October 30, 2025 • 23 mins
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Five trillion is a headline; the harder story is what comes next. We dig into NVIDIA’s historic market cap, the AI hardware and software flywheel behind it, and the reality that scale turns leaders into targets. From Blackwell-class GPUs to ecosystem partnerships like Palantir, we map how compute, tooling, and customers reinforce each other—and where fragility hides when growth expectations run ahead of execution.
We get candid about market structure. Liquidity and call-option fever can blur the line between conviction and speculation, and when a trillion gets added in weeks, a reset becomes more likely. That’s why we’re trimming oversize winners, keeping meaningful cash in yield-bearing vehicles, and holding a measured slice of gold. Not to sit out AI, but to stay agile. We also look beyond the obvious tickers to the underloved shovels of the AI buildout: data center construction, power, grid upgrades, thermal management, and select semis that benefit from rising compute demand without the richest multiples.
Zooming out, we unpack why U.S. tech clusters dominate: world-class universities, venture capital depth, immigration-fueled talent, and public markets that finance bold bets. But concentration is a double-edged sword. Policy shocks, China–U.S. tech rivalry, export controls, and emerging models trained efficiently on non‑NVIDIA hardware can all shift margins and leadership. Resilience comes from structure: a portfolio that blends platform leaders with infrastructure plays, and that pairs risk assets with cash optionality rather than long-duration bond exposure.
Our take is optimistic, not naive. Celebrate engineering that moves the world forward, but respect the math of large numbers. Corrections are healthy, positioning matters, and patience—funded by real yield—wins more often than adrenaline. If this lens helps you think clearer about AI, chips, and market risk, follow the show, share it with a friend, and leave a quick review so more investors can find us.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Clem Miller (00:26):
Hello, everybody, and welcome to Skeptic's Guide
to Investing.
I'm Clem Miller.
I'm here with Steve Davenport.
And today we're going to betalking about the fact that
NVIDIA yesterday reached a highof five trillion dollars market
cap.
The first time any company hasever reached such a market cap.
(00:51):
And, you know, of course,NVIDIA ticker NVDA is kind of a
market darling right now.
It is the number one designerof uh AI-related chips, gaming
chips as well, but AI-relatedchips uh has developed uh yet
(01:17):
another advanced chip calledBlackwell.
Uh these are GPUs, by the way,graphical processing units,
these uh AI chips.
And uh and also uh is uh youknow does a software stack uh as
the industry calls it on top ofuh the chips.
(01:37):
So they're also a softwaremanufacturer, and they've got
various uh partnerships uh toprovide AI chips for certain uh
uh industries.
Uh just yesterday was announceda uh a deal, a partnership
between NVIDIA and Palantir, uhthe uh defense uh uh advanced
(02:01):
software manufacturer who's nowtrying to get into commercial
markets.
And so they're working with uhwith NVIDIA on um uh on that.
So uh NVIDIA um you know issort of the emblem, I guess we
could call it, of what's goingon with AI and the AI economy,
(02:24):
which of course extends waybeyond NVIDIA, uh, but they are
the the the central part of it.
Steve, what do you have to say?
Well I sneeze.
Steve Davenport (02:35):
I guess I'd say that um I didn't expect this to
keep happening.
I mean, we we came out with anhour an August podcast about the
frothy fourth, and I guess Ijust keep seeing the market go
up.
And I think that part of it isthe Fed cut, part of it is in
general, we don't see things onthe headlines that indicate
(02:58):
there's risks.
But I think that with thegovernment shutdown going on, I
don't know how we would measureit or determine that.
So I think it's a little bitlike we're driving blind now.
And by driving blind, I I don'tthink that's a really good
thing in terms of uh what areyour guardrails and how do you
(03:19):
make sure you stay on the road.
So um I believe that NVIDIA isa great company.
Um is it a company that shouldbe five trillion?
Uh I can't tell you what'sgoing to be the top 10 companies
in 10 years, but I can tell youthat every time we do this and
we look back at the bestcompanies 10 years, usually one
(03:43):
or two survive.
And maybe it will be one or twoof these companies, but when
you look at Google, Amazon,Microsoft, you know, uh Tesla,
and Nvidia, you you seecompanies who have unique
advantages and are special umorganizations.
(04:06):
And what I believe is, Ibelieve that the US in Silicon
Valley has created um a sourceof innovation and a source of
growth that is unlike any othercountry in terms of educational
institutions, investors, earlyprivate investors, late stage
(04:29):
investors, large um funds thatwant to uh support these
companies because they believethat some of them are going to
change the world of thetechnology and how it gets used
in our economy.
So, yes, I I think that itmakes sense that they are now
the the top of the heap.
(04:49):
But just as at anything, Clem,I mean, when you get really
good, you know, when you're umOtani and you're hitting home
runs and just striking everyoneout, um it's there's people who
are gonna come for you.
And in the next game, uh, youknow, Guerrero hits a home run.
(05:11):
Uh it's off of Otani.
And I think it's it's you know,we have to realize that
becoming more of a target andbecoming a larger firm and
becoming that big, the ship getsharder to move.
And I've used this analogybefore, but this is a large
(05:31):
tanker now rolling across theocean, but it's not gonna turn
on a dime, and it's not gonna,you know, give you all of the
returns, you know, ad infinitum.
Doesn't trees don't grow to thesky.
And I I look at this and Ithink, you know, there's a deep
seek, which upset the whole AIuniverse in February, is coming
(05:56):
out with a new version of theirum their bot.
And Deep Seek in December onewill be releasing the newest
version.
And my question is, what ifit's good?
What if it's what if itsurprises people again?
And they're using non-NVIDIAchips, and their advantage has
(06:20):
been they're programming itbetter, and so by programming,
they you know have figured out away to make their model as good
as Chat GPT, maybe better.
And so everyone is always gonnaface challenges.
And I think that when you hitfive trillion, you you
(06:40):
celebrate, you pop somechampagne, you you have a round,
and then you say, okay, wegotta go back to work because
it's even harder now.
Growing 20% on uh $5 trillionis adding another trillion
dollars.
They added this last trillionin 70 days, which is the fastest
(07:03):
amount of time anyone's everadded a trillion in market cap.
Yeah, I think that's you know,things are moving fast, people.
And I think if we thought itwas overpriced or frothy in
August, we have to say it'sfrothier now.
And I have no trouble sayingthat I think it's ripe for a
(07:23):
correction.
I think that a correction wouldbe healthy.
I think a correction wouldstart to make people realize and
we would separate some of theshort-term buying call options.
I don't really own these names,I'm just betting.
And I think that speculation isdifferent than investing.
And what we have right now is aspeculative fewer with names
(07:47):
like Ocklo and other things thatare just going up without any
revenue or earnings.
Yeah.
Clem Miller (07:53):
So I don't think you can separate NVIDIA's at 5
trillion, OCLO is up 600% thisyear, and some of these other
things.
I think they're all related toa market that's looking for
extreme advances and short-terminvestors.
And I I don't think thatusually translates into a
(08:17):
long-term good result.
So I think people need to be alittle more cautious.
And I'm gonna continue to beatthe skeptics drum.
Are you still a skeptic or areyou on board with the NVIDIA
party?
Have you popped your champagne,Clun?
Steve Davenport (08:35):
Well, uh, I do have NVIDIA in my uh portfolio.
I think probably you do too,Steve, and others do.
Um, I have been trimming it uhas it's been going up.
Um, I've become the greattrimmer uh lately with gold and
other things um because I dothink the market is frothy, and
(08:55):
I do think that eventually we'llhave a downturn.
And when we have a downturn, Iwant to have a lot of cash.
Uh and you know, when we reachthe downturn and start to pick
back up, that cash allows me tobuy a lot of things that I think
are gonna do better uh at thatpoint in time.
You know, and who knows?
Maybe it'll be buying back someof the things I had sold around
(09:18):
now.
Who knows, right?
Uh but but you know, it's Ithink it's helpful to be
trimming now some of thesestocks that have been rising a
lot.
Um, I I do have uh a lot ofcomfort with the AI story.
And what helps me becomfortable with the AI story is
(09:39):
that I do have a lot of cashand gold in my portfolio.
So I feel those are offsets tosome degree to the AI story.
Um not offsets, but really, youknow, if AI starts to falter,
you know, gold presumably,although I'm less uh I'm less
comfortable with that thatconcept now for gold, but
(10:02):
presumably gold will do well ifAI goes down.
Um so from a standpoint of arisk uh a risk reducer.
Clem Miller (10:11):
Yeah, I mean cash is a great reducer.
Steve Davenport (10:13):
Yeah, cash is the cash is the ultimate
reducer, and right now I've gotabout a quarter of my uh options
are the ultimate reducer, butwell, okay.
Cash is I've got about aquarter of my uh portfolio in um
uh in cash right now.
Um and um about 10% or 11% uhin uh in gold at the moment.
(10:36):
Um but a lot of the rest of myportfolio are in sort of AI
adjacent stocks, um, not justyou know NVIDIA uh but also in a
lot of uh the constructioncompanies and the power
companies and all of that thatare helping to build the data
(10:56):
centers that are required forAI.
Um also I'm in some somesemiconductor stocks other than
uh other than NVIDIA.
Uh but and here's uh a keything, uh I'm not in Tesla, I'm
not in Amazon, I'm not in Apple,um and I'm not in Meta right
(11:20):
now, right?
And I think those stocks uh tosome degree have gotten away
from their fundamentals in termsof their prices.
I still have Microsoft.
I should I should have sold ortrimmed that a lot, uh, but I'm
still holding on to it because Ithink there's some some
(11:42):
positive story there left.
Uh and oh, and I do holdGoogle, which uh I'm glad I do.
Um continue to hold Google, butI'm not nearly as exposed to
the magnificent seven, quoteunquote, as a lot of people are,
and as you know, the SP is youknow exposed to it.
(12:05):
So I and I think I've donequite well by sort of going for
other companies uh that are sortof in that whole AI world, uh,
rather than um you know the onesthat I had trimmed like Meta
and Amazon and Apple or trimmedor gotten rid of Meta, Amazon,
Apple.
Clem Miller (12:25):
Um, can you help me?
I think that investors havethis term or feeling about cash
as like you're stepping away andyou're not earning anything.
When you have something and yousay it's in cash, what vehicle
are you using and what's theyield?
Steve Davenport (12:42):
Oh, it's uh you know it's a money market, so it
is making money, right?
Correct.
So so it's got a yield on it.
Um it's not a it's not a greatyield, it's actually a yield
that's uh that's better than uhthan dividend yields for many
stocks, right?
Um but it's got a yield on it.
And um do you mind sharing whatwhat what the yield or what the
(13:06):
vehicle is I haven't I haven'tlooked lately, but it's uh you
know it's a it's a money market,so so you're saying two to
three?
That would be my guess, too,somewhere between two and three
percent, which is higher thanyou know, sort of the SP 500
average dividend risk, right?
Clem Miller (13:24):
I just want to say to people that hey, you know,
when we say we're taking thingsoff, we're taking off the equity
risk of downside.
Correct.
And the risk we're taking whenwe move to cash is against
inflation, really, becauseinflation moves more.
And so by doing a two to three,if you think inflation is going
to be less than two to three,which I think you can debate,
(13:48):
but you're not losing purchasingpower in a lot of these cases,
because there are vehicles outthere that take, you know, that
try to make those decisions tobe in cash, um, to still have
some yield and still, and sowhile the Fed is lowering rates,
we're you know, we're stillmaking money.
It's just that we're not takingthe market exposure or the
(14:12):
individual stock exposure.
Steve Davenport (14:14):
Right.
Now, I'm not a big fan ofbonds, as you know.
I know.
I mean, the thing about bondsis yeah, you can get a higher a
higher yield, right?
A higher current yield, uhhigher coupon, but you know, it
can the the the longer-termyields, you know, this goes back
to what we talked about in ourFed uh discussion.
(14:35):
Longer-term yields can whiparound, and that can affect bond
prices.
And uh, you know, depending onhow long your uh duration is, uh
that can really have amultiplier effect on uh what
happens with bond prices ifyields go up or down.
So uh I'm not really all thatcomfortable with bonds.
(14:57):
Uh, you know, whereas a lot ofpeople might have bonds for a
certain part of their portfolio,uh as in aka the 60-40
portfolio.
Uh I don't really believe inthat 40 part, uh, but I do
believe in like uh uh a 30 to35, at least right now, a 30 to
(15:17):
35 cash plus gold part.
Okay.
Clem Miller (15:22):
I just think uh as everybody looks at the NVIDIA
going across 5 trillion, it is acelebration of success for US
ingenuity, U.S.
technology, and U.S.
ability to nurture companiesand have employees that are you
know diverse and uh across allkinds of skill sets from all
(15:43):
over the world to solve some ofthese problems?
Our legal environment isstrong, our banking environment
is strong, our investing marketand and and economy is strong.
So I believe that thesecompanies are going to be great
companies.
The question is from this pointforward, will the return mirror
(16:06):
the past?
Will the returns have to pauseto give the you know the joy
that refreshes?
I think that a pause would behealthy here.
And I believe that a pause orsome question about what's
happening with China in the rareearth space or in the deep sea
space will cause um this rallyto come to a uh you know a
(16:32):
correction.
I don't know how deep thecorrection will be, but I would
say that given the movementswe've seen in some of these days
when things get uncertain, themovements are much faster and
much more severe than they'veever been.
So, in that way, you know, Ithink that if you're interested
(16:52):
in options and optionstrategies, I work at Circuit
Capital and we can help you withthose.
Um, options are a choice justlike cash, just like gold.
So at Circuit Capital, I'vebeen working with options over
the last 20 years, and that'spart of what we do for clients.
So I think that everyone shouldthink about how their
(17:16):
portfolios are structured andhow, if anything, they should
change them as they head intothis, you know, end of year and
holiday season.
It's usually a strong term formarkets, but this is a little
bit different time.
And I think that over the nextday, we're gonna hear a lot
about China and the meetingsthat uh in Korea.
(17:36):
And I hope we find more thingsthat are gonna make us confident
of the rally and what's goingon going forward.
So, Glem, any more commentsabout NVIDIA and the five
trillion?
Steve Davenport (17:49):
I I would just say that you know, you mentioned
the uh the China talks.
You know, the this was, I wouldsay, at best, a temporary
truce.
Uh, and you know, there's acontinuing um economic and
technological war between the USand China that I think is going
(18:11):
to continue, persist, perhapsget uh perhaps get even worse.
So that's the first thing Iwould say.
Second thing I would say is uh,you know, everybody talks about
American exceptionalism asdriving the market.
I don't think that's the rightway to describe it.
I think the right way todescribe it is to say that the
(18:34):
U.S.
has an unusual concentration ofadvanced technology firms in uh
Silicon Valley, writ large.
And by writ large, I mean notjust the Bay Area uh but also in
(18:54):
the Seattle area, right?
Clem Miller (18:56):
So over the Boston area.
Steve Davenport (18:59):
Yeah.
Or you could throw Boston inthere too, right?
So you've got that that sort ofgreater Silicon Valley, uh,
which uh which is where you knowif you took if you took the
firms that are in thoselocations out of the picture,
uh, I think our um Americanexceptionalism wouldn't look as
(19:19):
in terms of uh the marketwouldn't look as uh as frothy or
as as as strong really uh as itdoes now.
And and why, why, you may ask,do we have uh this concentration
of excellent advancedtechnology businesses in these
areas?
Well, it's because you've gotexcellent universities in those
(19:43):
areas.
You've got venture capitalfirms uh that are providing
capital in those areas.
You've got, because of theuniversities and the venture
capital, you've got anincredibly highly advanced
workforce uh in those areas.
I mean, even when a particularfirm might lay off people, you
(20:05):
know, have a different change indirection, may lay off people,
those people uh almost alwayscan find jobs at other firms uh
in the same complex of advancedtechnology.
So it's you know, it's a uhthat's what drives our
exceptionalism.
And and then, you know, inChina, you've got the same thing
(20:28):
going on.
You know, you've got the wholeShenzhen area, uh, which
ironically they also call theGreater Bay Area, right?
Hong Kong, Macau, Shenzhen, uhGuang Uh Guangdong, Guangdong,
Guangzhou, Guangzhou, I think,uh, in the Greater Bay Bay Area.
Uh, and they uh and that isalso an advanced technology
(20:52):
complex.
Um, they have advancedtechnology in other places in
China, but that that's reallythe uh the center of it all.
So yeah, it's you know, we'rereally talking about a world
where you know advancedtechnology companies, the ones
with the greatest market caps,are located in pretty small uh
(21:14):
areas, uh pockets, and the vastparts at least geographically of
the US and other parts of theworld, uh including practically
all of Europe, for example, umuh are uh are are less advanced.
Clem Miller (21:32):
Yeah, there's nothing wrong with them.
We still like to visit, um, andthey're wonderful, you know,
reminders of history.
Steve Davenport (21:39):
But if you're looking for the best companies,
some of the Yeah, ASML would bethe exception, I think, that
proves the move.
Clem Miller (21:46):
Um and I think we know that Taiwan's Femi in
Taiwan.
There there are examples ofexceptionalism all around the
world.
We're just saying that, hey,this this the move of NVIDIA and
the concentration of the top 10in the world companies right
now, being US companies, is umis based on a lot of good
reasons.
And we think that um it's not atime to run from the markets.
(22:11):
What we are saying is it's agood time to look and think and
and try to rationalize yourposition so that you're
positioned if things were to gothe other way.
So again, thanks for listeningto Skeptics Guide.
We appreciate your support anduh we really like delivering
these ideas to you andeducational purposes, and we
(22:34):
hope you uh you know improveyour investing IQ and and uh
financial wellness with us.
All right.
Thanks.
Anything else, Gwen?
Nope.
All right, be good, everyone.
Hello, everybody, and welcome to Skeptic's Guide
to Investing.
I'm Clem Miller.
I'm here with Steve Davenport.
And today we're going to betalking about the fact that
NVIDIA yesterday reached a highof five trillion dollars market
cap.
The first time any company hasever reached such a market cap.
(00:51):
And, you know, of course,NVIDIA ticker NVDA is kind of a
market darling right now.
It is the number one designerof uh AI-related chips, gaming
chips as well, but AI-relatedchips uh has developed uh yet
(01:17):
another advanced chip calledBlackwell.
Uh these are GPUs, by the way,graphical processing units,
these uh AI chips.
And uh and also uh is uh youknow does a software stack uh as
the industry calls it on top ofuh the chips.
(01:37):
So they're also a softwaremanufacturer, and they've got
various uh partnerships uh toprovide AI chips for certain uh
uh industries.
Uh just yesterday was announceda uh a deal, a partnership
between NVIDIA and Palantir, uhthe uh defense uh uh advanced
(02:01):
software manufacturer who's nowtrying to get into commercial
markets.
And so they're working with uhwith NVIDIA on um uh on that.
So uh NVIDIA um you know issort of the emblem, I guess we
could call it, of what's goingon with AI and the AI economy,
(02:24):
which of course extends waybeyond NVIDIA, uh, but they are
the the the central part of it.
Steve, what do you have to say?
Well I sneeze.
Steve Davenport (02:35):
I guess I'd say that um I didn't expect this to
keep happening.
I mean, we we came out with anhour an August podcast about the
frothy fourth, and I guess Ijust keep seeing the market go
up.
And I think that part of it isthe Fed cut, part of it is in
general, we don't see things onthe headlines that indicate
(02:58):
there's risks.
But I think that with thegovernment shutdown going on, I
don't know how we would measureit or determine that.
So I think it's a little bitlike we're driving blind now.
And by driving blind, I I don'tthink that's a really good
thing in terms of uh what areyour guardrails and how do you
(03:19):
make sure you stay on the road.
So um I believe that NVIDIA isa great company.
Um is it a company that shouldbe five trillion?
Uh I can't tell you what'sgoing to be the top 10 companies
in 10 years, but I can tell youthat every time we do this and
we look back at the bestcompanies 10 years, usually one
(03:43):
or two survive.
And maybe it will be one or twoof these companies, but when
you look at Google, Amazon,Microsoft, you know, uh Tesla,
and Nvidia, you you seecompanies who have unique
advantages and are special umorganizations.
(04:06):
And what I believe is, Ibelieve that the US in Silicon
Valley has created um a sourceof innovation and a source of
growth that is unlike any othercountry in terms of educational
institutions, investors, earlyprivate investors, late stage
(04:29):
investors, large um funds thatwant to uh support these
companies because they believethat some of them are going to
change the world of thetechnology and how it gets used
in our economy.
So, yes, I I think that itmakes sense that they are now
the the top of the heap.
(04:49):
But just as at anything, Clem,I mean, when you get really
good, you know, when you're umOtani and you're hitting home
runs and just striking everyoneout, um it's there's people who
are gonna come for you.
And in the next game, uh, youknow, Guerrero hits a home run.
(05:11):
Uh it's off of Otani.
And I think it's it's you know,we have to realize that
becoming more of a target andbecoming a larger firm and
becoming that big, the ship getsharder to move.
And I've used this analogybefore, but this is a large
(05:31):
tanker now rolling across theocean, but it's not gonna turn
on a dime, and it's not gonna,you know, give you all of the
returns, you know, ad infinitum.
Doesn't trees don't grow to thesky.
And I I look at this and Ithink, you know, there's a deep
seek, which upset the whole AIuniverse in February, is coming
(05:56):
out with a new version of theirum their bot.
And Deep Seek in December onewill be releasing the newest
version.
And my question is, what ifit's good?
What if it's what if itsurprises people again?
And they're using non-NVIDIAchips, and their advantage has
(06:20):
been they're programming itbetter, and so by programming,
they you know have figured out away to make their model as good
as Chat GPT, maybe better.
And so everyone is always gonnaface challenges.
And I think that when you hitfive trillion, you you
(06:40):
celebrate, you pop somechampagne, you you have a round,
and then you say, okay, wegotta go back to work because
it's even harder now.
Growing 20% on uh $5 trillionis adding another trillion
dollars.
They added this last trillionin 70 days, which is the fastest
(07:03):
amount of time anyone's everadded a trillion in market cap.
Yeah, I think that's you know,things are moving fast, people.
And I think if we thought itwas overpriced or frothy in
August, we have to say it'sfrothier now.
And I have no trouble sayingthat I think it's ripe for a
(07:23):
correction.
I think that a correction wouldbe healthy.
I think a correction wouldstart to make people realize and
we would separate some of theshort-term buying call options.
I don't really own these names,I'm just betting.
And I think that speculation isdifferent than investing.
And what we have right now is aspeculative fewer with names
(07:47):
like Ocklo and other things thatare just going up without any
revenue or earnings.
Yeah.
Clem Miller (07:53):
So I don't think you can separate NVIDIA's at 5
trillion, OCLO is up 600% thisyear, and some of these other
things.
I think they're all related toa market that's looking for
extreme advances and short-terminvestors.
And I I don't think thatusually translates into a
(08:17):
long-term good result.
So I think people need to be alittle more cautious.
And I'm gonna continue to beatthe skeptics drum.
Are you still a skeptic or areyou on board with the NVIDIA
party?
Have you popped your champagne,Clun?
Steve Davenport (08:35):
Well, uh, I do have NVIDIA in my uh portfolio.
I think probably you do too,Steve, and others do.
Um, I have been trimming it uhas it's been going up.
Um, I've become the greattrimmer uh lately with gold and
other things um because I dothink the market is frothy, and
(08:55):
I do think that eventually we'llhave a downturn.
And when we have a downturn, Iwant to have a lot of cash.
Uh and you know, when we reachthe downturn and start to pick
back up, that cash allows me tobuy a lot of things that I think
are gonna do better uh at thatpoint in time.
You know, and who knows?
Maybe it'll be buying back someof the things I had sold around
(09:18):
now.
Who knows, right?
Uh but but you know, it's Ithink it's helpful to be
trimming now some of thesestocks that have been rising a
lot.
Um, I I do have uh a lot ofcomfort with the AI story.
And what helps me becomfortable with the AI story is
(09:39):
that I do have a lot of cashand gold in my portfolio.
So I feel those are offsets tosome degree to the AI story.
Um not offsets, but really, youknow, if AI starts to falter,
you know, gold presumably,although I'm less uh I'm less
comfortable with that thatconcept now for gold, but
(10:02):
presumably gold will do well ifAI goes down.
Um so from a standpoint of arisk uh a risk reducer.
Clem Miller (10:11):
Yeah, I mean cash is a great reducer.
Steve Davenport (10:13):
Yeah, cash is the cash is the ultimate
reducer, and right now I've gotabout a quarter of my uh options
are the ultimate reducer, butwell, okay.
Cash is I've got about aquarter of my uh portfolio in um
uh in cash right now.
Um and um about 10% or 11% uhin uh in gold at the moment.
(10:36):
Um but a lot of the rest of myportfolio are in sort of AI
adjacent stocks, um, not justyou know NVIDIA uh but also in a
lot of uh the constructioncompanies and the power
companies and all of that thatare helping to build the data
(10:56):
centers that are required forAI.
Um also I'm in some somesemiconductor stocks other than
uh other than NVIDIA.
Uh but and here's uh a keything, uh I'm not in Tesla, I'm
not in Amazon, I'm not in Apple,um and I'm not in Meta right
(11:20):
now, right?
And I think those stocks uh tosome degree have gotten away
from their fundamentals in termsof their prices.
I still have Microsoft.
I should I should have sold ortrimmed that a lot, uh, but I'm
still holding on to it because Ithink there's some some
(11:42):
positive story there left.
Uh and oh, and I do holdGoogle, which uh I'm glad I do.
Um continue to hold Google, butI'm not nearly as exposed to
the magnificent seven, quoteunquote, as a lot of people are,
and as you know, the SP is youknow exposed to it.
(12:05):
So I and I think I've donequite well by sort of going for
other companies uh that are sortof in that whole AI world, uh,
rather than um you know the onesthat I had trimmed like Meta
and Amazon and Apple or trimmedor gotten rid of Meta, Amazon,
Apple.
Clem Miller (12:25):
Um, can you help me?
I think that investors havethis term or feeling about cash
as like you're stepping away andyou're not earning anything.
When you have something and yousay it's in cash, what vehicle
are you using and what's theyield?
Steve Davenport (12:42):
Oh, it's uh you know it's a money market, so it
is making money, right?
Correct.
So so it's got a yield on it.
Um it's not a it's not a greatyield, it's actually a yield
that's uh that's better than uhthan dividend yields for many
stocks, right?
Um but it's got a yield on it.
And um do you mind sharing whatwhat what the yield or what the
(13:06):
vehicle is I haven't I haven'tlooked lately, but it's uh you
know it's a it's a money market,so so you're saying two to
three?
That would be my guess, too,somewhere between two and three
percent, which is higher thanyou know, sort of the SP 500
average dividend risk, right?
Clem Miller (13:24):
I just want to say to people that hey, you know,
when we say we're taking thingsoff, we're taking off the equity
risk of downside.
Correct.
And the risk we're taking whenwe move to cash is against
inflation, really, becauseinflation moves more.
And so by doing a two to three,if you think inflation is going
to be less than two to three,which I think you can debate,
(13:48):
but you're not losing purchasingpower in a lot of these cases,
because there are vehicles outthere that take, you know, that
try to make those decisions tobe in cash, um, to still have
some yield and still, and sowhile the Fed is lowering rates,
we're you know, we're stillmaking money.
It's just that we're not takingthe market exposure or the
(14:12):
individual stock exposure.
Steve Davenport (14:14):
Right.
Now, I'm not a big fan ofbonds, as you know.
I know.
I mean, the thing about bondsis yeah, you can get a higher a
higher yield, right?
A higher current yield, uhhigher coupon, but you know, it
can the the the longer-termyields, you know, this goes back
to what we talked about in ourFed uh discussion.
(14:35):
Longer-term yields can whiparound, and that can affect bond
prices.
And uh, you know, depending onhow long your uh duration is, uh
that can really have amultiplier effect on uh what
happens with bond prices ifyields go up or down.
So uh I'm not really all thatcomfortable with bonds.
(14:57):
Uh, you know, whereas a lot ofpeople might have bonds for a
certain part of their portfolio,uh as in aka the 60-40
portfolio.
Uh I don't really believe inthat 40 part, uh, but I do
believe in like uh uh a 30 to35, at least right now, a 30 to
(15:17):
35 cash plus gold part.
Okay.
Clem Miller (15:22):
I just think uh as everybody looks at the NVIDIA
going across 5 trillion, it is acelebration of success for US
ingenuity, U.S.
technology, and U.S.
ability to nurture companiesand have employees that are you
know diverse and uh across allkinds of skill sets from all
(15:43):
over the world to solve some ofthese problems?
Our legal environment isstrong, our banking environment
is strong, our investing marketand and and economy is strong.
So I believe that thesecompanies are going to be great
companies.
The question is from this pointforward, will the return mirror
(16:06):
the past?
Will the returns have to pauseto give the you know the joy
that refreshes?
I think that a pause would behealthy here.
And I believe that a pause orsome question about what's
happening with China in the rareearth space or in the deep sea
space will cause um this rallyto come to a uh you know a
(16:32):
correction.
I don't know how deep thecorrection will be, but I would
say that given the movementswe've seen in some of these days
when things get uncertain, themovements are much faster and
much more severe than they'veever been.
So, in that way, you know, Ithink that if you're interested
(16:52):
in options and optionstrategies, I work at Circuit
Capital and we can help you withthose.
Um, options are a choice justlike cash, just like gold.
So at Circuit Capital, I'vebeen working with options over
the last 20 years, and that'spart of what we do for clients.
So I think that everyone shouldthink about how their
(17:16):
portfolios are structured andhow, if anything, they should
change them as they head intothis, you know, end of year and
holiday season.
It's usually a strong term formarkets, but this is a little
bit different time.
And I think that over the nextday, we're gonna hear a lot
about China and the meetingsthat uh in Korea.
(17:36):
And I hope we find more thingsthat are gonna make us confident
of the rally and what's goingon going forward.
So, Glem, any more commentsabout NVIDIA and the five
trillion?
Steve Davenport (17:49):
I I would just say that you know, you mentioned
the uh the China talks.
You know, the this was, I wouldsay, at best, a temporary
truce.
Uh, and you know, there's acontinuing um economic and
technological war between the USand China that I think is going
(18:11):
to continue, persist, perhapsget uh perhaps get even worse.
So that's the first thing Iwould say.
Second thing I would say is uh,you know, everybody talks about
American exceptionalism asdriving the market.
I don't think that's the rightway to describe it.
I think the right way todescribe it is to say that the
(18:34):
U.S.
has an unusual concentration ofadvanced technology firms in uh
Silicon Valley, writ large.
And by writ large, I mean notjust the Bay Area uh but also in
(18:54):
the Seattle area, right?
Clem Miller (18:56):
So over the Boston area.
Steve Davenport (18:59):
Yeah.
Or you could throw Boston inthere too, right?
So you've got that that sort ofgreater Silicon Valley, uh,
which uh which is where you knowif you took if you took the
firms that are in thoselocations out of the picture,
uh, I think our um Americanexceptionalism wouldn't look as
(19:19):
in terms of uh the marketwouldn't look as uh as frothy or
as as as strong really uh as itdoes now.
And and why, why, you may ask,do we have uh this concentration
of excellent advancedtechnology businesses in these
areas?
Well, it's because you've gotexcellent universities in those
(19:43):
areas.
You've got venture capitalfirms uh that are providing
capital in those areas.
You've got, because of theuniversities and the venture
capital, you've got anincredibly highly advanced
workforce uh in those areas.
I mean, even when a particularfirm might lay off people, you
(20:05):
know, have a different change indirection, may lay off people,
those people uh almost alwayscan find jobs at other firms uh
in the same complex of advancedtechnology.
So it's you know, it's a uhthat's what drives our
exceptionalism.
And and then, you know, inChina, you've got the same thing
(20:28):
going on.
You know, you've got the wholeShenzhen area, uh, which
ironically they also call theGreater Bay Area, right?
Hong Kong, Macau, Shenzhen, uhGuang Uh Guangdong, Guangdong,
Guangzhou, Guangzhou, I think,uh, in the Greater Bay Bay Area.
Uh, and they uh and that isalso an advanced technology
(20:52):
complex.
Um, they have advancedtechnology in other places in
China, but that that's reallythe uh the center of it all.
So yeah, it's you know, we'rereally talking about a world
where you know advancedtechnology companies, the ones
with the greatest market caps,are located in pretty small uh
(21:14):
areas, uh pockets, and the vastparts at least geographically of
the US and other parts of theworld, uh including practically
all of Europe, for example, umuh are uh are are less advanced.
Clem Miller (21:32):
Yeah, there's nothing wrong with them.
We still like to visit, um, andthey're wonderful, you know,
reminders of history.
Steve Davenport (21:39):
But if you're looking for the best companies,
some of the Yeah, ASML would bethe exception, I think, that
proves the move.
Clem Miller (21:46):
Um and I think we know that Taiwan's Femi in
Taiwan.
There there are examples ofexceptionalism all around the
world.
We're just saying that, hey,this this the move of NVIDIA and
the concentration of the top 10in the world companies right
now, being US companies, is umis based on a lot of good
reasons.
And we think that um it's not atime to run from the markets.
(22:11):
What we are saying is it's agood time to look and think and
and try to rationalize yourposition so that you're
positioned if things were to gothe other way.
So again, thanks for listeningto Skeptics Guide.
We appreciate your support anduh we really like delivering
these ideas to you andeducational purposes, and we
(22:34):
hope you uh you know improveyour investing IQ and and uh
financial wellness with us.
All right.
Thanks.
Anything else, Gwen?
Nope.
All right, be good, everyone.
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