Transcription
Welcome back everyone. Today on the JO Carlson show, we're going to be breaking down one of the biggest concerns growing in the general market. And that is that the companies you hear about every single day, the biggest, most important companies in the market, the Nvidias, the Open AIs, the Oracles, the AMDs, all these companies that you're hearing about every day are simply just investing in each other. And they're investing in each other in very complex ways. It's caused concerns that investors are pointing out that this looks like a lot of circular deals.
In fact, Bloomberg has a report today going over the extent of this circular deal bubble. They say a wave of deals and partnerships are escalating concerns that the trillion-dollar AI boom is being propped up by interconnected business transactions. What investors are seeing and the reason they're becoming concerned is because all the deals that are going on right now are between the same groups of companies. It's become a spaghetti bowl of interconnected deals and money sloshing around between each other. What happens if you're invested in one of these companies that's investing in a different company that's getting an investment from a different company in a roundabout way? What does that mean for the future of AI and is this sustainable? In this episode, we're going to be breaking down this web of deals and if investors should be concerned.
We also have news that Equifax is responding to FICO's attack on their business model. Equifax strikes back in the battle of credit scores. We'll be taking a look at the approach FICO is taking. Amazon is launching a vending machine for pharmacy. That's right. You can get your prescription and pick it up by a vending machine. This obviously threatens the business model of many retail companies. We'll be taking a look. Netflix stock price is back above where it was preceding the boycott on the company. We'll be taking a look at why this boycott didn't pan out and why investors were quick to buy up the dip. And we have our fail of the week, which in this case are people quitting their full-time jobs in pursuit of replacing their income with covered calls and options in the stock market. So, we have a ton to get to in this episode, a lot to go over, and we kick things off today by talking about this issue with these big AI companies, the ones that you've heard of, Nvidia, Open AI, Microsoft.
Day in and day out, you're hearing about the same group of companies. But there's some investors that have noticed for some time that many of these deals you're hearing about that we're announcing on this channel all the time, every single week, we're announcing some big new deal like the one that OpenAI announced with Oracle, the one that OpenAI announced with AMD. They all have some vague similarities and it's starting to look like they may be circular financing or circular investments. Now, you may not be familiar with the term circular financing. It has a very specific meaning. It basically means when two companies are just investing in each other to create artificial demand. For example, I could say hypothetically if I started a juice company, we can call it Juice Co. If Juice Co is a company that just makes juices, I make really good juices. And we have another company over here that someone else started that's a bottle company. I could take $500,000 and invest that into the bottle company and call it a strategic partnership. Then that bottle company takes the $500,000 that I gave it and they buy juice from me and they say that they're doing it for testing or analytics. That way I got a brand new order for $500,000 and I generated $500,000 in additional revenue. My revenue growth is now 40% year-over-year as a result from the purchase from my own money. But to investors, I can say that I formed a strategic partnership and my revenue is growing like crazy. But see how it's a little bit misleading? All the money came from me. All of it originated from my company. I simply invested in another company. They turned around and gave the money back to me. And now we have strategic partnerships and revenue growth. And this is what investors are becoming concerned about that when you have these circular deals of all the same companies investing in each other of money trading hands and being recorded as revenue, it can end up being misleading of what's actually going on. And deciphering between organic revenue growth and very specific circular-like deals can become very difficult.
Bloomberg outlines this growing issue and concern from investors of this circular financing scheme. Two weeks ago, Nvidia agreed to invest as much as $100 billion in OpenAI to help the leading AI startup fund a data center buildout so massive it could power a major city. OpenAI in turn committed to filling those sites with millions of NVIDIA chips. The arrangement was promptly criticized for its circular nature. This week, undeterred, OpenAI struck a similar deal. The ChatGPT maker on Monday inked a partnership with Nvidia's rival, Advanced Micro Devices, AMD, to deploy tens of billions of dollars worth of its chips as part of a tie-up. OpenAI is poised to become one of AMD's largest shareholders. Never before has so much money been spent so rapidly on technology that for all its potential remains largely unproven as an avenue for profit. And often these investments can be tracked back to two leading firms, Nvidia and OpenAI. The recent wave of deals and partnerships involving these two are escalating concerns that an increasingly complex and interconnected web of business transactions is artificially propping up a trillion-dollar AI boom. At stake is virtually every corner of the economy with the hype of the buildout of AI infrastructure rippling across the markets from debt and equity to real estate and energy.
So we can take a look at the breakdown that they provide and this gives us a glimpse of what's what's actually happening right now. Now, OpenAI is not at the heart of this, but they're very close to it. There's a lot of concerns about how many circular deals in nature OpenAI has. They have a circular deal, of course, with Microsoft. They get the compute, Microsoft supplies that, and then they get equity as a result. But they also have it with Ambience Healthcare, with Harvey AI, with a company called Anosphere, with AMD. That's the new one that they just announced. They also have different deals that aren't quite directly circular with Netscale, Oracle, and Coreweave. And then, of course, they have a circular deal with Nvidia. So, OpenAI just looks like an airport of circular deals, just deals coming in from every direction where they're giving something as a result of that deal. They're promising something back.
Then you have Nvidia, which is at the heart of this concern. As you can see, it's at a massive market cap, the biggest company in the world, but Nvidia has deals with virtually everyone. They're making deals with hundreds of companies. In fact, this chart here doesn't even highlight the full extent of it. This is just the biggest portion of it. They have deals with Microsoft and OpenAI. They have deals with Netscale, Mistral, Figure AI, XAI, Oracle, Intel, AMD, Core, and so on and so forth. All of it is going in and out of Nvidia. Nvidia has become like the central bank of AI. They are the hub, the station, the bank of the AI future. While many investors will look at that positively and say they want to invest in the company that has all these deals, that owns all the equity, that's doing all these deals, there's others again that are concerned about the circular nature of all of these deals.
The companies which ignited the AI frenzy 3 years ago have been instrumental in keeping it going by inking larger and sometimes overlapping partnerships with cloud providers, AI developers, and other startups in the sector. OpenAI alone has now struck AI computing deals with Nvidia, AMD, Oracle that all together could easily top one trillion. Meaning that the AI startup is burning through cash and doesn't expect to be cash flow positive until near the end of the decade. Analysts from Morningstar are saying, quote, "If we get a point a year from now where we had an AI bubble and it popped, this deal might be one of the early breadcrumbs." The deals are so fast now. They're so rapid one after another and they're so large in scale that it's almost incomprehensible. The day after NVIDIA and OpenAI announced their $100 billion investment agreement, OpenAI confirmed it had struck a separate $300 billion deal with Oracle to build a data center in the US. So these deals were one day apart in their announcement. $100 billion to Nvidia, $300 billion to Oracle. Oracle is in turn spending billions of dollars on Nvidia chips for those facilities, sending money back to Nvidia, a company that is emerging as one of OpenAI's most prominent backers. Do we see the problem here? Nvidia makes this big deal with OpenAI. Then OpenAI makes a big deal with Oracle. While Oracle is making a big deal with Nvidia, they will pay back the deal for OpenAI. This is starting to get really confusing.
Now, on top of all of these complex weaves of deals that are going in circular logic, there's also the concern of how profitable all these AI deals will actually be. While Oracle generated about $900 million in sales by renting servers powered by Nvidia chips in the most recent quarter, its gross profit came in 14 cents for every $1 in sales. The information reported citing internal documents. The news dragged down Oracle stock and weighed on the broader market. So, here we have reports that out of hundreds of millions of dollars, their profit margins are now going down. They're getting thinner.
Now, we also just have news that Nvidia is now planning to invest $2 billion into Elon Musk's XAI, which of course is going to be financing a round for the company as they're buying Nvidia chips. So, they're again investing in a company that's buying their product. So, again, we have that relationship. We have the relationship of the juice company investing in the bottle company. The bottle company turning around and putting that invested capital to buy juice from the juice company. In this case, it's Nvidia investing in the companies that are buying its product. We see this over and over again. There's a similar set of cyclical relationships that can be seen with Coreweave. One of the breakout successes on Wall Street this year. Nvidia buoyed the cloud company's initial public offering by taking a 7% stake. It has since agreed to buy $6.3 billion worth of cloud services from Coreweave, which rents out access to Nvidia chips. So again, they're investing in a company that's primarily turning that money around and using it on Nvidia. OpenAI, meanwhile, received $350 million in equity from Coreweave ahead of the IPO and recently expanded its cloud deals with the company as much as $22.4 billion. Once again, a set of deals tied OpenAI and Nvidia more tightly together.
So, if you're looking at this plainly, again, it's just more of the case of investing in a company, meaning that you're giving them money. They're turning around with that same money you just gave them and then buying your services, which you're recording as revenue. So, you have revenue growth and a strategic partnership. Now, of course, executives in these companies are saying a different thing. They're not just saying that this is circular investment. They're arguing that these are great relationships and they're needed right now. Inside the tech industry, executives argue that these unorthodox business relationships are essential to meet an unprecedented surge in demand for AI services. AMD's CEO, Lisa Su, told Bloomberg that the partnership with OpenAI is quote "a virtuous positive cycle." Likewise, Greg Brockman, OpenAI's president and co-founder, said it takes an industry-wide effort using the entire AI supply chain to meet the immense demand of computing power to support ChatGPT and other products. The CEOs are saying, "No, we want to invest in everyone. This is meaningful growth. We have real products here. We're getting real revenue. This isn't just a web of deals between the same companies."
But if we look at this laid out, this complex web of AI deals, and we actually just go line item by line item, it shows the extent of why investors are so concerned about this issue. $100 billion from Nvidia to OpenAI, $300 billion from OpenAI to Oracle. We have $6.3 billion from Nvidia to Coreweave. We have $22.4 billion from OpenAI to Coreweave, OpenAI to AMD, that's worth tens of billions of dollars. We have US and Intel taking a 10% stake. So, the United States government is now participating in somewhat of the same thing. We have Nvidia and Intel. They have invested $5 billion and they plan to co-develop chips. Then we have the US and Nvidia which are now taking a license off of any chips sold to China. All of these deals are massive and they're propping up the stock prices for these companies for sure. And there's analysts that have noticed, and I know it's the same type of comparison we always see. I don't necessarily like it because I think it's heavily overused. But of course, there's comparisons to the 1990s. Circular deals are often centered around advertising and cross-selling between startups. The companies bought each other's services to inflate perceived growth. This is a type of thing that was reminiscent of another time period that preceded a large bubble. They acknowledge that today's AI firms have tangible products and customers, but their spending is still outpacing monetization. So, it is true that ChatGPT and all these companies have very real products. They are groundbreaking. Everybody can see how impressive they are, but the spend that's going into them is at a far higher rate than their monetization, than the money they're making. And it seems like this trend of bigger deal-making, stock price pumping, these stocks going up 30% in a single day is getting a little out of hand. We need to see real profits made from these products before investors overextend with the spending.
So now we're getting those comparisons that we always get during times like this to the dot bubble. But there's reason to believe it may not end up that bad. And the reason why is because we've seen this happen before where there can be circular financing deals just like we're seeing now that don't end in a crash. In fact, I've seen the same thing with Google. It was a common strategy for Google with their Google Cloud initially during the growth phase when they really needed customers to invest in those companies on the basis that these small companies would turn around and spend their money on the cloud. The deal would basically go like this: "Hey, we're Google. We notice that you have a nice fast-growing company. We want to give you additional capital and become a partner with you on the basis that you make an exclusive agreement to only use our cloud. And that way we get more usage on our cloud. Our cloud can scale and you get some capital to fund your growth." Google did that routinely to try to catch up with Azure and AWS. And guess what? Google Cloud today is rather big. They don't have to make those deals as frequently as they did at the beginning. Google's just fine. It didn't end in a collapse of any kind. There's no calamity as a result of those circular deals. So, Google can be a counterexample of a company that made many circular deals early on in its growth that didn't end in tragedy.
But it's also the case that the deals that Google is making early in its cloud are nowhere near the size of deals that we see being made between OpenAI and NVIDIA. These deals are on an entirely different level and in some cases they are mind-boggling. I believe that in this circumstance, investors should be a little bit more wary about the scale of artificial revenue and circular deals going on. We still know that AI is going to change the world, that there are real revenues behind this. The companies like OpenAI and Microsoft and Oracle have very real products, but the scale of investment is exceeding the growth of monetization and that is a trend that can't last forever. The impression that Jensen, as the CEO of Nvidia, will leave you every time he talks is that this will go on forever. That there's no end in sight to these deals, that there's no end in sight to the amount of revenue growth that will happen. Here's his most recent TV appearance just this morning.
"Sure. I would say the thing that is even quite surprising this year, particularly the last six months, demand of computing has gone up substantially. And this is what's happened because AI went from a simple one-shot answers to these reasoning and thinking AIs. The results are so good. But it uses exponential amounts of computing. But the interesting thing is because they're so good, because they're so smart, and they use exponential amounts of computing, we're seeing exponential demand, which makes sense because the AIs are smart enough that everybody wants to use it. And so we now have two exponentials happening at the same time. Demand for Blackwell is really, really high. And we're trying, we're working hard to get everybody online and get AI to the next level. But I think we're at the beginning of a new buildout, beginning of a new industrial revolution, and it's going to be exciting times."
"Not only are we not towards the end of this, we're only at the beginning. Demand is ticking up. We have two exponentials at the same time and things are just getting started."
Now, moving on, we get some news here. Just a couple clips I want to highlight from a recent interview from Jeff Bezos. He doesn't do these that often, and he's one of, I mean, he's one amazing CEO. Obviously, Jeff Bezos is great, but his interviews are actually incredible. And the reminder of focusing on what matters with the company. He's extremely good at focusing on really what matters. The part that I'm going to highlight on this is the difference between stock prices and the fundamentals. This is something that we continually have to remind ourselves of as investors because if you don't remind yourself of it, you're going to forget. And you're going to start looking at companies through the share price, through the sentiment. Jeff Bezos remains firmly anchored to the fundamentals.
"Well, okay. So, to take you back in time in the year 2000 when the internet bubble burst, Amazon stock in a very short period of time went from $113 a share to $6 a share. And by the way, it's split many times since then. I don't know, 20 for one or maybe even more. I don't have the number. But so these prices have nothing to do with today's stock prices. But to go from 113 to six in a short period of time was very concerning. And shareholders were upset. Employees were nervous. We had all of our employee base. Their parents were all calling our employees and saying, 'Are you okay?' You know, this was the environment of great nervousness. But I looked at the numbers in the business and every month as the stock price went from 113 to six, the number of customers went up every month. Our gross profits went up every month. Our operating expense, we were still in a loss position, but our losses as a percentage of sales went down every month."
What is he outlining there? He's outlining KPIs, key performance indicators, the things that we should actually focus on as investors, not price speculation, not the stock price going down 90%. But all those things he outlined, that they're losing less money every single month, that they're gaining more customers every single month, that their retention is going up, that everything is moving in the right direction fundamentally. Revenue growth, customer retention, more sales, and lower losses every month as the stock price is plummeting. Now, a 90% drop in stock price crushes sentiment, but Jeff Bezos, he doesn't care about sentiment. He's looking at the fundamentals again, what we should be focused on, and he says that things are actually improving with the company. They're not getting worse.
"Every single business metric, new customers, customer repeat purchases, everything that we were monitoring through that entire period kept getting better. And so this, that's one observation about bubbles in general. The fundamentals can be disconnected. The fundamentals of the business. And of course, as entrepreneurs, you're focused on the fundamentals of the business. The stock price is an output, an ultimate output that you actually have very little control over. Benjamin Graham, the great investor, is famous for saying, 'In the short term, the stock market is a voting machine. In the long term, it's a weighing machine.' And so as founders and entrepreneurs and business people, our job is to build a heavy company. We want to build a company that when it is weighed, it is a very heavy company."
That is a really great way of saying it. When we look at the companies we're investing in, you can focus on the share price. And that's what every investor inevitably does for some time period. If you don't catch yourself, you may be doing that same thing. Your sentiment and your feelings towards the company are heavily dictated by how it's been trading over the past month. If it's going down in price, you'll look for reasons to be sour on the company. If it's going up, you'll look for reasons to be positive. But overall, what we want are companies that are becoming heavier by the day. Bezos built an extremely heavy company. So, when I'm looking at analysis of my companies every week and determining which ones are going well and which ones aren't, I'm looking at whether or not that company is heavier this week than it was last year. Is it a bigger, more profitable company that fundamentals are moving more positively? It doesn't matter if the stock price is going down. That's an output method that, like he says, you have very little control over. So, even though we've heard this before many times, it's not original to Jeff Bezos. He's quoting Benjamin Graham. I still think it's necessary to remind ourselves of that, especially when we get in cases where the market seems to be infatuated with stock prices.
Now, moving on, we get some news of this epic war that's going on behind the scenes. As you're focused on your day-to-day, the credit bureaus and FICO are fighting it out. They're fighting back and forth with each other. And the last blow was struck by Equifax. Equifax strikes back in the battle of the credit scores. Fair Isaac stock tumbles. What did Equifax do? Well, less than a week after Fair Isaac moved to bypass the three nationwide credit bureaus in distributing FICO scores directly to the mortgage lenders. So, this is a move that FICO did to bypass Equifax. Equifax has since announced that it would make the VantageScore, the 4.0 VantageScore is the one that's the competitor to FICO, an alternative to the FICO score available for $4.50, a score over the next 2 years. So, it's roughly half the price of the FICO score, even less than half. The FICO score is like $10 now. Otherwise, you have to pay $5 and then $33 on a successful close. So, it's essentially $10 a score. Equifax is now undercutting them by over 50% to try to gain market share. Equifax also released this whole document and part of it they highlight directly that the FICO score costs have increased by 100% over the last four years. I've never really seen this before. This is Equifax's documentation calling out directly the price increases of FICO. Have you ever seen a different company do this? Just directly call out the price changes of a competitor over time. I don't know if I've seen this before. These companies, although they're very stodgy, they're not companies that you typically focus on. What's going on between Equifax and FICO today is like a knife fight between these two companies. It's really incredible to see them fighting this way. And this doesn't really show the response that the other credit bureaus have. For example, we just have Equifax here. We don't have the response from the other two credit bureaus.
Now, we also have news that Amazon is yet again going into another sector with a different angle this time. We know that big tech has been trying to go after pharmaceuticals for a long period of time. Healthcare costs are out of control. Pharmacy costs are out of control. The big tech companies that are great at bringing prices down for consumers, that's basically their specialty, especially the ones that do retail like Amazon. Their whole goal is to make things cheaper, more efficient, more cost-effective. They see pharmacy as this holy grail that if they could only take a chunk of this category, it could be a dramatic benefit to Amazon. So, Amazon is again taking a stab at it, trying to get into the pharmaceutical industry, but this time they're doing it through vending machines. Amazon is launching a prescription drug kiosk at some One Medical offices in Los Angeles. The company announced Wednesday in a move that could disrupt brick-and-mortar pharmacy businesses. The kiosks are operated by Amazon Pharmacy, working similar to vending machines. They dispense prescriptions for patients within minutes of their doctor's visit. The company said, "Yeah, it looks like you literally go up and swipe your card like an ATM and then it just dispenses your drugs." We know that when patients have to make an extra trip to the pharmacy after seeing their doctor, many prescriptions never get filled. By bringing the pharmacy directly to the point of care, we're removing the critical barrier and helping patients start their treatment when it matters most, right away. So, the idea here is that these vending machines aren't going to be in a Rite Aid or a Walmart. They're going to be right in the medical office. So, you have a big medical practice and then you have the vending machine full of drugs right outside of it for most prescriptions. I've been saying this for a while. Companies like Rite Aid and Walgreens, I think, are just dead. They're dead. It's a matter of time. This is part of the reason why I've thought that companies like Realty Income Corp., they have Rite Aid and Walgreens as a huge part of their lease agreements, are not good investments. These companies are just being crushed by Amazon one step at a time.
Now, moving on, we also get to the news. Well, it's not really news. It's just a simple observation, a statement of fact that Netflix is now above the stock price it was preceding the boycott. The boycott that lasted around 5 days. Now, if you were to look at this year-to-date performance of Netflix and I was to tell you at one point or another, there was a boycott during this, you might point to different time periods where you think the boycott could have happened. Maybe it started here. Maybe it started right there. The stock price fell for those. Maybe it started right here. Right? It could have been any of these time periods. The boycott started right there. This is where the boycott started. This is where we are today at a higher price. And we have here a V formation, also known as some extremely short-term volatility. Now, I don't think that boycotts are ever good for a company. So, I'm not suggesting it is in this case, but I just don't see the success of a boycott really happening when you have a billionaire instructing millions of people to not pay for one of the cheapest forms of entertainment to completely avoid that. Why said billionaire can afford any form of entertainment, can fly to any event, any live event, can travel the world, can do whatever he wants. He's telling hundreds of millions of people, "Hey, that really cheap form of entertainment that you can afford, yeah, stop paying for that." I don't think that that's going to be a long-lasting boycott. But when I look at Netflix overall, it is true that there is trash content on Netflix. There's a lot of trash content on Netflix. Things I never plan on watching, things I never plan on letting my kids watch. There's lots of it. But that's the same case for virtually every large video streaming platform in the world. That's the same case for every social media company. That's the same case for almost every single scaled platform in existence. When you look at Netflix, it still remains one of the cheapest forms of entertainment that exists. And as much as it has a huge amount of trash content that many people want to avoid, there's also some remarkably good pieces of content on Netflix that people are going to want to see. While I didn't think that this boycott would have a lasting impact on Netflix, I also didn't imagine it would recover quite this fast, but it did.
Now, next up, we have our fail of the week. Of course, this is where we outline silly things people are doing online. And in this case, we have TikTok. This is always a great place to go if you're looking for questionable financial decisions. Here we have this girl. I don't know who it is, but she's telling us about her story of shifting from full-time work to now just going full-time in the stock market.
"So, how long will it take me to replace my income via the stock market? I had this crazy idea while on maternity leave to take one week of my leave benefit, invested in the stock market, and use that to sell covered calls to try to replace my income. I just jumped in without doing any math."
She just jumped in without doing any math. Why try to do any math? Why even bother with that? Just jump right in.
"We're a month in. I've had some time to crunch the numbers and see how long it's going to take to actually generate enough money in premiums to replace my income. So, the amount that I started with was $1,542, which is the maximum benefit in the state of Washington for paid family leave. So far, I've been able to earn about a 10% return on that initial capital, but it's unrealistic to think that that amount would continue consistently week after week."
Okay, so I like that. Um, that's actually a positive thing. I think she just said she's acknowledging that the initial return she got, 10% in a week, is unrealistic. So, at least we have that. I like the direction this is going. Maybe she's going to make actually some rational assumptions. So, I looked at a couple scenarios with different amounts of returns each week, and it, the fastest that I could potentially replace my income would be 31 weeks.
"Okay. Am I reading that right? It says up here, assuming 8% weekly returns. So, she could replace her full-time income in only 31 weeks. I think she said 31 weeks. Only assuming an 8% weekly return. So here we went just a minute ago like, you know, just one minute ago she's saying 10% returns, that's a little unrealistic, but what about 8% weekly returns? That's a bit more reasonable, right? We're not being crazy. We're not assuming 10% weekly returns. We bumped it down to 8%. Maybe she's going to hopefully she'll acknowledge that 8% weekly returns is an insane thing to even assume for a minute that that's possible."
"31 weeks. And a middle amount would be about a year. And if..."
A middle amount, so like 8% weekly returns is like her bull case scenario. Her base case, just the middle of the road, is 5% weekly returns. So, okay, so if you're starting off and you believe 10% is totally unreasonable, like, you know, who would ever promise that? All I need is 5% weekly returns. That's far more reasonable. That's kind of middle of the road. Um, she can replace her income after how many? About a year. So, 52 weeks, she can replace her income with 5% weekly returns. This is one of the things I see common amongst amateur novice investors or at least people that are duped into these type of trading strategies. In almost every scenario, they seem to underestimate the power of compounding. They kind of talk about it flippantly, like you can just get 5% weekly returns. Why couldn't you? If that was feasible. And a way that we can outline how ridiculous those assumptions are is by simply doing the thing where we just extrapolate it out for any length of time. For example, if you took $100 and you compounded it at 5% per week, in less than seven years, in fact, a little over 6 years, you would be a billionaire. That's how fast it compounds. From $100 compounded 5% per week in a little over 6 years, you are a billionaire. Now, we can go ahead and look at the other assumptions and maybe see if they're a bit more conservative.
"...year. And if returns are very low, it would obviously extend much longer than that. Basically, what I need to do is grow that $1,500 that I started with to somewhere between $20 and $30,000 in order to have enough capital to invest to earn about $1,500 a week selling covered calls."
Now, the next thing that this goes to is after she compounds her wealth by like 7 to 10x through doing trading, she wants to then switch off from trading with only $30,000 to do covered call options, which, by the way, they are heavily marketed. Brokerages make a fortune from people buying covered call options all the time, as well as there's ETFs that have high markups and high fees for having covered call options. There is no evidence that they meaningfully give any type of alpha over direct equity, not selling covered calls. When you look at any study, in fact, most ETFs like the S&P 500, the QQQ will outperform any covered call strategy over any length of time. This is something that's proven time and time again. Yet, people still pursue these strategies. They're still so marketed heavily towards young investors. In almost every case, what they are doing is sacrificing potential upside in the stocks that they own for current income and the overall returns are lower as a result. There's more friction. There's more expense ratios and fees, and there's higher taxes. And this is why this is the fail of the week. Not her in particular. I don't mean to pick on her, but it's the overall trend of many young investors quitting their full-time income, their full-time jobs, in pursuit of trading online, selling covered call options, and generating other income through the stock market. I love investing. I think everybody should invest all their money, but you are not going to replace your full-time income by trading stocks. You're not going to replace it with covered call options with $30,000. So, wait until you have far more money. Keep the income that you have. Keep the jobs you have. Roll that into stocks, and keep the upside you have in your stocks with equity. That's going to be it for this episode. Hope you enjoyed.