The Compound and Friends - Stocks After an Oil Spike, Internals Gone Wild, Bcred Problems, Nvda Stuck

Episode Date: March 4, 2026

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Holy cow, we're back. Do you believe this? We are back. Doing it again? Yeah. My God. All right. Ladies and gentlemen, welcome to an all-new edition of what are your thoughts.

We are live from the Strait of Hormuz. I'm here with my co-host as always, Mr. Michael Batnik. Michael say hello to the folks. Hello, hello. All right. And for those of you who don't know, my name is downtown Josh Brown. Every week we get together Tuesday night, 5 p.m. Eastern. to talk about the biggest stories moving markets.

We are so appreciative of those of you who come to the live. So let me say hello to the chat. The Chase 22 is here. He says, there it was, waiting all day for that. The straight of Hormuz? The Strait of Hormuz is always on time. Best 2252 says sick hoodie, Josh. I know, it's lit, right?

Alex P. Keaton is here. Hi. Hello. I have a feeling that's not his real name, though. Bob Sacramento, I see you, see Marie. Hi, Marie. Good see you. John Mellett is here.

We need a Halo ETF. Stay tuned. More to come on that. All right. All the gangsters are here. We have a sponsor. Michael, who's sponsoring the show tonight? Who is sponsoring the show tonight?

I'll tell you who's sponsored the show tonight. It's Tucrium. Nice. Josh, are you looking to diversify your portfolio beyond stocks and bonds. Commodities are getting more and more attention as we enter into 2026. Tukrium is an agricultural ETF. offer a way to access the future of prices of essential crops. These funds may help manage inflation risk and add diversification to your portfolio.

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All right, you hear my coughing fit just now? I do. I swallowed water down the wrong. What does they say the down the wrong pipe? Piper tube. No, wait, nobody says tube. Tube, no. Tubes in your throat.

Pipes. All right. CrowdStrike reported. Those of you who have been with us a while are aware, CrowdStrike is a core holding of mine. I ride it up. I ride it down. I ride it back up.

That's just so I roll. Stock started to recover over the last couple of days. Yeah, you know why? Because I bought it at $3.55. I don't lie it. I swing it. I swing it. You're a genius.

Thank you. I think the threats of cyber terror or hacking being part of whatever's about to happen in the Middle East, dawned on people. And they said, oh, yeah, wait a minute. Of course, Anthropic didn't solve cybersecurity with a bug detector. Oh, how could I have been so ridiculous? Anyway, here are the numbers. It looks like a textbook beat across the board. earnings were $112 versus $110 expected.

Revenue one spot 3-1 versus 1-30. So they're on a $5.25 billion annual recurring revenue run rate, which is amazing. And that's up 24% year-over-year. Year-over-year revenue growth plus 23% overall. Net new ARR. This is the big number for Wall Street. AR annually recurring revenue. So the street wants to know how much,

how much net new ARR, and it was $331 million, subscription revenue, $1.24 billion. Free cash flow is a beat. They have $5.23 billion in cash now in the bank. And I think the only, it's not a weakness. The only reason the stock's not continuing to rally that much in the after hours is the guidance. wasn't like a knockout number.

But the $5 billion ARR milestone is huge. I've had George on this channel. We've talked to him about that. It is the fastest pure play cybersecurity software company ever to reach that scale. And the growth rate is still strong. And they spent a lot of the press release, it looks like, leaning into the AI security as the new growth driver, positioning Falcon as protecting AI work. So if the whole world is now that AI,

CrowdStrikes answer is, yeah, duh, more AI workloads means more things that need to be secured by Falcon and our products. I don't know, what are you, what are your thoughts on the run-up into the numbers and the reaction? I thought you said, net new AR is $1 billion. What did I say?

I think you said $300 million. No, that's a different number. Okay. My bad. Yeah. It's, listen, it's a, it's a crazy thing. thing, but I guess I shouldn't be surprised that they caught the cyber names like Palo Alto and Z Scalar.

They caught these up with the whole SaaS selloff. They were the last to get hit, but they got hit. And I think the lesson here is like nothing's really safe in the end when there is that level of anxiety of that sector. They're going to hit every stock in the sector. So I bought the stock on the second big red down day. I don't follow the company as close as you do, obviously, on the money where I'm like, I don't know anything about this stuff.

It just makes no sense. You know when we were like this, the Schwab self just fundamentally doesn't make sense. The business models are not changing that dramatically where it's warrants itself. Now, ultimately it might not matter because perception is reality. I guess depending on your time or horizon, you know, it will matter. But it just, the sell-up was too extreme. It didn't make sense to me. Now, why is the stock not rallying on a good number?

The market's still, you know, not really on firm footing. And also, it is an expensive stock. Like, it still trades at 20 times sales. And this is just not the environment for a name like that. Right. We're not the only people. Right. We're not the only people who are bullish on cybersecurity and crowd strike.

Therefore, it's not like it went into this volatility at a, at a, like, a margin of safety sort of multiple. So I'll tell you right now, that $5 billion in revenue, the company's trading at $100 billion market cap. I don't know about the debt. They've got to deliver. Like this company cannot stall or slow down at $7 billion. They have to like sprint to $10 to $15 to $20 billion. Otherwise, they're toast. The stock is going to get murdered.

In the meanwhile, this might be, look, I'm not going to say the last chance, but you have this thing under $100 billion market cap, which it's been a minute since the last time you've been able to get it this cheap. The high is November, $557 per share, got down to a little bit. as low as, what was the ultimate low? It looks like 350. Did you literally nail the bottom? 355 is when I'm in it.

I mean, dude. Well, I bought on that Monday, but let me tell you this. You should go, you should go into like something on Wall Street, maybe. That's pretty, it's pretty great. That's a pretty great trade. Well, I also, I sold the bottom on Blackstone today. We'll talk about that later. If this is going to be the best of breed cybersecurity name.

And I think it is. I know this is very, this is way overly simplistic, but a $100 billion market cap is not big enough. Now, for today, it's justified. But if you are the type of buy and hold investor, which I am not with these individual names, but if you are, you could easily see a path to this becoming a much bigger company. So here's what's interesting. There are still too many of them publicly traded more than their need to be. We haven't really seen massive consolidation, although Palo Alto did a really big acquisition.

they bought another one. And CrowdStrikes been making acquisitions, but they're buying startups. CrowdStrikes got this thing where they invest in a ton of cybersecurity startups, and then every once in a while, they'll snap one of them up. They just did two of those,

which I had George Kurtz on to talk about recently. But like, nobody in the public markets in this space is like gobbling up a lot of competitors, but I don't know. I don't think there's going to be 15, publicly traded cybersecurity companies because I think the way the world works is eventually everyone coalesces around two or three platforms

and the platform provides like everything. Like there are so many different, there are so many modules within cybersecurity. There's identity, there's threat assessment, there's like when a breach happens, there's a whole category of products that you come in with after to figure out what happened.

There's just, there's so many, And I think for most Fortune 500 companies, they don't want to have five different vendors. Dude, there's one and a half. There's one and a half ride sharing apps. Right? There's not going to be, you're right. There's not going to be 15 of these.

No way. Like even in semi-capital equipment, when I started in the business, there were like 20 of them. And now it's Amat, Lamb, and KLA. And I know those three of them have bought a lot of their competitors. And, you know, I know there are other companies in the semi-capital equipment business, but there's three gigantic

companies. And that's every market. That's how this ends up going. Yeah. So I don't see CrowdStrike as being bought by anyone. It's too big. And George is a force of nature within the industry. So like for me, what you did makes a lot of sense.

My average cost is significantly lower. So I wasn't looking to add to it. But maybe I should have because I just think it's a steel here. Yeah. I think over time, if they continue to execute, you'll be proven right. Let's talk about the stock market over the last two days. So here's my sense of the market's reaction. On Sunday night, when futures were down a measly 1.5% or whatever it was, I thought to myself,

and I can't prove this because I have no text messages, but I genuinely thought to myself, yeah, I wouldn't be surprised this as the market is green tomorrow. And the market ended up green on the day, and you had an equal number of advances, decline or is even like stocks that you would that traditionally would have gotten destroyed on something like this like Delta like closed at near the highs of the day and then I woke up this morning and I opened my phone and I check the market as I always do and I said oh this is going to get ugly because that false that false um security that we that investors felt that might have chased the the high close right on Monday because there was a really really strong tournament you said all right

see where investors are looking past this and And then I woke this morning, I saw the future, I'm like, okay, this is going to get ugly. Because you had a chance to get out yesterday. How could you have been so complacent? The market all would down 2.5%. And I thought that they were going to kill them because the S&P has been within 2 and a half percent of an all-time high for 65 days. Even if we just use this as an excuse to sell, like whatever, just take profit is normal. And the fact that the market couldn't even muster any sort of downside follow-through, I found to be,

surprising and extraordinary. Now, it's not to say that we can't, you know, that we can't close 3% lower tomorrow, but the strength and the resiliency of this stock market after these two days, I was really surprised, not by Monday, but by today in particular. All right.

The turn started when Donald Trump came on TV from the White House. He was sitting with the, the president of Germany. Is that today or yesterday? Today. Okay. The, all right, so the market was down at its worst.

this morning, like 11, 1,200 points. And then Trump came on in the middle of the day, like around 11 something. He took questions for, I don't know, what seemed like 40 minutes or so. And I think it was the first time that the press had a chance to ask him things about the strike.

And I guess enough of his answers seemed like, I don't want to say coherent because that's the wrong way to phrase this. But I think enough of his answers seemed rational enough that the market, maybe that gave the sellers a reason to take a break from selling. And we ended up erasing eight,

I know you're not a points guy, but I am. But the Dow, what's the Dow? All the real guys are. I'm a points guy. We erased 800 points of losses into the close. We were down 1,200, closed down 400. That is a major intraday reversal, one of the biggest we've seen in a long time on the Dow.

Not the NASDAQ, not the NASDAQ, not tech. I'm just saying on the index that really matters. That was a big one. The other thing is that the energy spike is now, look, this is the thing like Nick Colist taught me this a long time ago. You never sell your energy stocks. Even when they go through a prolonged period where there are drag on returns, you got to keep some energy exposure because that has been the bright spot. And so when energy spikes and spooks the rest of the market, at least you have a lot of the market. At least you have some green on the screen. And like Exxon has just been an absolute standout.

I did sell Devon Energy, which is still on the best stocks of the market list. I don't dislike the stock, but I took it off. I wish I had bought more of these energy names. But my Exxon position is pretty decent. I also wanted to mention some of the big movers. But wait, hold on. I want your take on the market. Were you as surprised as I was?

that we didn't see more downside follow through today, that we closed 2.2% off the highs. Are you kidding me? That's it? I'm watching some of the software stocks individually, bottom out. And that's why I wasn't totally surprised. Because if you think about what was going on before the strike on Iran, the market was like just in one of its most miserable funks that we've seen in a long time.

And it was all about AI-driven disruption. So when I started to see those stocks go green individually, one after another, it told me that this could be more meaningful. Like, this could be a real bounce. I also, I'm not kidding. I thought that Bitcoin would have gotten just destroyed in a risk off tape like this. And it didn't. It's stabilized. Matthew Byr in the chat.

Josh forgot ASML exists. Okay, first of all, ASML's in Europe, not the United States. second of all, not quite a competitor to AMAT. They're doing advanced lithography, and it's an amazing stock, but it's nothing to do with what we're talking about. So, all right, I want to, wait, where did I want to take?

Can we put up the, can we put up the tiles? So this, I screened this at about 2 o'clock in the afternoon. And to me, This is all the ETFs. Yeah, the obvious standouts, the international, just blood red for obvious reasons. Yeah, I mean, what I'm trying to think of like where were the places that you could hide? Internationally? The short sold, no, just period.

Like the short ETFs were all, I mean, for obvious reasons. USO was green, that's oil, UNG was green, that's gas. I mean, there was not much here to work with. Software was up 1.6% today. I added to ServiceNet, by the way. Me and the CEO, I'm buying 20 shares or whatever it is, and he's buying a little bit more. We're in this together, buddy. You know what they finally got to today and yesterday?

They finally got to the Halo stocks. That's just classic, like, risk-off behavior in the market. Put up the bottom 20 performing S&P 500 stocks. But, dude, this is nothing. Like, are you kidding me? on a on what what very easily could have been a very risk off tape this is like pretty no i just i just i think it's notable like these seven eight nine and ten percent uh individual stock selloffs none of these are the stocks that were hurting us prior it was like a new it was a new

reason to sell a new batch of stocks yeah these were these were winners you got ford newmont nrj carnival Alba Morrow, Norwegian crews. You know, they, they were hitting some stuff that really had nothing to do with the sell-off prior to. Let's do their scatter plots. All right. This is wild. So going back to 2012, we've never seen a day like today.

How about that? Normally, these, these, the, so we're looking at the S&P 500 and emerging markets indexes. And of course, generally speaking, they move. in line with each other. One goes up, the other goes up, generally speaking. We've never had a day

where international, I'm sorry, emerging market stocks fell nearly 5% where the S&P was down on the 1%. Really interesting day. It's, uh,

yeah, and it's just like, I just feel like the emerging market stocks have been so strong for so long. And a lot of times, people don't understand this.

A lot of times when, a lot of times when you see something like what you just showed us, it's not because people are now bearish. It's because you sell what you can. And when you're up 20% in a position and you need to take risk off or you need to lower your exposure

or you're trying to like chill the volatility out of your overall portfolio, it's so easy to sell the thing that you're up 20% in. Like not sell all of it, but like sell some of it. It's a much easier trim than to sell something that you're already down 10% in. And people misinterpret that. They look at that as some sort of opinion being rendered

on whatever the asset is, whether it's gold or emerging markets. Sometimes, especially if you're a professional and other people are judging you, it's easier to sell the thing that you're up in a lot. And I'm a case in point. I'm not bearish on Devin. I needed liquidity.

There's some other stuff that I want to do. It was an easy sale. I was up in it from the minute I bought it. It moved fast. Next. So South Korea was an example of that, South Korean stocks, but there also was a legitimate reason to sell them. So South Korean stocks prior to the last two days were up 160% new over year.

Like these things have gone vertical. And the index is weird. It's like all Samsung and a few other big electronic companies. Not all, but it's like highly concentrated. It's half S.K. Heinex and Samsung. It's half memory chips, basically. Yeah.

So their market fell 9% today. Worse one day dropped since COVID. But there's a big reason for this. Super concentrated. So they are heavily reliant on importing imported energy. So check this out. I, Claude, make this. Net energy imports as a percentage of energy use.

And they got nothing internally. Yeah. Yeah. So it's not like it's not a shocker that people, that people would want to be sellers there. Yeah. All right. So you mentioned software stock stabilizing. This is over the last five days.

I grabbed this chart at about 2 o'clock, so it might be not exactly right, but it's close enough. So over the last five days, IGV is up 8%. And to me, Intuit is the poster child. And it's not that we haven't really spoken much about.

But it really is the poster child of software because of AI. Intuit is TurboTax. It's MailChimp. It's credit karma. And one other thing that you would be like, this doesn't need to exist. exist. It's literally, it's literally a collection of software products where you would say to

yourself, why am I paying for this? Right. But, but the, it's, it bounced 22% at five days. Let's see that chart. Let's go. Here we go. Uh, into it. So up 22% service now. Of 12% into it, into it gained back 22% of its market cap in the last five. Okay. That's interesting. Um, what else is on here? Service now. Workday. Salesforce, Adobe. Right. These are all the poster children for the AI threat to SAS.

Apparently, apparently Burry got long Adobe. I saw. I already did my knife-catching act in Adobe. It didn't go well. I cut my hand on Adobe, but I'm in service now in Salesforce.

Anecdotally, I got a really nice bounce in toast, which I added to at, like, I don't know, 27 maybe. Good. So a big activist Value Act just bought four and a half million more shares. They're at, I think, 8 million shares now or something like that. And that is Mason Morfitt's firm.

Used to be Jeff Ubb. And Value Act is one of the best activist hedge funds there is. You know, you love your activist. Can I tell you something? I've got to tell you this. I was listening to a book about General Electric called Lights Out. And as I'm listening to it, my ears perked up because they said, Um, financial, what do they call you?

Financial, I don't know, financial pundit blog or whatever they called you. Josh Brown tweeted, Nelson Peltz is a genius. He is. This is a 2017. Do you remember sending that tweet? No, but he is a genius. 2017. Multi-billionaire.

You do love your activists. I do. Service Titan caught a little bit of a bid, too. The other one I'm. Which one? Oh, this was for construction people. I'm destroyed in. This is the toast for the trades.

Right. So they handle all the billing and they handle all the software and all the job scheduling for all of the trades. What's the ticker here? T-T-A-N. It's only been public for a year and two months.

Nobody knows what it is. I'm one of the only people that even know that it exists. You don't think that your handyman is going to be vibe coding? For some reason, I just highly doubt electricians are going to try to

create their own billing software. I don't know why I don't know why I have this out of consensus opinion. But I really like that business. I really like their market share position. And it reminds me of toast. I think both of these stocks have an amazing opportunity to be the AI providers. All right. So obviously, nobody knows where software stocks go from here.

I wouldn't, I would shut it to take a one-year predict. let alone like a one day or two day. So who knows? Maybe this is not the low. But if this is not like a local low, like if these stocks roll over and take out the most recent lows, oh my God, is it going to be so ugly?

Wait, wait, wait. Is it too far to ask the question of, is it a rotation? Because if all these software stocks are bottoming, now let me show you the other side. Momentum got absolutely demolished this week. Yeah, yeah, yeah. So give me these two charts, one after another.

Let me see. All right, this is MTF. This is like when people talk about momentum. This is the first ETF that people think of. It's the granddaddy of momentum style ETFs. They sort of finally got around to wrecking this thing. Here's another one. This is the Invesco SEP 500 Momentum ETF SPMO.

I'm not really fluent on the differences between these two. this one seems to have lower beta for some reason? I don't track the, I don't track the Invesco one. But for example, one of the names that's been working is like, like healthcare stocks have been working. And they whacked them off today, big time.

They whack them off hard. Yeah. I agree. So there is, there is a rotation. And this is like, this just keeps happening. There are so many stocks that are getting killed.

And yet the index is going sideways. I don't know. In the short term, If you're just looking at the stock market, forget about the news, okay? I'm not talking about earnings or macro or interest rates or any of your opinion. If you are merely looking inside and at the market, it's hard to be bearish. Don't you think? So I think Sancholi, Michael Santoli was saying, like, we keep escaping.

Yeah, and refuse to go down. And we're escaping the same way via rotation. Rotation. What could be better? That's how that's the get out of jail free card so far. Like, why are we hovering within 5% of the S&P 500 all time high with all of the insane things going on? The get out of jail free card has been rotation. And it's, look at this like this, just what the NASDAQ has been going through.

And we're alive. Yeah. So I have a bad make the case for tonight. Spoiler alert. I should have made an American Express. So American Express is one of these companies that got whacked off hard, excuse me, by the, by the AI fear. right because this was like the white collar worker like the white collar worker is is is is good to get hit so this stock was down 20 percent and this is like this has been the secular winner for the

upper k and they said okay the upper the upper k is like a little bit wobbly this stock was down 20 like not overnight but why because people are afraid about 10 percent of employment and if they're hitting a white collar worker they hit everything they got like they got j p morgan under 300 they got berkshire back under 500 and meanwhile the index is 2.2% from the high i know well i it's it's sort of miraculous but that's the that's been the secret so far let's do oil uh what did you expect to see more when you saw the future sunday night you expect to see a bigger move out of oil i don't think i did i thought it felt big 6% was that what it was 7% yeah i sort of think that I sort of think that

oil could oil could be a cell like they they took out the they took out the Iranian Navy there's not the straight of her mood stuff the ships are not going

through the strait of Hormuz now because they're nervous not because they can't but like that was one of the first things the Israelis and the American pilots went for the ships Trump said the ships are at the bottom of the straight

I'll take I'll think as well word for it. I think that's why you didn't get such an extreme reaction. Also, Iranian oil is not on the market. Like, it's literally, it's embargoed. Like, it's, the Chinese buy it. So if the Chinese have to substitute Venezuelan oil and Iranian oil and they have to come to the regular market or whatever the mechanics are, maybe there'll be a little bit of a squeeze of supply. But like, this is not like the whole world was a wash in oil from Iran. That's not. not how the oil market works. That's why you're not seeing a 20% move in crude.

Like, I think in people's imagination, that's what they would expect. It's just not the reality of how that oil market works. But weren't, I don't file this stuff closely at all. Didn't European natural gas prices go nuts? Yeah, but they just, that's a reality. They always do. They always go nuts. Because they don't produce their own natural gas.

They are wholly reliant on Russia and then whatever we can ship out of our LNG terminals from New Orleans. The Europeans require natural gas from off continent, similar to what we were just saying about South Korea. So the moment there's some sort of geopolitical event, that's one of the knee-jerk things that happens in the commodity markets. Give me my WTI crude spot price. I don't know, man.

If you would have told me even 10 years ago, you would have told me in 2015, there's going to be a thing that happens on a Saturday, night where the United States and Israel team up to knock out the entire leadership of Iran, I would guess crude's at 100. And it just goes to show like how much things can change. And I thought this was really interesting. Give me the next, give me the XLE, a little bit blow off topy the last two days.

I think a lot of profit taking. Yeah. Just look at the way, but look at the way these oil stocks. anticipated this. Yeah. Look at like January, January 1st for the XLE stocks, which is Chevron, Exxon, Conoco, et cetera, all the big guys. January 1st was like somebody waved the green flag. And it was like, gentlemen, start your engines.

And these, these stocks just methodically ran right up. I think the oil, I think the oil sector as a sector is up 28% year to date. which is incredible when you think about it. Chris Moran said to us, news always follows price. Or any surprising news, right? Like it almost always goes in the direction of the prevailing trend. Yeah, well, the mark, right, because the market figures it out before the journalists do. And that shouldn't be controversial.

Give me Chevron. Like, this thing looked incredible going into this. the investing public understood that all these warships being sent to the region they weren't just going to go home. Something was going to happen and you can see it. Give me EOG resources.

This one looks interesting. Breaking out of a fairly long consolidation, now retesting the breakout level. This is the type of chart people won't buy because they think they missed it and that's how you know it's going to work. Let me see what else I have here. Diamondback, Fang.

This one's gone. Say goodbye. Occidental oxy I mentioned before. You got a gap and go in this chart. You got a golden cross happening. This thing will probably be lazy for a couple of days. Work off that overboard RSI. And then it's going to launch again.

I just know it. Target resources, TRGP, gone. Forget about it. forget about it. All of these were on the best stocks in the market list. I wrote about all of these this year with Sean. We asked Chart Kid Matt for this. This is a chart kid Matt special.

Michael, what's going on in this chart? So, man, this is pretty, huh? We're looking at the red dots. Those represent every time where crude gained at least 5% two days in a row. And of course, it only happens for a very specific reason. And then what did the stock market do on a fold return? And outside of September 2008, I mean, outside of that one, outside of that, pretty damn green. For the listeners, the average 12-month return after crude oil goes up 5% two days in a row, which just happened, is 21.9%.

The median is 22%. And the win ratio, which is the thing I care most about, is 83%. That's strong. It's quite strong. Very strong. 83% of the time stocks are higher 12 months after one of these two-day oil price spikes. So, and it doesn't, 83% win rate means 17% of the time it was lower. Okay.

So it's not a guarantee of anything. But I like those odds. Do you like those odds? I love those odds. We have 12 prior instances. One of them was 2008. Let's assume this isn't then. Okay?

So pretty good. Let me show you something else. It's the first I've even heard that this thing exists. There's an ETF company called Defiance. You probably know those guys, right? Yeah. I don't know the person, but I know the company. Okay.

Did you see the movie Defiance? Daniel Craig? Yeah. Yeah, loved it. It's an incredible moment. movie, right? I think I've directed that.

It's about a family in Eastern, a Jewish family in Eastern Europe, like a whole town, they get chased into the woods and they decide to fight back. And it's a true story. And they end up liberating all of these towns from the Nazis.

And that family, I guess some of them ended up in the United States, specifically on Long Island. And the founders of this ETF family are the family depicted in the movie. No shit. I had no idea. That's right.

I learned that. today the girl, I guess their chief strategist or whatever, was on squawk and she retold that story. So this is like, this is a family that fought off the Nazis and saved. God knows how many Jews in the woods. I don't know if it's Poland or wherever it is. And then they named the ETF company defiance after the story of their family. Anyway, they have a stock. great ticker, Jedi, J-E-D-I,

and it owns all of the drone warfare and munitions stocks. And this is apparently the way that we wage war now in the 21st century. We were sending some of these one-way drones where they're almost like kamikazis. The drone is not expected to make it back. Its job is to crash into a building. We are fighting with those things now. And you could imagine how expensive they are and how much it costs to replace them. sounds pretty bullish.

This is the ETF that owns all the drone warfare of stocks. Put the chart up for me. It's called the Defiance Drone and Modern Warfare ETF. I'm not recommending it. Everybody relax. I'm just pointing out that it exists. And I guess I would have expected it to have done more. Here are the top holdings.

It does exist. You're right. Here are the top holdings. L3 Harris, of course. R-TX, you know it as Wathion, Rocket Lab, Elbit systems, Thales, Saab, so it's international.

A lot of these are European. Kratos Defense. Palantir's in this. Who else is in this than I know? All right. Some of these companies I don't know very well at all. And some of them I don't know how to pronounce, so I'm pretending that it's not important to read their names.

But like, I thought it was interesting that something like that exists. When Anderil comes public, at probably $100 billion valuation, it'll instantly be one of the bigger weights in this fund, I would guess. That's the one everyone's waiting for. What did you think of the Bitcoin reaction to all of this? I told you. I was shocked.

Like Monday morning, this made me feel really good. Like, okay, Bitcoin's up 5%. Like, we're going to be okay. This is not going to be a serious sell-off. And it's hovering at $68,000. So the fact that Bitcoin found the bottom and soft or found the bottom, has me feeling pretty positive. I'm going to share a take with you on Circle,

which had a nice bounce. I should have made the chart. Huge bounce. I think I asked for the chart, but they didn't get around to doing it. So anyway, Circle had a huge move. And this is from Missouho, our friend Dan Dolev.

Does Unstable Midiast help stable coin? He says Circle shares were up 15% yesterday, resulting in a 35% increase relative to SPX. We believe that yesterday's rally was in part driven by the rise in oil prices as mid-east tensions ameliorate. Why is that positive for Circle? Rising oil prices could drive up inflation,

lowering the odds of rate cuts. How does it impact Circle's revenue? Although more muted rate cut expectations drive just a 1% increase to our 26-27 revenue expectations, The 2x increase in right tail risk of no rate cut scenario likely adds more torque. So in other words, if you think there's no rate cuts and, of course, an oil price spike might keep the Fed from cutting rates.

Circle the stock is the beneficiary. It's a little bit of a Rube Goldberg machine. You have to follow that logic through a lot of twists and turns. I think it's maybe more simple than that. I think it's oligarchs might be more likely to want to plow more of their money into this international, uh, uh, digital monetary system.

And some of that ends up in circle. But, uh, or maybe just it was time for the stock to rally. I don't really know. But I thought that was an interesting take. Um, gold, not much of a safe haven.

I mean, it's, would you, would you have expected a bigger rally in, in gold as like a risk? golf trade Monday morning. So Monday it rallied. I don't know if it hit new highs.

It was damn close. That's the thing. It's already at. Like, you know what? It's up 100% year every year almost. Like, what do you want from it? Yeah. I guess it's like been pricing in these tensions.

Ever since Trump got reelected. I feel like it's sort of been pricing this stuff in. And also the distance, I'm just eyeballing this from its 200 and moving average has got to be. I don't know, a 40-year record. You know what I mean? Like, so it's going sideways. And so, yeah, let's still, I mean, it still looks good. Okay.

Still looks good. All right. Let's do this thing on internals. Citadel securities had, I thought, a really interesting piece talking about the record levels of dispersion amongst stocks beneath the market surface. So we were just saying that rotation has been to get out of jail free card. It's the thing that we keep, that keeps saving us. Well, the reason you get that sort of rotation is because there's a lot of zgging and zagging

going on amongst individual stocks. You should see my trading account. They're not all acting as one asset class per se. So this is Citadel. And then I'll get your reaction to this. Only 31 trading sessions in the year. The index may appear relatively stable. But the magnitude of sector and factor reallocation beneath the surface, anything but

retail participation remains historically elevated. ETF flows are at one of the strongest early year paces on record, and liquidity has thinned during episodic selloffs. At the same time, AI-driven disruption narratives have accelerated repricing across vulnerable business models, which intensifies the rotation. They say over the last 30 days, the S&P 500 is down 1.4% to 6%. this is as of last week, while the average stock in the index has moved 10% in absolute terms, placing the 8.6% dispersion spread in the 97th percentile over the last three decades.

Throw that chart up. So this is what a stock pickers market looks like. That's what you look at is the dispersion. The only other two times this happened was in catastrophic markets. That's why I wanted to bring this to attention. It's so weird. Yeah. this usually had so we have a couple of instances of this it's the year 2000 and it's 2008 and it's

now so i don't feel i don't feel great about that no i don't feel good about it either so for as bullish as i think the stock market is acting and i say that because don't take like it's not that i'm bullish i think the stock market is behaving bullish i have another i have another chart on this hold on let me just let me just say this one thing it's hard for i think it will be hard for for the market to continue to shrug off these blowups. Like, they have to slow down. If investors keep believing that AI is going to kill everything and you just keep having these individual names fall of 18% because of a Claude announcement, like, I think the market

can only take so much at some point. I think we'll see lower prices. But if this can cool off and this is mostly behind us, then I think we're set up very nicely. I said this last week. and I'm fairly convinced that everything that's happened since has proved me right. I really do think that there was a conversation between the SaaS industry, which is a huge spending, powerful group of CEOs and some of these AI platforms.

And I think they're finished with these types of shock and awe announcements and allowing the media to run with this narrative. Conspiracy, Josh. It's not a conspiracy. I think there was a dialogue, though, because they're not doing it anymore. And actually, the last few big, like, AI platform announcements were made in conjunction with existing incumbent companies as, like, partnerships. Dude, these stocks fell 60% and now they bounce a little bit. I know.

But I think the Jensen Wang commentary after the Nvidia earnings sort of set a new tone. like saying to the business media and the tech media, you guys are getting this wrong. You don't understand. These tools exist and they work. The agents are not going to invent their own tools for no reason. They're going to be trained on the existing products that exist out there. Even if you don't believe that's true,

and I'm sure plenty of people don't, just the fact that that's how the AI industry is speaking now is a change in tone. And I don't think it's like totally. Accidental. So one of our advisors said to me, hey, I've been playing with these tools over the last couple of weeks. And I don't think we're going to need company X, company Y, company Z. And my first internal reaction was, if you're able to do something kind of cool, what do you

think these companies that you're talking about are doing right now, the companies that you think that we're going to eliminate? You think they're just like, oh, la-di-da, we have no idea what's going on. Yeah, what's AI? Right. Of course. That's the point. So that's the point.

And it might be case by case. Of course it is. But just like not to just keep talking about my stocks, but like. Take Uber, like take Uber, for example. Well, Uber, right. Uber has been utilizing AI and machine learning for 15 years. But even if you think about Toast, for example, Toast IQ is their AI product.

They're selling this to a guy standing behind a bar. with a rag on his shoulder and an apron. That guy's not like, oh, cool, I think I'm going to make my own. Right. Like, Toast IQ will be one of the highest penetration AI products in the hospitality sector. How do I know? Because, of course, it will be. And so it's not like, and that doesn't mean Adobe's AI will be successful.

They want to be a layer for the creators. Doesn't mean that age and force will be. I think it's going to be case by case. I just don't think it's going to be as black and white and as obvious as everyone thinks it will. I just, I can't imagine that it's one way or the other. Either there's no disruption or there's total disruption. They sold these stocks off 60% in most cases.

Yeah. And now we'll see. I agree. Biff Grebel says Toast doesn't need an AI product. Okay. But Toast is the billing and payment system for every restaurant in a Marriott all over the world. That's a partnership with Marriott where they are.

So do you think Marriott doesn't want AI derived insights from their billing and other activities delivered to them? I'm pretty sure they do. All right. Are you done? Last chart on this. Back to single stock volatility. The implied vowel spread from now to year end suggests that single stocks will be more volatile versus the index at a degree last implied in October 2008. That's great.

Is this the craziest thing you've ever seen? Yeah, love it. Okay. All right. You're up. All right. Invidia. So, Nvidia reported last week and very similar to what happened the last time I reported

when we were in Austin. Great report. Beat, raise, the whole thing. Stock can't go up. Now, if you zoom out, the stock is behaving totally fine, okay? It was in one of those stocks that was so extended, three miles above. of every moving average and it's digested it really well. But it's gone sideways since August 2025.

Like it's a long, right? So it just bounced at the 200 moving average, which finally caught up to it. So it's fine. It's not like, you know, nothing to be like alarmed about. But I think in video it just might be too big to move. So turning point market research shows their, shares their,

the post-earnings performance since the introduction of chatchibate. and this is three quarters in a row where, like, what more can they say? Every one of these quarters was a great report. Dude, and it's not just, okay, try it off, please. What more can they deliver and what more can they say for this stock to go up? It's impossible. Now, I'm not saying that it will never, but like, the quarter that they just had was the biggest sequential increase in revenue, I think ever? And the guidance was not bad. And the stock still

can't find a buyer. It's the biggest stock in the world. And I think this is just plain old, like good old multiple compression. It's nothing fancy happening here. I think it's now a forward PE ratio of 22. You know what? This stock is way too big to trade out of market premium. Yeah, it's too big and there's nobody that doesn't know about its dominant market share. So I think you have just multiple compression. But then the other thing that you have is like real competition. And I'm not to my AMD.

Like a lot of Nvidia's customers are now looking to ship their own chips to other Nvidia customers. Like we're hearing about tensor processing units. they don't replace GPUs, but they maybe make it so that companies don't need as many GPUs. They still will need them, but there are a lot of like inference things that can happen with a TPU, which is significantly cheaper. It's a more narrowly focused thing. It's not a replacement for Blackwell chip or a Rubin.

Like no one's saying it's like Coke and Pepsi, but these cloud data centers are going to be somewhat cost conscious going forward. And as things get replaced, they're going to be. looking for what are, all right, what are my options? And there are options now in the marketplace. Amazon's working on Silicon. Like, it's, so it's not, there's not one big Nvidia competitor that Nvidia shareholders need to worry about. There's like 10. And a lot of those would be competitors offering new solutions like application specific integrated circuits are Nvidia's biggest customers. And I have to believe that that is having an impact on the multiple, on the, on the,

on the forward earnings multiple. And people just a little slightly less confident that Nvidia is going to maintain its market share and its gross margins. Here's the head that I don't love. Blackstone plans public company. Okay. Blackstone plans public company for AI data center buying sprays.

So Bloomberg said Blackstone is launching a publicly traded acquisition company that will snap up data centers, giving millions of mom and pop, are we democratizing data centers? Millions of mom and pop investors a chance to bet on the artificial intelligence boom. And why wouldn't they? I mean, look at this chart of digital realty trust

and AQinex versus the index. These data center reits are working really, really well. But, man, I just don't love this. Can I say the very obvious thing? This is exit liquidity. Well, of course. For the data centers that they're already building or have built.

It's only ones that are built. This is not, no contracts. No, I understand. But like, you and I went to the, you and I went to listen to B-Wit. We went to listen to them speak. And I think like, what is it, 20-something percent of the portfolio is data center.

And they are, they are very much an important part of the infrastructure, of all of this on the financing side. And now building a vehicle so that there could be like a shareholder ownership makes sense to be the next. So I know exit liquidity sounds really bad, obviously. And I don't know enough about this just to talk super intelligently. It is my understanding that these are already contracted out, that there are obviously tenants

in each one of these things. Yeah, they go to, right, they're building it. They finance it. they're building it and meta kicks in money on the equity side and meta signed something saying that they're going to be utilizing it for five years or for 10 years. It gives you the confidence to want to build one of these things. What's really interesting is that there's like a scarcity play here, almost like cell phone towers. Communities do not want new cell phone towers, even if you tell them it's going to make their,

it's going to make their 5G work better or whatever. Like, people don't want it. People do not want these data centers. They're coming out and voting against them. So it is an important asset, and there is a scarcity value. They can't just throw them up as quickly as they were. Yeah. So this is a nice segue way to be credit redemption.

So you know how somebody could be right for the wrong reason? Like, you can make money, even though your thesis was incorrect. I think I was wrong for the wrong reason on some of these alternative asset managers. And what I mean was I think the, not I think, the reason for, now there was obviously smoke, right? It started with, we don't, we need to like do all the history of this. But it started with things that I thought could be handwaved the way. Oh, this makes sense. This is like understandable.

This is not news to anybody. Oh, this is an isolated incident. And then all the sudden, it was the software stuff. And that's it. So I sold Blackstone today and I probably sold it for the bottom. I was telling Ben, listen, this is, I think that this is, I think that this. the sale that I did of Blackstone is going to look really stupid in, I don't know if it's six months or two years or whatever, because these are predictable fee-related earnings.

But whatever, it doesn't matter. So this is my trading account. This is my don't lose money account. This is not like my get married to a losing stock account. So I'm just not interested in the headache because right now the sentiment is so bad on these alternative asset managers. and I think it's going to stay there for a while, rightly or wrongly.

Like whether or not the fundamentals deteriorate to catch down with the news, I don't know, nobody does. But I don't even think that matters because so long as investors want more money out than they're putting in, these stocks are going to be under pressure. They have John Gray on CNBC today

from Blackstone. This is like the full court press now. They are all, and it's not just Blackstone, all of them. They're sending their thought leaders out to do as much media as possible. You're seeing these guys pop up everywhere, seeing them on TV, on Bloomberg. You're going to start hearing more of them on the podcasts. And look, I wrote this thing last fall or last summer.

Why would you buy any of these BDCs or these illiquid vehicles? Just be a, just be a GP. Like, just own the equity. Well, that didn't work out well either. Well, turns out neither of these things are good. But what's so interesting, we haven't even seen the cycle hasn't even turned. Like the portfolios, I'm using air quotes, are fine. There's no, the fund.

When they keep saying the fundamentals are fine, the fundamentals are fine. Nobody cares if the fundamentals are fine today. Because B-Cred, for example, 26% of their portfolio is in software. So, yeah, there might not be stressed today, but these middle market software companies are doing $250 or $300 million of EBITI, You don't think there's stress. Are you kidding me? Sometimes my cynicism keeps me out, keeps me from making money.

But I find that more often than not, my cynicism, when I see a gold rush and I see an activity bubble, I just, in my head, I just call bullshit on it at first glance. And sometimes I'm wrong, of course. But like, in this case, I was right. I just saw, like, whole teams of RIA people being flown into New York City. and whined and dined so that like the employees of these RIAs could be taught how to sell a fucking private credit fund and I'm just like, who does that

if the product's any good? Like it shouldn't need it. A great investment doesn't need to be to be sold that way. There's nuance there though, because. I know, of course there's always nuance. But I'm generalizing for a reason. Yeah. When I see that level of full court press

making unsophisticated yokels, get on a plane, come to New York, take them to like a Yankees game, and then like put them in the penthouse office of one of these companies for like the the timeshare pitch. How could that possibly be a good outcome for their clients? You are right. You are 100% right. And also in 2022, the bond market had its worst year ever, basically. Like no bond investor has ever seen a year like that.

And so we had this really weird environment where you had increasing interest rates, increasing very rapidly and sort of unbelievably, no credit deterioration. So with private credit, investors got the benefit of higher interest rates without the duration and no credit losses. So private credit did amazing in 2022, did amazing. And these asset managers, they said, we have to strike the iron will never be this hot. We will never, ever have this opportunity. Correct.

Dude, I was at delivering alpha, which was at the Glass House, the CNBC event. And it's like, I don't even know what, like, I don't even know. The audience is weird. It's like, it has a lot of retail investors, but then it also has institutions. And then they were like hedge fund people. I don't know. But like the guys were. walking around like they just won the Super Bowl,

we're all private credit guys. And they were strutting around. I never even heard of these people. They were getting out of like, they were getting out of like black Yukons out front on 10th Avenue with the tents. And they were just walking around like they just invented a cure for cancer.

And I really, that was the first inkling that I had that, oh, all right, something has changed because my entire career, nobody cared about this asset class. they were like keynotes speaking their asses off. And that was 23. So that's almost three years ago. That's the spring of 2020.

And they were selling past performance, basically. Yeah. But in the end, credit is credit. I don't care if it's held privately or publicly. And these are all great firms. They're not bad firms. I'm not saying they're bad products. The fundamental flaw is they're presupposing

that they can teach financial advisors and their retail clients to act like they're on the board of a hospital. It's never going to happen. Correct. Sorry. Correct. It's never. Correct.

Okay. And also, let me, before we get to the B credit thing, let me ask you this, do you think that in three years, private credit will be bigger than it is today, maybe substantially so, or we're going to look back in 2025 and be like, can you believe how drunk people were? I'm so glad you asked me that question. Ironically, if you're an investor in private credit, what's going on now is the best thing that could possibly happen.

Get rid of the weekends? Because the valuations, the valuations, the marks, this is private credit and private equity. Panic in the private markets will create better opportunities prospectively for new dollars going into the asset class. When you have less competition bidding up or putting out loans at pricing. That's just like, right, like the pricing on some of these loans is like no margin of safety.

It's tightrope walking. And that has to work itself out. And I don't know how long that takes. So we're going to see. We're going to see. So my suspicion is that private credit will continue to grow in size. But we are going to see what these portfolios are really made of because, you know what? We'll put a pin in this.

We'll get to Mark Rowan in a second. Let's talk about B-Cred. So I want to show people like there's been no problem. here. This is a table of the historical net asset value of B-CRED, which I think is the largest. Yeah, it's $80 billion. Now listen, this is not private equity fake marks, okay? These are loans. So, yeah, they're not liquid. I mean, they're not going to be marked every day. They shouldn't be. But this is, this is like, you know, this is legit. The NAV fluctuates. The NAV is fluctuating like 30 to 40 cents per quarter. It's all. It's, it's stuck right where it should be.

and then there's a yield on this. Yeah, it's a bond. But like, it is remarkably stable. Now, the cynic would say so far, wait, okay, fine. We'll say right now they're doing their job for their investors. I want to also show the growth of $100,000. Real money has been made in this space. Yeah.

And Michael is right. In 2022, when people's publicly traded bond portfolios, including treasuries, got absolutely murdered. this did act as a safe haven. Now, if you hate these people, then the thing that you could say is, yeah, they cheated, they never moved the valuation

because there were no transactions and they got away with it. I personally don't think that's the case. That's the whole point. It's loans. It's in liquid loans. I'm making this point. In a lot of cases,

it's not syndicated. It's a bilateral agreement. I'm a lender. Michael's the borrower. He and I decide what it's worth because if he so long as he continues to pay and perform and I'm not selling it to anyone else. The loan is worth what I say it is. And that's the nature of the, it's the difference between publicly traded bonds where the whole market is a verdict. Yeah. Or a syndicated loan where

you have 40 different buyers and they all end up in court for three years to work something out. In this asset class, it doesn't work that way. And I don't think people, understand that that nuance all right so i'm so i'm so curious to see where this goes if the fundamentals do deteriorate and you start to see some defaults pick up oh my god the press is going to have a field all right so the reason we're talking about this today is because it came out that investors pulled 7.9% um of of uh of uh of their here redeem a record 7.9% of shares from the be be credit fund now what black i thought what Blackstone did was a great move.

They have a cap where they could say no more than 5% in any one period of time. And they said, no, you know what, actually, no problem. Here's everything. And that kept the people pulling some of their money out from panicking. It's 7%. It's 7%. That's 7%. So they said, here's 7.9.

No problem. No cap. We got you. That's number one. Number two, they actually had influence. not on a net basis, but they said $2 billion in new money came in,

came in at the same time that three points. So they had $3.7 to sell. People wanted out, but $2 billion to buy. And so the net was a negative number. Ooh. But the other power move they made is they say $400 million worth of the buying

came from employees. So employees, Black Rock, maybe, and maybe they'll be judged on this come bonus time. Did they put up or shut up? But like, I find that to be an admirable solution. And they said, if anything, this aligns us even more with our investors. Our employees are buying into the fund. Yeah.

I thought that was super dope. So I took a 13% loss in the stock. Won't be the first or last loss that I take. But I think it will look, I think it will look foolish in hindsight. But that's okay. I'm fine with that. I mean, this stock is a falling knife. In fairness.

I usually catch falling knives. Now I'm selling a falling knife. Played the first. Let's hear from Mark Rowan, one of the adults in the room. This kind of slightly riskier on the face of it, lending has been outsourced to professionals like you and to people who know what they're doing.

The worry is that suddenly you're now getting, in Britain we call Aunt Agatha, coming into these markets. It's more worrying. Look, we're going to have a correction, but it's no different than the correction that happening in banking. If you look in banking, the dominant banking institutions of today were not as dominant pre-crisis.

Those that sat out the subprime lending have arisen and become magnified in terms of their fortress balance sheet and market share because they were good managers of risk and good managers of underwriting. I believe the same thing is going to happen in investment markets. Investment markets, people made choices. If you wanted a higher dividend, you could take more risk, you could lend to smaller companies, you could do more pick, you can invest in equity and preferred not to. this first lien and you could run with a lot of leverage. That felt really good on the way up.

That's not going to feel so good on the way down. And there are companies of which we are one, but not the only one, who went all first lien, who went almost all cash pay, who went large companies, who work with low leverage. I like where we sit. And we, Jamie Diamond said it, there's always going to be fraud. There's always going to be underwriting mistakes. But the question is, who's a good risk manager and who's not a good risk manager. If 30% of your report is in one industry, and that one industry is being impacted by technology, you have not been a good risk manager. Pretty good.

Some of these stocks are going to set up generational buying opportunities. They're not all going to be Blue Owl, and they're not all just going to keep going down and down and down and down. I do think that the portfolios of these companies, both on the equity and the credit side, They got a lot of stuff that people don't want. There's a lot of software. There's a lot of commercial, real estate. There's a lot of stuff that people just do not want.

This stuff, the headlines are going to continue to get bad. They haven't even started to get bad. And the outflows, unfortunately, have probably only just begun. To your point, B-Cre... For all this talk, B-Cred's performance 9.8% annualized total return since inception. Yeah, it's been great. And guess what?

Almost no defaults. Like, they've done a great job. Yes, yes. And we already are hearing panic. Like, it's, I mean, I agree with you. I think, uh, I think that's why I'm not, that's why I'm not like, I'm buying Apollo. I'm buying it. Eventually, you will hear me do that.

I will, I will, I don't know when that's going to be back. You damn right. I'll be back. All right. Let's, let's, let's do the, what are the, what are the IPOs? It's enough. It's, we don't, we can skip it. So much, everybody.

All right. So I've got a pretty, I've got a pretty. Wait, are we in make the case? Yeah. Yeah, this is a very tepid make the case. So I was, I've been noticing, as I'm sure you have, like, is New York City back? And I'm just talking about just based on the train station. Dude, it is packed early.

I took a 715 train the other day. I was like, are you kidding me? I think economic, I think economic anxiety is back. and people are showing up, showing their faces in their offices more. I don't think that's an economic story. I think it's a labor market story. People are worried about their future.

Okay. Very well could be. Very well could be. Look at, throw this chart above SL Greens' occupancy rate, or vacancy rate, rather. Yeah. Go to the right direction.

I don't know if this is the same number of, oh, it says same store. Okay. So it's the same amount of buildings we're tracking. Look, anecdotally, and because I have inside information from Barry Finkelman, who is the commercial realtor to the stars in New York City. Barry explained this to me very well three years ago, and it enabled me to know what I was talking about because I don't really know this market. But the way that Barry explains it, there was a flight to quality after the pandemic. all of the biggest and best companies,

not just public companies, law firms, accounting firms. They wanted to be in the best buildings because they recognized they needed more amenities and nicer scenery to keep people coming into the office and almost like reward them

for coming into the office. So that flight to quality wasn't just about class A buildings in the best neighborhoods. They wanted to be in the top third of the stack. They wanted to be upper third of these buildings,

the best views. So, So it's top floors in top buildings. Those rents are all $250 a square foot, like nothing ever happened. The real knife fight is in Class B, is in dilapidated 1960s buildings with low ceilings. Nobody wants that. I know. That's the real knife fight.

But that's not the SL Green portfolio. SL Green's all A. So I, so this. I almost, The SL Green is one Vanderbilt. Yeah. And I think one Madison, which is. is Madison Square Park.

It's the best most brand new towers. So I thought, I suspected that S.L. Green was under pressure. I thought it was a big Mammani thing, like less demand. All of these office real estate, all of these office rates around the country are getting murdered. It has nothing to do with Moundana. I thought that was interesting. Anyway, I'm not making the case for this, although maybe I should have.

I'm making the case. I actually bought the stock today. So I sold, I sold Blackstone, and I bought Draft Kings. and let me take you through my thesis, which I... Why are we talking about commercial real estate? I'm lost. I almost made the case for Esla Green,

but I didn't. I'm making the case for draft things. So now we're doing your... Okay, we're doing your B role and then we get to the A role? Okay, got it. You should have seen it. I had a whole thing on Eselle Green.

I said, you know what? I don't want to do this. All right. Now, that's conviction. Nope, because a lot of the fundamentals like don't really look great. Anyway, all right, draft kings. Thank God you were never a stockbroker.

Draft Kings. Yeah, I have no conviction. I starved, you would have starved. I have no conviction. I should have said, yeah, you probably should sell stock. It's not really that great. All right, Draft Kings. I think Draft Kings is in the same position as the software stocks in terms of software is under siege by AI.

And draft Kings and Fandul are under siege by prediction markets. And I think it is way overblown, way, way, way overblown. So let me think you through this. You're going to be wrong. Go. Oh, yeah, I'm only looking for 12%. So shut up. Well, that I couldn't help you.

All right. So draft things, the stock fell 60%. It fell from like 50 something down to 20. It was, it was, so this is not a great business. Let's be clear. This is not a good business. And it was trading way too richly. It was at six times sales earlier in January, 2024.

Nobody wants it anymore. You can't give it away. It was under one, it was under two times sales. All right. In their most recent report, and their CEO is a real guy. He said, we are not seeing a discernible impact from predictions on our revenue.

Still there's chart on. We're looking at leading prediction operator versus regulated sportsbook. I kind of don't believe these numbers. There's probably something in the fine print because this makes it look like there's no impact whatsoever. Everybody knows or everybody thinks that the prediction markets are going to take a huge bite

out of these companies. They cleaned up their stock-based comp in a big, big way. which was totally out of control next chart. As a percentage of revenue, it has gone in the right direction. They finally had a positive gap quarter. Their operating income is going up and then the right direction. And next chart, I think I found the short term bottom. So I don't love that I made the case for this, but I just think that it's way over them.

I don't believe the prediction markets are going to destroy draft kings and fandle. No, I think it's actually worse than that. They destroy their own customers. Draft Kings. All of them. Yeah. It's just fucking terrible. Nobody, they never, I never would, so I know you're trading and you, you, you probably

make some money. I would never invest in companies that are bad for, that are like fundamentally, like, they, they need to, the cost of acquiring a customer is so high in part because they have to keep acquiring customers because everyone gets burned. Nobody's a winner. Nobody gambling on sports for a year is. up. Sorry, they're just not. So the higher usage of the platform, the worst off you are as a customer. It's a shit business. And it's not, there is no comp, there's no, do not compare these to the,

the brokerage stocks. The people who have had accounts of Charles Schwab for 20 years are significantly wealthier. All right. He's already done. Listen. You will not be able to say that. I will not be able to say that about any of these. And now there's this free for all, but that number's bullshit. The prediction markets have only taken 1% market share. No way that's true. I don't know how they're measuring that. That can't be right. We just use your brain.

You know, it's fake. And then consider how much competition there is, not just from the prediction markets. Like, now you have fanatics is in the fray. All the casinos are using this as a lifeline because they're losing money. No, Fandil and Draft Kings have 80% market share. Listen, I said at the outset, in my defense,

this is the worst make the case I've ever made in my life. All right. That was super bold. I loved it. Let's do a mystery chart. Pop me up. Okay. We alluded to a commodity tonight during the show. And this is the publicly traded company that is most associated with that commodity.

And I thought of this as a really obvious buying opportunity if that trendline test were to hold. Newmont? Do you know what it is? Say it. Newmont. You are the smartest man alive. Round of applause for Michael. Well, I mean, that was not hard.

First guess. Well, no, you could have gone oil. Could have gone Bitcoin. I don't know. What do you think about this? What do you think about the setup? You don't trade these types of setups, do you? No.

No, it's too easy. It's too easy to trade. Yeah. Yeah. I love that. I love what, put it back up real quick, guys. I love when a stock hasn't revisited. It's uptrend than a long.

It's moving average in a long time. And then it falls in there on a completely exogenous event that has nothing to do with the company. I feel like this is a super low risk, super high reward if you set your stop right. Why wouldn't everyone trade this way? I truly don't get it. But I don't know. It had a big downward flush today, recovered about half of it intraday. I feel like this is what people should be doing when they are short-term trading.

People think that they either miss the move or just. my luck, I'm going to buy it, and it's going to stop working. That's just how people think. That's why the stop. I agree. I agree. If only people understood, you want to buy dips in stocks in powerful uptrends, and you want to buy retests of the major supportive moving average.

If only people did that, they wouldn't have to be on Flutter or whatever the fuck, betting on nonsense that's literally impossible to win at. Like, if only people understood, there's actually a rhyme and reason to how consistently profitable traders operate. All right. I'm sure I'm Draf King, so you convince me. But they won't listen. Okay, guys, thank you so much for listening.

My favorite podcast, Michael and Ben's Animal Spirits, is on tomorrow morning, the podcast app of your choice and YouTube later in the morning. Don't miss that. We have an all new Ask the Compound later that day with Duncan and Ben. And, of course, an all new edition

of The Compound and Friends at the end of this week. New guest for us. And we're super excited to bring this guest to you. Thank you guys so much for watching. Listening. Thanks for all the likes and the subscribes. We'll talk to you soon.

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