The Compound and Friends - This Is Your Last Chance to Get Rich, Mag 7 Earnings Week

Episode Date: January 28, 2026

Join ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Downtown Josh Brown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ for another episode of What Are Your Thoughts and see what they have to say about the growing fear coming out of Silicon Valley about mass job losses and the idea that this is the last chance to build generational wealth, market sentiment, MAG 7 earnings to watch, Tesla’s latest numbers and outlook, and what early earnings season data is actually saying. This episode is sponsored by Public. Find out more at https://public.com/WAYT Sign up for ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Compound Newsletter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and never miss out! Instagram: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://instagram.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Twitter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://twitter.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ LinkedIn: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.linkedin.com/company/the-compound-media/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ TikTok: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.tiktok.com/@thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Public Disclosure: Paid endorsement. Brokerage services provided by Open to the Public Investing Inc, member FINRA & SIPC. Investing involves risk. Not investment advice. Generated Assets is an interactive analysis tool by Public Advisors. Output is for informational purposes only and is not an investment recommendation or advice. See disclosures at http://public.com/disclosures/ga. Past performance does not guarantee future results, and investment values may rise or fall. See terms of match program at https://public.com/disclosures/matchprogram. Matched funds must remain in your account for at least 5 years. Match rate and other terms are subject to change at any time. 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

Hello, gangsters, gangsterets. Welcome back. It's an all-do edition of What Are You Thoughts? It is Tuesday, 5 p.m. on the East Coast, but Michael and I are actually in Mountain Time. We're both in Scottsdale, Arizona. But we're not pre-taping. We are live. It's just a little bit earlier here than it normally would be when we create the show.

But we're ready? You ready? It's very live. Hold on. Let's just test and make sure we're actually live. When you hear three, say one, two, three. Beyond live. I beat you to it.

All right, guys, on what are your thoughts each week, Michael and I dissect the biggest stories that are making an impact on markets. That's what we focus on. I see the chat's a little distracted with Patriots versus Seahawks talk. Do you have like a strong opinion on what this game's going to be like? I think Seattle rolls on them, but I'm not sure. Josh, I don't have a dog in that fight. Yes, I do. I bet way too much money on the Seahawks not winning the Super Bowl.

And it looks like I'm about to eat my words or my bets in this case. Wait, you're betting on New England? So in, no, stop. In week 16 of the NFL season. All right. I saw that the Seahawks yes to win the Super Bowl was 87 cents on the dollar. I said, 87, what? Why are they the favorites?

F*** all that. There's no way San Donald's winning the Super Bowl. And then they steamrolled the Niners that Thursday night. I was like, uh-oh. And, yeah, it's been, I never bet against Sam, I never bet again Sam Donald. How could you? It's been downhill ever since. So, yeah, no, I'm, I've got an interest.

You better believe it. But no, they're going to, the Searchs of the better team, clearly. So, but. You know what I'm rooting for? I just want everyone to have fun. Yeah. Hey, guys, we have, uh, we have, we have all the peeps in the live chat. Let me say a couple of quick, hello's, and, um, and, and we'll, we'll get down to business.

Magnus is here. So is Chris Hayes. McKenna Baird. Uh, any. other wholesalers here, I would imagine, probably tons of them, right? I would just, I guess I would just have to guess. Cliff is here. Rachel is back. Jerry, Jimma is here. Evan Ferrara is Mike wearing his Seahawks bet, right? Sweating his Seahawks bet. Yep. Yeah. Yeah. You heard. No, I've already come to peace. I'm not sweating and it's over. It's, my mind already look.

All the gangsters are here. Tonight's show is sponsored by our friends. at public. And the public trading app, as well as public.com. And I personally use public. They call themselves the investing platform for those to take it seriously. So do I. On public, you could build a multi-asset portfolio of stocks, bonds, options, crypto. And now they have this thing called generated assets.

So if you type an idea into the box using AI, it will create you an investable index. And all you have to do is have a prompt that you'd be. curious to see what would this stock portfolio look like. So you can do something like renewable energies companies with high free cash flow, semiconductor suppliers with 20% revenue growth. Like just think of something. And it will screen thousands of stocks, build you a one of the kind index. You could backtest it against the S&P 500.

You could invest in in a few clicks. Generated assets are like ETFs with infinite possibilities. Completely customizable based on your thesis, not someone else's goal. public.com slash W-A-Y-T and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com slash W-A-Y-T paid for by public investing, full disclosure and podcast description. All right. Let's get to work. Earnings season, as it always is at all times, basically at this point.

But this is really the biggest week. We've got the banks out of the way. And now we're looking at the other big sector, the big sector, the big. biggest sector technology. And we've got the Mag 7, four of the Mag 7 this week. And I thought, Michael, it would just be good to give people a little bit of a recap of where we are before we dive into some of the companies that are about to report. What do you think about that?

Set the stage, if you will, Josh. 14% of the S&P 500 market cap had reported so far as of this afternoon. So post to close probably some more names. There's 102 companies this week. that is 32.9% of total market cap in the S&P. So about a third of what really matters is about to happen. Four of the Mag 7, Apple, Microsoft MetaTesla this week. Analysts are looking for S&P companies to post 8.6% year-over-year earnings growth this quarter.

And a lot of that's coming from tech. If you pull tech out and just look at the other 10 sectors in aggregate, it's really more like 2.9% earnings growth. So for the people that are like, why is the financial media so focused on Mag 7 on tech? Well, this is why. It's basically the most important fulcrum that moves the entire market. Mike, am I saying that right? That's exactly right.

I love the setup. We'll talk about this later. But the Mag 7 is not cool right now. Like, investors are not really digging it. And so the bar is low for the first time in a while. Yeah. We have a good beat weight going. 78% of the S&P companies that have reported.

401% have beaten earnings expectations. The five-year average is 77, so right on target. It's always 77, by the way. Spoiler alert, every quarter. Analysts are looking for sales to grow 7.5%. So it's not just earnings tricks and buybacks. It's actual revenue growth. And again, highest growth rates, tech, materials, financials, lowest during the defense

sectors, and healthcare, energy, and discretion. five of the 11 sectors have beaten beginning of season growth estimates. So where are the beats? In other words, they're fairly concentrated in about half of the segments. Let's put this chart up just to give people an idea of what the week looks like. So you can see a lot of logos here. MasterCard and Visa will be exciting. Those will be on Thursday.

I don't know. Do we care about Starbucks anymore? Are you long? Nope, flat, out. I feel like nothing ever happens with that stock. Exxon and Chevron are Friday, not tech, but I will be paying close attention. Long Exxon. Who else is big in here?

IBM sort of matters again. Did you say meta and Microsoft or did you skip over that? Nope, meta Microsoft IBM all Wednesday. Okay. And Tesla. Apple's Thursday. 430, I think it's when it comes out. Yeah.

And I saw Texas Instruments reported. It looked like a slight miss, but then they reiterated guidance. They reaffirmed guidance for the year. Can I be honest. Sort of seem non-a-venti. Texas Instruments, as far as I'm concerned, they make calculators in elementary schools. That's all they do. Yeah.

They make the chips that go into your TV remote. It's not a. So they're on the call saying they want to refocus their end market customers around the data center. Yeah, no shit. You know what's so? Oh, you do? I was thinking about this today. So I had CNBC on the airplane, and I saw something coming along the screen about, like,

Dan Loeb getting involved in a company that I'm not really familiar with. And the shareholders are upset. It's down 24% of the last three years. A piece of a night. Postar. I know that. Co-star. And I was thinking, like, it is amazing that every large company.

I mean, obviously, this is not profound, like, has large shareholders. Like, Texas Instruments is a great example. like no offense, all of respect, whatever, why would you own, why would you, why would you own

Texas instruments? Well, it's a cash flow, it's a cash flow story. Fine, yeah, cool. You could say about a million

companies, though. Like, you know what I mean? Like, why would there be like a large shareholder base of,

I don't know, uh, SAP. Like, I got a cold, I got a cold bullshit on this. Dude, Dell and IBM are two of the most

boring companies in tech. And I think they both, I didn't say, I think they both tripled. I didn't say that low IBM. But who is to say Intel tripled? Who is to say that who is to say that Texas Instruments

all of a sudden the stock just gets completely ignored. They find a new path to growth. They get re-rated and the stock doubles. Who's to say that can't happen? Who's to say, all right, buy the stock. Buy it. No, I don't want it. I'm good.

Dude, TV remotes. No, I know. Remote controls. That's the growth story. Well, things change. Things change. And when I show you, and when I unveil my mystery chart for you,

it'll be a great reminder and how quickly, or not how quickly, but how drastically things can change. Let's do some of these charts. This is the blended earnings growth estimate. Is this the estimate? Yes. The overall S&P is...

The overall S&P 500 is in red. So what we're basically showing you is each sector what we're what we're looking at um it includes some of the actual reports and then blends it with the companies that still haven't reported and you can really see materials is really interesting which we'll talk about in a second but um you can really see it's tech and then it's everything else next chart this is revenue um it's sort of the same story except then you could throw communication services in there and and interestingly health care so you're going to get 9% growth out of both of those sectors based on the estimates, but tech is still 18%.

And once again, energy expected to have negative revenue growth. But just keep in mind, that's based on commodity price and that can change really quickly. Probably not this quarter, but next quarter. Blended revenue growth. So this is like, oh, actual report in earnings growth. So these are just the companies that we have in so far. So as high as the estimates for tech are, like we have 24. 7% earnings growth amongst the reported tech companies.

They are literally delivering. I don't know. What do you thoughts? And the prices aren't moving that much. The 4%. The 4th has got to be coming down in a big way. Love it. Love to see it.

Yeah. Well, they're definitely not up 24%. I'll tell you. I'll tell you that. Not the ones I look at. All right. Mag 7. Take it away.

Well, I was going to ask you. Like, which one are you most looking forward to? I don't think that. Oh. Okay. Go on. Did I jump the gun? Yeah, no, go on.

Everyone's too negative. Everyone's too negative. We know what they have to say, and I think they'll just say it. Everybody wants to know return on investment. So they're not, all right, this is important. They're not a cloud data center business. Like, they're in a lot of the businesses

that the other MagSavs are in, but unfortunately, they're not in the same business as AWS, Google, Cloud, or Microsan. Microsoft Azure. So they are a spender on AI. And all the street wants to hear is like there's a revenue stream attached to all this money that you're spending. Like it's not good. Now, we know meta is one of the best users of AI just in terms of continuing to make the

algorithm more addictive for Instagram and continuing to help advertisers monetize it better than any other platform. Like there's no one better in the world, really. So everyone gets that. But the thing is, they're on seven or eight different side quests with all sorts of AI things that they're rolling out, developing, announcing, getting rid of, changing the name, losing employees, adding more employees. If you want to be bullish on meta, the number one thing you're missing is just clarity about the strategy. And it's not the LLM. It's not like Lama is not.

It's an open source thing. It's not getting anyone excited at this point, given what Gemini and chat GPT are doing. So it's just like, well, what are you spending all this money on? And how does it turn into revenue? So I'm not long the stock at the moment personally. And I don't know what the answer is going to be. But I think they know that they have to, like, explain it. You can't just do like 45 minutes on the call about AI without talking about revenue.

and if they do, I think that could be the end of this stock underperforming. What do you think? Last time they reported, they spoke about the reels and the algorithm and record revenue in all those segments. So I think it's going to be less about how are they monetizing all to spend and more on what exactly are they going to be spending because that number keeps going up. And last quote, I can't remember what it was. Was it 110 billion for 26, 180, whatever it was, the street was like, no.

And just bushwhacked him after the close. after hours. Yeah. Those are the twin storylines. It's the CAPX and what is the, what's the, what's the AI business? Not how well are you monetizing wheels. We get it. What's the business?

What is all the spending doing? I think Tesla is going to be the Elon show as it always is. It's not a car company anymore. Literally not a single investor cares about the cars. So it's going to be all about optimist and whatever. What's that? FSD, Robotoxy, Timeline. timeline for optimists.

So I don't think they're going to say anything. Are they getting into trucking? I don't think they're going to say anything because it's not ready yet. So I don't think that there's going to be anything massively revelatory there. Sort of similar with Apple. Like, I don't, I'm excited. Michael, in early 2025, he said full self-driving robotaxies with no safety drivers would be rolled out in every city across America.

They're in two cities. It doesn't make a difference He just makes up something for it It doesn't like he doesn't get He doesn't get dinged for missing timelines In fact He only gets rewarded for that So if he comes out and says

By 2030 Half of all American households We'll have a robot You good You think anyone's gonna be like No Right No

This stock is gonna go up 20% It doesn't even matter So he could say whatever he wants The timelines are squishy. Like people don't hold them accountable. That's not what this stock is about. This stock is about what is the next thing that he can dangle.

And right now it's Robotoxy without human drivers in more cities. And if he can say it, like if he could say, yeah, we're in two cities, we'll be in five cities by the end of this quarter. Stock's going up. Regardless, doesn't even that need to be profitable. And it won't be. I guarantee it. The one that I am most looking forward to is Microsoft because we don't hear from Nvidia until maybe the end of February.

I can't remember what they report like seriously late. So the next six weeks, I think the AI trade is going to be queued off Microsoft's reaction. Not necessarily what they say because every quarter, it's the same thing. It's 15% growth. It's 18% growth. Every segment is on fire. Like the business is humming. They're killing it.

But that's not important. What's important is how investors react to it. It's been sideways to down. Investors are not excited about it. And can Satya say something that reignites investor enthusiasm? Or is this just going to be like, no, we're moving out from back seven. Like we're broadening out. It's the 493's turn.

So that's what I'm the most excited to say. Do you think Microsoft is going to be a more excited call for Tesla? Or you're saying that's the one that you have more interest in? No, no, no. That's one that I am personally most interested. interested to say, because I think for the stock market, that is the most important call that we're going to hear this week. Okay. Apple reports Thursday, 5 o'clock. All right. So in other words, meta Microsoft will be after the close tomorrow, right? And then, excuse me, Tesla, Microsoft and

meta, all in one shot. And then Apple is the next night, Thursday. So two storylines. How is the consumer holding up and are 17 sales still rolling. And I think the answer will be yes. And then like any kind of AI surprise. So we know that they're working with Google. We know that the whole name of the game for them is to turn Siri into something more useful than it is today. We also know that they wanted to do this last year. And they're in like a year and a half delay. So if they surprise everybody and say anything on that front, my personal opinion is probably good enough. And then Morgan Stanley comment, they actually are expecting shares to trade sideways to lower due to seasonal headwinds, I guess coming out of Q4 phone sales slowdown.

I think Apple is down. I think the stock was down eight weeks in a row. So I'd love this setup. It's dribbling low. Yeah, I'd much rather see this if you're bullish, you know, if you want to see a positive reaction, the bar is pretty low. I want to share Canter's analyst, Andres Shepard, who we've had on the compound before, he actually covers all my flying car stocks.

This is his outlook for the Tesla call. On tomorrow's call, we expect Tesla to likely disclose its 2026 vehicle delivery outlook, LOL. It'll be interesting to see whether Tesla guides to growth in its auto business or another year of fewer sales. Okay, you and I are both on record. They can say we sold zero cars. Yeah, it doesn't matter. It won't even matter.

Energy generation and storage segment experienced its highest year on record in fiscal year 25. After the company announced it deployed 46.7 gigawatt hurts, whatever that means in real life. And tomorrow, we expect the company. I don't know. It's like you wouldn't understand. It's above your head. Anyway, that's an exciting part of the business. And then CyberCab.

like this is to you know once again just to reiterate like do you have more cities that you're announcing or you don't and i think that's all they really need to do is they need to say yes and then on the optimist front this is not a product that exists we've seen the memes um but canner is bullish so they said musk stated that tesla's upcoming humanoid robot optimist will be available for purchase by consumers starting in second half, 27. In addition, they recently provided an update on humanoid robotics market, estimating the global market will grow from $2.9 billion this year to $15.3 billion by 2030, which is a 40% kegher.

We believe this is a material opportunity for Tesla over the long term. And on the call, we hope for further details on Optimus Mass Production timeline. I bet you Dan Ives is going to have the first question, and he's going to ask about the robot. What do you think about that? Can we make a prediction market in that bet? Is Dan usually on the test of the call asking questions? I don't know.

All the time. Okay. All right. Before we move on, I have a chart. I have a chart. So this is from Yuri and Timer, a friend of fidelity. Does great chart work. The black line is the Mag 7.

And the MAG 7 is going sideways, like for a long time. Yeah. Since the end of the summer? Yeah, it's gone sideways. Yeah. But interestingly, what's happened alongside of that is the rest of the market, broadening out. Percentage of members with the stock above a 50-day moving average, it's at the highest it's been in a while.

It's awesome. It's fantastic. Who doesn't like this? Right. It's such a cold glass of water thrown in the face of people who had the same. take where it's like, well, you better hope the Mag 7 holds up. It's like the opposite. It's the best thing that could have happened to the rest of the stock market is that those names do nothing. Some of them fall. Nothing falls apart, though. Like, we're not, you know, we're not like VIX 25

because meta and Microsoft are struggling. It almost doesn't matter. The money is finding other places to go. I know this is a point that you and I harp on repeatedly. But I think it's a It's necessary to combat all the people that tell our audience that the market works differently. No, it literally works like this. People are investing. It's not Apple or nothing. If Apple stops working, they find a new game. We don't, like, we know this.

The people that are worried, there's always something to worry about. You worry in a bare market. You're worrying a bull market. This is as good as it's going to get. Oh, look at nothing, no problems in credit lands. Spreads are at record high. I guess there's nothing. There's no risk.

No, it's a bull market. This is how it works. So, which brings me to a great chart from duality research. Wait, wait, before we go there, last thing on earning season just in general. And I know when we get closer to Nvidia, we'll go there. I think the number one thing that is not priced into Tesla is Jensen's desire to own the robot opportunity. And I'm sure they work together on a lot of things. And I'm sure there's a ton of GPUs in all sorts of Elon Musk projects.

But like, they're doing their own deals. they're doing their own deals with automakers. They're doing their own deals with Uber. I would imagine there's nobody that Jensen wouldn't work with just to make sure that the Nvidia platform remains at the center of autonomous vehicles and then eventually robotics. And there's going to come a collision point between these two companies. I don't know when it is.

I don't know when it is. But I think that is an underrated storyline for 2026. is Tesla is both a big user of Nvidia Silicon and is also going to see Nvidia become a fierce competitor in two of the markets that they're telling their investors they're the most excited about. So I just, I wanted to end that with, with that comment. So it'll be interesting to hear when the Nvidia call rolls around

how much time Jensen spends on AV and robots. I think this would be a lot. Yeah. All right. Good seed, noted. All right, look at, look at this freaking charts. You know, I have a high appreciation for chart art. And this guy at duality research is one of the best.

So here's what we're, I do. Look at how good this is. So here's what we're looking at it. On the top is the SMP 500. And underneath it, it's the AAII bull bear spread. Now, it's only one indicator, and it's mostly an older cohort, but whatever. It's something. And I think this is important.

So Alex says this chart makes it clear that once sentiment turns bullish, it usually stays there for a while. Okay. So you see how like the red and the greed, they don't oscillate every other day, right? They move in trends and waves. So he said it usually stays there for a while, especially if that 26 week average spent more than six months in red. And this is the key, key point. The biggest mistake, actually, you know what? Put a pin in that quote.

I just want to show one more chart. So this, next chart, please. So this is the forward returns. Now, it's only n equals what, seven, six or seven? Michael, can you explain what the AAI-I bull bear spread is? Yes. Yes. So when their previous chart, please.

So they poll these people and they say, are you bearish or are you bullish? And they do this every single week. And the difference between bulls and bears is represented by the green. lines where there's more bulls and bears, and the red lines when there are more bears than bulls. And the point is that only now, even after the run-up, only now are people just starting to turn bullish, at least according to this indicator. So he shows the next chart, which shows the long-run average, which is 26 weeks, when it flips from bearish to bullish after 26 months. Is that what's that 26 months in bearish territory? And it's higher every time. Again, not a huge sample size,

but I think the key point, the key point is this. He says, the biggest mistake you can make right now in a market like this is being a serial top caller. Right now, right now the crowd is just starting to get on board with the ball and we're still far from the kind of euphoria that screams market top. I just mentioned like the most popular widely held names in the market. Invita, Apple, Microsoft, they've been range bound for five. months. This is not a euphoric market, obviously. It's just not.

What do you say, though, to people that point out rightly that those stocks don't typically correct or crash from an all-time high. Usually, it's when they've been range-bound for a while and people are losing faith that sets up the next correction. Like, it's very rare that you get a record high and then bang, you're in a 10% draw down. It's more likely that a stock is 10 to 15% below it's high and then breaks down. 100%. That's like a, that's a legitimate concern. 100%.

I also think it has nothing to do with what I just said. Okay. All right. But yeah. I think like, I think like you see that sentiment flip bullish and based on the chart, like it could be, I don't know, is that like weeks, months for,

for how long that bull wave lasts historically? No, the last one. Back it up, John. It's. Yeah. It would be unusual. What are the timeframes down there? Those are, these are long.

What does that say? It's 26 weeks, dude. Yeah. Like it moves in long waves. All right. More investor behavior stuff. Check this out. You're to love this. People are selling U.S.

large cap stocks. It's like unbelievable. This has been a minute. Not only are they selling U.S. large cap, but look at the flows into global. That is something. It's the classic rebalance, chase, whatever. I don't know. I think, I think two things can be true.

I think a lot of people are looking at the outperformance of international stocks and they're just saying, you know what? It's been a while. I'll buy some shit. So I think that's one story. The story on large caps being up for distribution early this year, I don't know if it's related to the, I don't know if people selling U.S. buying international. I think it's more like people maybe like they held on to taxable gains through the new year. And now they don't have to worry about it until April 27. You are Mr. The Money goes somewhere.

15 billion came out. It's not going to cash. Okay. So you think that's all one story. It's like, I do. You know what? Our new target allocation goes from 10% international to 20. And the money has to come from somewhere.

So, I mean, who's doing that? Is that like TAMPS and big wealth management, CIOs, model portfolios? All right. All right. You know what? You're probably right. I would buy that. All right.

More stuff on this. All right. Equity sector flows. since cumulatively since the beginning of 2025. Dude, look at technology. It's the light blue line and it's flat. Flows are flat. It's unbelievable.

And number one and two, it's industrials and utilities. What? Well, I think because it's off of a base. So the baseline is that zero line in January of last year. These are cumulative flows to January of last year. That's correct. Right. So I just feel like the base is so low.

that like any additional sector flows look like really aggressive whereas with tech flows have never been a shortage. I think it's just a low base. Like how many people were at, how many people at the start at 25 were like allocating to utilities and industrials?

Now obviously things have changed and people have recognized that these are part of the AI trade. But what's interesting, these are absolute billions since there's no percentage here. Like it's billions. Okay.

So it's just in dollars. It's just straight dollars, homely. So then the, okay. So then the baseline doesn't actually matter. It's like it's wild. All right. One more. Actually, two more on this.

So this is from Daily Chartbook. And what I say? What a gift. This blog is. Yeah, go ahead. People think that this utility thing is like, oh, well, it's just about the data centers. And then whenever that runs its course, those stocks will normalize back to 10 times earnings. I don't think so. I think it's a secular bull market and electricity. It's not about the

utility companies. The demand for electricity is in hyperdrive, and I don't care if they stop building data centers tomorrow. The ones that they did build will be in heavy use forever. And just the elect, we've had a wake-up call about electricity, generation, and distribution in this country. And those assets, the equity shares of those businesses, have gone through a once-in-a-century re-rate, and that's not coming back off. Those are more valuable than we have systematically given them credit for. Those assets, the electricity generation, the pipelines, the transmission mechanism where they can get it from the plant to the grid to your home. All of those assets have been systematically undervalued.

And that is now what's at an end. And I would not be fading this utility thing as like, oh, that was a 25 story. I think it's like a forever story. And we're going to stop systematically undervaluing those companies. I think you're right. I think you got to be paying attention to these names. I know they went up. Get over it.

So the last chart that we looked at, those were sector flows. So I believe that was like flows not like, all right, let's add up all of the industrial stock buying. Like I think that flows into sector ETFs, okay? That's my understanding. This next chart is showing retail cumulative purchases of the Max 7 and Pallantor, okay? And this goes back to July 2025.

And it's hilarious that really the only game in town, relative to. speaking or the king, you know, just dominated was invidia. It was really invidia and then a massive, massive, massive gap. And then Tesla. And then everything is sort of bunched together. Meta, Amazon, Google. The purple line is in video. Yeah.

So that's billions of dollars. And then interestingly, just as interesting on the other side of the table, persistent outflow is from retail investors out of Apple. Like, big league. Does Warren Buffett count as a retail investor? I mean, they sold like two-thirds. They sold two-thirds of their stock over this time horizon that we're looking at. That's very funny.

Okay, one more on the retail stuff. This is awesome. So this chart from Goldman shows the 15-day rolling flow in billions, okay? In billions of dollars of the Mag 7, and this is retail. And only now for the first time since the beginning of 2024. So two full years, we've never seen what we just saw over the last 15 days, which is more retail buying out of the Mag 7 than inside the Mag 7. First time on like that has been this meaningful in a long time.

I think that's so cool. And, you know, one of the things is like they, I mean, we saw on the chart, they're obviously buying industrials. They're obviously buying material stocks. They're buying gold. We know that. We know that they're interested in the utility trade because those stocks look great. And Sean and I have been writing them up like every month.

We do at least one column that touches on that trade. So we know they're buying those stocks. But like the general thing is that the Mag 7 are just not as sexy as they used to be. We used to talk about how cool it was that they were like asset light. They're asset heavy. And it's okay. That's where they see the world going. They have to chase their future cash flows that they think they can earn.

But like, they're just different stocks than they used to be. And the apathy on the part of investors and the desire to look for new trades, new ideas, is perfectly normal. I think it's great. I love the two. And there's a voice in the back of my head where like the listener might be like, dude, this isn't investing. What are you talking about to what I'm about to say?

And what I'm about to say is that, and fine, let's call them traders. Let's just call it what it is. I think traders are getting better because when you're trading, the goal is to make money. And the way that you make money by trading is by buying stocks that you think are going to go up. And the stocks that are going to go up are the stocks that are already going up. An object in motion stays in motion. Like this is how the stock market works. And when you're trading, you want to be on the right side of stocks, not, you don't want to be in losers.

You want to be in winners. And so they are jumping from things that aren't working into things that are working. Now, the voice in the back of my head that I was just referencing is, well, they're just chasing. They're just donkeys. Like, I reject it. I'm sorry. If you're trading, you should be in the winners. And that's what they're doing.

Well, you know how I feel on that topic. I don't encourage everybody to go out and start trading their account. But if you're going to. Right. The point that I make is if you're going to trade, it's like, I'm going to go fishing. Great. Which pond are you going to fish in? The pond with the fish?

Or the pond with the fish? floating boot on the surface. That's it. You know what I'm saying? Like, what are we, what are we trying to accomplish? We're looking for trading gains on the long side of stocks. Well, fuck, let's buy some stocks that are going up for God's sake. Right.

Maybe one will you won't learn that lesson. I can't believe I still have to explain that. Although, maybe I don't. Maybe I don't because people seem to be doing it. Let's skip this last chart because we're two topists in with 35 minutes and we've got like 90 more things to go. So let's skip this one. Keep going. Well, look, this is you.

SPX versus R2K. No, see, what I said was... We're skipping it? We're skipping it. Oh, all right, got it. Out of respect to the audience. Michael, will AI make money worthless? No.

No. Okay, did you see this piece of the journal? It's freaked everybody out. I read it. How about that? I hate skimmed it. So, no, I read it. Let me just pull out this.

This is, we're now at the point. And maybe it was we were always headed here. We're now at the point of extreme paranoia about job loss. And not like a few people getting laid off, but tens of millions of people because their entire role in society is just replaced by some combination of AI and robotics. And so now we're talking about social safety nets. UBI is back. Universal basic income. Civil unrest.

And the power, the heart of this power. You'd think it'd be in Washington, D.C. or in New York with Wall Street, but it's not. It's in San Francisco. And I find that troubling because these are the actual people that are building the things. And as they're building them, they're sort of saying, like, this is so fucked up what we're doing. Like, over and over and over again. And there was, before we get to the journal piece, yesterday, the CEO of Anthropic, Dario Amade, basically wrote a 38-page essay, which not going to dive into today, but he said, quote, I believe we are entering a right of passage,

both turbulent and inevitable, which will test who we are as a species. As a species like humanity is under threat because of anthropic. Quote, humanity is about to be handed almost unimaginable power. And it is deeply unclear whether our social, political, and technological systems possess the maturity to wield it. Oh, no, no, no, it's not unclear. We fucking don't. I'll tell you right. I'll tell you right now we're not ready for this. So I don't know, do I want to read 38 pages of AI-related doom porn with my free time? I probably am not going to read it. But that's like one of the most important figures in all of AI. And he has a lot to gain by not saying this.

So the fact that he felt compelled to write 40 pages in that vein, I don't know, is it bother you? Yes. There's two schools of thought here. One, the techno people, this guy aside, look at the history of technology. It is nothing but up until the right advancing civilization. Yes, there are having periods of time where there is job displacement, of course. But thinking not at the human level, just thinking about society as a whole, those jobs are ultimately replaced with better jobs.

And yes, it is lumpy in real time. but ultimately progress. That's one school of thought. The other school is... That's the Pollyanna School of Thought. The other school is like, okay, fine. I understand history too. This is different.

This is not the computer. This is not the railroad. This is society-altering type stuff. And I'm not in the middle. I'm not on either extreme. Like, I don't think the world's going to end, but I'm definitely closer to the... This is like seriously scary stuff.

I'm center. I'm center slash End of Humanity. So I'm center slash End of Humanity too because, all right, so today, for example, and today doesn't really matter. But you talk about the paranoia

and I can only speak to the world that I live in. I see the train is fully full. The train station is fall. You get there past 803. I can't park there. But I'm also seeing, so John Market,

the Labor market is okay. Employment is good. Unemployment is relatively low. There's not a lot of layoffs. However, there's definitely not a lot of hiring and there's definitely not a lot of open jobs. So if you have a job right now, you're okay right now. But the labor market, especially for younger people, I don't know how this, like, why would it, why would it open up? Why would, why would companies start hiring young people all of a sudden when they might not need to? And that is some really terrifying shit. Here's Tim Higgins at the journal.

Silicon Valley is filled with all sorts of dreams, but one of those wild-eyed ideas, long debated on subreddits and in hacker houses, is becoming a real-life nightmare. Will the AI boom be the last chance to get rich before artificial intelligence makes money essentially worthless? Okay. The argument is that tech companies and their leaders

will become a class unto their own with infinite wealth. No one else will have the means to generate money for themselves because AI will have taken their jobs and opportunities. In other words, the bridge is about to be raised for those chasing the American dream and everyone is worried about being left on the wrong side. I wrote just all the damn robots in 2017. That was a great call. And I, way before we were to bet AI, I just have always thought that way.

And I know history says I'm wrong. I can't help but feel that this is something entirely different. and we're relying a little bit too heavily on, oh, what's it called? The automobile made all the people that were dealing with horses go find another job. That's a non-sequitur. I agree.

The internet was never built to replace your job. Literally, these solutions, these machines are being built to make us more efficient, the people that use it, and everybody else who's replaced, yeah, go for yourself. Like, that's what it's doing. And so is this article made by hyperbolic? Like, whatever, who cares? There's more than a kernel of truth in here.

Well, the article, right, the article is not being hyperbolic for this. They're just quoting people. Here's an Elon Musk quote. The transition will be, he said this on Joe Rogan, I think. The transition will be bumpy. We'll have radical change, social unrest, and immense prosperity. Like in what order? And how do we survive the first two?

Okay, one more, Sam Altlin. I used to be really excited about UBI, but I think people really need agency. They need to feel like they have a voice in governing the future and deciding where things go. How about a reason to get up in the morning? Yeah, if you just say, okay,

AI is going to do everything and then everybody gets a dividend from that, it's not going to feel good. And I don't think it actually would be good for people. So Sam and I completely... We completely agree. You need, we need purpose. You need to grow as a human being.

And if you have nothing to do but get government money and sit on your ass, that's not healthy. Here's another quote that I pulled out from Elon. I mean, this is wild. If you don't have, this is Elon, if you don't have a scarcity of resources, it's not clear what purpose money has. More recently, must suggest that people shouldn't even worry about saving for retirement, predicting AI will provide health care and retirement. Quote, it won't matter, he said of retirement savings. Okay, sure. It won't matter because you...

So much. Because we have... healthcare and entertainment and. Sorry. It will matter because other people will have more money than you do. And that will, and their spending will affect the standard of living that you yourself are able to afford. Like, wealthy people set the tone and the prices in any society and there will always be wealthy people.

Unless you tell me, Elon is going to say, I am actually going to give away all the shares of AI to the government or to some philanthropic cause and like everyone will own it. Bullshit. There's going to be winners and losers and you have to be a winner. I don't believe that. Obviously, none of us knows how this plays out, including the CEOs and founders of all these companies. Well, for starters, stop selling stocks every time the market drops 10%.

How about that? Because that's your only way out of this. I sold on Greenland fears. You know what I'm saying? Yeah. You want to be on the right side of history? You want to be on the right side of history? Step one.

Stop selling every time you get nervous because some man on TV says something. Stop doing that shit immediately. On the one hand, I'm terrified. But on the other hand, I'm optimistic that we're not just going to let this burn down civilization. Anyway, on that note, I don't know where to end this. So let's talk about the other side of the coin. Let's talk about the other side of the coin. Let's talk about SaaS companies.

All right. Our boy Todd, Sown, look at this. Tech sector ETF flows by exposure. And the only place you need to point your eyes is software. This is cumulative since chat GPT release. And software flows since November 2020 are negative. And man, look at semis. That's the green line.

You know, it's unbelievable. It's unbelievable, but there were probably people that very correctly said, okay, I get it. The LLMs and chatbots are going to enable people to code their own software, which will introduce a new risk for software stocks. I want out of those, and I want to reallocate that money into the semis, which there's just not enough of in the world and we can't make them fast enough for all of these LLMs to function. Like, that was the trade. And I assume some people got that really, really right three years ago when the LLMs first came out. Did you listen to Joe and Tracy did a podcast recently about, like, all the Claude stuff, people going nuts for that? What, Claudebot?

Yeah. No, not Claudebot. Claude code. Oh, regular. Oh, how Claude is helping people code. Yeah. Yeah. Well, the tech people are looking at that, like normally in order to do what I just did, I would need like six people around me.

But like having having this co-pilot that's AI, I just eliminate all that teamwork and I could just do it myself. So one of the things like I said was they were talking about Salesforce. And he's like, Salesforce turns unstructured data into clean data that's usable. But like 95, I'm making this up, 95% of the functionality of Salesforce, people don't even use. People aren't even entering the thing into the software. We know this to even get. Productivity out of there. And if I could just, like, literally make my own.

Anyway, not not a hot take. This is obviously in the performance of these stocks. So there was a report last week by a company called Avenir, and I just wanted to pull some charts and go through it. First one, this is awesome. Just a pretty visual to set the stage. It's like the medieval times. On the one hand, you've got all of the software companies workday and Slack and Zoom and whatever, Salesforce, against open AI and perplexity and anthropic.

Well, very pointedly, they have the workdays and the hub spots and like the publicly traded software giants as knights in armor. And they are in a defensive posture basically like defending the castle. And then they have all of the startup people like dressed like basically peasants that have shields. I don't know. Like, it's a great visual representation of what everyone's worried about. And that chart you showed before of what the software stocks have done since the advent of, like, at a certain point, you'll see, though, one of these companies, one of these peasant folk that are storming the castle, they're going to switch sides.

They're going to be on that enterprise side. And they're going to be selling an enterprise product. They already are. and like, you know, at a certain point, like, that's the thing about AI is that the disruptors are infinitely disruptible too. So I just, I just think it's important, like, to, it's a great, it's a great illustration, but like, things could change really fast. Like, what are we saying that Open AI's most important thing is not selling subscriptions like an enterprise software business? Because it is. They're just not public yet, and they're not losing share.

but they will one day join the banners amongst the knights in shining armor. So does it go public? I would estimate. All right. So we've got like seven charts here. So let's just run through them quickly. Public SaaS revenue growth has stabilized over the past two years. So this goes back for, I don't know, since pre-COVID times.

And of course, the growth rate has come down because it was totally off the charts. But still, the median revenue growth in their basket. And I can't even see what's in here. It's my bad. But the point is it's down but stable. okay. And the next chart, their net retention shows the same thing. Median net dollar retention in their software basket down but stabilized. That's like churn. They're measuring. So they show, all right. Revenue growth, flatish. But rule of 40, still there. All right. So their growth

and their profitability is still there. But put a pin in that because we'll come back to that in a second. They break it up by a horizontal index versus a vertical index. And I could imagine what's in the horizontal. So I should have, I don't have to guess. What does that say? I can't even read this shit my freaking eyes. One segment of the market has performed a hell of a lot worse than the other. Yeah. All right. Next chart. 2021, 2021, 2022 was a total anomaly. What we're looking at here is the- I think horizontal SaaS is like Salesforce. It's like they serve every vertical under the sun, whether, right? Whether you're like a, whether you're a company that makes food or makes medical supplies

or a company that, you know, whatever it is. It's all the names that we know. It's Workday. It's Adobe. It's Salesforce. It's price service now. So I'm like actively making bets in the vertical in vertical stats because I think it's just less disruptable. there's too much knowledge, there's too much vertical specific knowledge for like something really

broad to just step in and disrupt. So Shopify is vertical. Post is an example of vertical software. Toast, service tighten, which I pitched you the other day. I think that those stocks are really interesting to me. CrowdStrike is horizontal with cyber security. Well, no, they're labeled in vertical. So these are companies that serve one thing.

versus a, right, like toast does what it does for the restaurant industry. They serve the restaurant industry. Versus sales force who serves everybody. So the companies that serve everybody. Versus block, which does payments, but not just for restaurants, but for every industry. So those companies that are not specialized that service everybody. Those are the ones that are like, dude, sorry. It's over.

Game over. All right. The median top quartile and bottom quartile multiples have normalized in a big way. Last chart, please. Nope, I'm sorry, my bad. Two, there we go, there we go. All right, so listen, we're coming out of silly season. So starting multiples are an important part of the story, totally out of control and at a more healthy normal level here.

Well, right. Expectations have come down. All the way down. All right. It's not 2020 anymore. So even though the rule of 40 is intact, if you look at, um, If you look at the median SaaS company, the gap, EBIT margin is freaking break-even. Like, not good.

Not good. So I guess a large portion of this is stock-based comp. Like, it's, it's gnarly. Yeah. And they, you know, they're big spenders, these companies. Like, they're, you know, they, because from their perspective, you talk about businesses, like, with 40, 50% profit margins and 20% growth year in, year out, they're not, they're not like grinding down their their cost structure until the Wall Street forces them by losing interest in the

stock. Like that's, that's the situation that they've been in for a long time. So almost done. It's important, though, that these are not, even though, even though these are in the same basket, a lot of these names, Adobe and Salesforce and Snowflake and Service Now, They're not all the same businesses, obviously, even though we grew them together. So they did a survey and they asked people, is AI going to help these companies or is it going to destroy them? And the spread is all over the place. Oh, my God. So, like, look at Salesforce.

40% of respondents, net respondents, so that AI is actually going to help them. And I would say that's probably more true than not if I had to guess. I think that Salesforce, these are deeply embedded companies. They're really hard to unwind. If you don't own your data, you can't just pick up and leave. Like, what are you looking at? I'm trying to understand confluent. Why do the net percentage of respond in saying AI helps is negative 30%.

So this means that people are 30% of people on a net basis. No, I know. It's going to hurt. What the hell is that business? I don't know who confluence. It's an IT, like an IT outsourced IT. So chatbots should be able to, right, done. I agree.

All right. So, all right. So where does this leave us? Data streaming platform for real time, data integration and processing. Oh, is that like data entry? Get the fuck out of here. Done. No way.

Finished. John, let's do the last chart and then the second to last chart. Let's go to the prime book. All right, hedge fund flows. Selling and tech was driven mostly by short sales and led again by software stocks. So this goes back to January, 20, and look at this gigantic spread of software versus semis and semi equipment. It's unbelievable.

I mean, it really is. At some point, this has to reverse, right? Okay. So last chart. So this is, again, duality research. We're looking at a ratio of software versus the S&P at key, key, key, key, key, key, critical potential support levels. And on the one hand. on the one hand, I think that it's very easy to hear us and see the trends and say that, yeah, software's in trouble.

Everybody knows this is in trouble. It's not as bad as everybody else thinks. Bye. And maybe that works this time. I just feel like in recent history, that sort of thinking has just been a money loser. Dude, I hope that we're contrary indicators and these stocks are all screaming guys. Wait, I have no opinion. Oh, I have an opinion.

Like, I'm not, well, I don't own the stocks, so I guess by de facto, I'm not buying them. I'm sure these stocks bounce, but they're just, they're not, it's going to be a while. It's going to be a while before they can convince anyone of what the previous chart was showing, like, whether or not people believe that they're going to use AI to actually make more money. I think it's going to be like years and some of them never will. But they're going to have, they're going to have to, like, they're going to have to demonstrate, not just say it. Like, Benioff can run around saying, oh, we're agent force now and we're like all about agents and AI.

But the market doesn't believe it. And he might end up being right and being able to demonstrate that. I would rather wait. So I just don't trust. I just don't trust that these companies are going to figure it out that fast. It's really hard. There will be bounces because these are still giant businesses. Adobe is still reporting record numbers.

So there will be 20% bounces along the way. Of course there will be. But like to what end? Are these businesses just, are they in secular decline? Like, is it a melting ice cube? And right now that's how investors believe maybe they're wrong, but I'm not getting in front of this train. Not again.

Been there. Right. That's not my, it's not my time. I don't love ratio trades any, like ratio chart based trades anyway, because I think, like, I think in a lot of cases, when things get this extreme. it really could go, it really could get so much worse. It doesn't get this extreme because the bears are totally wrong. Correct.

Like, all right. So that's, I don't like that kind of ratio rationale for, I can't believe how oversawed such and such industry group is relative to the S&P. Right. That's not my. Yeah, if you want to, if you want to buy it for a trade, 11% upside, 3% downside, all right, I'm not doing that. We're going to blaze through the last two.

I want to get to this Adam Parker thing. And we don't have a ton of time to spend on it. he put out a great note about why buying stocks that just got cheap is actually a trap. He looked at the top 900 stocks by market cap, divided them into deciles based on forward PEs and excluded all companies with no profits. And what he found was that there's a relationship between trail and growth and valuation. I think we all intuitively understand that. Only stocks in the cheapest desile that just saw a quarterly decline,

in their forward PE, have less than 50% of the companies growing year-over-year earnings per share growth. So in other words, a higher percentage of more expensive stocks actually grow their earnings year-over-year versus cheap stocks. Right. That's how they get cheap. That's how they get expensive. So for the knee-jerk contrarians sort of think twice because there's an inner logic to why stocks do what they do.

He says, buying a cheap stock that just got cheaper is a bad idea. We assess the percentage of stocks that have positive three-month forward earnings revisions by how much their price to forward earnings changes over the three months prior to the report. And this is a losing battle. You're up against, you're up against, like, the odds. They're not great. Companies that are cheap are much less likely to beat earnings estimates than companies that are expensive. If you didn't know that, you should know that.

do. Companies that get more expensive, no matter what they're starting valuation level, are far more likely to get upward revisions than companies that just saw lower multiples over the last quarter. So, last thing, 74% of stocks in the second most expensive desal on a forward PE basis with price to earnings multiple expansion over the prior quarter, then had upward revisions. So the companies with the upward earnings revisions are the ones that are growing more expensive in advance. Yeah, the market gets it right, usually.

I think this is such a key concept. We don't have more time for it, but shout to Adam and Trivariate. I think he just answers such interesting questions every time he publishes. Okay, are hedge funds back, Michael? So says the Wall Street Journal. Everybody's saying it.

Bloomberg, the Wall Street Journal. it must be true. I think they sort of are back. Good. This is the same thing. It's the same. It's a Mac 7 story. That has been, that was the only thing working and it's boring.

It's enough already. All right. Hedge fund investors post the gains of 12.6% last year. Okay. We know. The S&P did 17, but fine. That is the best year of returns for the sector since 2009, according to HFRI. hedge funds run by industry giants like D.E. Shaw and Millennium posted double-digit returns.

Bridgewater's Pure Alpha 2 did a 34% gain. I'm sorry, not to be super duper annoying, but this is not a sector. I mean, this is, that's, all these hedgewits are doing, a lot of them are doing very different things. Correct. But those pod shops are doing everything. Fine. I think Barry said this night. D.E.

Shua and Millennium have every strategy under one roof. Hedge funds are not an asset class. It's a legal structure. I agree with that. But many of them are doing better. And there's a new story in town. Hedge funds secured net inflows of $71 billion during the first three quarters of last year. A major reversal after a decade of outflows.

So people are looking back. We have a chart of the best performing strategies, the best performing hedge funds last year, along with the category that they're in. I know like maybe half of these. Melkart opportunities, event driven up 45% okay. Bridgewater Asia, congratulations. Bridgewater's got a few funds in here. They have a China fund.

D.E. Shaw Oculus. AQR has a fund in here. AQR adaptive. Bridgewater, all weather, up 20%. That's risk parity, old school. Wow. All right. And then the Wall Street Journal wrote an article today.

Hedge funds are back on top after a long alpha winter. And here are just some of the data points that I'll share with you. And then I want to get your feedback. Equity, long, short strategy was the best of all the categories, up 17% last year. Event-driven, up 11%. So that's activist, merger arbitrage, special sitch. Global macro, only 7%. Mostly benefiting from commodities, fx, and rates.

Okay. There was a lot of volatility in commodities, FX, and rates last year. relative value gained 7 to 8% driven by fixed income and arbitrage that's like a lower risk type of hedge fund discretionary global macro managers outperforms systematic convertible ARB was one of the top relative

So I think it's I think this is going to have momentum and the media is going to start writing about hedge funds again and like famous hedge fund managers the only stories we get these days are about the pod shops or if there's an activist

13D filing. We really don't, like nobody cares anymore. You know what I love this. And I think that'll change this year. I think because the poor hedge fund managers that I've just not been making enough money. Now, here's why I love it, for real.

Most, I think people think like, oh, this is only for the rich. Guess what? Most, I'm making this up. A lot of money in these hedge funds are paying. funds and foundations and like literally like like policemen and firefighters like it's public money in here so I want these pools of capital to go up this is a benefit for society right

the end investor is not is not Montgomery Burns in his mansion with his fingers tinted yeah now Montgomery's in there too Montgomery's in there too but so are a lot of normal people depends on the fund but like Bridgewater is a great example. It's in Connecticut. You think they don't have the police, the nurses, the firefighters, the teachers, the teachers. I'm with you on that. I'm with you on that. All right. It's great. Okay. Anything else, Josh? Just shout out hedge funds. Shout out to the hedge funds. It's awesome. All our friends in the hedge fund community, salute. It's good. It's good. Better than good. All right, I'm going to make the case for the rest of the world. And maybe this is a flash in the pan of 15 years of. Are you going out on a limb here? Which? You're really going out on the limb here. You're making the case for global stocks?

Yeah. Okay. I think you're in the majority. Everybody agrees. Go ahead. Tell us the story. Really? Everybody agrees.

You just showed me a chart that showed money coming out of U.S. large caps going into international. That was one week. All right. Pitch me. All right. Get me bullish on this. It's not just price change. Like, there is a reason for the price change.

And a lot of that has to do with what's going on here. And as a result, what's going on overseas? So, for example, this yesterday, we heard this is from the Walsh Journal. India and the European Union have reached a free trade agreement that will open a new market for European cars and other products, showing how the world's middle powers are expanding alliances in response to President Trump's tariffs. The deal announced Tuesday is set to link almost two billion consumers. across the two economies, making it the biggest free trade agreement by population that the EU has concluded. It is the mother of all deals, said President Ursula von der Leyen.

So, all right, it's all happening. I want to take you through some charts. This is from our friends at all-star charts. And what we're looking at on top is all-world ex-US versus U.S. and this is bumping up against the declining 200-week moving average. And listen, there have been plenty of false starts along the way. It hasn't been just a straight-up U.S. outperforms in one direction. There have been moments of time where it looked like this is happening only for it to roll over again. But what we're looking at on the bottom is the rolling 50-week rate of change. And it's happening in a material way of U.S. stocks underperforming international stocks,

We haven't seen this level of underperformance since basically pre-GFC or GFC. Right. It's happening. All right. Global breadth. This is Rob Anderson at Ned Davis Research. So the global breadth measured by the percentage of aqua markets within 5% of a one-year high, hit a new cycle high of 92%.

That's the highest reading for the indicator since 2007. Try it off for a sec. By the way, my making. the case, I'm not suggesting that you abandon our incredible capitalist society, obviously, but it also goes to the point that we're making earlier about the knee-jerk reaction to call everything at the top. It's not just a bull market in the United States. It's a global bull market.

That's a great point. It is happening everywhere, including here, obviously. All right. So investors are starting to notice. Look at this. Record flows into emerging markets. This is a monthly, monthly, like not even close. And if you think that you missed the trade, because, John, skip to the Exhibit A, one, please, the cycles of International versus U.S.

So you're looking at like, all right, come on, dude. Like, international hasn't outperformed by this much. By the way, shout to Exhibit A for the advisors. You can have this in your own brand. This is a great chart. So what we're looking at is the cycles of International versus U.S., only on a one-year basis. And international stocks haven't outperformed by this much since right after the G. GFC.

This could be a five-year run. No problem. So you're like, oh, I miss this? Oh, really? All right. Next chart, Emerging Markets versus S&P 500. So if you look back, so it outperformed in 2025 by a lot, but underperformed in 24, underperformed in 23, in 22, in 21, oh my God, don't even look at that, in 20, in 19,

in 18. And if you look at the three year, the five year, the 10 year, monster, monster, monster, monster, underperformance. And this brings me to my last chart of my make the case. Look at this ratio, Josh. This is emerging markets versus the U.S. And I don't know, man, this looks like a long bottoming base. And it looks like we're breaking out. So I do think that this, that this is early. So you really just need China and India to go. I really think I continue. Because that's where all the that's where all the market cap is in emerging markets. Yeah. So maybe this is another fake out, but maybe it's not. All right. I like India. I like it right. I like it right.

Here, it's down from a tie. It doesn't look as good technically as China. I just, I love the story. I think I, NDY is the nifty 50 index. So it's like the Dow Jones of India. It's very concentrated. And it's got big industrial and financial waiting, right? Like the like the big, like metal and car companies.

And it's got the big, it's like five. giant Indian banks. They're all in it. The other one is INDA, which gives you hundreds, I think, of... And EPA is the other one. I don't know. Well, that is the wisdom tree

India earnings product, where they sort of are weighting it by earnings. I think INDA is... INDA and INDY are both I-Shares. All right. They're both very cheap. And I like that trade. Here's what I know.

The fundamentals and the technicals are lining up. the chase is on and people are under allocated. That is a nice setup. Yeah, I agree. That's a great make the case. I'm with you 100%. I love it. Here's my mystery chart and we'll get out of here.

Put it up! We were talking earlier about it. Oh, I know. This is Zoom. Look at you. You're so good. I didn't even give you a hint. Guys, round of applause in the chat.

Make some noise for Michael. That was, you might have just broken a record. Why? All right. So Zoom on Sean and I's list of best stocks in the market. We pitched it on this show to you guys probably multiple times. I've traded it. Here it is making a huge move today.

Shares of Zoom popped on Monday after analysts had Barrett estimated that the company's investment in the AI startup Anthropic could be worth billions. Anthropic announced the partnership with Zoom. revealed that Zoom Ventures invested in the company way back in May of 2023. Whoa. Baird's analysts estimate all, or at least the vast majority of Zoom's 51 million in strategic investments went to Anthropic in that quarter. That's where they get the $2 to $4 billion assumption, which is meaningful at Zoom's

market cap. You know, Anthropic is being more valued at $350 billion. So Zoom could be up 78x. on that investment. Think about that. Imagine that. Anyway, shout out to Zoom. Shout out to Zoom. And for all of you Zoom shareholders in the chat, who've been watching our show,

salute. Good job, guys. All right, that's it for us today. Ridthold's wealth management is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Ridthold's wealth management and its representatives are properly licensed or exempt from licensure. Nothing on this podcast should be construed as

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