Transcription
If I took every headline we've read over the last two months, you'd see war, terrorists, interest rates, AI, housing, oil, straight of her moves. And I tell you that they all are pointing to the exact same story, not six different stories. One, and nobody is talking about it, at least not the way I think they should be.
Wall Street has changed its definition of what it's calling a great company. And I'll tell you what I mean by that. 12 months ago, well, if you mention growth, then that was enough. But today, growth without cash isn't enough. If you mentioned a chipmaker, a AI infrastructure, that was enough to see your stock soaring, but today that isn't enough. Because while companies are spending a lot of money, Wall Street is asking where is the money?
But then you have completely different companies that are quietly becoming market leaders. And if you don't understand why that's happening, you'll not understand what's going on in the market and you'll probably be left behind. And so I feel like we don't have to wait for the market to pivot for us to get the best deals. I feel like we can take advantage of the deals right now and still take advantage of what Wall Street is rewarding.
So, in this video, I'm going to break down two ETFs in the video that I think we should be looking at that can really help us make money while the market is doing this while still taking advantage of some of the deals that's on the way. So, it's your boy, the Wall Street Ch, but make sure you like and subscribe and help us get this video to 2,000 likes. It helps us grow and helps the channel get rec recognized in the algorithm. Let's go.
So, we have two completely different charts we're going to look at. And I'm just saying that in the proverbial sense. So, we have the NASDAQ, which is down 11% today, closed down. That's officially correction territory. And then you have the SMH ETF, which is the semiconductor ETF, which is down about 25% today, which is in a deep bare market with no signs of closing soon. And then we have some of the hottest AI stocks that have lost 20, 30, 40% even.
But I want to show you something as we look at that. Even with companies like SNDK being down and losing so much, it's still up 300 and some percent on the year. Mind you, it was up 900%. And then you got companies like Dell, even with the loss, is still up 170%. You got STX companies like Seagate still up 175%. You got companies like Micron still up 170%. Western Digital still up 170%. Intel 120%. AMD up a 99%. and Marll up 94%. And these were some of the hottest stocks in the game. They still up triple digits, some of them, and some of them way over 50%. That just shows you how much the market ran off.
But the market is now repricing itself because look at this. Home prices are up. They climbing. The economy uh they say is still growing and strong only because consumers are still spending. And I'll be honest, if we took out the AI spend, then we probably be in a recession and still have hundreds of millions of billions of dollars being spent on artificial intelligence. So, if the economy hasn't fallen apart, why is the market acting like it has? Because Wall Street isn't selling the economy. Wall Street is just changing what it wants to reward.
So, for nearly two, two and a half years, investor could pay almost any price for growth. If you mention 8, your stock went up. If you announced another data center, your stock went up. If you bought some more Nvidia chips, your stock went up. But now, Wall Street cares. Before, it didn't care how much you spent because everyone believed that the profits will eventually come. And today, that question hasn't changed. The market is no longer asking who's building AI. The market is asking who's making money from it. And that is the big indicator. That's the one thing that changed everything. It's created one of the biggest rotations we've seen in years.
And by the end of this video, you're going to understand why semiconductors are falling, but why free cash flow is suddenly the most important words on Wall Street, not capex, and why some of the most boring investments in the game are outperforming the headlines that everybody's chasing. So, our goal isn't to follow the companies, it's to follow the money.
So, let's look at it for a second. If you only watch stock prices, you think you're headed into another major recession cuz that's all you hear talking about on the news. But then you look at housing and the story becomes a little bit different because home prices again keep roing, rising. The average home price right now is $440,000. That's roughly 3% higher than it was last year, which equals 36 straight months of yearover-year home price increases. Think about it. Mortgage rates are still elevated. Affordability has stretched and yet home prices are still climbing.
And I know people going to say that the foreclosures has risen as well. And that is something to watch. But let's take this into context. at 21% increases. That does sound alarming, but foreclosures started from historically low levels preandemic, forbearance, and strong home equity ownership. That that's not 2008. Back then, they had excessive leverage, weak lending standards, and millions of homeowners with little equity. Today, homeowners are locked in on low mortgage rates and they have substantial equity. The housing market, it has challenges, but it isn't showing the same structural weaknesses that trigger the housing crisis. So, that's what's keeping the broader economy rolling. One word, it's not homes, it's investment, and more specifically AI investments because that's what's keeping us out of a recession.
So, let's think about it. Alphabet, Amazon, Meta, Microsoft together are looking to spend over 730 billion dollars in AI infrastructure this year. And their all stocks are getting paid. They're paying for it. That's bigger than the 400 million billion it was going to spend last year. So in one year, that's a 70s something% jump. That's not a slowdown. That's an arms race. And every company wants the bigger data center. They want more GPUs. They want more networking. They want more power. They want more storage.
Don't get me wrong, I'm going to get us to the ETFs. That's not a problem. But just think about it. They're spending because nobody wants to lose the AAS. But here's the problem. Wall Street has already celebrated the spending. Now they want the return. And that return probably won't be here for a while. And so while everyone applauded the buildout, nine people are saying, "Where's the money?" And then we looking at these companies that spending all of this money and we now see that they're now free cash flow. Something that was really good has now gone negative. We're seeing companies like Meta have unprecedented. They bring in $60 billion in revenue in one quarter. That's unprecedented, but the free cash flow is shrinking. Google unprecedented quarter. Free cash flow is negative. Microsoft just had a amazing quarter. Stock is taking a beating.
So if Wall Street isn't rewarding spending anymore, what is it rewarding? Again, free cash flow. Now, let me simplify that. Revenue tells you how much money a company has coming in. Profits tell you what's left after expenses. Free cash flow tells you how much cash a company has available after paying to operate and invest in the business. That's the real financial flex. Companies coming in with strong free cash flow. They can buy back stock. They can pay dividends. They can reduce debt. Invest in new opportunities. Acquire competitors. They don't have to constantly borrow money.
And that's exactly why this one ETF cows I want to talk about that COZ. I'm sorry. A lot of people think it's just another ETF, but it's not. It has a simple strategy. Instead of chasing the fast growing companies, it looks for companies that generate some of the strongest free cash flow in the game. And that's what's important because Wall Street has shifted from rewarding promises to rewarding profits. And the reason why I want you to look at K because think about it, the stock is up 22. Um, the ETF is up 12% year to date. It's 23% tech, but we see tech taking a beating. It's also 19% healthcare. That's what's winning right now. So, think about it. Bookings holding is its biggest holding, Bristol Myers, and then General Dynamics. Again, the stock is up 12% year to date. That's beating the market and it's hitting all-time highs. Actually, to date, it hit an all-time high.
And another ETF I want us to look at is the company, the ETF SHD. Now, that ETF is up 22% year to date. It [snorts] has a 100 of the best dividend paying companies in it. Its biggest position is healthcare which makes up about 20% of the ETF. Consumer defense makes up 19% of the ETF. Its biggest holdings is Avid Labs Healthcare, Merc Healthcare, Amian Healthcare, and United Healthcare. But it's more than that. Many of the holdings inside are doable companies and businesses with healthy balance sheets, consistent cash generation, often in sectors that aren't doing massive bailouts and spending a lot of money. They aren't flashy. Names aren't dominating social media. There are companies that often hold up better when investors become selective.
So, it doesn't mean that AI is over. It just means that leadership has broadened and markets don't always move in a straight line. Leadership rotates and now cash flow matters. So, here's I'm thinking about the market. What do we do, y'all? Well, we don't panic. We don't abandon AI and we don't pretend that nothing hasn't changed. We adapt. Because investing isn't about falling in love with one sector. It's about following where the capital is going. There are times and there are seasons in the market where sometimes growth just leads the market. This is a time where value is leading the market. Sometimes technology will lead the mark. Sometimes healthcare, consumer stable, dividend payers, they quietly become the safe place to compound wealth. And right now I believe we're in that transition. It's not the end of AI, the next chapter of AI. The companies that continue to grow and begin producing stronger cash flows will likely separate themselves from the rest.
So, don't be distracted by the daily headlines. Watch the cash. Watch the earnings. Watch the balance sheets because Wall Street has already told us something important. The market isn't paying for dreams anymore. It's pay for businesses that can turn dreams into dollars. And investors who understand that shift are usually the ones who stay ahead of the next move. So I hope you heard this video and I bring you some value because the goal is to not get you scared of what's going on in the market. It's saying yes, we can buy those companies at a discount rate while we also can reward get rewarded with this value. It's your boy Traveler. Make sure you like, subscribe, and share this out, man. I hope I bring you some value and let me in the comments know what ETFs you're looking at. Salute.