Here’s a preview of what we’ll cover this week: 

This week on Bits and Bips, we had General James "Spider" Marx — 30-year Army veteran, and former commanding general of the US Army Intelligence Center

We talked about the Iran strikes, the Strait of Hormuz disruption, and what the "Venezuela playbook" means for regime change in Tehran.

I also asked the General whether there are aliens towards the end…

Here’s what we discuss:

Watch the full episode here.

The cruelest thing about a bear market is what it teaches you.

Spend a decade in a bull market and you learn one reflex: buy the dip. It works, reliably, over and over. 

You get rewarded every single time you buy on ‘extreme fear’.

Then the bear market arrives — and that same reflex gets you killed.

Every bounce is a trap. Every rally is an opportunity to reduce, not add. 

The market trains you on whatever it's doing — Bull markets train you to buy weakness, and bear markets train you to sell strength.

This isn't irrational. It's Pavlovian.

The CNBC-educated contrarian thinks extreme fear is the buy signal.

VIX spikes, headlines go apocalyptic, sentiment hits historic lows — surely this is the moment.

But in a bear market, extreme fear isn't a floor. It's a corridor.

The dip that felt unbuyable last week looks generous next week. Capitulation takes far longer than anyone expects. 

The investor who buys the first fear spike is underwater within days as the dip keeps dipping.

The reflex that made you money for a decade is now the mechanism of your losses.

Understanding why that happens is how you avoid it.

Bull markets and bear markets run the same mechanism — just in opposite directions.

In a bull market, information flows outward from smart money to the crowd.

The crowd's arrival validates the thesis. Everyone gets paid. The story gets louder with every new convert.

Bear markets run it in reverse.

Smart money — funds that saw the overvaluation forming, who have been quietly trimming or outright shorting — sells into the enthusiasm of the last cohort to arrive.

The retail investor. The late-stage allocator.

The pension committee that finally approved the "AI infrastructure" theme in Q4.

They are buying exactly the paper the informed seller needs to exit.

The information gap between the center of the circle and the edge is never wider than at the top. 

The bear market is the process by which that gap closes — violently

The important question: When does it mark the top for the information gap?

When every dollar is already in the market — when the narrative has been adopted by the wealth management channel, the thematic ETF has years of inflows, and venture funds have marked every portfolio company to round-number valuations — there is no marginal buyer left to sustain prices.

The unwind begins quietly. Not with a crash. With an absence of buyers. 

Bids thin. Rallies fail to hold. 

Then the stages of grief arrive in sequence.

Acceptance is where real capitulation happens. And it takes far longer to arrive than anyone expects.

We are watching all three phases play out right now — just at different stages across asset classes. 

Public equities are somewhere between denial and bargaining on the most crowded AI-adjacent names. 

Private venture capital is in bargaining: down rounds are starting (Brex), flat rounds are being called wins, 2021 vintage marks still haven't faced reality, and I still have clients asking me to get them invested in Anthropic and OpenAI. (Hell no.) 

The overvaluation that looked theoretical for three years is becoming arithmetic.

Corrections end when their proximate cause resolves. 

The Iran-tanker conflict in the Strait of Hormuz is a real risk, but it is a solvable risk.

When it resolves, the correction it catalyzed ends. That part is mechanical.

What doesn't end mechanically is the psychology the conflict has set in motion, operating against a backdrop that was already combustible. 

Industrials were priced for a world of perfect conditions. It does not make sense for these companies to trade at excessive valuations:

Caterpillar: 36.9x PE

John Deer: 32.6x PE

Corning: 76.x PE

(Disclosure: We are short many names in industrials including these from time to time.)

If you ever want to see a bubble burst in real time, let me introduce you to Corning.

Here is Caterpillar’s trailing forward PE:

Keynes once noted, ‘Markets can remain irrational longer than you can remain solvent.’

That’s true.

But, I think our timing over the last few weeks on seeing this turn in risk asssets is accurate.

The key was the torrent of negative news hitting simultaneously that valuations that hadn’t priced in (e.g., Warsh over Ric Redier, Iran conflict, economic populism, private credit liquidity run, Sam Altman talking about $1 Tn in capex spending, Pam Bondi’s Dow 50,000, post IPO unlock dumping, etc.)

You had a perfect combination of events.

Look at the SPX and the rolling over of the index.

Add to this: we are heading into a midterm cycle where private credit and capital markets dependency — particularly the OpenAI and Anthropic hyperscaler capex complex — becomes a political and regulatory headline risk. 

Politicians don’t like AI… AI is the primary theme animating markets.

The technical setup argues for relief in the near term. The Lumida invest app shows that markets are extremely oversold vs their 50-day moving average

Positioning is still at elevated levels. Retail investors' sentiment is still bullish.

However, hedge funds are de-grossing. 

See how hedge funds have significant gross leverage. That gross leverage is coming down, along with net leverage.

That’s why the market feels like it has less liquidity.

Is there a way to see the above effect in a price chart? Yes, Virginia. It’s called the Goldmans Sachs VIP ETF — an ETF that contains the most popular hedge fund names.

The index topped on February 3, 2026. Our newsletter on February 1st was titled ‘Markets at a Crossroads’.

How about the RIA world?

Fisher Investments, run by Ken Fisher, runs roughly $275 billion. I used the Lumida Invest app to check out his holdings on a whim.

My guess is this week Fisher Investments had a ‘recognition moment’. These positions are over-valued. They will begin trimming Industrial exposures as the sector de-rates.

They aren’t alone. I’m simply pointing out many, many investors are wrong way positioned and they have lots of AUM they need to unwind.

When a manager of that size starts rotating, the selling isn't a day or a week. It is months of VWAP pressure across the entire Industrials complex.

Take a look at the Industrials XLI ETF:

That’s another bubble, and we believe Industrials have a date with destiny below the 200 day moving average.

The flows that drove Industrials to extreme valuations will now work in reverse.

There is no obvious new buyer at these prices willing to absorb the supply.

The great de-grossing has structural staying power.

What other sectors have excessive leverage? Well, the datacenter complex. And what’s financing it? Private credit. That also has excessive leverage.

You can see how the ‘transmission mechanism’ is working in reverse.

Now that bond yields have backed up to 4.28%, bonds may be attractive here.

And you know how much I hate sovereign debt!

Remember back in Feb, we highlighted how Mag-7 were over bought, and it’s time to cut exposure there.

Since then, the MAGS ETF is down about ~7%, performing worse than the market.

We got this insight from analyzing the latest 13F filings from Renaissance Technologies, Two Sigma, and Druckenmiller and others.

We looked at the filings for 70+ funds. What made our life easier was the Lumida Invest App.

Lumida Invest is automatically updated with 13F filings data as soon as they are released. You can view the buys, sells, and biggest bets of institutional investors.

Here’s a screenshot showing the top sells in Q4 from Jim Simons.

See how he went bearish on APP (animal spirits) as well, and it has failed to perform ever since.

You need an edge to consistently outperform markets, and we have designed the Lumida Invest app to be your edge.

I use it every single day for idea generation, staying on top of news, and watching my portfolio with real analytics.

You can sign up here and try Lumida Invest on your iPhone or Android.

ALSO - we are preparing for a crowdfunding raise shortly . We’ve achieved our current success due to the strength of our community and readers of this newsletter.

More details will come - but we are building a waitlist and have about 130+ names on it already.

Sometime this week we will share a thread on twitter which should blow that up further. We do want to prioritize our fans on the newsletter first, so be sure to get on the waitlist and check out our vision at www.lumidatribe.com

The underwrite is simple. Download the app. See that it works, and ask yourself if we are an asymmetric bet to displace Robinhood focusing on Investing rather than Trading…

Travis Kalanick was on TBPN this week. He was asked whether AI makes human labor obsolete.

His answer was the opposite of what Citrini sold, and he is right:

"Let's say the entire world — everything in our world — was automated, except for plumbers. You had machines making buildings — you would basically have like a thousand buildings a day."

"How valuable would those plumbers be?"

"Each and every plumber would be like LeBron. Why? Because plumbing would be the long pole in the tent to progress. You can't get those thousand buildings unless you have a plumber."

"And by the way, you'd get so much efficiency everywhere else that you'd need millions of plumbers."

“Humans are going to become more and more valuable because they will be the long pole in the tent to progress — and that progress is going to accelerate and get faster and more robust."

That's exactly right. And it's the opposite of what the AI apocalypse crowd is selling.

The history is clear.

In 1900, one in two Americans was a farmer. Agricultural engineering arrived. 

Did labor disappear? 

No. It moved — diffusely, invisibly, through millions of local decisions made by people responding to prices and opportunity.

That's how it always works. That's how it will work with AI.

What AI actually disrupts is the menial.

The ICU nurse turning a patient every half hour. The prompt engineer writing instructions for a bad model. The typist in a room programming a mainframe.

Those jobs will fade. 

New ones — ones we can't yet name — arrive in their place.

I spoke to a marketing agency recently. 

Fully refactored around AI. 35 people. 

Two years ago, the business didn't exist. They disrupted a higher-cost incumbent and delivered more value to their customers.

The jobs that survive are the ones requiring judgment and trust.

Think about the Amazon outage when AI pushed a bad code update. Tens of millions in losses, instantly. 

The cost of getting it wrong is what creates demand for humans who supervise, audit, and course-correct.

If you're a chef, an architect, a psychiatrist, a storyteller — or a plumber — the world is your oyster.

We have a 4.4% unemployment rate. Labor markets are fine.

The age of abundance is ahead. But, developing a vaccine for their dog.

But, did AI see the top in markets? Has it created new pharmaceutical insights? Has it cured cancer.

Would be kind of funny if, after building the Tower of Babel god-like super AGI, we ask it to cure disease. I expect it would say ‘Eat well, sleep well, fast regularly, avoid stress, and laugh often.’

I did an FSD stream, titled ‘Game Theory of AI, Credit Cycle and Mom’, on Friday talking about bubbles in private credit, AI capex, and where we are in the market cycle. 

People keep asking why smart investors make the same mistakes over and over.

The answer isn't stupidity. 

It's game theory – Every player aims to maximize their gains. 

Now, apply that to markets.

The Mag 7 had no choice.

If you're running a multi-trillion dollar technology company today, game theory says you have to spend on AI.

Not because the ROI is guaranteed. But because the cost of not spending is existential.

Polaroid is not around anymore. Xerox is not around anymore. Yahoo is not around anymore.

The history of technology is a graveyard of companies that didn't invest when they should have. 

So when Zuckerberg and Bezos were selling stock while ramping capex, they weren't being reckless. They were playing the only rational move available to them.

You have to invest heavily. That's the game theory of technology incumbency.

Now apply the same logic to private credit — and watch how it breaks.

If you're an asset manager like KKR or Blackstone, how do you grow revenue? 

You make more loans. Your key performance indicator is AUM.

So on the margin, every incentive points in one direction: lend, lend, lend.

Boards hold CEOs accountable for market share and earnings growth. Size becomes the goal. 

And when everyone is competing to deploy capital, you become only as smart as your dumbest competitor.

You saw this in The Big Short. 

Mortgage brokers racing to give out loans. Nobody asking whether the borrower could actually pay it back. 

The incentive wasn't underwriting — it was volume.

That's the game theory of private credit. 

And it's rational at the individual level, even as it becomes destructive in aggregate.

This is exactly what the Minsky Hypothesis describes.

Every credit cycle moves through three phases — and each one plants the seed for the next.

Phase 1 — Value. 

Investors underwrite against free cash flow. Does this asset generate returns above my cost of capital? They do the work. They're disciplined. Capital goes to real businesses with real earnings.

Phase 2 — Momentum. 

Free cash flow yields compress as more capital chases the same assets. Now you're not buying cash flows — you're betting that someone else will pay more later. Momentum is a real force. It works, until it doesn't.

Phase 3 — Leverage. 

This is the last phase. The only way to hit your numbers now is to use debt. Lending standards loosen quietly. You start making loans to borrowers who shouldn't have them. You had taxi drivers with six mortgages. You had day traders maxing out credit cards on whatever they read about in a Reddit forum. 

That's leverage as the last resort — and it's always the sign you're at the end.

Then the cycle turns.

Equity holders get hurt first. That's happening now — look at the IPO market, look at any 2021 vintage deal.

Lenders come next. They're not in first-loss position, but they're watching equity get destroyed and they pull back. Credit extension contracts. Asset prices correct further.

Then fear replaces greed entirely. 

The same lenders who couldn't deploy fast enough now can't find reasons to lend at all. 

That's when Phase 1 begins again — and almost nobody has the courage to buy.

Apply this to AI capex today.

We have two companies projecting $1 trillion in revenues by end of decade. 

Betting on 10% GDP growth. Betting on total productivity capture across the global economy.

That's not a forecast. That's Phase 3 thinking.

Private credit is no longer financing it — not because they don't want to. They would. But markets are waking up. 

The same overinvestment dynamic played out in housing in 2006. 

When everyone builds at once, you create excess capacity. Even when the underlying technology is real.

Why can't we just learn from this?

Because the incentives run deeper than any single decision.

Boards want market cap. Asset managers want AUM. Politicians won't touch entitlement programs because they want to get re-elected. 

Every individual decision is locally rational. In aggregate, it's a cycle we've never been able to tame.

These cycles are biblical. Seven fat years, seven lean years. They've been with us forever — because they're a product of human nature, not bad actors.

The investors who understand which phase they're in are the ones who eat.

Everyone else is just playing the obvious move.

Boring is good. 

Here’s what we bought this week:

Put your over priced Citrini themes away.

GPU availability across cloud service providers has hit multi-year lows. B200s, H100s, and A100s are all in steep decline.

AI infrastructure is constrained, and customers are buying every chip they can get. This shows demand for AI picks and shovels is keeping up.

We added Nvidia on the pullback. (Markets are weak and we're sizing accordingly.)

But at a forward P/E of ~21x, Earnings growth greater than 60%, and GPU availability hitting multi-year lows, the risk-reward is hard to ignore.

Here’s the link… and it’s not obvious. 

1) The two largest forms of ‘private credit’ are the RPOs of OpenAI and Anthropic - totaling hundreds of billions of dollars

2) The financing does not come from a private credit firm. It is seller financing - provided by the datacenter who has chosen to take counterparty risk. 

Firms like Oracle and Microsoft are the private credit players here

3) The market is assuming OpenAI won’t make $1 Tn in revenue and is discounting the impairment impact to datacenter providers who are stuck with big capital outlays

4) Blackstone is active in both private credit AND datacenter finance

5) OpenAI and Anthropic have yet to default on their obligations. And that’s true for 99% of private credit too

6) The impairment and expected loss rate on OpenAI RPOs I would say is far greater than the loss rate on private credit 

For all the attention on private credit firms, I find it surprising the media has not focused on OpenAI and Anthropic…

There's some truth to the weakness in software.

Anthropic and OpenAI, despite their $1 Tn silly forecasts, are seeing rapid revenue growth from enterprise.

CFOs have budgets.

They aren't going to also grow spending on software at the same time.

In the short run, a budgeting cycle has a fixed spend (typically a % of revenues).

So, a number of SaaS companies will struggle to grow revenues.

And the forward EPS estimates are still very high for a number of software companies.

The best thing you can do is avoid over-priced software.

Ignore the forward PE. Focus on the trailing PE. 

Look for true value with software that has a high switching cost and deep specialization.

Software as a category is not a deep bargain or sale across the board.

And, most software stocks do remain over-priced.

Lastly, I noticed Citrini got back into software stocks.

That probably means the re-test now.

The AI disruption fears have driven some high quality stocks to all-time low valuations. 

Transunion (TRU) is a victim. It is down ~17% in the last three months.

The market is pricing it like a business under existential threat — a data intermediary about to get disintermediated.

The disruption case believes AI makes credit data commoditized – Why pay TransUnion for insights when a language model can synthesize publicly available data for free?

We think that's wrong.

Management addressed this directly on the earnings call.

CEO Christopher Cartwright:

"TransUnion's data assets are protected from this risk because they're broadly sourced, they're proprietary, they're highly regulated, and they're continuously enhanced by providing services across our networks. This creates a significant entry barrier."

The moat is structural. 

In the U.S. alone, TransUnion has 12,000 to 14,000 active lenders furnishing data at any point in time — each with individual contracts, individual supervision, and strict regulatory requirements on both contribution and usage.

Their fraud models draw from a device consortium that has engaged with over 14 billion devices over 15 years across hundreds of corporations worldwide.

You cannot crawl the web and replicate that.

Cartwright went further:

"Unless you are operating a credit bureau, fraud contributory networks, a marketing measurement platform, and you own all the public records in the U.S. plus, you're going to struggle to have the identity data that we have."

More importantly, AI isn't eating their lunch — it's expanding it. Their most AI-enabled customers consume more data, not less:

"Our most AI-enabled clients also consume the most data and adopt our newer solutions more quickly."

That's the opposite of the disruption narrative the market is pricing in.

While the stock has sold off, the fundamentals have been moving in the right direction. 

Q4 2025 revenue grew 12% organically, with U.S. Markets up 16% — the strongest since 2021. 

Adjusted diluted EPS came in at $1.07 (+11%), beating the top end of guidance by $0.05.

The company completed its $355M–$375M transformation program on time and on budget, delivering $200M in free cash flow savings. 

Free cash flow conversion is expected at 90%+ going forward, with FCF yield of ~5%.

For 2026, management guided 8–9% organic revenue growth and 8–10% EPS growth. And they have a consistent track record of beating their own guidance. 

In 2025, they guided 4.5–6% organic growth and delivered 9%. They guided 1–4% EPS growth and delivered double digits.

There are also several sources of upside not in the current numbers. 

At 14.4x forward earnings — lowest historical valuations — TransUnion trades at a discount to S&P 500 while compounding revenue and EPS at double digits.

The risks?

Well, the big one is if risk assets sell off more, TransUnion gets cheaper anyway.

If credit delinquencies go up, that constrains lending demand.

Being right and being early are different things.

We bought this on Friday. We might sell it on a tactical bounce, we’ll see how markets unfold.

Our marketing team brews magic every day, curating video clips of market moving insights from various CEOs, investors, and opinion leaders. Follow our X account to get view each curation as it comes out.

Here are the few best ones from last week.

As model costs fall nearly 10× each year, the real competitive edge in AI is shifting from scaling bigger models to accelerating research and learning cycles.

View Curation

Jeffrey Gundlach argues a historic shift may be coming as foreign capital that flooded U.S. markets for decades begins rotating toward emerging markets and local-currency assets.

View Curation

Elon Musk argues that as AI and robotics scale across space infrastructure, humans could soon represent only a tiny fraction of the total intelligence operating across the solar system.

View Curation

Not Subscribed Yet? Don’t miss out on future insights—subscribe to the newsletter now!

For real-time updates, follow us on: 

X | Telegram | Youtube | TikTok | News | Ram’s X | Lumida Health | Lumida Tax

As Featured In

Disclaimer: Lumida Wealth Management LLC (‘Lumida”) is located in New York, NY, and is an SEC registered investment adviser. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Lumida only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Any direct communication by Lumida with a prospective client will be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides.

The information in this material has been obtained from sources believed to be reliable. While all reasonable care has been taken to ensure that the facts stated in this material are accurate and that the forecasts, opinions and expectations contained herein are fair and reasonable, Lumida, Inc. and Lumida Wealth Management LLC (collectively Lumida) make no representations or warranties whatsoever the completeness or accuracy of the material provided, except with respect to any disclosures relative to Lumida. Accordingly, no reliance should be placed on the accuracy, fairness or completeness of the information contained in this material. Any data discrepancies in this material could be the result of different calculations and/or adjustments. Lumida accepts no liability whatsoever for any loss arising from any use of this material or its contents, and neither Lumida nor any of its respective directors, officers or employees, shall be in any way responsible for the contents hereof, apart from the liabilities and responsibilities that may be imposed on them by the relevant regulatory authority in the jurisdiction in question, or the regulatory regime thereunder. Opinions,forecasts or projections contained in this material represent Lumida’s current opinions or judgment as of the day of the material only and are therefore subject to change without notice. Periodic updates may be provided on companies/industries based on company-specific developments or announcements, market conditions or any other publicly available information. There can be no assurance that future results or events will be consistent with any such opinions, forecasts or projections, which represent only one possible outcome. Furthermore, such opinions, forecasts or projections are subject to certain risks, uncertainties and assumptions that have not been verified, and future actual results or events could differ materially. The value of, or income from, any investments referred to in this material may fluctuate and/or be affected by changes in exchange rates. All pricing is indicative as of the close of market for the securities discussed, unless otherwise stated. Past performance is not indicative of future results. Accordingly, investors may receive back less than originally invested. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies to particular clients. The recipients of this material must make their own independent decisions regarding any securities or financial instruments mentioned herein and should seek advice from such independent financial, legal, tax or other adviser as they deem necessary. Lumida may trade as a principal on the basis of its views and research, and it may also engage in transactions for its own account or for its clients’ accounts in a manner inconsistent with the views taken in this material, and Lumida is under no obligation to ensure that such other communication is brought to the attention of any recipient of this material. Others within Lumida may take views that are inconsistent with those taken in this material. Employees of Lumida not involved in the preparation of this material may have investments in the financial instruments or securities (or derivatives of such financial instruments or securities) mentioned in this material and may trade them in ways different from those discussed in this material. This material is not an advertisement for or marketing of any issuer, its products or services, or its securities in any jurisdiction.