🤔 Is it more important to make good investment decisions or to make money? We dive into this fundamental question that shapes investment strategy and psychology
🏦 Why poker players focus on process while many investors chase outcomes. We explore the differences between short-term performance measurement and long-term success
🎲 Survivorship Bias in Investing – The 99 investors who took big bets and lost don’t get to tell their stories. We examine how this distorts our perception of successful investing strategies
📊 Professional vs Retail Investors – Hedge funds have sold over a trillion dollars in shares while individual investors are buying the dip. Who will ultimately be proven right?
🛰️ Luke joins Krzysztof as a shareholder of this pre-revenue SpaceTech company! We analyze the commercial model, partnerships with mobile operators, and potential government contracts that make this space communication company compelling
🚚 Autonomous Trucking’s Future – one company’s challenge of bringing self-driving freight to highways. With regulators slowing progress, is this $12B pre-revenue company worth the risk?
💵 Luke shares two recent trim decisions on overvalued holdings while maintaining core positions
🔮 Krzysztof reviews this tiny medtech company developing one-time-use robotic systems for endovascular surgery. Is this speculative play worth a small position?
🌴 Thank You for Supporting Wall Street Wildlife on Patreon! 💵 Your support helps us continue bringing insightful episodes and valuable investing wisdom
Sources:
Being right versus making money: https://x.com/KevinLMak/status/1916612272371437948
Segments:
00:00:49 Introduction
00:02:36 Tesla Earnings Reaction and Share Price Movement $TSLA
00:04:03 SpaceTech Investment Discussion
00:13:57 UK Energy Innovation: Octopus Unlimited EV Charging
00:16:07 EV Market Observations and Beaten Down Stocks
00:17:37 Investing Philosophy: Poker vs. Professional Investing
00:22:18 Short-Term vs. Long-Term Investment Thinking
00:32:57 Role of Luck in Investment Outcomes
00:36:11 Market Chaos: Individual vs. Institutional Investors
00:41:49 Portfolio Management Strategy Discussion
00:48:32 MedTech Safari Stock Analysis
00:57:57 Autonomous Trucking Analysis
01:06:15 American Tower Put Option Discussion $AMT
01:16:15 FinChat Discount Announcement and Wrap-Up
E78 Make Good Decisions vs Make Money – Video With Ads –
[00:00:00] Luke: Like that meme, we could have like the dip of the dip of the dipty dip if things do, let’s say get cut in half, I imagine the large majority of these retail investors are gonna run for the exits, sell at the bottom, or you know, sell when things are worse than they are now, and then they will be unfortunately the dumb money yet again.
[00:00:20] kryzsztof: I broke my rule for the 20th time, my Cardinal rule, like, don’t sell the world’s best companies. because that’s always what’s cost me in the past.
So I broke the rule again.
[00:00:30] Luke: I don’t mind not being right, but I wanna make money and this looks like a good stock.
[00:00:34] kryzsztof: You hear about the big winners, but the 99 people out of a hundred that took big bets and lost, you don’t hear about them because they’re dead.
[00:00:42] Luke: Would you rather be make good decisions or make money?
[00:00:46] kryzsztof: Play the long game bet on process.
[00:00:49] Luke: For an advertising free version of the show, check out patreon.com/wall Street Wildlife.
hello and welcome to Wall Street Wildlife with Christophe and Luke this week. Is it more important to be right or to make money?
[00:01:11] kryzsztof: I like being right
[00:01:13] Luke: I like making money.
Boom. Also like I’ve done a bunch of trading. I bought some puts on something I mentioned last week. I’m gonna talk about that today. I also bought a stock and my t-shirt might be a clue. and I’ve trimmed some stuff. So there’s all sorts of things that happened in the portfolio. I’m gonna talk about that on the back of the episode.
[00:01:35] kryzsztof: Yeah, that’s the first thing we gotta discuss. What is this, uh, visual insult that you’re bringing to our podcast?
[00:01:42] Luke: I’m just supporting my company. I’m wearing a SpaceX t-shirt, which I, I dug out, it’s actually, I dug it out of the closet. I haven’t worn it for about a year. ’cause I had a really great catch up with an ex-colleague, Alex Alexandra this morning and she is now a Singapore based venture capitalist and she specializes in the space segment.
She’s got quite an interesting substack and we’ll talk about that more later ’cause we’re hoping to get her on the show to share some of her expertise on all things space. Interesting investments in the private market and in the public market. So that’s why I’m wearing the SpaceX t-shirt today.
[00:02:20] kryzsztof: That’ll be exciting. we didn’t plan this, but it occurred to me that last thing we talked about were Tesla earnings,
and I just want to say like how the mark Eno, like the whole thing between results and price and lack of correlation.
[00:02:36] Luke: Yeah.
[00:02:36] kryzsztof: I thought the results were bad.
[00:02:39] Luke: I thought they were terrible. Yeah.
[00:02:40] kryzsztof: And, got, what I thought we were gonna get is a bunch of future hopium
[00:02:46] Luke: Yeah.
[00:02:47] kryzsztof: and, but the, the results were bad enough that the price would actually drop significantly.
And what’s it done instead? It’s up like 24%, 25%
[00:02:57] Luke: What, 25% since earnings? I didn’t realize that much.
[00:03:00] kryzsztof: think, since, yeah. Don’t quote me on that number a lot, but it’s a lot. It’s not like a little,
[00:03:04] Luke: Yeah. Okay,
[00:03:05] kryzsztof: like, oh, you know, like the short-termism of, of it doesn’t, you know, it makes sense because some fund wants to defend. Its posi. It doesn’t even matter like
[00:03:15] Luke: cool.
[00:03:15] kryzsztof: it comes to be.
It’s just not rational
[00:03:18] Luke: Yeah.
[00:03:18] kryzsztof: is the point.
[00:03:19] Luke: And I gave strong consideration to that one ’cause I’ve, like, I trimmed two things today that are overvalued in my portfolio and I thought really hard, like, should I trim Tesla as well? ’cause it’s overvalued. No argument. And the results were dog shit. Um, like worse than I expected. But I can’t bring myself to trimming it.
Like, you know, we’re so close to auto taxi day, whatever it’s called, robo taxi day. Like, I dunno, it just feels like the bad play trimming it right now.
[00:03:47] kryzsztof: I broke my rule for the 20th time, my Cardinal rule, like, don’t sell the world’s best companies. because that’s always what, what’s cost me in the past. So I broke the rule again. I sold it because I want to allocate a little more to a STS.
[00:04:03] Luke: Okay.
[00:04:03] kryzsztof: So I had a definite reason with which for doing it, but I bet you it’s gonna bite me in the ass for the 20th time.
[00:04:10] Luke: Yeah, and I know why you are adding to your A STS. You’re getting frisky. So, you know, part of my disclosure at the back of the episode, I now am an A STS shareholder and I bought it in my real money portfolio starter position and I also bought it in my King of the Jungle portfolio. Just, you know, to sort of do honor there, but only bought a small amount in King of the Jungle to respect the fact that this is your stock.
But even that was like, you’re like, shit, he’s catching. I don’t wanna catch my position, I’ve gotta buy more.
[00:04:39] kryzsztof: that’s right. I, I wanted to call you out on that for saying both Thank you for being mostly noble, in your approach and, you know, uh, honoring what a gentleman’s agreement of sorts. Never spoken, never written down. We don’t have any, uh, bylaws, but I appreciate your call it, yeah, nobility, I think nobility is the right word.
You, you could, you know, there’s all kinds of game ish things we could do to kind of mess with the other guy and at the same time, fuck you.
[00:05:09] Luke: Yeah. Well look, hey,
[00:05:11] kryzsztof: Now I gotta buy all these extra shares to make up the difference
[00:05:14] Luke: but like I said at the top of the episode, Christophe, I don’t mind not being right, but I wanna make money and this looks like a good stock. So there you go.
[00:05:23] kryzsztof: so Right. I immediately had to buy an extra share to, to, to the delta and how many shares I, you know,
[00:05:31] Luke: You know what I did do though, actually? So, um, like I bought, uh, I bought the same stock within like a minute deliberately on both my regular brokerage, like my actual investment account with the real moneys. And I bought the same thing essentially, obviously much smaller amount on my trading 2 1 2 brokerage, which is where I have my King of the jungle portfolio.
And I, I did that ’cause I wanted to see am I getting like, substandard pricing on my trading 2 1 2 account? And I don’t think I am, I think I was maybe skeptical about the not being a proper broker and maybe giving me like dubious, spreads and things like that. But no, I, I mean I, I’ve read that they offer best execution, which you have to in the UK it’s like a legal requirement, but I thought maybe they got some dodge or something.
But I got like a, essentially the same price on different volumes on these two platforms. And like my, part of my real brokerage is interactive broker, like big serious broker. , and like I know I’m getting good like market pricing there. So Yeah. Actually maybe I, I’m wrong to be skeptical about my little, what I call my, like Mickey Mouse brokerage trading 2 1 2 maybe.
It’s totally legit.
[00:06:47] kryzsztof: Cool.
[00:06:48] Luke: Yeah.
[00:06:49] kryzsztof: Hey, can I backtrack and say one more thing about a STS?
[00:06:52] Luke: Yeah.
[00:06:53] kryzsztof: I didn’t buy that share, just out of gamesmanship. Uh, I think it’s worth noting. Uh, big, big news item happened. I think it was over the weekend. My, my time warp right now is a little weird because, uh, my professional stuff, but the, what’s it called, the head of the SEC the senator from Texas visited the facilities down in Texas.
And this is all in part of something that’s being tweeted out as the Golden Dome. Basically US defense systems. Just allocated many billions of dollars to the industry. And so the head, basically, why do senior government officials visit your facility in the middle of nowhere, Texas? You know what I mean?
[00:07:42] Luke: so.
[00:07:42] kryzsztof: it’s basically setting up a STS to jump through all the necessary future hoops, regulatory hoops to get. massive, massive government contracts. That’s where the big money is. You know, retail investors probably think of it as, you know, when it goes commercial, direct to phone, and yeah, I, that, that’s a huge part of the thesis.
But, but the hundreds of billions of dollars and contracts, that’s government spending and, , it seems like a STS has the lead there. And I just want as much exposure to it as is reasonable in this moment before, you know, actual news breaks. Because probabilistically, I think it’s now in favor of happening and it could happen.
One of those things like overnight, basically we don’t know. No one, no one knows.
[00:08:31] Luke: but, and I’m like, I bought a, like a just over a 0.5% allocation in my portfolio, my real money portfolio, which is I use that for like getting a foot in the door getting started. And it’s kind of based on relatively minimal due diligence. If I just like the look of something and I, and actually probably read more about a STS.
Over the weekend prior or prior to that buy, uh, over like th Wednesday, Thursday, um, than I would normally do for like a starter position like that. but there are still some like material execution risks with this company, right? They’ve got like, their big satellite, the huge one that unfolds to like 15 meters by 15 meters.
Like they haven’t put that in orbit yet. , so there’s like seriously unproven technology. Um, and like the whole thing could come like crashing down. I mean, literally the satellite could, but like the business model could come collapsing down still.
[00:09:25] kryzsztof: Yes. There’s no disagreement there though. I don’t know what the probabilities of a meltdown like that would be. So,
[00:09:34] Luke: You know what I liked most about them? What wasn’t so much the technology, it was like the commercial model. I. Do, you’ve been bleeding on about that. What, what noises the monkeys make, like yapping about it.
[00:09:47] kryzsztof: screeching I screech when I get, I.
[00:09:51] Luke: there they go. You’ve been screeching about, uh, their commercial model, but you’re right.
Like that is, makes a lot of sense. B two, B2C. Essentially they have contracted with like over 40 of the world’s biggest mobile network operators, including Vodafone, which is one of the biggest in the UK and Europe, at and t in the us and like a whole bunch of others all around the world. And like essentially those guys are selling the service for them.
So that makes a ton of sense. And, and also like Google and Vodafone and several others now own like a relative material stake in a STS. So even if, like, I, I think this stuff does get commoditized at some point. And I do think, like, we don’t know what SpaceX is. I. V3, like the next generation of hardware looks like, um, they haven’t announced any specs.
And it’s gonna be like materially more powerful, like terabits per second compared to hundreds of gigabits per second on the current generation of hardware. But they have, they haven’t proven it yet because they need like Starship, like bigger orbital capacity. They need that to put a thing in orbit, and that’s not actually delivering payloads of them test payloads yet.
But once they put that up, like they could be in comp competition with A-S-T-S-I think the commercial model protects a STS to a large extent, and the partnership protects them. But at some point, like SpaceX probably will have like some parity technology where they’re, they’re able to create like. Like a regular mobile phone cell, but a regular mobile phone handset can talk to, even though you’re saying, you know, squeezing a STS is technology is better ’cause it’s more focused.
Yeah, sure. But we don’t know what’s coming. Um, and at some point, you know, maybe the, maybe it is just becomes commoditized and like Vodafone and everybody else just buy capacity from these different providers.
[00:11:44] kryzsztof: My understanding is that it’s not that simple because of patents and because of regulatory approvals, because signals mess with all kinds of stuff whatever technology lead you’re talking about in years. Uh, to catch up and therefore, once a big player establishes a kind of monopoly and has all the backing of all the players, why there will be switchover gets complicated.
So
[00:12:11] Luke: IAnd what you’re saying. But, um, like if I were Vodafone. And I did this commercial deal and I bought a stake in A STS. Like these, these guys still have unproven technology and Vodafone would be fricking insane if they had some sort of exclusivity, like locked into the contract. That might be the spirit of the relationship.
But if they A STS can’t execute for some reason, then like you would think Vodafone will be able to walk away from that, maybe write off their investment and use like another partner. And they own the spectrum in each of their markets. So they would just essentially like allow SpaceX or whoever else to use the same spectrum.
So, you know, you’re right, there are hurdles and there’s an advantage, technology advantage, but I don’t think anything is off the table in terms of who could be the ultimate winner.
[00:13:02] kryzsztof: Well, that’s the other point I want to make. One of the reasons I’m as comfortable making this an ever increasingly large investment is because we’re talking about all of space here, and it, it seems like one of those things where a monopoly is not going to be the end result.
[00:13:20] Luke: Yeah.
[00:13:21] kryzsztof: And even if that’s the case, because the applications are so, I mean, we’ll hear more about this from your friend, but it’s like a whole new frontier. Even. I mean, even something as 50 something like 50 50 or 60 40 or 70 30 are gonna be massive, massive winners from these valuations. So I’m not even concerned about that.
[00:13:42] Luke: Yeah. And a 5 billion odd dollar valuation. I think A STS is a great risk-based reward bet. I’m with you.
[00:13:49] kryzsztof: Yeah. So welcome aboard Badger and uh, you know, best of luck to us both now.
[00:13:54] Luke: Yeah.
[00:13:57] kryzsztof: Took you a while, but we got you.
[00:13:58] Luke: Yeah. Good. Hey, before we get onto our headline topic about being right versus making money, quite an interesting other business model innovation in the UK I just saw announced so. , I buy my electricity, actually electricity and gas from a company called Octopus. And it’s like the way the uk I’m not gonna be an expert here, I’ll probably misstate this, but essentially the way like the UK market works is, if you buy gas or electricity, essentially, like there’s different providers.
No one, like, they don’t come and change like the pipes coming to the house. But you’re essentially, you’re buying like wholesale from different people. An octopus have always had a reputation for, like being greener, having using like green sources of power and to the extent you can like gas by, I dunno, planting trees or however they kind of offset the, the thing.
So I buy my electricity from octopus and so does my brother. And so I told him the other day, they have just announced a unlimited mileage for electric vehicles. So for 30 pounds a month, which is about 40 US dollars, uh, now you get unlimited charging of your electric car and you have to have like a particular like charger.
’cause then it talks to the network and they know you’re not like, you know, just like charging up your house and your batteries and making cups of tea in the middle of the night. And it only operates during like, periods of, uh, low network capacity. ’cause it means like, it makes sense, right? You wanna sell your power when you’ve got excess power and it stage, you have to store it and it gets complicated.
So, um, yeah, like great innovation for consumers. Like they’re piloting it in the UK market, but for 30 pounds a month you can do that deal for a year at the moment. And, essentially now if you’ve got like electric car, that’s it. Like free,
[00:15:46] kryzsztof: Cool.
[00:15:47] Luke: you know.
[00:15:47] kryzsztof: That’s good progress. I, I love seeing, uh, electric cars, just,
[00:15:51] Luke: Hmm.
[00:15:52] kryzsztof: you know, just becoming more mainstream. And one bit of note too. Go, uh, speaking of electric cars, my good buddy, sold his, uh, Tesla said, won’t ever go back and bought a Rivian
[00:16:06] Luke: Ah,
[00:16:07] kryzsztof: and let me play with it a little bit. And it’s pretty cool,
[00:16:10] Luke: okay.
[00:16:11] kryzsztof: so my earlier thesis that companies like Rivian and, uh, what was it, lucid. Like that they’re in trouble because they’re awful financials. I think the political stuff is definitely shifting
electric cars, I’m just seeing more of them everywhere and with things I, know. Um, like where it’s going, which reminds me that some of the really beaten down stocks, like for example, wolf speed and um, uh, air a EHR, those companies might be good for us to look at because that, that kind of pit of despair around electric vehicle adoption might be at its, know, lowest point kind of start to trend up.
[00:16:55] Luke: Yeah.
[00:16:55] kryzsztof: that’s a good moment to buy beaten down stock. So.
[00:16:59] Luke: Yeah. Cool. It’s interesting actually, that’ll bring me on to my Safari stock for today, but we’ll save that to the back. But like, like some of these companies are total frauds though, like, you know, you said Rivian, like they’re, they’re looking rock solid actually. Like they’ve got real production vehicles that they’re selling I think at a loss.
’cause they’re still scaling. I think so. I dunno if the business models quite worked out yet. But like Nikola right? They, they faked it with their electric truck. And then I think the founder, didn’t he do jail time for fraud? I think.
[00:17:32] kryzsztof: Uh, don’t know, but not great
[00:17:34] Luke: Yeah. Yeah, yeah, yeah. Yeah.
[00:17:37] kryzsztof: Okay, so the topic du jour is a post I came across on X that I really, really loved, and I think I. You and I could go nuts on this all day long because it spoke near and dear to my heart for lots of reasons. His name is Kevin Mack and he teaches finance over at Stanford. And in general, I just really enjoy, , he’s very thoughtful and, , critical on both sides.
Just doesn’t do rah rah, you know, quantifies, he’s like a poker player that does mathematical probabilities and multiplications of what’s the, like, you know, likeliness of things coming out. Uh, not just based on feeling. Anyway, his main question is , why is there a disconnect between poker and professional investing? Like, uh, what’s the difference between those two views? And he came up with a main ideas you wanna run. Let’s run through them.
the first one is that in investing timeframes are longer. And so in poker, basically, you know, when you’re good, you just make a lot of decisions very quickly get to, uh, find out whether you’re playing well or not, because you, you’ll have, what, a thousand decisions in a, in the night or something. , in investing, can make a decision today and not know until three years later,
right? and there’s this view that judgment in the financial world is based on the outcomes. So it is true. I mean, this is why you have such wild price fluctuations that diverge often from fundamentals because the people controlling the money they have to show a profit. At the end of a quarter, if they don’t show a profit, their jobs are at stake. So they’re gonna manipulate things not based on, process. But did you make money or did you lose money? So that’s short-termism,
[00:19:40] Luke: and by the way, like I’ve said this, so I’m blue in the face. This is why like chasing, like getting like an active fund manager or having like a financial advisor, like you’re asking for trouble because their incentives are not aligned with your incentives. Like if you’re not gonna manage your own money and pick your own stocks, where you only have to convince yourself that if at the end of a quarter you’re down, like you still know what you’re doing.
If you’re gonna, if you’re gonna go like hands off, don’t give the decision maker to somebody else. Put your money in a passive index tracker where there’s no human like having to show results. It’s just the market.
[00:20:17] kryzsztof: . In poker, you have ego and incentives to win big. So al also in the short term version of investing. And then there’s, in other words, where process is secondary, that’s the, the repeated point. Uh, and fourth survivorship buys, distorts everything. You talk about that quite a bit,
[00:20:39] Luke: Yep.
[00:20:40] kryzsztof: Sure.
You hear about the big winners, but the 99 people out of a hundred that took big bets and lost, you don’t hear about them because they’re dead. So he summarizes that that gap as the game. The game is to maximize variance during your evaluation window and hope that luck lands in your favor. So what does that mean in simple speak, evaluation window is when you have this artificial frame. By which you’re being judged. So for big portfolio managers, that’s, let’s say quarterly or even companies, right? You have to pull levers to make your results appear a certain way in the short term and within a certain window. You the, in a sense, to maximize variance means the bigger a bet you take, the more likely you could appear like a genius if you’re right. And so that’s the sort of short term game versus what we want to preach, or we try to preach is, it’s almost everything we just talked about is resulting. Annie Duke talks about that we wanna stick to the process. That’s correct. Because over a longer period of time, it’s the process that’s gonna win. and so he then comes up with some rules for himself. I. That he wants to make sure he applies to his own investing, that that gets away from the, call it short-termism. And I think there’s some nuance in here if you wanna talk about those points as well.
[00:22:18] Luke: And just, just before we do, like what, I haven’t really read beyond the, the link you sent me, like, is he a, you say he’s now a professional investor, but is he manage, he’s like a portfolio manager for other people’s money.
[00:22:28] kryzsztof: Right. He’s also doing that too.
[00:22:30] Luke: Okay. Right. Okay.
[00:22:32] kryzsztof: uh, that, pick up that one, that when you start managing other people’s money, you have to show, you have to show gains.
[00:22:41] Luke: Mm-hmm.
[00:22:42] kryzsztof: So it’s not theoretical, but he also says, and I think this is wise, and this speaks to our King of the Jungle portfolio, I. I think why it’s a feature of what we do is because we’re putting in our own money and our research, so we’re not just up with wild bets that have no, you know, that the therefore don’t impact us and our show, right? Because we’re responsible for our decisions, we have to talk about them. So he says that he also has 95% of his liquid wealth in the very things that he recommends his own funds to buy.
So I think that’s good, you know, skin in the game kind of stuff. so, he says you want, I mean, this is, this is interesting given this goal of being aligned with your investors and being willing to take big bets, but not so many that you will then destroy yourself. He says, given these goals, how should I? a more aligned process. Look one, pick an inve. an investing strategy that involves as many bets as possible with short resolution time. careful not to fool myself into thinking many correlated bets counts as as multiple NI want my alpha to, to converge as quickly as possible. So this is the interesting point.
That’s like, um, take as many bets as possible with a short resolution time. So that’s sort of counter, it feels like to me, to pick, uh, pick an investment and you have to wait for a long time before you find out with if you are or wrong or not. So to me, basically I’m reading this as a happy middle between pure short-term, short-term gambling, where you just find the bet with the highest alpha, meaning the highest. Kind of like gambling lottery Right. And on the other hand, there’s some bets that are so long, so far out and so unknown that it’ll take three to five years to, before you even know you’re right. And his approach is maybe like, kind of like, I don’t know if this is right, like a poker player that finds a table with less skilled players and then just tries to play as many hands as possible knowing that his skillset, that the way he’s playing is correct. But he wants to increase the the bets, so to speak, so he’ll know he’s right quicker.
[00:25:13] Luke: That, that makes sense, but I dunno how he does that. Um, like there’s, there’s, okay, so you do a bit this to an extent. Like you try and look for companies that have. Some sort of inflection point or like important thing coming up. And if you are like, we don’t know if you’re truly generating Alpha ’cause you haven’t done the fricking analysis and you, I’ll keep nagging you to, you know, give me some stats.
Christophe, show me how you are one of the world’s greatest investors. You don’t have the history to tell us that. So look, if you assume that you’re a market beating investor, then that makes sense and that, that this guy’s predicated on that. Like, if I have to assume I’m delivering like yielding alpha, otherwise why am I even doing this?
So if he does, and not many people do, like genuinely, there aren’t many people who can beat the market. That’s what generating alpha means, essentially. Um, you’re making better decisions than most, most of the time. Um, but yeah, if you can, if your decisions can pay off sooner, you’re gonna, like, you’ll validate that and you’ll have an important as a fund manager to other people.
Not only do you get like the satisfaction yourself, but you then have some evidence because it’s quite hard to run even like a, a fund of some sort, any kind of fund in the first couple of years. ’cause you’ve got no track record, you’ve got no way to sort of prove to your investors. And so then it’s hard to raise capital.
So you want like wins as early as possible.
[00:26:42] kryzsztof: Yeah, absolutely. And I would say that’s with the role that our King of the Jungle portfolio serves, in this case specifically, you’d be, I, this is why I found this so interesting, because I think I feel quite aligned with what he’s talking about. I think I’m doing a large extent what he’s, that kind of middle ground that I, I sense him talking about. The majority of my bets in King of the Jungle are right now. Um, I, I kind of, it feels like they are high alpha possibilities that still need some time to play out. They have not yet played out besides eos, meaning from the lows, uh, which I bought them, but I’m not gonna need. Three years to find out whether I was right or not. But, right now, I’m, I don’t even know what, what the total portfolio is in terms of gains.
[00:27:39] Luke: Like, like he’s, he’s given himself a, a difficult challenge and maybe it’s one he has to do. I sort of get his logic and like, if you’re listening to this conversation and you’re kind of confused, may go like, the link is in the show notes, go read the thing yourself and then come back and unpause and carry on with the conversation with us.
Um, I, I feel like he’s, if this is his strategy to make like short-term bets, in some ways he’s like artificially hampering himself because like there are significant, very good investments, but with a very long time horizon. So is it that he’s gonna bias us to short-term things a little bit or he is just gonna exclusively focus on those?
’cause if he does, like he’s missing a whole chunk of the market. That could be very interesting.
[00:28:22] kryzsztof: a lot has to do with how we’re defining short term versus long term, because in the abstract, that’s our, like, he’s not, he’s not taking positions in with like an expected. Three to six month outcome, but neither I think, is he taking positions. I don’t think he holds many companies that are, you know, the slow and slow, steady and, and, and true the kinds that you hold. So it’s, it’d be a good question to maybe ask him if we reach out, but May, I’m assuming is something like year-ish, two year-ish possible outcomes is what he’s thinking of as, as his timeframe. in the end, he ends the, the thread by saying, the leap. Play the long game bet on process. So is, this is, look at the end of it.
I came away with this feeling that he’s thinking like a poker player. I. He does want us thinking process first, but like a poker player, if you know you, you’re a good one. You wanna take a lot of bets quickly because it’s just a matter of time before you see the payoff. I think that’s the main point and that’s what’s resonating with me. if of course you know what you’re doing and you can find the, you know, real alpha via research, well, and that’s one of his other points, he says, this area of having legitimate alpha beating, call it research skills, is rare. And, he thinks he has it.
[00:30:12] Luke: He, so let me, lemme pick up on two other points I do want to critique in this, uh, um, we sort of skipped over ’em a little bit because I think two of ’em go hand in hand. So in his like five things that he’s gonna do, like his structure number three is actively communicate with outside investors. Ensure there’s good alignment between what they want and what I’m planning to do.
And then number five is have a cost structure in place that can withstand capital outflows that were inevitably will happen. Like if this guy ain’t managed a fund before, he might be underestimating how difficult number three years, the communication. And when things go bad, if they go really bad. Number five will spank his ass very, very fast.
Now what do I mean by that? Essentially, let’s say we are going into tariff doomsday, right? Who knows if starting a fund today, if this is gonna be like the best of times or the worst of times to start having like significant new long positions? ’cause we might be going into like a multi-year. Serious draw down recession, possibly stagflation.
Uh, we talked about that in previous episodes, ain’t 10. It’s gonna happen, but it could happen. And if you do it, if he does even his short bets, whatever, like even if he has Alpha, he’s probably gonna get chewed up by the market. ’cause we are all gonna get chewed up by the market in that kind of scenario.
Um, and, and then his investors like, good luck. Communicating that with your retail investors. Might be all right if it’s like, you know, like friends and family money. Uh, although maybe they’re harder, like Christmas and Thanksgiving’s gonna be pretty tough conversation. Um, but uh, like if he’s, if he’s managing outside money and everyone’s like, well the world is falling apart, what are you doing Kevin?
And if his answer is, well we’re, you know, we’re staying in good quality things and these short bets and here’s my thesis, people ain’t gonna buy that still when they’re like them. They’re hemorrhaging. Their balance on their investment, and they’re gonna pull the money out. Like they’ll just, they’ll write you off as someone who’s failed, whereas it may not be your decisions.
It might just be, you know, that unlucky fricking timing of starting a fund right now, when we might be going into like, some form of doomsday. This is why I, I really, and even with the best, if this guy is the greatest fund manager in the world, this game is, it’s, it’s not, I was about to say it’s rigged.
It’s not, it is rigged, but for different, that’s outside the scope, what we’re talking about, but it just doesn’t work in my mind, the game of managing other people’s money. I’m adamant about that, and I think Kevin’s gonna learn a hard lesson if he’s unlucky.
[00:32:57] kryzsztof: Yeah. And right. Uh, poker players know, uh, unfortunately that in the short term luck, luck rules.
[00:33:09] Luke: Yeah.
[00:33:10] kryzsztof: that’s another thing you have to survive long enough. He says this somewhere, to his credit because I really think he’s an honest, he’s one of these good faith actors in the space. Luck in the, you luck in the short term you have to survive.
[00:33:25] Luke: Yeah.
[00:33:26] kryzsztof: And that’s kind of priority number one. So it’s a tightrope act between trying to squeeze as much alpha as you can with some, call it that, I’m thinking of it as middle, short term ish bets at rapid pace measured with, but at the same time, you, you, you, you can’t explode.
[00:33:47] Luke: Yeah,
[00:33:47] kryzsztof: it’s a death spiral if you do.
[00:33:49] Luke: yeah, yeah. Good luck to him. Good luck to him if you Yeah, I’ve, I’ve not seen his account before. I’ll give him a follow, I’ll be interesting to see what’s actually in his portfolio. I dunno if that’s public somewhere.
[00:34:00] kryzsztof: uh, it is, uh, actually it’s not, but I know he’s, uh, an a STS investor
[00:34:06] Luke: Okay.
[00:34:06] kryzsztof: and, uh, but he’s critical. But he did this is, this is good. He’s critical of the rah rah stuff.
[00:34:13] Luke: Okay.
[00:34:14] kryzsztof: so you’ll find it valuable for that.
[00:34:16] Luke: Okay.
[00:34:16] kryzsztof: Uh, yeah.
[00:34:18] Luke: All right. Well, we’ll post a link to his Twitter on the show notes. Anyway, check it out. Very good. There’s, I’ve got a related news story, uh, which I think does tie into your, oh, did we, so did we answer that question actually? ’cause you’ve posted a question up front. Would you rather be make good decisions or make money?
Like where do you sit on that now?
[00:34:37] kryzsztof: I’d like to make good decisions because
[00:34:40] Luke: yeah.
[00:34:40] kryzsztof: that’s gonna make me more money as long as I have the right, right. Uh, expectations and frame, uh, timing framework. I’m, yes. So I’m betting on decision making.
[00:34:52] Luke: Oh, isn’t that like, that’s, that’s like, that’s not the point Kevin’s making. Like I know obviously if you make bad decisions, they’re probably gonna catch up with you, but part of his point, or my interpretation of it was. You, you don’t like what you said in the intro. You don’t know if the decisions are good until much further down the track and you could make, and you’ll only make like a handful of, of material decisions in your whole life as an investor compared to being a poker player.
So actually in my mind, the more important thing is make money.
[00:35:24] kryzsztof: so, yeah, no, he, he diverges from that view. He says that’s the cynical view
[00:35:31] Luke: Okay. Alright.
[00:35:31] kryzsztof: because that’s the game that’s rigged with survivorship bias. In the end. He’s saying, play the long game bet on the process. But there’s a way of doing it that, I think is, it’s not, it’s not just pure long-termism. If that takes many years to resolve,
[00:35:53] Luke: Okay.
[00:35:54] kryzsztof: is where the, your skills at finding alpha generating situations come into play.
[00:36:00] Luke: Yeah. Okay. But they’ve got the go hand in hand. Obviously you don’t wanna make bad decisions and you do want to make money. Ideally you get both.
[00:36:06] kryzsztof: Right. You just have to survive. You
[00:36:08] Luke: Yeah.
[00:36:09] kryzsztof: balance enough of them to survive.
[00:36:11] Luke: Yeah. Fair enough, fair enough. So anyway, I caught up with a interesting article on the Wall Street Journal. Don’t have a chance to read this before we co connected today.
I’m just gonna read a couple of excerpts from it. Uh, like essentially market chaos right now. And professional investors are running for the exits, like selling stuff, taking like, like short positions and hedging heavily individual investors, like supposedly the dumb, the dumb money, like we talked about dumb money many months ago.
On the back of that quite hilarious movie, like individual investors are holding tight and actually adding to their positions. So some stats from the article. So far this year, so first, like four months, 20, 25, hedge funds have sold over a trillion dollars more shares than they’ve purchased. Uh, while individual investors have bought $50 billion more in net purchases.
So kind of everyone’s operating in a different direction. And, um, and so, so what is going on right first? So, so this is kind of the point of this article ’cause it leads a little bit open-ended. The article implies perhaps somewhat naively that the institutional investors are the dumb money ’cause they’re selling.
And the retail investors are like following good principles and hanging on and buying the dip. And like, so that is like at a surface level. That is true. And if those individual investors could consistently do that through the possible doomsday that might be coming or might not be no idea, um, then that works.
Like that’s what I’ve done in the last couple of big corrections. And right now, like I’m very seriously hedged with a big old cash position and I’m fairly confident I’m not gonna like panic sell if my portfolio gets cut in half, let’s say over the next six months to a year. But these guy, like the retail investors, they might look smart right now buying the dip, but maybe this ain’t the dip.
Like that meme, we could have like the dip of the dip of the dipty dip if things do, let’s say get cut in half, like I imagine the large majority of these retail investors are gonna run for the exits, sell at the bottom, or you know, sell when things are worse than they are now, and then they will be unfortunately the dumb money yet again.
[00:38:41] kryzsztof: You know what my TLDR from hearing you talk just now
[00:38:45] Luke: Yeah.
[00:38:45] kryzsztof: No one knows neither the professionals nor the retail know. Retail investors know what’s around the corner because of the chaos. I.
[00:38:54] Luke: Yep.
[00:38:55] kryzsztof: In the world right now and one side looks smart, the other side looks dumb. And whether that will turn out to be true is, is in this moment impossible to know
[00:39:07] Luke: Yep.
[00:39:07] kryzsztof: though, I suppose statistically, I don’t know if this is a right way of thinking this about this. The people with the large ins, well, no. Yeah, I was gonna say I was, I like instinctively wanna side with the big funds selling as the smart money and that they’re more likely to be right because they actually control the game. You know, if a big, you know, like they could make the price go down if they want,
[00:39:35] Luke: Yeah.
[00:39:35] kryzsztof: but, uh. But for short-termism purposes, I don’t think that’s necessarily true. And if there’s like this massive reversal, because we know, side note, we know at this point that Trump’s style is that kind of art of the deal thing, where he’s just kind of forcing issues onto the table. And that huge drop that we had with the big reverse now signals to me that the world might not be, you know, on the verge of collapse.
It’s just more that it had to adapt to the kind of negotiation tactic that Trump is known for. And that the di you know, the, the actual drawdown has been relatively small compared to the chaos that we just experienced. So I’m kind of, cautiously optimistic might be the phrase, uh, around. Staying the course, letting the turbulence kind of make its way through the system, and that in the end, the big funds that were selling out of panic were more likely in this moment to have been wrong.
[00:40:50] Luke: Yeah, I, I dunno if, yeah, you’re right. Like, I dunno if you could point at any group right now where we don’t know and say anyone is right or wrong. Everyone has like different objectives and different strategies and like different regulations and things that apply to them. And what’s right for one group might be.
Wrong for the other group. Like if you’re a retail investor and if you’re clinging on, this is probably the most important part of the takeaway. Like right now, that’s looking like a good strategy, but you’ve gotta stick to that strategy. Like if things go really, really bad, then if you’re in a position to keep like dollar cost averaging on the way down, just keep doing that.
I mean, dollar cost average on the way down the way up. Just keep doing it for like the next 30, 40 years and you’re gonna be great. You’re a good situation. Um, but things could get very scary before they get consistently better. And so be ready for that.
[00:41:49] kryzsztof: To that note, something you mentioned previous podcasts that I wanna reiterate. The tariff shocks that we know are coming in, some segments are not yet being felt by the general population. when all of a sudden, I don’t know if it’s gonna be a month from now or two months from now, or weeks when you go to the store to buy something and it’s 70% more expensive or whatever the number is gonna be, and your eyes pop outta your head you know, people are gonna panic.
Like there’s probably, I’m assuming more seismic level kind of shocks that we can expect because of these delays. Just prepared for that. No, no one’s out of the the woods
[00:42:32] Luke: Yeah.
[00:42:32] kryzsztof: is all unfolding. Uh, but yes, the long term, um, know your companies and then just continue buying more shares at better and better value points.
Like that’s the playbook. That’s our playbook.
[00:42:45] Luke: Yeah, totally. And like the timeless wisdom of make sure you’re not investing money you might need in the next five years. Like now, like maybe a lot of people, if things go bad, a lot of people are gonna lose their jobs. Companies in these, like highly volatile infl, if we go into like inflation, everything gets more expensive.
, some goods you maybe see on the supermarket shelf today, you just may not see them. You can’t buy certain things. You’ve gotta be flexible perhaps with your shopping basket. And unfortunately, a lot of people are gonna lose their, their livelihood because companies haven’t do the same thing. Companies are gonna have to economize cut costs.
And the biggest cost base for most companies in most industries is like the human workforce. So like a ton of people are gonna lose their job. And if you are impacted by that, , you know, maybe you want to increase your emergency fund or something right now while you’re getting paid and probably don’t invest all of that.
Like maybe extend your emergency fund up to, I don’t know, an extra couple of months just to give yourself like a little bit of a buffer. , one of my friends, has got a great job just, you know, perfect for his skillset. I heard over the weekend, but he’d been out of work for. Over 400 days, like a year and a coming out for a year and a half.
trying to find a job that like, kind of, you know, lit him up around the idea and stuff. So like, that’s great, but like, it was a struggle. It’s like, it’s, it’s hard to, um, it’s just a tough market right now. Like unemployment is almost at all time lows. Um, and there’s a ton of jobs out there, but unemployment could be, , could be rising.
Uh, I’m with the first of the month coming up, uh, in just a couple days, uh, in our, in our monthly infusion of 200 bananas into our portfolios. It’s so, I’ve noticed it’s so tempting to buy more shares immediately for me because of the values I already see. Versus that feeling that two days out the market’s gonna drop.
[00:45:18] kryzsztof: And I could have had them, you know, for much shorter, but that’s market timey stuff. We’ve talked about that forever. But it’s, it’s an interesting, you know, over what you repeat the process over a year, I kind of feel, you know, and you just do the same thing consistently. You add consistently, I kind of think the times where you bought because you have a good reason, versus if you had waited and could have gotten it cheaper, or maybe you wait and it’s more expensive.
It all kind of statistically tends to wash out probably. So you just know you, you don’t think too hard and add what you can.
[00:45:50] Luke: And I like what I’m doing right now. So I went for a couple of months where I was just building up my cash allocation, got to like 25% in January, did nothing for a couple of months. I mentioned on last week’s podcast, I then started buying very tentatively. So I bought like a small stake in Novo Nordisk.
I’ve just mentioned. I bought A-S-T-S-A few days ago. Well, I’m, I, I, I’m back down to like 22% cash. I wanna get that back up again. So I trimmed two pretty overvalued holdings today, so I’ll declare that on the podcast. Um, I have trimmed my position in CrowdStrike and also my position in Palantir. Now, I still like both of these companies.
I still have, like in my real money portfolio, I’ve got a material exposure to both of these. But I’ve taken CrowdStrike down from like a. I think it was like a five, five, nearly a 6% allocation. I’ve cut it down to about a 5% allocation. Um, Palantir, I’ve taken down from like a 2.8% down to about a 2.2% allocation.
So I’ve kind of directionally trimmed about like a quarter or something off of both these holdings because the valuations are still like a bit whack.
[00:47:03] kryzsztof: I think that’s smart. Uh, I really think that’s smart. And don’t think it’s market timing. I think as long as, I would say as long as you have other places to put it. And cash is a position, you know, that framework, uh, you, you might be wrong, but you’re not selling out. I, I like that, that little nips and tucks here and there,
[00:47:26] Luke: Yeah.
[00:47:26] kryzsztof: So I’m glad you’re doing that.
[00:47:28] Luke: Yeah, like it’s definitely, we always see like these black and white positions when people talk about stocks on Twitter and places like, oh, you know, I’m like all in, buy the farm chase, whatever it is, like, load up the truck or I’ve sold it all. Like, investing decisions should rarely be like that unless something is fundamentally broken in the thesis when it’s correct to sell it all.
And maybe short it if you really believe that. Um, like nips and tucks, as you said, like add a little bit when the valuation seems reasonable and maybe trim a bit off when the valuation seems stretched. Like that’s served me pretty well over the last, I’ve probably been doing that more actively since I became a professional investor.
So the last five years or so.
[00:48:08] kryzsztof: Yeah.
[00:48:09] Luke: Yeah. Yeah, I do have, I have two stocks I’m gonna buy, but I’ll save those for next week’s podcast ’cause I’ve got quite an exciting thing in the diary tomorrow morning. But I’ll talk about that next week and hopefully have some photos to share.
[00:48:23] kryzsztof: Ooh, the intrigue. Speaking of nips and tucks, can I talk about our, our, uh, safari stock? My safari stock
[00:48:30] Luke: yeah, let’s do it.
[00:48:32] kryzsztof: This is, this is courtesy of one of our Patreons, that said, Hey, look into this company, and you punted it over to me because it’s a tiny, med tech company. And it, on initial glance, I was like, hell no. Uh, but, but, I’ll save my conclusion for, for the very end. The company is called Micro Bot Medical Ticker, MBOT. It’s a tiny robotics company that’s trying to revolutionize the endovascular surgery world, which means that when surgeons. Try to clean up your heart and your veins and, , arteries, basically to unclog them.
That’s, that’s more or less the point, right? You need to usually open up some, you know, open up the body and it’s mass. It’s a big thing. Uh, this company, if you think of it, they create this little robot that allows the surgeon to enter into an artery, let’s say through the leg. And then the low, what’s it called?
The low, um, mechanical snake thing kind of moves up through the artery and gets to where it needs to go. The big innovation here is that these little systems called the Liberty tiny. They’re small little, think of a Nintendo switch, little, almost like a game console, and they’re kind of shockingly one time use, and that has to do with. basically the huge, um, uh, demands on remaining sterile so big. The tip, the, the current state of the art is like big honking robots that hospitals buy for lots and lots of money. You’re quite familiar with, with these kinds of robots. The da Vinci systems from Intuitive Surgical, right? These guys are, are saying, no, we’re going to sell you one time, low game switches.
You get the job done and you don’t have to worry about sterility stuff. So that’s kind of the product. Uh, they recently had good reports in terms of how effective this tool is, so that’s good. And basically they aim to be cheap and, uh, kind of more, more simple version. And it’s a big market, however. However, uh, it’s a lottery ticket because it has no cash. It’s, they have $5 million on the balance sheet. You, they’re gonna probably very likely need ma more massive dilution. And one of our patons said they were already FDA approved. Uh, that’s not true. Uh, I think he then said, oh yeah, sorry, I got that wrong.
But, but this, there’s good and new bad news here. They filed for, I think it’s something called a 5 0 1 K, which is kind of one of these FDI approval things. That the one you wanna file for because it’s more likely to be fulfilled quicker. Uh, because they’re basically saying, we’re not inventing a brand new thing.
We’re just making something that exists kind of better. So, uh, it’s not like a new medicine that has to go through all kind of clinical trials, which takes years and years and years. So the good news is that. expecting the result from this filing sometime in June, let’s call it June, right? they get this approved, all of the dilution stuff kind of becomes less of an issue and now would be a great entry point. If they don’t get this approval, then delay of actual FDA approval will be more, you know, months and months away. And now it’s a bad investment at from this moment because of the dilution that’s coming up. So in the end, what you have is a lottery ticket on a tiny company. It’s under a hundred million market cap at the moment, which is usually even too small for me, for a brand new company that I know nothing about other than this initial dd. it’s just one of those, you know, yeah, it’s a lottery ticket. It’s a lottery ticket, but. Here’s the sort of surprise kicker, and I already maybe gave away my view. This is kind of, maybe, kind of, maybe more than kind of, this is, this seems to me like a future potential competitor to your top holding intuitive surgical
[00:53:04] Luke: Oh four.
[00:53:05] kryzsztof: because, and you’re the expert here, so you could tell me, you know, in which, which way I’m completely wrong.
But if, say things go, best case scenario gangbusters for these guys, right? Then basically saying we can get these load devices into surgeon’s hands for cheaper, quicker. The upfront cost capital to hospitals is much less. And if they basically do as good a job, and this is where I know nothing about, right, but if doctors like them, I think it’s fair to say they’re in the sort of, playing in the same. Sphere is intuitive surgical, and that’s why I ended up wanting to talk to you about this for the Safari stock because regardless of, call it, it being a viable in invest investment in this moment, people like you who have a large position in intuitive surgical should at the very least know about them and follow, you know, their journey.
Especially if it’s successful and they start getting the FDA approvals, then who knows, right? Who I, I don’t know how it’s gonna unfold, but it’s worth knowing about. So my TLDR is, I don’t know if this is gonna surprise you, but I’m actually going to buy one solid share. $2 and 60 cents to add it to my portfolio as one of those things.
I’m like, oh yeah, there’s catalysts in the near future. They have all the, they have momentum. It, it’s, I cannot take a large position in any stretch, but I definitely wanna keep them in my, you know, watch list radar. So $2 and 60 cents of bananas are going into monkey’s portfolio to micro bot.
[00:54:52] Luke: All right. Good luck. Yeah, I don’t know. I haven’t read too much about them. Apart from knowing it was probably more you than me, um, I felt cringed at the idea they could be a competitor to Intuitive Surgical, just because like those guys have, what, a 30 year track record, they’re on like the fifth major iteration of their hardware.
Like it’s a, it’s a, like, it’s a material job to catch up, but they might dis or they might be better at a very specific kind of thing, which might not be surgery. It might be, you know, these, some more difficult non-invasive investigative or, you know, intravascular things in particular.
[00:55:30] kryzsztof: Yeah, of course. No, but,
[00:55:32] Luke: Yeah.
[00:55:32] kryzsztof: is an important point.
[00:55:34] Luke: Hmm.
[00:55:34] kryzsztof: know, you’re starting from a, from a intuitive surgical is your baby,
[00:55:38] Luke: Sure.
[00:55:38] kryzsztof: so of course, and you have more knowledge about it than most of your other companies, so you get that point. But I think as investors, it’s it’s just wise to say, oh, there’s this tiny little, you know, uh, startup odds are against it, but they do have promise.
So if nothing
[00:55:55] Luke: Yeah,
[00:55:56] kryzsztof: worth just keeping up to date on for intuitive surgical sake, so to speak, because you know, what, if, what if they are successful, then maybe the future returns, they start cutting into the pie a little bit. And so future returns for intuitive surgical diminished by whatever percentage points, it’s not like it would make it a bad investment,
[00:56:16] Luke: yeah,
[00:56:17] kryzsztof: you know, you just wind the circle
[00:56:19] Luke: yeah. Totally. Totally. Yeah. I don’t focus on any one particular sector, but I think it can be powerful though to become like an expert in a particular domain. Um, and then just know everything about that and you can probably make better quality decisions in that area. So, you know, if you wanna be like a medical technology expert, I’m not, then yeah.
You know, you might wanna do like a whole bunch of research on all these little upstarts to, and you might have a better insight than me on which ones have a right to win and grow and be successful in their niche and which ones don’t. So.
[00:56:53] kryzsztof: Yeah. Uh, and uh, two more points. the financials. MBOT, That’s courtesy of Fin Chat, which is one of our supporters for the show. Uh, that’s my go-to platform where I see the overview of the financials, which obviously here pre-revenue are not great. Um, and the other point I want to reemphasize is this is a Patreon recommendation, so patreon.com/wall streete Wildlife. And this is exactly why small community of investors working together to, put ideas forward every so often. You know, maybe this’ll be, uh, 10 x investment in five years. Who
[00:57:34] Luke: Yeah.
[00:57:35] kryzsztof: And it’s, it’s, uh, we really appreciate our, patons and how that’s unfolding. So check us out if you haven’t yet.
[00:57:42] Luke: Alright. Very good, very good. I got a safari stop for us as well this week. Should we do that? before, before I get into it, like I, so we talked about autonomous vehicles earlier and that I’ve always been interested in autonomous trucking like freight. And I looked fairly hard at a company called Two Simple about a year and a half ago, and then they’ve just like gone to zero.
Like they’re, they’re dead in the water. Like no one’s really looking like they have a solid approach to it. But anyway, let me Safari stock a company that is, uh, another one of these like startups trying to solve autonomous trucking. So Aurora Innovation, ticker a UR, and they specialize in, uh, developing, they say developing and deploying autonomous driving solutions.
They haven’t really deployed any solutions just yet, but essentially their plan is to, um, put driverless. Um, like, you know, the big 16 wheelers, like big trucks onto the roads and the thesis makes a ton of sense because, um, if like the, it is, it has, having humans in the driving seat of trucks is expensive as a lot of inefficiency for very good reasons.
Drivers only allowed to drive a certain number of hours a day. And so they have like, like various devices to make sure they don’t kind of breach that because you fall asleep, you can do a ton of damage in a big truck compared to like a car or a motorcycle. Um, but no one’s really solved it just yet. So Aurora innovation, and I think this is really timely because they have said as recently as like a month ago in April, 2025, so like in the next couple of days, I’m not sure I buy it, they’re gonna launch their autonomous driving solution form a.
Uh, for the, like a particular lane of like a fleet from Houston to Dallas, so it’s not far from your neighborhood. And so there will be running like autonomous vehicles in Texas. They claim now, if you dig behind the headline a tiny bit, it’s a little bit thin. Um, so I think they’re, they’ve sort of paired back their announcement to, they’re planning to get 10 trucks on the road, one of which is autonomous.
So like a bunch of smoker mirrors, one autonomous vehicle. By April. I don’t think, I don’t, I’ve not seen the news When I looked again this morning, they’ve only got like two or three days of the month left. So I dunno if they do something artificial to try and hit that date or not. I think the model makes sense because they’re using Nvidia drive for system on a trip and their DRI NVIDIA’s drive os.
So I, I think that means they don’t need to solve autonomy themselves, but it’s a lot more complex like navigating a massive vehicle like that with so much inertia compared to a car. Like you have to plan so much further ahead. But at the same time it’s like such an I import, it’s such an expensive platform.
You probably can affordably put like Lidar and all sorts of other like radar and vision and all sorts of other sensors where it may not make sense economically to do that on like cars. It would make sense to like sensor up the wazoo your big trucks. ’cause they’re very expensive. Um, so there are safari stock for me, and I think they are a terrible investment right now.
so check out their market cap. It’s currently Christophe just shy of $12 billion. This is a pre-revenue company with unproven technology that ain’t doing anything yet. Like they claim they’re gonna get one truck on the road, $12 billion. Okay.
They’ve got a billion dollars in the bank and no material debt, but they’ve had to dilute shareholders materially to raise that money.
Um, and I think there’s gonna be a ton more dilution down the track. It’s on my radar as a, for a future possible investment, but $12 billion for, uh, what amounts to maybe a wing and a prayer right now. ’cause I haven’t actually done anything just yet. that’s too rich for my blood.
[01:01:56] kryzsztof: Badger, do you know what the, where Tesla’s semis and their AI innovation, how they would potentially be an obvious competitor to these
[01:02:07] Luke: Yeah, yeah, totally. Absolutely would. Yeah. But I think Tesla don’t have any of those on the roads just yet, right?
[01:02:12] kryzsztof: Right. But I mean, down the road.
[01:02:14] Luke: Yeah, totally. Yeah. Absolutely. Yeah.
[01:02:16] kryzsztof: Okay.
[01:02:17] Luke: Yeah.
[01:02:18] kryzsztof: the record, there are 3 million truck drivers, uh, in, as far as I understand the AI stuff that’s coming. driving is obviously one of the first things. So in terms of employment, 3 million in, uh, the US of about 300 million people, that’s what 1% of the workforce right
[01:02:39] Luke: Yeah. It’s gonna be painful when autonomous trucks hit. ’cause once someone solves it, like there are some complexities. Let me go a tiny bit deeper into this Aurora thing. ’cause there is a complexity. They’ve been wrangling with the regulators over. Um, so evidently in the states, I dunno if this is like statewide or just Texas or that nationwide or just in certain states.
Evidently if you have a commercial truck, if the truck breaks down or has some sort of issue, the driver has to get out and like hand place like cones or warning devices around the perimeter of the stuck vehicle so that other drivers can kind of see it and navigate round like this big. Like roadblock, essentially.
Um, and if you’re a car or a motorcycle, maybe you’re encouraged to do that. You don’t have to do that. And so I think Aurora probably quite correctly tried to challenge your driving regulators, whoever they are on that. But they failed in that challenge. So what they suggested was, instead of having like these cones, ’cause there’s no human beings to go and stick the cones out there, that they could have like a series of like flashing warning lights and something really obvious.
So it kind of makes sense. I, I dunno why the regulators, uh, push back on that. So, yeah. So there,
[01:03:52] kryzsztof: Right. See even, even then, when I’m thinking of the Tesla counter case, they could put an optimist robot in the truck, and optimist Robot comes. I mean, that’s a simple task, right? We know that they could do that
[01:04:04] Luke: yeah, there’s probably other solutions, right? You could probably like. That’s so dumb. But you could have like drones or you could just like push these things out on like articulated arms and like put the cones down and then, you know, just have, so I’m sure it’s solvable, but it’s just like a bit of like, it’s, it’s sort of daft to have to engineer your way around that.
You’re right. Optimist would be like an easy shortcut for that. Um, but uh, and it is, and that’s just one small example of how the regulations probably aren’t really keeping pace with like, the pace of innovation. Um, yeah. But anyway, so it’s more complex than cars, but in some ways it’s easier, but perhaps because like trucks essentially will drive like the same arteries over and over.
Like, you know what, if you solve like Houston to Dallas, well that’s it. And you could have, you know, a couple of thousand trucks doing that journey continuously. And if you have like a fleet of them, if something’s happened, you know, it could be informing the rest of the fleet through the crowd. I. Through the cloud that, you know, there’s some obstruction or something.
Whereas driverless cars are going in like every different direction and they have to like, so maybe solving autonomy, it might be in some ways easier for trucks, but harder in that it’s probably harder to sort of stop safely ‘ cause it’s such a big thing and might park safely, whereas it’s easy with your car.
[01:05:25] kryzsztof: and on autonomy angle, my FSD Tesla is just getting stupidly good now, so Right. To your point, trucks, which basically more or less go up and down. a whole, it’s a, it’s a much simpler problem. In theory
[01:05:42] Luke: Yeah,
[01:05:42] kryzsztof: it’s those edge cases always, of course, that,
[01:05:45] Luke: yeah.
[01:05:45] kryzsztof: it, make it the big problem that it is. So, are you buying any shares?
[01:05:50] Luke: No, definitely not.
[01:05:53] kryzsztof: You’re going all in. Sweet.
[01:05:55] Luke: I mean 12, to be honest, I’m gonna talk about a short in a minute, but like, or I rather a put option, I have bought, like maybe I should buy, puts on this ’cause $12 billion, right? Like the wheels are gonna come off that pretty freaking hard. I think when it goes bad, maybe I should, in fact, I, I might do, I’ll tell you next week if I do or not.
[01:06:15] kryzsztof: Okay.
[01:06:15] Luke: Should I tell you about, I put, I did buy though.
[01:06:17] kryzsztof: Yeah. ’cause I’ve really, uh, you need to educate me on, on a technical detail that obviously I don’t quite understand with, with this. And
[01:06:27] Luke: Maybe, maybe I’m being dumb money here then. ’cause I haven’t done a huge amount of research. I just, it got, I got a b in my bonnet about it. Um, so I, I now own a couple of shorts. I, I’ve rather, I’ve bought long dated deep outta the money puts on American Tower ticker a MT. Um, now America, I don’t, I’m not an expert in American Tower, but.
Essentially it’s like a real estate investment trust. They own like a whole bunch of like the cell phone towers across North America. And, um, and I guess they must lease them out to like the mobile providers to stick their, you know, sensors on them. And then that creates like the, the grid, like well, the sort of cellular network.
So like if we believe that starlink and more importantly A STS are gonna deliver like cell cell phone signal from space over some long period of time, like 10 years time, there’ll be a decreasing need for ground-based infrastructure. Um, particularly in like less dense rural areas. So you’re always gonna want to have like ground-based stuff in like cities.
’cause it doesn’t make sense to try and service a city with today’s technology from space. There’s too many. Too many people living on top of each other and too much like bandwidth in one narrow geographic area, but across like some huge, like, I dunno, Iowa or somewhere then, um, you don’t, if you can serve, you know, however million Iowans there are with a couple of satellites rather than a whole ton of ground-based infrastructure, it’s gonna be cheaper in the long run.
So I think AMTs business model is probably gonna be in trouble in the long run. So I bought some puts.
[01:08:24] kryzsztof: The thing that confuses me, I guess, is, and I should, it’s embarrassing that I don’t know the answer to this question, uh, but, uh, I’ll probably dig into it as after we finish recording, is why is American Tower partners with a STS if it were to spell their imminent demise? So there must be something complicated about the relationship business model that I just, yeah.
I, I don’t, I don’t get.
[01:08:54] Luke: Well, it’s like why, you know, the Saudi Arabians have made huge investments in solar, right? Like you’ve gotta hedge your risks. And so a MT board clearly sees that as a risk, so they wanna get some exposure to that thesis themselves because it protects their business model. No,
[01:09:11] kryzsztof: Yeah. So it seems like it has more to do with some kind of both and model rather than either or that the terrestrial stuff is not gonna go away. It’s just that the space stuff is in augmentation. But so that’s, see, that’s actually side note. Uh, my understanding, T-Mobile is the only starlink affiliated large player, but from the A STS Bulls, they’re saying they’ll regret that decision because SpaceX in the end is kind of going to be in it for themselves and. know, we know Elon’s playbook is, is gonna be quite aggressive and they’re probably at some point gonna do what’s best for themselves. Whereas A STS has signed up all of these deals that are together with the other, mobile network operators. So maybe I’m, I’m stuck at seeing is it that STS would do to put American Tower out of business with American Tower to reiterate actually funding them.
[01:10:25] Luke: Well, again, I think there. I suspect they’re funding them more for like a hedging or protective thing, but let’s just look at their growth. So I’m not saying a and t are gonna go out of business and suddenly, like, we don’t need any cell phone towers. I’m not saying that at all, but like today, let’s, let’s assume, right, there are areas, underserved areas in North America, like there are in Britain where you have very poor cell phone coverage or no cell phone coverage, right? And right s some big highway bet like some backwater highway between like two major towns or something.
Probably got no cell phone coverage there. And you wait till you get to town before your phone starts working. Definitely in Death Valley. I’ve driven through Death Valley before at like, no, no phone signal there. Um, so there’s money to be made there if, if you can provide a signal, um. But not enough to justify building like ground infrastructure, like a, a big cell phone tower and then having to run all the cables and the electricity and everything else.
So it wouldn’t justify putting that network in space. Sorry, putting that network in place with like traditional technologies. So you’ve lost some economic value. ’cause they will, there is economic value of like those guys driving through that location or the few shops that happen to be there, whatever’s there.
Well, if you have satellite based communication, you can capture that economic value, right? ’cause the incremental cost is almost zero to cover like these dead zones that are otherwise inaccessible to ground or not economically viable for ground-based infrastructure. So like a MT probably already serve such a huge part of the market.
Where does their future growth come from? If it’s like economically unviable to hit some of these smaller locations. So I feel like the growth is gonna get slammed and maybe, I mean, they’re a mature, they’re not a growth company, they’re like a mature dividend paying, like investment trust. But um, like do you, does it at some point then as this technology gets better and that now we’re like a few generations down the road, five or 10 years time and maybe satellite based communication can serve some of the existing like denser towns and areas more effectively, more efficiently.
Um, and then maybe like the at ts and these guys say, well actually we’ll buy our capacity from. Like a STS rather than have putting like a, like the next gen five, whatever, you know, masked in the study. ’cause it’s cheaper to do that. And actually we can deliver like 5G much cheaper. So at some point, like slowly, slowly, the needs for these locations is gonna wane away.
[01:13:14] kryzsztof: Okay, I think I have a bearish take on your put,
[01:13:18] Luke: Gone.
[01:13:19] kryzsztof: and you said that earlier, if I think of American Tower as a real estate company,
[01:13:23] Luke: Yeah.
[01:13:24] kryzsztof: so just forget tech, cellular tech stuff. We know that the space stuff is, uh, space direct coverage is playing along with, um, terrestrial towers.
[01:13:39] Luke: Yep.
[01:13:40] kryzsztof: Okay? So it’s a layer. It’s to go back. It’s not an either or. are not gonna disappear.
The real estate remains valuable.
I could, you all also said it yourself. It’s a sort of slow and steady dividend plane. Yeah. Real estate, they own land. Right. I don’t see why buying a put here is smart. it could, meaning, because it could, if nothing else, even if growth slows down a little bit, you’re still, there’s nothing that’s gonna make the stock dive. That’s what you need in the
[01:14:15] Luke: Yeah.
[01:14:15] kryzsztof: is like catalyst for like, the company explodes for some reason, or, and so even the growth slowdown, whatever, right. You’re still, it’s still a reasonable investment just for dividend perspective. Right. to me it’s like one of those situations where on the surface it looks like. yeah, I, I don’t, yeah, I don’t think I could, I could justify buying a put on the thesis that growth is going to slow.
[01:14:46] Luke: Okay, fair enough, fair enough. This is in my options portfolio, which is my entertainment portfolio. So like I’ll often take, you know, a couple of thousand dollars here and there just for a laugh, just to kind of see what happens. Um, so I’m sticking with this bet and it’s a deep. Outta the money long dated put, so, uh, like the stock price for doesn’t have to move too far in my favor for that to start to look quite interesting.
[01:15:13] kryzsztof: Let’s revisit this. I wanna see how this plays
[01:15:16] Luke: Yeah, yeah, yeah, yeah, yeah, yeah. I did this with Duolingo and I, I had to like, go home with my, like broken arms or whatever, so like the Duolingo owl effed me up, so we’ll see.
[01:15:31] kryzsztof: Yeah. Yeah. Cool. Badger.
[01:15:35] Luke: Awesome monkey. Very good. Good chats. So we both use fin chat again in today’s episode. We use it every week. The deal may have finished by the time this episode goes out, but if somehow I.
Well, if you’re on our Patreon, we definitely told you today, uh, right now fin chat.io/wildlife are offering a 25% discount, much more than the usual 15% discount off of any paid plan. So go check it out, fin chat.io/wildlife to get that excellent discount and it ain’t gonna last long. They only do these discounts at most twice a year, sometimes only once a year.
So this is your window right now to get that benefit.
[01:16:15] kryzsztof: Yep. And the shout out to our Patreons. Thanks for everything you do over there. It’s a, it’s a fun ride. patreon.com/wall Street Wildlife. Are you ready to become a beast of an investor?
[01:16:27] Luke: Your journey starts here.
[01:16:30] kryzsztof: That’s the saddest monkey claw I’ve ever seen There.
