The Market Is Splitting In Two — How Do We Navigate it?

I was at a dinner last night with a few people who were in the crypto industry. I think the general mentality here is that people feel very stuck. I'm just here to tell you: you're not stuck. That's why we only talk about crypto 25% of the time now and the rest of the market 75% of the time.

You can go trade equities, and you shouldn't miss out on this once-in-a-generation rally. Don't get stuck in the permanent underclass by holding Bitcoin forever. Here's what I think about crypto: if you work in crypto, especially if you work for a protocol like, let's just say, HBAR, Polkadot, or Cardano, and you're affiliated with that, quit your job. Do something else. Pivot to AI, or pivot to something that uses crypto that you know users want. If you're a crypto trader, just delete the word crypto. Just call yourself a trader.

How are we looking?

We're doing. There's some downward price action and some stuff that I still own. The market is very volatile, guys. I've been saying it for the last few weeks. I think I started saying, “Hey, maybe it's time to raise some cash.” The best way to navigate these markets when they're high-volume is to have those single names that you think are going to do really well and then have cash so that you can buy the dips.

What I'm seeing in the market right now is that we're getting to levels and seeing things that are kind of scaring me. Number 1, as an example, is that you're seeing massive moves in things like HP and Dell, assets that are almost catch-up trades to the rest of the market. When you get a rally, 1 way to tell that the rally is coming to an end is when people are buying the things that are derivative plays and not necessarily the direct play itself.

Right now, we're in alt season in the markets, and that is leading to a weird split in the way the market is trading. If you actually look at what's happening, let's recap: the S&P is up roughly 7% year to date. But if you look at the recent price action from the main drivers of S&P and Nasdaq performance over the last year, you look at Google, Microsoft, and the Mag 7.

Pull up Nvidia. I guess Nvidia has still done well, but not necessarily as well as the rest of the market—up around 10% or something like that—with Google coming off over the last few weeks, Microsoft down, and Meta struggling. What that's telling me is that we're in the crazy part of the bull market, where all of the derivatives start to run.

You have to maybe raise some cash, and you don't want to miss out, right? You have to be somewhat allocated to the market. But I think right now the optimal thing to do is to wait for really good entries on these things that you know are phenomenal companies. If we can get Google back down to $300, which would be tough, I think, that would be great. If we can get Nvidia back to the yearly open, maybe around $185, that would be great.

Things seem to be struggling to rally right now. The larger assets are struggling to rally right now, and that makes me worried. For those crypto investors out there, it's like the equivalent of EOS running in April 2018 after Bitcoin had topped. All this excess liquidity is sloshing around.

A great example of this, by the way, is RKLB, which I love and have talked about on the pod before. I no longer own it because it went up. It literally went from a $4.5 billion to a $9 billion market cap because it signed a $90 million contract, and that's just nuts. That tells you there's a lot of retail money chasing.

I'm starting to get more worried than I was before. I hate to be bear-pilled. This year has been phenomenal, and there are a lot of people who are up 3x, 5x, or 10x on their portfolios because they got into these memory stocks early. You have to start thinking to yourself, “All right, if you traded like an amazing hedge fund manager—if you traded like a god—it's time to pay yourself like a god.”

You can't just sit on that UPNL forever. I know maybe you have to tax it—sorry about that—but you have to pay the tax man. You have to pay Zamani something. I came up with that yesterday. I was walking down the street thinking to myself, “Why does nobody call him Zamani?” It's such an easy name. Instead of likely Zohran Mamdani, call him Zamani. It sounds like a Zamboni, a Jabroni. Zamani.

Zam the Zamboni. The Zamboni. You mentioned UPNL and taxes.

1. The Market Is Splitting In Two

For those uninitiated to the abbreviations of trading systems, U stands for unrealized. Your unrealized P&L—when you run something up a lot, you have a lot of UPNL. When you sell it, it's just P&L. It's cash in the bank, and you get taxed up the wazoo. So, yeah, Avi's got a point. Taxes matter, and UPNL is substantial in some of these memory stocks and, generally, compute- and AI-adjacent stocks.

2. The Memory Supercycle: Reading the DRAM Chart

I'm sharing my screen here, so if you want to throw it up there. I disagree with you that we're in some kind of crazy bubble or alt season. Dell Technologies is on the screen here. It's run up a lot, but the price-to-earnings ratio on this thing is around 50x P/E—23x forward P/E.

50x is kind of crazy, brother. But their earnings are going up, Avi, right? So, 23x forward P/E is more relevant than comparing their stock price to what they were earning before they were selling all this new stuff, right?

True. Going even deeper, this is a service that I pay for that not many people would spend $4,000 a year on, but it's called DRAM Exchange. These guys make indices of memory. Last August, the price of a DDR4 16-gigabyte module was, let's call it, $8.50. Then it topped out around $78.

Jonah, for the uninitiated, can you explain what the hell a DDR4 is? Because to me, it's Dance Dance Revolution 4. I was not kidding. I know what it is, but tell the audience.

D stands for dynamic. RAM stands for random-access memory. It's basically just memory you stick next to the processing unit on the circuit board. It goes next to the GPU or the CPU, and it helps.

It only works when the power is on, unlike flash. Your Ledger or your Trezor is sort of a flash memory, which works whether it's got power or no power. This type of memory only works when the power is on. “Dynamic” means that it syncs with the clock speed of the processor or the GPU, which is more efficient for bandwidth, but less efficient in other ways. There are other trade-offs.

DDR5 is the latest generation. DDR4 is where there's the biggest shortage in the physical memory market right now. Mr. Commodity Trader in me likes to always go to the root of the bubble or the blowup. In crypto, it's usually Bitcoin. Here, it's memory sticks—the actual silicon that's getting printed onto boards that the market is short.

This chart shows you what we're dealing with here. The price basically went up 9x, and then this year, between March and May, it sold off a good 30%. It sold off from around $80 to $58. If it were still trending lower, I would start to be concerned about Dell's forward earnings. But the opposite is happening: it's picking right back up.

It has rallied on crazy volatile stuff—another 10% in the last week. Basically, when this sell-off becomes real, if this thing starts trending back down, that's when I'd be concerned.

Now, the only question is: do you know if these are forward-leading indicators or lagging indicators?

To me, this is the most leading indicator. This is physical demand. This is as leading as it gets. This is your finger on the pulse of what's actually driving this whole revolution.

When people stop caring about this, that's going to happen first. Then demand for compute—you know, basically, the real leading indicator is how much demand there is for compute. But the way that translates into markets is that this is the squeezest physical asset there is.

To me, this is the bleeding-edge indicator. This will lead everything else. I'm not worried about Dell trading at 23x forward earnings unless those forward earnings are going to revert to what they looked like in the past. That won't happen until this chart goes all the way back down, in my opinion.

On the UPNL and taxes point, I read this awesome tweet. This guy Jason Williams tweeted, “I feel compelled to remind you: if you buy 1 Bitcoin at $126,000 and it goes to $89,000, you can sell it and buy it back 6 seconds later. You still have the same 1 Bitcoin, but you can realize a capital loss of $37,000 for tax purposes.”

And that's specifically because Bitcoin is treated as property under the IRS.

I think crypto in general is—there's no wash-sale rule in crypto. And this actually, by the way, just as a tangent, led to a very good trade. Basically, every year that crypto has been down—which is at the end of the year, like the last week of December—things tend to go down a lot more because people sell all of their assets and then buy them back in the new year.

Yep. So, here's where I was going with all this. There were sort of 3 threads: Dell being the alt season of the chip bubble, DRAM being the leading indicator of the chip bubble, and this tax-loss-harvesting thing. So, when you're sitting on big UPNL, you can't sell. And I don't think we're going to get the moment when people try to realize huge tax gains and take their money off the table, because memory is still a hot commodity.

Bitcoin, though, I read this and I was like, “Oh, yeah, good reminder.” Bitcoin was trading more like $70,000 when I read this. I was like, “This thing's only been out for a few minutes. It's only got a few tens of thousands of views. Let me just sell all of the lots of Bitcoin—all the units that I bought—at prices above $70,000. And I'll buy it right back 6 seconds later.” And guess what I didn't do, Avi? I didn't buy it back 6 seconds later.

Oh, and why not?

I think I'm just going to buy it back. I'm still long a ton of Bitcoin from lower levels, so I'm still eating it. But I've decided I'm going to rebuy those units when Sailor is finished blowing up, because every day it's like, “Oh, I'm just testing the market. I'm just selling $35 worth of Bitcoin just to prove that it has value. I'm just selling $2 billion worth of Bitcoin.” It just keeps accelerating from here. He's obviously facing a survival crisis, and I'm not going to sell in the first inning of that. I'm not going to rebuy Bitcoin in the first inning of that unwind.

So, to tie a bow on all of this, the final 10 seconds of this is: I think people will be hanging on to their winners, puking out of their losers with a tax-loss-harvesting agenda, and then have the same gut check that I had. So, I think we're in a K-shaped market. The market is splitting in two, basically. Brad, feel free to—

Yeah, exactly. I think that's fair. I do think that one thing that we need to pay attention to just on Bitcoin is that the technical analysis here looks really terrible as well.

One of the major ways to tell whether an asset might go higher or lower—a good hit-rate trade—is when you trade in a range for a significant period of time. If you look at the Bitcoin price, we sort of entered this $62,000-to-$71,000 range in February, and we traded in that range all the way up until April. We then broke out of that range. People got bullish. We thought that, basically, Michael Sailor would be able to start a flywheel effect.

The idea there, which was well articulated by our friend Tiki on his show, is that you can front-run Sailor's buys. STRC was issuing a lot of equity and buying a ton of Bitcoin. We knew when the ex-dividend date was, we knew when they were going to get the cash in, and we knew approximately when they were going to buy. So, the idea was there were probably going to be people who stepped in and front-ran it.

What ended up happening is it worked—or it worked for 1 month—and then the 2nd month it didn't work, because markets adjust. Markets always adjust, and as a trader you have to adjust as well. Things don't just continuously happen in the exact same way every time.

Instead of front-running the trade, like what happened in the first month, in the 2nd month people used the trade as exit liquidity. They used Sailor's buying to basically get out, and he also didn't buy that much relative to how much he bought before, because I think people started to realize that the product itself was a little bit of a Ponzi product.

That was a big reason why Bitcoin went up: people were betting on the reflexive nature of MicroStrategy's buying. Once that didn't materialize, everyone just started chucking out of their Bitcoin. Combine that with the quantum fears, and you get a market that maybe has the most dispersion that I've ever seen in my entire life, with things like HYPE, Zcash, and VVV just absolutely crushing it and doing extremely well, while Bitcoin, Ethereum, and all the majors are doing very poorly.

3. The Pair Trade Playbook

I sent out a tweet a few hours ago that was basically articulating that the market right now is still very overweight majors. All the crypto funds and all the large allocators are still in SOL, ETH, and BTC. The reason is liquidity. If you have $100 million, you can't really buy a ton of alts.

What's happening right now is there's actually a convergence happening where these altcoins are growing in market cap relative to the majors, because they're good assets. If you look at TON, TON has outperformed over the last little bit because Pavel is renaming it Gram. He's going to be integrating it more into Telegram, so it potentially has a narrative. He's going to make money.

You see VVV doing well. You see NEAR doing well off the—I mean, NEAR's more of a narrative play, and I'm not so sure about that long term. Zcash is doing well, obviously, as people are selling out of Bitcoin to buy it as the quantum-resistant play.

We're seeing a tremendous amount of dispersion, and I think as a trader, as somebody who's nimble, you have to take advantage of that. Now, I know people hate when you look back on things and explain what happened. So then the question becomes: what's the trade moving forward?

If you want to do some risk-adjusted trades here, I think it's a great time to, if you're nervous about the market—if you're nervous about Bitcoin going down—put them on as pair trades. Go short Bitcoin and go long these assets.

One other trade that I've actually been looking at is XMR/ZEC. I think that privacy—quantum resistance—XMR will be quantum-resistant as well, far before BTC. XMR is up 10% against ZEC today, and I think it probably has another 50% to go against ZEC. So that's maybe another interesting pair trade.

In moments like this, when there's a ton of dispersion out there and a lot of volatility, in order to protect the downside but capture the upside, you have to take advantage of it. That's the only place I could think of where you can trade pairs.

I've got a pair trade for you. What do you think of selling MSTR and buying BTC, notional neutral? MicroStrategy is still trading at 1.2x NAV. That doesn't seem like it's going to last. I bet it goes to a discount pretty soon as everybody gets blown up.

I think that's actually—that needs to be talked about more. That's a truly phenomenal trade.

So, we've got 2 trades for you. Let's track them and mark them. We've got XMR/ZEC, and we've got MSTR/BTC. I bet the reason why the MSTR/BTC trade is a little tough is that it's not really on-chain. Can you trade a tokenized MSTR on Pair Protocol? Probably not. I think you'd have to do that on, like—

Like a Kraken, or you'd have to do it MSTR versus IBIT.

Well, what you could do is—I mean, on Robinhood, for example, you can short IBIT, right? And long—

You want to be long IBIT here.

Sorry. Yeah, long IBIT, short MSTR.

Yeah, I think that's on Robinhood.

That's probably the trade, because collateralizing it with BTC is, I think, tougher. And that's a no-brainer. Hold on, let me pull this up in TradingView here.

Let me just ask: chart short MSTR versus long IBIT or BTC—your call—and give me the Sharpe of that trade over the past 3 months. Let's just see.

And so, Dylan.

4. Delete "Crypto": Apply Your Skills to Equities

Yeah, outside of crypto, because I think, again, it's funny. I was at a dinner last night with a few people who were in the crypto industry, and I think the general mentality here is that people feel very stuck. I'm just here to tell you: you're not stuck.

That's why we only talk about crypto 25% of the time now and talk about the rest of the market 75% of the time, because you can go trade equities and you shouldn't miss out on this once-in-a-generation rally. Don't get stuck in the permanent underclass by holding Bitcoin forever. Adjust your frameworks and adjust what you're allocated to.

You don't have to be a crypto trader. Tying yourself to that identity, I think, is actually quite negative.

I think so too.

Not only that, if you've been a crypto trader for a few years, you are in a phenomenal position to trade this market from a narratives perspective. One thing that I'm looking at is this: this is a classic thing to do in the crypto markets. Now apply it to the traditional markets: when the market is going up, when there's a bull run, look for the underallocated sectors and buy them, or look for the heavily shorted sectors and buy them. Because if retail is driving the market and flows are driving the market, oftentimes the things that are best set up are the things that, especially once everything else has run, you can take tactical trades out on things that are shorted. And that's actually what happened with software.

Over the last few weeks, software is up 25% across the board. All the shorts got blown out. I think if you didn't catch the long side of the trade there, you have to understand you can also catch the short side of the trade. I think probably shorting software here, that's a megatrend. And this is something that we talk about on the podcast a lot: what are the megatrends? What is actually going to happen?

Over the next 3 years, software businesses are going to be heavily impacted by AI. And so when you get a massive short squeeze, when you get a 25%-plus move in something that is probably going to be hammered over the next 3 years, that's an entry for you. The same way that Worldcoin is probably an entry right now because it's up 35% today. Maybe you want to start building a short there. You have to apply these narrative frameworks now to the equity markets as well, which I think will probably pay you dividends over time. Let's take all these skills that we've fought for over the last 7 years, I guess. Oh my God. I've been in crypto for 9 years.

Oh my God. Where did the time go? I was a young man when I got in this thing. I was 22 years old when I got in. Now I'm 31.

Yeah.

What am I going to do? The time flies. So, okay, let's talk through this a little bit. Back to crypto. Here's what I think about crypto.

If you work in crypto, especially if you work for a protocol like, let's just say, HBAR, Polkadot, or Cardano, if you're affiliated with that, quit your job. Do something else, right? Pivot to AI or pivot to something that uses crypto that you know users want. If you are a crypto trader, just delete the word crypto. Just call yourself a trader.

Crypto is amazing because, unlike oil, where you need to be part of this little coterie of special people at special companies to have access to winning trades and winning information, and if you're not in that coterie, if you're the 99%, you're at such a ludicrous disadvantage that it's not even worth your time. Crypto is like a really retail-optimized asset class where you have the advantage if you're retail because you can touch things that the daddy at the TradFi company you work for won't let you touch. And you could be a profitable trader at Wintermute or a profitable trader in your pajamas working remotely from Thailand. Crypto is really democratized in a way no other market is, except maybe the stock market. But crypto is better because it's more inefficient.

Delete the word crypto and just branch out into other things where you can be a retail trader. I would not recommend being a retail trader of physical DDR4 memory sticks. That is a bad idea.

How would you even trade that?

You can buy all of it that you want,

but it's going to be physical.

Yeah, and stash the boxes in your garage or your bathroom. But if you want to go and resell those things, good luck. You've got to be ISO 9001:2015 certified. You've got to be AS9120B certified. You have to be AS6081—I forget which one—certified. Basically, the point is, if you want to trade physical memory, there are some people on X who LARP as physical electronic-component traders, but the reason why they're all just faking it is because, let's say that I'm Dell.

Let's just go with Dell. Let's say that I'm Dell. And some random guy, Zephyr, is the biggest LARP on Twitter. I think he works for Citrini Research. He's a researcher. He's not a memory trader, but he's pretended to be in the book. Well, I like Citrini, but maybe this—

Yeah, I like Citrini, too, but this guy Zephyr, who works for them or created it—I don't know which—LARPs as a memory trader sometimes. It's like, no, you're not.

Because if Dell has a choice between buying a cluster of GPUs from Arrow, Avnet, and Zephyr with an NFT profile pic, even if Zephyr is offering it at a third of the price that Avnet is offering—the same exact modules or GPUs or whatever—Dell's going to pick Avnet. Why? Because they're certified, and they know that if they put it on the board, their board isn't going to break. And if their board breaks, then the whole assembly line goes down and they lose hundreds of millions of dollars.

And the same logic applies to a GPU or a memory stick as it does to a diode, right? Something that costs a tenth of a penny. One counterfeit or faulty diode can stop an entire assembly line for weeks while they go and procure the right one. So they're going to pay the price to procure from trusted sources rather than from random guys pretending to trade electronics on the internet.

So that's why I wouldn't recommend memory. But crypto—back to crypto—is not one of those markets. Stocks—equity—is not one of those markets.

5. The Leading Indicator Framework

In fact, more than ever, equities are not that market. I highly encourage everybody, whether you're using our terminal, Claude, or ChatGPT, to go in and debate all your ideas with them and really spend the time to read through the outputs and then dig into the actual data yourself. You're going to be able to find incredible opportunities here in the market just by using AI.

You were talking about sourcing opportunities, and I just threw in: if your AI is connected to proprietary data sources, you source 10 times as many opportunities per hour as if it's not. So you were talking about using AI to source opportunities in the equity market.

You as a retail investor can now get smart on anything. And this is something that I'm digging into right now that maybe you need to as well. I sit there and I think to myself, okay, well, if software has done really well over the last little bit, software has been a heavily shorted area of the market.

As the Magnificent 7 came off, as the leaders of the market started paring back, software started doing very well because I think people started unwinding some of these trades. And so then the next question is, well, what other overlooked sectors are there? What sectors have not performed well?

And I go into our terminal and I ask it, okay, well, what hasn't performed well? Healthcare pops up as something that has immediately underperformed the market. Healthcare actually benefits massively from AI. Drug development benefits massively from AI. And so now I'm probably going to spend the next week digging into biotech to figure out whether right now this market seems to be reasonably overlooked.

I mean, Novo Nordisk is down—went down 44% in 2025. It trades around a 4-year low, with a P/E of 14. I’ve got to dig in and see if they have anything new coming online. Maybe I go buy Eli Lilly.

Oscar Health is another one, down 50% from its 2025 highs despite guiding to pretty massive growth in 2026. That’s a managed-care insurer. Maybe I’m looking at UnitedHealth, but AI is actually going to benefit these companies in a pretty substantial way.

I mean, insurance companies, I think, are actually going to be huge winners of the AI revolution, specifically because as healthcare outcomes improve, costs come down. As new drugs are created, we stop allocating tremendous amounts of money to pay for palliative care and long-term healthcare, if we can solve some of these underlying issues.

I mean, there’s a drug that just came out that basically said, “We’re going to solve cholesterol issues.” And that would be a huge boon for all of these insurance companies that have people who have bought long-term contracts with them. Now, their cost of servicing these contracts is going to come down a ton.

So, it’s like, okay, maybe we start to look at these other areas and AI. I mean, I would have found it really difficult to do this without AI in the past. I would have had no idea where to look. I do have a note of caution on that, though.

I don’t even know where to start. Right. Yeah, go ahead.

I have a note of caution. I’m going to go back to the South Park meme where it says: step 1, collect underpants; step 2, question mark; step 3, profit.

I warn the community here and now, with all of you as my witnesses, against “step 1: AI, step 2: question mark, step 3: profit.” You need to guide the AI.

That’s fair, right? That is fair.

So, before you go out there and get smart on pharma stocks and start trading them, be careful.

I would say an unstructured prompt about a euphoric future in pharma stocks—the AI will just self-reinforce your ideas and tell you to buy them all, and then you might vomit. So, let’s go back to the charts I showed you earlier in the podcast.

The first is physical DDR4, the tip of the spear, and the second is the Dell chart. The DDR4 chart starts getting white-hot and going vertical in October and November. Dell stock in October, November, and December is trending down. It looks like Bitcoin does right now.

It bottoms out in February at $110 a share, and then that’s it. Then it goes straight up to $475 a share. So, the way that I would prompt your AI—and this is actionable; Avi and I always like to do actionable things instead of just telling AI, “Hey, what do you think of this? What could the future be with AI in this sector?”—is that I would try to find the commodity that represents the leading indicator for the sector, or the asset or basket of assets that you care about.

I would get smart not just on that sector or basket, but on its physical or fundamental leading indicator. Think about the lag between price action in the leading indicator and the basket that you care about, and why that lag would be. Sanity-check it with your meat computer in your head. Don’t just trust whatever the AI says. Think about it and see if it makes sense, so that you’re not overfitting.

No, I understand what it means. I just don’t want to think about a meat computer living in my head.

Okay, let’s call it your noodle, your gray matter. Anyway, think about it and then try to identify that.

So, if you’d been researching, you could have done this with AI 6 to 12 months ago. If you’d been researching, “What’s the squeeziest physical fundamental indicator in the compute sector?” it probably would have told you memory is where the big shortage is.

Then you would have to shell out $5,000 a year, $6,000 a year, to DRAM Exchange or Bloomberg or one of these other indicators—basically, find a DDR4 index—and then map that onto the stocks that you think you’re interested in. That’s the way I would do it.

I just think it’s very important as a commodities trader to find these lead-lag relationships, because most of this is—we are in a paradigm shift in many asset classes, but most fundamentals are mean-reverting. Like Econ 101, we talk about this almost every episode now: when prices go up, supply increases and demand drops.

That’s how most markets work, unless there’s such a crazy paradigm shift that you break the range. You need to assess that by identifying the fundamental asset underneath it all and asking yourself, “Has this broken the range or not?” That’s the way, in my opinion.

I think that’s fair. To take a pivot on that point, because I think it’s important to address the supply-side issue, I do think that part of the rally and what you’re seeing is because people don’t necessarily have access to the companies that are making direct revenue on AI.

6. Hawkish Warsh + The Cash Barbell

I mean, obviously, companies making direct revenue on chips, sure, but people don’t necessarily have access to Anthropic and OpenAI, which are generating a huge amount of revenue. You can buy the Mag 7 because they’re spending money on AI and presumably, at some point in the future, will benefit substantially from that capex buildout.

But part of the rally is because people just want to be allocated to that theme. And when the Anthropic IPO comes out, I’ve had a lot of people say that it’s a quote-unquote consensus take to say that the market will top around a massive supply event.

While that may be true among smart traders and allocators, I don’t think that’s true among the vast majority of people who are trading in this market. We’re about to have, once OpenAI and Anthropic come on the market, maybe up to $3 trillion of additional supply for the AI thesis come onto the market.

I think, definitionally, that’s going to dampen the ability to rally, because some portion of this—it’s not all of it, but some portion—is due to the fact that people don’t have access to these things and they just want to allocate to the AI thesis.

And so, that, combined with the inflation data, the consumption data, and Trump already attacking Kevin Warsh—I don’t know if you saw this—

I didn’t see him attacking Kevin Warsh. I just—what happened?

Yeah, he already threatened Kevin Warsh. He was like, “You better do a good job.” I think what we’re probably going to see is a slowdown at some point around that IPO, and maybe we get one push off into that.

But this is why, again, I just go back to the basics. I’m advocating for high cash and high concentration in single names, because what you want to do is take advantage of the bull market.

When you buy the index, you’re allocating to Nasdaq-100 companies and S&P 500 companies. The reality is, the bull market is in roughly 30 companies. So, why would you allocate to the rest of it when you can just allocate to where the bull market is and have cash to buy the dip when it comes?

It just doesn’t make sense. Allocate to where the economy is actually growing, right? The rest of the economy is not doing particularly well. This is the major growth driver.

We’re traders. Obviously, the counter to that is, “Time in the market beats timing the market,” but we’re here to trade. In a world of volatility, I think that’s the best way to do it. My general approach now is going to be very tactical relative to the past.

What am I looking at buying on dips? I’m looking at buying all of the Mag 7 if we get down another 20%. I think they’re absolute screaming buys. Uranium’s been struggling here. We’ve sort of been distributing for a bit.

7. Iran Heats Back Up: The Hormuz Tail Risk

If we get down to the 42 level, load the boat there again, because I do think that energy is a long-term thesis here. But in the meantime, I’m focused on these pair trades, like we’ve been talking about.

I want to talk about oil for a second. Oil is up again because of what’s happening in Iran, and we’ve sort of forgotten about Iran. But that’s another threat vector, because Israel is heating up in Lebanon. You saw that call that Trump had with Bibi; apparently, he got quite mad at him.

To me, that indicates—not having a united front against Iran, I don’t want to say a fractured relationship—probably ends up in a worse deal for the United States. It seems like Trump might be willing to take a poor deal just to get this thing over with, which I think would be bad for the markets.

Yeah, I agree. I’ll give you an analogy.

When I go into the pantry and start eating my children’s candy when I’m not supposed to, I’m just chilling—eating one marshmallow here, one marshmallow there. Then my wife, from way across the house, sees me and says, “Jonah, your cholesterol. What the fuck are you doing eating the marshmallows?”

My first instinct isn’t to walk away from the marshmallows. My first instinct is—my lizard brain says, “Quick, eat all the marshmallows. Eat every single one quickly,” before she gets over here and physically drags me out of the pantry.

Your brain works in beautiful and mysterious ways, Jonah. I do have to say, my kids do the same thing. They stuff their faces right before I grab them. Basically, I think that's what Bibi's doing here. It's like it's going to end, and the figurative marshmallow in this case is, “Let's cross the likely Litani River and whack a few more of these terrorists before Daddy Trump comes and ends the show.”

I remain of the opinion that we are not going to stock out of oil globally and allow this to persist into a dire economic depression scenario. My timing has been horrendous on that call as it relates to the actual duration of the war itself, but my call and the way that I expressed it has been freaking fantastic. The stock market has done nothing but melt upwards ever since I said that this is not a concern. That is my biggest position. I'm happy.

You can bet your boots that the stock market will trade down 30–40% if there's an actual global oil stockout and the price of a barrel of crude goes to $200. Sayonara equities, sayonara Mag 7, sayonara Dell stock, sayonara memory. Memory is all fun, and AI is cool, and paying for prompts and tokens is great, but when you can't drive to the grocery store, you don't care about any of that, right? Oil is on the Maslow hierarchy of needs way, way, way more fundamentally than Anthropic credits. Just bear that in mind.

I thought tokens were the new oil.

They will be one day, if all the high-frequency traders who are talking their own books get what they are wishing for. But for now, you need the wheat and you need the oil long before you need the LLM call. No, that is true. But I'm still reasonably confident that we will get out of this Iran war. If we do, this is all about probabilities, right?

The question now is what happens, given that this has dragged out and there have been new strikes. I think the Iranian drones damaged Kuwait's airport, we conducted fresh strikes on Keshum Island, and the talks sort of broke down a bit. That is, in this particular environment, a lot more dangerous than it was in April. Why do I say that? Because in April, yes, we had had a rally, but we hadn't had the same type of leverage-driven, extremely high-dispersion stock market rally that we're seeing now.

We had a bit of a healthier market in terms of breadth. What that means is that the people who were holding these assets were much more likely to be strong hands than the people who are holding these assets now. A lot of the people who are holding assets now are in it because they are going up, right? When that happens, people are a lot more sensitive to shocks like Iran and shocks like inflation. At the end of the day, as a trader, you have to make the determination: Who is holding what, and for what reason?

If your conclusion is that people are holding things because they are going up and there's a lot of retail flow in the market, that makes these types of risks a lot higher. Whereas back in April, especially once the war actually started and the market sold off a bit, the reason that we got bullish is because, basically, 3, 4, 5 days into the war, everyone that had derisked because they wanted to derisk, because the war had already happened, was out—and the market was, I think, in a good position with strong hands holding it. And now we have the opposite.

Which, again, is why one exercise that you should do as an investor every day is try to figure out who's holding what and for what reason, for all the assets that you hold, right? The optimal way to trade is to hold an asset that you think is going to hit a narrative at some point in the future but right now is being held by deep-value investors, so that even if it 5×s, people aren't selling it. That's kind of what happened in memory.

I think robotics is probably going to be a big one. We have to wrap up soon, unfortunately, but I interviewed Andrew King this morning. We talk about everything to do with robotics, how to invest, and what companies are doing well. I do think robotics is going to be a pretty massive megabubble, and there are kind of no ways to get access to it right now except for Robbo Strategy, which, again, I was not an early investor in. I bought it on the open market, so I'm biased because I own it, but not because I got a sweetheart deal or anything like that.

And this is a stock, not a token.

It's a stock. It's a stock symbol. So, basically, my goal on the next drawdown—on the next market scare—is scaling into space, scaling into robotics, and probably buying less memory and more energy. That's the way that I would think about it. I'm buying Mag 7, robotics, and space. I'm probably not buying as much Intel as I was buying back during the Iran war. I went overboard on that one.

Mazel tov. That was amazing. I can't complain about it.

What other content should we talk a little bit about? I didn't even realize you interviewed Andrew Kang. That's fantastic. Do you want to tease that? I guess you already teased it. Do you want to tease some of the other types of content that are going to be coming out on the show? Just for my edification as well. I'm curious.

Yeah, as you guys know, we're expanding the show. My favorite color is orange.

Mine too.

Which is Jonah's favorite color, which was crazy when I found it out, because what men have orange as their favorite color?

Have you seen Step Brothers, Avi?

No.

Oh, man.

Oh, no—yeah, of course. Did we?

This is like the John Stamos moment, you know, when we both realize—

Yeah.

Name your favorite color.

Orange.

Oh, is it orange in that movie, too?

No. It's like they both realize that they both like John Stamos at the same time.

Super unusual. And actually, my childhood bedroom was painted orange. Not that anyone needs to know that, but I bullied my parents into painting it orange. They were like, “Why would you want to sleep in an orange room?” I'm like, “Because I like orange.”

When we have some success with this new media venture, Avi, we can buy matching orange Nissan Sentras or something.

Yeah, that would be sick. Or, I feel like if we do really well, we got to get the McLarens, because those are meant to be in orange.

Those are awesome cars.

Yeah, those are ridiculous cars.

I saw Jon at IRL last week. He's much taller and more Chad-looking.

So, roam around Los Angeles and bump into us, or I guess in New York in Avi's case. I'm not going to dox where in New York, but as you can see from the super-distinctive background behind him, he's probably in one of those New York apartments, you know.

Yeah, it is, in fact, the New York apartment. It is, in fact, the New York apartment. On the next pod, I'm going to explain what that painting is, because it's kind of cool. Not as cool as your butterfly gun, but if we're talking about our paintings, I think it's probably time to wrap the live.

Yeah. Love you, brother. See you soon.