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

This week, I sat down with Angelo Robles — founder of the SFO Community — for our first ever face-to-face conversation at a live Lumida investor event.

Angelo and I have known each other since 2013, and we've done four podcasts together. This was the most animated one yet.

We covered a lot of ground:

You can view the Lumida Non-Consensus Investing podcast here. We are also available on Spotify and Apple podcasts.

Since Feb 2nd, our ‘Markets at a Crossroads’ newsletter, we’ve been bearish on risk assets.

Unfortunately, I don’t see a reason to change that view. Tankers are still not moving thru the SoH.

Here’s another way to assess markets in simple terms.

Will the conflict take longer or shorter than markets expect? That’s it.

Our view: longer.

Markets were guided to a 4 to 5 week timeline. This past Thursday, the Trump Cabinet and Vance specifically noted: this will take “for a little while longer”.

It reminds me a bit of ‘subprime is contained’.

This is a dynamic situation. No party has control over enough variables to model out a timeline with precision. It’s uncertain. That means volatility.

US markets have had their worst one-month drop in March since September 2022, with SPY down about ~6.6%. 

What makes this a pernicious time for markets is: everyone was all in by January — peak goldilocks. Positioning was high.

Unwinding that positioning takes time.

You can see it in the daily behavior of markets. Market rallies are sold. Bounces are weak. Gap ups are faded.

It was notable that Trump on Thursday floated a ‘we will not strike Iranian energy infrastructure’. Markets gapped up overnight, but by the next morning they had sold off.

The rally from Monday thru Wednesday of last week was driven by Trump’s speech on the tarmac that a number of points of agreements with Iran had been achieved. It wasn’t clear who the negotiating counterparty is — maybe the head of the Iranian parliament?

What we’re going to see now are goalposts moving. It’s not in the interest for the WH to commit to new timelines and then disappoint.

Are We There Yet?

Here’s the results from a DB investors survey — most of them see the conflict ending in April 2026 with 3% expecting a March end.

I have done equity financing and done M&A transactions.

That’s a stituation when both parties have trust in one another. Never seen a deal get done in 30 days. Those take 90 days.

The conditions for a swift resolution that is binding with an identified counter-party are simply not there.

How this likely unfolds is not a negotiated peace settlement, but more coercion from both sides.

The negotiation doesn't run on good faith - it runs on the credible threat of pain.

That's a much slower process. And a much messier one.

We continue to see extremely elevated valuations in industrials, biotech, SaaS stocks, private credit companies. Markets have not fully priced in an extended conflict.

The Real Risk Hiding in Plain Sight

Here's what I want you to focus on instead.

You don't need oil to spike to $100 for this to get ugly.

You just need oil to stay above $85 for another two months.

If that happens, the inflation pass-through becomes severe enough to eliminate any possibility of Fed rate cuts.

The global budget for oil was $2 to $3 Tn pre-conflict. It’s moving to $5 to $8 Tn. That spend must be funded by curtailments in spending elsewhere.

Millions of Americans live paycheck to paycheck and are rolling debt from one month to the next.

There will be great opportunities in consumer discretionary stocks when the conflict ultimately winds down, but that category is likely to see analysts revising down analyst price targets.

We are short names like Macy’s, Kohl’s, Estee Lauder and a number of luxury stocks that are pricier than Nvidia for some unknown reason.

The United Airlines CEO said ticket prices are going up 20%. We can add that to the weight of evidence on the inflation checklist.

Inflation is pernicious in a specific way. In the long run, equities reprice alongside real assets. They find their footing.

But in the short run - which is where we live - inflation hurts bonds, hurts stocks, and erodes the purchasing power of the cash you thought was your safe haven.

Kharg Island: The Bargaining Chip Theory

Trump has Marines and elements of the 82nd Airborne heading toward the Kharg region.

We have not seen a situation where Trump has deployed forces and not used them. He’s not the kind of guy to waste money.

He's not spending that money for theater.

We made the accurate prediction as an Armada was building that Trump would take action. This is what we said in Jan in our Newsletter, titled Davos and Great Power Politics:

My speculation is the following.

Trump tried to do the ‘Two Step Taco’ de-esclation. This requires the cooperation of Iran.

Trump can’t withdraw and let Iran exact a $2 MM tax and declare a win.

I expect Trump will move to take Kharg Island, and then use this as a bargaining chip with Iran.

Note: Iran is making more money selling oil than ever before. This conflict is profitable for Iran. People respond to incentives.

The bull case for Kharg is real: you take it, you hold it briefly, and you use it as leverage to extract a ceasefire.

But, as a general noted this past week, putting troops on Kharg Island is akin to making a sponge for rockets. Iran has the high ground.

The fact is no one knows the situation on the ground. It’s hard to assess. But, controlling Kharg is expensive long-term and how and under what circumstances would the U.S. unwind that if the IRGC don’t negotiate?

The IRGC can fire cheap rockets from decentralized positions at unpredictable intervals.

One rocket hits a tanker. Insurance companies pull out.

Oil spikes regardless of who controls the island. Perhaps the intention is to accelerate inflation and destabilize the Iranian economy.

I had dinner this week with a guest who flew in from Atlanta for our investor event. He works in the defense industry and is an investor in Shield AI — the deal we just closed.

He made a point worth sharing.

He said the strategic objectives here may be broader than the Strait of Hormuz. He also agreed with our thesis that the bigger messaging is to China.

He noted that taking Kharg island, and the display of force, and the Venezuela action, are meant to deter China aggression towards Taiwan.

From where we stand today, it’s hard to see the conditions for de-escalation.

That said, I could see buyers stepping in to buy if the S&P hits 6200 for a tactical bounce.

What We're Doing

We remain defensively positioned with lower beta and excess cash.

We are outperforming by losing less than the market - which is what you do in this environment if you're running a long book.

During times like this I question the point of benchmark investing. Why not operate fully unconstrained?

We are seeing genuine value emerge in high quality economically resilient areas.

Here are a few:

Berkshire Hathaway is near the lower end of its trading range. The new CEO, Greg Abel, is buying back stock.

Here is a chart of the price to tangible book value of Berkshire:

I noted in May of last year that owning Berkshire was akin to paying for Treasury bills at a premium to par value and that it should be avoided. The date of Warren Buffett’s retirement was the exact top in the stock.

Now, I believe Berkshire is a ‘stalk’. We built a 2% position on Friday. If markets capitulate, and that’s a real possibility, the name could re-test October 2022 valuation lows in which case I would build a large position.

Markets require taking a ‘mixed strategy’.

While we wait for that moment, the world around investing is changing fast 

The gap between how institutions operate and how most investors access information is closing quickly.

A former Coatue trader just gave everyone a glimpse of what asset management looks like in five years. 

His new fund, Epicenter, has built an AI system called Eve that is plugged into every corner of the firm — every email, every trade, every research workflow. 

Without being prompted, Eve assigns tasks to human analysts, writes code on their behalf, screens through more than 13,000 company disclosures, listens to podcasts, and generates research primers and custom audio briefings autonomously.

We’ve been talking about how AI is poised to transform Investing for the last two years.

We see a world where AI disrupts wealth management. You don’t need advisors and traders in the years ahead. Access to this technology will be democratized.

Everyone will have a Citadel LLM running on their phone in the not too distant future. They will talk to an AI Avatar that knows their personal situation, tax considerations, and trust and estate planning considerations, and relevant changes to the tax code better than anyone else.

This is exactly the vision we have been executing on at Lumida.

I encourage you to check out the Lumida Invest app here: www.lumidainvest.com

If you already have it, be sure to go to Testflight and click ‘Update’ as we’ve rolled out quite a few fixes, performance enhancements, and new capabilities such as tracking insider buying and selling.

By the way, the CEO of OKLO is dumping his shares. That’s a simple way to see concrete value. We are building ‘smart watchlists’ that alert you if you own a stock where the CEO is brazenly dumping like this. That’s one of many ways around how we see AI transforming investing.

Also, Lumida is preparing for an equity crowdfunding raise in the coming weeks. 

I told my team don’t formally launch this until we see green weekly candles on the S&P :)

Everything we have built has come from the strength of this community, and we want you to own a piece of what comes next.

We already have 150 people on the waitlist at lumidatribe.com — and we have not yet opened this to our broader X audience.

View the following video to see the underwrite.

We will be sharing the audited financials, valuation, and other important documents with the waitlisted users.

If you want to join the waitlist, check out www.lumidatribe.com.

We’re here to disrupt wealth management as we know it.

Trump is previewing his withdrawal from NATO in the same way he previewed Iran action. 

This is his style. Tease it for a few weeks, then do it. 

What would it mean for asset prices?

Similar to what happened when Zelensky was ejected out of the oval office. 

Risk off. 

I’m surprised people have not picked up on this. 

You need to be sensitive to these cues. 

The writing was on the wall on Feb 2nd there was an Armada stationed outside the Strait of Hormuz.

Look at the chart below. It plots WTI price changes from 30 trading days before the start of major conflicts.

We are tracking the Gulf War trajectory almost precisely.

That spike didn't resolve in weeks - it ran for months. However, the U.S. today is less energy sensitive than during the Gulf War.

Maybe peak altitude is lower, but the trend appears higher.

And this conflict carries a feature the Gulf War didn't:

it lands on top of an inflation backdrop that was already re-accelerating before the first missile was fired.

We talked about the inflation backdrop in our January newsletter - Run it hot… well ahead of when the PPI report came in hot.

Core PCE never fully normalized after its 2022 peak.

It never got below 2.6%. It's now back at 3.1%, with the one-month reading running at 4.5% annualized.

Even if the Iran conflict wraps up tomorrow, and equity indices surge, there will be a knock-on effect to valuations for major indices and a continued bid for commodities in our view.

We are seeing a mini-echo of the 1970s, aren’t we?

Believe me, I hate being bearish. I’m a Founder and builder and have a gratitude and growth and abundance mindset. But, I’m sharing how I read the facts and backing it up with data.

There will be amazing opportunities when we get to a climactic sell-off… But it’s prudent to preserve and defend capital here.

I did selectively add Berkshire, Meta, and Microsoft this Friday — but I also added shorts to speculative categories such as Biotech which I believe will continue to roll into a bear market.

Biotech depends on capital markets access and retail confidence. We have about 50+ small shorts in our active strategy. It’s been working well.

Back to Inflation

Core import prices are already at 3.0% year-over-year, with February recording the third-highest monthly import price print on record — and that's before the energy shock has had time to transmit through the economy.

Higher oil prices don't just raise the price at the pump — it works its way through everything.

Petrochemicals feed into plastics, fertilizers, and pharmaceuticals. Fuel surcharges hit every product that moves by truck, ship, or plane.

Then workers facing higher commuting costs and grocery bills demand higher wages.

Each channel operates on a different lag — pump prices move in days, airline tickets in weeks, grocery shelves in months, wages in six to twelve months.

All of these push inflation higher.

We own commodities such as wheat, and corn, and fertilizers.

In energy, we own names like CRGY, REPX, PAGP, and SHEL, GASS, and we are back in FTI.

These names are linked to natural gas midstream, oil and gas production, oil field services, and select tankers.

PPI across all four stages of production — raw materials through finished goods — is inflecting upward simultaneously.

This is broad-based cost-push inflation, and it creates a specific problem for the Fed.

The Fed’s tools are designed to cool demand.

They cannot increase the supply of oil, reopen the Strait of Hormuz, or lower the input cost of goods moving by truck or ship.

The result is a double squeeze: higher input costs compressing margins from above, tighter financial conditions compressing demand from below.

Consumer spending, home buying, capital investment — all soften simultaneously.

That is the historical pattern every time oil has sustained above $85 for more than a quarter.

We are at the beginning of that transmission, not the end. The earnings estimates embedded in current valuations do not yet reflect it.

And here is where it gets interesting.

DB’s TACO Index

Deutsche Bank has constructed what they call a "pressure index" — a composite of Trump's approval rating trajectory, one-year inflation expectations, S&P 500 performance, and Treasury yields. 

The concept is simple: the higher the index, the greater the political and economic pressure on the administration to pivot.

It correctly predicted the Liberation Day tariff delay. It has flagged every major Trump TACO in the past year.

It is now at an all-time high. If history was a signal, we are nearing a TACO.

Trump did try to TACO this week… But Iran needs to play ball.

Blackrock’s Chief Equities Investment Strategiest, Wai Lee, shifted their position on Equities to Neutral.

Better late than never, I guess?

This shows why big money managers lag. They have big committees. The committee has to shift from a prior consensus to a new consensus.

That takes debate and time, and people admitting they are wrong.

BlackRock is one to watch. Many RIAs index their allocations against the Blackrock models.

I noted last one or two years ago that BlackRock had shifted to an overweight stance on international value stocks. Fast forward, and international value has out-run U.S. equities.

(BlackRock is neutral on international now also.)

BlackRock controls so many flows and they move like a big tanker in the ocean so you can run ahead of them. Their adjustments sare worth watching in my view.

Rates?

Ten-year Treasury yields have risen nearly 40 basis points since the conflict began, tracking the Gulf War trajectory almost exactly.

When yields rise during an equity selloff, the 60/40 portfolio doesn't protect you.

This is another reason why I believe manager are like Generals fighting the old war and why wealth management is poised for disruption.

The Ten-Year would be appealing to us if rates approach 5% which is possible given the inflation backdrop.

Relative to prior conflicts, this correction has actually been contained. 

The Gulf War produced a drawdown approaching 15% within the first 25 trading days. The Arab oil embargo was comparable.

The current Iran conflict has tracked more like Ukraine — painful but not catastrophic, sitting in the minus 4 to 6% range at this stage. 

The S&P is down roughly 9% from highs, but the P/E ratio has already compressed by 20%. 

The P/E NTM ratio on S&P 500 went from 24.2 to 19.8x today. 

The reason the index hasn't fallen further is that earnings estimates are still holding up. 

Analysts haven't yet revised their forecasts to reflect $85-plus oil, rising input costs, or softening consumer demand, or softening capex demand. 

When earnings estimates finally follow — which they historically do, with a one to two quarter lag after a sustained oil shock — the index faces a second leg of pressure. 

We have seen this happen during 2022 previously, and what followed was a bear market. 

Today, the market is relying on a forward earnings picture that was written before any of this happened.

Once those estimates adjust, markets will face further downward pressure.

Snapback rallies are face-rippers.

The average three-month rally from bear market lows across every major historical drawdown is 24%. The median is 15%. 

I believe we can get to a bottom as soon as the tanker situation resolves. It might lead to a rally to new highs. 

However, the structural issues underneath this market — private credit stress, OpenAI risk, and industrial complex that was priced for perfection — don't disappear when the geopolitical trigger does. 

They create resistance on the way back up.

We wrote about these structural issues in our ‘Markets At A Crossroad’ newsletter. Read here. 

Thoma Bravo — the world's largest software private equity firm — released their LP meeting slides this week. These slides make a pretty solid case for software.

Software is trading at a discount to the S&P 500. That has happened only twice in the last 30 years — now, and during the 2008 financial crisis. 

Every other period in three decades, software commanded a premium. The market is pricing software like it's in structural decline.

The fundamentals tell a completely different story. 

Software companies grew revenue at 17% last year. The rest of the S&P 500 grew at 6%. Gross margins in software run at 74% versus 43% for the broader index. 

And 80 to 95% of next year's revenue is already sitting under contract today — a revenue visibility profile no other sector in the market can match.

The market has been attributing software's growth deceleration to AI disruption. Bravo's data says otherwise. 

Our view is more nuanced. Software does have bubbles regardless of good fundamentals.

MongoDB has a forward PE of 45x for example. That’s insane.

Datadog has a 50x+ forward PE, and a 300x trailing PE.

But, then you have names like Go Daddy which are trading at a 15% free cashflow yield and a 10x forward PE. That makes more sense to us.

That said, there’s a world where over-valuation in software names drags all names lower. It’s hard for a name to out-run the theme it’s in.

And cybersecurity stocks are also in software, and also a bubble.

It’s a stock pickers market, and timing is difficult.

Here’s a name we bought this past week that (i) is quality, (ii) priced well, and (iii) linked to an investment theme and (iv) is a growing and market leader.

Frontdoor (FTDR) is that investment right now.

The company runs the largest home warranty platform in the United States — 2.1 million members paying recurring revenue to have their HVAC systems, appliances, and home infrastructure covered when something breaks. 

It is a boring business in the best possible way. No datacenter capex dependency. No Sam Altman balance sheet risk. No exposure to oil prices or the Strait of Hormuz. 

Just a recurring revenue model with 75% renewal rates, expanding margins, and a management team that has quietly turned this into a cash generation machine.

Look at where it trades. P/E NTM of 12x — sitting at the lowest of its 3Y history. 

The stock has been indiscriminately sold down to levels it almost never trades at, despite the underlying business improving every quarter.

The cash flow picture is what makes this genuinely compelling. Free cash flow yield is now over 10% — highest of its three-year history. 

2025 numbers were solid. 

Revenue grew 14% to $2.1 billion. Gross margin expanded 150 basis points to a record 55%. 

Adjusted EBITDA grew 25% to $553 million. 

Free cash flow hit a record $390 million.

The company bought back $280 million in shares — its fourth consecutive year of increasing buybacks — and still carries only 1.4x net leverage. 

There is $329 million remaining on the current authorization (~8% of MCap), and management said they are on track to complete it ahead of schedule.

The growth story is also improving. 

Member count stabilized in 2025 after years of decline — the first time that has happened since 2020. 

Management guided for actual member count growth in 2026, the first year of net member expansion in six years. 

The renewal rate improvement to 75% is particularly important because it means the members they are adding are actually staying. 

Beyond the core warranty business, there is a real optionality story in non-warranty services. 

The new HVAC upgrade program — where Frontdoor essentially sells and installs new HVAC systems to its existing 2.1 million members — grew 48% to $128 million in 2025, with only 55,000 installations completed against a total member base of 2.1 million. 

That is barely scratching the surface. 

They are now extending the same model into appliances. 

Management also has a contractor network of 17,000 and a builder network of 19,000 through the 210 acquisition that they are beginning to monetize. None of these are fully in the numbers yet.

The bull case is simple. 

You have a recurring revenue business with a 55% gross margin, record free cash flow, net leverage of 1.4x, a management team aggressively buying back stock, and an expanding non-warranty revenue layer — all trading at 12x forward earnings and a 10% FCF yield. 

In a market environment where we are actively hunting for businesses that are resilient to inflation, immune to geopolitical risk, and priced for a bad outcome that hasn't materialized, Frontdoor checks every box.

The risks?

Consumer spending is likely under pressure. New demand is likely frozen as consumers take a ‘wait and see’ approach.

The housing market remains sluggish — existing home sales near historic lows constrain the real estate channel where warranty attach rates drive new member acquisition. 

Any tariff escalation on imported appliance components could pressure claims costs, though management noted their HVAC exposure is largely domestically sourced. 

And if the broader market continues to sell off, Frontdoor gets cheaper regardless of its fundamentals — being right and being early are different things.

By the way, we made a call on TransUnion two weeks ago. We noted it was a good idea to buy it, and then sell it on a tactical bounce which we did.

OpenAI is offering a 17.5% ‘guaranteed return’ to PE firms. 

It gets better. 

It has a PIK toggle. 

It gets better. 

JP Morgan is selling shares in OpenAI at a premium to their last round. 

It gets better. 

Microsoft is threatening to sue OpenAI for breach of contract. (They were exclusive). 

It gets better. 

Claude is eating OpenAI’s lunch. 

It gets better. 

Retail investors are paying a premium to the premium to access OpenAI shares.

Note: As of the time of this writing, VCX since crashed 50%+. Bummer there was no way to short this monstrosity.

Felix Jauvin, Quinn Thompson, and Joseph Wang make the case that sustained high oil prices don't just create a geopolitical problem — they create a Fed trap, where cutting into inflation is impossible and hiking into a weakening economy is equally so.

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Citi's Head of Equity Trading Strategy Stuart Kaiser lays out the asymmetry defining this market: 3-5% upside, 10%+ downside, with headlines dropping overnight that no hedge can cover.

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On Lex Fridman's podcast, Nvidia's Jensen Huang made three statements that should stop every tech CEO in their tracks: AGI has already been achieved, the global coder base just expanded from 30 million to 1 billion overnight, and an AI agent could already build the next billion-dollar company.

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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.