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Live from Seeking Alpha’s 1st ever Investing Summit, Joe Albano and Logan Kane discuss AI software tiers and behavioral finance (0:25). Nvidia in the near-term (2:05). Is the market frothy and will the Fed cut rates? (3:00)
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Transcript
Rena Sherbill: Okay, so we’re here at Seeking Alpha’s first ever Investing Summit. We have two stalwart analysts, Logan Kane, Joe Albano. It’s great to have you guys both here. First, I’m interested in hearing what you’re looking to gain from this and what you feel that investors are most interested in, in terms of what you’re talking about.
Joe Albano: I’m really excited to be here and to meet a lot of my readers and subscribers. The level of enthusiasm here has been pretty awesome and well above expectations. I think Seeking Alpha has done a great job setting this up. And for my talk later about AI software, I think people have been coming up to me and saying, I can’t wait to go to your session. So, that’s awesome and a little nerve wracking at the same time that you’ve got a lot of interested people. So, that’s really cool.
I’m talking about the AI software funnel and basically breaking that down into what I have as the three tiers of software and AI and pretty much answering the question of why certain AI stocks aren’t seeing the revenue growth that many have expected even as AI has taken off over the last 12 months to 15 months. And what that looks like in practical investing terms and what those returns look like and what tiers should benefit over the coming years.
Logan Kane: Yeah, it’s just awesome to be here. We just came off a great session on crypto and I really enjoyed the speakers and different perspectives on stuff.
And I’m talking about behavioral finance, which is essentially just combining psychology and economics and investing all-in-one. And for my audience here, I just want to provide some value, show you guys some ways you can make more money with your investments. Whether you’re bullish, whether you’re bearish, we’ve got good tactics for you that can help you really increase your wealth over time.
RS: What are your thoughts about NVIDIA (NVDA) and what’s going to happen to the AI stocks in the near-term?
JA: In the near-term, I mean, they can extend probably a little bit more. Obviously, I mean, I was talking with some subscribers this morning about Micron (MU) that’s pushing into all-time highs and hasn’t looked back, but as far as like the NVIDIA stocks and the big names, I’m expecting a pretty decent correction over the coming months.
And I think we’re getting to that point here where there’s a bit of a blow-off top happening and we might see a fairly quick reversal and better entry points coming in towards the later end of the year.
LK: Yeah, to Joe’s point, I know about half a dozen people who are all in on NVIDIA. They have all their net worth in the stock. Just the craziest people I know.
JA: I would call that crazy for sure, especially at this point in time.
RS: Even I know putting all your net worth in one stock isn’t great portfolio management.
JA: Which is also a great sentiment gauge of where we are, right? When everybody gets bullish at the same time, that’s when I’m concerned.
LK: Yeah, some of these stocks, you can’t justify these valuations with science. I mean, it’s religion at this point, how much people are putting into NVIDIA?
RS: What do you think about the market? Where do you see it going in terms of how it’s going to continue to grow or not grow from here? Do you see it as frothy?
LK: I’m probably more bearish than most people here. We got sentiment close to all-time highs like retail investors are positioned. They’re really not sitting on a lot of cash, although institutional investors are. I mean, I’ll say this.
One thing that I think is interesting is that one of the unexpected things was that when the Fed started to hike rates, it actually made corporate profits go up. And we saw this with affluent households as well, who have fixed rate mortgages, 2.5%, 3% mortgages, and now they’re earning money, they’re earning interest on their money.
So the most unexpected thing that I think might happen here is the Fed starts to cut rates. Would that unexpectedly weaken the stock market and the economy through the same channel that kept things going over the past year and a half? We’ll see.
I think to match the dotcom bubble valuation, I think we need to go to about S&P 6,000, 6,300. So, I mean, I’ll say it here. NVIDIA might go to 200 next month. I mean it doesn’t really stress me out if it does, it’s not my problem, but I think we’re due for a substantial correction over the next 2 to 3 years, timing unknown.
RS: Do you think that there’s just one rate cut coming this year?
LK: I think they’re going to go in September, the Fed. I think this has more to do with politics and the economy. I think from there, it’s going to depend on how stuff plays out. We’re starting to see jobless claims start to pick up. We’re starting to see unemployment pick up.
Canada is probably going to be declared to be in a recession right now, the UK is probably in a recession or is entering one soon. They have more variable rate mortgages, so the U.S. is going to hang on longer. I don’t know. We’re going to see what happens.
If unemployment in the U.S. starts to rise pretty quickly, the Fed’s just going to start cutting like crazy and that’s where things will get interesting.
JA: Yeah, macro is not my lane so I’ll make sure that I note that. I’ll try to stay in my lane with technology, but as far as the Federal Reserve, they were late to raise, I think they’ll be late to cut. So, September, I think that’s optimistic.
RS: Would you agree with the fact that it’s more political posturing than economic strategy?
JA: I mean, at this point, does it matter? I’m not really even sure. I think anybody can put the narrative that it’s political or anybody could put the narrative that they’re doing their best. To me it doesn’t really matter. It’s what happens when the numbers actually hit the market.
LK: So we did a study and 93% of people are earning less than 4% on their cash and I think that’s a place where people can make a lot of money. You can get 5.5 in money market funds from Vanguard and Schwab.
So, I don’t care whether you’re bullish, whether you’re bearish, get the most value for your money, and that’s part of what my talk is about today. It’s about tactics. If you’re bullish, be bullish, be smart about it. If you’re bearish, be smart about it. I mean, we’re all making money.
JA: Yeah, I agree with that. I’ll stick with the AI stuff. I think we’ll be continuing to talk about AI over the next few years, but I think there’ll be a mixed or misunderstanding of when these stocks do correct that people think the AI “bubble” will be over, but I think it’s just inning number 3 of 9 that we’ll get to in the next few years. I think we’ll see some all-time highs again with some of these AI stocks.
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