SPEAKER_01 0:00

And I believe we are live. Dustin, I understand that your family size has gone up by 33%.

SPEAKER_02 0:08

Yes, I made an investment in my family, a fairly large investment in my family.

SPEAKER_01 0:14

Yeah, I thought it was a very microscopic investment, but it has turned out to be seeing in large ROIs. All right.

SPEAKER_02 0:29

Congratulations. Thank you. Thank you. I'm shocked to be here right now, but glad to be here right now.

unknown 0:36

Yeah.

SPEAKER_02 0:37

Barely survived. You're welcome.

SPEAKER_01 0:42

You're like, I need I need a break from the baby to go give Hamida.

SPEAKER_02 0:48

This this is my escape.

SPEAKER_01 0:51

Good, good. I'm glad I could be here for you in these times of need. What's our agenda for today? Let's just let's just get started.

SPEAKER_02 1:01

So big agenda. We're deep into earnings season. We obviously have Robinhood earnings from yesterday. We have Microsoft, Amazon, Google, and Meta reporting today. We're going to talk about uh memory shortages coming to the iPhone and what that might mean for um iPhone prices. Uh a bunch of listener questions that we're gonna get to. Uh, we're gonna do something slightly new where we're going to take questions from your savvy trader community. Um, and the biggest plot twist, I think, of the year, you sold some Robinhood. So I think we should start with that. Oh boy.

SPEAKER_01 1:42

Yeah. So Robinhood had their quarterly report yesterday. It wasn't a spectacular quarterly report the way we've come to expect from Robinhood. Um, they uh missed on uh some expectations. Uh growth rate has slowed, but that's in the face of uh crypto revenue getting cut in half compared to a year ago. Um, so they they have had some headwinds, right? They've had some um high-level uh macro headwinds that uh that hasn't uh played in their favor for the quarter. Uh so the crypto was one, and then the other, of course, uh in the first quarter, the um equities got hit slammed pretty hard. Um in near the end of March, equities were still down quite a bit uh for the year, whereas in April they started to make new highs. So um so that has partly played into it. Robinhood continues to execute really well, their product strategy continues to be on fast track, their banking product hasn't yet even rolled out completely, and it's already growing very, very rapidly. Uh, so uh in terms of all the promises of what I like Robinhood for for its future are still pretty sound. Um, but in the meantime, I did add some shares at uh $91 per share. I added some more when it dropped to $80, and then some more when it dropped to 70 uh uh earlier in the year. Uh, and I decided specifically to sell some of the $91 a share um uh uh shares so that I could take a loss against some of the gains that I've had in other places this year. So um it's largely a tax-related move. It's about 3.5% of my Robin Hood shares that I sold. Um and uh, you know, yeah, you got to sacrifice where where you have to in order to uh address some of the needs. And I'm trying to increase my cash position, which is still just four and a half percent. Uh it's way below my normal comfort level.

SPEAKER_02 3:48

I I do want to add a bit more color to this move that you made. So I'm pulling up your chart uh of the past five years with Robinhood of all your buys and your sells, right? So you could see the the green, um, which are the buys, and then the red, which are the sells, really is a good indication of like how you're feeling uh about the stock. Yeah. Um, or at least how you're operating with the stock. So what I want to just clarify for the listeners is if you wanted to build out your cash position and you wanted to sell some Robin Hood, if you sold any of the shares back here, you would have a huge tax bill because of the you know, fairly large gains. Where because you sold your shares from over here, uh it it ends up being a loss, which is going to be offset by gains that you already made. So it was exactly a a really smart um move.

SPEAKER_01 4:48

Yeah, no, this is this is a great view. I honestly forget that we even have this view. Um that's one of my favorites. But yeah, it is one of my favorites as well. Every time I look at it, it's like uh it's fantastic. But basically, the view is showing for people who are just listening, it's on a timeline, it shows exactly what the price is and when I have purchased with the pluses and minuses. And you can actually hover over the uh pluses and minuses and see how you know how much I uh increased my position. And you can see like most of my purchases of Robin Hood were when the stock price was, you know, anywhere from $7 to uh $10 or $12. And then I started sales later on. Uh sometimes regrettably. So there's like every now and then there's a plus uh sign when when the when the market took Robin Hood down. But but yeah, this is super helpful to kind of see the overall picture. But yeah, I am not selling the the shares that I bought at the $7, $8 uh per share. Uh I sold some of the ones that I bought at $91 per share. So uh another sort of like aspect of um uh investing, and it might be worth talking about this just briefly, is that um when you when you sell shares in uh the majority of brokerages, you have the option to say that I want to sell a specific lot as it's known. So you can say, sell the shares that I bought for X price as opposed to the shares that I bought for Y price. So you can minimize your um uh your tax impact. So in in my case, selling these 3.5% of my Robin Hood, I sold 3.5% of shares that I had bought at $91 uh per share. And as a result, I actually, despite being up significantly overall on my Robin Hood, I'm actually taking a loss on these shares that I sold, which will offset some other gains. Um, but yeah, that was worth sort of pointing out.

SPEAKER_02 6:45

Yeah, I do want to give my thoughts on um just a snippet of the earnings and also my overall view of Robin and how I'm thinking of things. Um, the one call out I want to make, which I thought was interesting being in the software space. I'm curious to get your thoughts, is and I don't know if you caught this because they they briefly touched on it. They mentioned that it's going to cost them roughly a hundred million dollars to build out the child tax accounts for the government. Um and the government will pay them cost plus, so they'll get that hundred million dollars back plus a little bit extra. That's right. But that the hundred million dollar amount seems a little crazy to me. Like we could build that for you know uh one percent of that. Could we?

SPEAKER_01 7:41

Maybe maybe three or four percent of that, uh, maybe maybe five percent of that. Well, um but but uh uh I mean it's taken uh significantly more to build what what we have built, uh, and it doesn't have uh brokerage uh capabilities. So there is some safeguards in there. Um anyway, not not to get sort of distracted by the cost. So the $100 million, it is uh seems it didn't seem completely out of whack. This is a product that's going to potentially have like what 60 million uh users, and yeah, uh it needs to have all kinds of safeguards, it needs to be compliant in all the ways that um uh gets complicated by the government because the government is involved. So there's gonna be all kinds of rules that it has to apply to these accounts, like who can trade, who can't trade, what parents can do, what they can't do. So this is going to be a very specialized product. So it doesn't surprise me that it's gonna cost them $100 million to build it. Uh the nice part about it is uh not only will they make a small amount of profit because it's a cost plus type of contract with the government, uh, but also it gets their brand out there in front of these 60 million people, uh, presumably up to 60 million uh accounts that over time continues to build Robin Hood's brand recognition and trust with users. Um, and because they had a significant trust issue back in the GameStop it uh phase, and that whole fiasco sort of like um impacted their their trust aspect pretty negatively for Robinhood. This helps sort of solidify them back into a positive direction of trust. I think it's all around goodness, but yeah.

SPEAKER_02 9:27

I hope that's the case. I don't know how much of a benefit it will be for their brand because it's gonna be a separate app. Like I don't know how much and hopefully they get to brand it and put Robin Hood all over it. But I think there's there's someone else involved that also loves being the face of this that is gonna want to put their brand all over it as well. So we'll we'll see. Um, and they are partnering with um I forget the name of it, the national like design committee. It's not committee council. Um, so there we'll we'll see how how it ends up going. Um and then in regards to the actual price move here, I do want to pull up another savvy trader chart. Now, in this instead of looking at the uh and I'll zoom in, instead of looking at the five-year view, this is the one-month view of when I sold uh my uh just eight percent of my Robin Hood position uh a couple weeks ago. Uh and it was funny because after I sold I'd mentioned it, it went up pretty much immediately. I sold at around like $86, I think. And then it went, it shot up to $91, $92. Yeah. Um, and now it's back down to $71. Um good timing there, yeah.

SPEAKER_01 10:53

Yeah, so it was not not that timing is an important part of uh investing, but but that just happened to be good timing. Right.

SPEAKER_02 11:03

And it was like, is there an element of luck? Always. Yeah. But there were two reasons why I decided to sell at this point. The first was the reason why it had this big um run-up was because of that. The SEC changed the um what was that? It's yeah, whatever it was called that we did a whole segment on. Um that to me, that was a big nothing burger. Like it did, it was going to make an impact for Robinhood, a positive impact, but not that much. Right, right. And then this the second is as you know, I've been looking at Robin's hood Robin Hood's price relative to Bitcoin, and where it should be at roughly right now is 0.001 Bitcoin. That's where it's kind of been the last couple of weeks. So meaning if Bitcoin right now is $75,000, Robinhood should be around $75.

SPEAKER_01 12:07

$75. Which is roughly roughly been accurate. Yes. But but but as crypto drops as a percentage of revenue, that should be less and less uh sort of correlation. That correlation should be less and less moving forward. You would like to think, yeah. I would like to.

SPEAKER_02 12:26

And eventually this will break. But for now, this is how it's been working. And when and in the when Robinhood was hitting all-time highs, it was closer to like 0.0015. And as we go into uh this Bitcoin bear market, I expect it to drop more. And right now it's actually at 0.0009, so it kind of reversed in the other direction. But it was just clear it was kind of over its skis um when it did that move. And you know, you never know, it could have been a complete reversal from Robinhood. Um, that's why I don't like make any crazy crazy moves and sell my entire position when I believe in the company long term, right? But it just seemed like that was a good time to uh take some profit. So the interesting thing is now that Robinhood is at this point zero zero zero nine valuation, Bitcoin only needs to go to 60K and Robinhood needs to remain correlated for it to get to $54. It doesn't even have to get to 60k for me to win the bet.

SPEAKER_01 13:29

So we are getting close to the I do I do think that you have the highest probability of winning the bet that than you have had since we made the bet. So uh you know, and our bet for those who don't know is that uh in in my view, Robinhood won't hit $60 a share. Dustin has bet that it will hit $60, or it will go below $60 a share. So by the end of the year. By the end of the year. So I I uh uh you know, who knows? It could. Yeah, it hasn't gotten there yet. It hasn't gotten there yet, but uh but uh it's get it's inching its way closer today. 13 what what was it down 13, 14 percent? So something like that. Yeah, 13. All right, okay. What else do we got? I think we we we beat Robin Hood. We beat that horse, you know. Let's move on to other things. Uh do we okay?

SPEAKER_02 14:27

We have Amazon earnings, we have Microsoft earnings, uh, we're still waiting for Meta, and we have Google earnings. What what do you want to talk about first? Uh oh, we have Meta too. Um we do?

SPEAKER_01 14:39

I need to refresh my page. Or do you want to share your screen? Sure. Um yeah, go go for it. Uh I can pull it up here. So yeah, there's uh we can do it in the same order that they appear on Earnings Hub if you want. So Amazon uh looks like they beat revenue by 2% and beat EPS by almost 70%. And I suspect that has to do with some one-time events because you that's a that's a huge beat on EPS. Right. Um they are down one percent after hours, they're down one percent, okay. Um meta uh beats revenue by one just over one percent and EPS by 9.6%. Pretty substantial beat on EPS, okay beat on revenue. What are they doing after hours? They are down six and a half percent after hours. So this is gonna be a rough uh earnings season, it sounds like. Um here's Google. Uh Google beat top line by 5.6%. That's a pretty impressive beat because 5.6% on Google's numbers is beating revenues by 5 billion. Uh pretty substantial. Yeah. Pretty substantial beat. And then EPS, holy macro, here, uh, beat by 92%. Uh, and unless that's a one-time uh impact, that is an unbelievable beat there. So what's Google doing after hours? They they are up three and a half percent after hours. Uh pretty awesome there. And then Microsoft beat revenues by 1.8, EPS by 4.9. Um okay beats on both. So I suspect if I had to guess, I'd guess that Microsoft is probably down a little bit. Yeah, they're down a little less than three percent. Okay, so the only winner so far is Google, huh?

SPEAKER_02 16:30

It's Google. Very unclear to me why why Google uh made such a big move. I mean, uh the EPS beat was huge, but it seems like with something like that, it would be one off.

SPEAKER_01 16:43

Yeah. Although it is kind of uh retreating, it looks like a little bit. But uh yeah, yeah, uh super interesting. What what are your thoughts on uh on the results so far?

SPEAKER_02 16:57

I mean, I love to see the beats. I always especially with the these larger uh companies that really drive the entire market. Um even if I wasn't invested in them, and in this case I'm invested in three, I'm invested in all of them except for Microsoft. Um but even if I wasn't invested in them, I would want them to be uh beating results because it's just a good sign of a healthy overall market. Yeah. Um what are what are your thoughts uh on this? And do you think we should do like a like do we have the meta slides yet? Let me check we have the we have the report, I think. Because we could always do a breakdown if we had.

SPEAKER_01 17:38

Let me look for it real quick. Uh we have the report. Yeah, I don't I don't see the slides. Okay.

unknown 17:50

Okay.

SPEAKER_01 17:50

Yeah, I mean the the percent change, holy cow, on revenue for meta, by the way, is 33% growth. So they they went from 42 billion last year to 56 billion this year. 33% growth. That that's even accelerating the growth rate, which seems phenomenal to me. Uh income from operations went from 17 billion to 22 billion, um, a growth of 30 percent. Um, so again, phenomenal growth. And net income went from 16 billion to 26 billion, 61% growth. Um that just seems unbelievable, actually. Uh I think the uh the expectations might have been extremely high uh and they still beat it, but uh I don't know what people are expecting that the revenue or that the stock price would be down after after this kind of uh um this these kind of results. So yeah, that that's pretty shocking. Yeah. Yeah.

SPEAKER_02 18:52

I mean, maybe they were the market was hoping that they would have better guidance as opposed to like their guidance is meeting expectations as opposed to uh you know beating expectations. Yeah. But it's always hard to explain why the market does what it does. Yeah.

SPEAKER_01 19:11

With with uh with Robinhood, it was a little bit more understandable. They did uh miss there was 15% year-over-year growth as opposed to you, you know, the significant they've been growing at a much faster rate historically. But Robinhood's business is more lumpy, right? It it's affected by macro events, it's uh the directionally they're going in the right direction, but sometimes they'll have a quarter of 70% growth, another quarter of 15% growth, right? Whereas with Meta, the the growth seems to just be super consistent and uh and accelerating. So, you know, in fact, uh let me see if I can pull up Meta's historical revenue here. Uh oops, that's not what I'm meant to do. Yeah, if we if we look at this sort of like here's a 10-year chart of Meta, um you can kind of see how crazy this growth rate is, which is like phenomenal relative to last year. So this is a $56 billion quarter. Uh last year was $42 billion. So you got to compare each one of these bars to four bars ago to four bars previous from it. Uh because every Q4, they have these sort of like uh uh exceptional bars because of holidays, right? So this is incredible growth on Meta's performance. Let's see if we did uh Google. What does that look like? Yeah, Google's growth is also pretty phenomenal. 109 uh point nine, almost 110 billion compared to 90 billion. Uh that is a growth of about just over 20%, maybe 22%. So Meta is still beating Google in terms of growth rate. I I stick with my uh I'll stick with my sort of uh meta is better than Google stands based on the growth rates alone.

SPEAKER_02 21:21

So yeah. Do you do you think if uh meta is still down six and a half percent by tomorrow, you end up buying more, or are you happy with the current position you have?

SPEAKER_01 21:32

I have a pretty substantial position in Meta. And like I think at this point, I the the position that I'm most uncomfortable with is my cash position. So I think I'm gonna try to resist the urge of buying more shares. As uh I I definitely didn't resist that urge when I bought uh more Robinhood at 91. Um, and then again more at 80 and and at 70. I warned you. You did, you did warn you. Read um, but uh, but I'm gonna resist the urge to buying more because the you know, in the short term, the market can be irrational for a long time, you know. Right, and I shouldn't even say short term, market can always be irrational for for quite some time. But um, but I'm comfortable with the amount of meta shares that I own and I've added to it in the 600s and 500s most recently. So feel pretty good.

SPEAKER_02 22:23

Do you want to go into any details for any of the other companies or do you want to move on to um the memory shortage?

SPEAKER_01 22:32

Oh, that that was an interesting article with the uh Apple um cost potentially going up. You want to talk about that for a bit?

SPEAKER_02 22:39

Yeah, I'll I'll break it down. So uh there was uh basically this analysis done from JP Morgan stating that they believe memory costs for the iPhone are going to quadruple by next year. Um currently memory costs uh account for roughly 10% of component costs. They are are expecting that to go up to 45% of component costs. That's a huge that's a substantial increase. Yeah, it's a it's a crazy amount. Um, right, for the if they're selling millions and millions of these devices, um it's a crazy amount of money. Um they part of their solution for this is a and this is all rumor, is adjusting how they launch the iPhone. So typically they'll launch the regular iPhone and the iPhone Pro every September. And they've done this for years due to the memory shortage to optimize their resources of memory and to maximize revenue. The rumor is they're actually going to release the pro version of the iPhone in September. But the regular uh, what are they up to? 18, 19? Yeah, the next one will be 18. Yeah. Yeah. So the regular iPhone 18 will actually not be announced until spring of 2027. Oh, wow. Yeah, uh deal with the these costs. Um again, that is just a rumor.

SPEAKER_01 24:11

Wow. That would be interesting. How would that impact them, do you think? Because there's people who are probably waiting for those upgrades to come out.

SPEAKER_02 24:20

I mean, they're hope I think they're hoping to push more people to buy the pro. Um, you know, because people don't want to wait to to get the the regular iPhone. And a lot of people buy the pro, at least in my circles, a lot of people buy the pro anyway. Right. Um and then one last piece to note is a Bank of America analyst believes that Apple actually won't increase the iPhones uh much or even at all from the memory increase. Uh, the idea being they want to gain even more market share, thinking that competitors that currently offer cheaper phones will have to increase their costs because they they don't have the flexibility that Apple does. Um again, this is that this is just speculation, but it's a very interesting article.

SPEAKER_01 25:07

Well, how would that uh impact margins? Okay, so if I recall correctly, uh Apple's margins or on iPhones are roughly 60%, 50% or 60%. I don't remember the exact numbers, but if the um memory is making up 10% of it and it's gonna go up to 40%, that's a uh that's a roughly 30% increase in in uh in costs. So if their costs go from 40% of an iPhone sale, if they increase by 40%, that would mean or 30%. That would that would mean that uh it it goes from being 40% of the cost of an iPhone to what like 52% roughly? Roughly, or 56%? So somewhere in the neighborhood, that's a pretty substantial increase um in in cost. So it would hit their margins pretty hard uh if that 4x increase in memory costs is accurate. I like I'm I suspect it's not though. I I suspect that Apple has been making deals, long-term deals for memory, considering they have been the number one customer of the memory providers, right? The the uh storage and memory providers like Mike on or whoever. So you wouldn't want to upset your number one customer, despite the fact that there are demands on uh on your product by uh the hyperscalers for AI use. You know, you want to make sure you keep your number one customer happy. So this might be more speculative as to what the increase in Apple's cost might be based on normal pricing as opposed to what Apple might be getting, which might be special, special pricing.

SPEAKER_02 26:53

Right. But even if it was going up by like 20%, it's still a significant increase.

SPEAKER_01 26:59

Yes, yeah, I I would agree. And and that would, you know, it would make sense what you're saying with them trying to sort of release the pros first so that hopefully more people would buy the pro as opposed to the previous uh or or the lower end model, uh, and that might offset some of the gains in pure dollar uh dollar terms.

SPEAKER_02 27:19

Do you think it makes sense for for Apple to keep the the iPhone cost the same and and you know eat the the margin loss? Or do you think they should increase the price?

SPEAKER_01 27:33

Yeah, that's a great question. I mean, I think that the price is already pretty high. The fact that they have such huge margins is kind of a luxury, luxury position to be in, that you could sort of like take that hit. That way you can sell just as many units. Um so I I think selling just as many units is probably more important than maintaining your profit level at the same amount because the market might be more forgiving on short-term profit hit, as opposed to, oh no, they're not selling as many iPhones anymore, iPhone is dead. Because this is how like the market sort of reacts to things, right? It's bipolar. It's like, oh, nobody's buying iPhones anymore because they don't need them. So if they increase the prices of iPhones, it would directly impact the number of units that they would sell. Uh, and the market might sort of all of a sudden write out, write off Apple saying that Apple is dead now because nobody's buying iPhones. Whereas if they sell just as many iPhones, they're just not making as much profit. The market might be like, well, it's because memory prices are super high and be more totally. So I could see that uh playing out more in their favor if they take the hit as opposed to trying to remain just as profitable. Yeah, that's fair.

SPEAKER_02 28:51

Well, how does this affect Micron as a like?

SPEAKER_01 28:57

All this is good for Micron. Yeah, all things happening in the market is good for Micron, no matter no matter what is happening. Uh because you you know the memory shortages is uh an AI boom just continues to need more and more memory. So yeah, it micron continues to be the the story of 2026 for me anyway. That uh this stock, I I do not understand why it's valued where it is, despite the fact that it's up, by the way, like 60% year today or whatever. But like it's still undervalued, heavily undervalued relative to its potential and its revenue growth and its profit growth. So um the stock is doing exceptionally well, just to sort of like uh you know put that caveat on it, but it still seems uh incredibly uh inexpensive relative to its revenue growth and um profit growth. So I like I like this for Micron. I mean, every every news seems to have been positive for Micron over the past year.

SPEAKER_02 30:02

Are they your largest position now? Did I see that?

SPEAKER_01 30:05

They go back and it goes back and forth between Micron and Rocket Lab. So it depends on whether or not Rocket Lab is down that day today or like up today or whatever, but it it's going back and forth. Like sometimes in the same day, it'll become my largest position and the day like second largest.

SPEAKER_02 30:21

Yeah, it seems like it's going to outpace Rocket Lab at some point. Oh, yeah. Yeah, I fully expect that. Yeah. Um, okay, I think we should get to our listener questions. Angel, what do you have for us?

SPEAKER_00 30:37

Hey guys.

SPEAKER_02 30:39

Hello.

SPEAKER_00 30:41

Hello, everybody. Um, well, should we do something new this time? We have um Dustin, you mentioned that we would ask a few questions from Hamid's savvy trader community. Um, so I have a couple that we'll do, and then we've got several listener questions. Does that sound good?

SPEAKER_02 30:59

Listener questions, yeah. Perfect. Okay.

SPEAKER_00 31:03

So let's go to how do you stay disciplined when stocks like AMD or INTC go parabolic while your current holdings might be moving slower?

SPEAKER_01 31:16

Or even going down in some cases. Um, yeah, so on any given uh day or at least week, you can probably find S stock that's going parabolic. I it it has it doesn't affect me. Um, I don't have this uh FOMO of missing out on something that other people are making money off of, uh, especially if uh if it's hype-based, I have zero FOMO on hype-based type of uh increases uh because they crash just as quickly. Um there's been several of those just in the past several weeks that that have happened. One one was like a shoe company that said they were Alberts, AI. Alberts, yeah. Thank you. Yeah. And it, you know, like uh the stock was up uh multiple hundred percent in a matter of a couple of days, and then it's down like 70, 80 percent since then. So it's hard to predict these things, and that is not investment, in my in my opinion. Uh, what is way more painful is missing something that's in my wheelhouse where I may have looked at and passed on, and then it sort of like starts to do well. Um, Intel, I've looked at quite a bit over the past uh few years, and um uh I've even been in it if we go back further than four or five years ago. Uh I did decide to stay out of it, and I don't have regrets. I've done just fine without it. But Intel's revenue and profit performance has not yet been there. Now the stock price has skyrocketed, granted. But to me, until the revenues and profits um are there, I haven't been wrong, right, in predicting that like their revenue and profits are not gonna grow very rapidly. Um, where I was wrong was NVIDIA, whereas like I didn't think that uh the AI um train was going to grow as quickly as it has from four years ago. I had looked at NVIDIA and thought it was overvalued the entire first couple of years, and now I think it's appropriately valued. So I feel like I missed the bulk of bulk of the rise, and therefore uh I'm much more excited about other things that are uh going to ride the AI train, such as Micron. Uh and if I missed out on Micron, I would be much more upset with myself as opposed to um uh missing out some random stocks that uh uh that are rising quickly. So that's that's the way I view it. I don't really have a significant FOMO on things that are not in my wheelhouse or that I've looked at and passed and they're they're rising, but not because of revenue and profit growth. Uh if they're rising because of hype uh or because of other reasons, then you know, from from my perspective, it's like a non-issue.

SPEAKER_02 34:01

Yeah. For me, um opportunity cost is a losing game. Like you could just never win. There's always going to be something better. Um especially when you're looking at it historically. Yes. Right. Yeah, hindsight's 2020. Um it now, if there was something that I was specifically looking at, um, like uh, I don't know, maybe maybe I was considering to buy Micron and I didn't, and it went up. And now I felt like, oh man, I should have done that. Like that's different than oh, there's this other stock going up that it was not on my radar, I wasn't even really thinking about. Like, and you can't constantly be chasing, or I don't want to constantly be chasing the next best thing I'm looking to invest in the long term. Just because something is up, you know, 60% this month doesn't mean it's gonna win out in the 10-year uh timeframe. So, you know, it it helps when uh I take a step back uh and look at the larger picture. In regards to Intel specifically, I don't know too much about their business, but it does give me pause when Apple moved off of Intel uh to Apple Silicon, and it was a major success uh in regards to improved performance for their uh machines. So I don't personally I don't love Intel um as a as a technology company right now. Um but again, I don't I don't know too much about Intel outside of that.

SPEAKER_01 35:38

Yeah. And after as significant rise as it has had, uh multi-hundred percent, if I'm not mistaken, uh in the past year, uh it might be hard to justify it. Like, is it going to have that kind of a rise going forward? Well, the revenues and profitability don't support it right now. So uh just things to keep in mind. Let's go on to the next one, Adrian.

SPEAKER_00 35:59

Okay. Going back to the Rocket Lab conversation, when a company like Rocket Lab becomes a massive chunk of the portfolio and hits a high PS of 76, why not rotate more rapidly into fairly valued plays like Micro?

SPEAKER_01 36:17

Yeah, that's a that's a great question. And I ask myself this question all the time as well, because uh once once something has gone up that fast and that you know to that level, uh, and um I no longer even view it as inexpensive. Like the the question is, why would I even hold any Rocket Lab at all? Um, well, the short answer is that the uh there's some like level of loyalty that you like maybe I built to a stock that has like done really well for me. Um so that's part of it. Uh I have already extracted more than four times what I have put into Rocket Lab. Uh, and it's still the largest investment in my portfolio, uh, largely because it has gone up 20 times from the early prices that I uh that I purchased it at. Um but uh so that that's part of it is that you build this loyalty. And another part uh is that um uh generally speaking, things, you know, and this is something that I've learned over the past 25, 30 years of uh investing, is that things get way overvalued and way undervalued based on the direction of momentum that a stock has, the price momentum that a stock has uh in both directions, both positively and negatively. Uh and as a result, you know, you know, if I'm buying something with a negative momentum, I tend to buy it slowly. Uh and if I'm selling something that has a positive momentum, I tend to sell it slowly. So I've I've learned this because you know, in the past I might be like, okay, stock is overvalued based on what I would think, and I would sell all of it. And then I would just watch it just go up another 40, 50%, sometimes 100% or more in the coming months. And, you know, I have learned to just do it more slowly. So that's the second part. Uh, and then lastly, the third part is that uh a great company such as Rocket Lab uh has an incredibly bright future that will justify easily its current valuation that is overvalued as long as you go forward long enough. And that forward long enough might now be five years for Rocket Lab. Uh, but I very strongly believe that if you go forward five years for Rocket Lab, it it will easily be worth significantly more than it is today. Uh so that's the other reason that I hold on to a significant portion of it. So um so hopefully that answers all of the different things with respect to Rocket Lab and why I still hold on to it. Let's go to the next one.

SPEAKER_00 38:55

Okay, let's do one last question from Hamid's community and then we'll dive into the chat. So this is when I want to hear you talk about. How do you look at the relationship between market cap, PE, PS, and revenue growth? Like when is a high PS actually acceptable?

SPEAKER_01 39:18

Yeah, so uh that's a that's a great question. Um you know, Rocket Lab is a perfect example, just going back to that, as uh one that has an extremely high uh price sales ratio. Uh you have to be growing very, very fast, like 50% plus growth rates in order to justify a Rocket Lab level of uh price sales ratio, which is currently at around 70s or so, if I'm not mistaken. Um is it 74? Okay. So um, yeah, it you know, just to put things in perspective, 74 means it would take 74 years of this much revenue just to just just to get the um current market cap if the company didn't grow. Now, if it's growing at 50% year over year or faster potentially, uh that uh that growth rate being so high and exponential means like in two years it'll have 2.25 times current year's revenues. In three years, it'll have uh you know three point uh you know, three times like the math is harder. But you know, you go out four years, five years, now all of a sudden each year it's growing at a much, much uh its revenue is much, much greater. Um and uh and and that's what sort of like helps justify it is that you're you're sort of like looking down the road. And the other question you have to ask is does it have that much room to grow in the market for it to just justify uh like you know, if we expect Rocket Lab revenues to be 10 times greater than they are today in five years, uh is that even a possibility? Well, the answer is that yeah, absolutely it's a possibility because the space market is so massive and big, and Starlink has now shown that you could also make uh huge amounts of money from uh space-based communication. So the combination of launch and satellites and space-based communication, uh, and now potentially data centers in space makes the space sort of uh uh segment enormous, and Rocket Lab is a major player. So uh the relationship between growth and you know, opportunity size, uh profitability, all of these things you have to sort of like mesh together. And every now and then you find a company that is you know in the perfect segment, growing rapidly, executing brilliantly, but is only valued uh a tiny fraction. And this is you know what happened with Rocket Lab when I first it first came on my radar, uh, is that it was a uh two and a half or three billion dollar company playing in this enormous space. It wasn't a $40 billion company as it is now. Uh and at a two and a half, three billion dollar uh company, the the uh opportunity seemed amazing. And I started to buy it slowly. And the funny thing is that when I started buying it, the stock price actually went down 40% before it started to turn around and back up. And I just kept buying more and more of it as it was going down. Um, so it yeah, it's it's it's tough. There aren't like absolute formulas, but valuation definitely matters. I think uh that that's something that people forget. Uh buying Rocket Lab today is not going to have the same results as buying Rocket Lab two years ago or three years ago.

SPEAKER_02 42:40

Yeah, one other piece to note is the all these numbers can be a bit misleading when revenue um is small, right? Like it's very easy to grow revenue by a significant amount, or it's very easy for a stock to get um ahead of it of its revenue if the revenue is tiny. So like it's not the end all be all, and you need to take the the the size uh of the company into account.

SPEAKER_01 43:10

Yeah, and and the valuation. Yeah, you're absolutely right. Because you know, and you know, people um constantly think uh that uh I have something against Elon or Tesla or SpaceX or whatever when when I speak uh negatively on um on you know why I wouldn't purchase these uh like Tesla or SpaceX at the at the current valuations. And that's because, in my view, the valuation matters and the potential growth for a company that's already one and a half trillion dollars is is uh very tough for it to grow as fast as it has historically, because uh the revenue numbers just simply don't support it, right? And uh all of that has to be in place in order for there to be a great opportunity. Or you know, a great way to look at an uh opportunity is to say intend. Years, if it could grow this much, first of all, is it possible to grow at the same rate for 10 years? Uh because the the uh numbers start to get really big. So if you were growing at 10 at 50% year over year for 10 years in a row, you would be 57 times larger. So if you had a million dollars in revenue, you'd have a 57 million dollars in revenue after 10 years. If you had a billion dollars in revenue, you'd have 57 billion dollars in revenue. But if you have $100 billion in revenue, in order to be 57 times larger, you have to have $5.7 trillion of revenue, right? So uh, you know, Tesla is a perfect example. In order for it to uh grow 50% annually for the next 10 years, it would it would need you know uh $5.7 trillion of revenue. And that the market simply just does not support it. That's not a possibility anymore uh for that kind of growth rate. Um whereas that is a possibility for smaller companies. So just additional points to keep in mind.

SPEAKER_00 45:08

Should we move on to listener questions?

SPEAKER_01 45:10

Let's do it. Okay.

SPEAKER_00 45:14

All right. This listener wants to know do you have any recommendations on other ways to get similar insights from experienced investors or traders when they make a move like that? I think he's referring to your move to buy uh sell Robinhood.

SPEAKER_01 45:31

Or or buy any given stock. Dustin, do you want to answer this question? I think we've been working on this for the past few years.

SPEAKER_02 45:37

Yeah, we made we made a little uh product called Savvy Trader. Uh it's and it is a great way to find fellow uh investors and traders and get new ideas. That's the whole reason why we built it. Um, because not only are you seeing what they're doing and being notified of uh their investments, but they'll write on the trade exactly their thought process. Um, and you can our portfolios are in the the description uh below, totally free so you can see how it works. Um but it really is a a great product, and I know I'm biased because I built the thing, but uh personally I've I've learned a lot just watching, you know, how other people think about the market um and different stocks and how they go about it. So yeah.

SPEAKER_01 46:27

Let's do another one, Adrian.

SPEAKER_00 46:30

Okay, we've talked about this one again, but I let's answer it again. Bloom energy has been on a tear in the past six months. Are you looking at this stock or any other energy place to meet the growing energy demands from data centered build-out?

SPEAKER_01 46:46

So energy is not in my wheelhouse, but um just like looking at Bloom Energy in particular, I'm pulling it up on my uh screen right now. Uh it's an $80 billion market cap company with $2.4 billion revenue run rate, um which is growing pretty rapidly, 57%. That's really good growth rate. The question is, how long is that growth rate sustainable for? Um not very profitable. Uh the price earnings ratio uh is currently 252, although that seems uh quite high. Uh for a oh no, that that's about right. Sorry about that. Um, yeah, so uh it does look like the revenue has been growing rapidly most recently, probably due to the AI demands, AI data center demands. And you know, I'm not I'm not an expert on energy, and I haven't been following energy closely enough to be able to determine whether or not this is still a good uh good price, what the margins are on uh on a product like Bloom Energy. Uh, this might actually be more in your wheelhouse, Dustin. Do you have comments on it?

SPEAKER_02 47:59

Because I know you've been I I used to own Bloom way before the run-up, so I totally uh sold out uh like a year or two before um I should have, but um I'm not I don't feel like I and this kind of goes back to opportunity cost, right? Like is there opportunity in energy stocks? Absolutely. That doesn't necessarily mean I'm going to uh invest there um because I I'm bullish on like my current portfolio. With that said, I do own EOS, which is different than Bloom, because Bloom, they're generating the energy on site where EOS is an energy storage company. So they could sell it to anyone. Right. I'm sure there's some correlation there of how the stocks may move, but one's energy generation, one's energy uh storage. And then I also own Iron, which I wouldn't necessarily consider them an energy generation company, but they are building out data centers and they are generating their own energy through um like solar panels and wind. So I do have some exposure to energy, but I'm not uh particularly like too interested in like doing it, having a specific energy play.

SPEAKER_00 49:20

All right, you ready?

SPEAKER_01 49:22

Let's do it.

SPEAKER_00 49:25

What is your take on royalty companies for specific commodities like NRP for coal, Vietnam for oil, etc.? Do you venture into the under into under-the-radar stocks or only look at growth accounts?

SPEAKER_01 49:38

I actually don't know what that is, uh, any of those. So do you do Dustin? Do you have any?

SPEAKER_02 49:45

I I don't know much about this, but I will I could talk more about the second question. Do you venture into under-the-radar stocks or only look at growth accounts? And I think what we both like, Ameat and I, is companies that people think are dead and aren't, right? So uh and sometimes the um it well continue with uh it's not it's not it's not what we only invest in. Uh but I there a lot of our the similar stocks we own, I think we bought for the same reason. So like uh Robin Hood is an example where like they got massively hit after um the game stopped debacle, and you know that that there was a lot of negativity around that brand. Same thing with Meta. Uh there was a lot of negativity after the 2016 election and several years uh later. Um I arguably that's a reason why, or that's a big reason why I'm invested in Bumble right now is I think a lot of people are writing off the dating app space in general when clearly dating's not going away anytime soon. Uh, but we're we're on the the the early end of this story. It hasn't uh the stock price hasn't shot up like the others, and it doesn't mean that it will, but um, those are the types of stocks that I like to look for, not necessarily under the radar and not necessarily growth. It's stocks that are misunderstood.

SPEAKER_01 51:16

I agree. I think stocks that are misunderstood, especially in in the short term, are uh where the biggest opportunities lie. But but even buying companies that um whose products you use that you absolutely love and continue to love just turns out to be a great strategy of investing in general. Um but yeah, no, I and I don't know what the royalty companies are uh or which ones uh those ones referred to here are. So let's go on to the next question, if we have another one.

SPEAKER_00 51:50

This person, I'm returning to the market and I want to start buying again. I don't know what time is the best time to re-enter the market for Micron.

SPEAKER_01 52:01

Um Yeah, so so this is uh this is a recurring question that comes up is like, is it still time to buy? Or you know, um, is it is is it gonna go down lower? And these are the types of questions that no one should be answering um because no one knows the answer to them. Uh and if they do, you should be very skeptical of them. Uh is a different type of question that uh I'm more comfortable answering uh is do I think that Micron is currently undervalued? The answer to that is much easier because you know uh something that is undervalued can still go down significantly. Um and that's how I would answer it is that uh uh in my view, Micron is very much undervalued and should be an $800 or $900 stock already. Um I don't know why it's not. And uh the market has decided that memory is cyclical and therefore it's not gonna pay attention to what Micron's numbers are producing quarter after quarter. Um but uh and can it go down further? Uh can Micron go down further? Absolutely. And can it also miss its uh uh expectations that go down for good reasons? Yes, absolutely. Uh so all of those things are possibilities. Uh, but uh, but you know, if it continues to go on track as uh the micron management team expects, I would be shocked if this uh stock doesn't perform really well, even from its current price point. So um that's my view on it. It's it's not like my investment advice that just because you know that's not something that uh uh anybody can determine definitively tell you whether or not a stock is gonna go up or down.

SPEAKER_02 53:43

But yeah. So I'm here to say it's definitely gonna go up. Okay, let's move on.

SPEAKER_00 53:52

All right, should we move on?

SPEAKER_02 53:53

Yeah, before I get in trouble.

SPEAKER_00 53:55

Don't yeah, don't get us in trouble. Um, do you do much trading in your Roth?

SPEAKER_01 54:02

Um so I did not understand the difference between Roth and traditional IRA when I was contributing to my IRA heavily uh you know 20 years ago. And and unfortunately, um I grew my um IRA as uh as a traditional IRA account, which which has the uh tax benefit of being able to sort of write off what you put into it. But as it grows, you you know, like that money is still going to be taxed when it's withdrawn at retirement age. Um and it's gonna be taxed at normal um uh income levels and not based on capital gains. So uh, you know, fortunately for me, the IRA has grown pretty substantially over the past, you know, 20 years uh because I've done well with my individual stock picks in that in that account. But unfortunately, I don't have it in a Roth. And if it was in a Roth, it would have this huge tax benefit because I'm in this like 40% tax bracket where uh if it was Roth, it would be zero on extraction versus traditional, where it's gonna be 40% or more on extraction uh when I start to draw from it. Um but I do do the same trades. And in fact, a lot of uh the trades that I do are in my IRA account, and uh that is already included in my portfolio on Savvy Trader. So um my Savvy Trader portfolio represents multiple accounts. My um I it's it includes my IRA, but it also includes um some trust accounts that I have that are sort of like for my benefit and um uh and personal accounts as well. So it's a combination of things.

SPEAKER_02 55:48

Yeah, I um typically have done a split, a 50-50 split of putting money into a traditional uh uh IRA versus Roth versus Roth or 401k. Um and I don't I'm not too active in either of them. In my Roth, it's mostly um a 2060 index, but there is part of it that I do uh individual stock investing, and there is part of it that is, of course, dedicated to uh Bitcoin ETFs.

SPEAKER_01 56:24

Okay. So Dustin, this is this is not investment advice for the general public, but I'm gonna I'm gonna tell you what I a huge mistake I made is thinking that uh it's not a big deal to go uh traditional versus Roth. Definitely I should have done Roth. Like it it would have made a massive difference from a tax consequence standpoint, a massive, especially if you're doing individual highly concentrated um investing in your Roth account uh or in your IRA account, which is what I did um in either traditional or Roth, it'll have a much bigger impact because if you're having really high growth rates over time, the the growth is going to be worth substantially more than the tax savings up front. So the tax savings later will be significantly greater in in a ROI. So I would 100% of what I could in a Roth as opposed to traditional.

SPEAKER_02 57:23

So just Yeah, I I've learned I've learned the benefits kind of like you over time. Um more recently, I'm not gonna get into the details. I actually and we'll maybe we'll talk offline about this, but I only contribute to a Roth IRA because that's the only thing I can contribute to. Um but it's a weird tax loophole. Um but yeah, and the other benefit of a Roth, by the way, like really planning ahead, is there's if you if you pass and you and you're um giving that account to your kids, there's no, I believe there's no tax, or there's little produced tax, um going from a Roth versus going from a traditional where it's fully taxed.

SPEAKER_01 58:15

Which makes sense because traditional the the way uh the IRS views it is that the traditional uh benefits from uh pre-tax money being put in, so you don't pay any taxes on that income right now. But as it grows, when it when you're extracting it, when you're taking money out, you have to pay taxes on that as if that whole thing was your income, whatever you're you're pulling out. Uh in the Roth, uh, you're first paying taxes on the income you're having, you're putting it into a Roth IRA, but then whatever it grows to, it says, Oh, you already paid taxes on all of that. So you're good. You don't have to pay any taxes on. So it it is that distinction doesn't seem like a big distinction up front when you're putting money in. And because when you're putting money in, you want the savings right away, because you're thinking of it as uh, you know, this $10,000 being put into my IRA is only gonna cost me um $7,000 of post-tax money, right? Whereas in the IRA, the $10,000 of that you're putting in will actually cost you um, you know, $13,000 or $14,000 or uh of money because you don't get to write that off. So um so so there's a huge hit up front, but as the money grows, if you're getting pretty substantial returns, as has been the case for my account, you know, by retirement, it makes a huge difference. So um I did not fully grasp the magnitude of the difference at the at the time I was making the contribution. So um, and and then you know, when you talk to investment advisors, they also don't really emphasize the appropriate uh sort of set of parameters correctly. Not sure if they get it themselves, but uh but also um you know, you know, these are all things that you learn over time, and you're you're you know, you're like, uh but also you know, just to sort of uh caveat that, not that it like actually matters, because you know, I've been fortunate enough where it sort of doesn't matter, right? Like the taxes are the taxes, it's not a big deal. I'm not complaining about having to pay a lot of taxes. I'm just saying that there is a significant consequence to it.

SPEAKER_02 1:00:34

But and just to be clear, in both accounts, there are no capital gains taxes, like you could uh buy into transactions on transactions. It's just for uh traditional IRA, when you take the money out, that is when you're hit with income tax. Yeah.

SPEAKER_00 1:00:53

All right, you ready? I'm gonna propose that we go a little bit over. We've got a couple more questions that I want to give.

SPEAKER_01 1:01:01

Let's do it. Let's do it. I thought we were gonna wrap up, but no, let's do it. If we have a couple more, let's get a couple more answered.

SPEAKER_00 1:01:09

Yeah. Give the people what they want, Humid. Okay, this person wants to is asking, why would you want to have any cash position cash position as inflation guarantees your cash will be devalued? And then they add at the end, if your portfolio grows at 15% and then it and inflation is at 7%, why keep cash? It would seem like you guarantee that you miss out on a 22% gain.

SPEAKER_01 1:01:40

Well, uh, a couple of things there. That the the math is wrong because inflation is not 7%. It's closer to um under 3 uh percent. And currently you get just over 3% in interest rate on cash. So uh you can consider that a wash. Um, so keeping cash doesn't actually at current interest rates doesn't actually devalue the the money. It just sort of like keeps up with inflation.

SPEAKER_02 1:02:07

And to be clear, most brokerages, the cash that you keep in a brokerage, they're giving you a dividend that offsets that inflation because that's that's where you're getting the the interest from. You don't have to have a separate high yield savings account that you're moving the cash into. It's built into the brokerage.

SPEAKER_01 1:02:23

Uh just I think some brokerages you might have to, just uh just to be clear, but uh you might have to buy like market fund uh with with the cash.

SPEAKER_02 1:02:33

But a lot a lot default to a safe money market fund is where the cash is parked. It's a it's a setting that you could also adjust.

SPEAKER_01 1:02:40

So something to look into. Yeah, for sure. So if you're not getting like roughly three and a half percent for your cash, you should be, and uh, and definitely make that change.

SPEAKER_02 1:02:49

But um I definitely make that change. It's not investment advice. It's we would definitely make that change if we were doing it, but we are not advising you to do that. Okay, sorry, keep going.

SPEAKER_01 1:03:00

Yeah, yeah, I gotta, I gotta like uh make sure I choose my words correctly. Um but um but moving off the like why have cash if the cash is gonna be break-even when when the overall portfolio might have averaged 20 or 30 or 40 percent uh per year. Um and and part of the reason is because uh A, it's not guaranteed that the portfolio is gonna go up in any given year. Uh, and because market fluctuate fluctuates quite a bit, uh, when uh when it goes down, having cash gives you the optionality of deploying cash when the market is at its um most attractive uh prices, right? So um having cash, for example, in December when I when Micron came on my radar is why I was able to take advantage of that micron opportunity in December uh and and buy heavily into the stock when I thought it was uh undervalued without having to be forced to sell something in order to buy it. So that's part of the reason that um I like to have a substantial cash uh amount. And then uh the other part is that um uh as you sell things with gains, you do have to pay taxes on them. So uh my tax bill sort of accumulates uh like last year was accumulating over the course of the year. Uh and I knew I I would have a substantial tax bill that I'd have to pay in April of this year. So that was part of the other reason that I needed more cash uh in general. But but yeah, cash gives you optionality in in lots of different ways. Yeah.

SPEAKER_00 1:04:42

I jumped the gun. Um me, and I would say Dustin, anything about service now.

SPEAKER_01 1:04:50

Um I don't have strong opinions on this company. Do you do you? Uh no. No. Especially that the question was not directed towards me.

SPEAKER_02 1:04:58

I have no opinion on this company. I'm not better.

SPEAKER_01 1:05:03

Oh, wait. It sounds like you do have some history with this stock, huh? No, no, no, I don't.

SPEAKER_02 1:05:09

I'm I just making a joke. Okay. And I know nothing about this stock.

SPEAKER_00 1:05:16

Okay, should we move on?

SPEAKER_02 1:05:17

I don't either.

SPEAKER_01 1:05:18

Yeah, let's do it.

SPEAKER_00 1:05:19

Okay. Um, all righty. Let's this is let's do this as the last one.

unknown 1:05:26

Okay.

SPEAKER_00 1:05:26

What are your thoughts on Rivian's earnings tomorrow? And have you looked into SoFi technology?

SPEAKER_01 1:05:33

So I'm not expecting any miracles from Rivian's uh earnings tomorrow. Uh they have already reported their uh delivery numbers, which uh happened on the second of the month in in April for the previous quarter. So there's not going to be much surprises. Uh two um the R R2 deliveries have like are just now rolling off and getting started, so there's not Going to be any R2 deliveries in Q1. I don't expect any surprises that would have a significant upside potential. The uh how the management team talks about uh the future, uh, and if they surprise us on spending, and if, like, for example, their expenses are lower than expected, or adjust what they expect um uh you know, their margins to be, those types of things might be an upside surprise, uh, but not on the core of revenues or deliveries um or you know, you know, the uh ramp up of R2. We're not gonna get much information about that. That would be uh a major surprise. So uh I'm not expecting a lot from Rivian's earnings tomorrow. Rivian for me is like a bet that I'm expecting will pay off long term. Uh and uh in any given quarter, I I don't know if it if the numbers are going to be super exciting. Like certainly not Q1, but maybe Q3 or Q4 this year could be more exciting. Um and then SoFi, I had looked into this company several years ago uh and uh and decided to pass on them in favor of Robinhood. And I still, every time I've looked into them, I prefer Robin Hood over SoFi. Uh Robinhood has less debt and um less exposure to consumer debt uh and growing faster, low lower PE, that sort of thing. That's the reason I had picked Robinhood as opposed to SoFi.

SPEAKER_02 1:07:34

Okay, let's deep up there. Um just because we're going over. And I might, you know, I don't have too many additional thoughts. Um, I do think in regards to Rivian, and I agree it's uh obviously a long-term investment, but once our twos start deliver delivering, I'm very curious to see um their earnings numbers, and I do think that that will have a big impact, positive or negative, um on the company. Hopefully, hopefully positive. Hopefully positive. That's really um that's definitely a big part of the thesis. Um, but yeah, so thank you all for listening and for ranting with us, and we will see you all next week. Appreciate it. Bye, everyone.