Will Fed Shock Markets This Week? Forgotten Stocks That Could Soar Next | Thomas Hayes
Summary
AI Beneficiaries: Preference for derivative AI plays that gain margin expansion without massive capex, versus MAG7 cost centers facing decelerating earnings and margin pressure.
Alibaba (BABA): Framed as the cheapest AI play when unloved; strong cash and free cash flow, and despite a big rebound, still seen as undervalued with potential to continue higher.
Intel (INTC): Backed by U.S. government equity support to onshore advanced chips; recovering CPUs plus new GPU/advanced chip initiatives could drive multi-year upside, potentially doubling or more.
Natural Gas: Data-center power demand expected to surge with ~60% fueled by natural gas, creating a structural tailwind for low-cost producers tied to AI infrastructure growth.
Comstock Resources (CRK): Highlighted as a low-cost natural gas producer with significant insider ownership; positioned as an AI power-demand beneficiary with further upside potential.
Energy Sector: At its lowest S&P 500 weighting since 2020, high-quality energy names are favored for contrarian outperformance; services preferred over E&Ps.
Market Outlook: Anticipates potential rotation from mega-cap tech to overlooked beneficiaries and value areas; year-end rally possible after near-term earnings and guidance clarity.
Risks and Policy: Big Tech earnings deceleration and capex burdens are noted risks; ongoing global rate cuts and a potential U.S.-China thaw provide supportive liquidity and sentiment.
Transcript
You couldn't give Intel away at $19. Now everyone wants it at $39. And I think it's going to make the taxpayer a tremendous amount of money over the next five years. While everyone looks at Tesla trading at 13 times revenues and 200 times earnings. The only way you don't make money is if you buy lowquality stuff that has balance sheet risk. If you buy the high quality stuff when the waiting is this low in the in in the index, uh you tend to make enormous amounts of money. you can still get it. >> I'm pleased to welcome back Thomas Hayes. He's the managing member of Great Hill Capital and also uh the author of Hedge Fund Tips. Check it out. Very good resource online for all investors. We'll be talking about uh the Fed. What are they going to do this week? We'll do a preview. We'll talk about a potential China deal. Stocks are up today on Monday on uh a potential and of course uh earning season is upon us. Welcome back to the show, Thomas. Good to see you. >> Thanks for having me, David. I want to start with uh this potential China deal. Actually, it's uh driving markets higher. Gold is down 3% on the day. Stocks are up and u Bitcoin is up today. So, risk on day. Uh new records on stocks on Monday after China and the US officials cool tensions over the weekend according to reports. Um now, no official deal has been ironed out as far as I'm reading. Uh, but I think there's a there's a framework that's being discussed. I think we have a very successful framework for the leaders to discuss on Thursday, said Treasury Secretary Scott Bent. Um, yeah, this is days away from November 1st, which is the day that uh, Trump said initially said would be the start day for new 100% tariffs on China. So, I guess we're not seeing that anymore. Thomas, >> yeah, look, you have, as you said, Besson said we have a successful framework. The Chinese counterpart said we have a preliminary consensus. We saw uh some of our Chinese holdings were up huge overnight. Babo's up three 3% in change. The Bus of the world were up 5%. So the market is saying this looks money good. Um uh we will find out for sure on Thursday. You never know. Uh with with President Trump's negotiations sometimes at the last minute he'll throw a curveball to get a little bit more for the American people. But on balance, that that looks very good. That's constructive. That's why you see tech up big today. But I think we got a lot more to focus on on earnings this week. That's going to be the real tell. >> Yeah, we'll get to earnings and uh and discuss that in just a bit. But this confirms, I guess partly confirms the theory that every time a new tariff is announced, that's just a buying opportunity. Do you buy that? >> Until it's not. But yeah, I mean, look, as you know, we've been excessively bullish when other people were bearish. Uh and that's now going back, you know, multiple years to the fall of 2022. We did get a little cautious this month. Uh we built up a little bit of cash. We have no margin. Uh and and uh we'll see if that proves to be correct. Uh and if we get a buying opportunity before the final year end rally or if this just keeps pushing higher. But a lot of this has been retail driven. You're seeing it in option flow. you're seeing it in uh triple and uh 5x leveraged ETFs uh and all the craziness that's coming with that. But uh I think when all is said and done, David, price is what you pay, value is what you get. And I think uh this is the moment of truth this week and and we're going to dissect some of that in the imminent earnings in in coming days. >> So what are the drivers of key drivers of multiple expansion now going into 2026 now? Well, usually you get multiple expansion when you get growth expansion. And uh this ca this time is different so to speak. So far, uh what we're going to see uh as we saw with uh Netflix and Tesla, the first two kind of mag 7 plus that reported was uh some concerns about margin compression. Uh and you saw Netflix down pretty big off of that. Tesla was a little bit uncertain off of that. And if we look yearonear, David, uh, MAG7 earnings growth is decelerating from 32% in Q3 of 2024 to what's expected to be 14% in Q3 of 2025. So, uh, a havinging of earnings growth and yet the multiple for the Mag 7 basket has stayed well above 30 times. It's usually the opposite. when you see earnings growth decelerate uh you see multiple compression not multiple maintenance or multiple uh expansion. So you know uh max 7 $400 billion of committed capex uh this this year which is a 67% increase uh from last year and so far very little evidence of return on invested capital which is why you're seeing earnings growth contract. Uh that's going to impact margins that as you saw with Tesla and Netflix that's going to impact buyback ability which impacts EPS. So uh will the market continue to assign a very high growth multiple to a group that is decelerating in earnings growth uh at present? And and uh the answer is we're going to find out on Wednesday and Thursday. >> Right now there seems to be a trend that the tech companies are spending a lot on capex. In fact, it's considerably more uh considerably higher margin on capex than the other S&P 500s companies. And so Thomas, the question is whether or not uh this trend has actually been pushing up the entire stock market. And as soon as maybe they stop spending money for whatever reason, that's when we get a slowdown. >> Well, there there is something to be said for that. Um I you know, it's interesting. The mark the stock S&P is up around 41% off the April 7th trough. uh 27% of the Russell 3000 uh is only up 10% or less since the April 7th trough, which tells you we've we've basically been in the camp that maybe the MAG 7 needs to stall for a bit on the basis of earnings growth deceleration and high multiples. However, it doesn't mean everything has to do poorly. Uh maybe the the answer is an abrupt shift into those stocks that have been left for dead that are not the AI cost centers like the Mag 7, but the AI beneficiaries that that uh benefit from the technology and have margin expansion without massive amounts of investment like you're seeing across the Mag 7. So, so we could see that type of shift. And then you look, we're in uh the final week of October, David. This is the end of tax laws selling for mutual funds. Uh and often times the stocks that have done worst year to date going into the end of October tend to do extremely well uh in November once that tax law selling pressure is in the rear view mirror. >> And so now with AI and full swing on everyone's radars, what uh what are some sectors or plays that investors can take? Are we looking at hyperscalers, uh, construction companies around that are involved with data centers? Are we looking at the big mag 7 companies themselves? Um, or anything on the periphery? How are you doing this? >> Uh, we've always looked to find, uh, the derivative plays. So, uh, one of the holdings that we've had that has been tremendously unpopular was Alibaba. You couldn't give it away year two years ago. It it just kind of was left for dead. China was uninvestable. It turned out it was the cheapest AI play in the world when everyone was saying it was uninvestable at $60 a share. Now people are getting interested at $175 a share. Uh they had $80 billion of cash on the balance sheet at that point. They were generating 25 billion of free cash flow. You couldn't give it away. So that was an easy one. That's just getting started. Alibaba is going to continue to press higher. So while everyone looks at uh Tesla trading at uh uh you know 13 times revenues and 200 times earnings, you can still get Alibaba at a low double digit multiple with a huge uh blue skies ahead. Uh the second way we played that was Intel. No one you couldn't give Intel away at $19. Now everyone wants it at $39. Intel was was easy peasy when the government stepped in to backs stop that. Uh the game became the US government decided we are not going to depend on Taiwan semiconductor for all the semiconductors in the world. We are going to stand up Intel and they're the only game in town in the US that was at the 10 yard line. Uh Gellzinger had actually put everything in place. It's just the board got antsy even though they authorized him to do everything uh because the stock price was down. So they got rid of Gellzinger. They brought in someone that even better Lip Bhan from Cadence Systems. He had a 68 plus bagger there. He did a huge turnaround uh at Cadence Design Systems and uh and he's going to do the exact same thing in Intel. So uh they got two tailwinds. One is advanced chip development uh at their fabs uh uh GPUs and three their uh two their legacy CPU business has started to recover aggressively. So that's already up double uh plus from the lows and uh I think it could double again over the next few years as as the advanced chip demand becomes um um basically unlimited and Taiwan semiconductor you know Nvidia's biggest problem uh in terms of growth rate has not been for lack of demand it's been for lack of supply because Taiwan semiconductors capped them at $4 billion of revenue growth per quarter with Intel getting into the advanced chip game that was a huge uh easy way to play uh that AI play. And then finally was comtock resources uh which is a natural gas play uh if you consider the data center demand for for the next handful of years going into 2020 2030 you look at some of the Goldman Sachs numbers triple digit increase uh 60% of that is going to be powered by natural gas and some time back you couldn't give these stocks away comtock resources is 75% owned by Jerry Jones we built up a position $89 $8 $9, $10. Uh, that's just getting started. It's one of the lowest cost producers of natural gas and that's going to be an AI beneficiary as well. So, we're looking for the nonobvious ways, the ones that most of the lemon has not been most of the juice has not been squeezed out of the lemon where there's a lot lot of runway ahead. And I and I don't see it as aggressively in the Mag 7. When you think about some of the names that I've mentioned, uh, with, um, uh, you know, BABA tripling off almost tripling off the lows, we think that can double again. Intel doubling off the lows, we think that could double or triple from here. Uh, com stock resources uh, double off the lows, we think that can double again. I don't think you can say that about too many of the mag 7 stocks that you expect them to double over the next few years uh, or could double or triple. Uh I think that would be pretty aggressive relative to a decelerating growth rate and a monstrous amount of capex required uh and a and a big prayer session that they're actually going to get a a sufficient return on invested capital uh prospectively. >> And uh are you are you banking on energy companies being acquired by the tech companies? Microsoft for example is restarting a nuclear facility. Uh potentially they could go further into the vertical integration. What do you think? >> It's not out of the question. I don't think that's their highest and best use of the capital, but I I wouldn't rule it out. That's not in our thesis. The the name of the game is the demand is going to be there, and I think these energy companies know that. So, why would they want to sell out at historic low multiples? Speaking of energy, by the way, um in that basket of 27% of the Russell, that's only rebounded 10% off the uh April 7th lows while the market's up 41%. You got energy, you have real estate, and you have consumer staples, the ones that have been left for dead that I think you're you're going to see uh a bid. So, as it relates to energy, the the sector as a whole is at its lowest waiting in the S&P 500 since when? Since COVID 2020 lows. We made an absolute fortune buying am uh buying Exxon at $33 and change when oil was trading negative. We are in a position right now with some and I'm less sanguin, believe it or not, on the ENTP oil companies than I am on some of the servicesers. But we're in a position with the waiting so low. If you buy energy when they're this far out of favor, it's really, really hard not to make money. The only way you don't make money is if you buy lowquality stuff that has balance sheet risk. If you buy the highquality stuff uh at when when the waiting is this low in the in in the index uh you tend to make enormous amounts of money. The last time prior to co that the waiting got in similar low single digits was 20201 which was the last uh tech mania where you couldn't give away an energy stock and then the next 5 to seven years what outperformed uh energy did value did uh international did small caps did uh and I think we could see a similar situation not that tech has to crash but in terms of relative performance where's your opportunity and you just chase the things that are already up a lot or do you look for things that can double and triple over 3, four, 5 years? >> Going back to Intel uh and tax stocks overall, how do you feel about the government making equity stakes? We're making investments into companies themselves earlier in the summer. Intel announced that the Trump administration is placing an $ 8.9 billion investment into the company uh to make an agreement um and ex and and they'll help expand uh the company. Uh, how do you feel as an investor with the companies getting involved with the government? >> Well, I think people complicate the Intel deal. The the the problem with the Intel deal was the previous administration said, "We're going to give you $9 billion because you're pathetic and we think we need we think we need you at some point." Trump comes in, he goes, "Wait, we're giving them $8 billion for what? For failing?" No, we're giving you $8 billion. We want something in return. This is not your money, Intel. This is the taxpayers's money. like they work, you know, four or five months of the year to pay the US government taxes, they're going to get something in return. So, not only are we going to stand you up, but we're going to give them equity. And then, just like President Trump, commander-in-chief, goes out and sells planes for Boeing, even though we have no equity stake in Boeing, he's going to go out. If you think he can sell planes for Boeing, wait till you see how many chips he sells for Intel. And you saw it that the next week Nvidia was asking Trump for favors to to be able to sell some of their chips in China. Guess what? They miraculously put a $5 billion investment in Intel. And then Soft Bank Masoshi Sun uh put in a $2 billion investment in Intel. So this is in in terms of uh Trump demanding that US taxpayers get paid for capital that was already committed. he is being a responsible steward of our tax dollars. Uh as it relates to these mineral right deals, um I'm less sanguin on that in terms of uh I don't want to see uh unlimited government uh interference because you know there was some rumors earlier like oh look how much uh how many contracts we're giving to these defense companies like Lockheed. We should have equity in locked. I think that becomes a slippery slope and that's problematic. I think Intel was different. Uh he he walked into capital that had already been committed with no strings attached and he said, "No, no, no, no. If you want the taxpayers's money, the taxpayer is going to get something for it." And um as it relates to the rest of them, the mineral rights, I think that's to be determined. uh uh we certainly need uh these these these specialized resources uh and to the extent that the private market can't sort it on its own. Could there be different deals done where the public sector comes to bear for national security reasons? Yes. Uh hopefully we can avoid those at all costs. But if absolutely necessary, I think it is something that needs to be done for national security. The stock's up roughly 60% since the deal was announced late August. I think as an investor, you're looking at this trend and saying to yourself, well, one of two things could happen. Either the government continues this trend. There were rumors that uh Trump wanted to make an uh investments into some um um some quantum computing companies that has been refuted by the Department of Commerce. Uh but anyway, if they do continue this trend, we could continue to see stocks being pumped up. But potentially the government may may misallocate company resources into things that some investors in those companies may not deem productive. So it's a double-edged sword. Uh what's the future here? What do you think? >> I think that the company's board of directors in each respective deal has the opportunity to say no. >> And what that simply means is we don't want your money and we don't want your strings. Uh but if they say we want your money, they should expect to have the strings attached to it. And that's you know that is there is some free market element. It's no different than any other outside investor that says uh we're going to give you money for equity or for for debt. Uh we want this voting right or we have this say uh or we want these terms or we're not going to give you the money. Now the company can say keep your money. We'll get it elsewhere with the terms that we want. Or they'll say we can't get it elsewhere. Therefore, we will submit to whatever terms you you deem appropriate. Uh, and I think it's no different with the rare earths. I think it's no different. I mean, as far as the quantum computing stocks, that seemed like a little bit of silly season and a little bit worrisome. Fortunately, that that's not showing that uh that there's going to be any followthrough on that. But to the extent that it becomes uh a national security, look, you've got DARPA working on similar things. So maybe there will be more and more public private partnerships uh in the name of national security. But when it comes to investing money in a company andor taking equity or debt um uh the company will will uh companies will have the right to say say no or demand different terms and I think that's that's just the case. Now if the administration starts co-opting companies we haven't seen any evidence of that. uh uh that would be a different situation and uh and I think there would be a huge uh uprising against that type of behavior. Uh we haven't seen it to date. Uh and in terms of Intel, it's proven to be a success and I think it's going to make the taxpayer a tremendous amount of money over the next 5 years. It's going to be one of the best investments uh taxpayer money has ever been involved in. >> And if restrictions are placed on tech companies for exporting to China, for example, Nvidia, uh those restrictions were in place by Trump. But uh anyway, if they double down, the current administration doubles down, is that a sell-off uh kind of impetus for you? Look, I think I was against the restrictions uh that came came to bear by the previous administration. I mean, the previous administration's stance was China bad in every way under every circumstance. Let's not talk. Uh Trump is China's fine as long as they give us what we want. And if we can come to a deal where we make more money than we lose, then we love China. And if we can't, we'll isolate them and um and go back to the China bad for every possible reason under the sun like the previous administration. Trump is willing to talk. Trump is willing to do a deal as long as Trump a aka America gets paid and benefits from it. As far as um refusing to export chips to China in the name of national security, I think it was the worst national security mistake uh we've seen in many many years. And the reason is is because China used to be dependent on us and they used to take what we would give them and they would take it with open arms and they would just funnel money into our coffers and create massive earnings power for the US companies. Now, we've said we're not going to allow you to give us unlimited amounts of money uh because we're not going to give you our chips in the name of national security. And what China has done is they have gone on to make uh incredible chips on their own. And on that basis, uh they've gone from being dependent to now being independent to now being in some areas superior. If you look at some of the large language models like Quen uh with Alibaba, like some of the uh chips that they're developing internally, uh we kind of let the genie out of the bottle. They they would have not been that far ahead on innovation had we continue to supply them and continue to keep them dependent on our technology. Now they're becoming independent and in some areas uh excelling beyond us. >> Okay, let's move on to uh the Fed. It's uh Fed week this week. Uh, importantly, Bessent has named top picks to replace uh, Jerome Powell. Um, Fed chair finalists are Christopher Waller, Kevin Walsh, uh, Kevin Hasset, Michelle Bowman, Rick Reer. Um, we we we have we have a short list now and um, no one's been confirmed yet, but it looks like everyone uh is, correct me if I'm wrong, but it seems like everybody is supportive of much lower rates. Is that correct? >> I think everyone except for one is supportive of lower rates. I think Worsh has a history of being hawkish uh and he's playing the game that he's going to be cooperative in order to be given a serious consideration. I think it's not dissimilar to what we saw from Powell before he was confirmed. Uh that he seemed flexible and then the moment he came in, if you remember the autopilot comment in December of 2018 where he basically crashed the market before Christmas and um Minutian had to come in and uh convene a meeting of all the banks 3 days before Christmas on a Sunday to create liquidity and pump the market back up. Um, I think that uh uh Waller for sure, Bowman, uh, all of these are good. Worsh, uh, Reer, they're all s fantastic picks. I think Worsh um, uh, Worsh, you really run the risk of once he's in doing whatever the hell he wants. And, uh, I'm not saying he's not competent, he's very skilled. I he would be the wild card that I would be very concerned about in terms of maybe keeping things too restrictive too long, thinking he knows better uh and uh and maybe putting governors on the uh economy that that don't necessarily need to be there in the short term. So I think four out of five are phenomenal. Everyone I talked to loves Worsh. So maybe I'm missing something. But uh if you go back to his stances over, you know, decade plus, uh he's he's often been very very hawkish and and now he's kind of changed stripes uh in order to be in the mix. >> Uh this is I I love looking at um betting markets on issues. Who will Trump announce his Fed share in 2025? No announcement by December is the majority of votes. And if you actually look at who people are voting or betting on rather um Hassid is lightly leading Christopher Waller I mean it's pretty close when it comes to these uh the first two rather are pretty close. Uh so anyway if you had to if you had to put your money on and bet nobody knows but who who would you bet on? >> You know I I think any of those would be great. Uh I think Hassid or Worsh maybe Bowman. You know President Trump does like to appoint women to um positions. He's he's been one of the most pro- women, pro- diversity kind of administrations historically. Uh never gets any credit for that. I it wouldn't shock me if he put in Bowman, but I certainly think uh Waller uh Worsh all of those would be good choices. As far as whether he makes the announcements before December, that's going to be dependent on what Powell does. You know, if Powell cuts uh this week and he cuts in December, Trump is going to let him ride out like uh Seinfeld on top and uh let him let him have a kind of victory lap and let him go out with style. If he tries to choke things up uh by either not moving this week, which I think is unlikely, or uh not moving in December, I think at that point Trump will announce his, you know, top one or top two picks and make it clear to the market that uh that Powell is a lame duck until he he vacates his seat in 2026. But, uh, hopefully it'll be a cooperative policy, a progrowth policy from the Fed, uh, and, uh, Powell can go out and, um, and have a, a, um, a favorable legacy. >> So, we're looking at at least a 25 basis point cut this week, Thomas. So, last time you were on the show, >> you mentioned to me that once unemployment ticks up, it's a very hard genie to put back in the bottle, I believe, >> words. And now we have 4.3%. Let me just double check. 4.3% as of um >> well we have no idea we have no data. So >> that's right that's that's >> by you know there is that thing called the uh we're we've got the 27 days into a shutdown uh economies economists estimate 10 to 25 basis points a week for every week of the shutdown. Yes, it's earned back once it reopens but uh no one's paying attention to it. I think the longer this thing drags on, if you get that coupled with uh mixed guidance with the MAG 7, uh I think you could find find ourselves uh maybe with a little bit of pullback. You know, ordinarily when you have these 15% plus midyear corrections like we had in April and then you hit all-time highs, there's a secondary correction in that year that averages 6.4%. We haven't seen it yet. Is it coming? uh as a result of maybe some surprises this week. I don't know. Uh but any of those dips if we if they did materialize are to be bought because year to date we've got 312 going on 313 central bank cuts this year globally around the world which is the highest since the postgra financial crisis in 2009. So there's a lot of liquidity slloshing around in the system. Uh even if we get some short-term shocks, whether it's from the shutdown, whether it's from mag seven earnings, uh or something else geopolitical or otherwise. Uh you know, as I said, we've been, you know, accused of being a perman permeable and that's been right. We raised some cash this month. We're, you know, have zero margin effectively. Uh and uh and we've been waiting for a pullback that may never come. uh which is fine. You know, there's also something to be said for locking in a huge year, but um we'd love to see some type of volatility that we could benefit from uh and then play into the year- end rally. So, um we we'll see how that how that materializes. >> Well, how significant is the government shutdown on Fed policy decision-making? Because on the one hand, like you said, we don't have official unemployment data from the BLS, but we have we have other private uh data uh that's tracking u payrolls. Uh but on the other hand, we did get CPI released last week. And so, could the Fed just ignore unemployment for now and look at higher CPI print and maybe maybe slow down their uh their dovishness? Is that possible? I I think it's a low probability that they don't move this week, but as as is the case with the Mag 7, uh the key is going to be the forward guidance. So, I think uh if if they they're not going to be immensely penalized for more hawkish than normal guidance if they cut. And so, what's the downside for them doing it? And I don't know that the market expects them to do it. So on that basis, I would say maybe that there's a surprise in that. Uh yeah, they cut 25 basis points and then they come out hawkish at the 230 meeting saying, you know, we don't have data. you know, inflation came in better than expected, but it's still more elevated than we would like to see or above target or some some type of language like that that the market maybe interprets as December off the table for the next, you know, few days and until they start to get employment numbers and realize, no, December is well on the table. Uh the labor market's a little bit weaker. I think um you know the sooner we get that employment data the the the clearer we're going to know the trajectory moving forward but uh the the trajectory moving forward is lower rates whether whether there's a pit stop in December or not um Trump has made it abundantly clear that the next Fed chair will will be dovish and uh so if if we pause for a couple months until Powell uh vacates then so be it. But uh I think everything is pointing toward uh lower and lower rates for the foreseeable future. >> Uh I want to close off uh Thomas on alternative assets. You and I haven't spoken much about the precious metals, but it's become more of a mainstream topic in the last couple uh weeks to months. Um major banks JP Morgan are uh and Goldman Sachs are upping their gold forecast by the end of 2026. I believe Goldman has a $4,900 um outlook by the end of 2026. This is the price so far. The gold price has pulled back from its highs. Um this is kind of mirroring what happened in 2011. Anyway, do you have a view on this asset? Do you have an allocation to it? Have you allocated more on this really historical uh rally? It's up more than uh let me just get the exact number here to the peak. It's up more than 60% year to date. >> Okay. So, you know what's interesting about gold is that it's a non-productive asset. So, when people say, "Oh my gosh, gold is the greatest thing that's ever." Look, it's up 61%. Do you know how many stocks are up o, you know, over 60% this year, like while everyone was focused on gold, uh the amount of stocks that you could have bought in the April trough that are up double and triple already is unlimited. uh relative to gold. So spending your time on an asset that you're buying in hopes that people will come behind you and and push it higher based on demand for fear geopolitical or debasement trade. Uh look, if you get the basement, it's like Warren Buffett said, whether we get paid in dollars or sea shells or shekels or whatever, if you're buying a business that provides value to the marketplace, you're going to command the most of those seashells, shekels, gold coins. it it it it's really immaterial. The key is buy a productive asset and if there's a debasement trade, you'll just get more shekels per value provided and uh and and find great companies when they're temporarily impaired. And doubles and triples over a 3 to 5 year period are relatively easy to find if you have a solid framework. As far as gold, you're you're effectively guessing. I think the theme is correct that the dollar is going to trend weaker over time, in which case uh gold in theory should should remain elevated. But why, you know, why play that game when when there's so many other opportunities where you actually have uh some level of control over analyzing the forward cash flows and what you'd be willing to pay for those forward cash flows versus just hoping there are other buyers coming in behind you. So, uh to those who have allocation, have been gold bugs for the last 20 years and now have their day in the sun, you know, congratulations. Uh this is the day you've been waiting for. Uh, you know, like they say, the most expensive drink in the casino is the free drink because it means you're still at the table. So, take a few chips off the table. Take your free drink. Uh, maybe let a few chips ride if that's your game, but uh uh beware because uh the clock strikes 12 and uh we'll we'll see if Cinderella uh does okay. couple years ago, Berkshire Hathaway did own Bareric Gold for a few months, I believe, until they sold it off and uh the play there and Warren Buffett has never liked gold as a as a bullion uh mainly for the reasons that you've talked about. Uh but he did buy a minor. Are you would you consider a minor if the free cash flow is extraordinarily strong at current gold prices? >> If I'm not saying they will be, but you know, if >> Yeah. No, I I I have found that the miners, no matter how high the price of the underlying asset goes, they they somehow figure out a way to lose money. Like invariably, uh maybe they get a quarter or two where they generate free cash and everyone says, "Oh, this time is different." But somehow that mining business is a really difficult business. I don't think that was Warren himself. I think that was his uh Todd or Ted. Uh and you see these tiny little positions come and go kind of trading. There's never been a Warren Buffett. there never will. We're seeing that. Um uh and uh and I I could almost guarantee that wasn't Warren's decision. >> Okay, fair enough. Thank you very much, Thomas. We'll we'll end it here and uh please do follow Hedge Fund Tips. Very good uh resource, good summary of the news as well as um um other information and analysis and charts. Uh Thomas, where else can we follow you? >> Yeah, hedge fun.com is the best place. then you could subscribe to our uh uh weekly podcast there. It's uh stock market focused individual companies, ask me anything questions from the audience. That's probably the number one way and it's also anywhere you get your podcast hedge fun tips with Tom Hayes and the YouTube channel. Uh if you go to YouTube, just type in hedge fun tips and all of our stuff is there. >> Okay, excellent. Thank you very much, Thomas. We'll see you again next time. >> Appreciate it, David. >> Great. Thank you for watching. Don't forget to like, subscribe, follow Thomas, and follow this channel.
Will Fed Shock Markets This Week? Forgotten Stocks That Could Soar Next | Thomas Hayes
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You couldn't give Intel away at $19. Now everyone wants it at $39. And I think it's going to make the taxpayer a tremendous amount of money over the next five years. While everyone looks at Tesla trading at 13 times revenues and 200 times earnings. The only way you don't make money is if you buy lowquality stuff that has balance sheet risk. If you buy the high quality stuff when the waiting is this low in the in in the index, uh you tend to make enormous amounts of money. you can still get it. >> I'm pleased to welcome back Thomas Hayes. He's the managing member of Great Hill Capital and also uh the author of Hedge Fund Tips. Check it out. Very good resource online for all investors. We'll be talking about uh the Fed. What are they going to do this week? We'll do a preview. We'll talk about a potential China deal. Stocks are up today on Monday on uh a potential and of course uh earning season is upon us. Welcome back to the show, Thomas. Good to see you. >> Thanks for having me, David. I want to start with uh this potential China deal. Actually, it's uh driving markets higher. Gold is down 3% on the day. Stocks are up and u Bitcoin is up today. So, risk on day. Uh new records on stocks on Monday after China and the US officials cool tensions over the weekend according to reports. Um now, no official deal has been ironed out as far as I'm reading. Uh, but I think there's a there's a framework that's being discussed. I think we have a very successful framework for the leaders to discuss on Thursday, said Treasury Secretary Scott Bent. Um, yeah, this is days away from November 1st, which is the day that uh, Trump said initially said would be the start day for new 100% tariffs on China. So, I guess we're not seeing that anymore. Thomas, >> yeah, look, you have, as you said, Besson said we have a successful framework. The Chinese counterpart said we have a preliminary consensus. We saw uh some of our Chinese holdings were up huge overnight. Babo's up three 3% in change. The Bus of the world were up 5%. So the market is saying this looks money good. Um uh we will find out for sure on Thursday. You never know. Uh with with President Trump's negotiations sometimes at the last minute he'll throw a curveball to get a little bit more for the American people. But on balance, that that looks very good. That's constructive. That's why you see tech up big today. But I think we got a lot more to focus on on earnings this week. That's going to be the real tell. >> Yeah, we'll get to earnings and uh and discuss that in just a bit. But this confirms, I guess partly confirms the theory that every time a new tariff is announced, that's just a buying opportunity. Do you buy that? >> Until it's not. But yeah, I mean, look, as you know, we've been excessively bullish when other people were bearish. Uh and that's now going back, you know, multiple years to the fall of 2022. We did get a little cautious this month. Uh we built up a little bit of cash. We have no margin. Uh and and uh we'll see if that proves to be correct. Uh and if we get a buying opportunity before the final year end rally or if this just keeps pushing higher. But a lot of this has been retail driven. You're seeing it in option flow. you're seeing it in uh triple and uh 5x leveraged ETFs uh and all the craziness that's coming with that. But uh I think when all is said and done, David, price is what you pay, value is what you get. And I think uh this is the moment of truth this week and and we're going to dissect some of that in the imminent earnings in in coming days. >> So what are the drivers of key drivers of multiple expansion now going into 2026 now? Well, usually you get multiple expansion when you get growth expansion. And uh this ca this time is different so to speak. So far, uh what we're going to see uh as we saw with uh Netflix and Tesla, the first two kind of mag 7 plus that reported was uh some concerns about margin compression. Uh and you saw Netflix down pretty big off of that. Tesla was a little bit uncertain off of that. And if we look yearonear, David, uh, MAG7 earnings growth is decelerating from 32% in Q3 of 2024 to what's expected to be 14% in Q3 of 2025. So, uh, a havinging of earnings growth and yet the multiple for the Mag 7 basket has stayed well above 30 times. It's usually the opposite. when you see earnings growth decelerate uh you see multiple compression not multiple maintenance or multiple uh expansion. So you know uh max 7 $400 billion of committed capex uh this this year which is a 67% increase uh from last year and so far very little evidence of return on invested capital which is why you're seeing earnings growth contract. Uh that's going to impact margins that as you saw with Tesla and Netflix that's going to impact buyback ability which impacts EPS. So uh will the market continue to assign a very high growth multiple to a group that is decelerating in earnings growth uh at present? And and uh the answer is we're going to find out on Wednesday and Thursday. >> Right now there seems to be a trend that the tech companies are spending a lot on capex. In fact, it's considerably more uh considerably higher margin on capex than the other S&P 500s companies. And so Thomas, the question is whether or not uh this trend has actually been pushing up the entire stock market. And as soon as maybe they stop spending money for whatever reason, that's when we get a slowdown. >> Well, there there is something to be said for that. Um I you know, it's interesting. The mark the stock S&P is up around 41% off the April 7th trough. uh 27% of the Russell 3000 uh is only up 10% or less since the April 7th trough, which tells you we've we've basically been in the camp that maybe the MAG 7 needs to stall for a bit on the basis of earnings growth deceleration and high multiples. However, it doesn't mean everything has to do poorly. Uh maybe the the answer is an abrupt shift into those stocks that have been left for dead that are not the AI cost centers like the Mag 7, but the AI beneficiaries that that uh benefit from the technology and have margin expansion without massive amounts of investment like you're seeing across the Mag 7. So, so we could see that type of shift. And then you look, we're in uh the final week of October, David. This is the end of tax laws selling for mutual funds. Uh and often times the stocks that have done worst year to date going into the end of October tend to do extremely well uh in November once that tax law selling pressure is in the rear view mirror. >> And so now with AI and full swing on everyone's radars, what uh what are some sectors or plays that investors can take? Are we looking at hyperscalers, uh, construction companies around that are involved with data centers? Are we looking at the big mag 7 companies themselves? Um, or anything on the periphery? How are you doing this? >> Uh, we've always looked to find, uh, the derivative plays. So, uh, one of the holdings that we've had that has been tremendously unpopular was Alibaba. You couldn't give it away year two years ago. It it just kind of was left for dead. China was uninvestable. It turned out it was the cheapest AI play in the world when everyone was saying it was uninvestable at $60 a share. Now people are getting interested at $175 a share. Uh they had $80 billion of cash on the balance sheet at that point. They were generating 25 billion of free cash flow. You couldn't give it away. So that was an easy one. That's just getting started. Alibaba is going to continue to press higher. So while everyone looks at uh Tesla trading at uh uh you know 13 times revenues and 200 times earnings, you can still get Alibaba at a low double digit multiple with a huge uh blue skies ahead. Uh the second way we played that was Intel. No one you couldn't give Intel away at $19. Now everyone wants it at $39. Intel was was easy peasy when the government stepped in to backs stop that. Uh the game became the US government decided we are not going to depend on Taiwan semiconductor for all the semiconductors in the world. We are going to stand up Intel and they're the only game in town in the US that was at the 10 yard line. Uh Gellzinger had actually put everything in place. It's just the board got antsy even though they authorized him to do everything uh because the stock price was down. So they got rid of Gellzinger. They brought in someone that even better Lip Bhan from Cadence Systems. He had a 68 plus bagger there. He did a huge turnaround uh at Cadence Design Systems and uh and he's going to do the exact same thing in Intel. So uh they got two tailwinds. One is advanced chip development uh at their fabs uh uh GPUs and three their uh two their legacy CPU business has started to recover aggressively. So that's already up double uh plus from the lows and uh I think it could double again over the next few years as as the advanced chip demand becomes um um basically unlimited and Taiwan semiconductor you know Nvidia's biggest problem uh in terms of growth rate has not been for lack of demand it's been for lack of supply because Taiwan semiconductors capped them at $4 billion of revenue growth per quarter with Intel getting into the advanced chip game that was a huge uh easy way to play uh that AI play. And then finally was comtock resources uh which is a natural gas play uh if you consider the data center demand for for the next handful of years going into 2020 2030 you look at some of the Goldman Sachs numbers triple digit increase uh 60% of that is going to be powered by natural gas and some time back you couldn't give these stocks away comtock resources is 75% owned by Jerry Jones we built up a position $89 $8 $9, $10. Uh, that's just getting started. It's one of the lowest cost producers of natural gas and that's going to be an AI beneficiary as well. So, we're looking for the nonobvious ways, the ones that most of the lemon has not been most of the juice has not been squeezed out of the lemon where there's a lot lot of runway ahead. And I and I don't see it as aggressively in the Mag 7. When you think about some of the names that I've mentioned, uh, with, um, uh, you know, BABA tripling off almost tripling off the lows, we think that can double again. Intel doubling off the lows, we think that could double or triple from here. Uh, com stock resources uh, double off the lows, we think that can double again. I don't think you can say that about too many of the mag 7 stocks that you expect them to double over the next few years uh, or could double or triple. Uh I think that would be pretty aggressive relative to a decelerating growth rate and a monstrous amount of capex required uh and a and a big prayer session that they're actually going to get a a sufficient return on invested capital uh prospectively. >> And uh are you are you banking on energy companies being acquired by the tech companies? Microsoft for example is restarting a nuclear facility. Uh potentially they could go further into the vertical integration. What do you think? >> It's not out of the question. I don't think that's their highest and best use of the capital, but I I wouldn't rule it out. That's not in our thesis. The the name of the game is the demand is going to be there, and I think these energy companies know that. So, why would they want to sell out at historic low multiples? Speaking of energy, by the way, um in that basket of 27% of the Russell, that's only rebounded 10% off the uh April 7th lows while the market's up 41%. You got energy, you have real estate, and you have consumer staples, the ones that have been left for dead that I think you're you're going to see uh a bid. So, as it relates to energy, the the sector as a whole is at its lowest waiting in the S&P 500 since when? Since COVID 2020 lows. We made an absolute fortune buying am uh buying Exxon at $33 and change when oil was trading negative. We are in a position right now with some and I'm less sanguin, believe it or not, on the ENTP oil companies than I am on some of the servicesers. But we're in a position with the waiting so low. If you buy energy when they're this far out of favor, it's really, really hard not to make money. The only way you don't make money is if you buy lowquality stuff that has balance sheet risk. If you buy the highquality stuff uh at when when the waiting is this low in the in in the index uh you tend to make enormous amounts of money. The last time prior to co that the waiting got in similar low single digits was 20201 which was the last uh tech mania where you couldn't give away an energy stock and then the next 5 to seven years what outperformed uh energy did value did uh international did small caps did uh and I think we could see a similar situation not that tech has to crash but in terms of relative performance where's your opportunity and you just chase the things that are already up a lot or do you look for things that can double and triple over 3, four, 5 years? >> Going back to Intel uh and tax stocks overall, how do you feel about the government making equity stakes? We're making investments into companies themselves earlier in the summer. Intel announced that the Trump administration is placing an $ 8.9 billion investment into the company uh to make an agreement um and ex and and they'll help expand uh the company. Uh, how do you feel as an investor with the companies getting involved with the government? >> Well, I think people complicate the Intel deal. The the the problem with the Intel deal was the previous administration said, "We're going to give you $9 billion because you're pathetic and we think we need we think we need you at some point." Trump comes in, he goes, "Wait, we're giving them $8 billion for what? For failing?" No, we're giving you $8 billion. We want something in return. This is not your money, Intel. This is the taxpayers's money. like they work, you know, four or five months of the year to pay the US government taxes, they're going to get something in return. So, not only are we going to stand you up, but we're going to give them equity. And then, just like President Trump, commander-in-chief, goes out and sells planes for Boeing, even though we have no equity stake in Boeing, he's going to go out. If you think he can sell planes for Boeing, wait till you see how many chips he sells for Intel. And you saw it that the next week Nvidia was asking Trump for favors to to be able to sell some of their chips in China. Guess what? They miraculously put a $5 billion investment in Intel. And then Soft Bank Masoshi Sun uh put in a $2 billion investment in Intel. So this is in in terms of uh Trump demanding that US taxpayers get paid for capital that was already committed. he is being a responsible steward of our tax dollars. Uh as it relates to these mineral right deals, um I'm less sanguin on that in terms of uh I don't want to see uh unlimited government uh interference because you know there was some rumors earlier like oh look how much uh how many contracts we're giving to these defense companies like Lockheed. We should have equity in locked. I think that becomes a slippery slope and that's problematic. I think Intel was different. Uh he he walked into capital that had already been committed with no strings attached and he said, "No, no, no, no. If you want the taxpayers's money, the taxpayer is going to get something for it." And um as it relates to the rest of them, the mineral rights, I think that's to be determined. uh uh we certainly need uh these these these specialized resources uh and to the extent that the private market can't sort it on its own. Could there be different deals done where the public sector comes to bear for national security reasons? Yes. Uh hopefully we can avoid those at all costs. But if absolutely necessary, I think it is something that needs to be done for national security. The stock's up roughly 60% since the deal was announced late August. I think as an investor, you're looking at this trend and saying to yourself, well, one of two things could happen. Either the government continues this trend. There were rumors that uh Trump wanted to make an uh investments into some um um some quantum computing companies that has been refuted by the Department of Commerce. Uh but anyway, if they do continue this trend, we could continue to see stocks being pumped up. But potentially the government may may misallocate company resources into things that some investors in those companies may not deem productive. So it's a double-edged sword. Uh what's the future here? What do you think? >> I think that the company's board of directors in each respective deal has the opportunity to say no. >> And what that simply means is we don't want your money and we don't want your strings. Uh but if they say we want your money, they should expect to have the strings attached to it. And that's you know that is there is some free market element. It's no different than any other outside investor that says uh we're going to give you money for equity or for for debt. Uh we want this voting right or we have this say uh or we want these terms or we're not going to give you the money. Now the company can say keep your money. We'll get it elsewhere with the terms that we want. Or they'll say we can't get it elsewhere. Therefore, we will submit to whatever terms you you deem appropriate. Uh, and I think it's no different with the rare earths. I think it's no different. I mean, as far as the quantum computing stocks, that seemed like a little bit of silly season and a little bit worrisome. Fortunately, that that's not showing that uh that there's going to be any followthrough on that. But to the extent that it becomes uh a national security, look, you've got DARPA working on similar things. So maybe there will be more and more public private partnerships uh in the name of national security. But when it comes to investing money in a company andor taking equity or debt um uh the company will will uh companies will have the right to say say no or demand different terms and I think that's that's just the case. Now if the administration starts co-opting companies we haven't seen any evidence of that. uh uh that would be a different situation and uh and I think there would be a huge uh uprising against that type of behavior. Uh we haven't seen it to date. Uh and in terms of Intel, it's proven to be a success and I think it's going to make the taxpayer a tremendous amount of money over the next 5 years. It's going to be one of the best investments uh taxpayer money has ever been involved in. >> And if restrictions are placed on tech companies for exporting to China, for example, Nvidia, uh those restrictions were in place by Trump. But uh anyway, if they double down, the current administration doubles down, is that a sell-off uh kind of impetus for you? Look, I think I was against the restrictions uh that came came to bear by the previous administration. I mean, the previous administration's stance was China bad in every way under every circumstance. Let's not talk. Uh Trump is China's fine as long as they give us what we want. And if we can come to a deal where we make more money than we lose, then we love China. And if we can't, we'll isolate them and um and go back to the China bad for every possible reason under the sun like the previous administration. Trump is willing to talk. Trump is willing to do a deal as long as Trump a aka America gets paid and benefits from it. As far as um refusing to export chips to China in the name of national security, I think it was the worst national security mistake uh we've seen in many many years. And the reason is is because China used to be dependent on us and they used to take what we would give them and they would take it with open arms and they would just funnel money into our coffers and create massive earnings power for the US companies. Now, we've said we're not going to allow you to give us unlimited amounts of money uh because we're not going to give you our chips in the name of national security. And what China has done is they have gone on to make uh incredible chips on their own. And on that basis, uh they've gone from being dependent to now being independent to now being in some areas superior. If you look at some of the large language models like Quen uh with Alibaba, like some of the uh chips that they're developing internally, uh we kind of let the genie out of the bottle. They they would have not been that far ahead on innovation had we continue to supply them and continue to keep them dependent on our technology. Now they're becoming independent and in some areas uh excelling beyond us. >> Okay, let's move on to uh the Fed. It's uh Fed week this week. Uh, importantly, Bessent has named top picks to replace uh, Jerome Powell. Um, Fed chair finalists are Christopher Waller, Kevin Walsh, uh, Kevin Hasset, Michelle Bowman, Rick Reer. Um, we we we have we have a short list now and um, no one's been confirmed yet, but it looks like everyone uh is, correct me if I'm wrong, but it seems like everybody is supportive of much lower rates. Is that correct? >> I think everyone except for one is supportive of lower rates. I think Worsh has a history of being hawkish uh and he's playing the game that he's going to be cooperative in order to be given a serious consideration. I think it's not dissimilar to what we saw from Powell before he was confirmed. Uh that he seemed flexible and then the moment he came in, if you remember the autopilot comment in December of 2018 where he basically crashed the market before Christmas and um Minutian had to come in and uh convene a meeting of all the banks 3 days before Christmas on a Sunday to create liquidity and pump the market back up. Um, I think that uh uh Waller for sure, Bowman, uh, all of these are good. Worsh, uh, Reer, they're all s fantastic picks. I think Worsh um, uh, Worsh, you really run the risk of once he's in doing whatever the hell he wants. And, uh, I'm not saying he's not competent, he's very skilled. I he would be the wild card that I would be very concerned about in terms of maybe keeping things too restrictive too long, thinking he knows better uh and uh and maybe putting governors on the uh economy that that don't necessarily need to be there in the short term. So I think four out of five are phenomenal. Everyone I talked to loves Worsh. So maybe I'm missing something. But uh if you go back to his stances over, you know, decade plus, uh he's he's often been very very hawkish and and now he's kind of changed stripes uh in order to be in the mix. >> Uh this is I I love looking at um betting markets on issues. Who will Trump announce his Fed share in 2025? No announcement by December is the majority of votes. And if you actually look at who people are voting or betting on rather um Hassid is lightly leading Christopher Waller I mean it's pretty close when it comes to these uh the first two rather are pretty close. Uh so anyway if you had to if you had to put your money on and bet nobody knows but who who would you bet on? >> You know I I think any of those would be great. Uh I think Hassid or Worsh maybe Bowman. You know President Trump does like to appoint women to um positions. He's he's been one of the most pro- women, pro- diversity kind of administrations historically. Uh never gets any credit for that. I it wouldn't shock me if he put in Bowman, but I certainly think uh Waller uh Worsh all of those would be good choices. As far as whether he makes the announcements before December, that's going to be dependent on what Powell does. You know, if Powell cuts uh this week and he cuts in December, Trump is going to let him ride out like uh Seinfeld on top and uh let him let him have a kind of victory lap and let him go out with style. If he tries to choke things up uh by either not moving this week, which I think is unlikely, or uh not moving in December, I think at that point Trump will announce his, you know, top one or top two picks and make it clear to the market that uh that Powell is a lame duck until he he vacates his seat in 2026. But, uh, hopefully it'll be a cooperative policy, a progrowth policy from the Fed, uh, and, uh, Powell can go out and, um, and have a, a, um, a favorable legacy. >> So, we're looking at at least a 25 basis point cut this week, Thomas. So, last time you were on the show, >> you mentioned to me that once unemployment ticks up, it's a very hard genie to put back in the bottle, I believe, >> words. And now we have 4.3%. Let me just double check. 4.3% as of um >> well we have no idea we have no data. So >> that's right that's that's >> by you know there is that thing called the uh we're we've got the 27 days into a shutdown uh economies economists estimate 10 to 25 basis points a week for every week of the shutdown. Yes, it's earned back once it reopens but uh no one's paying attention to it. I think the longer this thing drags on, if you get that coupled with uh mixed guidance with the MAG 7, uh I think you could find find ourselves uh maybe with a little bit of pullback. You know, ordinarily when you have these 15% plus midyear corrections like we had in April and then you hit all-time highs, there's a secondary correction in that year that averages 6.4%. We haven't seen it yet. Is it coming? uh as a result of maybe some surprises this week. I don't know. Uh but any of those dips if we if they did materialize are to be bought because year to date we've got 312 going on 313 central bank cuts this year globally around the world which is the highest since the postgra financial crisis in 2009. So there's a lot of liquidity slloshing around in the system. Uh even if we get some short-term shocks, whether it's from the shutdown, whether it's from mag seven earnings, uh or something else geopolitical or otherwise. Uh you know, as I said, we've been, you know, accused of being a perman permeable and that's been right. We raised some cash this month. We're, you know, have zero margin effectively. Uh and uh and we've been waiting for a pullback that may never come. uh which is fine. You know, there's also something to be said for locking in a huge year, but um we'd love to see some type of volatility that we could benefit from uh and then play into the year- end rally. So, um we we'll see how that how that materializes. >> Well, how significant is the government shutdown on Fed policy decision-making? Because on the one hand, like you said, we don't have official unemployment data from the BLS, but we have we have other private uh data uh that's tracking u payrolls. Uh but on the other hand, we did get CPI released last week. And so, could the Fed just ignore unemployment for now and look at higher CPI print and maybe maybe slow down their uh their dovishness? Is that possible? I I think it's a low probability that they don't move this week, but as as is the case with the Mag 7, uh the key is going to be the forward guidance. So, I think uh if if they they're not going to be immensely penalized for more hawkish than normal guidance if they cut. And so, what's the downside for them doing it? And I don't know that the market expects them to do it. So on that basis, I would say maybe that there's a surprise in that. Uh yeah, they cut 25 basis points and then they come out hawkish at the 230 meeting saying, you know, we don't have data. you know, inflation came in better than expected, but it's still more elevated than we would like to see or above target or some some type of language like that that the market maybe interprets as December off the table for the next, you know, few days and until they start to get employment numbers and realize, no, December is well on the table. Uh the labor market's a little bit weaker. I think um you know the sooner we get that employment data the the the clearer we're going to know the trajectory moving forward but uh the the trajectory moving forward is lower rates whether whether there's a pit stop in December or not um Trump has made it abundantly clear that the next Fed chair will will be dovish and uh so if if we pause for a couple months until Powell uh vacates then so be it. But uh I think everything is pointing toward uh lower and lower rates for the foreseeable future. >> Uh I want to close off uh Thomas on alternative assets. You and I haven't spoken much about the precious metals, but it's become more of a mainstream topic in the last couple uh weeks to months. Um major banks JP Morgan are uh and Goldman Sachs are upping their gold forecast by the end of 2026. I believe Goldman has a $4,900 um outlook by the end of 2026. This is the price so far. The gold price has pulled back from its highs. Um this is kind of mirroring what happened in 2011. Anyway, do you have a view on this asset? Do you have an allocation to it? Have you allocated more on this really historical uh rally? It's up more than uh let me just get the exact number here to the peak. It's up more than 60% year to date. >> Okay. So, you know what's interesting about gold is that it's a non-productive asset. So, when people say, "Oh my gosh, gold is the greatest thing that's ever." Look, it's up 61%. Do you know how many stocks are up o, you know, over 60% this year, like while everyone was focused on gold, uh the amount of stocks that you could have bought in the April trough that are up double and triple already is unlimited. uh relative to gold. So spending your time on an asset that you're buying in hopes that people will come behind you and and push it higher based on demand for fear geopolitical or debasement trade. Uh look, if you get the basement, it's like Warren Buffett said, whether we get paid in dollars or sea shells or shekels or whatever, if you're buying a business that provides value to the marketplace, you're going to command the most of those seashells, shekels, gold coins. it it it it's really immaterial. The key is buy a productive asset and if there's a debasement trade, you'll just get more shekels per value provided and uh and and find great companies when they're temporarily impaired. And doubles and triples over a 3 to 5 year period are relatively easy to find if you have a solid framework. As far as gold, you're you're effectively guessing. I think the theme is correct that the dollar is going to trend weaker over time, in which case uh gold in theory should should remain elevated. But why, you know, why play that game when when there's so many other opportunities where you actually have uh some level of control over analyzing the forward cash flows and what you'd be willing to pay for those forward cash flows versus just hoping there are other buyers coming in behind you. So, uh to those who have allocation, have been gold bugs for the last 20 years and now have their day in the sun, you know, congratulations. Uh this is the day you've been waiting for. Uh, you know, like they say, the most expensive drink in the casino is the free drink because it means you're still at the table. So, take a few chips off the table. Take your free drink. Uh, maybe let a few chips ride if that's your game, but uh uh beware because uh the clock strikes 12 and uh we'll we'll see if Cinderella uh does okay. couple years ago, Berkshire Hathaway did own Bareric Gold for a few months, I believe, until they sold it off and uh the play there and Warren Buffett has never liked gold as a as a bullion uh mainly for the reasons that you've talked about. Uh but he did buy a minor. Are you would you consider a minor if the free cash flow is extraordinarily strong at current gold prices? >> If I'm not saying they will be, but you know, if >> Yeah. No, I I I have found that the miners, no matter how high the price of the underlying asset goes, they they somehow figure out a way to lose money. Like invariably, uh maybe they get a quarter or two where they generate free cash and everyone says, "Oh, this time is different." But somehow that mining business is a really difficult business. I don't think that was Warren himself. I think that was his uh Todd or Ted. Uh and you see these tiny little positions come and go kind of trading. There's never been a Warren Buffett. there never will. We're seeing that. Um uh and uh and I I could almost guarantee that wasn't Warren's decision. >> Okay, fair enough. Thank you very much, Thomas. We'll we'll end it here and uh please do follow Hedge Fund Tips. Very good uh resource, good summary of the news as well as um um other information and analysis and charts. Uh Thomas, where else can we follow you? >> Yeah, hedge fun.com is the best place. then you could subscribe to our uh uh weekly podcast there. It's uh stock market focused individual companies, ask me anything questions from the audience. That's probably the number one way and it's also anywhere you get your podcast hedge fun tips with Tom Hayes and the YouTube channel. Uh if you go to YouTube, just type in hedge fun tips and all of our stuff is there. >> Okay, excellent. Thank you very much, Thomas. We'll see you again next time. >> Appreciate it, David. >> Great. Thank you for watching. Don't forget to like, subscribe, follow Thomas, and follow this channel.