AI ChangeWave Investing with Tobin Smith | The Great Reset Ep 1

TobinSmith.io  AI Investing Primer https://truemarketinsiders.io/learning/articles/an-artificial-intelligence-primer

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Join Badlands Media for The Great Rest with host Sean Morgan. Each week Sean will discuss all the important financial news you need to know.
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What happens when the AI mania meets the transformative force of change wave investing? Prepare for an enlightening journey with Tobin Smith, the renowned author of Change Wave Investing and Change Wave Investing 2.0, and former Fox News commentator. We traverse the landscape of the tech stack, spotting winners and losers in every 15-year transformative cycle, and delve into the heart of the current AI explosion. Hear Tobin's take on Mera's Law, the NVIDIA GPU revolution, and the dramatic impact of the Fed's trillion-dollar injection on the digital image market.

Every revolution promises casualties and opportunities. We probe into the world of Artificial General Intelligence (AGI), its potential to overturn businesses, and its power to unlock a staggering global opportunity worth trillions. Discussions meander through the treacherous terrain of the EU's upcoming Artificial Intelligence Act, its implications on companies, and the potential tremors it could cause in the world of work through job automation. 

The future of labor and productivity is poised on the edge of a radical shift. We explore how machine learning, GPUs, and AGI are transforming the workplace and making real-time answers a reality. We also examine the rise of revolutionary software like Wayfinder, altering the very fabric of logistics and reducing the need for manual labor. To wrap up our journey, Tobin offers an insightful look into the mechanics of the stock market and shares pearls of wisdom from his investment newsletter. Strap in for a deep dive into the tumultuous, thrilling wave of AI with Tobin Smith.
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Transcript

Speaker 1: 0:01

Welcome to the great reset. I'm your host, Sean Morgan. I'm also the host of the Sean Morgan Report on AMP News. I'm here with Tobin Smith, formerly of Fox News and the author of Change Wave Investing and Change Wave Investing 2.0. Tobin, I wanted to ask you about AI and AI mania. Is this not just a mania? Is it really part of what you would consider a change wave? Before you answer that, can you tell us what is change wave investing?

Speaker 2: 0:28

Well, thank you, sean. Years ago and I have a twin brother, by the way, and he's always surprised that as poor a student I was in college there was a couple of things I really enjoyed, and one was calculus and the other one was statistics, and that really blew him away. What I discovered was that I was not the only person in the world that put the dots together, if you will. That says that when you have truly transformative change and artificial intelligence at this point is not truly transformative change yet it's getting there but when you get these type of transformations and they could be technological, they also could be political, they could be at the corporate level. I mean, I'll use an example of GE stock. Ge stock didn't do anything for 15 years. They finally decided to transform the business and sell off at pieces Stocks up 150 percent in the last four months. It's not just technological change, but when you get an S-curve of demand like this, then it's a secular shift it's not a cycle.

Speaker 2: 1:34

It's a very long cycle, if you will, and there will be massive winners and massive losers In Silicon Valley. About every 15 years there are these transformations In the tech business. We call it the changing of the tech stack. What is the enabling technology to make the new stuff happen? I just happen to be old enough that I cut my teeth basically on the dot-com mania, which was a mania, god bless, and I love mania, sean, and you should love manias too, because if you know how to trade them, you make a lot of money. In that process of learning how to trade a mania, I ran across this concept called Mera's Law. The guy named Ralph Mera goes way back, but he basically drew this S-curve as well and said that at the outset of a new tech stack in Silicon Valley, everything's going to be overhyped. That's like Gartner Group, the technology group Everything is going to be overhyped and everything is overhyped in AI.

Speaker 1: 2:44

Right, this reminds me of diaperscom and the dot-com bubble, just anything that had dot-com name.

Speaker 2: 2:50

My favorite was zoomcom. You're too young to know what that was, but they helped me with my publishing company, put our content on their site because they were going public through Bear Stearns, a really fancy firm. They were getting valued based on their eyeballs and at my large publishing company, which at that time I was CEO of, we had like 400,000 eyeballs which they were getting valued at like $10 an eyeball. Now that was cray-cray, but it's human nature. We get overhyped and then all of a sudden we come back down. We underhype and we're still in a high place. But what makes artificial intelligence different, sean, is you have to separate. Well, let me look at it. If I got my iPhone here, if I ask Siri, tell me about Sean Hayes. It's going to go back to its machine learning. It's just huge pulls of data. It goes in, pulls your name out, puts some stuff together, but speaks to me. That's pretty cool.

Speaker 2: 3:52

That was sort of I call it productized magic when Siri first came out and it was really worthwhile, apple had productized magic. Apple productized magic when they came out with the iPhone that didn't have freaking keys and had great video and great camera and yada, yada, yada. So in this stack change, what's happening is we have the chat GPT, not BTs. I don't know, for some reason people keep messing that up. All that is, sean, is huge amounts of data, like trillions and trillions and trillions of bytes of data that goes into the so-called data lake.

Speaker 2: 4:32

If you look at the stock Snowflake which we did quite well yesterday in the video news, snowflake holds all that stuff, all that data goes in, and then this application on top of it, the chat GPT, takes all that data and then, just essentially, it's like a giant spreadsheet in the sky. It's not artificial intelligence, it's machine learning at a grand scale. The only reason it happens is because there's this little company called NVIDIA you may have heard of that created a chip, a graphic processor unit, gpu, that now processes 32 trillion bits of data per second. Now, that's a big number, and I have a giant head based on this television screen you have here, and I'm still telling you it's very hard to get my head around that, but that's what's changed?

Speaker 2: 5:26

It's not.

Speaker 1: 5:30

What's interesting about NVIDIA to me is that the metaverse mania and the crypto mania also are reliant upon that same tech stack. This is a very important technology.

Speaker 2: 5:43

Well, there's no question. But even if you just made a great example, zuckerberg, god bless him. I hope he wins the fight. By the way, Zuckerberg changes the name of the company into Metta, puts literally $21 billion into their metaverse, and they have, as I used to say on Saturday Night Live.

Speaker 1: 6:06

Jack.

Speaker 2: 6:06

Squad to show for it. I love the one. Remember when they first came out with the digital images and somebody paid like $2 billion for a picture of the first tweet and now that sells for like $100. That was a beyond a mania. I mean, that was in hysteria.

Speaker 2: 6:28

Right, it was also came at the time where the Fed was putting a trillion dollars of money into the market. There was this excess dough, and excess dough went to the craziest shizzle. I like to use all those words, sean, this is different. This is incredibly important to the world as we get to what is known in the AI business as artificial general intelligence.

Speaker 2: 6:54

Artificial general intelligence is an intelligence that takes your data makes inferences because they're able to use AI technology, and it's able to tell you important things about your business, about your personal business, about your life, about what you're doing. Blah, blah, blah.

Speaker 1: 7:12

True interpretation, true thinking.

Speaker 2: 7:15

True thinking. There's a company that we have on our bio list that I can't really talk about your show here because it's a small cap company, but I can tell you that what's different this time is the chat GPT. You throw all that stuff, gpt, all that stuff, and it will not infer a damn thing. It will just regurgitate and come out in different words. So I use the term. It's a giant spreadsheet in the sky. But what happens with data and I think this is when I talked to CEOs over the last six months they have never heard the concept about unstructured data and structured data. Unstructured data is all that stuff that's sitting in your quicken books, it's sitting in your service now that there's a application, a software application, that is written to read that data, but it only reads it in the way that the software runs. So if you take that quicken data and your service now data and you put it on this giant data lake and then you ask the chat GPT, okay.

Speaker 2: 8:22

Sean we have 350 stores. A friend of mine is a big Chick-fil-A franchisee oh my gosh, what a business. And one day I tell him about the difference between structured and unstructured data and how there's a new software that will allow you to easily structure that data and then ask questions and get thinking responses back. And I said, would that help you at all? He said, well, let me tell you, out of all these stores, we have one store where they sell 25% more of our $5 Chick-fil-A super high chicken sandwiches, which I had to go taste test, sean, just to make sure that they were that good. And this one store sells 25% more than the other 300-ish stores. And I said, well, what if, tommy, what if you would have been told that not only Did that store somewhere, because you could see that easily from your day, but why?

Speaker 2: 9:22

did it sell more and it sold more because the desk clerk number three.

Speaker 2: 9:27

Two one out there forget that number is a tall, very personable young lady and she sells them. When something comes up, she, she comes in, says you don't want the little sandwich man, look at you, your big strap and guy, you go for the biggest. And man, all right, my point is in In the thinking world, in a artificial general intelligence, it would put that together and say hey, number three, two, one is selling more than this. You need to go find out why. And I then I said if you'd found that out six months before, how much more business would you've done it? It's probably a hundred and fifty million dollars.

Speaker 1: 10:03

That's the.

Speaker 2: 10:04

That's the power of artificial general intelligence, and To get there, however, you have to. You have to structure, the data needs to be identified. The second big thing that's happening here is in Europe. On September 15th they're going to pass what they call the EU artificial intelligence Act and in Europe they sort of are responsible to copyrighted content and remember Literally 75 to 80 percent of all the content that's in chat, gpt or in my favorite, barred, googlecom Is scraped from the internet. Mean that data is simply robot goes in, pulls all the data and puts it into data like now my, you know a lot of that's copyrighted content and in Europe, for some reason, they say the respect copyrights more than we do On September 15th. If you have a data lake that has one piece of copyrighted data in it, you're subject to a fine of two million to ten million dollars per violation. Violation.

Speaker 1: 11:07

Wow, millions of violations that could add up.

Speaker 2: 11:13

Here, million there, sean, I mean it adds up. In addition, if you have just multiple transgressions, like basically Facebook did with the, the Voting information in the, I say Facebook paid a 2.8 billion dollar fine to the EU just for that.

Speaker 1: 11:34

Now, the EU is on a nice way to blackmail big tech and get as much money as they want from them.

Speaker 2: 11:41

Well, you know what. It's copyrighted material and it's the EU and they got more people than we do. They have 500 million people. So again there's Until we get to this point where you can actually and again we have a software company that that structures this data, then you can add, then it will start to think, which is, we do have the technology to think, it's just that no one ever thought about.

Speaker 2: 12:05

Well, let's put this way, I have a data scientist nephew. I Introduced him to a company in San Francisco that is a fantastic company using all sorts of artificial intelligence type and Data metric stuff to make incredible medicines. He now makes 450 thousand dollars a year. He started at 200,000 a year but all of a sudden he started getting all these offers from big pharma Companies because he's a data scientist that knows how to structure data so that you can actually get stuff out of it. All right, well, I'm not saying he's gonna be out of business. I'm just saying is that pretty soon we're gonna have software out there that and look, kathy Woods, the one who says it.

Speaker 2: 12:46

You know, if you take the numbers of what the hardware versus the software is going to be in true artificial general intelligence, you know hardware right now is a 17, 18 trillion dollar opportunity Just look at Nvidia. But the software is a 50 to 60 trillion dollar opportunity worldwide.

Speaker 2: 13:06

And and there's. We need it now, sean, because as I, you know, stated many times to you and others, I'm a boomer. We already had the kids, the Gen Z years. They're not having kids boomers 15,000 boomers in the United States. We had 65 or 70 Every day for the next 12 years. The fertility rates in all modern countries are down. We could not replace the boomers with the Gen Xers and then the Gen Z years. It ain't gonna happen in the United States.

Speaker 1: 13:44

Labor shortage, it's actually could be a good thing to have AI be able to replace a lot of the jobs.

Speaker 2: 13:51

Well, it's, it's yeah, I mean, it's now down to not even just replace, it's just to do the freaking jobs, to have somebody to be able to do it. And at the lowest level, when AI is structured data and you have some ways of actually getting information in thinking out of it, I'll tell you, the first people to go are the the lawyer, assistant, junior lawyers, junior lawyers, who my lawyer friends, if they're gonna do a lawsuit, they go. You know, let's just call Bob. Hey, bob, listen, go in and get sight, read all the shizzle and and go through all the Databases and let's cite all these citations we got to use in our thing, okay, and they actually, you know, read it, take some days, weeks to put this you know case together. Or you could go Bob I don't need Bob, find me, all the cases have to do with XYZ and give the citations and and then summarize them. 5, 4, 3 done.

Speaker 1: 14:52

Here's another one. See how many types of jobs could be completely replaced well, yes, but no.

Speaker 2: 14:58

Also, bob doesn't want to do that freaking Labor work. It's just, you know, because he's got a four-year degree and the college in a lot of law, you know, and a correctional, he's a legal lawyer. Bob doesn't want to do that, but somebody's got to do it and it's not the $5,000 an hour partner, it's you, bob, because you can't charge that yet. But what will happen here?

Speaker 2: 15:25

here's another one in law, the Dutton's, the largest global law firm in the world 144 countries. They have on staff according to last time I chatted with them, about 1,400 lawyers who do nothing but translations At 300,000 a year because, shockingly, the translation needs to be accurate. You can't leave out a participle here and a verb and so on and so forth. So they are starting to use, starting to use a software that you don't need, bob, for. It will go in and it will find these in their data systems and summarize it, and that's gonna be great for everybody, because nobody wants to be the Bob. I'm with you.

Speaker 1: 16:18

Sometimes people in our niche get really scared of AI because there are dangers to AI and we do need to explore the whole topic. But we're exploring using AI tools at AMP News and we're making short videos automatically, we're captioning videos automatically, we're doing titles and descriptions. It's assisting with that. We still kinda have to go in and correct a few things, but these are jobs that we couldn't afford to pay someone to do and even if we could, it would be repetitive and people wouldn't wanna do it anyway. So it's exactly what you said that it's just creating more productivity and value. It's unlocking it where it wasn't there before.

Speaker 2: 16:59

Well, there's no question, and my new best friend is bardgooglecom. Bard is the remember. There's again little nomenclature thing, but it is important there is generative.

Speaker 2: 17:14

AI, which is what chat, gpt is, and bardcom, and generative again, just means that you load trillions of data in together and because of machine learning not because of artificial intelligence, artificial general intelligence, as in thinking stuff, but machine learning has been around for 20, 25 years and you're able to construct sentences and things by putting it together in because of the speed of these GPUs. So we get to the point that I can even bardgooglecom. Oh my God, I get so much more done during the day. I was late for our interview. Well, one of the reasons was is because I was late on getting some content out this morning before I went to the doctor's house and I was able to get a five page report done in about 20 minutes. That would have taken me two hours without part of that.

Speaker 1: 18:20

There's a lot of the fundamental work and then you can go in and use your actual intelligence to tweak it. Is that right?

Speaker 2: 18:28

You are correct, sir. And what's amazing is, once you start now again, if middle management or the account and God. I remember at our old, our big company Phillips Publishing. We had an entire floor of bean counters and accounts, payable, accounts, receivable, blah, blah, blah. And now you don't need those really good people.

Speaker 2: 18:54

I mean the point is, you are exactly right, there are going to be levels of work that are just go away because there's no reason to do that. I mean, for instance again I'm going to go back to the cost accounting with Tommy the chicken filet king Imagine if you had all this structured data and you had real artificial general intelligence and you'd simply say what was our cost of chicken yesterday? Because the other thing about artificial general intelligence and the data lakes you have, is that they're in real time.

Speaker 2: 19:31

There's a thing about chat, gpt, as you know. I think anybody's ever tried it. If you say, hey, what were the earnings of Microsoft in 2009, or, excuse me, 2019? And it will say I'm sorry, dave, but I only go back to September 2021. Great. How does that help me Today? I have a problem I want to know. I mean another software company who work with specializes in logistics, in cutting the amount of manpower. Nri is one of the largest logistics companies in the world.

Speaker 1: 20:07

I bet you did not know this Sean.

Speaker 2: 20:10

Logistics is about 10% of the United States GDP.

Speaker 2: 20:15

In China it's about 11%. I mean, in my neighborhood we should just get an apartment for the FedEx driver because he's here five times a day. So the worst part of being in logistics Sean, if you've ever been on the floor of logistics places I have is being a picker. Now, first off, it could be the worst name of all for human being doing labor right. But you hire this new person. It takes him about two months to figure out where North and South is and what island, blah, blah, blah. Then after about a year, about 70%, 75% quit because it's the world's crappiest job.

Speaker 2: 20:58

So with this new software called Wayfinder, first off, it's like on your phone here your first job of the day is and it tells you exactly where to go and creates the route for you and you go around and if you're with your auto robot, you take stuff you put in a robot, you keep going. They improve the productivity 35 percent with just essentially an iPhone and their artificial intelligence. Well, that was great, because you know what the biggest cost in logistics just happens to be. Labor is shocking. But the other side of it is that then this was a nine month trial. They're now like 14 months into the dropout rate Because, by the way, 75 percent of people quit after the first year. They dropped the dropout rate down to 30 percent because people actually enjoyed the job. They got a lot more done and they weren't just flopping around. That will completely change logistics and you're not going to need as many pickers. But trust me when I tell you this there's a lot of other jobs out there other than being a picker in a logistics place.

Speaker 1: 22:12

Part of the way humans will adapt to this is they have to figure out how can I be savvy with the latest technology to do the right prompts to be able to work with these robots, machine learning tools and so forth. It's already turned into a whole new job category instantly, within the last six months, of someone who does chat GPT prompting.

Speaker 2: 22:38

Yeah, when you get into it and I'm now freaking total addict shockingly, the prompting really means a lot. I have prompt tools in front of me that tell me all right, toby, if you want to know this, so on and so forth. Prompt it this way. Absolutely amazing. But let's go back.

Speaker 2: 22:58

There was this thing before you were born. It was called a PC. It came out in about the early 80s. Those of us who had offices all had secretaries. If you were a VP and up the secretary basically did all this stuff, but mostly what he did is they typed because he reports in this and that and so on and so forth. I'll never forget Mary Ann, and she was ridiculously good. However, when I got my compact PC, which was in a box like this big, the screen was like this size, it was green, but I had a keyboard, and within six months Mary Ann was gone, which she loved because she didn't like being a secretary but she really wanted to be it was an art history in which she turned out to be and opened up an art store and build a nice life for herself in Long Beach, california.

Speaker 2: 23:58

She hated being a secretary. It's sought Well when you go to the C-level now at companies, first of all you don't have the secretary as their executive assistants. If you're the CEO of a billion-dollar company, you have executive assistant, and maybe some of the other people do, but they're actually scheduling stuff and they're actually putting things together. I mean, they're not typing, but now I just talk into this little machine. All my content goes in there, whether I'm on the road or I'm on the plane or whatever. It gets spell checks put together, et cetera. I hit a button and, excuse me, it goes out.

Speaker 2: 24:36

That was the change of the tech stack in the mid-80s. Then the next tech it's very easy for me to say tech stack change was this thing called the browser and it was all encoded in HTML and HTML allowed the browser to go to two market insiders. My publishing company, go to. Antfire knows where to go, takes you to the page, yada, yada, yada. That was a tech stack change. The next tech stack change was certainly iPhone and apps. I mean, can you remember not having an app to find out where the hell you were going on a freeway? If you remember, I've totally blocked out. We used to have a thing called the Thomas Guide, which was a giant map of book of maps.

Speaker 2: 25:27

And we wanted to go somewhere you like, fold it out. You freaking Thomas Guide, and then your wife was going, but I don't know what's going on.

Speaker 1: 25:37

Yeah, see these types of Google Maps and things have helped marriages. Maybe artificial intelligence and machine learning will help marriages as well. We just have to figure out how to use it properly. I wanna do a quick recap, toby, because you talked about the S curve of the change waves, and sometimes it's technology, sometimes it's not. In the case of AI, it really does seem like, even though there's maybe a temporary mania, that, as the years to come, this is a secular trend. This is gonna just keep going and going and going for years to come here, there's no question.

Speaker 2: 26:13

And again, the world does not have enough of the next generation to replace the boomers, and the Gen Zs are not producing enough.

Speaker 1: 26:23

I mean, I think Is that a nice happy accident that we have a labor shortage at the same time, we have a technology that can replace labor.

Speaker 2: 26:30

You know I'm not a real spiritual man, but if I was, I would say that somebody was looking out and saying hey, wait a minute. You know your GDP is based on at least in the United States and most moderate countries of how many people you have and how much they consume. The United States, 72% of our GDP is, you know, personal consumption. Yeah Well, it is it is exactly but it's been going for a while.

Speaker 1: 26:57

AI these AI groups are obsessed with universal basic income because they're looking ahead and they're thinking to themselves this could replace almost all of us here and we're gonna have to have people, are gonna have to have something to do. I think we're years away from that kind of thing, obviously, but they're already thinking about that. We don't have time to dig into that now, but let's save that for the next conversation. Where can people go to learn about your investment research?

Speaker 2: 27:25

Well, they can go to Tobensmithio. We have an investment newsletter called Transformity Investors shocking. That's on the True Market Insiders platform. I'm just looking at the numbers here. Today, our artificial intelligence portfolio, which we've had for a year we just didn't start it yesterday is up 105% so far this year.

Speaker 2: 27:50

That's not shabby, not shabby. The market's up 15, but who knows? But the important thing is that, just like in thecom mania and just like in the app mania why it was, you know deal it's literally the picks and shovel makers, the people who are making the silicon in the stack and then the software that makes the money. So the reason why NVIDIA is our largest position I was looking at here is because we understood what they were doing. Checked CPT was out in November of last year. I don't you know, unless you're really wired into this stuff.

Speaker 2: 28:33

A lot of people don't realize that they think well, it just started in January Well, no, it's been around for a while, but even in November we could see how productivity was gonna be enhanced. And then the second point we didn't ask, but we'll get to later is Elon Musk and other guys set up open AI because they were afraid of you know, the monsters coming out and killing people and creating the, you know a neutron bomb that the robot lets off and wipes out humanity. And there's no question that, as we get deeper and deeper into artificial general intelligence, there's going to need to be guardrails.

Speaker 2: 29:19

But we can't be afraid of this, todd, because it's happening whether we like it or not. You learn how to leverage your time, whatever you do, and be more productive, and then, when we start to do the real thinking stuff, you'll just be amazed. Again, I would say, like the chicken. How much did our chicken cost today, landed in store 56? Well, let's say it's a $1.50 a pound. What's the average chicken price that we pay for the other stores? A $1.05. What is that?

Speaker 2: 29:52

And in AGI world it's going to say because your manager is taking 20% of it and selling it out the back door. That's why, and the time, you would know that. I'd like to my auditors and my beam counters. They would know it a quarter or two quarters later, Right.

Speaker 1: 30:11

And in fascinating to me is that it's not just us retail people, normal citizens, who are able to use these types of tools. It's nation states. This is how civilizations and nation states will win wars world wars and lose world wars, how they end up interpreting big data and so forth. So this is really a complete game changer and it's already happening. It's not like it's it's something to happen in the future. There's all these types of wars are already being fought with supercomputers and with this type of drones.

Speaker 2: 30:46

Look at the drones in Ukraine. How do you think those drones got to Moscow? How do you think those drones shut down Ukraine before was invaded Excuse me and it still is one of the leading math mathematical countries in the world. They have more universities, more degrees in math and in statistics and science per capita than any other country. I think that's why Putin invaded them. It was for their brainpower. I mean, yeah, they have a lot of wheat and so on and so forth, but why is China buying hundreds of thousands? Why are Saudi Arabia buying 100,000 NVIDIA GPUs on the black market? Because they know everybody Arms race.

Speaker 2: 31:34

Yes, you. Why would you send somebody into battle when you know? Do what the Ukrainians are first to do now, essentially, put their troops through minefields to find out where the freaking minds are, and then you could have had all this surveilled, excuse me, you could have had all this surveilled and you would have seen that happening in real time, and then you would have sent your drone in and blow out all those bombs. I mean, it's totally going to change. When you say we're going to go into a station or ask war, siri, what's the most vulnerable part of the Russian? You know, army right now, boom.

Speaker 1: 32:11

Here it is. How should we go there?

Speaker 2: 32:13

We need a tension.

Speaker 1: 32:17

Siri is actually talking to you. She's actually going to give you an answer on that. But you know that's scary. But you're right, it's already happening now. And it's going to be scary when these AIs can make decisions for themselves and say hey, wait a minute here. Maybe the best thing to do is to order the drones to kill the guy who's prompting me. So you know, this goes into science fiction. We have an F-18 that costs $250 million.

Speaker 2: 32:49

It's the most lethal war fighting machine in the history of mankind. The pilots don't do crap as pilots. It's auto takeoff, it's auto control, it's all run, you know, be a radar and so on and so forth. They do the bombs. They. You know, if you have to get into dogfighting they would be in the dogfighting. But it's very soon going to be that for those $280 million planes which then are going to become $500 million planes, they're going to be completely AI.

Speaker 2: 33:18

They'll be a person there in less, because maybe the system goes down and there's, you know, a pilot, but you're not going to be able to fight. You're not, you know. And the naval war the naval war is the one everybody's most focused on, which is in China versus Taiwan and an invasion. You should see some of the technology they have shot. I've been there to intercept incoming bombs. You know the laser stuff that they're doing in Ukraine.

Speaker 2: 33:45

That's all AI driven, that's all machine learning. There's no guy sitting back here. Hey, wait a minute, let me see it. So if you don't, if you as a society and a culture don't have leading chops when it comes to generative AI and then to the real stuff, the artificial general intelligence, agi, by the way, you're going to be behind. And you know Russia has some really smart people, but most of all the smart people have left because they're smart. And I still go the fact that you know, with the egotism of Putin, he thought he could get AI upleg by essentially, you know, taking over Ukraine, which he didn't understand that all the smart people in Ukraine left to. He thought, you know, they all stayed there kicking their ass. But isn't that important, sean, it is a generational change.

Speaker 1: 34:40

Nation states are trying to figure out how can we get the right human capital, the human resources that understand this type of stuff, because that's part of the equation of who are the humans and what kind of skill sets do they need to be able to interface with this new technology. The Apple vision AR technology is coming out in January and I've seen you know the promos for this stuff and the first thing I thought was actually about military applications, about how soldiers and generals and so forth are going to be using this AR augmented reality to use their hands to work with big data, analytics and graphs and stats and stuff, instead of using a mouse and pointing at a screen. It's going to change everything. This is kind of like the iPhone. That's how big of a change that Apple is going to actually usher in a new virtual reality type of mania. We'll see how that rolls out and we should do an episode in January when Apple vision comes out.

Speaker 2: 35:46

I'm going to skip it. I have used the demo, Sean. Oh yeah it makes that Facebook thing look like a toy right and Any of chips to make that work too.

Speaker 1: 36:00

Do you see how you need NVIDIA for everything?

Speaker 2: 36:03

Well, yes, but remember that the other chip makers particularly like broad conferences. There's a small chip called an ASIC ASIC which is just a specific chip to do a specific task. Amd has a new GPU coming out in November that has the same or better specs. The war is on it. Video can't dominate everything else because the reason why they beat their numbers by, you know, a trillion dollars Is their pricing power.

Speaker 2: 36:35

If you're a venture capitalist, you in Silicon Valley, they're going out and buying the, you know NVIDIA H100, that's the super powered one. They're buying a hundreds and thousands of them so they can go to their venture capital Investments and get them the GPUs that they couldn't get because they're not available to anybody else. I mean, right, it's, it is a generational ship. There's a huge amount of money to be made. It's in the picks and shovels, it's in the intellectual property that is patented, copyrighted and and and enables this, and right now, no question that NVIDIA, you know. I mean, we have a price target of 600 bucks. We'll probably change that quickly because it's now a flywheel, meaning that, as it's, as the more GPUs are being made, more Stuff for Jeep are using these high-speed GPUs. More high-speed GPUs is creating more applications and the incremental. Remember, taiwan semiconductor is the one who makes it. Videos, gpus, they don't even make their own, they just design them. How about that for intellectual, the value, intellectual property?

Speaker 1: 37:50

Right that there's more, more than one way to play this, and it's interesting. Some people are projecting NVIDIA over a thousand dollars a share, putting it at the most, the biggest company in the world, and if you ask the average person on the street, they wouldn't know what NVIDIA is.

Speaker 2: 38:08

There's none has the NVIDIA GPU to play. You know world of war, war crap. But I'm looking at our list. We own a company called SMCI. Smci builds the data racks that go into the data center. That has the, you know, the, the artificial general intelligent, the AGI stuff, but certainly the, the generative AI stuff. Well, the stock has gone from I'm looking at here $120. We're now at $350 today Because they're the largest buyer of NVIDIA H100 GPUs. We added a company a couple weeks ago called Celestica. They're a contract manufacturer. They make phones, they make all sorts of, but they also make a rack that goes into your data center and it's a competitive SMCI but it was selling for, you know, much lower multiple.

Speaker 2: 39:05

As I say, as you dig into the pieces of how Barred Googlecom sends me this wonderful, you know, two-page essay on whatever I'm looking for. It starts with the silicon not silicone, silicon, it and those chips. Then it goes to the Optical networking. All this is happening at literally light speed, right? So a net a and et. We bought that in December. I'm looking at now it's. It's $400 stock. We bought it for 110. Why? Because you, if you have that GPU, it's like having, you know, the world's biggest engine and but now you're trying to connect with another server.

Speaker 1: 39:53

If you don't have this lightning connection, it's like somebody's going a thousand miles an hour, somebody's going one mile an hour right so there's the food chain and figuring out which which part of that food chain is necessary, which companies play a role there, and Is it already priced in or not. And so looks like you were kind of early there. And what you said to me you texted me before the show that some of these things went really high in the mania. You guys sold and then you waited it for it to come back down to earth and then you bought them again. Well, that's the plane.

Speaker 2: 40:29

The mania didn't the dot-com days that I learned that in the mania of the dot-com days, which was that when you truly hit a mania. A mania is when People in their 401k or in their Schwab account put a market order in for a stock. This you know Going like this. So all of a sudden, a marketer means you buy it at any price. Well, shockingly, those prices keep going up like this because it gets hit with all these market orders and you know that it got caught the Viagra triangle.

Speaker 1: 41:01

The stock goes like this but nowadays they just shut down the trading. No one seems to be able to make any money when things go straight up.

Speaker 2: 41:10

But well, it's just. But that's because you got FOMO fear of missing out. You have people who can buy a hundred thousand shares on a phone. I mean so what you do in those manias is you.

Speaker 2: 41:24

There's a variety of strategies I don't bore you with, but we sell Options against that stuff and we're making money, no matter what happens. And then when it peaks, you you'll see it. It you know, three day, five day, eight day, whatever it is, you'll see a peak. It'll be so overbought, meaning that the relative strength is like ten times what it used to be. That's the top. Then we sell that stuff and if we can buy options, will buy options, because we know it's coming down. But one of our small cap companies Literally went from fifty five cents to two dollars and fifty five cents in about eight trading days. Now what I tell my subscribers is you don't wait for me, don't wait for us to send you. Take those profits, you bonehead. No stock goes up 255% in eight days.

Speaker 2: 42:12

The only stock that does that is either they're getting bought out so that's a buyout, and you know or there's a mania behind it and people are in there with market orders, just they don't care, because Stocks are priced by the marginal buyer, sean, and the marginal buyer is the price insensitive buyer. If we were at an auction and I were all bidding against you know a Picasso that I love you know who's gonna win that? It's the person who's not price sensitive. So the Smith would have been out of the bidding a long time ago. But the price insensitive buyer is the marginal buyer. They are the ones who set the price and as long as there are market orders existing While the stock's going like this, it's going to continue to go like this.

Speaker 2: 42:55

You know what, until it doesn't. And when it doesn't, it's gonna reverse almost all that, because 300% up and they want to save their ass and they swear the number by. A stock again is you know Blah, blah, blah. And they have market orders on the down, the limit. In others they have stopped orders. So it's the mechanics of the market, sean, and I've seen it enough that it's just so much fun to ride that New, new change waves, because you can see them coming from a mile away at this point.

Speaker 1: 43:31

Thank you, tobin, for coming on. We have completely run out of time, but we're gonna put a link in the description below. At Tobensmithio, people can learn all about your investment newsletter. God bless you and we'll see you next time.

Speaker 2: 43:42

Cheers.