January 27, 2025 • 10 mins
Chris delves into the recent AI breakthrough by China's DeepSeek, its impact on Nvidia, and the broader tech industry. He discusses creative destruction, the risks of holding positions too long, and the importance of trimming portfolios. Learn how to navigate market uncertainty and avoid common investment pitfalls. Visit Watchdogonwallstreet.com for more insights.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it we'll have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.
Speaker 2 (00:16):
It's the end ol AI, and I know it, and
I feel fine. Yeah, we're fine. No worries. Why do
we have no worries? Well, we'll explain anyway. First and foremost,
let's go through what has been happening, because this has
been lingering out there for some time. China has this
(00:37):
deep Seek Deep Seek. The a bunch of these smart
Chinese people put together this AI app that well, it
doesn't cost that much, did They're claiming that they didn't
need any really brand new fancy pants Invidia chips. They
(01:00):
did it for the low low costs of some like
six million dollars. Again, Open Ai has been working on
this stuff for over ten years, all sorts of stuff.
Mark Anderson, who's again Andersen and Horowitz, he's big a
venture capital guy's Trump's right hand man when it comes
to AI, says that this is China's Sputnek moment, the
(01:26):
collective freakout everywhere chip stocks dropping like crazy? Now, why
do you think that is okay? Again, most people don't
realize the amount of spend that's actually involved with this AI.
It's massive, and that's why Nvidia has been to the
moon for a very long period of time. Now, if
(01:50):
everything that they're saying is true, most certainly would change
the dynamic, no doubt about it at all. Why is
this a good thing? Well, first and foremost, this is
the natural ebb and flow of technology. Remember what it
used to cost for storage, what it used to cost
(02:12):
for chips, what it used to cost for televisions, pieces,
whatever it may be. Technology and productivity drive these costs down.
Now collectively, you've seen the Nasdaq sell off across the board.
Everything seems to be going down. Oh, how is this
going to affect the mag seven Well, if you are
(02:36):
a company that needs these in Vidio chips, well used
to need these Invidio chips. This is actually a good
thing for you. Your your costs of developing AI platforms for whatever,
you know Amazon rock for you know Tesla and x
(02:58):
and all these other companies. Your costs of way down.
You're not going to have to spend as much money.
The dynamic has changed. If everything plays out the way
it plays out, we don't know. Elon Musk and Alexander
Wang suggested that this Deep seek has about fifty thousand
(03:20):
in Nvidia Hopper GPUs, not the ten thousand a one
hundreds they claim. And again, China's able to get the
I don't get export controls, but they're able to get
these things. We're a myriad of different ways. I'm sure.
I'm sure they can get them through Taiwan or some
other places in some way, shape matter form. With that
(03:42):
being said, put all of this aside. Am I getting
am I getting quite a few worried emails emails from
from people that listen to this podcast, in this program whining.
(04:03):
You know, it's I remind you like Johnny Fontaine and
Godfather Won. I don't know what to do, Godfather, I
don't know what to do. And again I want to
smack them up side the head. You could open up
an account here maybe and you wouldn't have this problem. Yeah, Yeah,
to everybody out there that thought that, yeah, chips were
(04:27):
just going to go up forever in ten days and
never decided to take a profit, and we're nothing but
long massive amounts of semiconductors without trimming positions and doing
what we've been telling you to do here on this program.
I don't know what to tell you, man, but we've
been explaining this for a very long time here on
(04:48):
this show. Don't do stupid stuff with your portfolio. Oh well, in.
Speaker 3 (04:56):
Video, you see how well it's done. Yeah, it's done great.
Many companies throughout the ages have done great until they
no longer do great. This is just the nature of
the industry.
Speaker 2 (05:09):
Blue chips, and you'd say in videos, pretty much a
tech blue chip blue chips can die. Now. I don't
think in Vidia is going to die. I don't think
an even video is going anywhere, but the dynamic most
certainly can change. Yeah, and again, at least a lot
of younger investors out there that are so smart. They
(05:31):
they know so much more than we do over here. Yes, again,
I went through the dot com clomb. I'm not even
talking about the dot com collapse. Companies weren't making any money.
But many of the companies that were involved in building
out infrastructure telecom late nineteen nineties early two thousands. Take
(05:52):
a look at a Cisco chart that company did. It's
still around. It came down and it took a long, long,
long long time for it to do a damn thing.
And that's the reality. Even though I don't think, I
don't Video is not going anywhere, But if things play
(06:15):
out the way that they are, obviously it's going to
have a different multiple. One of the things we've been
trying to teach everybody here on the program, with all
of the great successes that you can have in certain
positions in your portfolio, is to understand that you need
to trim positions, You need to take money off the
(06:39):
table and reallocate assets. Do I still own in Video, Yeah,
we still own in Vidia. Yeah, absolutely, but we've been
selling it along the way. The positions that we own
(07:00):
the way up and there's still way up despite today
sell off. Are we thinking we're gonna kind of see
how things play out and how we're going to go
about maybe trimming these positions to a greater degree. Absolutely,
But when I wake up on a Monday morning, or
I obviously knew about this earlier, what was going to
happen this Monday morning over the course of the weekend, Okay,
(07:22):
no big deal, But for people all of a sudden, oh,
craping up margin calls. I know what to do with
my whole portfolios down.
Speaker 3 (07:31):
I got broad Colm, I've got Envidio, I've got all
this stuff.
Speaker 2 (07:34):
Come on, you know you can't let risk lead to ruin.
I'm going to talk about blue chips dying. I wrote
about this back in two thousand and seven. I've talked
about this here on the program. I actually started off
a column again. This is two thousand and seven predicting
(07:56):
Walmart and General Electric will no longer exist. This is
before General Electric really imploded. But Walmart, now, who coulds
How could I say such a thing. Well, eventually, you know,
everything plays out. Companies go under. And I talked about
(08:17):
in the first company that issued stock, the Dutch East
India Company in sixteen o two. For two hundred years,
that company paid an eighteen percent dividend. That kicks ass.
That's awesome. It's it's no longer. It's a concept that
(08:37):
we often talk about. It's called creative destruction. Again, I
don't I want to harp on this, but people, you
never you never go poor taking profits that you think
you're so smart, You think you think you're smarter than
you know. Everyone has been doing this for decades. That
(08:58):
you're able to figure out when the bottom is or
the exact top is. Okay, Okay, you're gonna get hammers.
Eventually you're going to get hammered. I quite thank at
this point in time. I'm following this because I find
it fascinating and what's gonna happen next? But there's still
(09:20):
a lot out there that nobody really knows. Nobody really knows.
Let's let's say, let's let's let's say a week from now,
let's say we trim positions in our portfolios further based
upon the risk that's involved right now, and the whole
thing is a big fugacy and a stock rockets up again.
(09:46):
Am I gonna play Monday morning quarterback?
Speaker 1 (09:48):
No?
Speaker 2 (09:50):
No? Again? We we It was way risk, way reward.
Move on still made a fortune difference? Does it make
one funny note before we go? This is an actual
Jim Kramer Jim Kramer tweet from last week. Invidia stock,
(10:14):
which has been roughly flat since June of last year,
could be breaking out if there's no if there's so
much enthusiasm, what we know would happen in the data
center world, plus what we talked about last night on
Mad Money again, it's amazing, guys. It's like, it's unbelieve
He's like George from Seinfeld. He should just say the
exact opposite of what he's thinking. Anyway, Watchdog on Wall
(10:37):
Street dot Com
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it we'll have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.
Speaker 2 (00:16):
It's the end ol AI, and I know it, and
I feel fine. Yeah, we're fine. No worries. Why do
we have no worries? Well, we'll explain anyway. First and foremost,
let's go through what has been happening, because this has
been lingering out there for some time. China has this
(00:37):
deep Seek Deep Seek. The a bunch of these smart
Chinese people put together this AI app that well, it
doesn't cost that much, did They're claiming that they didn't
need any really brand new fancy pants Invidia chips. They
(01:00):
did it for the low low costs of some like
six million dollars. Again, Open Ai has been working on
this stuff for over ten years, all sorts of stuff.
Mark Anderson, who's again Andersen and Horowitz, he's big a
venture capital guy's Trump's right hand man when it comes
to AI, says that this is China's Sputnek moment, the
(01:26):
collective freakout everywhere chip stocks dropping like crazy? Now, why
do you think that is okay? Again, most people don't
realize the amount of spend that's actually involved with this AI.
It's massive, and that's why Nvidia has been to the
moon for a very long period of time. Now, if
(01:50):
everything that they're saying is true, most certainly would change
the dynamic, no doubt about it at all. Why is
this a good thing? Well, first and foremost, this is
the natural ebb and flow of technology. Remember what it
used to cost for storage, what it used to cost
(02:12):
for chips, what it used to cost for televisions, pieces,
whatever it may be. Technology and productivity drive these costs down.
Now collectively, you've seen the Nasdaq sell off across the board.
Everything seems to be going down. Oh, how is this
going to affect the mag seven Well, if you are
(02:36):
a company that needs these in Vidio chips, well used
to need these Invidio chips. This is actually a good
thing for you. Your your costs of developing AI platforms for whatever,
you know Amazon rock for you know Tesla and x
(02:58):
and all these other companies. Your costs of way down.
You're not going to have to spend as much money.
The dynamic has changed. If everything plays out the way
it plays out, we don't know. Elon Musk and Alexander
Wang suggested that this Deep seek has about fifty thousand
(03:20):
in Nvidia Hopper GPUs, not the ten thousand a one
hundreds they claim. And again, China's able to get the
I don't get export controls, but they're able to get
these things. We're a myriad of different ways. I'm sure.
I'm sure they can get them through Taiwan or some
other places in some way, shape matter form. With that
(03:42):
being said, put all of this aside. Am I getting
am I getting quite a few worried emails emails from
from people that listen to this podcast, in this program whining.
(04:03):
You know, it's I remind you like Johnny Fontaine and
Godfather Won. I don't know what to do, Godfather, I
don't know what to do. And again I want to
smack them up side the head. You could open up
an account here maybe and you wouldn't have this problem. Yeah, Yeah,
to everybody out there that thought that, yeah, chips were
(04:27):
just going to go up forever in ten days and
never decided to take a profit, and we're nothing but
long massive amounts of semiconductors without trimming positions and doing
what we've been telling you to do here on this program.
I don't know what to tell you, man, but we've
been explaining this for a very long time here on
(04:48):
this show. Don't do stupid stuff with your portfolio. Oh well, in.
Speaker 3 (04:56):
Video, you see how well it's done. Yeah, it's done great.
Many companies throughout the ages have done great until they
no longer do great. This is just the nature of
the industry.
Speaker 2 (05:09):
Blue chips, and you'd say in videos, pretty much a
tech blue chip blue chips can die. Now. I don't
think in Vidia is going to die. I don't think
an even video is going anywhere, but the dynamic most
certainly can change. Yeah, and again, at least a lot
of younger investors out there that are so smart. They
(05:31):
they know so much more than we do over here. Yes, again,
I went through the dot com clomb. I'm not even
talking about the dot com collapse. Companies weren't making any money.
But many of the companies that were involved in building
out infrastructure telecom late nineteen nineties early two thousands. Take
(05:52):
a look at a Cisco chart that company did. It's
still around. It came down and it took a long, long,
long long time for it to do a damn thing.
And that's the reality. Even though I don't think, I
don't Video is not going anywhere, But if things play
(06:15):
out the way that they are, obviously it's going to
have a different multiple. One of the things we've been
trying to teach everybody here on the program, with all
of the great successes that you can have in certain
positions in your portfolio, is to understand that you need
to trim positions, You need to take money off the
(06:39):
table and reallocate assets. Do I still own in Video, Yeah,
we still own in Vidia. Yeah, absolutely, but we've been
selling it along the way. The positions that we own
(07:00):
the way up and there's still way up despite today
sell off. Are we thinking we're gonna kind of see
how things play out and how we're going to go
about maybe trimming these positions to a greater degree. Absolutely,
But when I wake up on a Monday morning, or
I obviously knew about this earlier, what was going to
happen this Monday morning over the course of the weekend, Okay,
(07:22):
no big deal, But for people all of a sudden, oh,
craping up margin calls. I know what to do with
my whole portfolios down.
Speaker 3 (07:31):
I got broad Colm, I've got Envidio, I've got all
this stuff.
Speaker 2 (07:34):
Come on, you know you can't let risk lead to ruin.
I'm going to talk about blue chips dying. I wrote
about this back in two thousand and seven. I've talked
about this here on the program. I actually started off
a column again. This is two thousand and seven predicting
(07:56):
Walmart and General Electric will no longer exist. This is
before General Electric really imploded. But Walmart, now, who coulds
How could I say such a thing. Well, eventually, you know,
everything plays out. Companies go under. And I talked about
(08:17):
in the first company that issued stock, the Dutch East
India Company in sixteen o two. For two hundred years,
that company paid an eighteen percent dividend. That kicks ass.
That's awesome. It's it's no longer. It's a concept that
(08:37):
we often talk about. It's called creative destruction. Again, I
don't I want to harp on this, but people, you
never you never go poor taking profits that you think
you're so smart, You think you think you're smarter than
you know. Everyone has been doing this for decades. That
(08:58):
you're able to figure out when the bottom is or
the exact top is. Okay, Okay, you're gonna get hammers.
Eventually you're going to get hammered. I quite thank at
this point in time. I'm following this because I find
it fascinating and what's gonna happen next? But there's still
(09:20):
a lot out there that nobody really knows. Nobody really knows.
Let's let's say, let's let's let's say a week from now,
let's say we trim positions in our portfolios further based
upon the risk that's involved right now, and the whole
thing is a big fugacy and a stock rockets up again.
(09:46):
Am I gonna play Monday morning quarterback?
Speaker 1 (09:48):
No?
Speaker 2 (09:50):
No? Again? We we It was way risk, way reward.
Move on still made a fortune difference? Does it make
one funny note before we go? This is an actual
Jim Kramer Jim Kramer tweet from last week. Invidia stock,
(10:14):
which has been roughly flat since June of last year,
could be breaking out if there's no if there's so
much enthusiasm, what we know would happen in the data
center world, plus what we talked about last night on
Mad Money again, it's amazing, guys. It's like, it's unbelieve
He's like George from Seinfeld. He should just say the
exact opposite of what he's thinking. Anyway, Watchdog on Wall
(10:37):
Street dot Com
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