The Compound and Friends - Earning Stock Rewards With Bill Capuzzi, Indian Stocks Hit New Highs, Jamie Dimon vs Private Credit

Episode Date: June 4, 2024

On this TCAF Tuesday, Josh Brown is joined by Bill Capuzzi, CEO of Apex Fintech Solutions to discuss the future of fintech and how shopping can earn you free shares of stock. Then, at 38:55, hear an all-new episode of What Are Your Thoughts with Josh and Michael Batnick! Thanks to YCharts for sponsoring this episode! Visit https://go.ycharts.com/compound to get 20% off your initial YCharts Professional subscription when you start your free YCharts trial through The Compound (new customers only). The Compound x Tropical Bros: https://tropicalbros.com/products/super-stretch-the-compound-hawaiian-shirt Sign up for The Compound newsletter and never miss out: https://www.thecompoundnews.com/subscribe Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Instagram: https://instagram.com/thecompoundnews Twitter: https://twitter.com/thecompoundnews LinkedIn: LinkedIn: https://www.linkedin.com/company/the-compound-media/ Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Ladies and gentlemen, welcome to the compound and friends. Tonight's show is brought to you by the folks at Y charts. Y charts built a really cool tool for financial advisors. It's their transition analysis tool. Financial advisors are frequently looking for ways to help their clients with tax situations. When an advisor transfers in a new client's portfolio, oftentimes there will be embedded gains in positions. And if an advisor is a fiduciary, the one thing she or he cannot do is start whacking

positions out of the portfolio willy-nilly, creating all sorts of tax consequences for a client, of course. So YCharts will be releasing its new transition analysis tool and advisors get a shot to take a look at it. And if you are a new YCharts user, 20% off your initial YCharts professional subscription when you start your free trial through the compound. Go to go.wycharts.com slash compound to learn more. Okay.

On the show tonight, I'm talking to Bill Capuzzi, who is the CEO of a company that's really important to the backbone of the financial system and growing in importance. Bill is the CEO of Apex Fintech Solutions. Apex is the technology behind some of your favorite financial apps. And Bill and I talk about stock rewards, which is something that Apex has a patent on. Basically, you're running around town, you're spending money at Ycharts, excuse me, spending money at Home Depot and at Starbucks and at various stores and airlines. And what if you could, in the course of that spending, earn shares in those company stocks?

So those of you who have been watching me for a long time on TV know that a lot of the companies I own are also companies where I am a big user of the product. I believe in that. I try to teach my kids about that. Why just be a customer when you could be a customer and a shareholder? So this sounds like a really cool idea. I also got into some T plus one settlement stuff with Bill and we talked a little bit

about some of the other things going on in the market. So I think you'll enjoy that. And then it's an all new edition of What Are Your Thoughts with Michael Batnick and myself. And boy, did we have a show. I don't wanna ruin it for you, but lots of topics, lots of new stuff that we haven't talked about before. I think you'll have a lot of fun.

So stick around. Duncan and John will send you to the show right now. Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Batnick, and their castmates are solely their own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions

in the securities discussed in this podcast. Hey everyone, it's Josh Brown. I am here with Bill Capuzzi. Bill is the CEO of Apex Clearing Corporation, a prominent provider of digital clearing and custody solutions. Bill, so good to see you. How's everything?

Good to see you, Josh. Thanks for having me on. How are things? All good? Life is good. I have, we have four kids. I've got the first down, one graduated. So three to go.

Congratulations on that. Bill, I want to give people a little bit of an idea of what Apex does and its role in the ecosystem. My understanding is custody, clearing, you've got all high-tech cutting edge customers like SoFi and Webull and eToro, and you are the fintechs fintech. You are the tech stack for some of the biggest consumer and business facing names in brokerage. Do I have that right? Yeah, it's about right.

I started my career on Wall Street a long time ago, late 90s, at a firm called DLJ. For those that remember the firm. Amazing investment bank. One of the things that they owned, which, you know, not too many people knew about, they own this company called Pershing, which was this custody clearing was kind of the OG of clearing firms way back when. And I was part of their MBA program. And at the end of the MBA program, they sort of place you somewhere.

And so all my friends were going into distressed debt, trading and investment banking. I got sort of banished to Jersey City circa 1999, which is not what it is today there at this firm called Pershing. I remember thinking like, what did I do wrong to sort of put me in the spot? I ended up spending 10 years there and what I learned is amazing firm, amazing people eventually got bought by Credit Suisse and Credit Suisse sold Pershing specifically off to Bank of New York. Yeah. Yeah.

And they're still there. I visited Pershing in Jersey City five years ago. Still there. Here's the difference though. You could actually go out and grab a cup of coffee or have lunch. Back in 1999, you had to run to your car. Yeah. All right.

Shout out Jersey City. But so you learned a lot about the guts of brokerage and custody and clearing and the technical side of how all these things work. Fast forward to now where you are doing that technical work much faster and much more efficient than it was in 1999. Yeah, I always love to talk about it. Use an inchworm as a good analogy, right? So I think the industry, we work in the advisor side, Josh, you and I, and there's a Michael

Kitsis has this place mat that he puts out of all the different firms that are involved in sort of helping advisors. And if you look at that place mat, I don't know, 90% of the firms on there, and there's hundreds and hundreds of firms, are focused on the front office. Okay, how do you open the UI experience,

the portfolio construction, the CRMs. And then when you get to the back, right, there's only a few of us. I mean, think about sort of the back of the inchworm, right, is, you know, a Schwab, it's fidelity, it's Pershing, it's Apex. There's a handful of others that are out there. And, you know, what I learned back in my days of Pershing is that there's a better way to take the back end of the inchworm and move it forward, which is using technology to make it such that you can open an account in seconds. What a novel thought.

Open an account in seconds. So when an enterprising company that is customer facing in finance wants to be able to do something that is somewhat futuristic given where the technology is now. You are among the firms in that conversation. Hey, we can build that. We can help you make your client experience faster, better, stronger, etc. That's right. Yeah.

So we started way back when, and you've mentioned some of the firms, right? The Robin Hoods, the Wealthfronts, the Betterment, Scott Trade, anybody was trying to do something disruptive in the space, you know, in this world of investing, by and large used Apex, right? Fast forward SoFi and Stash and Webull and eToro. And what they need is a partner obviously is going to do the right thing, follow all the rules, dot the rules all the eyes cross all the t's from a regulatory standpoint. Provide a chassis allows you to open accounts fund them trade send conference statements to all that stuff. In an incredibly efficient time effective way. Is we took that same thing that we kinda did for fintech and are now applying it more to the advisory front.

We took that same thing that we kind of did for FinTech and are now applying it more to the advisory front. So we're definitely going to get there. I want to start with some recent news about stock rewards. The concept of stock rewards is basically people, consumers, people watching the show right now, years in that business. And I have been doing that myself forever. So if you look at my portfolio, so many of the companies in there are companies that I spend money with all the time, but I didn't get any kind of rewards.

I just bought the stock myself. Tell us about stock rewards and what Apex is doing in that area. Yeah. So, you know, look, think Peter Lynch, right? Invest in what you know, invest in what you sort of believe in. And this notion of, okay, you're on Amazon and you buy a pair of Lululemon pants, right? Lululemon is a public company. Why couldn't you get back? Why shouldn't you be able to get back?

Instead of points or some sort of rewards program, why wouldn't you get stock back? Right? In the case of Amazon, as a good example, it, be like, Hey, can I get stock in Amazon? As the company that's providing the service or individually, can I get stock back in the actual product that I'm buying on Amazon? Right? Home Depot, you walk into Home Depot, you buy stuff to improve your house, you get 2% back in stock in Home Depot.

And the notion there, we have a patent on the chassis around this thing. It's really simple. As this B2B company, which Apex is, a company can come into Apex. Let's just use Amazon or we'll use Home Depot. And we can provide the ability for someone that walks in, swipes their credit card, buys some lumber to get 2% back on whatever they acquired in Amazon or Home Depot. Right. Put that in an account that's in Josh's name. And to your point is all of a sudden,

you effectively over time, you don't change your habits. You just go out and live your life. All of a sudden, you effectively over time, you don't change your habits. You just go out and live your life. Next thing you know, you have 10 stocks that are the brands that you use, that you believe in and you're actually acquiring and then accumulating more stock over time. I think this kind of thing really resonates front seat to watch enormous amounts of wealth be created. And they kind of have this idea that, well, isn't the smart thing to do to be a shareholder, not just be an employee. And that kind of thinking was maybe not as prevalent 30 years ago.

And now to this generation, it's really obvious. So you guys have a patent specifically on the API itself. I'm just going to quote a recent article. You said, the patent filing was done quite a while ago, and we have been doing this and offering it as a service for a number of years. But effectively, a stock rewards API, which is the thing that won patent approval, allows any Apex customer to adopt stock rewards programs. That's a win-win for consumers and retailers.

So I agree it's a win-win. The retailer brings the consumer closer to them by making them a shareholder. The consumer gets something back for having patronized that business. What's the mechanism by which that API enables that to happen for the investor? What does it look like? So I think there's kind of three flavors. I talked about two of them, but I think the one that's probably the easiest is your firm could do this.

You offer a card, a debit card, they walk in, they swipe that card, and that card effectively connects into this brokerage account. So long as the vendor, if they walk into Starbucks, participates in the program, will effectively take 2% by the stock as a fractional share. I mean, talk about why, okay, there's a lot that had to happen to make this happen. But you're talking about 2% of a $5, you know, you buy

a cup of coffee for eight bucks, you get, you know, whatever 2% back, you're talking about cents, right? 50 cents of stock. And you have to have this platform that allows for people to accumulate 50 cents of stock, right? Which is a fraction of a share. You need a fractional share trading is what enables this. Yeah, exactly. And you have to have a chassis that allows for an account that has very little amount of money, but over time will accumulate to actually be something that works.

And that's kind of where the focus for Apex has been historically. So that's one is like a firm like yours offering debit card. The second, which really hasn't taken off yet, but this notion of these e-commerce brands, right? So, you know, I keep mentioning Amazon, like Amazon should do this, right? Without going into a lot of detail, there have been a lot of conversations with them about offering something like this. You know, the challenge for an airline is a good example is that their point system works or doesn't

work, however they want to look at it. The concern for many of these e-commerce companies is the good news is they're turning a consumer into a shareholder. The bad news is they're turning a consumer into a shareholder in that they now have lots of small retail accounts that are on their books. And the risk is that the stock goes down, right? Those same people are looking at this company maybe- I was going to ask you, what would make a company not want to do this?

It's probably something like that. Well, the sad part is too much about the plumbing in our industry, but small retail clients aren't necessarily great for these companies because it costs them a bunch of money to send out prospectuses and the proxy statements. It's a whole different part of our industry that has to be overhauled. But when you talk about small accounts, typically the public company doesn't necessarily want the smaller clients on their books. So that's one negative.

But you know, the consumer into a shareholder, as that notion of turning like you just you talked about yourself, Josh, like I invested in the things that I care about in my life. And this gives people an opportunity to do that without actually changing and have to open an account and get into brokerage. They just live their life. They swipe this card. And next thing you know, they got stock in an account. Well, to be clear, the entity, the corporation is not hosting the brokerage account or at

all involved in the brokerage part. That's a connection that's being made via your API. So, Delta doesn't end up with small shareholders necessarily on their books, although every corporation has the same responsibility to notify clients and they typically do that via brokerage channels. That's right. So, that notion of the API is plugging into one of those platforms and then partnering with a firm like yours and saying, Hey, look, you can support the end customer or any other brokerage firm can support the end customer or Apex directly, which will offer that. They don't have to get involved in the regulatory world. And it's kind of a win-win for them. Back

to the point about turning a consumer into a shareholder. Well, I would say in this day and age and this new generation of investor or consumer, they're the same people. They do care about who they're giving money to. They do use their purchases to signal their feelings. As we're recording this, I'm watching shares of GameStop up 30%. A lot of the meme stock stuff is predicated on this idea that short sellers were somehow hurting businesses that Gen Z and millennials care about, like the movie theater, like the video game store.

A lot of this is just gambling, but some of it is affinity for the underlying company. And so there is a connection between the stock and the investor in that stock also being a consumer of that business. So making that like a full circle connection is really interesting to me. Well, think about it, Josh. I mean, the fact that let's just take GME or AMC, which also flying today. The fact that these stocks can get moved by retail investors. Yeah.

10 years ago, it wasn't really the case. You didn't see this movement. And the cool part is why I'm proud of what we've done as a firm is there's 22 million end investors that use Apex today. You kind of lower the barriers and you gave people the ability to open an account and invest with small amounts of money. If you're talking about tens, hundreds of millions of people, you think about the Robinhoods and Apexes and some of the other firms.

You provided this kind of next, like you said, this next generation access that was a lot harder, you know, 10, 15 years ago than it is today. And they're showing up, right? In the case of GME, we've got roughly about 150,000 people on our books that own shares in GME. The activity in GME over the course of May was up 3,700%. Yeah, leading up to what we're seeing today. Right. So leading up today. Exactly. Could you envision a scenario where a company finds that there's more loyalty from the consumer who's a shareholder of theirs via stock rewards? Is that something that you've seen already or you think could at some point materialize when enough people are enrolled? Yeah.

So there was a study that one of our clients bumped did with Columbia University. And what it showed with some of the brands is that moving from a consumer to a shareholder increased loyalty within that brand by roughly 100%. The small-ish sample size, but 100% increase in loyalty. So this notion of turning a consumer to or consumer into a shareholder is incredibly powerful. So you could have challenges. Yeah, I was gonna ask you could have someone say, well, Target is Target is now a company that I'm invested in. Therefore, if I'm choosing

between making a purchase at target.com versus walmart.com. It's an easy decision for me. Yeah, because you're like, Hey, look, I have this account. I've got this stock in here. The last time I looked at it, it's up 22%. Wow, this is actually real. It's working this this notion of turning it, you know, this 2% instead of some weird points. I mean, you know, I fly a lot, which I think you do as well. I get points in the airlines. It's hard to use them. They don't really work that well. If I had the option of instead of taking American Airlines points, taking stock, I would do

that all day long. Okay. Right. And it probably think about yourself, like it would turn you into somebody that was like more connected to that company. You now get the proxies. You're now looking at stuff about that company that you wouldn't be looking at as a consumer only. Well, I think if this ends up being successful, it could be the case that some people's first stock

purchases ever anywhere happen as a result of stock rewards. But that's your job, I guess, to make it easy enough that people who are not well-versed in how the stock market works, they get the concept, and they're able to translate their spending into becoming shareholders. That's the hard part, I guess, that has to be figured out so that it's so seamless that people don't have to feel intimidated, I don't understand the stock market. That's right. All right.

So that's what you guys are at work facilitating right now. Yeah, it's one of the things. Remember, we're a platform. So go back to this B2B platform. It's just an easy way to provide a different, like you said, different venue to allow for retail investors, whether they're coming via an advisor or they're coming direct into the market to create more connection, to create more sort of loyalty into either the advisor or the brokerage firm or that brand.

I love it. I want to ask you about T plus one settlement. So last week for the first time ever, US stock markets moved from T plus two to T plus one. For those who are unaware, T plus two means trade date plus two days for settlement, which is effectively how the machinery of the market decides this transaction happened, this person sold at this price to person B who bought at this price. And we moved from that being, since I started my career, I think I started at T plus three. I'm not 100% sure. But then since 2017, it's been T plus two. Last week we got it to T plus one. What are your thoughts on what investors should know about that?

And how long do you think we go at T plus one until we go to instantaneous? Yeah. So, so first the move from T five to T three happened in 1995 for my career, probably for yours. That's just before me. T plus 5, wow. Yeah, T plus 5. And that doesn't include, by the way, the weekends. That's T plus 5 business days.

OK. We moved to T3. The interesting thing is, and this is one of the first things I did work on on Wall Street, when I was at Pershing, there was a big push right after Y2K to go to T plus one. Yeah. And if not for 9-11, the path was to get to T1. This is a little over 20 years ago.

And it took us better part of 20 years, one, to take this starter step to T2 and then eventually get to T1. So yeah, we got to a decimalization right after 2000. That was right. That was a huge deal going from eighths and quarters and sixteenths to decimals. And that did have some ancillary effects on liquidity. Yeah. Okay. And that did have some ancillary effects on... It's huge track. Liquidity.

Yeah. Okay. So this was on a much slower track, but we eventually... Yeah. Okay. Go on. So here's what I'd say. So I'm on the board of DTCC, which is sort of that body that sits within the industry

to sort of be the sort of central clearing hub across the entire industry. Right? And so the buyers come in, the sellers come in, and they net inside this thing called DTCC. So DTCC was really the driver to sort of the impetus pushing for T plus one with the SEC sort of mandating it. So Frank LaSalle is the CEO of DTCC and his team did an amazing job getting us there.

With that said, so the good news is, you're right. So today versus last week, you buy a stock, tomorrow you own the stock. It's in your account. Right? And let's use the other one, right? Which is you sell, you own stock, you sell it. You have to wait until tomorrow to actually get your cash. Let's go back to the T plus five.

You imagine through a weekend, it used to be where you sold stock, you wouldn't get it five business days later. You couldn't do anything in that timeframe with that money. I was a retail broker during a lot of T plus three and you sold the stock, clients wanted to buy the next one and sometimes you couldn't move that quickly or you would get a violation if you tried to move through settlement. So it was a real issue that did hold people back from being able to do what they wanted to do. Yeah. So the good news is, hey, we got to T1.

Buying a large industry did it without a lot of fanfare. There's this AFIRM rate, which effectively measures how well the buy side and the sell side match up in terms of on trade date. Meaning do I know the buy and do you know the buy and the buy side? Do they match up? We're at about 92%, meaning that there's roughly 8% that don't match up. That's amazing compared to where it used to be on trade date.

You asked a question about going to T0 and I'll give you my two cents. And it's actually one of the things I'm pushing on DTCC on. Take the world and separate it, Josh. You got your institutional business, right? So you have big buy side. Think Wellington buying a block of stock from a million shares of GME, right? They send that order to Goldman Sachs. Goldman Sachs executes that on what's called RVP DVP.

Right. That is very different than Josh Brown wants to buy a hundred dollars worth of stock. Wait, why can't, why can't Josh Brown buy the million share block? Well, in your example. Okay. Go on. But on the institutional side, I think we're gonna have a really hard time

getting to something less than T plus one, largely because the infrastructure amongst the banks. We're not talking about DTCC issues. We are thinking the Bank of New York and State Street, and these big banks that are sitting on batch processing, this cold ball code, IBM mainframe. And so this notion of moving that to something less than overnight. Is going to be a massive overhaul, massive, massive overhaul, right?

For retail though, right? So let's just take Apex. I could settle, you're having an account on my books. You have money in the account. You can settle that just like a cryptocurrency immediately. I kind of sit here and twiddle my thumbs and wait for the industry to settle tomorrow. I don't think I'm representative of all the retail brokers, but at least at Apex, I could settle a trade immediately.

The industry is not ready for that. Okay. But it should on the retail side. I'm pushing very hard, you know, seat on the DTCC, but also from an industry standpoint to say retail, why are we waiting? If I have cash in the account and I buy something, why don't I have it immediately?

Broadly speaking, do you think the stock brokerage machinery, maybe to a lesser extent bonds, but do you think the stock brokerage machinery is being influenced by the crypto markets, given how that settlement is instantaneous? It's largely done via blockchain. Do you think there's like an influence coming from crypto? No, I mean, there was, I'll tell you, you know, so back, let's rewind the tape 2020, 2021. I call that the sort of gold rush of retail. There was a lot of mixing and people were doing both. And then there was like, okay, you would sell crypto and use the proceeds to buy stock and vice versa. So there was a lot of push for like, Hey, why is this work this way? Yeah.

But you've got to remember the other side of that though was we also had a lot of fraud in crypto. Yeah. Right. All that happened in 2022. But it was like fun. It was like fun fraud. No, I'm just kidding.

No, I'm just kidding. It seemed it seemed fun at the time. It was fun until 2022. Yeah. Yeah. Okay. So I can tell you just sitting in my seat, that's not a big driver. It's really interesting because of the SEC, because of regulators, they've kind of pushed

the two aside and said, okay, you're going to go right for your crypto and you're going to go left for your brokerage. And this commingling really doesn't happen. I asked that question because when I talk to very young traders, like people who started in the last three years, they talk about crypto assets and stocks interchangeably as if there is no difference. And that's going to be a great segue to my next question for you. We are now hearing increasingly about experiments in 24-hour trading.

And that's definitely a crypto influence. So just to back things up, we've had late night, we've had aftermarket trading for a long time. I remember the early days of Instanet. And now that's kind of a standard thing where both retail and institutional can get trades off in the pre-market, in the post-market. But to my earlier point, someone who's 22 years old and started trading two years ago probably doesn't understand why some of the assets they're trading are 24-hour markets, whereas stocks are during this proscribed

period of time that's specific to the East Coast of the United States of America. And why they can't affect the trade on a Sunday night in their stock market holdings the way they can in their crypto holdings. So what are your thoughts about whether or not that's coming? Yeah, we launched 24 by 5 earlier this year. And the notion there is, okay, we'll get to the weekend. We're actually working on that, hoping we'll launch something by the end of this year on the weekend.

I need to lose money seven days a week. This is very important to me. Go on. But think about, so here's what I'll tell you. So I got a 22-year-old son, like I said, just graduated from Tulane. And his friends and him, yeah, they don't think like I did when I was his age. Right. And again, I think it's cool. We lower the barriers and these kids can actually invest in their future. And so they're out to dinner and they're talking about a certain stock and they're like, why

can't I just press a button and buy it now? I guess I'll buy it at 930 tomorrow or I'll buy it Monday. Yeah. Right. And then if they forget about it and, and look, I think from that passive investor, the casual investor, the Delta, when you're talking about, okay, the bid I asked spread and like, what's the spread and like, what's the slippage. It doesn't really matter in the long, long term. So that's one thing here in the States. The other

thing I'll tell you is that today, the 24 by 5, the stuff that Apex supports in the industry, is almost entirely, I mean, there is some activity here in the States, but a gigantic portion of it is coming from Asia, Josh. Do they have overnight markets or seven day a week markets in Asia yet? Are there any areas in the world that have this? No, they don't. Here's the thing. It's like you're in South Korea.

There's three stocks that you can trade in South Korea, right? It's a small market. It's a tiny market. They want to trade the US market and they don't want to be up until three o'clock in the morning, their time. So this notion of 24 by 5 has been a gigantic win for these folks to be able to trade during their day. And they don't care about that slippage back to the long term investing. Is that happening in reverse at all? Are US investors trading Samsung?

No. Not really, right? Okay. No. So that's all one way. Remember, some of the bigger names, you got to remember, bigger names overseas, US market smart, they create this thing called ADR, right? Which trades in the US market almost in parallel with that name overseas. So most of the world wants access to the US. How much do prices move at two in the morning New York time? Like is there still like an issue with wild prices

because there's not much liquidity or how do you think about that? Yeah, look, so there's still a lot of room for us to get this even better. The price formation is tricky, right? If nothing's going on, which typically it's not, it's gonna trade around people's interests. If there's demand, it's gonna push the stock up a little bit. If people are selling more, it's going to push it down.

If there's news that comes out, Elon Musk tweets something in the middle of the night, that's the tricky part. And at least for now, what happens is you just pull the quote, you sort of stop trading in that name in the overnight. Okay. If something happens, but somebody has to make that decision. That's right. So you have market makers that are smart market makers, right? Likes of the Citadels, the Virtus, Peak Six, firms that are making markets and looking at what's happening. Right? The problem is that there's not price formation at two o'clock in the morning.

Yeah. Right. And so the risk there is that you could get stuck with a fairly large position in something that moves adversely against you, you know, at the open. If you're an institute, if you're an institution, can you designate? I own, so I have a, I have a, a cell stop limit in place on You know a million shares of Tesla. I do not I do not want to trade outside of yeah 9 30 a.m. To 4 p.m. You so you can do that to protect yourself from

Having like a limit triggered somewhere and most of them most of them are like that most of people put in a limit order Even if it's a GTC, they're not flipping into this overnight, right? Until there's more liquidity. I do think what's, and look, part of the reason is you think about it, people wanna go home at four o'clock, right? So you think about these big asset managers,

who wants to be watching the markets at eight o'clock at night? Well, that's the number one thing when I talk to financial advisors, there's not a lot of excitement about seven day a week, 24 seven trading, because that adds an extra, I don't know, 100 hours of things that potentially could affect their clients psyche. So we, if you ask a typical financial advisor, they'd say, give us four hours a day. Give us four hours of trading a day.

It's enough. So I want to say, oh, please go ahead. I was going to say if there's enough liquidity, and I think it's going to continue to grow, Josh, that those buy-side firms are going to be forced to pay attention, right? Because you're going to see liquidity outside of that normal 930 to 4 range. because you're going to see liquidity outside of that normal 930 to 4 range. I agree. I wanted to finish by asking you a little bit about the future of APEX. So you guys at one point were almost going public and then I think those plans were put on the shelf for good reason. The market environment deteriorated for tech, for FinTech especially, but that was a few

years back. It looks like as of December, you started talking about possibly going public again. Where does that stand? Yeah, I obviously can't say too much. We have a desire to, I've got 22 million, like I said, 22 million retail investors on our books. We support roughly 200 different firms out there. And we custody the assets, Josh. And so, one, there's a reason to be public, which is firms should, people should know

who we are. Increased visibility will aid in your attempt to become a bigger custodian, of course. Yeah. Yeah. And I listened to you and Joe Moglia, which was a really good podcast the other day. You guys talked a little bit about custody and yeah, the world needs a better custodian, right? And I expect it will be apex. There's no doubt in my mind. The next Schwab, right? People listen to this podcast in somewhere between five and 10 years. The next Schwab, right, people listen to this podcast in somewhere between five and 10 years, the next Schwab, say that in air quotes, will be Apex. And, and it's just very clear, right, because I think technology needs to be better, right, we built this thing

from the bottom up, we have the capital, right, we follow the rules, we dot i's and cross t's from a regulatory standpoint, and the industry deserves a better platform. Our job as a custodian is to facilitate an investor accessing an investment and then hold the asset for when that person wants to do something with it. We think about that world today and how expensive it is, right? How many people are involved, and then how stupid some of the stuff is. Open accounts taking three, five days, ACATs taking up to eight days. This is crazy stuff. We should lower the barriers, make it super simple, make it a lot more efficient in terms of the costs. That's kind of the game for Apex. And this path

of the public company, it's something we're exploring. The expectation is the markets continue to get better. We'll be in a good position. Bill, I think that's a great place to leave it. And I think we found your stump speech. I think that's a really great way to I think that's a really great way to sum up your ambitions and why it's important. And of course, if and when that happens, maybe we'll have you back and we'll talk about it then. But thank you so much for your time today. I want to tell people where they can learn more about Apex and maybe follow some of the things that you have to say periodically.

What's the homepage for Apex? Yeah, it's apexfinntaxsolutions.com. Okay. And then my, you know, on LinkedIn, I'm pretty active on LinkedIn, William Kapuzzi, C-A-P-U-Z-Z-I. Awesome, thank you so much for your time today, Bill, and for sharing with us, we really appreciate it. Thanks to everyone for watching and listening,

do all the likes, all the subscribes, and we'll talk to you soon. How's my hair? It's strong to quite strong. When I put too much product in it, you can see how thin it's gotten over the years. I got to do like less or I got to put the product in when it's dry already. So it's not right. I not so worried about this. I cut my head pretty bad with a razor the other day.

I don't know why. Usually I'm like pretty quick. I'm like, and for, for reasons that are unknown to me, I decided to like press and see what happened if I like pressed it and I took a chunk out of my scalp. You F'd around and found out. I really did. It was so dumb. As soon as I did, I was like, what an idiot. Hey everybody.

It's an all new edition of What Are Your Thoughts? My name is Downtown Josh Brown with me as always. My co-host, Michael Batnick. Michael, say hello. Hey, guys. Guys, this is your new... If you're new to the show, this is your new favorite stock market slash economy slash business weekly update.

Finance? This is going to be your new... This is going to be your new thing. You don't know it yet, but you will by the end. For those of you regular viewers who are joining us again, thank you so much. I'm in the live chat right now. I see Dr. Horton is back. Jay Luther, Georgie D, Jack C, stock market Mike.

What's happening, Mike? Roger's here. Magnus. I'd say hello to everyone, but we'd be here all night. We love you guys. Thank you for coming for the live. Much appreciated. I want to mention that we are sponsored tonight by best sponsor in the world. Our friends at Y charts.

Michael, what's going on at Y charts these days? Best sponsor. I think our first sponsor. Yeah, it is the tab that I have open most on my computer on a given day. So there is something to brag. I have three Y charts tabs open right now. Okay. I have six.

They built a transition analysis tool for advisors. So when we get portfolios, assuming they're taxable, they're usually there's gains, strong market. And so what we can't do is just rip out what they've done and put our models in. So YCharts created this just for you. If you're a new listener or a new subscriber to the show and a listener, a new subscriber to YCharts, excuse me, and a listener to this year's show, tell them we sent you, you'll get 20% off your initial subscription.

And I cannot recommend them strongly enough. You're going to go to go.Ycharts.com slash compound and learn more and let them know that it came from us. All right. I have like a topic 1A tonight. It's not an official, but we have to at least just acknowledge what's going on. Roaring Kitty is back. I think it's the big news of the week, or at least it will be until the jobs report

on Friday. I don't know what, unless something else crazy happens. This is kind of crazy. So just to recap from people that aren't spending tons of time on day-to-day market stuff. Roaring Kitty just disclosed a massive long position, I think by way of options and stock, in GameStop. The stock gapped higher like 100% on Monday morning. It's since faded.

It's still up from where he tweeted out this screenshot of his holdings. He's doing these trades on E-Trade, which is owned by Morgan Stanley. There's chatter, it looks like it was leaked to our friend Gungeon at the journal that there were internal debates at Morgan Stanley. Should we shut this kid, Keith Gill, down,

not let him use our platform for this type of trading, given that regulators are now looking at it, but they also don't want the ire of the meme stock crowd to turn on them. So they're almost damned if they do, damned if they don't. My opinion here is the only reason somebody at E-Trader or Morgan Stanley leaks this to Gungeon Banerjee at the Journal is, because what they really want is for the SEC to step in and shut this down so that Morgan Stanley doesn't have to become the next target of the GameStop crowd.

Michael, what are your thoughts on all this? Yeah, I think what you just said is 100% accurate. I won't rehash what you said, because I think it's right. I agree with everything you said. What I'm curious to see is a couple of things. One, when does he close out his position? A lot of this is leverage with options and there's massive time decay, so time is of

the essence here, and I think he laddered them out. Bought some weeklies, this beautiful maniac. So does he need this to keep going in the short term to preserve the money that he's made so far because a lot of this is options. I'd say depending on when these expire, certainly. The other thing that there's debate around, well, there's two things. Number one, where did all of this money come from?

So yeah, he made a fortune in the last meme cycle. But I think there's almost $200 million on the line. So there's speculation that, wait a minute, did he raise a fund to do this? And if so, who in the world is giving him money? So there's one debate there. Do you have any thoughts there? This isn't all his money. It's too much.

Yeah. So I read an article where some of the short sellers who obviously have a horse in the race and obviously have a bias are speculating that somebody is helping fund this kind of activity. If that's true and that somebody gets found out and they work in the industry, they're in a lot of trouble. Because the thing that I think is keeping Keith safe from a regulatory perspective is that he is not advising anyone else what to do. Even though he's like playfully doing Uno cards and whatever, he knows the impact that he has.

You can't say that there's any evidence that he's instructing other people to act. And I think that's where it crosses over into manipulation. This is, he's doing this with his own money. This is why I think he should be left alone. Oh, I agree. Okay. He's doing this with his own money. Number one, we think.

And number two, he's not telling anybody else what to do. And he's not, I don't think he's lying. He's saying, this is what I own. And other people are choosing to react. So that's not, that's not their free speech in America. Yes. Right. Are these adults using their own money to copy him? Yes. Right. He doesn't have a gun to anyone's head. So I think let this kid do what he wants to do. Um, but, but there, if the wrinkle is that he's a puppet and there are more powerful forces who are utilizing

him for manipulation, I would say that that might make a difference. So Citron Research, I don't even want to, I believe they have a short position. Andy left. Yeah. I don't know why he's back to this shit again. So he tweeted, for the record, I don't think anything Kiddie did was illegal because there's like people saying like, is he going to go to jail? However, I believe he and his associates overstate their importance in the market and overlook

the market dynamics and structure of GameStop. He's not stating anything. This is interesting. He said back then, he bought the stock at $2 when it had 100% short interest and there were still hope to turn the business around. Now he's buying the stock at 80, split adjusted, with low short interest in a failed business model. If investors want to buy GameStop, they should be allowed.

The risks are well known. These are free capital markets. Assuming Kitty does not have material nonpublic information, he has the right to make a large bet and tell everyone he cannot predict the reaction. Andrew Left has it backwards. He's wrong. It's in better shape now than it was then. They raised $2 billion selling shares to meme people.

But that's his point. In other words... No, it's not his point. He's saying it's the opposite. No, no, no. He's saying it's a failed business model. I think they make money now. I think it's profitable.

That's one. Two, the balance sheet is better now. The first time, there was so much short interest and there was plausibility that there could be a turnaround story and that double juiced the stock higher. Now the fact that it is a decent business, it's not going to 10x again or whatever exit did. I think that's his point. Well, look, I have no idea what will happen, but I'm on record saying the sequel is never

as good as the original. I think the events this week bear that out because if he had tweeted out a screenshot of his current dollar amount invested in this in 2021 with this dollar amount, the stock would go to a thousand. It would have been bigger than Apple. Right. So the fact that the most we got was a 40 something dollar print pre-market and it's been down ever since. Yeah.

Tells me that I sequel is not as good as the original. Totally. Great. All right. I don't want to spend more time in this. I, I do think it's likely that, uh, Morgan Stanley slash each trade is going to be forced to do something here, the Massachusetts regulator, Massachusetts has the most rigorous stock market regulator of all the 50 states.

I don't know what Massachusetts has to do with this other than they have residents who are trading the stock. So they could just like claim, you know, we have to take a look at this. But that's Elizabeth Warren's state. And we know she's not a fan of these shenanigans. I would guess nothing happens. I would not. I would guess the opposite. I would guess full-blown investigation into who is loading up on options trades. Was it just Keith Gill? Were there other people involved? Was there international money? Were there hedge funds? They have to be combing through this stuff right now as we speak.

There's no possible way that they're not. And I'm just saying, I don't think, I don't think action happens in terms of people not being able to trade or, or E trade having to do anything. That's, that's what I'm, that's what I mean. Oh, you don't think they'll force him to leave the platform? No. Okay. $50 bet. Sure. Okay. I think it happens by Friday. So I'll put a timeframe on it and if it happens later, I won't say it's right. I feel like you need odds. No,

no, no. We'll just, we'll time it. We'll put a timeframe on it. I would say by the end of the week, there's news that he has to move his money somewhere. Do you take GameStop? Dude, you're talking about Morgan Stanley. You're talking about literally the most risk averse investment bank on the street. I think they want nothing to do with this stuff. It's not about how much money they have. The only thing they don't want is to have the cannons turned on them. If there's a way out for them where they don't look like the bad guys that shut roaring kitty down, they're going to take it.

So I think that lifeline is coming in the form of some sort of regulatory thing. I mean, I'm making things up. I don't know anything, but that's my guess. All right. Speaking of making things up, let's talk about India. India is the most fascinating situation. I was excited to talk about it over the weekend. And then today things really got interesting. So India is important in that it's one of the best international stock markets in the world in recent years. It is the best of the large emerging markets.

And I want you guys to understand that this is not only a fast growing stock market, but a fast growing economy, a rapidly developing country. Since Modi became the prime minister 10 years ago, this stock exchange, the National Stock Exchange of India, the NSE, became larger than the Shenzhen Stock Exchange, larger than the Hong Kong Exchange. It is now the sixth largest stock market in the world. And I think it's on its way to like, I don't know, five or four, like at the current rate. A lot of the reason for the stock hitting a record high yesterday got unwound today.

And that's what I want to talk about with you, Michael. How close are you following this, by the way, like at all or just a little bit? Not much at all. All right. Let's put up this Bloomberg chart. These were the headlines yesterday. The reason why people were so excited about India, in addition to the fact that it's got a fast growing GDP and its companies are doing great, is that Narendra Modi was about to win a super majority for his third term as PM. And the super majority allows him to continue his business friendly reforms at a rapid pace

chart off, meaning he will not need a coalition government. His party, the BJP, was going to have this huge majority, like Trump in 2017, where it was just like, this guy's going to come do whatever he wants. The stock market likes that. It's different than the United States where we like gridlock. In India, the investor class likes business-friendly, stock market-friendly reforms, and that's what Modi was promising. Today, now that we have the real polls and not the exit polls, where people were saying who they voted for,

today, reports coming in from all over the country were that not only is he not getting a super majority, although he still wins, his lead is so slim that he's going to have to do all kinds of compromises with all different parties all over India. This Sensex fell 4,000 points on this news, wiped out almost the entire year-to-date gain for the Indian stock market. Let's do this next chart. I just threw, this is the Nifty 50 ETF. Sean, do we have this? I just threw this in at the last minute, but you could see this is a 6% sell off after

these polls came back and showed that Modi is really not going to be able to carry out the rest of his reforms without doing a lot of two minutes later back. I thought it was just me. We in the stream. We're streaming. We're live. All right.

Let's get going. We'll do it live. All right. All right. That was cool. We're back. All right, let's get going. We'll do it live. All right, that was cool. We're back. All right. Anyway, long story short, this is one of the wilder days we've seen for an individual EM market, even China at its most volatile. It was kind of like a steady drip down and kind of a steady rally back up. This is the sixth largest stock market in the world, making huge intraday and multiday,

going from record highs to a massive 6% one day crash. What are your thoughts? So a few things. This was the largest election ever. 600 million people voted, which is 600 million. So listen, I don't, I won't pretend to know anything about Indian politics or the Indian stock market, but this has like Indian food. I love Indian food.

I had it last week. Um, this is one of the most powerful up trends on planet earth in terms of stock markets. So I don't see one day changing a trend. I see that the US ETFs, which trade after the hours that India has closed, close at the highs of the day, which whatever, it's one day, who knows. So I don't know that the... In other words, knowing nothing, I would be a buyer.

Knowing nothing, I would be a buyer. Knowing nothing, I would think I could take this off. I think this is a viable dip. It's politics. We buy dips on politics. Politics is bullshit. And also, it's not like he's not in office. So there's going to be a fundamental change to the way that business is run. And again, I don't know anything about their economy or their politics. But just given what we just said, that if politics is the noisiest noise out of anything,

so to me, this is not a change in trend I buy this. You know what I would say also is like, if you're in the opposition party, I know there's like multiple parties in India. It's not like Republicans versus Democrats. If you're in one of these other parties that now has to form a coalition government, you look at this stock market reaction, that should tell you, hey, maybe get in line a little bit. This is what the investor class wants.

This is what your economy wants. Maybe play ball a little bit. Maybe don't be so oppositional. Let me show you some ETFs. There's two major ETFs here. This is the first one, INDA. This is the iShares MSCI India ETF. Head Sean dig into these a little bit. 85% of this is Indian stocks but does not have small caps. So it's a market cap weighted index. This is your large cap India exposure. Okay.

So the Nifty 50, which is their index of they have two in that they have the Sensex, which is, I think, 30 stocks. And then the Nifty 50 is more like their Nasdaq, maybe, or their S&P 500. Maybe. I don't know. Anyway, EPI is the one I know better. So this is the wisdom tree built and earnings driven India ETF, which screens out some of the more speculative stuff.

You have to be profitable to make it into the EPI pretty sure the EPI has a higher dividend. Um, it's got a here, uh, according to Sean, it's got a stronger value tilt. The top 10 holdings, um, in, hold on one sec here. Let's look at, uh, let's, let's look at the technicals here. Um, look at that uptrend. It's pretty flawless.

Yeah. So this looks like it's going to be a one or two day event. And I want to be in trends that look like this. It could be wrong, but look how oversold it got in just one day. It went from extreme overbought to almost extreme oversold in a single day. Well, also, I mean, just the fundamental, the demographic tailwinds that this country is enjoying. And there's some crazy stats out there. I don't know, I have it in the top of my head, sorry, but does it not change with the leader of the country having less of a grip on everything that's going on?

Yeah, one more thing. Year-to-date net flows into these two ETFs. INDA took in $1.7 billion. Wow. EPI took in $448 million. Total returns since inception on these funds. INDA looks like it's back to late 2012, early 2013, up 121% total return. EPI up about 112% but remember there's a value tilt there. So maybe it didn't know as much tech and then looks like chart kid Matt made us something cool. Let's

put this India stock market performance chart up. So this is the sense X versus the nifty 50 you see they basically end up in the same place. It's the same if you can see it. I'm not sure if you can see it. I'm not sure if you can see it. I'm not sure if you can see it. I'm not sure if you can see it. I'm not sure if you can see it. I'm not sure if you can see it. I'm not sure if you can see it. I'm not sure if you can see it.

I'm not sure if you can see it. I'm not sure if you can see it. I'm not sure if you can see it. I'm not sure if you can see it. I'm not sure if you can see it. I'm not sure if you can see it. I'm not sure if you can see it. I'm not sure if you can see it.

I'm not sure if you can see it. I'm not sure if you can see it. I'm not sure if you can see it. I'm not sure if you can see it. I'm not sure if you can see it. I'm not sure if you can see it. I'm not sure if you can see it. I'm not sure if you can see it. I'm not sure if you can see it. I'm not sure if you can see it. I, no, no. Here we go. This is India versus all of emerging markets total return over five years. You could see INDA is up 53% versus total EM, which is up only 21.

Last one is we have some big Indian stocks. This is the top 10 companies in the nifty 50 by market cap. Do you know any of these? No, I feel like we're this is like getting to JC territory. Nobody cares. No offense. Okay, to to rename. All right.

Enough. Anyway, I think I think that this is sort of becoming a hot trade though amongst hedge funds amongst asset allocators. And I could, I could see this trend reverse reversing back higher and these stocks continuing to move because I looked at like valuation, et cetera. It doesn't, this is not like a Japan 1989 situation or a NASDAQ tooth. That's not what's going on here. These companies are just doing well. So worth following.

All right. Let's talk about what has previously been one of the hottest industry groups in the United States, around the world, the software. There was, I was about to call it a blog post. It was a Google doc. It was a Google doc that went mega viral, got millions and millions of impressions. You had major CEOs commenting on it and it was short. It was probably 500 words. I think it was called the end of software or something like the end of software. By this guy, Chris Paik, who is a venture capitalist in New York City. I don't know really anything about him or his company, but he made the comparison. You know what, let me just quote him. He said, Vogue wasn't replaced by another fashion media company. It was replaced by 10,000 influencers. Salesforce will not be replaced by another monolithic CRM.

It will be replaced by a constellation of things that dynamically serve the same intent and pain points. Software companies will be replaced the same way media companies were, giving rise to a new set of platforms that control distribution. SaaS, AOR, Magic Numbers, these are all shorthand to understand the old business model of business building and software, one where the expense associated with creating software was a moat. The invisible hand has been stayed in software for a long time, but LLMs will usher in its swift, familiar corrective force. Majoring in computer science today

will be like majoring in journalism in the late 90s. So I feel like this was a really well-written piece that could end up being really, really wrong. But the point is really interesting. He's making this comparison to media where all of a sudden the cost of making media went to zero. You have millions of kids that are willing to film themselves dancing or modeling or

slam dunking basketballs or skateboarding off of the roofs of buildings. And it's free content. People upload it themselves. You no longer have to pay somebody to entertain. And he's saying like with AI, you're going to see software just be created for free amongst people that have their own uses for it and they're just uploading it and there's just like all these different software tools that people can grab and they don't need Salesforce to sell them a license.

All right. I mean, I suppose that's one way things could turn out, but I just disagree with the premise that there are no media companies. Vogue might not matter, but Netflix does. Like I think it's just the media companies that are important now are the ones that got really good at distribution. Well, I guess what? The media companies today and there's there's yeah, there's not as many, but in terms of their dominance and their market cap, there are multiples bigger than the entire industry used to be before

the internet. Yeah, I think it would be wrong to look at individual channels on TV or individual magazines disappearing and saying that like, quote, the media disappeared. It's just evolved. So look, there is a really strong point here, which is that Google has no cost of content creation with YouTube. YouTube is just open for business. This content and everything else people are watching is free because somebody is creating it. And I grasp that point. Could there be somebody offering open source software or open source code that other people could grab and nobody pays for it?

I think so. The strongest point he makes is that software coders make a lot of money because they're interpreters. They interpret human ideas and desires into computer code and vice versa. And if I could just talk to AI and tell it what I want my computer to do in English and the AI will translate that into code, yes, you will disintermediate some SaaS companies. Is that ever gonna happen? Where you could like literally in plain English be like, hey, do this. I don't know, we'll see, obviously, who knows.

It's happening now. To the last. It's happening now. But for people, but you still need to know stuff. I don't think you could start a software company not knowing anything, but you could definitely give commands to your phone. You do it with Siri every day. Sure. Well, you might not, but right.

Uh, so the last point, which was provocative, he said majoring in computer science today will be like majoring in journalism in the late nineties. Somebody replied, Andrew coat replied, this is like saying the printing press eliminated the need to learn to write well. Yeah, maybe. Buko capital, Buko capital, who is one of the best on Twitter, quote tweeted it and said, VCs are posting Google Docs about the death of software. Must be close to the bottom.

So to that point, software has had a rough year, just the stocks. Salesforce got bombed the other day. I think I saw crazy stat its first revenue miss in like, I don't know, 20 years or something astronomical. So we had Chartkid pull some of this data from Ycharts and make a really nifty chart. Throw this up, please. So what we're looking at, the circles, the average stock,

there we go. All right, so we're looking at these on the X axis, you have the ranked year-to-date returns on average for different industry groups. And on the Y axis, you have the return. And the size of the bubble is the size of the industry group. So software, as you could see, it's down 5%. I think the average stock, I'm sorry, 60% of stocks within software are negative year-to-date.

John, next chart, please. So this just zoomed in on that circle and it's the same style chart. Just now we're looking at the individual components. So again, 60% of these stocks are negative. Remember I pitched this thing app love into you. Remember that? Oh, you did. What's the ticker?

The best performing stock in the group this year. What's the ticker? It might be a P P. Let me ask. Oh, it's a P P. Let me ask. Watch out. Yeah, there it is. Don't feel Let me, uh, let me ask. Oh, it's a P P. Let me ask. Watch out. Yeah, there is. Don't feel, uh,

don't feel bad. I didn't, I didn't buy it either. Don't feel. It's great. John chart back on. So, but you've got some massive companies. Now if we looked at this just in terms of like drawdown instead of a year to date return, these companies are well off the highs. So, uh, Salesforce, yeah, it's down 11% year to date, but the drawdown is way nastier. Adobe. Like these are monster stocks with real big losses. So to Buco's point, when you got VCs talking about like this, maybe there's an opportunity. Who knows?

Well, I would just point out that these stocks that are down an average of 5% this year were probably up an average of 30% or 40% last year. Salesforce was a monster year last year. Yeah. up an average of 30 or 40% last year. Salesforce was a monster year last year. Yeah, I would also say like what Benioff at Salesforce said was nothing totally alarming. It's just it's surprising because of how good they are normally at beating their own expectations that they themselves set out. And what he said was that things are taking longer. The cycle is sales cycle is taking

longer to cycle through to the close. People are pushing decisions off. That makes sense. I think we're seeing versions of that all over the economy. But can I kind of throw two things out at you? There is a obvious priority on tech spend right now toward AI. And unfortunately, that just doesn't include most of the companies that are those software company bubbles. It's a narrower area that companies are focused on spending. That's one, two, there is a priority area of spending

that is becoming more of a priority every day. Cyber. And that is cyber. And by the way, as we're talking, CrowdStrike is up 20 points post close because they just smoked their earnings. 63% growth to 93 cents a share. Revenue rose 33% to 921 million. If you ask most Fortune 500 companies where they're not slowing their spending or where

sales cycles are not being extended, it's with CrowdStrike. Full disclosure, I own the stock. So I think it's not like a yes software or no software. I think priority one is AI because nobody wants to get fired or be left behind. Priority two is cyber because there's not a day that goes by where another gigantic healthcare company or ticket master or somebody doesn't announce a massive hack. And so if I'm investing in software companies right now, I want something in one of those two areas. That's where I want to be. Maybe the opportunity is too much money comes out of software because companies aren't spending

as much on it and investors are chasing AI. But if that trend loses steam, that's a segue, then maybe money comes back into software next year. Yeah, right. A lot of this stuff is dependent on there at some point being a return on investment AI. All right. So Chris Mims wrote about the AI revolution is already losing steam in the Wall Street Journal over the weekend. I think the point that he's trying to make is that the rate of improvement in these large language models and in chat GPT and Gemini,

it's already slowing down relative to the rate of improvement a year ago. Is that what you got from it? Yeah. The headline did not match the reality of this article, but that's not his fault. Right. So he's not saying people are spending less money or he's not saying like people are giving up on AI. It just seems that way from the headline. But he is making a different, interesting point, which is that we may have seen the fastest

rate of performance improvement of these tools that we'll ever see going forward, which I don't necessarily think is a negative. It just means that they've already gotten pretty good. Well the zero to one moment happened really quickly, at least in terms of the public perception of it, right? We got it in November, it didn't exist in October, here it is and it's pretty cool. And I think to Chris's point, the launch, things haven't gotten that much better since launch. He also made another point, which has been made several times, that the company spent whatever the number was, $60 billion on these chips last year,

and they only saw $3 billion of incremental revenue. And then also OpenAI at a $90 billion valuation and only $2 billion of revenue. Yeah, we know these stocks are expensive. So these are two other things that he brought up, which I do think are more interesting than the rate of improvement point. He says a mature technology is one where everyone knows how to build it. Absent profound breakthroughs, which become exceedingly rare, no one has an edge in performance. So he's saying the commoditization of AI is already a thing. So if you're out there building an LLM to be the next Anthropic or the next OpenAI, you're probably lighting money on fire at this point.

He mentions a couple of startups already selling themselves. The CEO of Stability AI, which built stable diffusion, which a lot of people were using. It's like an image program. Left his own company already. Inflection AI, they already left and went to Microsoft. So there's already this thing where it's too expensive to keep building at the rate that this stuff costs and then keep it running for these to be venture backed for much longer. So I thought that was a strong point too. I like that because my big bet this year is Amazon, which I just doubled my position in. I feel like the incumbents now are going to be the way to really play this more so than

the startups. Let me ask you this. The image of Jensen Wang today. John throw this up if than the startups. Let me ask you this, the image of Jensen Wang today, John, throw this up if we have it. I mean, did this, so- I do this when I'm leaving the New York Stock Exchange, like you'll frequently see young ladies come running. For listeners, not viewers, Jensen Wang is signing

the CEO of Founder of Nvidia, he's signing a woman holding up her shirt, He's signing her bra. Come on, man. It's time to sell. In fact, this is how you know it's going higher, because that should be the top. Fine. Is this the tippy tippy top?

I don't know. But come on, man. It's too much. It's too much. It's that. I mean, are we sure this happened? This is not AI? It's almost like, it's almost too on the nose for a top.

Like if I told a large language model, show me a photograph of the top that would convince other traders that Nvidia has peaked. It might come up with the CEO of Nvidia signing a woman's chest. That might be the image that an AI would come up with. Yeah, so I don't usually talk like this, but this is it. We're here. I don't know if it's in a year from now or whatever, but we're close. Yeah, I don't like it. Yeah, nothing to like here. All right. All right, market breath. Maybe so bad it's actually good.

So let's open this chart. People were using this chart. At least Bank of America, there was Bank of America chart floating around showing this. This is the equal weighted version of the S&P 500 divided by the cap weighted version. And as you can see, it is the equal weighted version of the S&P 500 divided by the cap weighted version. And as you can see, it is at a multi, I don't know, decade and a half lower, more than that, 2009. Okay. So it's a long time, 15 years. But, but this chart can be misleading because

it's not like the average stock is getting smoked. Next chart, please. So the top pane is this, is a cap weighted version. The bottom is the equal weight, and I think one's up 11 and the other's up 4%. So would I be concerned, chart off, please. We've said this, we've made this point a million times, but I'm just gonna keep repeating it until things change. I would be very concerned about the first chart

if the equal weight was actually crashing and it was just Nvidia and Apple and Microsoft holding up everything else. That's just not happening. So yeah, the mega caps continue to kick the shit out of the average stock, but that's a trend that's been in place for 15 years. Can we go back to the first chart? So these are all large caps. There's no like, right? This is not like, uh, it's not like, um, yeah, the smallest one thousand, the smallest company is a couple of billion. Right. Correct. All right. Uh, I dunno. Like I, you, utilities are the best performing sector this year, better than tech. You know that? Is that a tech bubble? My take on this is if you, sorry,

one more time with this first chart. If I overlaid this on top of the actual P500 since 2004, you would understand that this doesn't matter like who gives a shit what stocks are if if if Market cap is beating equal weight. What what is that a signal if you own an equal weight portfolio sucks for you Market cap over time is almost definitely gonna win. Like why would you equal weight? Why would you want to have as much of the weakest stocks as you have of the best stocks? So this has never... I like internals. I think there are like trading signals in internals when you get... That's not internals.

That's not internals. That's not internals. That's just not. So Bespoke did great work on internals. This is from Luke Howard Sherwood. So heading into Thursday, John, try it off for a sec because this is just distracting. So heading into Thursday, the 10-day market breadth, so they're looking at the number of stocks advancing minus stocks that are declining. So the 10-day market

breadth, so short term but still, the 10-day market breath was in the bottom 10% of readings going back to 2002. But actually, here's a quote from Bespoke, low breath readings, the bottom decile, actually lead to stronger forward returns. As upside mean reversion typically occurs, the bottom decile where breath currently sits is the strongest performing decile of the bunch across the next day, week, month. So here we go. Try it on. So look at this. So, so look at like three months, six months, one year again, from, from green to light green, dark green to light green, it's going from the worst

breath readings to the highest. And the highest is when everything's working. So actually we're, this is like a bullish washout. This is not a bad thing. That's that right. This is the rubber band being pulled back as far as it goes. This is not where you get bearish. This is where you play for a springback in all the stocks that have been lagging.

Yeah. All right. I like that. I'm not saying get super bullish at all time highs, but I'm also saying there's no reason to be alarmed. Okay. Jamie Dimon and Mark Rowan were at the same conference last week and they weren't debating on stage or anything like that. I think Dimon might have spoken the day before or earlier in the morning.

But Dimon has been, I don't want to say ringing the alarm on private credit, but just trying to be publicly skeptical enough so that when it all blows up, he could say, I told you so. He seems to be trying to continue to play the role of Jamie Dimon, which is to say, things are good, but there are things that I worry about. And private credit is like the thing that has become a recurring. Private credit has taken a lot of business that banks used to do. Some would argue there are regulatory reasons why there was this opportunity for private credit funds to slide in where banks would no longer make loans.

But then Mark Rowan, who is the CEO of Apollo, which is one of the best performing stocks of the year, it looks like in the financial services space, took on Diamond's credit, private credit comments and defended his industry. And seems like we now have a good guy and a bad guy depending on whether or not you work in private credit. It's a root for, I don't know. What do you think? What I think is I'm so happy I went to the source and I listened to the call. So let's flex for quarter, please, a company that we invested in.

Charlam please. So at the quarter app, I get to look at the Alliance Bernstein Strategic Decisions Conference 2024, which was yesterday. I'm sorry, It was not yesterday. It was May 29th where the headline about, um, about there being held to pay was pulled from. And that was the headline because he did say it, but trot off the context. He was not saying anything really negative and the health of predicting a blow up. No, he was saying there were going to be bad actors. No, he's's saying there are some bad players. But what's really happening is he's talking his book. He wants in.

He wants in. So he said, we've seen a whole bunch of dealers go from private markets to the syndicated market. You know why? It's 200 basis points cheaper. So we're going to compete. We can do direct lending off our balance sheet. We can do direct lending and syndicate it.

So we're in the mix. And we haven't yet. A lot of these people raise these big funds and stuff like that. We haven't done that yet. So we're comfortable. We can compete chart off. And then an analyst asked a question and he goes, he just steamrolls him. He goes, Oh, and by the way, with our balance sheet and capital, we could put 100 billion into it, 200 billion, but I'm not afraid about it if you think it's good credit. So, so chart off. So the, this is hilarious. It wasn't alarmist at all.

It's he's saying like, how the are we not here? Yeah, but but I also think that there's a component to what he's saying, where or the subtext to what he's saying is like, look at the size of us. And look how good we are at risk management. You're going to tell me these 700 hedge funds that just started in the last three years are doing the types of due diligence that we're doing bullshit. Totally. That's one of his points. And he said this about FinTechs a few years ago.

People were worried about JP Morgan being competed out of business by fucking Chime. You know what I mean? And he's like, look, when there's a downturn in the market, we're going to stand. And I don't know if all these other lenders are going to stand with us and be there. But so he did say it's like, it's not systemic. So it was not the health of a comment was taking wildly out of context. Right. The verbal sparring came to an end. There could be other.

Rowan responded to. So Mark Rowan is running Apollo. Rowan responded to Diamond's comments that higher capital requirements for banks had private lenders like Apollo dancing in the streets, meaning Apollo could make loans and do things that the regular banks are too constrained because of capital ratios that they have to maintain. Okay fine Yes, the back and forth underscores a growing fascination with the nascent private credit sector

Which has grown from 2% of the capital that leveraged companies borrowed in 2012 to more than 20% That's wild as of September 2022 and I'm sure it's grown since then. Dude, diamond diamond is saying if a nickel bag gets sold in central park, I want it. You got to do that more walking like though. I know, I know. You got to go from here to the other, from here on, nothing goes down. Unless I'm involved. That's no deals. A nickel bag gets sold in the park. I want in. Yeah. So that's why the rest of us are one. One other thing. Oh, let's put this Apollo chart up.

Yeah. Business is good. Business is really good. It's really good. Beautiful bitch. It's really good Alright this I didn't love next one Yeah, not great AI firm plans private credit fund for servers with Nvidia chips see this is an example I don't know what that means. Honestly. I don't know what that means. It's a blend of two bubbles It's a private credit fund That will stand up servers with Nvidia chips. It's the perfect stock. It's AI or not stock. It's the perfect scam.

It's AI and it's private credit. It's everything people want. Dude, please sell Nvidia tomorrow. Just you won. But you know what I mean? What else could we throw into this to make it better? Zendaya? Can Zendaya be the CEO of the private credit fund that buys Nvidia chips? Like I'm trying, Caitlin Clark can get involved. If Nvidia does a commercial

with Tom Brady, will that convince you? Yes. All right. NYC is back. Tell me why. Okay. All right. Let's just, let's just run through some charts. So a lot of headlines. Okay. New York City is the most popular. This all came in with us in the last week. New York City is the most popular destination for class of 2024 applicants, attracting 9% of total applications up from 8% last year. That's probably the same as always was. I'm guessing New York's been the top city for a long time. I'm guessing. New York City's tourist fuel record, $4.9 billion in tax revenue. This was a headline from Bloomberg.

Look at this chart from Ycharts. New York City payrolls, accounting, tax prep, bookkeeping, right near all-time highs. And then we just- Slow down, slow down, slow down. I can't, I'm on fire. Is there people working in an accounting in New York City? No, no, no.

What am I? You sure? I think that's what it is. OK. All right. Fine. But be that as it may, be that as it may, next chart, this is trailing 12-month tax revenue, the whole kit

and caboodle in New York City. Does this look like New York City died? Well, this is just a function of the stock market, my friend. Sorry to tell you that. Sorry to tell you that. The stock market dictates, stock market and real estate dictate employment in New York City. Well, yeah. Well, how's real estate going? What are you talking about? Not great. And that's why this is not at the highs from 2021. What does this have to do with the stock market? Not great. And that's why this is not at the highs from 2021. What does this have to do with the stock market?

Stock market is like all of the high paying jobs in New York are related to how the stock market's doing. Investment banking, underwriting, mergers and acquisition, hedge fund shit. It's all related to the stock market. If real estate were better. Whatever. This is non-sequitur. What you're saying is not even relevant. But my point is that, look at this chart. Does this look like a dying chart? No, it looks good, because the stock market's good.

It's not in New York City. I think I'm making the point here that New York City collects a ton of taxes right after the stock market goes up a ton. And you actually can see stock market rallies in this chart. Put it back up. You could see where tax revenue falls in 2009, and you could see where tax revenue gets collected by crazy, like crazy after 2020 and 2021.

New York City tax revenue is based on how well the stock market did the year before. So it's good. It's definitely not dying. I agree with you. I agree with your bigger point. All right. So pitch me Dr. Pepper. By the way, why are they some people in the chat talking about Caitlin Clark? Why do you think they're beating this lady up? Why are you in the chat? What is wrong with you? I mean, we're going to do this every single week. I don't follow. I don't follow. How are you in the chat while you're doing a live channel?

It makes no sense. People are commenting on the New York City chart, but there's a lot of Caitlin chatter because I think I mentioned her. Listen, I love the chatters, but the chatters are for the chatters. They're not for the person who's on air. What do you think is going on there? Is that going to stop at some point? I will defer to the wonderful, uh, cornheiser and well bond who can speak about this issue a lot more eloquent

than I can, but they are definitely beating the shit out of her. Should I watch it though? It sounds like exciting. Like it's, it's, she's not, she's not playing well. It's not like, it's not like a tournament where she's lining it up. She had, she had one field goal last, the other night. So she's having a tough time, but no, it's, it's, it's.

I'm missing all this, but I know people talking about it. So Keurig was green mountain coffee. Remember that GMCR? Yeah. So that was where it disappeared into green mountain. No, it was bought by Coca-Cola, I believe. Green Mountain Coffee. And then maybe they, what, it wasn't?

Stop. This is my segment. Make the case. KDP is Keurig Green Mountain, Dr. Pepper. It's a one giant combined company. The merger happened a couple of years back, which I'm going to show you on a chart in a minute. If you look at, let's put up the first chart.

So I bought this today. This is a beverage company that got thrown in the garbage with all the GLP-1 stuff going on. And by the way, it also owns Snapple. It owns like a hundred otherle. It owns like 100 other brands. It owns things you don't even think still exist, like Hawaiian Punch. Anyway, stock is breaking above its 200 day. And I think it's probably going to break this 35, 36 area resistance, which I think goes back to

back to me, quite overbought just yet. Has this longer term chart. So next chart, when Dr. Pepper merged with Kerrig, Dr. Pepper Snapple shareholders. So the original company is DPS. You with me on that? Hello? Sorry, I'm in the chat. Okay. All right, that's fine. The original company was Dr. Pepper Snapple.

It merged with Keurig, which itself was already merged with Green Mountain Coffee. So, they paid a special cash dividend to shareholders of Dr. Pepper Snapple of $100 a share. That's why this chart looks so weird. See that? The stock price adjusted for that $100 dividend in July of 2018. So that's a thing that you don't normally see happen very often. Anyway, all that weirdness is now behind the company. They have a new CEO.

He's been the COO for a year. This was a planned succession. He took over in April. He had been at Mondelez for 25 years. He ran another public company called Central Garden and Pet. That was a huge growth story. People are excited again about this company, their potential to fix what's going wrong with with the coffee pods They have some innovation. They have some new brands. They got black rifle involved. They got some very popular coffee roasters to create pods with them and I think with high inflation and the ridiculous prices at Starbucks people end up defaulting back to K cups and And coffee pods.

And that would play directly into this company's near monopoly on the space. So I think the soft drink business is great. The coffee business has been challenged. If they fix the coffee business, stock breaks out. And that's what I think is happening here on the chart. Are you a buyer? How many shares can I put you down for? So first of all, I just wanted to defend my honor.

I was right. Coca-Cola owns 16% of Green Mountain Coffee back in the day. They took a monster, monster, monster position. Okay. What was your point? They don't own it. My point was you tried to embarrass me and I was right. Coca-Cola did have a launch in Green Mountain.

No, they don't own it. You're wrong. I know they don't own it. Sorry, my memory from 2014 was a bit hasty. They had a gigantic position. So why is that embarrassing? I just said you're wrong. No, don't... Listen, rewind the tape. I know what you did. You tried to embarrass me.

F*** off. However, I will say... Coca-Cola doesn't own it. All I'm trying to tell you. I'll go back to the tape. Technically, this chart looks phenomenal. So it's going higher. You're right there. Are you buying the stock? I bought the stock already. I think it's going to go to 40 and then I'll reevaluate. It's an 18. It's an 18, a 17 multiple.

I think Pepsi is 22. By the way, Dr. Pepper has now unseated Pepsi as the second largest selling soft drink in the United States, which is crazy. What else does Dr. Pepper make other than Dr. Pepper and Diet Dr. Pepper? They have this, you mean just Dr. Pepper or you mean the company itself?

What other soft drinks do they make? Hawaiian Punch you like? I don't. Not four. Do they do Yoohoo? That's a good one. They might do Yoohoo. Hold on, I'll tell you right now. All right. Swiss Miss, Tully's, Crispy, oh these are their coffee brands, Crispy Cream, McCafe, Cinnabon, they have all those as K-Cups. They make Orange Crush, 7-Up, Dr. Pepper, Canada Dry, Sunkist, Snapple, A&W Root Beer, all the shit that's the best shit.

Do you remember? Schweppes, RC Cola, U know, Ned talking nectars. RC Cola. That's a, uh, I'm not gonna say that's rude. Do you remember a cherry seven up? Yes, they would make, they would be the maker of cherry seven up dude, Sunkist. How good is Sunkist orange, orange soda? I haven't seen that in a long time. All right. Well they make that. Um, but they also make stuff like core, which is like a popular water, I feel like.

And they have an energy drink. I don't know, whatever. All right, now I'm all confused. Now I'm all confused. The Coca-Cola company is a parent company to Dr. Pepper? No. Who's telling you that? Wikipedia?

What does it say? I don't know. It's not. What is it? Semester rate. Stop trying to win arguments with me. I don't think we'll ever get to the bottom of it. You have a mystery chart coming up.

If it makes you feel better, you can use it to stump me. Okay. All right, chart on please, John. All right chart on please John. All right smarty pants what do you got? All right read this. Give me something that's a fraction. So this is this is a ratio chart and this might be the peak. It's we spoke about, we spoke about one of these companies today. What time it's a ratio chart between two companies.

Yes. Okay. I like that. It's market caps. It's market caps. Oh, so it's a valuation. It, uh, so, so this is, this is going back, uh, five years. And as you can see in the beginning, this was 10%.

It was 10 cents on the dollar, numerate over denominator. Now it's approaching parity. So it's got to be two companies in the same sector where one is giant and one is tiny. I'm going to say UberLift. Not a bad guess. It's Nvidia and Apple. Oh, wait, what? Yeah, so.

Oh, they're approaching the same, I misheard what you said. So it's 0.95, meaning they're almost at parity. Yes. John, next chart. So I'm pretty stupid. So look at this. So it was a 10th back in 2019.

So. a 10th back in 2019. So it Nvidia is like Apple six or 7% of the S and P now. It's wild. It's too much. Remember when we were playing that game last week, like, doesn't this sound wrong? Yeah, that sounds wrong. This is the one that sounds the most wrong that Nvidia and Apple are the same. That sounds more wrong to me actually than Nvidia and Microsoft. And Microsoft I think is bigger than both. Yeah. Yeah. Still. Yeah. It's whack. I'm sorry. I'm sorry. It's enough.

I think that if Nvidia is $2.9 trillion, like I'm making, I'm like doing this like off my head. It's not math, obviously, because it's me. But I'm just saying like then Amazon shouldn't be under two trillion. When I look at the revenue, when I look at the revenue and the earnings of Amazon, just no, but I'm just I don't know the actual numbers, but I know that they're close enough. It's too much. They're close enough. Yeah. So this being the same size as Apple is just absolutely insane to me. And I own both. I'm not complaining. It just sounds wrong. So that's what we are. All right. What did we learn today? Learned about Indian stock market. JP Morgan getting into private credit, which I think does, makes it no longer

private credit, uh, Jensen Wang's Walker. I don't know what else is happening. We learned a lot. Uh, so I think AT&T is the culprit here. I don't want to name names, but that's what I'm seeing in the Slack that AT&T is having outages. So thank you for sticking with us. Who uses AT&T? Oh, that's, that's why we got kicked off the thing. Yeah. All right. Whatever. Hey everybody. Did you know that tomorrow was Wednesday and you're in for a treat? All new animal spirits with

Michael and Ben followed by ask Ask the Compound on Thursday. There's a very special guest on the show. I don't wanna tell you who, but I think you're gonna like it. Also wanna tell you about an all new Compound and Friends on Friday. We have special guests on that show. And then of course, Jill on Money on Saturday, as always. So we have a full slate for you guys.

Thank you so much for rocking with us have a full slate for you guys. Thank you so much for rocking with us. We will talk to you soon. Whether you're just getting started as an investor or you're managing a multimillion dollar portfolio, Ridholtz Wealth Management has the solution for you. It all starts with building the right financial plan. To speak with a certified financial planner today, visit riddholtzwealth.com. Don't forget to check us out at youtube.com slash the compound RWM. Make sure to leave a rating and review on your favorite podcasting app. If you love investing podcasts, check out Michael and Ben every Wednesday morning on

Animal Spirits. Thanks for listening. Ritholtz Wealth Management is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Ritholtz Wealth Management and its representatives are properly licensed or exempt from licensure. Nothing on this podcast should be construed as and may not be used in connection with an offer to sell or solicitation of an offer to buy or hold an interest in any security or investment product.

Past performance is no guarantee of future results. Investing involves risk and possible loss of principal capital. No advice may be rendered by Ritholtz Wealth Management unless a client service agreement is in place.