What To Do When The Big Flush Comes

In their latest episode of the VALUE: After Hours Podcast, Brewster, Taylor, and Carlisle discuss What To Do When The Big Flush Comes. Here’s an excerpt from the episode:

Bill: Do you think a flush is coming?

Tobias: Yeah, I do.

Bill: Jake, do you think a flush is coming?

Jake: I think it’s probably more than 50% chance, yes.

Bill: I agree. Are any of us selling– [crosstalk]

Tobias: There’s nothing need to do. No.

Bill: Are any of us selling equities to protect ourselves?

Tobias: No, absolutely not. Because the forward returns are good from here. The forward returns are good.

Bill: Maybe.

Tobias: You’re either a trader you as an investor. Well, they’re better than they were. Let’s all agree on that. [crosstalk]

Bill: No doubt.

Jake: Yeah.

Bill: They could have been pretty shitty.

Tobias: You just can’t trade every twist and turn of the market. There are traders out there, good luck to those guys, I can’t trade every twist and turn. Michael Gayed, [crosstalk] melt up. But I think that if you look at what Michael is saying, he’s saying like, “melt up through to the end of the year, we’re still in a bear market. Thereafter, then everything falls apart.” I don’t know.

Jake: I don’t know, man, Twitter is full of dudes who can’t have every turn.

Bill: Right.

Tobias: That is true.

Bill: Right.

Tobias: That is true. But to be fair, he’s quite vocal and that is a non-mainstream view that we’re going to have a melt up here. So, he could be entirely right, because I don’t know what happens to the market in the short term. I just think that we’re very, very close to being down so much that we’re getting to that point where sometimes you get those little cascades of selling where people get– FTX, I know that’s got nothing to do with anything else that’s going on, but it is one of those things that the bodies just float up in markets like this. There’s all the cross contagion and I think that that’s how you get these big flushes.

Bill: But Rivian still got a $39 billion valuation. Tesla still trades where it trades. As much as I have liked big tech over the years, one of the things that they have done over these past years is take a lot of the fixed cost from companies, and turned it into companies’ variable cost, and they brought the fixed cost onto their, I guess, balance sheet via the cloud. I don’t know. Team margins can go up for a while. I still think if the Fed didn’t try to stop the entire economy, that was a plausible outcome.

Jake: Well, hold on a second.

Bill: I don’t know what we flush to.

Jake: Stop [crosstalk] the economy.

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