negotiations is remind the rest of the world that in spite of the rise of Southeast Asia,
in spite of the rise of China, in spite of the war in Russia and Ukraine and the war in Israel
and Gaza, like in spite of all of the things that are happening globally, there is still no alternative to the United States when it comes to consumption power
and the ability to feed global markets with dollars. That is the unique ability the United
States has. You could group up every major consumption economy on planet Earth, every one.
And by the way, you can include China in that basket and you still wouldn't hit annual U.S. consumption power.
Right. You're talking about one country making up roughly a third of all of the consumption power on planet Earth with one nation.
And Trump is leveraging that effectively. And he's reminding the world, hey, I know these deals might not be the sexiest deal for you and your people, but you need to make them.
Because where else are you going to go?
Who else is going to buy, you know, your cars and your steel and your consumer goods and your cosmetics and your apparel?
No one except us.
No one has the power to do it.
And so that, I think, is where it gets tricky here.
And we'll see how that unfolds over the next few weeks.
Sam, last comment before I close it out?
I actually forgot what I was going to talk about.
I think I raised my hand some time ago.
I might have forgot to bring it down.
Sorry about that.
Boom.
Same time, same place.
Earnings season is back.
Guess what?
These spaces are about to get awesome.
This week is a crazy one we got
really smart people I'm excited
FOMC
MAG7 earnings the best company in the world
reports earnings this week
it's a fun time I appreciate everyone
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We appreciate everyone.
Have a great one team.
Catch you all tomorrow. Thank you.
