Walker retweeted
Few thoughts on retail investing since it’s popping up again on FinTwit:
- As I’ve said before, I think it’s probably the lowest ROI activity you can do if you’re trying to get rich. Focus on your career
- You should index 90% of your money
- You have zero edge day to day. Your advantages are that you have duration, no mandate, and nobody forcing you to sell
- It follows that the fewer trades you do, the better. The more trades you do, the worse you will do
- Process is the only thing that matters. How rigorous is your process? How do you reflect on what worked and what didn’t? Do you even know why it worked? Otherwise it’s just luck. For most people is still probably just luck.
- Your biggest enemy is yourself. You have no institutional guardrails to stop you from doing stupid things
- If you are thinking of it YTD you have already lost. That’s not your game, and is a recipe for failure. Trying to beat the market every single year will cause you to overtrade, where you have a structural and insurmountable disadvantage
- It’s OK to just do it for the love of the game. Because it’s the greatest game on earth!
Walker retweeted
The Non-Bubble that disappointed both Bulls and Bears -- how Sam's Splurge changed everything
The worst kept secret among Tech market participants — just something AI bulls don’t admit out loud: they want a price-action bubble every bit as much as the bears do.
Both want to see that steep, “blow-off” ascent that characterizes parabolic tops. Why? The AI bulls are all fully loaded for a vertical melt-up and AI bears want the aftermath so they can yell “I told you so.”
It’s obvious to AI bulls (us included) that we’re not in an AI bubble. The non-argument is simple: valuations are reasonable (NVDA near 20x), the equity risk premium is almost 300bps above where it troughed in the tech bubble, operating margins are rich, and we’re still very early in the demand/build out of the AI supercycle.
But bulls will typically follow this argument up by saying “‘it’s more like ‘97/’98.”
Implicit in that statement is that they’re hoping the inevitable outcome is a ‘97-’99 style ramp, with all hoping it would occur as soon as possible. Why? The simplest answer is usually the right one: everyone likes bigger bonuses as soon as possible.
Stated succinctly: the “AI bubble” ascent was the paradigm that both bulls and bears were operating under for most of this year, or longer.
Bad news for the AI bulls and bears: the past few weeks has brought an end to that paradigm and led us to an unexpected turning point in the dynamics of the AI trade/narrative. On the 3 year anniversary of ChatGPT’s release, no less.
And we have Sam’s $1.4T 30GW splurge to thank for it.
Sam’s Splurge (we’ll call it “SS”) opened up AI “pandora’s box,” shifting the AI narrative in unexpected ways.
First, the overarching discussion has shifted to a greater focus on OAI’s ability to monetize and what that means across the Tech ecosystem, from ad platforms to software/services companies to GPUs to infra hosting like ORCL. Despite the behemoth it already is, the market began to appreciate it was taking implicit bets on what is still a 3 year old start up industry/company.
Second, SS and connected deals brought more focus to the interconnectedness of the whole ecosystem, OAI’s outsized role in it, circular financing, and “too big too fail” discussions.
The interconnectedness of the AI ecosystem📷
Third, SS and his “Give us a few months and it’ll all make sense … We are not as crazy as it seems. There is a plan.” opened up discussions about government’s role in AI. While government intervention would help accelerate the AI buildout, it also opened a doorway of investor doubt. Reader CIO At CG expressed these opposite outcomes well in TMTB Chat:
“It’s bullish if/when it happens. But until it happens it creates doubt if it is gravy (more upside) or if it’s needed to execute the 1trn+ commitments. Any doubts on ability to execute the 1.4trn is just bearish sentiment vis-à-vis today. So Friar opened a door that was closed. And by opening it, it opened both the left and right side of the distribution. It also makes people realize that they are too big to fail: if they fail to execute they will bring the entire ecosystem multiple down. And hard.”
Fourth, the sheer scale of the SS $1.4T plan, which is nearly the size of the whole private credit market, nudged both public and private lenders to reprice AI-linked risk, most notably seen in the rise of Oracle and Coreweaves’ CDS spreads. At the same time, off-balance-sheet structures—e.g., Meta’s $27B Hyperion SPV with Blue Owl— didn’t help by concentrating risk with private creditors and muddying system-wide leverage mapping.
The ironic thing is, if SS would have been half the size, things would have continued to grind along, investors would have enjoyed the ‘27 and ‘28 visibility, maybe even building the energy for a large vertical ascent in price action. Instead, it had the opposite effect: pouring too much gasoline on the fire and drowning out the energy for a big move up.
Fifth — by locking in commitments eight years out, SS dragged the long-horizon AI debate into the present. Over the last few weeks I’ve heard an increasing amount of bulls give voice to risks they’ve been able to normally wave away over the first 3 years of the AI trade, in an unusual sign of humility. Some of the key existential questions that now feel more present in the discussion:
How does the grid support the post-’28/’29 buildouts and what about water, land use, and local pushback? We’ve already heard of local governments slowing DC buildouts, and this week the WSJ wrote how Bernie and others are dialing up scrutiny of Data CentersIf inference moves to phones/PCs/cars, how does that rebalance hyperscaler capex, useful life assumptions, and who captures value? What’s the risk of stranded assets if models plateau or workloads shift to cheaper/edge solutions?The AI catch-22 no bulls want to talk about: If enterprise agents and automation work as advertised, what’s the path for unemployment and wages? If white-collar unemployment rises, what happens to ad spend and consumer wallets — remembering that GOOGLE and META are cyclically exposed ad businesses at their core? How does the seep into their top line and capex trajectory? If AI models don’t deliver, do we get a capex hangover and productivity disappointment?All of this sits against a U.S. backdrop that’s still skeptical of AI — worried about job loss and asking for a slower, safer rollout — which can swing sentiment and policy quickly. Will the current administration still be as supportive of the AI rollout if sentiment and unemployment shift in a more negative direction?
These are issues that will be a lot more prominent in the next 3 years of the AI trade than they were in the first 3 years of the AI trade.
This all began to seep into the price action of AI stocks several weeks ago: ORCL giving back all of its “monster RPO” move and more, very speculative sectors like Nuclear/Quantum rolling over, and the AI ecosystem progressively rallying less and less on each Open AI deal that was announced.
It all culminated in the last two weeks. We can give thanks to some hawkish fed speak and Sam’s now infamous BG2 pod appearance for providing the spark needed to ignite the fire spreading. In a period of time where nothing has changed fundamentally in respects to the AI trade, the market began more heavily digesting the overarching effect of SS: more unknowns and more uncertainty in the minds of investors. After all, the market isn’t just a mechanism for discounting fundamentals and perceived risk, but also the current emotional state of participants. With belief shifting from inevitable euphoria (read: vertical ascent price action) to verification, SS has had the opposite effect of what Altman likely intended: more multiple compression and less belief in out year estimates.
With greater uncertainty, it’s no wonder certain pockets of the market have underperformed: names with perceived questionable business models / debt issues (ORCL, CRWV, NBIS, Miners, etc.), names with perceived AI top of funnel / structural issues (DUOL, MNDY), names with rising opex as the market is less confident in how long heightened spend will be here to stay (META).
It’s also no surprise that as the market digests these new developments, the profitability factor has outperformed while names with good narratives and fast growth but little in the way of valuation support have underperformed: NET, PLTR, SHOP, TSLA, U. This is also why memory has been so strong: EPS revisions are currently happening —> there’s nothing uncertain about opening up your favorite DRAM/NAND spot price checker, seeing how much DRAM/NAND has risen overnight, and plugging it into your model. These names are arguably more attractive in the current environment than they were before.
The market is currently doing what it always does after a narrative/paradigm shock: digest, recalibrate, reassign risk premia. NVDA EPS and Gemini 3 are the next events on the docket to absorb. We’re running low gross while we let the market do its thing, letting the overarching narrative/price action stabilize and become clearer.
@dylan522p at Semianalysis joked this week that time is now divided in BC (Before ChatGPT) and AD (After Da Launch of ChatGPT). We think the AI trade will eventually be divided between BSS (Before Sam’s Splurge) and ASS (After Sam’s Splurge). BSS and ASS.
Wait - that doesn’t have a nice a ring to it, so let’s say it differently. We think the straight-line giddy phase of the AI trade will give way to something healthier: a phase where fundamentals and idiosyncrasies matter even more. Tech will always be a narrative and boom and bust heavy investing sector (that’s part of the fun), but in a landscape where sentiment is more balanced, stock-picking will become more relevant. That’s a good thing.
SS popped the non-bubble. But the AI trade isn’t broken: it’s simply entering a more mature, scrutinized phase.
Walker retweeted
Homebuilder Comp Sheet
$DHI $LEN $NVR $PHM $TOL $TMHC $MTH $KBH $TPH $MHO $GRBK $CCS $DFH $LGIH $SDHC $HOV $BZH $LSEA
Unpopular Opinion - Trump will be Bad for the Current Housing Rally
1) Supply side pressures: The current supply of cheap foreign labor for builder subcontractors is reduced, while imported housing components of all sorts (lighting, cabinets, fixtures, appliances, furniture) receive new tariffs. The cost of building a home will go higher.
2) Demand side pressures: The US has added as many as 25M people via immigration over the last few years while only building 1-1.5M new housing units annually. This has had a meaningful impact on housing price appreciation. Dropping 25M to a level much closer to zero under the next administration will reduce demand for housing.
3) Interest rate pressures: As DJT has said, “The dollar will be the strongest ever!” Well that’s tough to do while also pushing rates lower. Aside from that, our friend Bill Dudley has repeatedly emphasized that the Fed will be less accommodating under Trump.
Combine all of this and explain why all home builders should be sitting at ATH prices. What’s the best explanation? Yes, they are currently almost the entirety of housing supply right now as existing home sales sit below Covid lows, and are enjoying a massive tailwind as a result. But the equation likely changes dramatically with a Trump victory.
Walker retweeted
Below is the one pager I would give my junior analysts back in the day (pod model)
xitter.cf/S_curvecap/status/1957…
PMs/Sr Analysts (if you've managed analysts) -- what are some best practices/info you give analysts you hire on Day 1 to give them the best chance for success?
Can be anything. Research process outline? Model template? Mgmt mtg prep? What else?
Looking for thoughtful replies -- trying to put some things together. Thx.
Walker retweeted
If anyone is writing wedding thank yous or any other type of thank yous, no advice will ever beat Lemony Snicket's:
Walker retweeted
“What I have learned is this strange law of inverse prioritization. … The most important thing in our lives at any given time is the least likely thing to get done, which is really strange.”
— Greg McKeown
Walker retweeted
HOW TO BECOME A SERVICEABLE FUNDAMENTAL INVESTOR
This is the time of year I tend to get a lot of questions from students interested in investing. I thought I’d put a tweet together regarding the steps I tell them to take and resources I recommend they should go through.
Walker retweeted
Just like the #1 rule in music is to practice practice practice, the #1 rule in investing is to read read read.
Here are a bunch of smart accounts / fund letters we follow, mostly to see how others are approaching the same problems we encounter 👇
Fairlight Alpha Fund @Fairlight_Cap
Deep Sail Capital @DeepSailCapital
LRT Capital Management @tomicki
Saga Partners @SagaPartners
SVN Capital Fund @SvnCapital
Rowan Street Capital @RowanStreetCap
Oakmark Select Fund @HarrisOakmark
Laughing Water Capital @LaughingH20Cap
1 Main Capital @1MainCapital
Patient Capital Management @PatientCM
Polen Capital - Global Growth @PolenCapital
Headwaters Capital @Headwaters_Cap
McIntyre Partnerships @Mc_Partnerships
Buckley Capital @buckleycapital
Sohra Peak Capital Partners @JonCukierwar
Alger Spectra Fund @AlgerInvest
SRK Capital @CaptnKirk13
RV Capital RiverPark Large Growth @mitchrubin
Bison Interests @BisonInterests
Praetorian Capital @hkuppy
Symmetry Invest @Symmetry_Invest
RF Capital Management Voss Capital @CapitalVoss
Bonsai Partners @Anrosenblum
Emeth Value Capital Asia Frontier Capital @AsiaFrontierCap
Long Cast Advisers @longcastadviser
Artisan Focus Fund $ARTTX
Southpoint Qualified Fund
Greenlight Capital @davidein
Greenhaven Road Capital @GreenhavenRoad
Qualivian Investment Partners @qualivian
Alphyn Capital Management @SamerHakoura
Kernow Asset Management (kernowam .com)
East72 Holdings @East72Holdings
Roubaix Capital (roubaixcapital .com)
ClearBridge Investments @Clear_Bridge
Black Bear Value Partners (blackbearfund .com)
Akre Focus Fund (akrefund. com)
Ace River Capital @AceRiverCapital
Distillate Capital @DistillateCap
Miller Value Partners @MillerValue
Wedgewood Partners (wedgewoodpartners .com)
Boyar Value Group @BoyarValue
Pernas Research @pernasresearch
Leaven Partners @leavenpartners
Upslope Capital Management @UpslopeCapital
Spear Advisors @SpearAdvisors
Third Point Partners @DanielSLoeb1
FMI (fmimgt .com) Fairlight Alpha Fund @Fairlight_Cap
Stanphyl Capital Management @StanphylCap
Oaktree Capital @HowardMarksBook
Stewart Asset Management (stewartassetmgmt .com)
Vulcan Value Partners (vulcanvaluepartners .com)
Tidefall Capital Management @TidefallCapital
Weitz Investments @WeitzInvest
Starvine Capital @StarvineCapital
Aristotle Funds (aristotlefundsimst .com)
Broyhill Asset Management @ChrisPavese
Maran Capital Management @Dan_Roller
Warden Capital @HawkinsEntrekin
Sequoia Fund (sequoiafund .com)
Bonhoeffer Fund @Bonhoeffer_KDS
Walker retweeted
“Inaction breeds doubt and fear. Action breeds confidence and courage. If you want to conquer the negative elements in your life, don’t sit at home and think about it. Go out and get busy!” — Dale Carnegie
Walker retweeted
Joel Greenblatt once asked a class of 9th graders to write down how many jellybeans they thought were in a jar.
He then let them guess again but instead of writing their answer down, they would answer out loud.
The results tell you a lot about the stock market.
Walker retweeted
Here are a few of the highlights from the question: "What are a few things you wish you had known when you started out [investing]?"
Thanks to everyone who contributed! 🙏
Walker retweeted
"Go for a walk. Reconsider what you're doing. If it's not fun, you're unlikely to be great at it anyway."
@naval































