The Most DANGEROUS Time To Buy A Stock... | Kevin Xu

The worst trade I made in this this new account is has been ARKK red cat drones because I thought that you know the Pentagon they approved like a billion dollars spending and the whole you know Ukraine war kind of changed how the the war story works and there's going to be a lot of investment in drones. Like that is actually true. That did not reflect in the stock price at all. You know, and so I kind of held this down and all the way that's that's what kind of made me round trip all the way down back to 35k. >> What I was curious about is I know you bought ARKK and then it went down a lot but then you double down by buying ARKKX which is the 2x leveraged ARKK stock. And I'm curious did your thesis change or did your conviction level change in order for you to go from you know just the the base share of ARKK to the 2x leverage? >> I had never done any leverage ETF ever before, right? I try to stay away from those. And that was a rule I set but well you know rules are meant to be changed, right? Different market conditions, different styles, whatever is meant to be you know played with. You got to experiment with yourself too. And so I did get successful with PALU which was a 2x version of Palo Alto Networks, right? And that went well because of earnings and whatever like that. So I was like oh you know maybe 2x leverage things are worth playing with, right? If you have extremely high conviction. And with the red cat play you know I thought like I could catch the bounce and with a 2x levered play you only have to bounce halfway there in order to make it all the way back. But again the bounce never came and I think my main takeaway there is yeah you don't that was almost essentially going all full tilt. >> And so the mental kind of stop loss was 35k cuz you didn't want to go probably beneath here. >> That is fair. Yeah, I don't do real stop losses like systematically, right? But I do have mental stop losses, right? If something's you know down 20% 30% and the chart just looks absolutely ugly, you know, then yeah there's I got >> I'm curious how your membership fees changed from you know taking it 35k to 100k. Like how many members did you have paying you $200 a month? And then how did that change after you were incorrect about the Arc Innovation Arc ETF thesis? >> The analytics behind extra subscriptions actually very light. There's not that much information about churn rate and who's canceled and when they cancel whatever right? >> But the gross number. >> Yeah, yeah. I mean I've seen it dip down. I mean it's I mean like like you know, I'm not sure if it's related to Arc Innovation play or just like you know, they subscribe for 1 month and want to see what was behind the content. They liked it or didn't like it and then they churned. Like I think like you know, similar to me like a lot of times you sign up for a subscription, right? And the first thing you do is just go cancel, right? So I'm not sure if that's not if it's related to the play itself or they just want to try for a month. >> What's funny to me is like a technically speaking you did bring it back up to to 50 or 55 is where you're at right now. Who's to say where you'll be in a week or 2 weeks or a month? Who's to say? But the funny thing is you bring it up and then everyone starts subscribing and I imagine like like the gross amount of subscribers that you had went down, right? After >> Yeah, yeah. >> Arc Innovation Arc ETF like once you were incorrect about that thesis then people unsubscribed and and stopped paying you. But then probably as you're going back up again, then people people are like resubscribing. It's but they don't have the foresight to look over a long period of time and this is not my endorsement into you as an investor. I'm just saying like technically speaking if you do look at the data over a long period of time you have been correct more than you've been wrong. >> Yeah. >> And it's funny how it just kind of like there is a clear correlation between how you're doing and how you're not doing. Like in a in a small window of time. >> investors across >> Yeah, exactly. It's it's just it's just funny. >> And I share my buying in the hype and selling the fear, always. I share this message with every new subscriber. I highly endorse independent thinking, right? I share my thesis. It's up to you to decide whether you like it or not, right? And for the the Arc Innovation one a lot of people disagreed with me, you know? And I noticed that. A lot of people did not enter the play with me cuz it was a fairly weak thesis like looking back on it, right? Uh and so I'm I'm happy that you know a lot of people >> Do you Do you think that you felt pressured to go big to like prove yourself again in that trade? >> Yes, there was another lesson I posted about recently, which was uh don't force a trade. Right? I think because of whatever was happening at that time, right? I was like, "Ah, let me find another trade." And like the thesis just wasn't strong enough. And so it's actually funny cuz even like last week, uh when the market was down a little bit, I was like, "Ah, should I like swing again?" I'm like, "No, no, no. Like just cool down." Right? If you're like trying to force it, if your thesis is not strong enough, just like cool down. It's fine. You can even stay in cash for a little bit until you feel like you you understand the market. And so a lot of lessons, yeah. >> Who do you think is the best investor alive right now? >> There's a There's a clear answer to that, actually. It's Leopold Aeschlimann Bettler. Right? He uh the ex-OpenAI guy that started his situational awareness fund and invested in all these picks and shovels, right? Like he's I think up to like $20 billion in AUM, which is from This is from like a two-year track record, by the way. Right? This is equal to Bill Ackman's Pershing Square that he's developed over 20 years. Right? Cuz you know, he he wrote his uh uh early thesis on uh the AI infrastructure build-out. Uh invested in all the picks and shovels along the way. Uh now that's why he's up to like 20 billion now. >> Doesn't that concern you, though, because Cathie Wood had a similar upswing 2020-2021? >> Yeah, I mean I think the game changes at different scales, right? Like I think um he knows this industry well. There's obviously this is the right timing for that. But who knows what wave happens in the future, right? That that he or may or may not benefit from. And also, you know, honestly speaking, like all these hedge fund managers, at a certain point you're like, you know, trying to increase your AUM cuz you can kind of bank the fees, right? You're not necessarily in it for the gains themselves. >> That's an interesting point. Yeah. That they're that they're probably not so focused on taking risk that could on average yield them 40% if that means they have some years where it goes down 10. >> That is my critique of that quote that like uh uh hedge fund managers uh statistically don't beat SPY. Because I think most managers are playing a different game, right? They're playing a game of delivering good reports to their bosses. They're playing a game of like, I better make sure I don't lose money so that, you know, my >> [clears throat] >> LPs don't don't don't exit, right? And they're playing a game of like, hey, we double, you know, we we double this year, give us more money, right? Versus if you're playing with your own money, you're actually really invested and and and and and concentrated in these bets and thinking deeply about your own net worth and stuff. >> It's easier to sell a product that guarantees, you know, positive return even if the positive return is like 3 to 5% than it is to sell something that could have -10% one year but up 40% and like that volatility cuz people don't have the stomachs for it. >> secret on Wall Street is most people just want to make that one year claim to fame, right? Start their own fund and then just coast for the rest of their life. >> What are your thoughts on Chris Camillo? >> Love Chris. Yeah, I watched a podcast with you guys. He was on another live stream with Amit and Wolf recently. I talked about AI and genetic trading. I think he's he's he's the goat. >> We asked him what he thought about you and he said, I actually don't know much about him and can't remember why I started following him but there must be a reason. Since he is a course guy that likely regularly shares trade ideas with traders who will pour money into each of them, I'd ask the question about exactly what parameters he puts in place to ensure that he's not profiting off of the trading flow of his subscribers. How many days minimum does he wait before exiting a published buy trade? Does he fully disclose his exits? By Kevin Shoe's own words in his article embracing degeneracy, he seems to be the byproduct of right time, right place, luck fueled by a methodology that is highly concentrated. Feels like he is better than an average investor who spends time researching and taking concentrated bets that have worked out but most of this appears to have been fueled by a bull market. So not necessarily a genius investor with a meaningfully differentiated strategy as much as a bold investor who is benefiting from simply bringing aggressive long and concentrated in high-risk growth equities. It's a relatable story as most anyone can replicate that success to some extent. What do you say to that? >> Thank you. I think uh it's fairly accurate critique. Uh I am very bold uh because I like to I like big rewards. Like small rewards don't excite me that much, right? It's not worth the time and effort. Um and uh there's definitely a huge degree of luck, right? Like I doing this in these bull markets, right? But I also I mean the way the reason I post on X and in in try to get engaged in beta is cuz I'm I'm I'm I'm trying to I I think you need to put yourself in positions of luck, too. Right? I think a lot of people uh don't. Uh I think a lot of people are are very conservative. They can't deal with any money loss at all. Like I I know people with millions in cash and they've been in cash for the last 5 years, right? I'm like, "What are you doing? At least put it in spy." They're like, "Oh, but I could be buying the top or etc." I don't get it. I'm just like I'm just like I think you need to put yourself in in in positions to become lucky, right? And and also just like minimize minimize your your loss, right? And and and and and that stuff. Uh in in terms of like the, you know, the course guy, it's funny I don't have a course. >> [laughter] >> Um I don't have a Discord. I don't have any of the that stuff, right? I I told you the story of X subscriptions uh and people I I am very thankful and people enjoy my kind of like more longer form rambling thoughts, right? Cuz like on X you have to kind of be more polished and, you know, very tight and concise to go viral, etc. versus um I still only put out like a kind of more long form just like what I'm thinking about etc. etc. And I I take that duty uh very importantly, right? And so I do have some guardrails I set for myself, right? I never touch a company like less than a billion dollar market cap. Um I never sell same day, you know, I I I mean that's generally just because I I I I want to see the thesis play out, right? And so I don't really have like a strict time like I must hold for this amount of time, right? But if you actually do look at my track record, I never sold a stock like within 3 days, right? Like I again I got want to see the thesis kind of play out. And I'm very up front with folks that like I might trade at and at a whim's notice, right? I had like I had I had that disclaimer. Uh I even give a heads up that like, "Hey, look, uh I'm looking at the market is looking weak today. I'm not liking this, you know, I might exit in like the next few hours or something like that, right?" And so like I'm not I'm not There's I'm not front running anybody. >> Now really quick, every business is asking themselves the same question. How do we make AI work for us? 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