Managing a portfolio full of winners

[00:00:00] Speaker 1: The Dow's the big ripper Malcolm today you do have some broadening into financials and discretionary and industrials and healthcare and there's money coming out of the biggest winners within the tech universe over the last month a lot of the chip names are weak some of the cyber names are weak and we can get to the individual broad comms and the crowd strikes in a moment but just the overall makeup of the market today what do you what do you take from [00:00:25] Speaker 2: it I think we're probably seeing one of the first of many tests of this existing bull market within tech the AI revolution continuing on the narrative is going to continue to be challenged this summer and into the fall as we've got these massive IPOs that are going to show up here we've got a lot of spending that investing that has happened in both private and public markets and I think investors are now trying to make sure that they're not caught off sides right there's a lot of hearkening back to 1999 there's a lot of talking about whether this is 99 all over again and I think one of the key differences here is the retail investor is able to move a lot faster than they were back then they're also a lot more educated on the markets than they were back then and so I think what we're seeing is a lot of people trying to make sure that they line up on the right side I don't think that this is necessarily indicative that we've reached the top and it's time to ring the bell here but I do think we're going to see these kind of kinds of ebb and flow moments throughout this year as we have these big events [00:01:25] Speaker 1: named and listed you look on the board today you know a lot of the biggest monthly winners as I as I was saying you know the the crowd strikes and the Palo Altos which even with the declines that you're you're seeing today are still up near 50 percent over the last month alone everybody knows what's been happening with the chip stocks AMD over the last month up 53 percent micron over the last month up 75 percent so a little bit of money coming out of those areas and finding a home elsewhere in some of those other sectors is probably a welcome sign for those who have been looking for a little more healthy looking market I [00:02:11] Speaker 3: completely agree I mean this is what a consolidation should look like these parabolas have occurred they have to come down a little bit and then stabilize before the next leg higher and that consolidation is healthy because it sets up the next leg higher I do want to draw a distinction there's no reason that I can see to think that there's going to be a correction anytime soon whether it's the market overall or semiconductors or technology I think for the real correction to happen you'd have to have a massive sentiment shift now that could happen if say things with Iran get meaningfully worse but let's face it this is a market that has grown very inured to what's going on in the Persian Gulf it's grown very inured to West Texas Intermediate being somewhere around a hundred dollars a barrel so a consolidation is healthy very unlikely to see corrections but I want everybody to consider if you as most of us have some of these parabolas in your portfolio it is a good time to do some risk management not sell the entire thing but trim some and go into other areas I think that's what's happening Scott I think that that's why you see a nice out performance today from the equal weight S&P 500 versus the Nasdaq or the Dow versus the S&P 500 rotation is [00:03:24] Speaker 1: healthy if you ask it's not like techs having a miserable day it's just as I said the areas that have gone up the most the you know the parabolic moves in many respects are the ones where a little bit of air is coming out but you're getting buying today in the Microsoft you're getting it in the alphabets and video which hasn't traded well it all is up one and a half percent the gains in other areas of the market other parts of tech over the last month so outweigh these areas so there's not a surprise either that money would be going back it's not like the trend is messed up by any sense of the imagination it's just looking at chips maybe Broadcom initiated that last night maybe CrowdStrike initiated it for parts of software but the trend feels like it's still very much intact it just may be [00:04:08] Speaker 4: a little bit shifty within the tech universe I agree trends intact this is a healthy rotation as Jim noted you kind of have to have this and consolidate it and show strength in other sectors in order for it not to be a correction and it really kind of take the next leg higher I completely agree one thing that stood out to me yesterday was when President Trump talked about the straight may not open until Labor Day you know he's setting he's setting a timeframe out there and I think that put the market in general on a little bit of weak footing now we know how a lot of his negotiation tactics work and that that could start getting moved up or into the to the more near term and that becomes a bullish catalyst but these two companies Broadcom and CrowdStrike I don't think they were bad bad reports by any means no no no no no they weren't but expectation-wise yeah you're in a real difficult playing field I mean Broadcom just the last week was up 20 percent so we're just giving that back you had these reports come out when not only also yet this the comments from Sam Altman and talking about AI spending the budgeting of these companies correlating it to the spending so you had some just weak footing yesterday and then these reports come out and then and then it exacerbates some of the downsides are you buying more Broadcom [00:05:19] Speaker 1: like you own I mean so the revenue missed for the first time since December of 24 their outlook was unchanged it's not like they're you know it was but you can't be unchanged your outlook can't be ho-hum yeah in the environment that the stocks have run up in that's just not going to cut it as they're finding out the hard way and you as an owner of the shares are as well [00:05:39] Speaker 4: yeah it has to be a real raise on that guidance it can't just come in just below the high expectations of the guidance it was a good report you know some of the things that are emerging from here is is where their moat is on the TPU you know they have that contract with Alphabet going on I think to 2031 it might be but the names like Marvell are starting to appear in the mix there and you've seen it seen that name go parabolic now Broadcom like I said was up 20 percent in the last week it's given that back I think it was a good you know it's been still a great name this this year we're not buying more right here but I do see a tremendous amount of support if it were to keep going 355 360 that's where the 20 moving averages that's where consolidation was earlier this year so there's if we did keep going and there were a real correction in the name I think that's where you want to be buying well [00:06:27] Speaker 1: the street's not giving up in any way shape or form on on this story uh Wells Fargo's bullish they're buyers of the weakness this you got six target raises today JPM to 580 UBS cut theirs down slightly uh 485 but the street remains bullish on this stock and I don't come across very many investors on this program or otherwise that are not bullish on this name I don't disagree with any of [00:06:56] Speaker 2: that but I think what also factors into this that we're not talking about is the fact that you have Taiwan semi CEO saying we don't see any way that we're going to catch up to global demand for semiconductors anytime soon and a lot of the excitement in the the bubble that we've talked about the run-up in chips for the last few months has been based on this idea that the remaining performance obligations continues to grow and it's kind of the point that I've been making for a while that the reason this industry is so cyclical is because it takes three four five years to build the infrastructure necessary to actually create the chips that these companies are relying on and so by the time they actually build the infrastructure needed to create the chips the foundries the demand has subsided one way or another either we figured out another solution and we don't need it as much as we did before or we've already gotten the supply that we needed from somewhere and so I think that that's also what's being reflected in the response to Broadcom specifically is this idea that yes the number was decent yes I mean we're talking about what 48 percent revenue growth year over year that they any other company reporting those numbers would be up 15 percent today not down but I think that this is indicative of that sentiment to where can we actually kind of stop the excitement over rpos and actually start to be concerned about legitimate sales happening now brand you you gotta [00:08:24] Speaker 1: like the the fact that you've got an almost evenly split market performance over the last month if you if you take the nasdaq over the last months up seven percent thereabouts s p up five and a quarter russell 2000 up near five the dow with its big gain today up about five and and a third or or so approaching five and a half percent over the last month it's hard to argue about you know the makeup of of all of that especially as I said at a time when you know people are hung up on the fact that yes we we do have a [00:08:59] Speaker 5: narrow market at at the top we we get it right I mean the narrowness is not necessarily in just in performance the narrowness is the size of the top companies just make up so much of the return because their size but that is very different to your point there are other sectors that are in other securities that that are doing well to me what I think today is really interesting and what I've been thinking about for some time is really when you look today at the semis being down besides nvidia is how the construct we're obviously big investors in the queues has just meaningfully changed over the last 12 months really versus the last five to ten years and so if I were to tell you meta nvidia apple and microsoft and google are all handily positive today but the queues are down they were down one percent earlier you'd say that's not possible but because the semiconductors the intel is like a top 15 you have micron you have broadcom you have these semiconductor companies are now such a big part of the queues it's interesting how much is that's changing and so I think this bifurcation is going to continue but I do think for for queue investors it's very interesting to see those other you know traditional leaders are up very nicely today but the queues are down which is telling me just investors need to understand what the biases of the queues are right now and it's definitely going to be in the non-nvidia semiconductors deciding if that index is going to be up or down for the day