Stagflation, NVDA Earnings, Guitar Practice, And Much More

Here’s the transcript from today’s Live Q&A Chat:

Q. Not to be negative/pessimistic but there are signs of stagflation around the world. Doesn’t it feel inevitable that it’s going to hit here as well? Inflation is being persistent/stubborn and economic output is starting to slow. Is this all the aftermath of the enormous amount of money printing during 2020 and subsequent government spending? If so, the current equity market setup is vulnerable to a major correction.

A. It’s okay to be negative/pessimistic sometimes and it’s always good to ponder both positive/optimistic and the other side to understand both viewpoints. Let’s define stagflation: “persistent high inflation combined with high unemployment and stagnant demand in a country’s economy.” We are a long way from high unemployment and The AI Revolution alone is driving hundreds of billions of dollars of demand. The low-income consumer is struggling for sure. The middle-income consumer is increasingly feeling the heat from inflationary pressures and higher rates and bubbled-up home valuations. The wealthy are feeling wealthy with stock prices, housing, and so many other assets at all-time highs. I think productivity is going to kick into another level as The AI Revolution makes people and companies more productive than ever. The Republican-Democrat Regime has always borrowed as much money as possible and printed as much money as they think they can away with for my entire lifetime and it’s going to come back to roost someday, but I’m not sure it’s coming tomorrow. I do think the markets are stretched valuation-wise and are overbought and there’s too much greed and too little fear out there and a 5-10% correction would be healthy for the broader markets regardless of what the broader economy is doing.

Q. Should we be mostly in cash/very short-dated UST bills right now given the current setup? Generally like a lot of our longs but if we’re entering stagflation, the broader equity market is going to pullback big time. Will probably have better opportunities later in the year or next year.

A. I have some cash on the sidelines in both the personal account and in the hedge fund right now courtesy in large part to the vast reduction in the number of longs we own now. I’m still a buyer of Tesla (TSLA) here and I don’t want to trim much more than we already have. In the hedge fund, we have quite a few more puts on the S&P 500 (SPY), Russell 2000 (IWM), Valkyrie Bitcoin Miners ETF (WGMI), SPDR Utilities ETF (XLU), SPDR Metals & Miners ETF (XME) and a few other indices and a few puts on other names as part of our hedging strategies than we did a month or two ago and definitely more defensively positioned than we were six months or eight months ago. Money markets are paying 5%+ and short-term Treasuries are too and that doesn’t suck for the nearly risk-free income that it is.

Q. This ship has probably sailed but thoughts on SPDR Gold Trust (GLD) here as the dollar continues to lose value?

A. I’m still a believer in gold long-term but it does look overbought near-term.

Q. What do you think the percentages are that this market is actually higher at the end of the year versus today? Feels like the equity market is priced to perfection.

A. I’d say there’s a 60% chance that the markets are slightly higher than current levels at the arbitrary cut off date you are asking about (the end of this year). I do think the markets will have ebbs and flows along the way though and that at the end of this year they could be down 10-15% from these current levels and I might or might not think that there are some incredible buys to be pounding the table about at that point, depending on all kinds of factors from the economy to interest rates to greed vs fear levels to what Tesla is doing with its autonomy and robots, etc.

Q. Do you still think the September 2025 and January 2026 Tesla (TSLA) calls are attractive here?

A. I’d probably rather buy some common but I can think of worse ideas than buying some very-long dated call options.

Q. Thoughts on NVIDIA (NVDA)? Are you making any move after its earnings conference call? Jensen seemed to lay the path to continued super growth.

A. Not changing much on NVDA here. I’d probably rather trim it than nibble it today and we did short a call or two in the hedge fund against our common stock long, but it was another amazing quarter of mind-blowing growth for this company.

Q. What would you rate NVIDIA (NVDA) here?

A. Probably an 8-/10 right here at this current quote. It’s executing like nobody else, it’s accelerated its growth unlike any giant company in history and its competitors seem to be falling farther behind. But it’s had such a huge run this year and over the last few years and certainly since we first bought it personally at $8 a share in 2016 that I have a hard time giving it too high of a rating.

Q. Would appreciate your views on Uber Technologies (UBER) . You did heavy 30 percent trim and stock has been trailing down. Have your views changed in terms of Uber being a core revolutionary company?

A. Good question. Still working on how likely and how soon the robotaxi impact on them will be in coming quarters.

Q. I have a large position in Transmedics Group (TMDX), from your first alert. Been a huge winner, what are your thoughts at this price? Seems to be hyperbolic with its price action. Thanks again for another winner.

A. We’ve trimmed down our TMDX position by about 1/3 or so at this point in the hedge fund. It’s a great company, quite Revolutionary, but trading at a bubbled-up valuation at this moment, IMHO.

Q. Would you consider Snowflake (SNOW) again as an AI revolutionary play?

A. Snowflake is a great company but it seems like AI ought to already be helping their growth rates accelerate but it hasn’t kicked in yet.

Q. What’s your take on the last couple Blacksky Technologies (BKSY) quarters? Still staying on sidelines?

A. We haven’t been focused on Blacksky much lately and we didn’t listen to their last couple conference calls. We are still sidelined on that one.

Q. Thoughts on Celcius Holdings (CELH)? Is it the next Monster Beverage (MNST)?

A. Chemical-laden drinks that make people’s heart race is a crowded field but I do know a lot of people, including my wife, who like that Celsius drink in particular. I’d probably pick a Red Bull if I had to pick one of those kinds of drinks but I don’t drink that kind of stuff very often and I’m not an expert on the industry and I haven’t done any work on that name. Let’s take a quick look at the valuation metrics on CELH though to see where it’s at: The stock is trading at 10x next year’s sales estimates and 60x next year’s earnings estimates is growing the topline at about 30% per year with 50% gross margins. Seems pretty expensive to me but if it can keep those growth rates and margins for another five years, it will probably be higher from this level of $91 today.

Q. If inflation is sticky and the yield on the 10-year gaps out, what is your best guess on what happens to Bitcoin?

A. Not sure inflation or the yield on the 10-year are going to drive the price of bitcoin more than another washout of the crappy, silly, and fraudulent cryptocurrencies and meme coins and all of that as near-term/mid-term drivers. And the long-term trend for bitcoin is, as I’ve been saying for 11 years now, that all currency roads lead to bitcoin eventually.

Q. When do you think the bitcoin (BTC) ETF’s will get options trading?

A. ProShares Bitcoin Strategy ETF (BITO) already has options on it. With respect to the newer bitcoin ETFs, I have no idea if/when they will get options.

Q. As your service is to alert subscribers to your buys and sells but not to make recommendations per se, please explain how we can tell in real-time when you are “pounding the table”.

A. Hmm, I think I usually write that “I’m pounding the table” when I’m pounding the table on something. Maybe I’m not understanding your question.

I leave you all with a picture of my 10-year-old on her way to guitar practice last week when we found this beautiful view of the Mescalero Apache Reservation on the way.