Dividend stocks are misunderstood as passive income
“I've had this conversation with countless people. They feel as though they are earning something when they get a dividend. This is passive income by getting a dividend, and that's just not the case. Settlers paribus, all things being equal, if a company pays out a cash dividend, its price should drop. Its market cap should drop by roughly the amount of the cash that leaves the portfolio. And so you are trading optionality for an income stream. If you want an income stream, invest in bonds.”
“It's the art of war. The generals tend to fight the last war. And while there's COVID and we did see a little inflation as of the last few years, really, the major crisis of most people's recent memory is o eight, is the financial crisis. And that was a big deflationary impulse. But the previous crisis is usually not the next crisis. The next crisis is usually something very, very different. And in this instance, it really is inflation, that the risk for most people's portfolios is that inflation continues to eat away purchasing power.”
US oil exports hit record 12.9M barrels per day amid Iran war
“Goldman Sachs has estimated the Persian Gulf crude output is down 14,500,000 barrels per day. That's 57% lower than prewar levels. And you even started to see Saudi Arabia, you know, OPEC's defect de facto leader, try and maximize outs output through its alternative Red Sea pipeline, but it doesn't really handle the full volume there. And so in a situation where the way to move oil to market is shut down for OPEC, of course, The United States then becomes a even more important producer of oil in the global economy. And total US oil exports earlier this month hit an all time high of 12,900,000 barrels per day.”
OpenAI's revenue warning exposes fragile AI infrastructure expectations
“Overall, it was a down day driven by news around Open AI. The CFO, Sarah Friar, said the company may not be able to pay for competing contracts if their revenue growth does not accelerate from where they're at. They miss their own targets of new users, revenue, and raise concerns that they'll be able to continue to spend as much as they are on their data centers, which kinda hit the tech industry as a whole, and that's why you saw the Nasdaq down. About 1% on the day, S and P down about half a percent.”
“Go back to the history of Micron's earnings. I will read them from 2020 to 2027. $5.14, $7.74, negative $5.34, 70¢, $7.59. So I think the question is not are earnings real today, but are they sustainably real moving forward, or are we just at a point in time where things are at the right position cyclically? The last peak in earnings for Micron was $8.35 in 2022. So analysis to earn over 10 times that next year. It's just not likely to be durable.”
Dividend obsession narrows your investment opportunity set
“You should not build a portfolio based on dividends. Dividends can be a piece of the puzzle because it alludes to something. The ability of a company to pay a consistent dividend is a good sign because of what it says about the company. But I've had this conversation with countless people. They feel as though they are earning something when they get a dividend. This is passive income by getting a dividend, and that's just not the case. If a company pays out a cash dividend, its price should drop. So you are trading optionality for an income stream. If you want an income stream, invest in bonds.”
AEHR's 800% rally is likely a short squeeze, not opportunity
“Looking at Air Systems, AEHR. Small cap name, $2,600,000,000 market cap. It has boomed, Luke. It was trading just last April, one year ago. Down around $7 per share. Today, even after dropping 7% today, it's at $82 per share. It's moved, like, 800% in the past fifty two weeks. What about just a month? And then last month, it was trading at 30, and now it's at 82 in a in a month. I'll give you another number. Let's see if you can guess what number it is. 18.7%. Short interest. There you go. So this move is just probably a short squeeze.”
Producers won't drill despite $90+ oil due to price volatility
“Despite oil being sustainably above $90 a barrel, US producers are not rushing to drill. Right? The Dallas Fed did a survey which showed rig counts actually declined. Even after, you know, a month of 90 plus dollar oil, oil executives are saying that the price swings are a bit too wild, and they can't really stomach it moving based on tweets and paper market manipulation. It effectively makes it impossible to plan capital budgets.”
US becomes world's swing oil producer after Iran war disrupts Gulf supply
“Well, there's somewhat of a ceasefire and a blockade in the Straits Of Hormuz, And about 13% of the global oil supplies have been basically closed off to the rest of the world. And gulf producers shut in about 9,000,000 barrels per day of output, which, as you would imagine, is a bit of a problem for especially countries that are dependent on energy. Goldman Sachs has estimated the Persian Gulf crude output is down 14,500,000 barrels per day. That's 57% lower than prewar levels. And total US oil exports earlier this month hit an all time high of 12,900,000 barrels per day.”
Air Test Systems' 800% rally is likely a short squeeze
“I'm looking at Air Systems, AEHR, Air Test Systems. AEHR is the symbol. Small cap name, $2,600,000,000 market cap. It has boomed, Luke. It was trading just last April, one year ago. Down around $7 per share. Today, even after dropping 7% today, it's at $82 per share. It's moved, like, 800% in the past fifty two weeks. What about just a month? And then last month, it was trading at 30, and now it's at 82 in a in a month. I'll give you another number. 18.7%. What number do you think that is? Short interest. There you go. So this move is just probably a short squeeze.”
Williams-Sonoma needs a housing recovery to break out
“One of the big issues really is that this is it's a furniture store. They own Pottery Barn, West Elm, obviously Williams Sonoma. And that is, it's typically a good business, but usually the spark to buy new furniture is buying a home. And home transactions remain near multi year lows. So until we get a catalyst that can improve the amount of home transactions that are being made, it's going to be difficult for them to manufacture a lot of real revenue growth here.”
Generals fight the last war — next crisis is inflation, not deflation
“It's the art of war. The generals tend to fight the last war. And while there's COVID and we did see a little inflation as of the last few years, really, the major crisis of most people's recent memory is o eight, is the financial crisis. And that was a big deflationary impulse. But the previous crisis is usually not the next crisis. The next crisis is usually something very, very different. And in this instance, it really is inflation, that the risk for most people's portfolios is that inflation continues to eat away purchasing power.”
Micron earnings forecasts may be a multi-standard-deviation anomaly
“Go back to the history of Micron's earnings. I will read them from 2020 to $2,027.37, $5.14, $7.74, negative $5.34, 70¢, $7.59. So I think the question is not are earnings real today, but are they sustainably real moving forward, or are we just at a point in time where things are at the right position cyclically? The last peak in earnings for Micron was $8.35 in 2022. So analysis to earn over 10 times that next year. It's just not likely to be durable.”
High oil prices alone won't trigger US drilling boom
“Well, I think one thing that you can't get away from is this the fact that despite oil being sustainably above $90 a barrel, US producers are not rushing to drill. The Dallas Fed did a survey which showed rig counts actually declined. Even after a month of 90 plus dollar oil, oil executives are saying that the price swings are a bit too wild, and they can't really stomach it moving based on tweets and paper market manipulation. It effectively makes it impossible to plan capital budgets.”
Long-short tax harvesting strategies often aren't worth the fees
“It's a one thirty thirty strategy, essentially, where you go one thirty long, 30% short. So the short positions effectively generate losses that can offset gains from selling your concentrated stock position. They tend to be pretty high fee, though, because they're high input. You could be paying, I don't know, one and a half percent on top of whatever your advisory fee is just to kind of manage that. You're also not really eliminating your taxes. You're just deferring them. Eventually, the tax man always gets paid.”
Retirement confidence drops to lowest level in nearly a decade
“Americans in general are feeling a little bit less confident in their ability to retire. 61% of workers are very or somewhat confident in having enough money for retirement. That's down from 67% last year and a recent high of 72% in 2021. That's the lowest level in nearly a decade. And most people are focused on inflation. Among retirees, 41% said that retirement spending had been higher than they expected when they first retired.”
Franco-Nevada's zero debt makes it the cleanest gold price proxy
“Looking at Franco Nevada. This is the name that we've actually owned for clients for an extended period of time. This is a streamer. What they basically do is they partner with the mining companies and they help finance the mines. So they basically own a piece of on a stream of the revenue coming out of the from the mines. We have zero debt. We have absolutely zero debt. So it is the purest, cleanest gold price proxy amongst these gold exposed names.”
