Hello Again,
Netflix had a 10-for-1 stock split that took effect after the market closed on Friday, November 14, 2025, and shares began trading on a split-adjusted basis on Monday, November 17, 2025. Our scorecard and newsletter got adjusted accordingly.
We had a minor correction in November but the fear factor went through the roof. This is very healthy. Look at our score card- our portfolio went down by 8.34% in November. Emotions run the market. The fear factor rose more than the actual decline in the market. CBOE Volatility Index (aka Fear Guage) was at 15.79 on 10/27/25 but on 11/20/25,it was at 26.42! I always keep a few put options on the S&P 500 index as a hedge against a major market crash. My current puts have a strike price of 200-in other words to get them assigned, the S&P 500 index has to drop from 6800 to 2000. Like paying for insurance premiums, I expect all these to expire worthless (as a tax deduction). I thought for me to have a gain in my puts the S&P 500 index will have to drop at least 30% but when the S&P dropped 3%, my puts had a paper gain of 15%!. There is a lot of fear in the market and that is a good thing. People are selling the tech giants and buying things like healthcare (sure losers).
Just before the 2024 November election, Japan “Yen Carry” trade came apart. Prior to that hedge funds borrowed from Japan at 0% and invested in tech- that was the story we were told. However, what I discovered then was that it hit bitcoins hard. I have gone in and out of Bitcoins thru the ETF, “ iShares Bitcoin Trust ETF (IBIT)”.Last year when IBIT dropped sharply due to the “Yen Carry Trade” I bought some of it. Then Trump won the election and Bitcoins/IBIT rose sharpy. On 11/21/25, CNBC reported on the “Japans Yield Shock”- bond yields rising in Japan. Once again, bitcoins are dropping. I hope it would drop 60% to 80%-which is normal for Bitcoins. This would create a great trading opportunity! In order to “reap”, you have to “sow” first. Happy hunting!
Are we in an AI bubble? Yes! How long will the bubble last until the whole market crashes? All this time it was stated that all the biggest tech companies (unlike the dot com stocks of 1999) have solid balance sheets; and they are making these billions of dollars in purchases with cash flow so there was nothing to be concerned. Now we are getting to know another story. In the past few month, 5 of the biggest tech companies have been borrowing over $100 billion in the bond market. Also, there are rumors of accounting fraud (very dangerous!). Michael Burry (“big short” fame from 2008) is back. Burry’s claim is audacious: these AI darlings are dangerously overvalued. The heart of his argument boils down to a fundamental accounting disagreement. He alleges that other companies are overstating the useful life of AI chips by stretching depreciation schedules beyond the typical two to three years. Burry argues this practice artificially inflates valuations and masks looming capital risks. Out of the biggest AI tech companies who is at most risk? Oracle- the only one in the trillion dollar “club” who has negative cash flow-just turned negative! All experts have doubts that Oracle will be able to get all that it has been promised. Per CNBC on 11/25/25, over the past 3 months, “Credit Default Swaps” for Oracle went up from $25 to $125 -400% gain in about 120 days!!! What is a “credit default swap”? A credit default swap (CDS) is a financial derivative that acts like an insurance policy against the default of a bond or loan. The buyer of a CDS makes periodic payments to the seller, and in return, the seller agrees to pay the buyer a lump sum if the underlying debt instrument, like a bond, goes into default. While often used to hedge risk, CDSs can also be used for speculation, as a buyer doesn't need to actually own the underlying asset to purchase a CDS. So…. Oracle bond buyers are afraid that Oracle will not be able to pay back their bonds! The bond market is much bigger than the stock market and bond “gurus’ are much more prudent that stock buyers. If Oracle declares bankruptcy, their bond holders get paid before the people who hold Oracle stocks. Right now (can change from day to day) Larry Ellison, Executive Chairman of Oracle is the 3rd richest man in the world with $256 Billion due to his Oracle stocks. Most experts believe that Oracle is out of control. Debt level of the 3 biggest tech companies for the past 3 months is bigger than the debt level they carried for the past 3 years (CNBC 11/12/25). On 11/18/25 the CEO of Google stated that if the AI bubble burst and crash, no company, including google will NOT be safe.
For the past 12 months, Wall Street experts hated Apple stating that they are not doing enough to make use of the “AI revolution” and the Apple stock suffered. Now that story has flipped. For one thing, whoever wins the AI race will have to use Apple (and vice versa) to reach billions of people. Apple also has a reputation of piggybacking on others. Apple did not “waste” billions and get in to debt. Last Qtr Apple had $54Billion in cash. For years it was $200Billion. Now Wall Street experts are buying Apple hand over fist. In my opinion, Apple spending over $100Billion per year to buy back their own stock is a waste of money-financial engineering.
Ever since Open AI came up with Chat Gpt, all Wall Street pundits have been saying that AI will destroy the “cash cow” at Alphabet aka Google- Google search was 56% of revenue at Alphabet in 2024. I did not buy that argument. Obviously, it will have an impact on Alphabet aka Google but I think it is going to be minor. Alphabet has other revenue streams and more yet to come. People say that Netflix is the biggest media company but Youtube is bigger. Meta who is in the process of spending hundreds of billions on AI, prompts me to ask anything but when I ask the same question from Meta AI and Google AI (free unlike chat gpt etc), I get the best answer from Google. Salesforce is one of the companies that will introduce AI to many global companies. On 11/24/25, CEO of Salesforce stated that he has been using Chat GPT for years and recently for the first time he used the new Gemini of Alphabet/Google and he said he was so amazed that he will never go back to Chat GPT again (by Open AI)!! The CFO of Open AI unnerved Wall Street by asking for government assistance. Next year Open AI is supposed to go public with a market cap over a trillion dollars! Scary! OpenAI has recently sought U.S. government assistance for its AI infrastructure expansion, primarily through tax credit expansions and expedited permits, though top executives have publicly denied asking for a "bailout" or loan guarantees. (Per Google AI).
So the fun goes on!
Have a great month! Happy Holidays!
Fernando