I sold it all today

Key Concepts

• Market Correction: A decline of 10% or more from all-time highs (NASDAQ).
• Big Dogs: The primary catalysts previously driving the market (Federal Reserve, Trump administration, Mag 7, and the resilient consumer).
• Capex (Capital Expenditure): Spending on long-term assets; specifically, the high AI-related spending by tech giants that is currently pressuring earnings per share (EPS).
• VIX (Volatility Index): A measure of market risk/fear, which has risen 85% year-to-date.
• TSLZ: A 2x inverse ETF against Tesla stock used as a hedging instrument.
• Risk-Off/Risk-On: Market environments where investors avoid (risk-off) or seek (risk-on) speculative assets.
• Depreciation: The accounting process of allocating the cost of a tangible asset over its useful life, which the speaker argues will hurt Mag 7 earnings.

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1. Market Status: "Cooked" in the Short Term

The speaker declares the market "cooked" for the short term (next 6–12 months) due to the loss of four key pillars of support:

• The Federal Reserve: Expectations for rate cuts have vanished; the market is now pricing in the possibility of rate hikes, which creates fear and drives capital toward treasuries.
• Trump Administration: Initial optimism has faded due to trade tariffs, geopolitical tensions (Middle East, Venezuela), and inflation. The speaker notes that since Trump took office, the NASDAQ is up <7%, compared to 28% in the same timeframe during his first term.
• The "Mag 7": Investors have lost faith in companies like Google, Meta, and Amazon due to excessive AI-related capex, which threatens future EPS. Apple is highlighted as the exception due to its focus on share buybacks and dividends rather than aggressive speculative spending.
• The Consumer: The narrative of a "resilient consumer" has shifted to a coin-flip probability of a recession.

2. Investment Strategy & Methodology

• Market Bottoms: The speaker argues that markets bottom on bad news. He emphasizes that waiting for "good news" is a mistake, as the best gains are made by buying during periods of extreme pessimism.
• The "Elevator Down, Stairs Up" Framework: Markets crash rapidly (elevator) but recover slowly (stairs). Investors often take 12–18 months to turn bullish after a bottom, missing the initial recovery phase.
• Long-Term Focus: The speaker explicitly ignores short-term portfolio fluctuations, aiming for a $20 million+ portfolio by 2036 rather than worrying about current account drawdowns.
• Financial Discipline: The most critical rule is maintaining "more income than expenses." The speaker insists that being "out of money" is not an excuse; investors should increase income (e.g., side jobs) to capitalize on market dips.

3. Portfolio Adjustments

• Exit: The speaker sold 100% of his TSLZ (Tesla hedge) position, realizing a profit of approximately $7,000, as the NASDAQ hit the 10% correction threshold.
• Buys:
  • American Express (AXP): Aggressive buying under $300.
  • Honest (HNST): Speculative long-term play at $2.88.
  • Fubo (FUBO): Small speculative position.
  • Adobe (ADBE): Bought at $240; considers it undervalued with a low forward PE.
  • Estee Lauder (EL): Buying opportunities under $100.
  • Nike (NKE) & Salesforce (CRM): Positions are now considered "fully built."

4. Notable Quotes

• "The market bottoms on bad news. Ask any experienced person... they'll all tell you that."
• "You can get caught up into all the short-term stuff... or you can try to position your portfolio for the next decade. That's a choice."
• "If you don't have more income than expenses every month, you're playing the game all wrong."

5. Synthesis and Conclusion

The speaker concludes that while the market is currently in a "brutal" short-term downtrend, this environment provides the best buying opportunities for long-term investors. By losing faith in the "Big Dogs" (Fed, Trump, Mag 7, and the consumer), the market has created a "drama phase" that historically precedes a new bull cycle. The speaker advises viewers to ignore the noise, maintain high income-to-expense ratios, and focus on accumulating high-quality assets for the next decade rather than reacting to the current volatility.