Daily notes (part I)
- 09/17/2025 – Tilson’s view on market A market melt up is more likely than a market meltdown; A ‘Buffett devotee’ made a big bet on crypto; I’m climbing the Grand Teton for KIPP NYC charter schools later this week | Stansberry Research
Take a look at the chart below from the WSJ. It shows what happened to the tech-heavy Nasdaq Composite Index amid the Internet bubble:
Of course, the big question is where we are today compared with back then…
Is today similar to the beginning of 1999?
Or is it more than a year later – after the Nasdaq skyrocketed nearly 90% in 1999 and continued rising until its peak on March 10, 2000? (From which it then crashed by nearly 80% over the next two and a half years.)
I would argue that we’re closer to the former. As I’ve said many times in my daily e-mails this year, I don’t think we’re in overall bubble territory.
Yes, stocks are richly valued. And yes, there are pockets of foolishness and speculation.
In conclusion, I haven’t been – and am still not – predicting a wild market melt up. However, I think it’s more likely than a market meltdown.
So, if you own good stocks and/or index funds, my advice is the same as it has been the rest of this year…
Sit tight, stay the course, and keep expectations modest (I would guess the S&P 500 compounds at 4% to 5% over the next five years). However, hope to be surprised to the upside!
When old-school Graham/Buffett/Charlie Munger investors like Casey throw in the towel and start speculating in high-flying Internet stocks (1999) or cryptocurrencies (today), it’s a sign of a top.
But timing is key…
I don’t see many traditional value-oriented managers piling into cryptos or crypto-related stocks.
So I don’t think Casey’s action is a sign of a bubble about to burst. Instead, this is more likely a potential catalyst for a bubble that hasn’t yet formed.
Casey’s peers must feel envy and pressure to keep up. When they all start to follow Casey, like lemmings going over a cliff, that will be the top.
Tilson’s view on AI to market A closer look at AI – and how to harness it in the markets | Stansberry Research
My view is somewhere in between these two…
Across the entire sector, I do think AI is starting to feel like a bubble.
But I also continue to like the shares of tech giants that are harnessing AI, like Meta – and my other two favorites, Alphabet (GOOGL) and Amazon (AMZN). These companies are profitable and dominant, yet their shares are still trading at modest earnings multiples.
“Davidson” submits:
The Discounted T-Bill rate has dropped to 3.92%. Should it fall to 3.83%, it will be 0.50% below the current mid-range of Fed Funds now at 4.33% by 0.50% and provide room for the Fed to follow as history demonstrates. Certainly a 025% cut is in the cards but a 0.50% appears likely with another 0.09% drop in the T-Bill.
- 08/19/2025 – Davidson on rate cut, Currently the Discounted T-Bill Rate is shifting lower and as of Aug 15 is 4.12%. The Fed could cut 0.25% this time as soon as the Discounted T-Bill Rate moves to 4.08%. Today (08/25) it is 4.10%, very close now.
Getting Very Close to A Rate Cut – ValuePlays
The history of Fed Funds adjustments vs the Discounted T-Bill Rate makes it clear that once the Discounted T-Bill rate has moved enough in any direction to provide the Fed room, it adjusts accordingly. Historically the Fed has required a premium of 0.1-0.2% but in recent years has been willing to move without a premium to the Discounted T-Bill Rate. Currently the Discounted T-Bill Rate is shifting lower and as of Aug 15 is 4.12%. The Fed could cut 0.25% this time as soon as the Discounted T-Bill Rate moves to 4.08%.
- 08/11/2025 – Tilson on Palantir
But when I read this Barron’s article over the weekend, I had to rub my eyes: Palantir’s stock is trading at more than 100 times revenue.
- 08/08/2025 – Tilson on Meta and LLY
Berkshire sold about $6.9 billion worth of stocks while only purchasing roughly $3.9 billion in the quarter. That nets to about $3 billion of stock sales.
And with more than $5 billion of free cash flow, Berkshire’s cash further ballooned to roughly $344 billion.
For perspective, that’s bigger than the market cap of 477 of the companies in the S&P 500 Index.
The increasing cash pile still leaves investors asking the big question…
What will Buffett and his designated successor, Greg Abel, do with all that cash?
- 08/02/2025 – from Tilson The disappointing jobs report doesn’t change my outlook for stocks; A look at Amazon’s latest earnings and current valuation | Stansberry Research
As I’ve said previously, if the economy remains strong, stocks will do well. And if it weakens, that will lead the Federal Reserve to cut rates… which will boost stocks.
And I think the rate cut matters most to small stocks TNA and SOXL
- 07/31/2025 – A review of Meta Platforms’ latest earnings and current valuation; AI capex and pay packages are astounding | Stansberry Research
- 07/29/2025 – Subs: Buybacks? – ValuePlays
People have long asked what Buffett sees in CVX. I like the business, and the fact that there are no new refineries of any significance being built in the US. What we have is what we have. Now, add massive buybacks due to the cash they are about to start generating. I believe they will be coming over the next few years. It’s the Buffett playbook.
Elon: “Optimus V3 is the right design to go to volume production. It is a significant redesign from V2.” Many people are confused by how Elon can seemingly commit to a production ramp on Optimus and then suddenly retrench. What may look like capricious behavior is really just standard engineering practice—only this time, it’s playing out in full public view. You’re witnessing how the sausage gets made (try to enjoy it). Elon likely attends regular engineering reviews on Optimus, covering hardware, software, and manufacturing progress. Because Optimus is so new, most things are being learned in real time. This is accelerated R&D— research and development happening concurrently, which is typical in frontier tech. During a review, the team— or Elon— might conclude that a redesign is needed. Maybe there’s a breakthrough in the actuators controlling hand movement— a more durable, high-precision mechanism. Or perhaps there’s a better way to design the product for manufacturability. Great engineers always want to make the product better. Sometimes, it makes sense to pause and improve before the product hits the manufacturing floor or worse, ends up in customers’ hands. Other times, it’s better to ship and iterate in the next version. There are always tradeoffs. This is the process: sometimes messy, sometimes a judgment call with no bright line. Elon’s judgment is superb. He understands the balance like few others. He knows you’re going to break some eggs to make an omelet— and maybe more than the usual number if you want a great one. He mixes data with intuition, applies first-principles thinking, and adopts a “fail fast” methodology: put the product into its real-world environment, observe, fix, repeat— rapidly. This same philosophy drives SpaceX, where iterative engineering is visible to the world. Rockets explode, and many observers still mistake it for failure. Unlike Apple, Tesla and SpaceX do a lot of R&D in the public eye. With rockets, you can’t hide it— but it’s also a conscious choice. A confident organization embraces public iteration, using real-world exposure as critical feedback. What matters most—non-negotiably—is a product that performs reliably and can be manufactured at scale with an acceptable cost structure. Tesla excels here. Manufacturing is its competitive superpower, and its R&D is world-class as well. If you’re rooting for Tesla to succeed with Optimus—if you have a stake in its future—recognize this for what it is: a sign they’re taking the challenge seriously. And if Tesla admits it’s hard, just imagine how hard it will be for everyone else. I’m imagine @thejefflutz might have a few things to say about this.
- 07/28/2025 – Avoid ‘DORK,’ the latest burst of meme-stock foolishness; Public companies are buying crypto to ride the speculative wave; This market reminds me of 1999, not 2000; Small-cap stocks look like attractive bargains right now | Stansberry Research – out-of-favor, small-cap stocks look attractive right now
- According to Goldman Sachs’ research referenced in the article, speculative trading is at its highest level since the dot-com bubble and the post-COVID bounce. At the same time, investor fear is at a five-month low, as measured by the CBOE Volatility Index (“VIX”). This Wall Street Journal (WSJ) article explains the recent meme-stock resurgence: The Latest Meme Craze Is Flashing a Warning to Wall Street
- Publicly traded companies are trying to get in on the action by buying cryptocurrencies, as this other WSJ article notes: The Hottest Business Strategy This Summer Is Buying Crypto.
- This third WSJ article attempts to analyze the implications of the surge in speculative fervor: Five Signs of a Market Bubble Investors Are Tracking. It’s not all bad news, as the market’s breadth is at healthy levels. Analysts typically consider that kind of improving breadth a sign of a sustainable bull market. As the article notes, “the economy is holding firm,” and the sharp slowdown in the labor market that economists worry about has yet to materialize.
- according to Goldman Sachs’ Speculative Trading Indicator, stocks have historically outperformed in the three-, six-, and 12-month periods following sharp increases in speculative trading. But then they underperformed over the next two- and three-year periods. You can see the data in the chart below, shared by Business Insider
- among the 10 largest U.S. companies, I’m only bearish on one of them: Tesla (TSLA). I think six are comfortable holds: Nvidia (NVDA), Microsoft (MSFT), Apple (AAPL), Broadcom (AVGO), Berkshire Hathaway (BRK-B), and JPMorgan Chase (JPM). And three are buys, as I’ve discussed in many e-mails: Amazon (AMZN), Alphabet (GOOGL), and Meta Platforms (META).
- In summary, this market reminds me not of the Internet bubble peak in March 2000 (after which the Nasdaq crashed by nearly 80% over the subsequent two and a half years), but rather 1999 (a year in which the Nasdaq rose 85.6%)
- In particular, I think WSJ columnist Jason Zweig is correct that out-of-favor, small-cap stocks look attractive right now: The Stock Market Bargain That’s Right Under Your Nose. It’s worth remembering, too, that most of the beneficiaries of the internet boom weren’t the online providers but rather the consumers: manufacturers, healthcare, service and materials companies that used the emerging technology to streamline their own operations. If the AI boom unfolds the same way, smaller companies could get a bigger boost than the giants. The market value of the five biggest companies in the S&P 500 is nearly five times the combined market value of the Russell 2000 index, according to Steven DeSanctis, an equity strategist at Jefferies. In fact, Nvidia alone—at its recent market value of $4.22 trillion—is 65% more valuable than all the stocks in the Russell 2000 combined. The 6.6% annualized total return on small stocks over the past 10 years trails large-company performance by 7.3 percentage points, says DeSanctis. (All figures include dividends.) That’s the widest gap going back to 1935.
- 07/27/2025 – good news for overall market (1) Evan on X: “🇺🇸 PRESIDENT TRUMP JUST SAID: – WE HAVE REACHED A DEAL WITH THE EUROPEAN UNION 🇪🇺, – SAYS EU WILL PAY A 15% TARIFF ACROSS THE BOARD – SAYS THE EU WILL MAKE $600B IN U.S. INVESTMENTS, BUY $150B IN U.S. ENERGY, BUY HUNDREDS OF BILLIONS OF USD IN MILITARY GEAR, EU AGREES TO OPEN https://t.co/sDwRkga5hj” / X
PRESIDENT TRUMP JUST SAID:
– WE HAVE REACHED A DEAL WITH THE EUROPEAN UNION ,
– SAYS EU WILL PAY A 15% TARIFF ACROSS THE BOARD
– SAYS THE EU WILL MAKE $600B IN U.S. INVESTMENTS, BUY $150B IN U.S. ENERGY, BUY HUNDREDS OF BILLIONS OF USD IN MILITARY GEAR, EU AGREES TO OPEN UP COUNTRIES TO TRADE AT 0% TARIFF
- 07/26/2025 – Amid a rising market, high valuations should equal low expectations; Don’t fall for Trevor Milton’s ridiculous narrative; I’m home from my European trip | Stansberry Research – The stock market is powering along, and folks are getting more bullish. But as I’ll explain today, amid all this, I’m feeling a bit more cautious than I previously was. To be clear, unlike late 1999 and early 2000, I do not think we’re in outright bubble territory when it comes to valuations. (And I don’t believe, as I did starting in early 2008, that we’re on the verge of an economic crisis.) But as I’ve been saying all year, as stocks continue to rise, you should temper your expectations for future returns.
As Creative Planning’s Charlie Bilello noted in his latest Week in Charts blog post on Wednesday, “the S&P 500’s price to peak earnings ratio has moved up to 26.5, its highest level since 2000 and 54% above the historical median.”
The story is similar going all the way back to 1871. Robert Shiller’s cyclically adjusted price-to-earnings (“CAPE”) ratio, based on average inflation-adjusted earnings from the previous 10 years, has been surging recently – and it just surpassed its high from October 2021.
Take a look at this long-term chart of the S&P 500’s CAPE ratio from Multpl.com:
To be clear, unlike late 1999 and early 2000, I do not think we’re in outright bubble territory when it comes to valuations. (And I don’t believe, as I did starting in early 2008, that we’re on the verge of an economic crisis.)
But as I’ve been saying all year, as stocks continue to rise, you should temper your expectations for future returns.
Positive reports as Industrial Production(IndPro) posts the highest level since Sept 2018 and Manufacturing Capacity posts a new high. Economic indicators continue to support economic expansion, even acceleration, as the PMI, a market psychology measure, registers recessionary conditions. The history is quite clear that when market psychology deviates from economic indicators, believe the economic indicators. The current narrative of reshoring manufacturing with current US tariff policy indicates that it is working. The dip in Capacity Utilization is typical of expanding capacity not yet fully utilized.
- 07/25/2025 – (1) *Walter Bloomberg on X: “TRUMP: THINK POWELL WILL LOWER INTEREST RATES” / X
- 07/19/2025 – Exclusive | How Bessent Made the Case to Trump Against Firing Fed Chair Powell – WSJ
-
Treasury Secretary Bessent advised President Trump against ousting Fed Chair Powell, citing potential economic and market risks.
-
Bessent highlighted potential legal challenges and Senate hurdles, suggesting Trump could shape the Fed through upcoming vacancies.
-
Some advisers suggest challenging Powell’s oversight of Fed construction costs, potentially laying groundwork for a “for cause” removal.
- 06/27/2025 – Retail Money Funds have always peaked at SP500 lows..this looks interesting – ValuePlays
Retail Money Funds have always peaked at SP500 lows.
- 07/16/2025 – Calafia Beach Pundit: Inflation remains low
June CPI and PPI figures were released this week, and the buzz centers around whether Trump’s tariffs have boosted inflation. There is some evidence in the numbers of tariffs boosting the prices of some goods, but it would be premature—and unwise—to declare that yes, tariffs are causing a rise in inflation. Tariffs arbitrarily increase the price of some goods, but that is not the same as monetary stimulus, which is the only thing that can boost the overall level of prices. Absent an increase in the supply of money, higher prices for some goods will almost certainly result in lower prices for other goods. A household on a fixed budget that is faced with higher prices for food will have to cut spending on some other things.
- 05/27/2025 – Fundamental Analysis – ValuePlays
