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

This week, I had a bits + bips podcast discussing the unwind of crowded thematic trades and what comes next.

The core view: Anything with a KOL behind it — Bitcoin with Michael Saylor, Ethereum with Tom Lee, quantum with Cathie Wood — is getting unwound. 

The right move is to rotate into what sounds boring: Small cap Industrials, waste management, oilfield services, anything with free cash flow. 

Watch our discussion here. 

Back on Feb 19th, Trump said Iran had 10-15 days to make a deal, and if a deal isn’t reached, “bad things will happen”.

On Saturday, the US began major combat operations in Iran. Israel joined with missile strikes simultaneously. 

Iran retaliated, targeting US assets and Israel, the UAE, Kuwait, Bahrain, and Arabic countries. (The fact lost on most major media is that no one in the Middle East actually likes Iran.) 

Our view is that any Iranian counter-response will be limited and ineffectual. The leadership is gone. You can’t mount a couner-response without command and control.

The US & Israel be able to fly with impunity within one week according to former Defense Secretary Epster.

Iran cannot block the Strait of Hormuz. We believe an oil price stock will be sticky. In fact, Saudi Arabia - an enemy of Iran - has plenty of reason to pump production.

Iran’s leadership is meeting in bunkers because they believe their digital comms are compromised. It’s already over.

And, there’s no credible blockage of the Straits of Hormuz.

The longer-term question for Iran is what institutions and leaders step in to fill the void.

Today, Iranians around the world and in Iran are rejoicing. Let’s hope they join the West.

Source: Telegraph

But, none of that has much to do with corporate earnings. A short-term spike in oil is possible. But, that should recede within weeks. We found it suprising that the WH has no plans to release oil from the Strategic Petroleum Reserves.

We talked about the “Iran risk” in our newsletter on 1st Feb, titled Markets at Crossroads and advised caution around risk assets in our 12/31 podcast titled ‘Is Goldilocks Over?’

We discussed 10 other signs that suggested the road ahead for equities wasn’t rosy. 

And, it played out as we expected. 

We also shared a post op-ex risk-off signal in that newsletter worked out well. SPY has lost ~0.6% in the last 1M.

The latest Iran attack will likely lead to a large Monday morning gap down. 

But, history tells markets bounce from the immediate bottom, and the drawdown might get absorbed within the week. 

I agree with a lot of what Alex says here below.

The harder question is — what assets and themes should you own when markets bottom?

And, will the 88-member council of Clerics choose another Supreme leader, or will the Iranians take back control of their government?

I've been bullish since the start of this newsletter in April 2023.

Goldilocks was my view. 

Disinflation, productivity growth, earnings growth.

That view was correct. 

And now it's fully priced in. 

Everyone owns that position.

That's the problem.

Somewhere between the end of last year and mid-January, we hit peak Goldilocks. 

The sentiment has peaked.  

And now that Consensus crowdedness is unwinding.

Who caused the crowdedness? 

The KOLs. Cathie Wood. Michael Saylor. Tom Lee. Dan Ives. You name it.

The tribal leaders pushing quantum stocks, Robinhood, and Palantir.

They built a thesis. It worked for a year or two. The tribe grew. The trade got crowded. It got expensive.

And now the capital is leaking out.

Here's a useful mental model.

What's the average duration of a relationship between two people before things start to fall apart? 

About 1.9 years.

What's the average duration of a market trend? 

About one and a half to two years.

3D printing. Cannabis. Potash. Quantum. 

The biology is the same. 

After two years, people start to notice the flaws. 

The attention wanders. Their brain wants fresh stimulus. The dopamine doesn’t fire as much.

Then the ‘tribe’ behind the investment theme fractures.

Our own biology may be the reason why trends last 1.5 to 2 years before they get tired and roll over.

People got tired of Internet Stocks in 2000, why can’t the same happen for Memory and Datacenter stocks now?

AI is a real trend — a big secular one. 

But even real trends get crowded and expensive. 

We're at that inflection point now.

The old themes continue to wash away lifting under-owned names to the surface.

Old guard high beta is done. Look at Palantir, SOFI, Duolingo, or Robinhood — all in deep bear markets.

What new themes may rise to the surace?

Main Street.

What's working?

Anti-themes are working.

These are names that growth-focused, thematic investors won't think of. 

That's exactly why they're not crowded.

Since Sam Altman’s October interview, we have been shifting from thematic stories to bond proxies– stocks with durable cash flows, and reasonable valuations. 

Markets are now noticing them.

It pays to be a contrarian.

Here’s one way AI can transform investing. Faster insight.

Can you front run Charles Schwab?

Charles Schwab is selling shares in SCHW.

The Walton family is selling Walmart's shares

The President of Caterpillar is also selling his shares.

I figured this all out in 30 seconds with the latest killer feature added to the Lumida Invest app. 

We also found some undiscovered gems with CEOs buying their own shares. 

Insiders sell for all sorts of reasons: tax, liquidity, diversification. 

They buy for only 1 reason…

We are now integrating this data feed into the existing Lumida Bull Bear scorecard and charting AI…

We’re coming for Robinhood. 

Want to try the app? Sign up here.

I have some exciting news to share.

Lumida is building the future of wealth management. 

It’s time to move beyond Robinhood’s gamified “Trade, Trade, Trade” model.


It hurts investors and their own data shows it.

(See this tweet from James Chanos on Robinhood’s retail investors - they have barely gained despite S&P 500 producing double digits gains in the last few years). 

The way we look at it, apps like Robinhood, E*Trade, and WeBull are primarily geared to “reward” you for trading. 

They make money on the backend, getting paid for order flow every time you make a move. 

We are investors, and we only do well if you succeed. 

Join our investor community and be part of our growth. We will launch an equity crowdfunding soon.

This is the waitlist. We already have dozens of names, and we’ll prioritize allocations as best as we can.

You’ll see our strong revenue growth (with third party audited financials) soon to follow before you need to make your final decision.

Our strategy is to grow with our community. The community and social media has helped us grow. We believe community is a powerful growth driver.

We’d like you, our valued community, to be a part of that as we seek to disrupt the trillion dollar wealth management industry.

AI Avatars are coming…and I expect we’ll be among the first to disrupt boomer advisors with AI Avatars that can meet you anytime, anywhere and have your best interest at heart.

The US economy has expanded meaningfully over the last year, and this week’s data show the economy has more room to run. 

Initial jobless claims came in healthy at 212,000, down from last year’s readings. 

Continuing claims also fell to 1.83 million, lower year-over-year. 

We are in a healthy job environment with lower layoffs, and the unemployed are finding it easier to get into newer jobs.

This employment data also reflects positively on higher business confidence.

When businesses are uncertain, the first thing they cut is hiring. 

However, this isn’t the case. Businesses are adding headcount because their forward order books justify it. 

Earnings season confirmed it. 

~75% of the companies beat their revenues estimates, while ~70% of companies performed better than expected on earnings. 

The outperformance came despite higher revisions to estimates after Q3 outperformance.  

This earnings season outperformed the vast majority of quarters over the past two decades, including several that came during genuine economic booms. 

This shows an economy running hot.

The consumer is holding up their end too. 

The Redbook Retail Sales index rose 6.7% YoY — well above trend. 

And, we have more fuel in the tank. 

Tax refunds this season are expected to rise by roughly $1,000, bringing the average check to nearly $4,000, up from $3,100 last year. 

This gives consumers greater room to increase spending, leading to a surge in aggregate demand across the economy.

More jobs. More sales. Better earnings. The economy has no reason to not grow.

I did an FSD video, titled AI apocalypse, discussing how the AI scare is overblown – it is my rebuttal to Citrini’s article, and where they got it wrong.

Markets are looking at AI as an asteroid. 

Every industry in its path: extinct.

It started with software. 

Then cybersecurity. 

Then payments and financial services. 

Then wealth management. 

Then office real estate.

Now consulting, logistics, and travel. 

Bespoke put together an "AI Doom Basket" spanning all these categories — the basket is down 19% year-to-date.

Doomers think: Anthropic's LLMs can write code better than coders. 

So who needs coders? And Who needs software companies? 

From there, the fear spreads. 

If AI eliminates white-collar headcount, who needs office space? 

If AI automates financial advice, who needs advisors? 

If AI handles freight routing, who needs brokers?

If AI does everything, who needs employees?

The narrative has a certain viral logic to it. It's clean. It's dramatic. It sells.

Citrini’s article is an example.

However, Citrini's article failed to understand how labor markets, business owners, and consumers actually behave. 

Having real world experience matters as an investor.

The actual data tells the other side of Citrini's view.

Indeed job postings for software engineers are up 11% year-over-year. 

Companies are bringing on more engineers to expedite product development. 

AI is helping boost productivity for each engineer, and companies are, in turn, paying their employees more for higher output.

See this tweet by Seth Golden. 

Every time, productivity jumps, we see both margins and wages grow.

This is how it has always worked. 

In 1900, one in two Americans was a farmer. 

Agricultural technology came. 

Farming employment reduced. 

What happened to those workers? 

The invisible hand doesn't move labor from A to B. 

It diffuses it — to B, C, D, E, F, and places no one predicted. 

AI productivity is the same. 

It compounds in millions of small increments across the economy.

That's a harder story to tell than "AI-kills-economy." 

But it's the true one. 

Talking about how the world is ending sells more clicks than a story about incremental enhancements compounding quietly across industries. 

The former is just easier to write.

The jobs at real risk are the menial ones. 

Data entry. Rote monitoring. Basic logistics tasks no one wanted anyway. 

The jobs that survive are judgment-intensive and trust-intensive — chef, architect, business owner, advisor, anyone where accountability matters.

You still need a human in the loop when the cost of being wrong is high.

Did you see how an AI at Amazon AI pushed a bad update and took down servers?

That cost tens of millions. At least.

How much supervision is that worth? A lot.

The AI apocalypse is a crowded trade idea, and sounds ‘easy’. 

Don't confuse an easy story with a true one.

Not all of SaaS is cheap (avoid cybersecurity for instance). But there are bargains emerging.

Morningstar is down 41% over the last year. 

It landed in the AI Doom Basket alongside financial advisors, SaaS companies, and wealth managers. 

We saw this - and some other names - and said ‘AI can’t kill this business.’

The fear is that AI replaces analysts, kills data subscriptions, and hollows out the business.

That fear misunderstands what Morningstar actually is.

Morningstar's moat isn't its analysts. 

It's its data. And data moats don't weaken with AI — they deepen. 

CEO Kunal Kapoor: "It's hard to build databases. There's the depth, the breadth, the quality, the timeliness, all of that adds up. We've been building our equity database for more than two decades, and every time I think we're done, there's the next thing you have to add." 

A language model can replicate a summary. It cannot replicate 20 years of structured, verified, institutionally trusted data with proprietary collection relationships.

Morningstar isn't defending against AI. It's using it. 

Kapoor has reframed the entire AI opportunity around removing friction: "We know the answers our clients want to get to, so why are we making them click six to eight times? With AI, the idea is remove the friction. Get people what they need quickly." 

PitchBook has already launched AI profile summaries, AI screener construction, and AI earnings call transcripts. 

Data collection is being automated, which means more database coverage without proportional headcount growth. 

AI is making the moat wider, not narrower.

The growth vectors have nothing to do with the disrupted parts of the market. 

PitchBook sits at the center of the private markets boom, providing the essential data layer for the private-assets world. 

Margins for the segment have expanded from 15.9% to 30% in the last two years with earnings compounding meaningfully.

The Direct Platform — institutional analytics and data — continues to grow with a stable, subscription-based client base of asset managers and advisors. 

Similarly, the Indexes business is the fastest-growing index franchise of any size globally.

None of these are getting replaced by AI. 

All of them are growing because of structural shifts in capital markets.

Now the numbers.

Q1 2026 revenue is tracking at $626M, up 7.5% year-over-year.

EBITDA margins are expanding toward 30%. 

The forward P/E sits at 16.1x — the lowest of its 3-year range.

FCF yield is 6.11% - highest in 3-years with a buyback yield of 11.17%.

Management is buying back shares at the fastest pace in company history. That shows their conviction in the business’s fundamentals.

The bear case?

But at current growth and valuations, the margin of safety is real. 

Morningstar has compounded uninterrupted for 20 years. The market has handed you a discount to own it.

We bought it on Wednesday after the bespoke report, and it feels like everyone else followed. 

The stock had five consecutive green days in over 6 months.

We bought Morningstar the morning we saw it on an AI doom basket. It rallied every day since.

We are stalking other names on that list too… a credit bureau and an enterprise data provider.

NVIDIA just printed another monster quarter. $68.1B in revenue, up 73% year-over-year. 

Net Income rose 94%. Guidance for the next quarter came in strong as well – $78.0B expected, 65%+ YoY growth. 

By every conventional measure, it was a clean beat.

The stock still dropped 5.5% on the day, then kept sliding the next session.

The market had its reasons.

The issue isn't NVIDIA's business. 

NVIDIA is an extraordinary company, and Jensen Huang is playing the game at a different level than almost anyone in tech.

But the question the market is now asking is who keeps paying for the datacenters NVIDIA supplies.

On the earnings call, an analyst asked exactly the right question: 

How are your customers going to keep affording these chips when their free cash flow is collapsing? 

Jensen's answer was that token consumption is revenue — that GenAI is driving inference, inference is driving prompts, and that demand loop will generate the returns that justify continued spending. 

That's partially true. 

Cloud spending growth remains strong and is going up every quarter. We don't dispute that.

But a significant portion of that token consumption is internal — coding tools, models being built in-house, experimental workloads that aren't attached to any external revenue line. 

It consumes cost without generating a corresponding return. 

And free cash flow is a real constraint. 

Mag-7 free cash flow is down 90% as capex has consumed nearly all of it. 

You can't indefinitely spend on capex beyond the FCF generation of the customer business.

There's also a structural shift happening that markets are beginning to price in. 

The first phase of AI capex was the one-step jump — companies woke up, realized they needed GPUs at scale, and ramped spending aggressively. 

That happened over the last two years. 

The next phase is slower and more dependent on the actual payback yield from those investments recycling into incremental cloud revenue. 

That's a different growth profile than what drove NVIDIA's last two years.

Think about where each player sits on the value chain.

At the end of the whip, you have the LLMs — OpenAI, Anthropic — which have no real pricing power, are burning cash, and are projecting trillion-dollar revenue figures that the market is increasingly skeptical of. 

Move up the chain and you get the hyperscalers, whose stock prices have been volatile as their margins compress under capex pressure. 

Then NVIDIA. 

Then Micron. 

Then silver, which tracks Micron so closely right now that one of them is probably wrong.

The farther up the supply chain you are, the more insulated your stock has been from this repricing. 

The closer you are to the end demand — the LLMs with uncertain revenue — the more you've felt it. 

We are skeptical of capex receivers and capex payers going forward.

We still own Taiwan Semiconductor and may buy names for tactical opportunities.

Druck is a contrarian, even though he says he is not. 

You are all missing this. 

Druck says ‘Never Invest in the Present’. 

He says, ‘Always look out two years’. 

Guess what?

The Present is Mainstream. 

Two years out?

That’s different than the Mainstream. 

That’s vision. That’s ‘what might be’. 

That’s contrarian. 

1. Druck sold the Nasdaq in January 2000.  

Contrarian. 

2.  Druck bought Nvidia in 2022 when ETH mining was dead and gaming demand was weak. He saw AI early. 

Contrarian. 

3. Druck sold Nvidia at the April 2024 local top. 

Contrarian. 

4. He sold AI stocks in the Fall around when Nvidia hit a $5 Tn market cap. 

Contrarian. 

5. He is buying Copper when everyone is buying Gold. 

Contrarian. 

Druck also said technicals are 20% of what he does down from 80% in the 80s. 

Nope. 

I don’t buy that. 

Druck also has said he likes to hold a few positions and ‘watch his eggs closely’. 

Then why 80+ positions. 

Druck is a clever guy. 

He’s not going to give you the magic formula. 

So, what’s the role of Morgan Stanley? 

Why this relationship?

Morgan Stanley is the ‘idea diffusion’ engine. 

If you are early to a trend you need others to follow your thesis. 

That’s the job of Morgan Stanley. 

They market trade ideas. 

It’s copy trading for institutions. 

It all becomes a self-fulfilling prophecy. 

Druck bought into biotech… biotech goes up.  

It has nothing to do with AI adjacency (even though that’s what he says). 

My point is this…

Druck wants to preserve his edge. 

Markets are highly competitive. He is a competitor. 

You need to critically engage with the subject matter. 

Study what he actually does.  

Assess the ideas more rigorously. 

Listen to this FSD livestream, titled Druckenmiller, where I discuss his latest interview, and what to make of it.

This is the S&P 500 weight on Technology.

This is free cashflow from Mag 7, the largest weight in information technology, drying up.

The crowdedness in Mag 7 names will take time to unwind.

So... breadth expansion and international names remains the path forward.

Druckenmiller explains why markets today react more to news, flows, and macro narratives than chart patterns — and why strategies that everyone knows stop working.

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Bill Gurley explains why the real competition in AI isn’t just about who builds the best model — it’s about who captures the users, the ecosystem, and the world.

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The gap between AI hype and AI profits is showing up in prices, and the market is starting to treat long-term disruption as real while questioning the near-term winners.

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