Sleep at Night Portfolio, Big Tech Earnings Week, Spotify Blows Up, Josh on Joby

all right all right so much excitement in the in the chat for tonight michael do you notice you have my full attention all right you have 25 of mine on this show we love the chat like real streamers here. Chad, great to see you guys. Hey, everybody. Welcome to an all-new edition of What Are Your Thoughts? My name is Downtown Josh Brown. Here with my co-host, Mr. Michael Batnick. Michael, say hello. How we doing? Salute doesn't quite work for audio. I spoke. I spoke. How we doing was great. I spoke. All right. Guys, this is – we are in the heart. We are in the meat of earnings season. And we have four of the biggest companies in the world reporting very soon. And we're going to get into a little bit of a preview. We're going to look at an earnings season in general because what we're witnessing right now is sort of an explosive moment in corporate profitability overall. We'll talk about it. We're also going to talk about the sleep at night portfolio. So many other cool things. Before we get to our sponsor, I do want to say hello to some folks in the chat. I see my guy Akbar is back. Patrick Othrow is here from Miami. Got you, brother. Good to see you. Giancarlo is here. Lisa Adams. Happy Taco Tuesday. Yeah. Good point. I always forget. It really is Taco Tuesday. Just Dave wants to talk about Hood. All right. We'll get into Hood tonight. They reported. Billy Paul Matthew says Batnick is back. I never left. never left. Never left. Cheers, guys. Good to see you. Before we get to the sponsor, I just saw Luke Cowell from Sherwood tweeted a great chart, Sign of the Times. We're going to get into this. Transaction revenue on event contracts surpassed crypto revenue at Robinhood for the quarter. How's that? Sign of the Times. So it's not like new money for gambling. It's like the new version of gambling is cannibalizing the old version of gambling. Can you think of anything more boring on Earth than crypto? Crypto's not hot. But it's not even like it's bad. It's like really not doing anything. It's not doing much. It's boring. It's just boring. Yeah. Well, you know who's not boring? Our sponsor, WisdomTree. That's who today's show is brought to you by. WisdomTree believes Japan is entering a new era. Corporate reforms and stronger shareholder policies are changing the game. And investors like Warren Buffett have taken notice. The Wisdom Tree Japan Opportunities Fund, ticker OPPJ, is designed to invest in Japanese companies positioned to benefit from macroeconomic policies, industrial innovation, and shifts in trade and consumer behavior. Learn more about OPPJ and the broader suite of geopolitical opportunity ETFs at wisdomtree.com slash geopolitical dash opportunities. In today's market uncertainty and revolving credit conditions, the $15 trillion securitized market may provide investors with diversifying income opportunities. As a leading provider in active securitized ETFs, Janice Henderson seeks to demystify a complex yet growing part of the market, offering a range of diversifying exposures across income, duration, and credit quality. Whether investors are seeking high-quality AAA rated CLOs for lower volatility exposure, higher income diversified across various securitized sectors, or perhaps agency MBS exposure as part of their core, Janice Henderson seeks to offer a variety of securitized solutions. Janice Henderson investors investing in a brighter future together. Learn more at JaniceHenderson.com slash securitized markets. Past performance is no guarantee of future results. Investing involves risk, including the possible loss of principle and fluctuation of value. Josh, I don't have this in the doc. Maybe we'll throw in for next week. I saw a chart. The aggregate dividend and buyback trend of Japanese stocks has exploded. We spoke about that maybe a year ago, about the reforms that they're making. And guess what? It's working. we were so we were so early to that like we were talking about these things that they were forcing their companies to come up with like like a plan to get their stock price appreciably above its book value and all these companies that are listed on the nikai had to fall in line we'll do this next week it's a good chart yeah and they and they did it and it and it literally worked the japanese stock market has been a bright spot okay uh first first things first though mag seven earnings week so just for catch people up um we've already gotten the tesla report so they're not part of this and the nvidia report comes at the very end but nvidia's biggest customers are all about to report and uh wednesday night tomorrow night if you're listening to this live is amazon meta and microsoft why do they do that it's almost it's almost too much can i ask a question Thursday night is Apple. Apple. I don't know if this is because I'm spending less time on the socials, but it felt to me like this earnings quarter for Tesla got little attention, or at least got very little of my attention. I don't know what happened. Because they're sort of in this transition between like, all right, nobody cares about the cars anymore. Now it's all about robots, but the robots aren't here. It's like in purgatory, kind of. it's like well it's like if you are in it for the robots you're just holding it waiting and if you were in it because of like cyber truck you've been gone for a long time so it's it's like a stasis there are people that were like bowled up on the cars and now companies like almost going out of its way to let you know that's not what this investment is about anymore so i think i just feel like it's all it's all very anticlimactic plus like spacex is like a thousand times more exciting than Tesla these days. And I'm sure Elon's feeling that too. So I think that's the story with here in the chat, John Carlos says, everyone's waiting for Tesla to merge with SpaceX. Yeah. Which of course is coming. And I have predicted all of these things that have happened. You haven't said that for a while. And it will. You know, I mean, obviously, you know, we do this every week. We spend so much time talking about the swings of the market. Stocks go up, stocks go down. Meta, the last time I reported, the stock was at $668. Where is it today? $670. But of course, it went from $660 down to $520. But it's literally right where it was last quarter before it reported. Yeah. And that's probably the most sleepy one of the group. Do you agree? Meta versus, I don't know. I would probably say Amazon, although it's been more interesting recently. Yeah. I mean, Apple's not going to say anything exciting. You never know. You never know. A lot of people waiting on the Siri upgrade, foldable phones. There's some stuff in the ether with Apple. It's been boring lately. I don't know if this is Tim Cook's last earnings call. I don't know when he's officially leaving, but it's one of his last ones. All right. Let's do Amazon. A consensus earnings estimate is $1.63 on revenue of $177 billion. And if they deliver, that would be a 14% growth rate over last year. I put together some of the storylines. I'll lay them on you. And then you let me know what you're thinking about. Morgan Stanley says AWS is entering an acceleration phase for its AI workload migrations. So this is like regular workloads moving within the cloud from just being plain vanilla to being like AI stuff and the volumes of that just being much higher for AI, which is likely. They think 38% AWS growth in 2026 and the street is at 26%. So obviously bulls. One other thing that I wanted to bring out. Mark Mahaney is looking at a modest beat on both revenue and earnings, but is worried about Q2. And he's saying that because of, I don't know, I guess like some mixture of CapEx or whatever. So Amazon, if you remember in February when they did their Q4 report, they put out their guidance for 2026 CapEx and they said 200 billion, which was a 60% jump over 2025. So you know what people- This stock got whacked. Yeah. And people are going to be looking for like, are they sticking to that? And then there's a lot of stuff going on with like proprietary chips and Amazon kind of flexing about Tranium and some of the stuff that they've been building. You fled the island reversal on Amazon a couple of weeks ago. It's really just amazing how fast these stocks move. I mean, Amazon had looked like shit for years, going sideways more recently if you zoom in. But even if you zoom out, just like an underperformer relative to the market, relative to its peer group. And then you blink and it goes from 210 to 260. Put this chart up. So you can't see this because we don't have candlesticks. But I did on a previous show show you guys the island reversal. And this is textbook. And sometimes they don't always work this simply. But, man, did this thing work. 60% of the time. An island reversal is a reversal. It's a reversal pattern. And it takes the trend from whatever direction it's in and sends it off in the other direction. And it's a very powerful signal where the seller, in this case, where the sellers are trapped and the buyers take control before anybody even knows what's happening. And this made a new all-time high. This is my full disclosure, now my second largest position personally. What's your biggest, NVIDIA? NVIDIA. Nvidia has been back and forth, but now it's back because it had a huge rally recently. And I'm going to stick with Amazon through the earnings. Mahaney might be right. They might give guidance for next quarter that people aren't in love with. What are you going to do? This is part of what it means to be a shareholder. Microsoft also tomorrow after the close, $4.07 for revenue, $81.37 billion. This is a stock that is in a 35% drawdown. Not anymore. Well, was from its high. It's since come back a little bit, hasn't gained back what it's lost. I think this is another aggressive CapEx spender. And there are some questions about how tethered they are to open AI. It's weird. Like OpenAI, there was bad news about it in the journal, which we're going to talk about. That was weird. And Microsoft went up. The timing of the release today, like why? It was like OpenAI misses internal guidance. I don't believe any of this shit. So weird story to print. Well, they came out and denied it. So the journal did this thing. The journal did this thing where they're quoting people that spoke to Sarah Fryer, the CFO. and they're saying like that the company is missing its usage targets and it's and and then the company immediately is like no nobody said that well what why is there so much smoke around this company oracle uh fell seven or eight percent pre-market and it did close down four percent but it closed up the highs of the day yeah i don't believe any of these open ai stories i think this company is just surrounded by people making things up i really do you don't believe any of it no i don't i don't i don't because they didn't they keep denying it and like let's not forget like sam altman and elon musk are in a court battle and that's this week and you don't know who's motivated by what to lie to a journalist i don't i don't i'm not assuming the journal the journalists are like making things up i'm saying like people are just like sourcing them with stuff that is instantly denied by the company. So somebody's lying. Maybe the company's lying, but how would we know? One of the pieces of information in that story today was that they raised $120 billion and they expect it to be gone in three years. That sounded nuts to me. How do you burn $120 billion in three years? Back to Microsoft. There's a polymarket trade on this where they're pricing in a 94.5% implied probability of a beat, and people are pointing to Azure growth coming in at 37% to 38% or above. Well, if AWS is going to be a winner from the AI cloud stuff. You would have to assume they all will. Yeah. You'd have to assume they all will. Give me the Microsoft chart. I know it's bounced, but this still looks like shit. Yeah. Versus the Amazon chart I just showed you, it's like two different worlds, right? Yeah. Okay. Meta, again, same day, tomorrow after the close, $7.51 in earnings, 55.5 billion in quarterly revenue. That would be 31% ahead of last year. And this stock does not trade like a company that is growing revenue 31% year over year. Here are the storylines. First, you guys probably remember the year of efficiency, which is when they were firing people and cutting their expenses down from the metaverse and retreating from a lot of ill-advised stuff they were doing. Now they're saying, Zuckerberg is calling this the era of personal super intelligence. They are touting what AI is doing for their core advertising engine, which as a reminder to the audience is about 97% of the business is advertising. guidance for ad click rates is three to 5% growth. I'm clicking everything, dude. I can't stop. I'm like addicted. You're not just clicking, you're purchasing. They love you. I can't stop. And then they say, obviously, CapEx credibility is the big storyline here. So the guidance that they gave was 115 to 135 billion for this year and next year, 142 billion. And if they can justify that with ROI from the ad business, then great. And if they can't, there's going to be some question about the wisdom of their continued spending in this area. There's also some talk about their own chip rollout. They have a two nanometer chip that they built with Broadcom. And let's put the chart up real quick. Just to give you guys, I mean, this is in no man's land. There's nothing really to say. But it's nothing really to say here. The chart in and of itself would not make you want to be bullish or bearish. No, you know what? There's something to say. Nobody knows. There's a lot of uncertainty in this name. Like a lot. I know that's the nature of investing. But like look at these swings. Yeah, I think that's right. Like these are $100 per share swings on a regular basis. Which equates to like literally hundreds of billions of dollars in market cap swing. People are just guessing. Yes. Okay. Give me Apple chart while I'm talking. Last one. So this will get Thursday. This is the company not spending on AI or not in it. This is the cleanest one, technically. I think we have a cup and handle forming here, but we'll see. Consensus, $1.94 per share for the quarter, which would be 17% year-over-year earnings growth and revenue of $109 billion. Tim Cook just announced that he going to transfer away from the CEO role He stay as chairman John Ternus will be taking over We talked about him last week No need to rehash Ternus is a product guy He's an engineer. He's been involved in all of the biggest things Apple has done in the last 25 years or so since he's been there. This would be the first CEO transition since Cook came in from, oh, you've Raj 94 wants to know how I pronounce nanometer. That's actually the way I said it is the way is the way that you're supposed to say it's not nanometer. So go back to eating crayons. Um, what else was I saying? Oh, Apple, you just lost a viewer forever. It's fine. Apple did, uh, did have a record breaking Q1, $143.8 billion. And China was the bright spot in that report, which caught people by surprise. And again, back to what I said, it's the least capital intensive AI story. We don't even really know what they're going to do with AI. We know that Siri sucks and needs an upgrade and that they've been failing at delivering that for two years. And so maybe that's the surprise. they might tell us that they have something uh agentic coming out this summer and people will get very excited for that so um the big the big number here that analysts care about is services um that's the highest margin business at apple 30.4 billion is the expectation that would be a 14 growth rate of these four which of the ones which which of these are you the most excited to to listen to? Not Apple. I would say the Microsoft, honestly, it's too much me. I never really understand what he's saying. It's like too technical. Probably. I think the Zuckerberg one is relatively digestible. That's the one that I feel like he speaks plain English. Let me blow your face off your body. You know the chart that we've made showing Apple by various segments in terms of the trend on 12-month revenue? So I had a chart could update it this morning. $226 billion in revenue for the iPhone over the last 12 months. Ready for this? Yeah. Put your crayons down. NVIDIA. Crayons down. NVIDIA, $216 billion. Apple has done more revenue with the iPhone over the last 12 months than NVIDIA. Really? Wait, wait. Say it again. Say it one more time. $226 for the iPhone. $226 billion in revenue for the iPhone, $216 billion in revenue for NVIDIA. All of NVIDIA. All of NVIDIA. Yeah. What were we talking about the other day where the iPad is bigger than Charles Schwab by revenue or something like that? Yeah, the iPad's done 29. Schwab did 24. McDonald's, that McDonald's, did 27. So services did 113. You said it's looking for 30. So annualized 120. Tesla did $97 billion. Johnson & Johnson did $96 billion. I mean, it's just, it's stupid. So you're saying Facebook, Facebook, Meta is the one that you're most interested in listening to because you understand what he's saying the most. It's like the most straightforward business. The Microsoft call is too technical. There's too many different business lines. And Satya is too, he speaks like an engineer and I don't understand what he's saying. No, it's just so from my head. I don't understand. The Amazon is just, there's a lot of different areas of the business. So for like the cleanest story into what's happening right now with big tech, I like meta. I think the AWS segment of the Amazon call is probably the highest signal other than Microsoft. And yeah, it's a good point you make. I don't really listen to the Microsoft call. I read the highlights. And maybe that's why. And I never really thought about why I don't like listening to that. It's very technical. I like the Apple call. they're it's just the facts ma'am like they're not freewheeling they don't they don't like give you off the cuff really they're extremely buttoned up apple is almost like listening to a bank report um but i just i personally as a shareholder just get so much out of that but it's not an exciting it's very rarely an exciting call and almost never an exciting reaction because you know why he thanks the employees they speak a lot about their global initiatives like it's boring Right. It's extraordinarily by the numbers. Yeah. And it's not that much fun. All right. Let's talk about earnings in general. You're up now. All right. So yeah, there's something special going on here. So Warren Pies tweeted a chart that like, I don't know, speaking of technical, this is like way over my head. But the point is this. Throw the chart on. The point is this. Warren said a historic earnings boom is developing. Estimates growing faster than they did in the mid-90s or late internet bubble years. Only COVID recovery periods started greater inflection. But this is the point. The boom is unique because it is not coming off an EPS drawdown recovery. So we're seeing earnings accelerate. And it is primarily tech. Next chart, please. It's 43% blended and actual. And this is a moving target. But holy shit, 43% for technology, almost 14% for the overall index. Gee, I wonder why stocks are on all-time high. I think if you pull NVIDIA and Micron out of that technology earnings growth composite, it's fairly a different picture. But it's still- Wrong. Come on. Next chart. Tell me where these earnings are coming from. I asked Matt, why are you taking- So this is tech, ex-Microsoft, Apple, and NVIDIA. And I said, why are you taking Microsoft, Apple, and NVIDIA out of here? And he said, it's because it's a Bloomberg standard chart. So I said, OK, fair enough. But this is without NVIDIA. All right. So it's, wow. OK. It's higher. Huh. Interesting. It's higher. So here's why. It's all about chips. How are they doing this? It's all about chips. Look at this. It's semis. So Adam was saying, like, Micron is trading at, like, five times forward earnings. And I was like, wait, what? So I said, Matt, make me a chart of Micron and Sandus. Like, what the hell's going on here? Next chart, please. I mean, what would you expect? Micron and Sandus, 12-month forward earnings per share. What would you expect a stock to be doing that 10x's its revenue? I'm sorry, its earnings. And 50x's its earnings over a 12-month period. Would you expect the stock to go up? I think so. So for the people listening, Micron was earning $9 a share in March of 25. And now the forward estimate is for $85 a share. Sandisk is even crazier. They had $2 in earnings per share expected for the forward 12-month period in March of 2025. That's a year ago. It's unbelievable. And now it's at $99. We may have never seen anything like this in our lives. I've never seen anything like this. I don't know that anyone has. i i really don't i think the most shocking thing about this is that so few people if anyone was able to predict it and you know what's funny and this is this is like a good reminder for all of us that in hindsight this seems so obvious like not me the chip thing in particular oh oh oh what did um yeah encore told us like she knew it was coming but then thought she must have been wrong. Right. That was because no one because no one else seemed to agree and the stocks weren't working. So she said to herself, I must be totally wrong about this because these stocks are not going up. And then like six months later, it just launched. Next chart shows the crazy, the growth and forward EPS versus the price. And hey, look at that. The market's not stupid. In fact, it's pretty damn smart. So the stocks that are growing their earnings the fastest are the best have the best performance are going up the most it's almost as it's almost as if it's not a bubble it's almost as if this is about earnings growth which is what we all every always has been always has been dude every investor like even value investors even dumpster diving like value guys they all like they they all kind of proselytize the same sermon to us all about how earnings, earnings, earnings. Well, here it is. Here, this is what you say is important. Now you're going to say it's a bubble because you don't own these stocks. Not my fault. Not my fault. They started rallying off of high valuations. That's what happens sometimes. And even value investors, it's not just about the valuation support. Obviously, that's a big ingredient. But I remember the synonymous guy, Jesse Livermore, in 2016, wrote a post for O'Shaughnessy Asset Management. And it honestly blew my mind because he demonstrated the fact that there is an earnings inflection, which is why the value stocks get re-rated. It's not magic. Earnings do trough out and go higher. And that's what it's all about. It's all about earnings. If you can predict the future- Oh, like what's the source of value performance you're saying? It's like it comes for a reason. The earnings turn. And if the earnings don't turn and they keep going lower, the stock price will follow it. That's it. You would think this would be obvious, but it's not. Well, it's because we invest day to day. At least I do. I'm guilty of this. I trade day to day too often. We have a guest on TCAP this week. And we're going to talk about something like long-term investing. And he said, listen, over the long term, a stock cannot meaningfully diverge from its earnings trajectory. And we're talking like over a 20-year period. If the business earns 20% compounded, the stock's not going to earn 50. And same thing. If a business is declining, that's what the stock is going to do. It just works. Yeah. Right. And we overcomplicate it with all these other factors. And we talk about multiple expansion and compression and re-rating. Because that's in the short term. Those things do exist. Yeah. But OK. It's a really good point. Give me this chart. this is quarterly results for S&P 500 companies year over year. Okay. So I want to call your attention. So it's a 16.1% growth rate this quarter versus the same quarter a year ago. And that's despite the fact that gasoline prices are up, I don't know, 25, 30%. And not only is this not financial engineering because these companies are actually contending with higher input costs and somehow still reporting bigger profits, but revenue is up 9.7%. Can't fake that. You can't engineer higher revenue unless you're literally like recognizing revenue early and committing accounting fraud. Like this is what's literally going on. Next chart. This is by sector. I'm just showing you S&P 500 companies by sector versus a year ago, like what the revenue and earnings growth rate is. And we know technology already, it's a 40 some odd percent earnings growth rate. Jump over last year, but revenue is like 24%. This is not just like AI driven efficiencies. There's a lot more happening here. every single sector has revenue growth versus the same quarter last year. And only two sectors have negative earnings growth. And those are energy and healthcare, which we barely pay attention to energy because it's the commodity fluctuating. And I don't fully understand what's going on with healthcare. But every sector has revenue grown, which I thought was notable. What are your thoughts? um i'm wondering why there's such a big gap like where's the leverage coming from for materials to have i don't know it looks like 10 earnings growth not even i mean revenue and then like 30 earnings growth uh yeah prices hedges i don't know with financials listen companies it's not like so straightforward like it's not so straightforward in those groups companies are very very good at uh expanding the bottom line. Yeah. So let me read this to you. Sales and profit eclipsed Wall Street expectations at Halliburton, the Houston-based global oil services company. The energy landscape changed meaningfully in just 60 days. And now companies are racing to invest from Norway and Nigeria to Argentina and Brazil. So that's a company where the price of crude shoots up $30, $40 a barrel and natural gas demand takes off. And all of a sudden there's all these projects that didn't make sense in January that people want to get into in March. And that's the nature of like materials, energy, some of these sectors is like prices change the reality for fundamentals almost overnight. night. Anyway, this is important if you are an investor and you think we're in some sort of a tech bubble. Yeah, things are going great for tech stocks. But like I'm showing you market-wide, we're looking at fundamental improvement for both earnings and revenue. It's every sector in the case of revenue growth. I want to do this permanent portfolio thing. Do you know what the permanent portfolio is? In my head, I have an idea. I think it's It's cash, stocks, long-term bonds, and gold. In my head, that's what I think of. 25% of each. 25%. Okay. That's the way I learned it. But there's other derivations of it. But basically, that's it. So Michael Hartnett, who is a strategist at Merrill Lynch, and I think one of the best market watchers, market thinkers out there, he has this thing called a sleep like a baby portfolio. Too many words. And it's similar. So what he's saying is 25% stocks, 25% long-term treasuries. So specific. Okay. 25% commodities, not gold, although that would include gold. And then 25% cash and T-bills. So almost the same thing. So the permanent portfolio is that, except instead of commodities, it's gold. The permanent portfolio came along in the early 80s as a direct response to the inflationary devastation that had been visited upon the investor class in the 1970s. Like that the permanent portfolio was like the solution to that secular bear market, which went on from 68 to 82. It was absolutely grueling. You didn't just lose money in absolute terms But you also lost money in inflation adjusted terms And so they came up So Harry Brown Who was a market Philosopher, politician He was like a He was like a polymath Came up with this idea And then they built a mutual fund based on it Which still exists But let's show this tweet from Mike Sicardi Because he's pulling the He has the Michael Hartnett chart John, can we get this up? Maybe we won't. I think we deleted it. Oh, cool. No, CharKid recreated it. All right, so we did our own. Yeah. I asked CharKid and Sean to take a whack at this. So this is us taking Hartnett's Sleep Like a Baby portfolio, and I think ours is way better, obviously. Well, by the way, hold on. So Hartnett annualized his 2026. Yeah. So ChartKid did the same just to recreate it. But that's a way to do it. Right. He's saying like on a year-to-date basis, it's annualizing a 26%, 27% return. Yeah. And so we're just doing what he did to show that it's having a good year. It's having a good year. My opinion it having a good year because we threw oil into the commodities the commodities portion of this and uh stocks have been doing like stocks have been doing great and the next the next one shows gold instead of commodities right when you go back to the permanent portfolio it's a much more muted version because you don't have oil in here so instead of commodities you have gold and um just put the first one back so for those listening the sleep like a baby portfolio that heart and is talking about is up at an annualized rate of 27%. And we're a little bit more than a quarter in a month, or maybe we're a quarter in a month through the year. So it's a little bit early to me annualizing things, but I get it. So this is a portfolio. So this is a great strategy because if you don't have the temperament to hold on to stocks and take all the smoke, and let's be honest, it's very difficult, obviously, in the bear market to do. Not everybody wants all the smoke. Average is 8% in an up year, which is great. Only 5% in a down year, pretty freaking awesome. The problem is it doesn't protect you from FOMO. So when the market is up 20% and then 19% and then 24%, you're like, what am I doing? So it's personality driven like everything else, but it's not bad. I'm so glad you said that. This concept goes into goes into hibernation in a bull market, people stop talking about it. And then when there's a crash, all of a sudden you start to see the permanent portfolio content come back. And you could do way worse. It works. No, I don't think it's bad. But to your point, like it's a permanent portfolio, but there's a trade-off. You're not racing the stock market in a bull market. And after five years of a bull market, you'd probably be looking at this thing like what the hell did I just do right look what I just missed out on um put up the permanent portfolio one one more time guys so when you do it with gold this is what it really looks like not the commodities so you get you what you could Michael the when you say like the most important thing here is how many how few negative years yeah and those negative years are like like a lot. The average down year is minus 3%. So you almost can sleep at night with this permanent portfolio, no matter what's going on, except a runaway bull market. Then you're not sleeping at night. Then you're cursing yourself for being such a coward. I feel like there's a very type of investor that buys these things, right? It's people that are wary of government debt and whatever. And for those people, this is sensible. I understand. Put up the hit rate. I love that they did this. They did this at the last minute for us, Charquette and Sean. So this is the, what we want you to understand about this guys is that there's a price to be paid. If you want something that's permanent and simple to understand, like 25%, 25%, right? If you want that, and if you want sleep like a baby, you could have it. But here is the price that you pay. and here's what you give up. The SPX, the best year back to 1928 is plus 52%. The best year the sleep like a baby portfolio has ever given you is 27% or half. And the permanent portfolio is 39%, which is actually pretty great. Now you go to these rolling performance periods. the best ever, the percentage of positive annualized returns for the S&P on a five-year basis is 88%. That sounds awesome until you remember that 12% of the time you're down. The sleep like a baby and permanent portfolio are more like 95% positive. 98% is like, that's like you're almost never down. I mean, obviously, we just show that you're down. So that's the cost. That's the benefit. Anyway, Hartnett's saying, without getting into the whole thing, money does grow on Cs. He's saying the four Cs are the key to this year. Curve steepeners in the bond market, consumer cyclical, chip stocks, and commodities. That's too cute. Very cute. What are we doing here? Not as cute as Halo. All right. Let me just for fun show you. There is an actual mutual fund based on the permanent portfolio. And there's a whole company that exists just to manage it. And this is what they are showing is their target portfolio structure. Give me the pie chart. So they have gold 20% silver five. Then they're doing 10% in Swiss franc assets. Another 15% in real estate and natural resource stocks. then aggressive growth stocks is 15 and 35 are dollar assets um so that's their i guess that's how they actually run let me show you the this is the all-time performance since inception that's 2 000 and that seems incredible it is until i show you it versus the s&p total return. But it's not the same thing. But still, the S&P total return of 4,000% is 4X. But you know what? But did you sleep at night? Yeah, you did. You really did. You did sleep at night. You really did. So I didn't realize this. The fund family, it's actually called Permanent Portfolio Family of Funds. I wonder if somebody else owns that. So that particular strategy has almost $7.4 billion in it. So good for them. They're delivering value to their investors. It's good. You'd love to see it. Jonesy1289 smart ass is saying, hey, la, meter. Go sniff glue. That's good. OK. All right, good stuff. All right, let's do this real quick. So our friend Alex at Duality Research showed what happens to semiconductors after a momentum thrust. and uh it makes me uncomfortable the way you say thrust thrust i really lean into it yeah so the average return every every letter in that every single letter the average return after said thrust uh after 63 days is 12 okay yeah and we're at 29 it's like too much it's like way too much it's off the charts well today they reversed finally yeah but but but did they i mean smh was smh was down three percent right after being up 40 in three weeks so um in other this is going straight up i never heard this term before i'm sure you have the ludicrous list Josh, you know about this? No. No? What is that? So Bespoke tracks this. And I actually did see somebody else reference it recently, maybe because they did. One way we have taken tabs on a general level of frothiness in equity markets is a screen for the number of stocks meeting a general criteria. All right? So here we go. Stocks with a market cap above $500 million. Check. A price to sales ratio above 10x. and a doubling in the stock price year over year. At the moment, there are 175 stocks meeting this criteria. This is like the classier version of the DGEN DAO. Correct. That's exactly right. All right. So what's in the list? Do we know what's in the list? I'm sure it's a lot of semis. The point is the list is now very large because a lot of stocks have done this. 175 stocks are over half a billion market cap. price to sales above 10 and have doubled. Yeah, I believe it. So the collective market cap is at like 2 trillion. And it looks like it's about, it looks like it's about, no, more, 20 trillion. And it's about a quarter of the entire Russell 3000 market cap. Holy shit. I mean, you just, it's like every semiconductor, it's every power supply company, every net like telecom networking component company. Like you just think of like huge categories of stocks where there are tons of tickers and you could picture it. It's a party. It's definitely a party. It's a party. All right. I wanted to just point out on this semiconductor reversal thing. I asked Sean for this for CNBC today. You know, people buying stocks that are parabolic on like the 12th day of a rally. It's almost I was saying like people don't even know how to buy stocks anymore. Because like they never were taught anything. They just opened an app and started trading. Imagine buying a stock that's up 12 days in a row betting on 13. Now people are like, yeah, but then they went up six more days. OK, that's the trades. That's the trade you want. That's the that's the bet you want to make. I guess you could do it. So we wrote a column for CNBC Pro yesterday morning, Monday morning. And the message was, yeah, these stocks look amazing, but pump the brakes. Here are better entries for microchip technology, Broadcom, NVIDIA. NVIDIA, I like the entry, actually. Yeah, it's good. And Intel. And like just the concept of just forget about the price and forget about the shape and how parabolic. Just solely on RSIs, professional investors don't buy stocks with an 84 RSI. Because what you're buying at that moment is the highest momentum stock in the entire market. And it never, it's never the right entry. It's like It's the thirstiest thing you could do So we looked at the RSIs of the biggest chip stocks Going into The market today When they all reversed On was an 88 RSI Can you imagine No stock should be at 88 Except for the day it comes public Doubles ST Micro 87 Intel 83, AMD 80, Marvell 78, Texas Instruments, which should never have a 76 RSI, 76. Monolithic Power, 76, NVIDIA 76, Qualcomm 74, Broadcom 74. Then you look at the DRAM stocks. Look out. Something called Kyoxia. You guys could correct me on that. I don't know. Is that a Korean company? I don't know. 81 RSI. Seagate, 77. Western Digital, 75. Dude, hold on. Seagate is up 14% in the after hours, last time I checked. Buy it now. Hurry up. You know what? The SMH, 50% above its 200 day. It's all too much. Yeah. Anyway, if you learn nothing else from this time that you spent with us this evening, like professionals are not buying 85 rsi it doesn't mean the stock can't go higher but just like you are putting the odds so far in the wrong direction versus yourself when you do stuff like that you might win sometimes the amount of times you're going to get burned are significantly uh higher in quantity is that a fair statement to make yeah this is like taking a fadeaway shot at half court. It might go in, but probably not. Wait, it's not impossible to make money. It's probably the wrong move to make. I think most of our viewers definitely know that. And I think the people that are buying it in general are very short-term in nature. I don't think anybody's initiating a new long-term position. I don't know. No, because you know there's a lot of people that will buy a top. They don't know what's the top at the time. I know it has to be. It turns out to be the top. And they're not selling because then that would mean they were wrong and nobody wants that. Yeah. All right. Let's do Spotify. So they've got new leadership in there. And on their report, they said, we are pleased with our performance in Q1. No one else is. As all of our KPIs met or exceeded guidance. The business added 10 million MAUs versus guidance for 8 million. While subscribing additions of 3 million were in line. Revenue was in line with guidance and grew at an accelerated 40% year-over-year basis, gross margin exceeded guidance, and expanded to 133 basis points. Fast forward. Overall, we view the business as well-positioned to deliver improved growth and margins in 2026 as we reinvest to support our long-term potential. You don't want to read that when the stock is down like 11% on the day. They beat the shit out of this thing. And it was already down. It was already in a drawdown. So it wasn't the worst quarter. They're right. They're right. The problem is it wasn't what they delivered this quarter. It's what they guided to next quarter. It's not great. It's just, it's not good. And the stock is not growing the way, the company's not growing the way that it should be. A lot of problem with the ad supported tier. And it's not a cheap stock at all. So you just can't miss like this. Biff Graebles points out it's in a 45% drawdown from the summer. I didn't even realize that. It's getting, this is reminiscent of what they did with Netflix. yeah and it's very similar type of business it's about subscribers and spending money on content that you then distribute amongst those uh subscribers i mean it doesn't look like a bad quarter i don't know what the it wasn't a bad i don't know what people thought they would get it wasn't a bad quarter it's the guide the guide was bad the guide was bad i mean it's how it goes it's you know you can't call it a bubble i'm sorry you can't say the market's a bubble and then have punishment for companies that miss or make and just don't give strong enough guidance that's not a bubble it's this is not a bubble would be they're like oh whoops the guide's a little light this quarter but don't worry we'll get him back at the end of the year it'll be a second half story and the stock goes up 20 that's a market saying the market saying no we don't believe it's a very disciplined market and they are beating up companies that don't do everything exactly perfectly. Yep. Which brings us to Robinhood. Yeah, so Robinhood is- Double miss. I feel a little bit better about missing the rally from 70 to 100. The stock is now back at $75. And this is, so we spoke a lot in the first quarter. There was one, I think it was with Farmer Jim actually, where we were talking about like the balls have left and the retail participation like is out. Like they are gone. They left the building. And this is the crowd that left the building. So let's go through some of their charts. All right. I want you to focus on the bottom two. So we've got total platform assets down from $322 billion in the previous quarter, $307 billion today. But the problem, Josh, is that they had net deposits of $18 billion. So net deposits of 18 and yet total assets on the platform are down 15. How does that happen? People lost money? People are losing money, which brings me to the next slide. Look at the financial results. Because you're doing dumb shit. Look at the financial results. Yeah, net income is down pretty bigly. What does that say? Earnings per share. That can't be right. $605. Whatever it is, their financial results are going in the wrong direction. All right? because people are trading less So transaction revenue for crypto was down 39 for the quarter quarter over quarter And options transactions are down 17 It not fun when you're losing money. So the customers chilled out. They'll be back, no doubt. But it was a tough quarter. Now, longer term, Robin's doing a lot of great stuff. But it was a tough quarter and crypto is a big part of their business and it's not going great. Hey, uh, I'll give you the other side of this story. I think, uh, we just heard from Jane street and I, I know that Jane street's not the counterparty for every single Robinhood trade. No, you're right. You're right. They are. Uh, Bloomberg news is able to write financial reporting stories on Jane street because Jane Street, I think, has bonds. And because they have publicly traded bonds, it necessitates a certain amount of SEC filings on the company's financials. But they are effectively a trading shop and a hedge fund, and they are private. But because of that publicly traded bond thing, we get some reporting there. Bloomberg just reported. This is insane. q4 revenue for jane street 15.5 billion with a b total 2025 revenue of 39.6 billion and total 2025 ebitda of 31 and a half billion jane street made 30 billion dollars in in effectively in free cash flow last year and that's more than now mark dude that's one of the biggest companies on earth nobody can name a single person who works there let alone the ceo or any of the partners 99 of people on earth have never heard of it and those that have don't even know where they're headquartered or what they do 30 billion dollars in annual cash flow and their counterparties are these numb nuts at robin hood like taking flyers on crypto shit and zero day options. Like, do you honestly think that those levels of trading were sustainable? Like people run out of money at a certain point. So this is who you're trading against. Like la cosa nostra of the financial universe. They're killing you. They're eating you. Every time you press buy, they press sell. They love it. Keep doing more of it. and it's, listen man, when I was coming up, if you were day trading, you were day trading against some other schmuck sitting in their own basement and you couldn't meet each other eye to eye and there was a market maker in the middle, that market maker was barely making any money too, right? This is a different world. Now you are trading against the greatest traders of all time and they're not even human. They're literally software programs designed to relieve you of your holdings. I like my chances. Still want to do it? All right. Feel free. Anyway, sorry to just inject a dose of reality. What brings the Robinhood trading enthusiasts back to full strength? Like another bubble? Dude, they didn't leave entirely. Q1 transaction-based revenue for options was 240. It was 260 this quarter. Equity was stronger. I mean, they're still at it. So higher prices, but they're still there. But they need crypto to come back because that's, I don't know, is it 20% of their profit? It was 134 out of 623. But like in Q3, for example, is 268 out of 730. All right. So I think Bitcoin back at 100,000 gets the juices flowing again at Coinbase and Robinhood and nothing really else can substitute for that. Agreed. So, all right, we'll see if it happens. While I don't approve of short-term speculation, I love long-term speculation. And today's Make the Case is about the most speculative stock I own. and nobody should listen to this and think I'm giving them investment advice. This is a long, long, long, long, long shot bet. I think it will require at least five to 10 years in terms of holding period to justify the amount of risk I'm taking. And that is probably not everyone's cup of tea. But here it goes. Talk about Joby. I went to, Michael, did you know I went to the Joby test flight of their eVTOL, the first run ever from JFK Airport to the west side of Manhattan. And it was yesterday at the Blade Helicopter Lounge on 30th Street and 12th Avenue. So this whole thing took place over the Hudson. It sort of looked like the set for like a Spider-Man set piece, like with big cranes and helicopters in the sky. and then this thing comes in for a landing. And John, give me some footage. So I'm standing right underneath this. So Joby bought Blade, which is the helicopter taxis, mostly for wealthy people to get to the Hamptons. Look at this thing, dude. Look how smooth. There's a pilot in there, no passengers. The pilot is obviously a professional and they will, I think, be making five of these a month for the foreseeable future manufacturing and trying to ramp that up to 50 so there aren't a lot of these on planet earth just yet this is the audience and we're all cheering because they successfully landed um pause this you see the propellers yeah okay so when the when When the thing is sitting like this and it's about to lift off, that's the position of the propellers. They are perpendicular to the ground. Once it lifts off to its cruising altitude, those props come forward like a plane. They're parallel to the ground, and then it flies on a fixed wing. And then when it's going to come in for a landing again, the props will go vertical, and it'll lower itself to the ground. The difference between this and a helicopter, four major differences. The obvious one is the sound. This thing is silent. It's like something out of Dune. It's hard to explain how insane it feels to watch that thing land in front of you and it doesn't make a sound. Helicopter sounds like a thunderstorm, especially when you ride under it. You literally have to cover your ears. It's so loud. Two, the propellers themselves, There were six of them on this craft and they're built, the system is built with double redundancy. You can lose two of those props and fly under four of them. Very, very important for safety. A helicopter is one rotor. If you lose the big rotor, you're going down. No, no other, no ifs, ends, or buts. The only question is how fast and are you spinning in a circle in the descent? Terrifying. um the third thing is you know why they don't land helicopters on skyscrapers in new york anymore when because they were literally blowing jet fuel exhaust into the air conditioning systems of buildings where people were working like they used to take helicopters off of hospitals like this was normal news choppers would take off from like the roof deck of a building that people were working in. They were blowing exhaust into the AC that people were breathing in. I'm laughing at my answer wind. Don't ask me scientific questions. Okay. Anyway, so these are battery. And the thing about Joby is they're going for vertical integration very much like Tesla once did, like SpaceX does now. They're writing the software. They're training the pilots. They're manufacturing the craft. They're making their own battery packs, full vertical integration, not cutting any corners, really thinking through the manufacturing from start to finish. When is this thing going to be live? It is live. You just looked at it. So next month- You know what I mean. Look at this guy. So next month, the EIPP takes effect. This is the Evital, chart off, Evital integration pilot program. By integration, they mean starting to integrate these things in the low earth orbit with like airplanes and literally at a federal level, overhauling air traffic control to account for the fact that these are going to be in the sky. Later this summer, the taxi, the air taxi service that's partnership with Uber and Joby will be flying in the skies above Dubai, the United Arab Emirates. And it will not be long before these things are happening uh taking flight from new york to the airport so i think there's a hundred mile range so the hamptons might be a little bit of a stretch or montauk might be a little bit of a stretch but um how long would you approximate it would take to get from jfk to the west side of manhattan 10 minutes by car oh forgot about it two hours yeah gotta be two hours let's say charitably at 2 a.m it might be whatever it would be horrendous seven minutes yeah okay now think about somebody in a car accident who needs to be airlifted to a hospital this versus a chopper or this versus an ambulance on wheels get to the joby um anyway joby is uh one of probably my most speculative holding i don't think that uh i wouldn't call it pre-revenue because they got $100 million in revenue from buying Blade annually. An eight pre-market cap. It's like $8 billion. $8 billion. It's a really – look, one of the things with Joby is every time the stock price gets momentum, they do a secondary, and I get it. They've raised billions of dollars in cash, and they're going to need it because they're burning probably $500 million, and these things are going to cost a lot of money to manufacture. That being said, they talk about this guy, Joe Ben, who I met yesterday. Do we have that picture? This is the CEO. That's why it's called Joby. There he is. His name is Joe Ben. And they talk about him like the guys that work for him talk about him like he's Thomas Edison. Like somebody said to me, and another investor in the company, Chartoff, said to me, there were like 30 of these guys on earth at any one time. like the Benjamin Franklins of the world, the Elon Musks of the world. And they think Joe Ben is one of those guys. The last thing I'll say about this, they've been working on this for like 20 years. It's not like some project that started in 2021. This is a very, very long-term vision. And they are now like within range of seeing this actually happen in the real world. After decades of solving physics challenges and technological barriers, like they are there. So I'm making the case. I'm telling you right now, this is not for the faint of heart. I absolutely think the stock could 10x. Also, it could go to zero. I just, I won't be the one that knows for sure. So whatever capital I have invested in here, I'm definitely taking a risk. But that is the bull case for Joby Aviation. What are your thoughts? I love, first of all, I hope this works out for humanity. I love that you're making the case after a 50% plus drawdown. I would feel way less comfortable if you were promoting this. I bought more recently since it sold off because I don't give a shit. So yeah, listen, you said all the right things. You laid out the case. It is highly speculative and I hope it works. Yeah, we'll check. You know what? We'll check back in on this in like five years. Okay, deal. How smart or stupid I look. All right, I've got a mystery chart for you. And this is the smallest stock in the Dow and probably coming out at some point because that's what they do. Wait, wait, wait. What is this? Is the Dow component current? This is the smallest stock in the Dow. It had a market cap of $275 billion at the peak, and it's now at like $60. There we go. Thank you. Great work. What sector? Please give it. What sector? Let's say consumer discretion. consumer to squash is it a is it a retailer is it target home depot you know you're right track ish i guess suppose it is uh i'll give you one more clue um okay uh management up big time i'm seeing guys in the chat say nike is nike in the dow this is in the dow yeah dude it's 44 stock it's coming out it's by it's by far the smallest name that's unbelievable what yeah it's 60 billion like could this go private could this literally like could nike be taken what could nike be taken private yes could nike get bought by the saudis yeah so i i don't know what the shelter structure is or anything like that but uh but that's crazy dude like what uh you gotta think even though even though shoe dog came out the book even though it looks beyond it looks like death the floor is not that much lower than 66 billion dollar equity i'm not buying it but is nike relevant to people under under uh 20 i couldn't tell you like nugget i feel like nugget wears air force ones but all the boys They all wear Nike sneakers still. Yeah. Shit. One thing I noticed is every time they arrest a mass shooter or some sort of like. They're wearing Nike tech. I noticed. There's a lot of Nike tech whenever somebody's shooting somebody. That's enough of that. It's not great. All right. Shout out to Nike. I still love the brand. I still wear a lot of Nike stuff. Maybe I'll take a look at that and catch that falling knife. Guys, thank you so much for watching. Thank you for listening. We love doing the show for you live. So for those of you who join us in the chat, we really appreciate you all coming through each and every week. It adds a lot to the show and we love you for it. I want to remind you guys tomorrow's Wednesday, which means an all new Animal Spirits with Michael and Ben. We'll do an Ask the Compound with Ben and Duncan taking your questions. Send your questions to askthecompoundshow at gmail.com. For the latest in financial fashion, check out idontshop.com, where we always have new compound merch just for you. And at the end of this week, I got to tell you, a very, very poignant and special edition, I believe, of the Compound and Friends. I think you're going to love it, and I can't wait to bring it to you. All right, that's it from us. Have a great night. Talk to you soon. Thank you. of future results. Investing involves risk and possible loss of principal capital. No advice may be rendered by Ritholtz Wealth Management unless a client service agreement is in place.