Episode 23: Investment Breakthrough, Finally

Hey guys and welcome to episode 23 of Shun the Bull Pod with Drowsy and Bear. We are back from our summer vacation and we cannot be more excited to be here. It has been way too long since we were last on the air. Bear how are you doing? Good man. Good to talk to you again and good to do an episode with just the two of us. It's been a few months. Yeah, we were just saying before the show that the last three or four episodes we've had guests on. So this is the first episode in almost three months that's just been Bear and I. We've had some amazing guests. But well actually and I want to start in true Shun the Bull pod fashion as many of you have commented and thank you for all the well wishes while we were on summer vacation and reminding me how to properly start the show. So Bear what kind of market do you think we're in? I don't know. I've been saving this one for months and it's just one of my absolute favorites. So I put out a tweet thread about all the weirdness and some funny stories but this is my absolute favorite. So I'm at a I don't know like a work dinner kind of function and there's this local business man who has like a construction firm or he's a contractor general contractor something like that. And I talked him occasionally just about housing and he comes up to me all excited which kind of caught me off guard. He's not really like the excitable type and he tells me how he's tripled his $5,000 investment in a company he can't remember the name in and tells me that the ticker is a and D. So alpha Nancy D dog and I look at him and go well first off I'm glad you tripled your money. That's amazing to hear that you went from 5,000 to 15,000. That's truly awesome. What does this company do? And he said this company makes parts for computers and I'm like okay there's lots of little companies out there. I mean you and I are kind of scholars of investing. So I was like okay, rack in my brain what kind of small microcap as he taught me about. And then his buddy comes over a smacks him on the shoulder and goes dude I told you it was called AMD and and he goes I knew I was missing something and I just think that like perfectly epitomizes kind of where we are in this AI market where we are investing. I'm glad he made a ton of money. He tells me he's still holding so it's probably been maybe even doubled since he told me the story or since I experienced it. But you said he put how much into it? He put $5,000 and and and the first time you said I heard I heard 500,000. I was like oh this is insane. But I don't know what the guy's situation is. He's correct I mean he's he's doing fine but one of the he tells I mean he's telling me this whole story about AMD and he heard about it from the other guy who smacked him on the shoulder who sells cybersecurity software or something like that. So like a somewhat inside maybe not inside of it but someone who knows a little bit about it tells him hey go put $5,000 on this stock. He goes into his account puts it triples his money amazingly and doesn't know what it is. And we don't like it there. Yeah, we've all kind of been there and made these gambles but man I just was thinking this is the kind of market we're in. Some people are making unbelievable amounts of money with some small sliver of the S&P 500 or I guess Russell 2000 for some of these names. Or one ticker that they don't even know all three letters to. When you and I go public we're going to name an AMD. That's going to be our ticker. That's a great point about the market we're in. It does seem like it's hard to keep track of what's going up when and how much. I've been calling out Stereolabs for having a price to sales ratio over. At first it was like it's over 60. I was 60 something. And then I looked a couple days later, it was 77 and then we were talking earlier today it's at 82. This is trailing price to sales but I'm just thinking man I used to think that data dogs was high in 2021 but 82 that's insane. We shall see but if they grow 100% that comes down to 40. We will see if they grow 100% here over here. We're taping this Monday afternoon so the market is absolutely ripping especially the AI trade is back on. Stereolabs as we're talking is hitting all time high is up 11% today. People are feeling good and this trade is back on after a couple days of other companies taking the glory for a day or two. Yep. I will let you lead us into our first topic because I was going to say something else that would just drag this on for longer. But I want to get into all the good stuff we have to talk about today. We have a ton of good stuff to catch up on to talk about. Bear and I are both trying to put more of our work online for folks to read whether it's a little bit on Twitter but also a lot on Reddit. We both had a few different posts that we've put a lot of thought in and as folks know like we're students of the game we spend a ridiculous amount of time thinking about investing philosophy about portfolio management about individual companies so we're going to try to put a little bit more out there and then it's a great opportunity here to discuss them. I had one what I hope was a good post about investor psychology and bear you had a great post about concentration portfolio management. So let's go through that and then as always we'll talk about a few other companies and how we're doing the ever long battle of bear kicking my ass. So let's try to triple me. I'm trying to triple you. Yeah, you go first with yours and may I just say first that it's great to have you know so posting a little bit longer form. I mean your tweets are always fun but like this is I hope you've gotten some good feedback other than what I'm giving you right now that you know a longer form drowsy post is good stuff. Well, thanks Ben. I appreciate it. It gives me an avenue to sort of explore thinking and investor psychology in a way that a tweet and sometimes our pod offers a little bit different of a venue. So I really enjoyed it. It's been great to connect with everyone and I'm definitely going to try to do more. So my my post and we'll start here and then go to your so it goes back to a chat that we had a little bit of a go of how we think about some of these names I've run up like crazy. So many of us now are sitting on some names that maybe were smaller positions that are up tens of hundreds of percent. And I think a lot of people struggle with what to do next. And I think there's a substantive side of this you can DCF out you can create models you can do all sorts of techniques to try to identify if where that stock fits on the valuation if 100% growth is just it's hitting its curve or if it's truly overvalued. So I wanted to take part of that aside and really just focus on as an investor how to frame what you do next. And there was an old post and WPR corrected well corrected me a bit but actively put in the context from Saul but Saul used to sort of get at this when things have run up like crazy especially during boom and bust parts. Think about it as you've kind of done your part and it's time to let someone else take on that risk. So I really that really resonated with me because I think too often I put this in the post when something goes up 100% that your first thought is nerves your first thought is I hit the jackpot or effort I'm out I have to get out and save that 100% and I always thought that was such a harsh way to view what is hitting the jackpot what is lightning in a bottle. So I really resonate with me and I thought I thought a good way of framing it is sort of you let someone else ride the ride at that point. You did you did your work you understood your risk tolerance you understood the company to whatever extent possible to let you hit that and then it goes up another 50% you've done your job you are letting someone else take on that risk which as some of these names really grow into crazy valuations like what you just said a star labs at 82 Ford price of sales like you just sort of need to be okay with it and know that's part of the game. So I called out some of and some of these numbers are old at this point but some of our crowd favorites that we talk about and several of us own these these plays like a star labs is up over 100% this year nebius is up 159% Silicon motion is up 200% credo some of these other names are up crazy amounts so as investors wrestle with what to do next and I'm not making a call on any of these companies in particular I just thought that framing was really really a good way to think through things. Yeah and you know some of those are up even more now probably but I think to your point about WPR sort of pointing out that when Saul said that it was really about the 2000 you know dot com bubble but he also said and I don't know I mean I think some of this is like probably you preaching to yourself right about being okay with trimming and selling and so Saul did trim a lot I don't know how much of it was based on valuation you know I do that based on valuation but also position size you know like I if I have whether it's a 20% position or a 7% position I may I may just say like you know like Reddit is a good example recently like I haven't let Reddit get above about 6% recently. because I just, I still like the company. I still think it's reasonable from a growth perspective and becoming more profitable, perspective and evaluation perspective. It's all good. It's just growth is coming down and I just don't want to let a position like that become like a 10 or 12% position. So there's all kinds of ways you can interpret this other than just time to sell. And I thought you started a good conversation there with that. And maybe like my posts, I'm often talking to myself. Maybe you can learn from your own post about when trimming might make sense for those various reasons. I just called out a couple of. And even with some of your, well, I suppose maybe you're a little bit more tuned to this, but I know investors, especially more junior investors, they have their first moment of 100% gain. They bought a stair labs. They did some research. They listened to those engineers talk. They heard Gavin Baker or Dr. John Ratonti or someone talk about this company and be like, I should take a starter position. And now they're up 150% in two months. And sort of what to do next. And I think there's a lot of learning and knowing yourself and your risk tolerance involved, but I think just a sort of framing of like I've done my job and now let's cognitively kind of cool down and think what's next. I think it's a really important step. And I think I think you've perfected it to some extent in just how you're really number focused mostly and concentration, portfolio risk focus. And I think for me as someone who really focuses on the story, the narrative, I think it's been helpful to sort of lift that burden off my shoulders to sort of be I do my part. Now do I practice what I preach a little bit? I definitely keep this mindset and it's been helpful as I've looked at stair labs and holding it up 5X or something now. But I thought it was worth a good conversation. A lot of people talked about their own ways of kind of finding that Zen as they choose what to do next. And that's been really inspirational to read on the chat. Well, I appreciate the compliment, but I would disagree. I don't think I have perfected any of that. And I think one two two parts of this, right? It's when something good happens to you and your position goes crazy, what do you do? Do you do you hold or do you trim or do you sell? I mean there's two ways to look at it. You know, you can you could certainly do what I do and and trim too early. And of course, like I have perfected not, or you know, maybe not perfected is probably the wrong word, but I have definitely become comfortable with saying, hey, I still stair labs before I'd ever hit 200. You know, I mean, probably before it hit, I don't know, anyway, maybe not 200, but before it hit 250 anyway, I was out. And you know, then I another guy on our Reddit was talking about how he did a DCF and he got out and I've been 350. I have no idea, but I don't remember. But, you know, now it's 450 and I still think probably the move is to trim if not get out, but you see it differently. And I think that's fine. I think there's two sides to like, you know, you have to be okay when you do decide to trim yourself with just like, like you said, somebody else can have the gains from here. I mean, like, it's gotten so crazy. And maybe you don't feel that way. You know, I don't think WPR feels that way. Yeah, a stair labs is one of his biggest positions and he's a great investor, obviously. And, you know, we can just disagree about that. And he may make it may go up to 900 and he's going to make another 100% on it. Who knows? I just think at some point, I like you feel that saying that makes a lot of sense. Just, you know, I've done really well on this one. It's gotten way past where I think it could be or should be, you know, and usually when I'm saying that, I'm thinking like, I'm still giving it a little room to grow in the next year. And I think it's already passed that point. You know, so I, and again, I'm wrong by 100% or more sometimes like a stair. Like I was literally out 100% ago. It was 50% of where it is now. And I was pretty much getting out. So anyway, lots of ways to split that out of them. But I certainly think that it was a good conversation and one that we ought to continue. Yeah. And maybe we'll tie in with with our next topic. Yeah, it was just going to say, I think that's a perfect transition of the mental, the investor psychology side of things. And then I thought you had a really interesting post on concentration. And as someone who runs sort of backed into this a bit, but unbelievably concentrated portfolio, I thought it was really helpful to think through. So, why don't you run through kind of an overview of your two posts? Well, it's three now. I had sort of a three part series and I just did the last one this morning. So I'm not sure if you're getting to absorb the whole thing or not. But the first two were kind of about when you are ultra concentrated, like concentrated to a fault. Like you only have maybe five or six positions and they're all, close to 20%. You know, you're you're really saying these are the only six stocks I want to participate in and nothing else matters. And you know, even if you have like a point 0.5% position in a couple others or a one percent position, a couple others like those six stocks or five stocks or four or however many, those are ruling your portfolio. And I said, you know, I said in the post this morning, you can invest in one stock if you want, but you know, you're it's either going to work out fantastically or horribly or or even if it does nothing, your portfolio goes nowhere and you're just kind of giving up time. You know, so I think I said in the third edition of this this morning that I also think that people can have the opposite problem where they don't concentrate enough. You know, if you have 50 positions that you've built up over years and they're all around 2% well, you're you're an index. Congratulations, you know, you're not you're not really getting any bang for the buck of your stock picking. So there's got to be a happy medium. And where I came down is what's all always just to run what I see WPR running what I like to run I have run in my better years is about 80% of your portfolio, maybe, you know, with some room, so a flux 60 70 80% of your portfolio is in your top seven to 10 stocks. And the reason for that is you only have a hundred percent to play with right? And if you split that 100 between 50 stocks or 100 stocks and you know none of them matter if you split between 20 stocks, that would be an average of 5% per position. Maybe that makes sense, but as you get to that 20 stocks, it becomes harder to value. So you kind of have cross purposes, right? You have you you want to diversify some way you want to participate in a lot of stocks. There's a lot of good companies, but you also don't want to get, you know, information overload and not be able to track them all and all that. So there's there's some kind of like somewhere between seven and 10 or 15 companies is like the most like real positions I think anyone can reasonably have and and track them as much as, you know, we spend a lot of time on these six. And then, you know, if you have a long tail of of 1.5% positions after that, who cares, right? That's the 20%. But the main party portfolio should be I think seven to 10 main positions with maybe a few other small positions that takes it to, you know, 12 or 15 that make up 80% of your portfolio. So I don't know how well I communicated that in the post, but that's what I was trying to say. And again, that's what that worked for me very well. And I also made the point that I kind of got off track from that in 2021 when everything was going crazy. And it was like I was selling some things because the numbers were slowed down. I was selling some things because it had just been such a crazy run. I'm thinking like upstart, you know, and that way was kind of both the numbers fine. The numbers started breaking down. It was an immediate sound. So I got down to five or six six positions, I think at the end of 2021. And that's just, you know, I was preaching. I was I was talking out of my own experience of like I had 87% of my portfolio and six companies. And then I think a little cash or something. But it's just, it's too much. It's not you, you know, especially and you pointed this out when we talked about this, the one recently too is especially when they're all in the same theme or even subfee. You know, if you've got like five different companies and they're all, you know, Bitcoin miners turn neoclides or if you have five different companies, are they're all SaaS companies in 2021, you know, that makes it even worse. But, you know, just having five or six companies in general, even if they're completely diversified industries, you're just you're missing, you're just giving yourself too much opportunities to miss out. Then if you have maybe 10 and then a few more, you know, smaller positions that you're also getting into. And so that was another thing that I'll stop here. But like another point to, you know, doing a little bit of a diversification from a very tight, you know, five stock portfolio is, keeps your portfolio vibrant, you know, is to always have something to like, okay, I've got this, you know, 15% cash and small positions or 20% cash and small positions. I want to be finding new stuff with that. And then some of those will become like toast for me was that a few weeks ago and has now become one of my larger positions. It's like a six or seven percent position. Because I took a small position in it a few weeks ago. And I said, you know, this is I'm seeing more and more merit and and making this a real position. So that's sort of another reason to expand yourself, not just in your what you're looking at, but actually keep the portfolio in flux. And what I've struggled with and what I've seen a bunch is, you take a 1% position in a company that you feel pretty strongly about, maybe not your top conviction play, but you've done all the work, your conviction might be the highest. It might ever be in this holding, or your understanding that the company might be the highest, it will be for some time because you put in hours of research or whatever that looks like in your system. And then it doubles. And now you have a 2% position. That's amazing. Meanwhile, your other six ideas that have 20% in on or 8% or whatever are struggling, or maybe not as prosperous or as on your mind as this small position is. So I mean, that certainly happened with me with Stara Labs, which maybe the title of this episode is just a deep dive on a Stara because that pops up in every one of our conversations today. But it was a 0.5% position. Now it's a 4%. Amazing growth. And I've been adding like crazy. Imagine if that started off a 3%. And now we're talking some pretty decent change right now. And this is the thing. This is why I say, whether it starts out at 1 or 2 or whatever, being willing to see the-- and this is why I kind of feel like the tail of my portfolio is usually only about 10 stocks. Because I feel like those are all candidates for like, I really need to bump this up quick. Like I did a bit toast. But they're also candidates to be out of the portfolio too. So it needs to be churning. It needs to be in flux. It needs to be vibrant and alive. And you need to make sure you're not just sort of shutting down all other companies because you have the six you like. Or maybe you have the-- maybe you have the three that you like and then a long tail. But that doesn't make much sense either because you're not really focusing on anything, but the ones that obviously are driving your performance in a huge, huge way. Or even if you are paying attention to the other companies, you're not considering, hey, do I need to be-- like you said, if I had just considered when you took this position in ALAB, who cares what it wasn't beginning, 1%. You followed it for a few days and weeks. And you were like, hey, this is amazing. And then maybe they reported in a quarter. And you're like, I got to double this. And it went down in March. Maybe you should have-- maybe that was the time to say, oh, man, let's make this a 4% or a 6% position. And being willing to say, actually, this is one of my top 10 now. And maybe Master of Card isn't anymore. Again, this is not financial advice. I'm not telling you what to do. I'm just saying, if that's how you feel, it's important to be able to make your portfolio look like that. And the other tangentially related part of this, too, and what I suffered for is my started positions were about the same amount of money from year three of investing to year 10 of investing. Obviously, there was a lot of compounding that happened. Some good picks, some very good picks, some horrible picks. But that size of money should have been a percentage of the portfolio and not the initial amount of money. I mean, I'll total-- Oh, total. So it was like a $500 starter position, which again, money, we don't-- amounts don't matter, but it was $500 when I was young and dumb. And now I'm not young, I'm just dumb. And it was still $500 until recently. But that's even, obviously, a much smaller percent. So it was sort of this, like, I'm doing the same steps, but not adjusting for what the account has compounded to and grown to. And that also played with me because here I am. I'm doing what I've always done. But obviously, you're having even less of an impact than if you took the courting percentage to what it is now. Yeah. So I think that is 100% right. And it speaks to something Saul wrote about. Basically, if you just invest $500 or whatever, $100 every time you get a paycheck or every month, that works for a while. That works for like two or three years, probably. And then one of your positions-- if you're doing the monthly full-style doing this, and you've been doing it for the last several years, maybe the last couple of decades, Netflix is probably an 80% position for you, or whatever you got into. Maybe it was Disney or all of the big wins that they've had Amazon. That one of those becomes just prohibitively a lot of your portfolio. And then not only do your $100 or $500 ads not really matter because it's a small portion of that 80% position, or I'm just making it 80. But it's also like that you don't know-- really none of your other stocks matter. It's all sort of the tale. And your portfolio has been driven by this one. And you have a little bit of experience with a side-pink you'll see or within media. And this is the point that I've probably-- I hope I've made in the past-- is that it's not risk. I think I've said this before. I don't know I'm not worried about your risk within video. I'm worried about your missing out. I'm worried about-- this was the whole part of the portfolio trio of posts on Reddit that I was saying. People think, oh, well, I'm willing to take risks. So I'll just have five positions. Or I'm willing to take risks. I've seen people with two positions in my mirrors. I don't know if anybody's doing that these days. But that's great, and all, except it doesn't actually-- in my experience, you're more likely to win when you have a reasonable number of bets. You want to place your bets on-- because hinge health happens to be my number one position. And it's had a crazy month. But I had several months where it wasn't doing as much. So it's like, if it had been my only position, I would have been nowhere to negative by March or April, and then had some crazy months now. Who can handle those kinds of swings? But also, even if you can, you're giving up time. You could have been doing well with other stocks then, and maybe even be adding to Hitch, with some of those gains. So I just think the idea of the vibrant portfolio where you're always-- and so for you, at some point, you're going to have to take some of that in video money and redistribute it into your other names. And I think we kind of talked about this a little bit. But you could take-- cut it from 40%, 25%. And that's-- they would go crazy and say, cut it in half, from 40 to 20. I know this is like, you're like, just kill me now. I don't want to be doing it. You want to know them off on me. I want no part of this. But if you did that, you'd have 20% of your portfolio that you could make all-- you could make five different positions, 4% larger. You could make them all top 10 positions, just like that. It could be Alab and whatever else. You feel that way about. And VDL. Sorry. Oh, gosh. That's the leverage in video. Correct. Yes. Oh, my gosh. No, no, no, no. But anyway, that is what you eventually have to do. And I think what you just said completely exemplifies that. You get to a point after investing for a number of years where you can't just add from your paycheck and make that your only money that you deploy into something new or used to add to something. You've got to start redistributing the portfolio. And that's hard. You got to get a new tool in the toolkit. Yep. And I think you are cracking finally into my psyche. And I think the way you did it in cracking my hardhead or whatever that phrase is, whenever somebody says, look at his wrist tolerance or look at his conviction, it's a gold star. Like, it's, oh, my gosh, I wish I had that conviction. And the way I viewed my huge and video position, it was this gold star of shining portfolio management that we all read about and ability to stick with conviction and almost that Matthew McConaughey with 50 cigarettes in his mouth. Like, he's living on the edge and look at him, put it all together. And that's never going to work from, I mean, like, that was my psyche and is my psyche to some extent now. The way you explained it as opportunity costs and not in the sense of, like macroeconomics 101, but in the sense of you could have all these other names that you're equally as excited about or slightly less excited about like at a 20% position or at a corresponding exciting level versus right now, it's all or nothing pretty much. And I think that is pretty enticing. And I do think at some point soon, I'm going to rebalance and bring it down from 40% to something smaller while still being probably a pretty outsized position. And that will then facilitate me to make some other hard decisions out where do I put this? Where is the excitement level? Where is the market? Where is valuation? And that'll set off a whole amount of research and brain power that I need to devote to that time. But I think you're cracking it, man. I love that you are talking through this for everyone to hear because this is like pretty key. stuff for people to get at some point. Like, you know, for you, you just said it was the idea of, it's not about, it's not about like, what Luke or monkey said, you know, you got balls of steel. It's not about that. - Where the record is. - Which you do. - I'm kidding. - Which the point is, like, that's not the issue. Like, it's not that anybody's worried about you losing all your money in Nvidia or whatever else it would be. It's gone up, you know, over the, over a long period of years, you know, it's like, that's not going back to where it was, you know, in 2017 or whatever, like, that's just not happening. So, the point is, like, I'm not really worried about your position. Even it goes down 50%. I know you can handle that. That's not the issue. The issue is opportunity to cost me, that's what you need to hear. For me, it was talking about how, I don't know who said it or where I heard it first, or if I don't think I made this up. But the idea of making your portfolio, like, every day or every time you take a chisel to it, making it look like you want it to look that day. And to do that, you have to redistribute money. You know, it's like, oh, I don't really want a 10% plus position in rubric anymore. I'm going to cut that down to five or four. Or, I, you know, I just bought this toast position, but I see a lot of merits too. It's something to bump it up, you know, that kind of thing. And I think that's a little harder than just saying, okay, I got to do something here. I'm going to, I'm going to cut video by 2% this week, and then I'll cut it by another 2% next week until I get it to something reasonable. So I think both, you know, both of these, and many other ways of getting this idea in your head work, I just think, you know, like what clicks for you, what clicks for me, what clicks for somebody else, this is probably different. So, you know, for some people, it may be having to go through a hard time. I remember one guy on the monthly full, don't even remember his, I do remember his username, but I'm not going to call him out. His username is @drausyinvestor. No, in 2022, I think, or the end of 2021, there was someone guy had 50% of his portfolio and upstart, and the other 50% and upstart options. And I don't know, I mean, I did not specify. I haven't heard from him lately, but I don't know how he's investing these days, but, you know, I'm betting that that was a hard lesson that he, you know, because obviously we know what happened upstart since then, it hasn't done well. And, yeah, maybe he got out of it without too much pain or maybe he lost a lot of money, but, you know, I think sometimes it's those hard knocks. It certainly was for me in 2022, you know, well, that was different lessons, but again, I'm glad that something is clicking for you, and I'm glad that like, you wanna, you know, keep this conversation going and start to like, you know, experiment with doing something, but you don't have to cut it from 40 to 20 in one fail swoop. You can sort of say, well, let's make this, maybe that's the way to phrase it. Let's make my portfolio like more, like I would want it to look if I was just buying everything afresh today. - So that would be, I would cut down in video from, let's say, 38% to 24% and then bump my axon position from 14% to 38%. (laughing) - That might be true for you actually. I mean, maybe you could moderate the percentages, but like you might actually want to add to axon still, because I know it's, you know, you have a, I feel like you have as high a conviction in them as in video if not higher. So, yeah, definitely. Maybe that's the switch, you know, I would like to think you could find a few dollars to add to other things as well than your top two positions, but yeah, but yeah, I think I can see it in your eyes that something is clicked here. - I'm a changed man. Let's talk toast. What's going on with toast? - So I had a toast on the Reddit, the subreddit, and it was just, you know, one of those companies that looked at thousands of times, I think I even owned them, you know, 2% you know, for a month and got out a couple years ago, but it's always been an interesting company. Ever since we invested in square, like way back in the day, drove back. - 2016. - 2016 and 2017 and then had some misadventures with light speed on Sal's board. - I used that the other day at like a little kiosk here, and I almost passed out. Like I just, the PTSD from that light speed adventure, like threw me for a loop when I saw it in the real. I was just unnerving. Sorry, back to you. - Well, it's always been interesting to think about who's gonna do well in that space, you know, like, it's huge, obviously, like just, toast is the leader now, they've taken the leadership position in just like US restaurants. And of course the question is, how much optionality could that be for other kinds of payments and other kinds of, but what's interesting to me is not just the payments and the fact that they're the leader, but the fact that, you know, they are still taking a little share, I don't expect the growth to be that crazy on the top line. They're going in the 20s now. So, there's two big ways you can, you know, do really well and, you know, improve the value of your company. One is, you know, as that revenue grows, everything else comes with it. The other is you, your margins improve, and more of that revenue drops down to the bottom line, even if the revenues that growing super fast. And that's exactly what's happening with toast. They have taken their margin, I don't have the exact post right in front of me, but basically from four points, something percent, which is very low, to seven points, something percent, which is still low in four quarters. And so, without getting into all the dynamics that are causing that, I mean, that trend is, you know, doubling profits is, I like that second only to doubling revenue, you know, that's a pretty good trend. And the fact that I can see this continuing, at least, you know, till it gets to 15%, or maybe even 20%, over the next few, you know, several quarters, few years, whatever, like, and the evaluation is reasonable right now. Seems like a pretty almost a no-brainer, which is what I'm always looking for. So, yeah, I've had some good discussion with people about that, not everybody sees it like I do. You know, some people, that's a little too boring, you know, like 20%, 25% grow or, you know, is it, like, I think WPR said, why not both, you know, try to find revenue and profit. I'm like, well, I'm not you. I don't find five new companies every morning and have to filter them down. But I do find this to be something that, as, you know, I've seen it work before. I've seen, you know, this idea of, hey, we've got this great business, and we're gonna, you know, we're basically to, the short version is, you know, they've got payments that are very low margin, so they've got like $6 billion in revenue or something, so like a ton of revenue, they're gonna price the sales of like two. But that revenue is never gonna be super profitable, so they have all this subscription revenue, like software revenue coming along that is profitable, and that's what's moving the needle in the bottom line. I think why I'm smiling so much throughout this, because I totally see what you're going for here. I totally like the move in a horrible, hated industry right now, payments base is largely left for dead, and this is the exact reason why I'm still interested in shift for a payment. It almost to a T of what you're describing eloquently is something that I've been thinking about unelequently for so long of hated space, margin improvement, tiny, tiny market cap, I mean, shift for is like a fourth of the size of toast, second in restaurants, first in everything else, international expansion, and like this is very much me not pounding the table on either, but it's this idea of this space is worth more than what it is now, and these companies traditionally have traded at higher valuations, toast, especially as a software kind of company, and shift for as a payments company more kind of PayPal or something like that. So I just see the narrative here, and it's funny you take one, and I'll take the second place on this, but I really like the move. I think combined with all of your other plays which kind of span the AI space or some of the software space, this offers you some diversification, may trade similarly, but the industries are quite different and going through different recessions right now, I mean, it's a hated industry. So I think it's interesting. - Yeah, to some extent, even if, you know, like I mentioned the software piece, it's not trading with other software stocks, it's not trading, you know, and then you could say, "End is software, it's not trading with other software stocks." So I think some diversification comes from adding to or getting into something that has been beaten down when others haven't, or maybe just, you know, in a sort of a skewed manner. I'll get, I'll use an example. I added two today figure because figure for some reason the market trades it with Bitcoin. When Bitcoin is we all we all know or anybody's paying attention knows Bitcoin is just getting crushed just relentlessly all year. Figures down 20 or 25% this month so I was like I yours down 53% since it's all time high in January. Wow. Yeah, yeah, I don't know that all time. I was a little giddy because that was I think that was still. I think that was still in Bitcoin was it it's like total fandom onium. Right. But then you know basically almost in a line as it's gotten his Bitcoin to come back to earth figure has it but there's really no. You know that it has nothing to do with Bitcoin it does have a cryptocurrency. It's a stable coin so it's not really trading on crypto gains or anything like that. It's but that's just part of the way that it conducts businesses. It's all blockchain crypto crazy stuff that I mean there's even a difference between blockchain and crypto right like all blockchain doesn't have to have anything to do with currencies so like it's just it's just it's just a hello fellow kids segmentive our part. Well, it's just funny to me that they would trade along with us and I'm not saying I know anything about that stuff I just know that this it does it's not rational for them to do so. So again, I'm kind of betting that that's what the market's doing here. Maybe that's not maybe maybe see something coming that I don't but it looks solid to me so I've added to that and I just think that that's you know going back to the portfolio management kind of idea that's another whole point of having your portfolio. You know vibrant and churning and changing is you know you get to you get to have you get to get into things or add to things opportunistically whereas if you're just like I've loaded up on my top ideas and I'm I'm done you know like it doesn't really give you that opportunity. Yeah, well said let's let shift gears into portfolios do you want to go first let's talk about portfolios for a change. Yeah, no let's do our let's do our early June wrap up it's you know you said earlier I think it's it's June 29th so we got one more day and some change to go. But I'm up yeah you go first I think I went first last time I'm up almost 19% oh my god that's fantastic that's on the growth portfolio and just just for full disclosure it's only about 15% overall because I did stratify the two that you know my port my growth portfolio from the two VOO slash you know cash not all the cash but like the ones that I'm actually like basically it's bonds is what it is like a S. God or whatever. Just because like I don't have money coming in that's sort of my safe bucket and the growth portfolio is the growth portfolio so I'll give those I'll probably give both of those when we talk about this for the rest of the care at least and then I'll probably just forget about the safe bucket side because that's not not actively doing anything with that it's just money that's taken out of the portfolio of the growth portfolio. And so yeah 19% is awesome I it's up from I think it was 12 points something at the end of May huge part of that has been hench health is up 49.5% in June my biggest position I've trimmed it a lot of course because you know if I had trimmed it to be 15 16% now I've kept it more around 11 but I haven't been like chopping it down I've been trying to let it grow you know as my number one position I mean it's it's still not crazy expensive the forward PE is 33.6 if you know I hate to use the false precision there that's if the earnings the market of the analysts expect come to fruition you know I think it'll be better than that so I think it's even cheaper that's not super cheap that's not a cheap it was in the you know below 20 at one point but it's also growing you know you grew 47% less quarter I think there's even a chance that could not only hold but accelerate a bit but if it holds I mean that's just a couple years of that goes a long way so I don't know I'm liking the position I'll go through the rest quicker but I mentioned I had added to figure I added to figure so much it passed so so far well and I also cut to a file a bit but so those are two and three toast is right there now reddit I'm a calorie ray hot loving see them cut up loving some most of these changes are too small to really talk about so see lemon ethos rubric I've cut a decent amount silicon motion I've I guess I've added to that now I'm having to look back at the end of made a member was actually changed but anyway I won't list the small tail after that axon still to I guess I should at least say that one axon would get us into a long discussion of I mentioned the other you know axons around 3% if I mentioned the other 3% positions some couple of them are new so I won't get into the that I'll post my portfolio on the reddit in a couple days and I can do more discussion about the new ones but I've been a great month for me the crazy thing is the the S&P 500 and my view is down about 2% this month so it's always great when the S&P is down and my portfolio is up that makes me feel like I'm doing something right with with the stock picking so how about you what did you have anything you wanted to ask me about no no just it's been a fantastic trend for you and I really like how the companies that are leading your portfolio now are not the companies that were leading it two months ago or six months ago several of them were in there but usually smaller position so I really liked how you've been a really good tactician and have held on and added and and played the sport really well for lack of a better oh and I guess I should say again I wasn't looking at may when I when I was saying all that but I guess I should say I did cut credo immensely it's a small position and I was they reported on June 1st and it was much the guidance especially I think I'm trying to remember if it's the guidance or this quarter or both they were both disappointing I would say they were both less than expected and the you know it's still you know it's still going to grow and they're talking about they didn't acquisitions that kind of might use things a little bit but they're talking about like at least 80% growth in the second half or something like or for the full year so it's not like dead by any means it's just that's a pretty big slowdown from 200% plus and there's an acquisition involved and I just feel like you know it's it's a little little confusing it's not nearly as expensive as stair labs but I feel like a stair labs has a much cleaner story you know there's no acquisition in the mix there's no major slowdown it's just kind of hovering you know I'm slowed down a little bit from 120% to 99% you know it's still it's still growing for now around 100% so I just I can see why that one is a little bit more beloved right now and credo's a little complicated and also the price was up so I was like I'm definitely going to use this opportunity so it is now in the middle of the portfolio all the way down from the number one spot let me look back at May and say if there's anything else I need to say so people won't wonder what the heck is going on. So yeah I said to trim rubric quite a bit everything else is you know within striking distance of where it was so I think I think with that agenda I will turn it over to you sure well I mean you're doing fantastic man for those who are helps when your top position goes up 50% in a month you can't play him for that but it's true and for those who are team drowsy over team bear I'm going to sadly to you once again so I am up about 4% on the year now coming down from five last month and still way better than down 20% a few months ago so heading in the right direction my big thing this month I've been redeploying so as folks know I sold out of some of my crowd strike last month and have been redeploying it and what I really wanted to do is add to the I trade I I thought as I looked at my portfolio is basically in video and still is and then a bunch of mag seven names which have done nothing but have questions around them and their cat and have lagged behind pretty much everything else so I wanted to build out some of those AI names that I'm pretty excited about I I see where they're going they're moving up and are still very much invoked so I sold some of my crowd strike and I added pretty heavily to star labs as we've talked about silicon and I'm still a con motion as as bear mentioned a second ago I added a bunch to nebius over the last couple weeks all of which is up a bit but nothing really crazy yet. So I'm trying to build out that AI trade to be about at least 10, 15% of my portfolio. I'm not counting Nvidia sort of other names. So then I have an oversized Nvidia position, CrowdStrike, and Axon at both 14% and then have kind of a core Amazon, Mercado Libre, Microsoft, Google, names that everyone's heard about for some stability and then sort of a 15% push at something a little hyper growth ish. So that was where a lot of it was put recently in transparency with Bear 2. I have a smaller account like Bear does where I have a lot of other names that you'll see me discuss at various times like AppLoveIn and Credo and RocketLab and some others that I watch a little bit. But again, my main portfolio and the one that I do updates for is the one that I focus all my time and lots of my attention on. So I'm not loving that I'm still trailing the market which is up, I don't know, maybe eight or nine percent of the year. I'm still thinking about redistributing some of that in Vitya to some of these other names. I still want to build out this sort of AI trade down below. Obviously some great works by others including WPR and others have got me thinking on which names I want to try to catch on to the ride a little bit. And yeah, I'm still oversized and axon and still believe heavily in that company and even after today's push over 500, I still think we're seeing even higher in the short run too. So I mean, I could say something about valuation for axon but it's not as crazy as it has been. So I mean 14 percent, dude, I don't think that's too heavy. I think that's a pretty reasonable size for your top position. I think it's just the only bugaboo that I have with the portfolio is in Vitya. And again, that's a personal decision. So I'm not going to tell you how to do it. I'm just what I've learned the way that has worked for me and that I've seen work for a lot of people is 15-20 percent is about the highest you want to go and then and all the redistribution stuff we talked about is the making your portfolio look like you if you had just bought it this morning or like more like you had just bought it this morning than it looks when you just let things run. I think I'm really going to be interested to watch the journey from here and see where you go with that. I do I think it's great that you added to some other AI names besides in Vitya because again, there are going to be multiple beneficiaries that already have been so many. I don't really love chasing micron or sterile right now but I get the idea. I love the ad to Silicon motion. I feel like it's although it has gone up a lot, it's still trading in a very reasonable multiple. Price to sales is like 10 or 11 and it's growing at 100 percent. And then the price to earnings is 4 price to earnings is like 30-32 which I'm going to like that. That's sort of how I was thinking it like I'm realizing I'm probably not smart enough to understand the AI build out to a level where I'm able to predict a substantive leader or some sort of bottle neck which is the worst word ever. But this bottle neck that no one else is seeing to some extent to get some sort of an edge. The only thing that I'm banking on is amazing revenue growth and frankly a small market cap to some extent for Silicon motion compared to some of these other AI plays. And then I think the only thing that we can count on right now is compute demand is going to be lasting longer and is far greater than right now. Hence me sort of doubling down on Nebius which I still have some bigger questions on business model that we've talked about plenty but I know that more computers need it and they are a pure play on compute because that's what they sell. I don't know necessarily about photonics or optics or all these other little things to know is another company on the verge is a microcap about to explode but I know we need more and some could be said about the energy kind of the energy side of things. So I've dabbled in a couple other energy plays although none of which I've held on to but we're going to need more energy. So trying to find the right moments for those big things which I think are idiot proof to some extent at this phase in the build out rather than trying to latch on to the next ester labs that still I've listened to two of their conference calls and still don't fully understand them. Yeah yeah it's hard to and I think even for the people there I'm sure there were some people that called the memory trade you know as a bottleneck how do you know when you know like if you had started calling that when Nvidia first went up so much in 2023 in 2024 you would have to wait on that a long time so you know I follow the numbers and even then with something like micron it's just hard you know it's just hard to there's so much involved with the sales price of what they sell it's not just a sort of with volumes or higher everything will be good it's that that works more for like well in Nvidia but then also the downstream component so like so look on motion you know they're more of a I don't know this the whole reason I started talking about this is to say nobody really knows and I don't understand these even even the couple that I own well enough to really say too much about them other than the numbers look extremely good and I don't know just like you just said I don't know either how to predict which numbers are going to continue to look the best so I think a smattering of these companies makes a lot of sense and I'm you know the none of them are going to probably be among my top positions because I just you know I don't really understand all the ends and else of the businesses as much and then there's a lot of catbacks involved there's other you know there's it's a little bit of a messier story but when they're in this inflection part of the curve where they're growing 100% plus here over here it's it's hard not to just you know take some small positions and do you know participate in sort of a measured way yeah um yeah I'm sorry to let my fans down well we'll do better we'll do two days we'll we'll get practicing I'm still excited about your your this is the closest I've ever gotten you to say uh that you but you basically said you're going to do something you know you're gonna you're gonna throw in video I mean that's tastes like vinegar but this is gonna this is gonna be this is like the the episode where everything change yeah this is the uh there this is Joe title right there this is a client instant classic um so I love it I think perfect way to wrap up kind of today's episode um bear and I will be back we have a lot of cool stuff over the horizon for folks so we definitely have some more guests some new guests that are gonna be awesome and really help us as investors and companies specific we have some fan favorites lined up again um we'll we have the usual banter between us the old married couple like we just have a lot of good stuff coming over the horizon so um bear any last parting words before I'll wrap up this episode I thought the joke was gonna be I do it poorly uh every time but no no no no I'll let you take it from there and uh no this is been good talk and I uh I hope these conversations that you and I have you know started on the Reddit and uh you know amongst each other we'll we'll continue I think this is really good stuff I've I've had a reinvigoration of people of realizing how interested people are always in talking about how they manage their portfolios we have had a lot of people posting theirs on the Reddit so I hope that'll continue me too um for those who want to reach out to us you can find us at um at drowsy investor at investing under sport bear you can hit us up on gmail at chunbulpod 2025 at gmail.com we love connecting we love hearing from y'all and baron and I will be back in just a couple weeks so have a good start of your summer everyone we'll talk to you soon