Transcription
Michael, the chat is booming right now, I have to say.
So is the stock market.
Yeah, all the gangsters are here. Um, there's a lot going. Oh, thanks for all the Nike updates, guys. I appreciate. I know. I don't know what's going on.
Oh, don't be salty. This is the life we chose.
Yo, imagine it was up 4%. I would be insufferable right now.
That's true.
All right. Uh, we're going to get to Nike later in the show. I want to say a quick couple of hellos to the chat. Um, a lot of our uh a lot of our OGs are here. Matt Ste in the house. C. Paul Breezy, what up? Uh, Just Dave is here. Have you seen Michael Jordan lately? He's gained a few pounds. I think he's earned that, Dave, to be honest. Georgie D says, "Squawk and friends." Okay. Not sure where where we're going with that. Shapiro, full-time Pounder. We appreciate you, brother. Thanks for being here. All right. And everyone I I don't get a chance to say hi to. I see you. I'm thrilled to have you here. All right. One more. Jackie Jimat is back from the greatest city on earth, Philadelphia. Debatable, Jackie, but we love you. Thank you for being here.
All right. Uh, tonight's show is brought to you by IMGP. Wait, what is it? DBMF, a market leading managed futures ETF. Um, the one constant today is change and investors everywhere are struggling to adapt. Managed futures accessed through DBMF seek to detect market trends early and capitalize on them.
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Thank you to the folks at IMGP. We appreciate you. Uh all right, so we're going to talk about earnings, which obviously uh is the main story in the market this year. Earnings growth is significantly better than economic growth. Um, earnings growth is the reason why we are where we are in the market.
Um, we are not getting here. Thanks. Oh,
who the what the
who could that be?
Dad.
Oh my god. It's Spencer Jacob from the Wall Street Journal. Ladies and gentlemen, what what brings you to the neighborhood tonight?
Interesting. I thought I'd check in. Talk about earnings growth. So, I jumped into the discussion.
You overheard us talking about earnings growth and and and you decided to come by. Well, we appreciate it. It's, you know, it's such a coincidence that you're here because we were literally about to talk about your excellent piece in your newsletter for the Wall Street Journal this morning. It's just like one of those serendipitous things. It's it's hard to explain even so.
All right. We're super happy both on the call.
Thank you.
We're super happy to hear. Uh Spencer, I want to quote you and then I want you to react to it. you did this really, as I mentioned, really good piece about the earnings growth this year and your title was earnings forecasts are on steroids and it's clever. It's a it's a it's a good way of thinking about it. I think it's exactly right. There are a lot of asterisks to what's happening to produce the sort of earnings growth that we're getting this year. Um, and then this is exactly what you said. The first clue about how unusually profitable the quarter has been is that analysts raised their earnings per share forecast for the S&P 500 by 3.4% since the end of March. And you note analysts typically lower their earnings expectations during the quarter, which that's how we get all these surprises in the next quarter. But the average reduction has been 2.7% over the last 40 quarters. Okay. So, right off the bat, this is a very unusual situation where we're actually raising the ante in the in the midst of of the the quarter itself. Tell us more.
Well, you got a couple of things going on. you know, one is that um you know, what's what's holding up earnings is that you have these hyperscalers spending a lot of money, but it's only going through the P&L pretty slowly because they've extended the depreciation of all these chips and the equipment and servers that they're they're buying. And it's revenue it's it's immediate revenue and profit for other people in the market. And so that that's kind of you know turbocharging the the the earnings but there's going to be a you know hell to pay for that later on when it goes into reverse. Another thing though is very interesting is that the stakes in these still private AI companies I mean Anthropic, OpenAI but also other companies you haven't heard of. uh a lot of them are the stakes held by companies like Nvidia um Alphabet those stakes have to be revalued according to accounting rules according to GAP accounting rules
written they get written they get up
they get you're saying they get the stake in anthrop a public company that's got a stake in anthropic and there are many
but just hypothetically um the valuation of anthropic during the course of the quarter has an event meaning they raise a a round of finance ing which raises the value of the company. A public company that's got that on their books has to then in their earning statement write up the value and we know it's not actual earnings but for the intents and purposes of what we calculate on the S&P 500 it counts and there's a lot of it happening. Yeah. like you know how you know you listen to um uh or you don't listen to because they don't have earnings calls but you see uh Bergkshire Hathaway's quarterly statements and they don't mean anything anymore because they have stakes in all these companies and they're going up they're going down and you know they tell you not to focus on that and it's not like Alphabet's telling you to focus on it and Nvidia is telling you to focus on it but those are such big companies and these stakes are so big that it's moving the needle for the entire stock market. is creating this illusion of more rapid earnings growth. Uh this professor at the University of Florida, Van Wang, looked at it and he said it amounted to it was equivalent to let's say about 12% of the first quarter's net profit. And his preliminary numbers say it's going to be two or three times as large for the second quarter. So, you know, these are are big numbers and so it it it creates the impression I mean earnings growth already is rapid, but it it creates the impression of even faster earnings growth and and these are these are not cash gains. These are not things that are being sold and cashed in on. They might be one day, but it's just an accounting thing that you you have to do. And just to perspective, the the first quarter the earnings growth uh was very rapid. the kind of thing that you see coming out of a crisis, not the thing you see year six of an expansion. Um, net margins were the highest they ever have been, 14.8% for the S&P 500. And that that actually does not include these gains. Um, so that that that's on an operating basis. Um, and it's likely to surpass that during the second quarter, which is is great. I mean, you could look at that as glass half full or glass half empty. I'm a pessimist so I find it a bit alarming because you know you're valuing the market on these and people are saying well stock market's not that expensive based on that and there is literally I don't want to air the Wall Street Journal Dirty Laundry it's not it's just two interpretations of the same thing but there was a news article that appeared the same day based on the same numbers not the um the extraordinary numbers on anthropic and things like that but just the that 14.8% 8% and I'll suddenly just read the headline to you. Uh why Wall Street bulls aren't worried about sky-high stock prices. So I am worried about skyhigh stock prices. I think that you know if once you you strip out all these abnormal things, the stock market's pretty expensive. And you know margins are are unlikely to stay this high for that long. But forecasts uh for the rest of this year and the next couple of years call for them to go even higher, which is would be pretty unusual. You talk about this as sort of a virtuous cycle where we write up the value of things and then that gives us cover to take stock prices even higher and then you've got all right so if we're saying 12% in Q1 is coming from this writeup issue of startup stakes uh and assuming assuming uh the professor is right that's going to go to 25 to 36% in the next quarter and no one's going to look at that and say nah We're not giving these companies credit.
Yeah. I mean, to be clear, you know, that that the operating earnings that you you see that like S&P puts out, they they then strip that back out. But the numbers that you see when you look at the companies, you you see it and people are getting optimistic about it and it's kind of a virtuous circle because then people see these big profit numbers for the hyperscalers and Nvidia you know that that own big stakes in these things and then they say well anthropic must be worth even more right and then the next round of funding is even higher right so it where does it stop I mean how many trillion does it stop at so obviously it does stop at at some point
but just more probably I mean it's a it's an interesting quirk but the the fact that margins even without that are are so high is is really unusual.
Let's put up Spencer's uh let's put up Spencer's chart. So you say for perspective the first quarter's net profit margin of 14.8% was about twice the post-war average.
Some of that has to do with the types of companies that dominate the market and you know we've made that point. You have made that point. companies selling each other lots of AI gear but depreciating it slowly is another temporary accounting boost. Uh this chart is remarkable. So this is what you guys are looking at is the net profit margin of the S&P 500 since the release of Chat GPT which I guess three almost four year three and a half years ago. Um this I look I'm not saying it's going to mean revert immediately and be back at 11 but this obviously seems unsustainable or unlikely to be sustained. Is that one of your is that one of your bigger uh asterisks here?
Yeah, absolutely. I mean, look, I mean, and and just do the math on that, right? I mean, let's let's say uh net margins are 15%. Just to make a nice round number this quarter and then people are saying, look, the market's not that expensive. you know, if you look at this incredible profitability and then it'll you know, analysts actually expect that to get better, which is not I mean, it could for a quarter or two, but it's pretty unusual for the whole stock market to be that profitable. You can't compare it to the 1970s. Obviously, you know, you you have different kinds of companies and different companies have different profit margins. That's that's obvious, but this is high even for a techheavy market. It's really unusual and we know that some of it is artificial because you buy you know a chip from Nvidia you know it's it's immediate profit to them but the chip they sold you is depreciated over three five six years right and so that goes through the the P&L more slowly and you know when once this slows down those margins are kind of going to roll over and be a little lower than
is that the hell to pay is that the hell to pay part is that what you meant by that when it goes into reverse
yeah And you know, and not just that, but like just do the math on 15% versus let's say 11% where you were just a few years ago. So you go, let's say like let's not the end of the world. You're going from 15% net margin to 11% net margin. Well, that's that's a lot lower. That's, you know, that's 25%.
That's 25% reduction. That's huge.
So if you say let's let's keep the the market's PE ratio constant. Let's say, well, we're comfortable paying 21 times forward earnings for the stock market. Well, then that's, you know, the flip side of that is stocks get that much more expensive. So, if you you hold the PE ratio constant and things aren't constant, things tend to go lower when profitability is declining. But let's say that that people aren't you don't get skittish about that, then the market should be 25% lower if you're justifying it based on those earnings. So, it it is of some concern. Things don't move in in a line that way, but that's that's a useful way to think about it. So think about where we are.
Two get potential get out of jail free cards. Tell me which or maybe neither of these are likely. One get out of jail free card is GPUs do not depreciate at the rate the bears say they will and we turn around 10 years from now and there are still Grace Blackwell uh chips and Vera chips that were sold in 2026 operating in data centers in a decade. That's I I mean I don't know if that helps or not, but that's part of that depreciation debate. The other get out of jail free card, this is a little bit more ephemeral, is profit margins remain closer to 15 than 11 because all the customers of all this uh of all this AI are more efficient businesses now and have margins that appear to be abnormal but maybe are the new normal and not subject to the 1970s, 1980s type of mean reversion in profit margins. we just sort of go into a new age of profitability. I know I know that maybe those are both reaches, but could either of those be true and bail us out of this paradigm that we're in?
Yeah. I mean, what's the famous last words or it's different this time? I mean, there's always look anytime that you you and maybe this technology is just so amazing that the the productivity gains in the economy will justify it. But we're talking about revenue growth, right? Revenue growth is is pretty good this year, but it's supposed to slow down in the future. Obviously, it's going to slow down because revenue growth is just nominal GDP growth, right? It's it's the GDP number that you hear plus inflation and then a little bit on top of that as companies, you know, gain share uh and and become more profitable. This doesn't grow at 11%. You know, it's only going to grow at 11% if you have very rapid inflation, which you really don't want. Um, every kind of boom, whether it was the late 20s or the the tech boom, you you always have someone saying, "Okay, but we're in a new era." I think uh Irving Fischer like the famous
you know quote is like we're
permanently high plateau
permanently high plateau I mean the this could be the time like the last 25 times it didn't work out and this could be the time obviously railroads electricity uh the internet uh man flight cars all those things were really big and maybe this is like all of those wrapped together the amount of money being invested in it relative to the size of the economy is like a few of those wrapped together too so
right
you it I if you if AI is is really going to be so revolutionary that you know like being like in start post scarcity Star Trek world yeah then it's great then then buy it's great you don't need to buy stocks though because then you'll have like you know go to the holiday and
no one will need stocks anymore we only have one more question which company is uh which company is Barry Bonds which is Sammy Sosa which is Mark Maguire in the in the earnings steroid era,
you know, I don't know what Mark Maguire came out like a lot later. He was very kind of uh trit and humble about it. Barry Bonds not so much. Samos, I don't remember like what he I don't think he kind of talked about it too much.
No, we won't make I'm not I don't want to sort of, you know, get sued by this. I had it's funny like I had a because you know I put out this market newsletter that I write I put it out so early that it's editors in London who have a last look at it and the nice editor who doesn't know Scott sports at all uh looked at it and said Spencer like you know that baseball player he looked I understand why you chose a baseball player because of the thing but like you know could it imply that like he took steroids like yeah that his name is Mark Maguire shows him hitting his 70th home running and he did take he admitted to it so I think we're
nobody needs to imply thing. All right, Spencer, thank you so much for joining us. Tell everybody what the name of your uh morning newsletter for the journal is and uh and and we'll have everyone look for it.
Yeah, and it is free. You do not need to be a journal subscriber yet to get it. It's called Marcus AM. Just Google Marcus Aam or my name and uh it's the first thing or the second thing that that pops up. You can just put in your email and and get it and uh more readers the marrier has a lot of readers already. Well, thank you so much for coincidentally stopping by, I guess. We we really appreciate it and uh keep up the great work. Thank you so much, Spencer.
Hey, thanks, guys.
All right, we'll talk to you soon. That was that was cool, right?
I am uh his biggest fan. I I open it up every morning at whatever time it is, 6:15. He does a like a sort of like a blog post.
Um he links to the journal and then there's four individual stock stories that are moving in pre-market and it's like a sentence or two in each. It's phenomenal.
Love it.
Yeah, I think I think he does a great job. We got to we're going to touch on Nike real quick, Michael.
Okay, it's down 8%.
You stupid idiot.
You dumb bastard. All right. Uh
well, the the the report sucked predictably.
Yeah, we well we knew it would be bad, but the question was is it is it enough negativity with the stock down 73% going into it priced in. Apparently the answer
you could I said this last time you mentioned it, you could buy it tomorrow. Tomorrow will be the bottom.
So that that'll be I think that is I think that is the opportunity to buy
tomorrow. Tomorrow is the bottom. Um, this is sort of neither here nor there. Not material to the stock. Converse sales fell 30%.
It's just not in style.
It's kind of wild.
It's not cool
that something could fall 30% in a year, but it's also like Converse is still doing 1.2 billion in sales. That's kind of not nothing, but the the the report from Nike wasn't good. We knew it wasn't going to be good. Uh, sales were flat, I think. Um, you know, China wasn't great. Like,
net income down 3%, diluted earnings down 2%.
We know. So
right,
I cannot imagine sentiment getting worse from here. Stipulated that the stock will open down 8% tomorrow, wherever it ends up opening, it's washed out. I think you could buy it.
So I own some and I left the door open for exactly this and I'll I'll have to take advantage of it or else uh or else what was the point of owning any in the first place, right?
So um I I think I will I don't know that I don't know that I even want to listen to the call. I think I just want to read the transcript. I don't want to hear these I don't want to hear these guys uh I don't want to hear Elliot Hill talk about a turnover that ne a turnaround that never comes.
Yeah, there were there were some
not a good use of an hour.
There was some hardcore corporate language in the in the press report. It was was not very inspiring. What do you think?
All right, just two two points on what what Spencer spoke about.
One get out of jail free card is yeah all right margins come down to 11% but the multiple goes up to 40. Hello. Do I have to think of everything? That that's a get out of jail free card.
Um, but in all seriousness, I do think that the point that he made, I'm not really concerned about the onetime adjustments for the stocks. So, it said like $69 billion worth of earnings or are um a mirage. The market's not dumb. Okay. It's not putting a multiple on top of that. The same way that companies don't get um don't get credit for currency moves one way or the other.
Yeah. I don't I don't think these stocks are gaining as a result of that.
No. No. their market
maybe with one
what Google
no zoom
but but Zoom came all the way back like Zoom had a pretty healthy correction
yes but I think it rallies on good anthropic news more so more so than than the others
Zoom's not moving the market to me the bigger point that is extremely valid is what could make these earnings look temporarily gooseed is the fact that for the last 5 years and it's not like Amazon and Google were not investing they were still spending shitloads of money on capex but just not nearly to the extent that they're doing now And if for whatever reason, and there's no signs of that they are, but if for whatever reason they all decide together to pull back on spending, well then that will pull back. That will that's right out of Micron and AMD.
That'll crush everything in the space. So you're right. It's I mean, that's we could talk about accounting and we could talk about profit margins all we want.
Yeah, that's not it.
That is that is the meta risk, pun intended, hanging over all of us at all times with this entire trade. Yeah.
Um, but a lot of people thought that would have happened already and it hasn't. So, uh, and it and it may not go the way that we think it could go wrong. You could have one company pull back on spending and another company say, "Oh, yeah, we're going even we're going even further." And then I don't even know if that's good or bad.
See, losers. All right. I want to talk about the bull market rally that we were living through. Um, it is ah great quarter, gentlemen. The last day of the quarter. Uh, the equal weight closed at an all-time high yesterday. It looks like it did an equinout today, but it's there's highs everywhere you look basically for the most part except, you know, except for pockets of software and whatever, whatever. Um, if you were a market technician and you were paying very little attention to the stories, if you're JC, what are fundamentals, who's the Fed, I don't care. If you're literally looking inside the market,
those guys exist,
you can come to no other conclusion than wow, this is bullish. So, let's start with this chart from Grant Hawkridge. On the top, we're looking at the S&P 500 relative relative to the Russell 2000 rolling over. We've showed this the inverse way. So, small caps are outperforming the S&P in a pretty material way. You are also seeing a transition away from gra growth to value. So, this is what I think people are describing as a broadening out. The the rally is expanding.
Why wouldn't they why wouldn't I don't I don't know, Grant. Why wouldn't they show this chart upside down?
It doesn't matter. Whatever tomato tomato um everything this year is outperforming the Mag 7.
Yep.
Everything. So the blue line is just the Mag 7, the dark, you know, the uh the bolder blue line and then everything else is
the worst trade of the year.
Yeah, Everything else is divided by. So literally every quadrant of the market from small value to midcap growth. Everything is outperforming the mag 7.
Including the NASDAQ. That's right. Moving on. Um airlines. Now, part of this is is oil, but part of this is just listen, the businesses are doing better. Their customers are on fire. You see airlines breaking out, and I had chart chart Kid make me a group uh a table, a chart. My god, of six areas of the market that are breaking out that if I told you this, it's really hard to be bearish. It just is.
So, here's what we're looking at. Semiconductors up and to the right. All right, we all know that. That's not a surprise. Industrials, transports, small caps, micro caps, regional banks, these are all at all-time highs. You cannot look at this charts, these charts, and make a bearish case other than other than whatever we're due for a pullback or whatever like the market is sending you a very strong signal. It's not always right. Okay, hedges aside, it's bullish. The market is breaking out in all areas where you'd love to see the breakouts occur.
I talked about this on TV today. If I just had regional banks and industrials, I don't need I really don't even I mean, it's great. What you just showed is great because the transports tell a really big story, especially the strength in the airlines and the trucking companies. So that's great. micro cap and small cap as sort of like ratifying this trade and then showing that these things are happening in concert with the semis. It's not a story where the semis are going up by themselves.
It's that's triple stamping a double stamp. For literally since we've been working together in 2012, people have been complaining that the transports are not confirming the rally.
Well, here it is. Well, here it is. What else you want?
All the good is that good now?
All the confirmation. Is this as good as it possibly gets? I don't know. We'll find out. But right now, things look pretty damn good. It's hard to do bears.
What What charts what what six sectors andor asset class charts would the bears put up to counteract this? If you gave if you gave somebody six contras to this, tell me what they would put up.
So, these are related names. I would say software and alternative asset managers look like
I could explain those away so easily, though.
Okay. I'm just telling you. Like,
no, I know. I could fight that.
Um, those are the top I would say. Oh, no. Here's the big one. The big one
to squash.
No, no, no, no. The big one is very, very obvious. If the market loses the mag 7, and you could argue they have because free cash flow is going to zero because we are exiting the asset light world. If the market loses the mag 7, which is 40% of the index, then it's going to be hard for the index to sustain a rally. I think that's valid.
You know what I would put up here? If I were be if I were trying to make the opposite case, I just it would just all be housing related. But housing stocks look fine. Like Home Depot's Home Depot has bounced pretty bigly.
Yeah, I'm thinking more like the builders.
They they've bounced. I mean, they've bounced, too. Uh Dr. Horton reported last week had a huge day. So, I would say the biggest bare case is probably the Mag 7. I don't know what else you would point to because credit spreads are tight. Like, what?
I don't know.
All right, I like it. I think you know what the PL that's a great that's a great chart. We should use that for clients. Um, whenever the next time we we do a presentation for clients,
we are
well I assume. All right. Um, I I had hoped to avoid this and I thought maybe we would run out the clock and not have to talk about it, but I at this point I just we have we have to you it can't ignore it. We've ignored it for a long time. Um, but uh we got to talk about strategy and you know more about this stuff than I do. I just want to give you my take and you could tell me if I'm completely crazy. This is just wallto-wall financial shenanigans. I'm not accusing anyone of crimes. I don't use the P-word Ponzi lightly. I don't talk that way. I'm not one of these people that just knee-jerk like as soon as someone's making money in something, I like I I have like an aversion to seeing that. I'm not that's not me, you know? I've never been that way. I have an open mind about things that I'm not involved in uh working out. It's perfectly fine. But this is shenanigans. an ordinary person and I would wager 80% of the shareholder base of strategy is ordinary people. I don't think this is a very heavily institutionallyowned uh situation. So ordinary people cannot possibly keep up with all the technicalities and the mechanisms that are now involved with this investment. It seems to me like it's this Bermuda triangle where um there's three three levers that Michael Sailor can pull in order to keep it going. One lever is he can sell stock in Micro Strategy, which was the proposed that was the trade. It's like we're gonna trade at a premium to our MNAV, which was made up. Um, but basically like if we have a million dollars in Bitcoin and we trade at 1.2 million, we're gonna take advantage of that premium and sell stock, take the money and buy even more Bitcoin. All right, that part. It's not it's new. It's novel. A lot of people hated it. It didn't bother me. And we actually said some positive things about it.
It was working.
It was working. John John, throw up that chart about the shares outstanding. It was working.
So he was he was Look at Look at that share. Look at the share count. He was able to grow the share count, buy more Bitcoin, he now owns 850,000 Bitcoin. Okay, so take take this off though. I want to finish the point. So the three sides of the Bermuda Triangle. So that's one lever he can pull. And that's what he was doing. And even if people didn't like it, it was explicable. The second lever he could pull was the one he maybe never said outright, but he sort of very strenuously implied it, and that is sell Bitcoin to raise capital. The bet was I am diamond hands. I'm the guy that not only never sells, I will continue to buy forever.
Sell your kidney if you have to.
Okay, so that's not my words. I'm not paraphrasing. He
he literally tweeted that I think
like every like he would tweet like every day you don't uh buy Bitcoin, you should kill yourself or like whatever. Like it was like the most one-way trade of all time is the way that he spoke about Bitcoin. Okay, so that's lever two. And a lot of people thought he would never in a million years pull that lever if he didn't have to. He just did, which we're going to get into. And then lever three are these preferreds. So he's sold these preferred shares to the market that purportedly were supposed to be stableish. They were supposed to bring in income uh supposed to pay out income to the buyers and trade nearpar. and the income that he was paying would be such that if the price dropped and he raised the income, people would almost have to buy it. It would be the yield would be too high to be ignored and that would bring the price back to par. And so that was another lever that he had was that he would raise money via these preferreds and that would give him even more money to buy more Bitcoin. The whole thing is now coming apart at the seams. It's backwards. The idea behind selling stretch and the other preferreds was this is a cheaper source of funding than the dilution of selling stock and strategy and so I'll use that cheaper source of funding to buy Bitcoin. Now he's selling Bitcoin to pay the dividend yield on the preferreds. It's it's like backward. Wait. The whole point of this was so you can use the money and buy, but now you're going to sell Bitcoin and you're going to stabilize the balance sheet and use the proceeds of the sold Bitcoin, which we you said you weren't going to do, and you're going to b and you're going to what is he doing? Retiring shares in the preferred or using it to pay the higher yield. All right. So, that's where I am with this. That's why I use the term shenanigans. It's not I'm not looking to go to war over it. I'm not angry about it. I don't get caught up in nonsense like this. You don't have to worry about me. But this is a really big thing now because there's a lot of money, not just in strategy, but in these preferreds and I almost don't even understand the point of it anymore. You have the floor. Defend it.
I'm just kidding.
Let's go to the source. Uh I had I had John pull three quotes. John, quote number one.
What we're doing here is we're building out a yield curve for BTC credit. What you can see here is that uh stretch looks like a onemon instrument. It's way pegged to the left. Um it's like a onemon te bill. Um stride is it has a mll that's illegal. You can't say that.
All right, Uh John, throw that chart on.
It's like a one-mon tea bill. In what way?
So this is the this is the the the yield curve for BTC credit. We've got the duration and the yield. And he's claiming that stretch had no duration. His words, not mine. He said it was like a one month T- bill.
Sure. Just like it. But it's at a 25% discount to its par.
All right.
But in every other way, it's just like a one month T bill.
We've got two more quotes. I don't remember which which one is which, but let's just let's just let it rip. Go ahead.
For the classic retail investor, the retail investor just kind of wants pure synthetic yield. They don't want duration and delta and volatility. They want all that to go away. And so STRC is is uh the flagship for that reason. One more.
We are a structured finance company and you can see here we're taking raw capital, digital capital, 40 vol 40 ARR, $1.6 trillion market cap of Bitcoin. We we are stripping we are stripping the currency risk. We are reducing the credit risk. We are reducing we are compressing the duration risk. We are distilling a yield. We are damping a volatility in order to create various instruments. And our greatest uh product and biggest success right now is stretch. As you can see, it's, you know, it's taking a 71 ball down to a three ball. You know, we're targeting a one ball.
I have no idea what any of that means. I'm so stupid.
I'm so I don't have a degree in business. I don't I guess I'm I'm not a quant. I I don't even know what this is. This is like um alchemy. I don't even know. This is not even a a discipline that they teach in business school. What is this? All right. Is the dampening of volatility in the room with us right now? Put Give me All right. Let's go through some charts and then and like I I can't I I'm laughing cuz I'm like certain nervous. I feel bad laughing because people lost like people lost real money. There's a lot of money here.
I'm not making I'm not laughing at all.
No, I'm laughing because I don't
You're laughing. You're laughing. You're laughing at me. You're not laughing at the at the people.
No, it's it's um uh let's do some charts.
All right. So, this is Bitcoin. Perfectly uh first chart, guys. Perfectly normal. It's it's 52% below all-time highs. This has happened over and over and over again since the launch of Bitcoin. We've seen it get cut in half from $20 to $10 like this.
Not new. Not not new now.
This is not this. All right. So, it's 32% down year to date. It's the probably the worst uh performing asset class on earth and it's in a 52% draw down which again we have seen that before. It is not a bug. It is a feature. It is part of what it means to be involved in crypto. Okay. I just wanted to to set the table. Here's Micro Strategy one-year performance. Okay. Um this is obviously problematic. It was $450 a share last summer. It's uh what is it now? 82. So, to Michael's point about laughing, it's not funny. Um, I'm going to yell at him after the show, you guys. Don't worry. I'm going to take care of Michael. Uh, but it's not funny. It's like substantial. I read somewhere that he might have destroyed 14 billion in capital this year. It might be the worst trade of all time if you like just on a dollar basis. Nobody It's possible that nobody's ever lost more. Now, I understand he hasn't sold all his Bitcoin, so it's the loss has not been enshrined. It could reverse when Bitcoin goes up, but that's a pretty big draw down in dollar terms.
The part the part that really really pisses me off is the comments that he made about stretch. Let's throw up this this chart, John. We've got ETF market comparisons in the universe of comparable assets.
Well, wait, can we can we go through the rest of these real quick before?
No, no, no, no, no, no. We cannot. We cannot. John, chart on. All right. This is the part that upsets me. So he's looking at the ETF market comparisons for the for the publicly traded preferred equity and these are the big boys PF. Nobody can see this. Summarize it for us.
Yeah, I am. And high yield bonds. We're looking at JNK and HYG. And he's looking at the net assets. You've got $17 billion in J in HY. You've got uh eight in in JNK. And he's comparing the yield and the volatility. And with stretch in particular, there's a column for volatility. And he's being transparent that that strike and strife, I don't know, I'm I'm calling it strife, whatever these other instruments are going to be extremely volatile. If you want a 12% yield, you have to swallow 23% volatility. With Stretch, he's showing a 10% yield with no volatility. Literally, it's blank. There's nothing there because he called it like a one-mon T bill. And he's the universe of comparable assets. He's comparing these things with, and I'm not even kidding, US treasuries, agency mortgage back securities.
You can't see
like what?
No, how
I took the series 65 a very long time ago, but I don't think that you're allowed to to do do things like that.
How are those comparable assets? A US Treasury? I've never seen a US Treasury go from a $100 par down to 78 or whatever it went,
right? Um, and I don't understand all of those things with like took a 21 V to a three V. What does that even mean?
A one a onemon T bill. Forget about Treasury because a onemon T bill. I've never seen that.
Nobody's ever seen that cuz that's not what a T- bill does. A T- bill is like cash and this obviously. But my earlier point about the purpose of launching Stretch was it's a cheaper funding source than diluting the common shareholders if you want to buy more Bitcoin. Now he's been selling some Bitcoin, I I guess here and there. He's not dumping his whole I don't want to imply something that he's not doing, but he's telling us he's selling his Bitcoin
very little amounts
in order to shore up stretch so that it can make its dividend payments. So it it's not it's like backwards,
right?
But that that's not why Don Stein in the chat, Josh, buy the dip. All right, I am going back through these charts because I want to give people a little bit more context. This is five. People say you don't understand the strategy. You didn't read the right you didn't read the white paper. You're right. I don't know anything. Let me show you something. This is 5 years. So, still up 29% or 5% annualized, but pretty bad for people that first quote unquote read the white paper circa December of 2024. You probably probably would have been better off reading a Judy Bloom novel. Um, here's the 10-year just to give you like real real deep context. Okay. Up 395% over 10 years or 17% annualized. So, I guess if you bought this stock before CO,
nobody bought before.
No But let me just Right. Um, if if you happen to have, you still love this guy. All right. I totally get it. Now, we're going to look at market value versus price because this is where we get into like the nitty-gritty of the whole point of this. The people who are buying Micro Strategy, Michael, if you ask them in one sentence, why are you buying this? What would their answer have have been?
It's levered Bitcoin.
Levered Bitcoin. In other words,
actually, people were buy Yes, it's levered Bitcoin, but people were buying it in their brokerage accounts because they didn't want to buy GBTC. That's why people originally bought this,
which made a lot of sense at the time. It did
because GBTC had a huge internal expense and
right and you were buying it at at a premium and the the argument was like well if you're bullish on Bitcoin nobody's more bullish than Micro Strategy buy that stock they're going to like buy every Bitcoin that's not nailed down and to his credit he did do that
worked
he did do that all right uh this is the cost basis of the coins versus price and as you can see um we're right there the cost basis This is 64,000 Bitcoin. I I know it never closes. Bitcoin closed quote unquote yesterday at 597.
So they're underwater on the
So they're now they're now in a loss on their average cost in Bitcoin. They bought a ton of Bitcoin um I guess at 80,000 90,000 100,000 which is what they said they would do. Again to his credit he said he was going to do it and he did it. Last thing, this is the premium or discount to NAV. And as you as you guys can see, this started out um especially around late 2024 as Donald Trump was elected and he became the crypto president. This started out trading at three to four times the value of Bitcoin held and now it is below one. But wait, one of the one of the important not not uh asterisk to the story, chart off please. You knew that at some point GBTC's premium would collapse to zero
when it became an ETF.
When it became an ETF and so you can't say well strategy was trading at premium too. No, different instruments. Totally different story. So strategy as an Micro Strategy as a thesis as an investment in 2021 whatever it made sense and it worked and it's not 2021 anymore. If Bitcoin were to go back to a 100,000, this thing would get its get back on its go because it still owns it still owns. They say, forget 21 million Bitcoin, it's really only 16 or 17 million that will ever exist because of loss.
People mined early bitcoins and forgot about them or there are wallets where people lost the password. So, it's not really 21, it's like 16. And if you think about it that way, he basically already owns 5% of all the Bitcoin that will ever exist. So, not knowing anything, let me ask you this. Is this like a death spiral to zero?
No, because he still owns so much Bitcoin. Like, that's the that's the problem. If you're It's not going to be
A death spiral, cuz he can liquidate Bitcoin at will. Unless you think he's the only buyer, and I don't. And I don't think anyone else does. I just think the problem now is this is no longer going to be a levered bet on Bitcoin. It can't be, because he's not going to be able to have enough capital to buy at the rate that he's been buying.
>> Well, not right now.
>> Now, now he's got to play this game where it's like, oh, the preferred is in a deep drawdown versus par and the yield is too high. I will use some of my Bitcoin to shore that up, and then maybe Bitcoin rallies and he could do the reverse.
>> So, it's a different story now. I'm very curious to see if Stretch, forget about par, gets even like, if it gets back above 90.
>> Do you know how big Stretch is?
>> Is it 10 billion?
>> It's like eight and a half billion. It's the largest, uh, pre, uh, the largest preferred ongoing preferred with no maturity in the world.
>> Yeah, I mean, obviously, I hope it works. I hope it goes back to par.
>> I would really like that very much. I would just say Matt Levine was, I'm not going to quote all the Levine stuff. Matt was talking about this as sort of like a, uh, slow-motion bank run, but not really, because Strategy's got the mechanism that you and I just talked about where effectively they can get out of it. Um, but is this now still a levered play on Bitcoin, or is it more like a financial engineering thing where unless you're running the company, you have no idea which lever they're going to pull next? To me, like, that sort of sounds like the problem with it. I would think if Bitcoin goes back to 100,000, what, what is that? A, a double from here or thereabouts. I would assume that Strategy would do better than that. But I don't know. I also do wonder if there's, there's, there's Sailor getting out of the way and and getting, uh, getting some of the spotlight off him is probably for the best.
>> What do you mean getting out of the way?
>> Long did he run already?
>> No, no, no. That's not what I mean. I just mean that I think that, uh, a lot of the Bitcoiners probably are not too thrilled that he is part of the story. Anytime you mention Bitcoin.
>> Fair. Oh. Oh. The, the non-Strategy cultists,
>> right,
>> who own Bitcoin are probably sick of hearing about this whale that's pushing the price around.
>> Okay. Yeah. I, I would, I would guess. I don't know. I don't speak to enough of those people, but I would guess they're probably sick of hearing about it.
>> Anything else?
>> Now we're good. We got it.
>> All right. Uh, let's talk. Oh, maybe let's end with this, and then this will be a nice segue into the next conversation. So Jeffrey Patac tweeted, "As if it's not bad enough, sorry guys, to pile on, the T-Rex 2x long Strategy has been one of the biggest cash furnaces I've ever seen."
>> Good.
>> From, from 9/17/24 through 6/24/26, I estimate it got $2.3 billion in cumulative net inflows. Over that period, I estimate it lost $2 billion. Doesn't include the past two days during which it lost 26%. I think I saw Jake tweet that like,
>> "I'm totally fine with that, and I don't feel bad for anyone. That's, you know what you do when you're pulling the trigger on a 2x MicroStrategy. You're a crackhead. You know that."
>> So what a G.
>> Besides, you know what that's like?
>> Is there going to be a hearing in Congress for the people who lost money on Melaniacoin?
>> I don't think so.
>> Right. Um, the 2x version, both, both, both inversed and levered long, I think are both down like 95% or something like that.
>> Oh, that's a shame. Oh, what a, what a, what a horrible thing.
>> So let's, let's talk about, let's talk about speculation and leverage, because there is, uh, there is a lot of it. Josh, you wrote a couple of weeks ago about like, people have nostalgia going back to the way things were. This is it, folks. There's no going back. There might be periods of time in which people that are speculating, you know, burn their hand and they step away from the stove. They'll be new people with new hands to burn. It's never going back to 2017. Like, this is, this is part of.
>> We're in a new world. I agree.
>> We're, we're in a new world. Um, interestingly, the old way of measuring how much leverage is in the system was FIN, was margin debt. FIN margin debt. And this is literally like ragtag margin where, okay, I will give you, I will have $100 in my account. I will take 50 more. And that is boomer leverage, because the leverage ETFs, which we're going to get into in a second,
>> options, swaps, all of it not reported.
>> So, but even, even just isolating the FINRA stuff, the, the FINRA margin debt, it's up 54% year-over-year. And of course, this moves with the market. Like, duh. The market is up year-over-year a lot. So, you know, margin debt is up a lot year-over-year. There's been three other periods over the last 20, I don't know, eight years where we've seen margin debt rise at a faster pace, and they're not good dates. So, not to scare anybody, but this is just true.
>> March.
>> This is the question. Here's the question I have for you about this chart.
>> Is it causal or is it or or is it coincident?
>> Which is?
>> Not like. Well, let me say it differently. Not coincident, like, oh, these two things have nothing to do with each other. Coincidence?
>> No, no, no, no, no, no. Is it causal, meaning the margin debt is what pushes us to the point where the market has to crash because there's so much speculation, or does the market crash and then we see that margin unwind happen just because that's what happens when stock prices go down, or at least stop going up? So when we're both, when we're talking about the distance above a 200-day moving average and we're getting a little bit uncomfortable discussing it, the higher these things go into space, into outer space, the less stable they become. This is physics. This is how markets function. And so this is why you're seeing Micron go up 10% and down 9%, and it is becoming less stable the higher it goes.
>> So, um.
>> Can I say one other thing about margin?
>> Go ahead.
>> This is the thing that people don't understand from the outside. The risk is all yours. This is not like, oh, the banks are being reckless with their lending and they're doing like all these mortgage bonds and blah, blah, blah. That's not how this is going to go. You are going to eat [ __ ] when this thing blows. Not you, the colloquial, the proverbial you. This is the brokerage firm. Robinhood is going to be fine. They are not going to be left holding the bag. They will liquidate securities, margin call, like they will liquidate securities until you go neg. I've, I've been on the phone with grown men with negative equity. I had to.
>> I had to sort of margin clerk in my role as a as a co-branch manager a million years ago. I had to talk to people who went negative equity. You know what that is? It's like I had 50 grand in my account and now my account's worth negative $8,000, and I'm on the phone like, "Yo, you got to send in $8,000." Well, what happens if I don't? Nothing, really. We lose $8,000. We're the, we're the introducing broker dealer, so we got to whack it up with Pershing or or Fidelity, but nothing's going to happen to you. Guess what? The person with negative equity says, "Oh, okay, great. Have a nice day. [ __ ] off." Like Robinhood will be fine. They will not have a problem with this. This is going to be your problem.
>> Okay. So, so Cali wrote a research report for Compound Insights with Marco Aayachini. He's a senior vice president of research at Vanderitra. So they brought the data and direction sponsored the paper. So we pub, I think we did this in November, and the paper was called "Leveraged Funds and the Active Trading Boom: Inside the Mind of the Active Trader." And one of the things that they found in the report was that leveraged volumes have grown at a 29% annual pace since 2020.
>> Faster than options and stock market volumes over the same period. Way faster. Way, way faster. So the current leverage fund universe at the time, look at the, the single stocks, and they've definitely since blown past broad equity, broad equity for losers, single stocks. And Josh, a couple of weeks ago, you were saying like, like, who's doing this? 90%?
>> I'll tell you, 90% of the turnover comes from active retail traders. So nobody's crying for these people. They know exactly what they're doing. I love to gamble too, and that's exactly what this is.
>> Chart back up. That's single stock options.
>> No, lever, single stock leveraged ETFs.
>> Yeah.
>> So dumb. All right.
>> So, okay. So, so this is where it gets dicey. Total assets in leverage ETFs, it's now, it's now approaching $200 billion. The Journal wrote about this over the weekend. And here's a great quote. "I'm fearful that we're building unintended leverage that isn't fully understood," said Mark Hackett, chief market strategist for Nationwide's Investment Management Group. "You've got people with a lottery mentality using margin to buy options on levered ETFs. That's three or four layers. That's what we were talking about on TAFF. Like there's options on RAM."
>> Margin trades on triple long ETFs.
>> Options on RAM, which is the double DRAM. So look at this amazing chart of the cumulative notional volume. And we'll get to, we'll, we'll describe this in a second.
>> Um, this is a great chart. Show, if you're listening, it shows like 2021 looks quaint by comparison. Even 2025, look how far off trend we are.
>> Josh, well, it's obviously being driven by SK Hynix and and semis and all, you know, all that sort of stuff. So, Todd has a chart showing the notional value. So, all right, fine. I have a dollar. I, there, there's $10 billion in Fund XYZ, but it could own $20 billion of a stock, and it's moving the market. I mean, obviously, it is. So, Todd, Todd's own shows that there is upwards of $500 billion in notional value for levered ETFs. And this is only 200 of the 600. And I'm, I'm guessing this is most of the, most of the assets, but we're talking about half a trillion dollars.
>> What?
>> This is absolutely moving these names everywhere.
>> So your point is, so you, okay, so you made that, that's a really big point. When somebody shows you a chart of FINRA margin debt,
>> you're looking, it's like it's like the blind man with an elephant. You're feeling the tail. You have no idea. You have no idea what else is going on.
>> Yeah, I'm with you on that. That's a really important point. Now, not to say that margin debt isn't elevated.
>> No, it is. It definitely is.
>> Very elevated. But then you have people that explain it away like, nah, you see, you don't understand how margin debt works. It grows as a function of the size of the stock market. It's like, oh, yeah, [ __ ] I have, I have $500 billion in levered stock fund betting in addition or maybe combined with that stupid federal margin debt chart.
>> Some of these, some of these levered funds aren't even allowed to use swaps anymore. The funding is getting too expensive. They're going to the options market. There is so much hidden leverage in the system between swaps and futures and whatever that we're not seeing. Yeah. People are speculating. These are not going away.
>> Are these like 25-year-old, uh, young men? Who, the, who the hell is this profile of the person?
>> Dude, everyone.
>> No, but time out. You made, you quoted somebody who said something to the effect of like, "I'm concerned we're building up leverage that people don't understand." They understand. What are they? Chimpanzees. They know what they're doing. They're doing it deliberately. They didn't do it by accident. They typed the wrong ticker in. What are you talking about?
>> They not only do they not understand, they're doing it deliberately BECAUSE THEY DO UNDERSTAND.
>> Of course they. I think he's talking about market participants don't understand what's happening.
>> Me trade good.
>> Yeah.
>> Dude. It's, it's bananas. All right. You know what though?
>> It's never going to stop. There will be wipeouts. It'll come down and then it'll go back. We, we, we don't have time for this today, but we are in this nihilistic period of, uh, American-style capitalism. We're kind of in this moment where people are like, "So, let me get this straight. There's like two ways to be able to pay my bills in this economy." Like, get in early on a crypto scam or or take off my clothes for OnlyFans. Like, that. Like the only people my generation that have any money are either naked or aggressively speculating. Like that's, those are my choices if I don't work at, uh, Goldman Sachs. Like, that really is the mentality I think that's driving this. And it's super nihilistic. And I hope, uh, I hope this period doesn't go on for much longer because I don't think we can as a society. I don't think we can carry on this way. It's, uh, deeply disturbing.
>> But I get, but I, but I understand it. But I understand it. I don't see how you can earn $20 an hour and and live.
>> The more, the more charitable version of what you're saying is people just love to gamble, too. Like that is.
>> There's a part. Oh, yeah. Yeah. Yeah.
>> Dude, it's fun. It's fun.
>> All right. Uh.
>> And it's definitely fun in a bull market. So.
>> All right. Before everyone kills themselves, we have one more thing we want to close with. This is a really great quote from Adam Parker. You want to do it?
>> It's so good.
>> So good.
>> Um, all right. So, Adam wrote, "What bothers me about investors that espouse the 'it is never different' mantra is that they project an air of intellectual superiority and laugh at those of us who say 'it is different this time.' Man, I, yes, tattoo that on my face. We are not saying that human cycles of fear and greed don't rhyme. We are not saying that hubris and debt aren't always present at tops. We are not saying that behavioral science in finance isn't critical. But when it comes to AI, semiconductors, my response is, it is already factually very different this time. Sure, when there is eventually a large downturn in profits in the stocks, these people will feel intellectually vindicated, but that doesn't matter. If they think AI is a joke and the hyperscaler capital spending is all stupid and the memory stocks are 'the biggest bubble they've ever seen,' they are already brutally wrong as it has already been massively different. Waiting for the cycle to turn lower to justify that you were right to miss a large portion of the biggest upcycle ever doesn't make sense."
>> Right? You can't ever be right. It's too late. Even, even if there's a downside, you, you can't be right. The goal is to have more upside capture of the cycle than downside capture. The goal is not. All right, I'm going to repeat this. I'm going to say this slowly. The goal is not to miss 90% of the upside and make fun of those who captured a lot of it, calling them crypto bros or retail idiots and morons, levered to single stock ETFs. This is not just the greatest profit cycle in DM history, but it might be the greatest in the history of all cyclicals. Micron went from being perceived as a low-quality commodity producer with a questionable reputation 25 years ago to a company that is guiding that they will do $50 billion in quarterly revenue at 86% gross margins this next quarter. Is that different?
>> Yeah. Right.
>> Well, amazing, Adam. Well done.
>> That's, that's, that's hitting hard. And yeah, it's real different. And that's not, and saying something is different is not the same as saying it'll never go into reverse or or it won't stop. Nobody is suggesting this just goes on for the rest of our lives. Everybody understands there's still going to be an ebb and flow. But to say that this has to rhyme with something you read about at, uh,
>> It's lazy.
>> in, in an article. I mean, or or in a book somewhere. Come on. This is total, completely different. The, the result, the result is not going to justify having missed the whole thing.
>> That's it. That's it.
>> So, so you have, you have a stock go up a thousand percent and then fall 30%.
>> Congrats.
>> And you're, and you're going to pop and you're going to pop in after it falls 30% and say, "I told you it was a bubble." Get the [ __ ] out of here. Uh, all right, make the case. Well, if you're riding with me on Nike, you're probably wondering what else I'm bullish on. Uh, all right. I'm in Toast. And the stock hit, uh, like 21 or 22, and it's since bounced back. I didn't see where it closed today.
>> 2780. It looks much better.
>> All right. It got, got up to 28 and change, pulled back 2780. Um, but it is joining the Midcap 400 effective tomorrow. So, it has just taken out its 50-day moving average on good volume. You've now got an RSI confirming a potential break of a downtrend. This downtrend has been in force for as long as all of the other software stocks have been selling off, which is July, August of last year. Um, this has been a one year of software stocks going down, down, down, down. But the premise here for me on Toast is this, and I've added to it when it was lower, and I'm, I'm doing the right thing here as an investor. Eventually, Michael, the market figures out that not every software company is as disruptible as AI, as other software companies. And some of these things are actually going to turn out to have been AI beneficiaries. And I want to show you what that looks like when that market realization happens. Chart, please.
>> You promise? Do you promise?
>> No. Uh, this is an example. This is not what I think is going to happen to Toast. This is CrowdStrike. And this stock, as you can see, started selling off last fall and was locked in this downtrend until sometime around April, probably coinciding with earnings. There were a little, and, and basically the downtrend ended, and then obviously a new bull market took hold as the story around Crouch. The result, the results were always good. Chart off, quarter after quarter, even on the way down, they were crushing it. Okay. The results were never the issue. The issue was the sentiment. And one day, inexplicably, the sentiment changed. Um, George Kurtz, friend of the show. I'm a longtime shareholder here, so I am talking my book. Um, but this stock is now almost $800 a share, up from, up from three something. It had just been absolutely atrocious. And then one day it wasn't. And nobody can look back and say, "This is the exact news." Just the market figures out, okay, Crowd Strike, more AI means more cybersecurity threats. Actually, this is now an AI play. Toast has Toast IQ, which is their AI product. And the premise for me, what is the more likely outcome? That restaurant owners use Claude to code their own solutions for things like payment and, um, giving healthcare to employees and restocking the kitchen with ingredients and managing reservations, or
>> or Toast is going to be the company that you helps them use AI to improve their businesses. The, the machine is already in the building. It's sitting on the counter. It's in the waiter's hands. If, if anyone is going to be in pole position to bring AI to the hospitality industry, my argument is it would be Toast. It would not be a thousand entrepreneurs working in the restaurant industry coming up with their own solutions.
>> We, we've heard, we've heard the pitch before, and you remain resolute.
>> I'm not backing out. I'm not backing down out of this thing.
>> The, the more important point that you made, because I agree with you. Yeah. I mean, what do I know about the restaurant industry? What you said about CrowdStrike is so important for people to understand.
>> There was no news.
>> Uh, there was news on the way down, or narrative news, and then.
>> No, there was sentiment. Sentiment changed.
>> The veil of uncertainty, the sentiment, it changed. And it's really hard to predict when and where, and even if you look on the chart and you say it, you can't point to when it happened. It just, it just changed. So I like it. Um, the stock looks way, way, way better. I will say it better not roll over again.
>> Oh god, I'll kill myself. All right. Uh, you have a mystery chart?
>> I do. All right. If I was a bear, and I'm not, but if I was,
>> If I did it.
>> If I did it, if I was a bear, if I were a bear, this is the chart that I would show you. Chart on, please. We're looking at, at, uh, at one stock compared to a semiconductor. And the semiconductor is the modern.com bubble. Um, and this happened in the.
>> Hold on. Hold on.
>> Let me finish.
>> Which is which, though? This is a mystery chart, but I see it says semiconductor ETF.
>> Right. I'm, I'm not done.
>> Okay. Go.
>> This looks exactly like what happened in the dot-com bubble. Replace the semiconductor ETF with the NASDAQ, and the purple line was the purple line.
>> So, what's the purple line?
>> Okay, the purple line is the purple line, an index or a sector or a stock?
>> A stock. It's an individual stock.
>> Correct. And I shouldn't have to give you any more clues.
>> You shouldn't have to give me any more clues.
>> No. And that in of itself is a clue.
>> Okay. The purple stock is Berkshire Hathaway.
>> Correct. Look at me.
>> I did that with no help. I did that with no help. I literally did that. I did that.
>> So this is, you know, this is not nothing. We, we saw this in, we saw this in the in '99, 2000.
>> Or '98 to 2000. So Berkshire flatlining while the semiconductor ETF goes up is what are you saying? What are we saying?
>> I'm saying exactly what I just said. In from '98 to 2000, I believe Berkshire was actually down 30% when the index was up like 150%.
>> Yeah.
>> It's happening again.
>> Well, oh, the stock's not participating with the S&P rallying. That's the thing. That's the thing. Don't be up to us. You know exactly what's happening.
>> No, I got, I got it. I got it. I agree. I agree with you. I agree with you. Um, it does own tech. It doesn't, it doesn't own enough.
>> Josh did not get a degree in economics from Queens College like I did.
>> Certainly did not. All right. Hey guys, thank you so much for watching. Thank you for listening. I want to let you know a couple of things. First of all, new merch in the Compound store. It's Iontshop.com. Iontshop.com.
>> I really don't.
>> We did, we did new, we did new hats for summer. We have the beach, uh, we have the beach towels. We got, we got some stuff in there. Go check it out. Um, also want to let you know tomorrow is Wednesday, which means Animal Spirits is back. It's Michael and Ben, my favorite podcast. You're going to love it. Um, Duncan and Ben will return with an all-new episode of Ask the Compound. And that is a show where you get to submit questions for the boys to answer, and whoever their special guest is from one week to the next. So, if you want to send a question into Ask the Compound, the easiest way to do it is askthecompoundshow@gmail.com. That inbox is constantly monitored, and if you ask something interesting and they use it, you will be getting some merch 'cause we love you. Um, we're going to do the Compound and Friends at the end of the week. One of our favorite return guests, returning champions coming back. Keep it locked on the Compound. Keep rocking with us. We'll talk soon. Hallelujah.