The Tech Stocks Going To ZERO: Bankruptcies ‘Only A Question Of Time’| George Noble

You know, we're short from 107 earlier this year. We actually doubled the short a couple of weeks ago. It's it's our biggest position. I think there's a very good chance Cory goes bankrupt. And I mean, Cory's already imploding. All right. It's only a question of time before this before this the whole structure the wheels are coming off the financing architecture of this whole edifice and therefore I think it's going to collapse. Debt financing within the AI tech sector is [music] hitting some serious walls. And in fact, the entire thing is about to fall apart. Our next guest is going to reveal to us which companies are on the verge of bankruptcy and what's going to happen once companies start defaulting on their debt, the ripple effect it's going to have on the rest of the markets. And he's going to reveal to us which companies he actually does like, shorts and longs. George Noble is going to reveal to us his top picks for this coming quarter. He is the managing partner of Noble Capital Advisor. Welcome back to the show, George. Good to see you. >> Thanks for having me, David. Always a pleasure. >> George is the managing partner of Noble Capital Advisors, and you can check out our last interview with George from early in the summer. Link down below. George, I know you've been short on a couple of tech stocks, which we can talk about. You had a great performance, by the way. Just leave this on the screen for now. Um, we can come back to this. This is your scorecard. Congratulations. You've had a pretty good year. Um, and uh, let me focus on some of the shorts first. All right, you've got SpaceX, Tesla. Now, um I don't know if this changed your mind, but uh you've seen this flying car, right? Let me let me let me let me let [laughter] me pull let me let me pull this up. Let me pull this up one more time. Now, just I I I just want to stress that as we're watching this, the the stock didn't actually move on this Tesla Roadster launch. Um which by the way, there there isn't a there isn't a production date exactly announced yet. Musk said sometime next year. Uh we're 2028 latest. But that thing flies. It's got thrusters. I I I also want to stress that these thrusters are not yet road legal. So you can't actually you can't actually fly those cars, but but but it it can technically. So I don't know if that's going to be a feature at some point, but um stock didn't really move on that launch. Um and uh you know, a lot of Tesla fans have been really excited. I I don't I'm not a Tesla fan. I love Teslas. I like Musk. I wouldn't call myself a fanboy, but that got me excited. Did that get you excited? Did that change your mind and anything? The fact that they have the ability to do this and what it signals for the future of technology in the auto automotive space. George, I'll let you start. Yeah. >> You know, David, you and I, we talk about Elon Musk and Tesla a lot. I mean, is entertainment fine, the Jets and sci-fi, that's cool. Okay. But you've heard me and others say many a time in the case of Tesla, the product is the stock. Usually the the product, the cars should be the product. No, the product is the stock. And all this stuff, all this Showtime, Rasmatz, it's all just designed to try to jack up the stock price. And so, you know, it's funny. That's actually the first time I've seen it. I heard about it. I didn't waste my time watching it when it came out. But, you know, like, >> oh, you have to watch the whole presentation. It's a live thing. They had a live audience just to make sure people didn't suspect they were faking the images. But anyway, >> oh, you mean like you mean like Trevor Milton, please call your office? Like we got that fake truck rolling down a hill with no engine like that thing or Elon Musk with a with a whole battery can be taken out and substituted. I mean, come on. This is all Look, when you have when you don't have fundamentals to talk about, when you don't have fundamentals to talk about, this is what you do. You you you deflect. Okay, so it's a complete tra I I see that I just want to laugh and you know Tesla's I think coming out with numbers tomorrow. I have no idea what the numbers are going to be. I don't really care. Um you know liars figure but figures don't lie. The cash cash flow burn is is intensifying. So it remains a favorite short of mine. Everyone says well you can't shoot Elon really. Uh we're short from 485 uh if you look at the table 475 485 at the end of last year. with 25% ahead uh on that short even in a market that's up 10 15%. So I think the Musk uh edge, the Musk charm is wearing off. Um you know, cash flow is starting to bite. Uh SpaceX has got a big cash flow problem. Tesla's got a big cash flow problem. So no, I I think I think the future is coming ever closer to now. And and again, not that these stocks necessarily trade to this level, but my fundamental assessment for each of those two stocks is they're worth $30 a share. Whether we get there or not, who knows? But that's the direction of travel. >> As you're valuing Tesla, you have to take into account maybe that they're shifting towards robotics and so this is becoming a robotics play. You're not bullish on humanoid robots. >> Well, that's what they would have you believe. But my point is if you look at the here's the problem with here's the problem with >> the sound bite sounds great. However, when you start doing the numbers and with the market cap I've lost I don't know where it is today 1.4 1.5 trillion. >> If you benchmark the robot the pretend robotics venture which really has nothing so far. >> But if you benchmark that against the best robotics companies it's worth like 30 or$40 billion. This is on a on a market cap of a trillion five. So, as a sound bite, yes, but in reality, it doesn't begin to move the needle. >> Before we continue with the video, I'd like to tell you about a company working on an interesting idea in the creator economy. Our sponsor today is Gigastar. It lets YouTube creators sell a share of their channel's future and revenue as channel revenue tokens or CRTs. Creators get funding to grow and token holders are paid monthly from that channel's actual revenue. Gigastar also runs Gigastar trading which the company says is the only SEC registered secondary market in the creator economy. So those CRTs can't be bought and sold after listing. This is already live. Channels in gaming, finance, comedy, and travel are listed and trading is underway. Gigastar is now raising capital through a community round on Weiunder to scale the platform. To learn more about the company and the offering, check out the link in the description down below or scan the QR code here. And as with any other early stage company, there is risk involved. So read the offering materials first. Back to the video. Another short that I wanted to talk about is Cororeweave. Now this goes into the heart of our discussion which is the AI debt um boom which is becoming less of a boom now. Coreweave is one of your shorts. Um I believe you're up on that short as well. Now um Cororeweave has $55 billion of debt. According to I was just reading this report on investing.com. HSBC is estimating that Cororeweave earns an average of 8.9% return on invested capital which is below supposedly below their cost of borrowing. That's one issue. The other issue is that um uh they have around $35 billion of debt um 55 in total. Microsoft's biggest customer is paying out as profits while OpenAI holds up to $22.4 billion of Cororee's contracts. So if any of these companies start to uh and by the way Open AAI is not so far not profitable. So if any of these companies maybe pull back on financing potentially Cororeweave is in a lot more trouble. But let's talk about the debt issue here. Why why is um why why why are people talking about Cororee and Oracle's debt right now? If you look at the numbers, um the amount of the debt and the interest expense associated with that debt relative to the market cap and revenues of the company, it's just it's it's extraordinary. Um and the problem with Cororeweave, I mean, there's there's they don't scale at all. There's no sign that the unit economics actually work. All right. Um, as as someone coined uh last year, I thought it was brilliant. Coral Corowe is basically we works with GPUs. You know, we works went bankrupt because why? They signed these long-term leases and they ran out space on a short-term basis to folks who need the office space. Okay. Corweave, you know, has [clears throat] these these these these these enormous uh uh this enormous exposure. They own a pile of chips, depreciating chips. All right, the debt and the depreciation are permanent and and they try to rent them out. Now, in the short run, when the getting's good, they can rent them out at high at high rates, but looking out on anything but the short term, like what are the sustainable long-term economics of renting those chips out? And uh it's it's it's rather questionable at best. And so, you see spend, spend, spend. They're investing more and more and more. Debt's going up and up and up. Interest rates, expense up and up and up. Depreciation up and up and up. But what's the end demand for these chips? what's the useful life of these chips? That's been a big big point of controversy. So, um, no, I I I think Cororeweave, uh, you know, thank you for mentioning it. You know, we're short from 107 earlier this year. We actually doubled the short a couple of weeks ago. It's it's our biggest position. I think there's a very good chance Corweed goes bankrupt. And then something very important I'd like to say Dave in the context of this of this I don't know if you saw this or not but I I put something on my uh Twitter feed um this morning or yesterday is [clears throat] unbelievable. All right in response to I think I wrote something like if you're if you're a crowe bull you don't want to see this. that basically what's happened as the stock prices plummeted, retail investors at Robin Hood came piling in at record amounts to buy coral. This is not how bottoms are made. Bottoms are made when you have people saying, "Get me out. There's blood in the streets. I can't take it." Retail has been embracing this with both arms, buying it to an extent they've never bought before. As a matter of fact, I saw something similar about tech generally. They're buying with both with both hands. So I I I mean I I just there's a huge I have a hugely varying perception between what's really going on with Coral Weave to me it's just un unbelievable. All right cuz you look at the balance sheet most of the folks looking looking at Corave not paying attention to the balance sheet they're just buying the narrative. I don't think pe I think most investors in Corweave they don't even know what they own they just bought a story. >> Yeah the central issue is that um they don't have they probably don't have enough cash flow to service their debt. U is this a core wave problem or an AI sector problem? >> Yeah, >> we're using this as an example. Okay, >> AI and this by the way gets into a very important point. Thank you for asking that question. Um there was a brilliant feed, a brilliant piece put out a couple months ago by this Canadian fellow, Jay, I believe is his name, and I reposted it and I urge everyone to you should put it in the show notes, everyone take a look at it. And he basically drew the analogy of uh the AI coming AI bust to what happened to the housing sector in the great financial crisis. And the gist of it was that the signal for the housing disaster, you didn't have to wait till 2008 to get the signal. The signal actually occurred in 2006. And in particular, what he was getting at was the idea that, you know, Dave, you might remember this. I don't know exactly if you were owned a house at this point or too young, much younger than I am, but in 2006, you know, folks were buying houses they really couldn't afford. And the way they were doing that was they said, "Okay, you know, here some some fast talking mortgage broker would say, "Here, David, buy this house. I can't afford this." Don't worry, David. We're going to give you a teaser rate for the first two or three years. And by the time, but you say, "But I can't afford this." By the time year two or three rolls around, it's like, "Don't worry. The house will have gone up enough in value. you'll sell it. So, forget about the fact you really can't afford it. All right, so as long as the house kept appreciating, all right, that worked. What happened in 2006, though, is the rate of house price appreciation slowed. So, that when people started to see that, you know, maybe the house price wouldn't go up as much as they um as they had hoped or anticipated, the shine uh came off that trade. And so what's happening now with AI, stay with me here, it's very important. The fact that you know you look at and this gets to your point about cash flow and the whole AI system is it hinges critically on two companies. Open AAI and Anthropic. Both of them are cash incinerating machines. All right. The only way this game kept working so far is they keep raising money at ever high price, ever higher prices. Each successive funding round has occurred, you know, 50 70% higher price. If however the so there's no cash flow. If on the if on the other hand though investors start to see that you know what maybe we're not going to make 50 or 75% on this round of financing. So you know what we don't want to put the money in. Just in the same way you don't want didn't want to buy the house cuz it wasn't going to go up enough to to to enable the transaction to make sense economically. If that happens then the the the the cash flow the external financing to the sector goes down the drain. And that is exactly what is happening right now. OpenAI, since we last were together, David, OpenAI, as you know, has postponed their IPO till 2027, next year. Who knows if they'll ever come public? And Anthropic, it's been pushed back. We're now told it's going to happen in um in November. And so, it's clear that the rate of of price appreciation for AI related assets is slowing. And that means less money into the sector, which means the growth rate slows down, which means lower valuations. So the apologists, you know, there was a whole controversy the other week. I think OpenAI, there's some confusion about OpenAI, the way they stated the numbers was gross or not or whatever. And the apologist say, well, it doesn't really matter. It was just a reclassification. That actually misses the point. Um, you know, yeah, that that was true. However, you know, the reaction to that to that even that nothing burger news, the reaction to the to that was extremely telling. The whole AI sector got totally destroyed. The market's not that dumb. The market sees that growth is slowing. And when growth slows, valuations compress. So, when the apologist say, well, you know, it's still growing at 45% blah blah blah blah blah. Okay, that's fine. There's only one problem. If you want a $2 trillion valuation, which is what I think Anthropic was shooting for, now they're talking about a trillion five. I don't think they're going to get it. you know 45% revenue growth is not going to do it for you. You know you need 150%. So I think so the whole financing architecture of this thing you asked the question I'm sorry a long way I didn't answer the whole financing ar the wheels are coming off the financing architecture of this whole edifice and therefore I think it's going to collapse. Okay. So, yeah, going back to my point, 8.9% ROIC is return on invested capital is what HSBC is estimating that the company will have for the next year and a half to to three years. But, uh, some of their bonds already reached 15%. Which illustrates a point. Their cost of capital is a lot higher than the actual return on invested capital. So, that's one problem. The other problem is why is the bond market signaling that they're in trouble when the equity uh market is is kind of reflecting that, not so much. I mean the entire AI sector is is more or less still in tech from a from an equities valuation standpoint. I mean Cororeweave is down um from May uh yeah from it's at down 56%. Um but uh when you say this is an entire AI sector problem. I'm not seeing the entire AI sector selling off even though bond yields and financing costs are are really rising. So what what is a bond market getting that the equities market is not yet getting? So, so David, as you know, they often say the uh the bond market's smarter than the than than the equity market. The equity markets are dreamers. The bond market just wants to the bond guys just want the credit guys just want to make sure they get paid back. All right. >> Yeah. >> Usually, you're better off following the bond guys, not the equity guys. All right. So, if the bonds are not money good and the CDS are telling you that, okay, if the bonds are not money good, then the equity is worthless. We're not quite there yet, but we're we're we're on the road, well on the way. And so, yes, I picked on the NEO class because that's the tip of the spear. It's not just Coreweave, it's iron, it's NBIS, it's CIFR, it's a whole bunch of these things. All right. The other thing I'd point out to you as well, just as a as a measure of public sentiment, when you go on X, the public is so long, this stuff, so fired up, they get so angered if I throw a log on the fire and they they respond with that hominemum attacks, no substance at all. They don't know what they own. They again, liars figure. Figures don't lie. The numbers tell all. And so the bond market's telling you, the bond market's telling you that the equity is close to being worthless. And I believe it's only question of time before the equity will be worthless. I expect Cory to go bankrupt. Uh NBIS is the best of the lot, but that is the most leip of the spear. That's the most leveraged part of the whole AI infrastructure. Now, of course, you have, you know, the hyperscalers with the big cash flows and so on and so forth, but they're they're pissing that out the window. Do you realize, David, that at current at current current rates, if they spend the way they're claiming, the hypers scalers, the Microsofts, Amazons of the world, they'll have zero profits. Zero profits in 2030. Why? The depreciation charge, if you look at the way the projected, the capex is going, the depreciation charge from all this stuff is going to exceed their state of profits. So, they are taking their free cash flow and flushing it down the toilet. If let's say cororeweave does go under, what's the um next um link of the chain so to speak that's going to fall? >> Well, I expect other neoclouds will go down in sympathy. I expect and it's already happening. The semiconductor stocks are taking on water big time. I mean, think about you, David, you read you read more than I do, okay? You saw the story overnight or yesterday. Uh it was going around a business inside somebody had Amazon has like $200 billion worth of chips sitting somewhere in a warehouse collecting dust. It's like you know all these chips are being produced but they're not being put into service for various reasons. They can't they can't build they can't get the the permitting. They can't do this. They can't do that. So there's a lot of double and triple ordering going on. >> This is like fake demand. It's demand brought forward. All right. And I I So what's the consequence of all this? The semiconductor stocks are already falling apart. There's going to be more where that came from. I think I think the whole thing is going to burn down. I I really do. Uh you know, it's funny. People say, well, and we were on last time, and I think I quoted Julian Garren, who you have to have on your show. You know, he had originally calculated the the extent of malinvestment is uh uh 17 times.com. Well, I was with Julian recently. Now it says 24 times. It's getting worse and worse and worse as we go along. Uh, and by the way, you know, it's not just it's not just, you know, corweave. Look at Oracle. Look at freaking ORC. >> This is becoming I'm going to I'm going to come back to Oc. Oracle is reaching junk bond status and that's huge. But just to go back to my point about what is next. I'm concerned about chip stocks and actually people online are concerned. This is this is a whole Reddit thread about this. Coreweave buys roughly 8%. Now, the exact number is not known. Nvidia doesn't disclose its customers. They don't by name. uh buys 8% of Nvidia chips and Nvidia backs cororeweave. Now Cororeweave is having trouble. How about Nvidia's revenues? You know this commenter says I think it's fair to be skeptical about new skeptical about NeoClouds but do you have any idea how many people in the world all over are clamoring over Nvidia chips like cororeweave could go under and I don't think it means a ton for Nvidia. It does mean a ton for chips if these companies do go under because AI, this is the part of the circle, right? AI cloud computing companies need chips. If they go under, chips demand falls. Anyway, what's your take agree? >> No, I I couldn't agree with you more. Did think about this for a second. Okay, imagine you're producing widgets. We have the David Widget Company and I'm your customer. Yeah. >> I can't afford to buy your widgets. You lend me the money, then I buy the widgets from you. You're lending me the money to buy your widgets. And by the way, it's not even clear once I buy the widgets, they have any economic useful purpose. But yet, the way gap accounting works, [snorts] there's nothing illegal here, but the way gap accounting works, yeah, it shows up as revenues and profits. Meanwhile, I bought these widgets from you and I I can't do anything with them. So, like, what's that worth? I mean, the problem with gap accounting, David, you know this, it has its limitations. is designed to try to portray as best as possible what's really going on, but it can't. And I'm telling you that that that that that that the powers that be with all these related party transactions and these [snorts] viees and all this crazy financial shenanigans, okay, is designed to obfuscate the truth. No one's going to go to jail because they're doing it in a way which avoids that. But it's designed to obfiscate the economic reality of what's going on. All right. This in my opinion in my opinion is far worse than dot com. History doesn't impede it rhymes. The reason it's far worse than do a couple things. One the sheer size of it relative to the economy is much greater. And number two, the bogus financing schemes that are being employed. kind of takes the worst of all right namely a rapidly evolving technology with low barriers to entry so no one gets any margins with scam financing from the GFC all the mortgage back securities nonsense so you kind of take scam financing with a short cycle technology product that has no moat and it's like like they would say what could possibly go wrong and by the way last point I'll make on this Peter Barrison I think I may have mentioned this last time he pointed out you know in 1999 9. If you were bullish on the internet, I didn't say internet stocks on the internet, you would have been right because he points out internet traffic for the next 25 years went up by 43% a year. 43% a year for 25 years increased by 500,000%. Sounds pretty good, right? Well, if you were a shareholder of Nortell or Elucent or Global Crossing, you got wiped out. So, you know, the technology is one thing. What's the mo? What's the barrier to entry? In this particular case, the new models coming out every week. It's cheaper than the other ones. The Chinese are doing it for 95% less. And oh, there's one other really important aspect here that no, very few people are talking about, which I must mention. So, some people say, I mean, look, AI is is a thing. I'm not arguing it's not a thing. It's a question is how big is the market? Is it going to be worth trillions or is this going to be worth a few hundred billion? And so, you know, that um right now they're they're charging like a teaser rate. They, you know, I have Chat GPT. I pay 20 bucks a month. If you look at the cost of the energy and the compute and the whole thing, they should be charging 200 bucks a month. It's kind of like the way Uber and Door Dash and all these guys started off with incentive pricing initially funded by the equity market. So, once they had to raise prices to more economic level, it changes the the size of the market. At any rate, um the the the so you so you have the individuals, the David Lind and George Nobles of the world who some of those guys will pay 20 bucks a month. Not a lot of them are going to pay 200 bucks a month. But then more importantly, this is the key point. This is a very key point which is not really talked about. This is differentiated point of view. This is the kind of content people come to the David Lynch show for. And that is when you talk about, you know, well, don't worry, you know, Boeing and Caterpillar and Fizer and all these guys, they're gonna spend gazillions of dollars on these LLMs. It doesn't matter that Dave Lynn is too cheap to to pay 20 bucks a month or George $200 a month. Wrong. I have a very good friend who is an industrials analyst. He's asked a whole bunch of these companies, what are you doing with it with AI and LLMs? And almost universally, universally, they all say none of them will buy the product. Why? There are security and compliance reasons. If you use an LLM, you put your data on there, all of a sudden scam Altman has your data. You cannot afford that from a compliance and security standpoint. So, this idea that don't worry, the corporates are really where the market, first of all, it's a the corporates are a small part of the market. But that being said, the vast majority of them are not going to do it because of compliance and security reasons. So you have a product where you you have record deflation, prices are collapsing, debt skyrocketing, new innovation comes out every week. The Chinese can do it for 95% off. The product, you know, to be priced properly should be 200 bucks for an individual. The addressable market there is much smaller. And the corporates aren't going to do it because of security reasons. David, what could possibly go wrong? The other side effect is what could happen to the banks and according to JP Morgan if hypothetically corweave defaults on its bonds. Um not much apparently. JP Morgan team said banks have helped to structure what are called delayed draw down or draw yeah draw down term loans or DDTL core can draw from these so credit lines either based on timeline or a project milestone such as the completed construction of a data center. Um that's their analysis. My question is what happens to um data center funding overall if there is higher interest rates slowing down funding because the cost of capital is higher do we get a slowdown in the construction uh of of data centers in other words a capex and the data center buildout does that slow down next >> 100% 100% as you well know you seen the numbers as much as I have the proportion of economic growth is accounted for by data centers and AI. By the way, not to mention, sidebar, we have an election coming up in a couple weeks and you know, the data center thing has become front and center for a lot of folks. There's widespread uh opposition to these things and so yeah, no, construction will grind to a halt. All right. And to your point about the banks, no, it is not a banking uh system problem per se. Um this is not really been funded by the banks. uh you've seen private equity, private credit, the blue owls of the world. A lot of the money's come from there. So it's not the problem doesn't re doesn't reside uh squarely on the loan books of the money center banks, but it but it lives in the portfolios of endowments and uh pensions and um in the S&P 500. Uh, you know, one thing which is really horrible, um, depending on how you define it, you know, the S&P is 40% tech, but then if you look at, I've seen estimates as much as 50 or 60% of the market trades with tech. So, the markets really become one giant trade. And, you know, we can BS each other about the market. It's a market of stocks. I always like to say that. That's Peter Lynch would always roll. However, when you have such a concentration in one area, tech, AI, that's very unhealthy. And but the flip side of that is it's a golden era for stock picking. There's a lot to do. We love energy stocks. We love gold stocks. I mean, there's there's a lot going on. Now, having said all that, you know, if you look at the soundbite indices, it gives you kind of a erroneous perception. The market's not as strong as the index would have you believe. All right. The average stock, as you know, David, is down whatever it is, 15% from its highs. Some ungodly percentage of stocks are down 20%, 30%, whatever. The market's being held up by a few big names. These things roll and the indices are going to roll. So, I'm not so concerned about the index. I think trying to predict the index is a fool's errand, but as you kindly uh presented our results so far this year, it's it's a market of stocks. There's a lot to do on the long side and a lot to do on the short side. >> Okay. Coming just coming back to um financing for for uh uh for AI stocks and then I want to talk about your long side now. Um Nvidia back firm scraps $5 billion Australian IPO. Um you know it's interesting I was just looking this up earlier according to prediction markets there's still a 60 cow on cowi there's still an above 60% chance that anthropic would IPO before the end of the year or announce an IPO before the end of the year. Uh not high but not low either. But I'm wondering, you know, Fer Fermis, uh a data center operator backed by Nvidia in Australia just shoved it $5 billion IPO on Friday. Again, could be firm specific, but does this signal anything to you, >> David? There's smoke coming underneath the door everywhere. You know, the open IPO got kicked back to 2027. Anthropic, they keep dragging their feet. This thing gets cancelled. There's another cancellation. >> Is that because of higher interest rates? or something else higher interest but also dimming perceptions of what's going on with the AI trade right and so is uh the termites my as Stan Weinstein the great technician would say the termites are eating out the eating the unstructure of this whole edifice it's at if it was just one thing it'd be it would be that would be that' be something everywhere you turn though it's happening it's happening so like they always say you know get people a date, giving people a price, never given the two together. I'm still a believer in that. But whatever the conversation would have had about this, and we did have one six months ago and three months ago, the hour is drawing is the hour is late. The the time is coming and uh you know, whether the whole thing implodes tomorrow, I mean, Cory's already imploding. All right. It's only a question of time before this before this the whole structure is is is it legs kicked out from under it. So whether it's fourth quarter this year, next year, you can pay me now, you can pay me later, you're going to pay me. >> Yeah. And so you're maintaining your shorts basically. You're not you're not looking at these draw downs 50% of core for example. Um the text the semiconductors are falling, chip stocks are falling. You're not looking at this as a buying opportunity. That's the bottom As a m as a matter of fact, you know, a couple weeks ago, we our new in fairness to the Noble Update subscribers, any positions that are less than 2 months old, we don't put the names in cuz we've, you know, our substack has doubled in the last couple of months because we we've been hot as hell with our picks. But, uh, truth be told, a couple weeks ago, two weeks ago, the week before the you know what hit the fan, we actually doubled down on the core. I think I think we added to it at 81. We we you know SpaceX went down then it went back up. We double down on SpaceX. Now is a great time to be adding to I mean not today necessarily but um if you just result on price and you say well the price is down you know I should be covering it. No no no no no Peter Lynch always always would say is the story getting better or is the story getting worse? Let's take a positive example. Okay, let's say we have Lynn Pharmaceutical and we buy the stock at 10 and we think it's going to go to 20 and they come out with some new drug. Bada bing, bada bing, bada bing and the next thing stocks at 16. Should be like George. You bought it at 10, it's now 16. Your price target was 20. So, it can't be as attractive now as it was before. Well, not necessarily. The promoter, the CEO of Lynn Pharmaceutical, David Lynn, he's a very charismatic guy. He's very promotional and he just made an announcement that the addressable market for their product is five times what it was before. They found five new uh uh applications. So now we got to redo the numbers. Before we thought it could go to 20. Now we say it's going to go to 100 because there's a lot more that can happen. So just because the price is up doesn't mean you you sell less. Just because the price of Coriv is down means it's less of a good short. As a matter of fact, when Cory was 107, you know, this the bonds of Cororee were not yielding 15%. They're yielding much lower. So, I would actually say that the short argument in Cororoeave is improving. It's even a better story now. And so, again, I'm not saying go short it today. Another thing, I don't get caught up in daily price moves. It's one of the reasons I don't have a Discord service. I don't care about day-to-day stuff. I'm investing. I'm looking at fundamentals. I'm looking at valuation. I'm not chasing narratives. I'm not chasing momentum. I'm not resulting on price. Know what you own. I believe submit for your consideration. The folks in Coror and all these neo clouds, they don't know what they own. They're there because of the momentum and the narrative. >> You uh mentioned to me offline something about life insurance being another hot topic. Can you tell us more? This is something I have not been following. >> Is this a rage story? Yeah, go ahead. Uh well now it's ra it's more it's more um life insurance companies, annuity companies who you know they they have longtailed liabilities, people paying their premiums and takes decades to pay out. You know maybe you you buy a a life insurance policy on your wife or husband and you're not going to know for 20, 30, 40 years when you need it. So in the meantime the companies can do a lot with the money. Back in the day, life insurance companies were all mutual companies. They were owned by the policy holders. So, there was no outside shareholder. Well, what happened? Um, once you had demutualization of life insurance companies, now all of a sudden, you know, the shareholders want to make profit. They want to get upstream some dividends. And so, you've had in particular a lot of private equity uh companies have taken control of life insurance companies and they've been using the kitty. they've been using the uh the pot of money uh to do all sorts of creative things with it. You know, invest in private equity, invest in private credit, invest in um related party transactions. Mark Walter, who gained a lot of notoriety uh in the last couple of months because of his sale of the uh LA Lakers to a group led by Jared Kushner. Um that was bought with uh private bought with insurance money. the Dodgers, which he bought, I believe, in 2014, same thing. So, what's actually been happening is they have longtail liabilities. There are rules and regulations what these companies can and and and can't do with the money. However, they've been rather uh loose. Uh I'll take it one step further. They they have violated these restrictions. They've been excessively investing in illquid securities in related party transactions doing things that they shouldn't be doing with the money. And the crisis here that's going to is developing and this is not page one news. It's like Don Cox's former uh well-known strategist for used to say you want to invest on the base of what's on page 16 of the newspaper not page one. That's on page one. It's already in the price. Like Cororo was not page one six months ago when we talked about AI. Now it is. The insurance companies are on page 16. It's moving to page one. And you're going to see uh a lot of these companies um getting into trouble bankruptcies. And the real problem here is and this is really sad you know post GFC there was concerned about the u the banking se sector. So you know capital requirements were intensified for the banking sector. Um, and so that's their capital is much stronger than it used to be. Insurance though is not subject to federal regulation. It's subject to state regulation. So you have 51 regulators supervising insurance. And these guys are asleep at the switch. They're either on the take or they're they don't care or they're unqualified. But the amount of malfeasants that's occurred, the overleveraging of these companies, Athen Credential Equitable MetLife we're talking household names here. We're not talking David Lyn insurance, okay? These are household names. I could show you an org chart of Credential, which makes Nvidia's org chart look like child's play. the amount of of of of chicanainery and and and and and misleading that's gone on with these related party transactions. And I urge everyone to run not walk to listen to an interview, watch an interview, and you have to have him on your show. Tom Gober, he was on Steve Eisman's show. I've had him on my my show recently. I did a series of four interviews with him. Uh he's a lifelong insurance investigator. It will make your blood boil when you hear what's been going on. And I think the the you know what's about to hit the fan with the insurance industry and um and by the way this is you know insurance is boring. However, it's about to come unfortunately very exciting. And the reason you should care about this is if you have your insurance policy with a bad bad actor like Credential or Equitable, you should get your money out of there as soon as possible and go with a better insurance company. There are things you can do to protect yourself. And finally, last point. I won't go too too deep in the weeds on this. The really sad thing is if you're with an insurance company that gets out over at skis, you go to the back of the bus. You go to the back of the line. If there's a problem, the creditors go to the front of the line. You're screwed. So, I think the insurance industry, it's been pillaged by private equity. I think that the you know what's about to hit the fan when it comes to the life insurance industry. And again, Tom Gober, G O B E R. Tom Gober is your man. What what happens to lenders once these companies reach junk bond status? So for example, Oracle, right? This is you mentioned Oracle earlier. This is what's going on. The extent of the splurge came into light in June when Oracle's results for the first fiscal year for the fiscal year ending in May 2026 showed its free cash flows were negative. The bulk of its revenue was spent on capital expenditure and it had it signed roughly $260 billion of data center leases. And the title of this is Oracle goes for high stakes ratings, gamble, and AI strategy. It's on the cusp of junk grade credit rating. I mean, we're talking about these companies potentially defaulting and potentially going under like Corewave, but what's happening to the lenders? Well, it's again to a large extent. I mean, in the case of Oracle, it's a little bit different that there the lenders are uh stuck. There have been stories about how some of the bulge bracket firms are stuck with when they underwrote some of these issues earlier this year. They're stuck with a lot of the paper and they're trying to get out of it. Okay. Um but again, a lot of this financing occurred in the form of private equity, private credit, and the risk therefore lies in the portfolios of many endowments and pension funds. It's less about the banking system. But you are correct. who's ever left holding the bag on the Oracle debt. Um, they got a problem. But, you know, for most of the folks watching this show, they're probably less concerned about the debt and they should be more concerned about Oracle. And so, when you look at Oracle, which is at 140 or the stock price is right now, okay? If if what you're saying is remotely true about what's what's going to happen to their Oracle debt, again, you can mark Oracle equity zero. I'm not predicting that right here right now. I'm just saying >> just because the price went down >> does not mean it's attractive. You have to measure the gap between changes in price and changes in fundamentals. >> I want to [snorts] close off by playing for you Kevin Worsher's statement on the outlook for the global economy, growth, and inflation. I think this ties everything we've talked about together quite nicely from a macro perspective. Take a listen please. >> What said that about so many the other thing which which is a commonality is a common challenge is I mentioned at the outset is inflation is not unique to the United States. So we're looking at it together. Each of us obviously make the choices that we feel we have to make given our own domestic remitt from our own congress from parliaments around the world. But there are spillovers and spillbacks and I heard I would say resolve from my colleagues around the world to deliver price stability. I've certainly delivered that resolve. >> We have different tools, different sequences, but I would say if I look back over the last few months, while we each did the right thing by our own judgment, by our own remit, it was a synchronous tightening in monetary policy in most places around the world. M >> and that means there's no free riders. We're seeing common things and we're taking action. Um and I view that as as a positive development. >> What are you trying to say here? That monetary policy around the world is only going to tighten. Cost of capital is going to get more expensive everywhere. That's my takeaway. What's yours? >> I concur completely. And I would say more importantly, people like to feel that we're in control, that the Fed's in control. You recall famously a couple years ago, uh, when Vladimir Zalinsky visited the White House and Trump was there with JD Vance and they were schooling Zalinski when Trump said to Zalinski, "You don't hold all the cards. We hold all the cards." So I say to you visav Mr. Worsh or Mr. Bessant by the way sidebar uh I'm very proud of in mid August when Bessant came out and said oh you know we're doubling the size of the bond buybacks from 2 billion to 4 billion or whatever it was 4 billion to 8 billion and he brought a water gun to a to a fight. Uh the tenure was around 470. You know, everyone's like, "Oh, this is great. This is great." D yours truly raised his hand in in wise guy fashion said, "No, what Besson really meant was you should short more bonds." Because I my reaction to that was exactly the opposite of everybody else's. Like he's kidding himself. How misguided can he be? Anyway, the point I want to make is the Fed is not in control. Mr. Market is in control. David, you're old enough to remember when, as they would say on X, at the end of last year. Remember, David? Oh, how many rate cuts are we going to have? The great disinflation. Two rate cuts, three rate cuts, four rate cuts. It was a bidding war to see who would have the most rate cuts in the bingo card for 2027 six as the year began. Well, what happened to those guys? Then a few months later, it's like, well, you know, the Fed's going to tighten. I got two cuts, three cut, two hikes, three hikes, four hikes. Okay. People don't know and the Fed is not in control. The Fed just follows. All right? And so, you know, he's in a tough position. Someone asked me when I was so outspokenly critical about Scott Bessant, you know, what advice would I give him? It was pretty simple. Resign. Not to be a total jerk, but he wanted this job badly. And you know, when they talk about Scott Besson being perhaps the most consequential Treasury Secretary ever in decades, yeah, I concur. Except he's going to be consequential in a way you don't want. He is a disaster. And whether he believes what he's saying or he's he doesn't, he's a liar. He's just carrying Trump's water. I don't know. I don't really care. But as I also outspokenly said at the time back in August, he is the Norman Lamont of 2026. Norman Lamont, for those of you who don't recall, he was a chancellor of the ex-checker in the UK in 1992 when George Soros and Stan Ducker Miller famously attacked the Bank of England and made a billion dollars. The reason they were able to do that is because the UK came out with a silly economic forecast with a bad budget. Sterling was grossly overvalued and the market attacked. And when when markets attack wrong prices or fixed prices, markets have a way of winning. And so any attempt by the US government to keep the bond market up, we know they're trying to do it. Keep the stock market up, keep the price of oil down, which by the way, last thing I'll say to you, governments always are involved in trying to manipulate markets in my opinion. But I think right here, right now, ahead of the election, the incentives for manipulation are particularly high. I don't think it would shock anyone to think that if they only knew how much the US government is trying to manipulate the oil price down, keep it down ahead of the election and and keep the stock market up and therefore and therefore regard we haven't even talked about the elections. Even if the Democrats I mean Democrats may sweep, who the hell knows, okay? All I'm saying is whether they sweep or they don't sweep, the incentive to manipulate declines post election and therefore I expect volatility to pick up after the election even if the Democrats don't win. If the Democrats win, it's a whole another story. Last thing, I keep saying last thing I'm sure you've touched on in your recent shows. You look at what's going on in France in the election they have there. That's another that's another hot point. So >> yeah, >> it's a lot of stuff going on. David, >> the chaos in France, let's save that for another time. Let's see how that progresses. Uh something tells me that's not the end of the riots. Let me finish off on the long pos long positions that you've had. Now my my going back to earlier question about the interest rates rising. My first thought if cost of capital is rising globally, not just in America, you probably want to stay away from companies with a lot of debt on the balance sheet. >> Bingo. Bingo. Yep. You want to stay away from debt. You want to stay away from high PE things. You want to stay you want to stay with companies short duration other words companies have a lot of cash flow now you want to stay with companies that benefit from inflation. So that list begins with and you see a heavy representation of energy stocks. Uh for all you Canadians out there was is the first name on the list. It's up like 80 90% so we picked it in December. You have Schlumbumberge Valaris. There a bunch of other ones on here as well. Um, Harbor Energy, a UK energy company. Um, and there's another one. There's a Southeast Asian companies on there as well. Um, and aside from energy, we're also in the precious metals. Uh, you know, I like the gold mining stocks. I think SSRM is particularly attractive and only seven or eight times earnings. Um, we have MAKO, which is a silver play. Um, AUGO, another mining play. Then we have a couple shipping stocks. Uh we have um star uh star bulkers um SBLK and then if you look below you'll see there a whole bunch of names it it says new idea uh they're no position we don't mention what they are again in fairness to the paying subscribers of the noble update but um there's another shipping stock or two in there as well as a couple more energy companies so the list has done incredibly well I guarantee you our performance will not be this good going forward the long short spread is 67% on a raw basis is annualized. I think it's 120% or some crazy number like that. >> It's not going to be as good as this. Why not? >> I I I guarantee it will not be. Okay. It can't be. We got lucky. All right. But what I really the point I want to leave folks to consider, it's not don't just result on performance. It's process. All right. I mean, David, you're a football, you're a sports fan, right? You could have team A, say it's basketball, destroying team B only because they got lucky. They're shooting up crazy three-pointers. One's going in after. You're not really paying attention to how they're winning, but they're winning. Someone says, "Oh, Lynn's pretty good." Well, they don't realize Lynn played the game of his life. His process sucked. He's shooting up three-pointers, right? So, don't just look at the scoreboard. What's the process? All right. We have a process. We pay attention to fundamentals. We pay attention to valuation. We're not chasing stories and and momentum. All right. So, and we've been battle tested through cycles. I've been doing this since 1981. I've seen Japanese crash, 87 crash,.com crash, the GFC co I've been through cycles. Look at what's happening already right now to a lot of the more speculative operators in the market. All the furus on X and they're chasing the NEOClouds, all other speculative garbage. I mean, we've put up these results in a market where at least judged by the indices hasn't really gone down very much. Imagine what's going to happen if the market starts to take on water. Imagine what's going to happen to all the speculative portfolios that are out there. And I feel badly for these guys. The problem is we've been in such a long upcycle. You know, post GFC, it's ease, ease, ease. All right. And this is coming to an end. So, we're going to separate the men from the boys here and and uh it's kind of market I thrive on and I'm I'm really excited and thank you for having me on, David. >> Yeah. No, of course. Appreciate you have appreciate you coming back on. So, good talk, George. Where do we follow you? X Gobble 79 my Substack which uh again I want to big big shout out and thank you to everyone who subscribed it's more than doubled in the last two or three months. Last thing I'll say and Dave maybe you can include it in the notes. We're having another conference next week. This one's all just for technicians chartists. We're having 20 of the leading chartists uh appear. Uh each one's coming with three ideas, 60 ideas. actionable ideas. Um 10 to 4 the 27th and 28th. Replays will be available within 24 hours, so it should be fantastic. Uh it's $199. It's it's it's a real bargain. >> Okay, good. We'll put the links down below. Make sure to check it out. George, welcome back. Good to see you. We'll see you next time. >> Thanks, David. >> Thank you for watching. Please do like, subscribe.