{"id":10043,"date":"2026-08-29T15:45:15","date_gmt":"2026-08-29T15:45:15","guid":{"rendered":"https:\/\/basedcapitalwealth.com\/?post_type=newsletter&p=10043"},"modified":"2026-08-29T16:30:23","modified_gmt":"2026-08-29T16:30:23","slug":"summer-is-nearly-over-back-to-work","status":"publish","type":"newsletter","link":"https:\/\/basedcapitalwealth.com\/index.php\/newsletter\/summer-is-nearly-over-back-to-work\/","title":{"rendered":"Summer is Nearly Over — Back to Work"},"content":{"rendered":"

In many ways the AI trade has turned the market into a carnival with barkers around every corner professing things that are both untrue and designed to self aggrandize. These are supposed to be the best of times, after all, and yet SJM is outperforming AVGO by 30% this year. The greatest company of all time NVDA is underperforming KO by 12% in 2026. Yet, for some reason, we are fascinated by the spectacle of it all. <\/p>

“Why are our finest companies betting it all on AI when their current businesses are cash generating machines?” is often posited. They will tell you the answers but no one believes them. It’s the muscle memory from 2000 that has investors in a chokehold, clamoring for JNJ over GOOGL — afraid of bubbles that only exist in their minds.<\/p>

Short sellers are chasing phantoms preying on the fears of folks who got poleaxed in 2000 and 2008 with fanciful stories of Hyperscaler CDS — conjuring up memories of Countrywide Financial and Wachovia. In many ways, all the matters is investor confidence, which is the very basis of how a stock receives its valuation. We can talk to our faces turn blue about how undervalued some stocks is but if investors don’t recognize and buy it — it will remain undervalued. <\/p>

David Einhorn just gave a speech at SOHN regarding value investing. He chalked up the death of it due to index ETFs and said most of the value hedge funds closed shop, removing a key pillar of capital who’d normally support value stocks. He elaborated about how Greenlight was forced to adapt and look for higher valued stocks over deep value because the former had been orphaned. <\/p>

The investing landscape has certainly changed quite a bit over the years and it continues to change today. For example, software cannot go up on the same day semis are up and the RSP is usually up when the QQQ is down. The hyperscsalers can only really rally when AI stocks are down — because the perception of the AI trade dying is viewed as a positive for GOOGL and AMZN shareholders, in spite of the fact those companies are making their largest investments ever into the very product their shareholders despise.<\/p>

On a day to day basis rotations are occurring rapidly. Banks and biotechs are now the favored sectors over AI because the trade has become too cumbersome — too many moving parts and too many asymmetrical moves. I recall the plunge CRDO took earlier this year after an analyst reported when visiting an Amazon datacenter that the wires on what were CRDO products were then purple, suggesting AMZN might have canceled them. The shares took a wayward plunge south, off by more than 50% until it was revealed by Amazon that they changed the CRDO colored wires themselves for inventory reasons and had not canceled CRDO. The stock then went on a 150% ripper. <\/p>

How does an investor make sense of any of this?<\/p>

Here we are rolling into September with a milquetoast tape. Markets are up in the ballpark of 12-15% and that’s a normal annual return for the past 15 years. But we want more. We see the capex and the earnings and clamor for it. When will markets give it to us?<\/p>

Answer: probably when you least expect it. <\/p>

Markets tend to work wonders when you least expect it, for example the recent gorilla run in software.<\/p>

\"\"<\/figure>

Stocklabs flagged this as 12 months oversold on the exact day of its bottom, around $86. Most didn’t buy it, including myself, because of headlines risk, Anthropic, AI concerns etc. Yet after a flurry of better than excepted earnings, people now love SAAS!<\/p>

Same thing with BTC. SL flagged it oversold at $62,000.<\/p>

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No one wanted it. It was going to zero, funny money.<\/p>

And now we have the SMH flagging 12 mo OS. <\/p>

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There isn’t a worst sector in the market now than the semis — barreling headlong into the tumultuous month of September. No one gives a flying fuck about their growth rates, better than expected results, or the fact that AI cannot exist without their products. Judging by the feverish demand for stocks like VZ, CLX and GIS — investors have all but given up on the idea that any of the AI investments will yield ROI to justify the spend — classic FUD. <\/p>

A wider panoramic perspective:<\/p>

Markets are up slightly in August after a rough July. Said July was rough because gains from March through end of June were of the ribald varietal. Now we head into the important months of the year and investors want clarity on inflation, interest rate policy, oil and the Iran war. The macro will affect the micro as long as investors feel it necessary. It won’t matter what GOOGL says about their AI ROI if the 10yr is sitting at 6%. Friday’s fears were because of Warsh’s retarded Jackson Hole speech, talking tough on rates and inflation, got markets spooked into believing a September rate hike was coming. Maybe it is and perhaps it won’t be the end of the world. It’d be nice to get this inflation business out of the way once and for all — wouldn’t it? <\/p>

At any rate, these fuckers will pretend to care about costs and inflation and then go right back to dollar debasement policies, which is why when it’s all said and done stocks are the single best way to protect your assets. Time has proven this to be true over and over again. This time will be no different, depending on your time frame of course. <\/p>

Ciao.<\/p>

<\/p>","protected":false},"excerpt":{"rendered":"

In many ways the AI trade has turned the market into a carnival with barkers around every corner professing things that are both untrue and designed to self aggrandize. These are supposed to be the best of times, after all, and yet SJM is outperforming AVGO by 30% this year. The greatest company of all […]<\/p>\n","protected":false},"author":2,"featured_media":0,"template":"","class_list":["post-10043","newsletter","type-newsletter","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/basedcapitalwealth.com\/index.php\/wp-json\/wp\/v2\/newsletter\/10043","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/basedcapitalwealth.com\/index.php\/wp-json\/wp\/v2\/newsletter"}],"about":[{"href":"https:\/\/basedcapitalwealth.com\/index.php\/wp-json\/wp\/v2\/types\/newsletter"}],"author":[{"embeddable":true,"href":"https:\/\/basedcapitalwealth.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"wp:attachment":[{"href":"https:\/\/basedcapitalwealth.com\/index.php\/wp-json\/wp\/v2\/media?parent=10043"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}