The lifetime numbers as of Tuesday’s close:

• Total return since inception: +267%

• CAGR: 38%

• 1-year return: +85%

• YTD return: +55%

• 1-month return: +2%

• S&P 500 over the same period: +92%

Roughly 174 percentage points of cumulative outperformance against the index.

This Week’s Trades

Sold CEG at $272.84 for a 4% gain.

Sold VST at $135.89 for a 17% loss.

Sold RKLB at $70.07 for a 10% gain.

Sold SPCX at $134.09 for a 17% gain.

Bought IBIT (iShares Bitcoin Trust) at an average cost of $45.10, now 6% of the portfolio.

Added to BRR (ProCap Financial), buying 59% more shares at $2.18, taking the cost basis to $2.21 and the position to 6% of the portfolio.

Net effect: four positions consolidated into a single theme. Combined bitcoin exposure is now roughly 12% of the portfolio, split between direct exposure (IBIT) and a leveraged treasury-company expression (BRR).

I still believe CEG, VST, RKLB, and SPCX will likely be good long-term investments so I’ll keep them on the watchlist. However, I think the next 12 - 24 months could be even better for Bitcoin and BRR. I’ll share my full thoughts below.

The Bitcoin Case: Why Now, and Why 12%

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1. My thoughts on Bitcoin, Gold, and Oil

2. Why I added to BRR

3. This week’s trades

4. Full portfolio update (all positions)

5. Portfolio company news

6. Current watchlist

7. This week’s Best Buys

Last week I wrote that ProCap Financial was my smallest position at under 1%, and that I’m keeping it small for a reason. This week I took it to 4% which is now pushing the upper limit of how much capital I will add to the position due to its risks.

Nothing about the key-man risk changed this week but there are several catalysts working in Bitcoin’s favor and if Bitcoin outperforms then BRR could be a steal at $2.15. In the bull case the math of where the current share price is doesn’t mak unless bitcoin takes a massive dive and BRR’s AI business is worth nothing. I will walk through the bull and the bear case below.

With the add this week, my cost basis moved from $2.01 to $2.23, which means I paid up from my original basis, and I am currently down 4% on the position.

The rest of the portfolio had a rough week. The S&P 500 finished lower with information technology dropping more than 3% over five days, semiconductors fell nearly 5% as measured by the VanEck Semiconductor ETF, and Walmart’s worst day in more than four years dragged the Dow down 704 points on Thursday. Every company in the portfolio tied to AI infrastructure fell.

Lifetime performance: the portfolio is up 265% since August 2022, which is a 38% CAGR. It’s up 90% over the past year and 54% year to date.

1. OIL, GOLD AND BITCOIN IN THIS ENVIRONMENT

I usually don’t focus much time on these but the macro backdrop right now is unusual enough that it is worth thinking through, and it feeds directly into why I added to ProCap.

The US-Iran war started at the end of February and is now in its sixth month. The Strait of Hormuz is effectively closed, with Iran holding conditions on reopening it. Brent is around $93 and West Texas is in the mid-$80s, with Brent up more than 20% since August 5 alone. July CPI came in at 3.4% headline and 2.5% core, and PPI ran 4.7% year over year. Treasury yields hit their highest levels in decades this week before pulling back.

And the Federal Reserve has not cut rates all year. The current debate is whether they hike in September, with odds bouncing between roughly 30% and 55%.

On oil and gas. This is the most straightforward of the three. A closed Hormuz removes roughly a fifth of global crude and gas supply from the market, and there is no technological substitute for that on a two-year timeline. Energy producers are generating enormous free cash flow at these prices and most of them are still valued as if crude reverts to $60. The counterargument is that you are buying an asset whose price is set by a war ending, and wars end suddenly. Qatar drafted a proposal in early August, Trump said a deal was possible within days, and Brent fell below $80 for a moment. It then went straight back above $90 when talks stalled. If you own energy here, you are making a geopolitical forecast whether you admit it or not, and I am not good at those. What I would say is that energy is the one sector where the AI power buildout and the war thesis point the same direction, which is more than you can say for most trades.

On gold. Gold has done its job in a strange way. It rose past $5,400 in early March on the war escalation, then had its worst monthly decline since 2008 in March as the market reasoned that oil-driven inflation means a hawkish Fed, and a hawkish Fed is bad for a non-yielding asset. It is around $4,390 now, up about 10% in August but still well below the highs. Central banks bought a quarterly record 288.9 tonnes in the second quarter even as prices fell, which tells you the marginal buyer is not a momentum trader. The case for owning some is that it is the only asset on this list that has actually functioned as an inflation hedge over the full cycle, and the case against is that in a world where the Fed might hike, gold competes with a risk-free rate that keeps going up.

On bitcoin. Bitcoin is now trading around $77,000, down roughly $36,000 from where it traded a year ago, during a period of elevated inflation, war, a closed shipping strait and a Fed that cannot cut. That is the exact scenario the debasement thesis was written for, and bitcoin went down while gold went up.

I think there are two ways to read that, and I do not know which is right.

The first is that the thesis was wrong, or at least incomplete. Bitcoin trades like a high-beta risk asset, not like digital gold, and when real yields go to multi-decade highs it gets crushed alongside everything else with no cash flow. That is a coherent view, and the historical price action supports it.

The second is that the thesis is correct and the timing was wrong, which is what every bitcoin drawdown has looked like from the inside. In that read, an asset that fell 30% while the fundamental case strengthened is the definition of an opportunity, and the reason to look at it now is precisely that everyone stopped talking about it.

I lean toward the second, but I hold that view loosely, and I have sized my exposure accordingly. If I were highly confident, I would own bitcoin directly at a much larger weight instead of a 4% position in a discounted holding company. The ProCap structure is a way to express a moderate view with a margin of safety, because I am buying the asset below its market price and getting an AI business thrown in. If bitcoin does nothing for two years, the discount closing can still make me money. That optionality is why I chose this vehicle over the coin itself or an ETF like IBIT. But admittedly, that could be a safer option than owning BRR.

None of this is a call to sell your growth stocks and buy commodities. I still have 96% of the portfolio in operating businesses. It is a suggestion that if every asset you own is levered to the same variable, which for a lot of us in 2026 is AI capital expenditure, then owning something with a different driver is worth thinking about

2. WHY I ADDED TO BRR

ProCap Financial closed Friday at $2.15. As of August 11, BRR had 88,369,575 shares outstanding, putting market capitalization at around $190 million. The 52-week range is $1.31 to $10.57, so the stock is down about 80% from its high.

The company held 5,355 bitcoin as of June 30, per the 10-Q filed on August 13. Bitcoin is trading around $77,000 after Friday’s rally on the Treasury buyback announcement, making its bitcoin holdings worth about $412 million. Against that sits $99.6 million of remaining 2028 convertible note principal, after management repurchased $135.4 million of those notes for $119.2 million back in February. Cash was $15.3 million at the end of the June quarter.

Take the bitcoin, subtract the converts, add the cash, and you get about $328 million of net assets against a $190 million market capitalization. That works out to $3.71 a share of net asset value and a 42% discount.

One caveat on that figure. The $15.3 million cash number is as of June 30 and the company burns roughly $6 to $7 million a quarter, so the real cash line today is lower. Strip cash out of the calculation entirely and net asset value is $3.54 a share, which is still a 39% discount. The conclusion holds either way.

Everything else in the company is free.

Two more numbers worth having in your head. Bitcoin per share works out to about 6,060 satoshis. And BRR’s average cost basis is roughly $92,100 per coin against a $77,000 market, so management is underwater about 16% on what they bought. That matters because every coin they sell to fund buybacks or operations is sold at a loss, and it reminds you this team hasn't been good at timing bitcoin.

What “everything else” is

Silvia is an AI agent lab focused exclusively on finance, acquired in April 2026. As of the August 10 release, it has more than $50 billion in assets connected across more than 20,000 users. People connect stocks, bonds, crypto, real estate, cars, collectibles, precious metals and private investments, and the agents analyze it. Average user net worth is above $2.5 million. Paying members chat with it more than 20 times a week.

On August 10, the company published a benchmark study on tax. Silvia’s team evaluated seven AI products across ten expert-level tax scenarios covering federal law plus the tax codes of California, Texas, North Carolina, New York and Florida, scored blind on a one to ten scale for factual accuracy. Silvia scored 8.73 and ranked first across every product tested, ahead of Claude Desktop at 8.40.

Then they open-sourced the questions, the results and the evaluation framework so anyone could reproduce it or attack it.

Pompliano’s framing on that release is the actual investment argument: “The largest AI labs on earth employ more researchers than we have employees, and Silvia beat all of them on tax with a team of only four AI engineers working on this problem.”

The piece I think gets overlooked is asset management. In the June quarter the company launched Silvia Innovation Fund I, LP, advised by its wholly owned subsidiary ProCap Investment Advisers. Then on August 13, Tidal Trust IV filed a registration statement for five actively managed ETFs with ProCap Investment Advisers named as the proposed sub-adviser. The 10-Q is explicit that no sub-advisory fees have been earned and no seed capital has been committed, and the funds cannot launch until the registration goes effective.

If that works, it is the whole business. You have $50 billion of connected assets belonging to people worth $2.5 million on average, and you are putting your own funds in front of them. Distribution is the hardest problem in asset management and they may have solved it sideways.

The company also runs ProCap Insights, launched in April as an agentic research product, with data partnerships with Kalshi for prediction market data and Ornn AI.

Revenue in the June quarter was $37 thousand. For the first half it was $38 thousand. Silvia itself contributed $12 thousand of revenue between April 6 and June 30 and lost $8.4 million over that stretch.

The June quarter net loss was $65.0 million, or $0.73 a share, and $49.4 million of that was an unrealized mark on bitcoin. Operating expenses ran $15.0 million, which included a one-time $5.0 million signing bonus for the new chief technology officer. Back that out and the quarterly burn is closer to $6 to $7 million of cash.

Capital allocation

Management has been doing something most bitcoin treasury companies talk about and never do. When the stock trades at a deep discount to net asset value, they sell a small amount of bitcoin and buy back stock, which increases the bitcoin per share owned by everyone who stays.

They did it in March, buying 450 bitcoin while repurchasing 782,408 shares. They did it again on June 1, selling roughly 52 bitcoin to repurchase two million shares at about half of net asset value. Across the first half, they retired 5,238,030 shares for $12.8 million, at an average of $1.85 in the June quarter. There is $84.4 million left on the $100 million authorization.

They also deleveraged into weakness, retiring $135.4 million of converts for $119.2 million and booking a $5.9 million gain.

The company has said it has nearly 20 years of runway at current expense levels. That is only true if you count bitcoin as spendable. Measured in actual cash, they have about two quarters before they have to sell coins to keep the lights on.

The June 2027 problem

This is what potential investors need to fully understand.

The converts mature in December 2028, but holders have the right to require the company to repurchase them for cash at 100% of principal on June 5, 2027. That is why they sit in current liabilities and why working capital is negative $77.3 million. Of the bitcoin, 3,515 coins sit at Anchorage Digital as collateral, of which 3,404 are required under a test that values bitcoin at only 50% for the calculation.

If those notes get put, ProCap either refinances or sells somewhere around 1,300 coins at today’s price to cover $99.6 million. That is a quarter of the stack, and it is the single biggest swing factor in the next twelve months.

THE BULL AND BEAR CASE FOR BRR

The bull case: a closed-end fund that owns an AI startup. You are buying roughly a dollar of net assets for about fifty-eight cents, and the asset is bitcoin, which is still down about $36,000 from where it traded a year ago. So the discount is stacked on top of a drawdown. If bitcoin simply returns to where it was twelve months ago, around $112,500, the stack is worth $602 million and net asset value goes to $5.86 a share. Narrow the discount to the 20% range that treasury companies trade at in better sentiment and you have a $4.70 stock without Silvia contributing a dollar of enterprise value. Close the discount entirely and you are at $5.86. To get above $6 you need Silvia to carry real value or the market to pay a premium, which is exactly what happens if the ETF suite gathers assets. A product with $50 billion connected, 20,000 users and a demonstrated ability to beat frontier labs in a narrow domain has genuine option value at a $190 million market capitalization. Meanwhile, management keeps shrinking the share count at a discount.

The base case: the discount narrows and bitcoin drifts. The most likely outcome is the boring one. Bitcoin trades in a range around current levels, the treasury company discount narrows but does not close because the market has decided the category deserves a permanent haircut, and Silvia grows users without generating meaningful revenue for a couple of years. Buybacks slowly grind bitcoin per share higher. At a flat $77,000 coin and a discount that goes from 42% to 25%, you get to about $2.80, and continued repurchases push that toward $3.00 to $3.50 over eighteen months. That is a fine return for doing nothing, and it is what I am actually underwriting.

The bear case: falling knife. Revenue is essentially zero, and the cost structure is not. Every dollar of expense comes out of a balance sheet that is one volatile asset, and cash is down to $15.3 million from $45.0 million at year end. If bitcoin goes to $50,000, net asset value drops to $2.08 a share and the stock is worth about $1.15 at the current discount. At $40,000 bitcoin, net asset value is $1.47 and you are looking at eighty cents. In that world the converts become a real problem rather than a financing detail, the buyback stops because there is nothing left to do it with, and the company is a forced seller of coins into weakness. There is also a resale registration covering 20,100,833 shares held by selling securityholders that has been effective since January, which is a standing overhang rather than new news, though the August 19 prospectus supplement put it back in front of people. And the concentration risk is not only in bitcoin. Pompliano is the vision, the distribution, the investor communication and the media presence. The chief investment officer resigned in April. If something happens to him, or he simply loses interest, there is very little institutional depth behind him.

How I sized it

4% is a position where a total loss costs the portfolio four points and does not change my life. A five-bagger adds twenty points.

I want to be clear that this is the highest-risk company in the portfolio by a wide margin. It is not a Rule Breaker in the David Gardner sense. It is closer to a special situation with a lottery ticket stapled to it, and it is the only position in the portfolio I would describe that way.

3. THIS WEEK’S TRADES

Added to ProCap Financial (BRR). Took the position from roughly 1% to 4% of the portfolio. Average cost is now $2.23, up from $2.01. This is the only trade I made.

4. FULL PORTFOLIO

Thirteen positions, no cash, prices as of Friday’s close.

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Lifetime performance: the portfolio is up 276% total since inception, against 95% for the S&P 500 over the same stretch. That works out to a 40% CAGR. Up 90% over the past year, 59% year to date, and 1% over the past month.

THIS WEEK’S TRADES

None.

I want to say something about this because I get asked about it a lot. Most weeks, I do nothing, and in my opinion, that’s EXACTLY the point of this newsletter and what long-term investors should strive for.

Constantly trading and reacting to the latest news seems like the right thing to do and it gives people on the internet things to write about and charge people for….the latest and greatest daily insights.

But that’s exhausting, unrealistic for people who want to enjoy their lives, and it’s far worse for your portfolio (and long-term wealth) than owning great companies for many years and minimizing transactions.

That’s the goal and focus of this newsletter and I’m happy to have you along for the ride.

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The Best Buys section below exists so readers with cash can act on ideas I like, even when I cannot.

THE PORTFOLIO

Thirteen positions (plus cash, so the screenshot below says 14), prices as of Thursday’s close.

One note on NU. That $13.93 price is Thursday’s close, before earnings. The stock is up 9% in after-hours trading to $15.22 after the report. So the 6% gain you see above understates where the position actually sits going into Friday.

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Took this from my phone so the screenshots aren’t the same as usual.

Full portfolio with tickers:

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Just added to our

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I’ve read the press release, the 10-Q, and the investor deck, and my short answer is this: the scary headline number is almost entirely non-cash accounting noise, the underlying business is still compounding, but there were two or three real soft spots worth taking seriously.

The Numbers

From the earnings release and 10-Q:

• Net sales of $213.8 million, up 31% year over year (Fire Safety $129.1 million up 7%, Specialty Products $84.7 million up 100%)

• Year-to-date net sales of $338.9 million, up 44%

• GAAP net loss of $181.6 million, or a $1.11 loss per diluted share

• Adjusted net income of $59.6 million, or $0.35 adjusted EPS

• Adjusted EBITDA of $105.6 million, up 16% (Fire Safety $78.8 million up 1%, Specialty Products $26.8 million up 96%)

• Adjusted EBITDA margin of 49%, down from 56% a year ago

• $82.8 million cash, 3.1x net leverage, no financial maintenance covenants

The company also announced it closed the $120 million cash acquisition of Monaco Enterprises, a life-safety systems provider deeply embedded across 200-plus Air Force and Air National Guard airbases, one day before the report. Monaco is expected to add roughly $31 million of 2026 revenue at about a 35% EBITDA margin.

The Details Behind The “$181.6 Million Loss”

Here’s the single most important thing to understand about this report. That $181.6 million net loss was driven overwhelmingly by a $266.3 million non-cash “founders advisory fee.”

If you’re newer to PRM, the company has an unusual structure left over from its EverArc/SPAC origins. The founders are owed an annual advisory payment tied to the appreciation of the stock. When the share price rises, the accounting value of that liability rises with it, and the increase flows through the income statement as an expense. It is non-cash, and it is largely a function of the stock having gone up.

The reason PRM posted a giant GAAP loss this quarter is, in significant part, that the stock has performed extremely well over the trailing period. The better the stock does, the bigger this non-cash charge gets. It tells you almost nothing about the health of the operating business.

This fee structure is annoying as an investor, but it won’t drag on the stock forever. Per the company’s disclosures, there is a fixed portion of the founders advisory fee that is paid annually only through the year ending 12/31/2027, and the variable portion (the volatile piece tied to share-price appreciation that drove most of this quarter’s $266.3 million charge) runs through the year ending 12/31/2031. So this isn’t an open-ended drag. It’s a known, finite obligation with a clear end date. Until then, expect these non-cash swings to keep distorting GAAP results in both directions: a big charge in quarters when the stock rises, and potentially a reversal in quarters when it falls.

Strip it out (along with amortization, acquisition costs, and other non-operating items) and you get the numbers that show the operating performance of the business: $105.6 million of adjusted EBITDA, up 16%, and $0.35 of adjusted EPS.

Key Earnings Takeaways

There were three things in this report that I think justify some of the market’s disappointment.

Fire Safety was soft. The crown-jewel segment grew revenue just 7% and adjusted EBITDA just 1%, with segment margin slipping from 65% to 61%. For a business the market prizes for its high-margin, contracted retardant franchise, near-flat EBITDA growth is underwhelming. Some of this is timing (wildfire season severity varies quarter to quarter and the aggressive initial-attack strategy changes the cadence of retardant demand), but a 7% top line in the seasonally important quarter is something to watch.

Adjusted EPS went backwards. Adjusted EPS came in at $0.35 versus $0.39 a year ago, and missed consensus of roughly $0.43 by a meaningful margin. Adjusted EBITDA grew 16% but adjusted EPS fell, because interest expense nearly doubled (to $19.6 million in the quarter) and the share count and amortization both climbed as the company levered up to fund acquisitions. Growth is being partly financed by debt, and that debt now costs real money.

The revenue miss. Revenue of $213.8 million came in just below the roughly $216.9 million consensus. Small on its own, but when a richly-valued stock misses on the top line and the bottom line in the same quarter, the market rarely gives it the benefit of the doubt.

A note on margins. Consolidated adjusted EBITDA margin fell from 56% to 49%. That’s mostly mix: Specialty Products doubled revenue but runs at a ~32% margin versus Fire Safety’s ~61%, so as Specialty becomes a bigger slice of the pie, blended margin naturally compresses. That’s not deterioration, it’s the acquisitions doing what they were designed to do. But it does mean the “60%-plus margin business” framing gets diluted over time.

Has the Thesis Changed, Broken, or Is This a Knee-Jerk Reaction?

I think the long-term thesis is intact, this is mostly a knee-jerk reaction to a scary-looking GAAP number and a rich starting valuation, but it’s a fair reminder that PRM is no longer the obviously-cheap stock it was when I started buying at $13.

The core thesis was never about any single quarter. It was that Perimeter is a dominant, mission-critical supplier (fire retardants for CAL FIRE and the US Forest Service, plus a growing specialty-chemicals and life-safety portfolio) run by disciplined operator-capital-allocators who compound per-share value through smart acquisitions and value-based pricing. Nothing in this report breaks that. Specialty Products doubling revenue with EBITDA up 96% is the value-creation flywheel working. The Monaco deal (proprietary, closed-loop life-safety systems specified by name into military bases, 95%-plus recurring sales into an existing installed base) is exactly the kind of high-quality, niche, mission-critical business the strategy targets. Management is still executing the playbook.

What has changed is the setup, not the story. When I started building the position at $13, I was paying a low multiple for a misunderstood business. At $37 going into this report, a lot of that gap had closed, and the stock was priced for continued flawless execution. So when Fire Safety came in soft and adjusted EPS slipped, there wasn’t much valuation cushion, and the stock gave back a chunk fast.

What I’m doing and Updated Bull/Bear Scenarios

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We made a few purchases this week during what I felt was an opportunistic pullback using volatility to our advantage.

We will cover those purchases, Amazon and Meta earnings reviews, update weekly best buys, and do a full portfolio update at the end.

I added to META the day after it dropped on earnings, buying more at $535.30. That takes Meta to roughly 19% of the portfolio, tied with Micron as my largest position.

I typically like to average up into my positions, not down, but when a business this good gets cheaper on an earnings reaction rather than on broken fundamentals, I add. I’ll explain exactly why below.

I also started small positions in RKLB and SPCX, and added to MU this week, which I flagged in Monday’s quick note.

Meta missed on earnings and fell hard. Amazon crushed it and jumped double digits. I’m going to cover both reports below, pulling straight from their releases, SEC filings, and earnings calls, and give you my updated bull and bear cases on each.

Memory had one of the wildest weeks I can remember. MU fell nearly 10% Wednesday on a mixture of rumors about the Fed raising rates, Situational Awareness fund unwinding, and fear around the AI investment cycle. Then ripped 18% Thursday on strong Samsung/Microsoft results, no rate hike, and news that the Situational Awareness fund was bought out by Citadel.

Portfolio Performance as of Thursday’s close:

• Total return since inception: +251%

• CAGR: 38%

• 1-year return: +90%

• YTD return: +49%

• 1-month return: down 3%

• S&P 500 over the same period: +86%

Roughly 165 percentage points of cumulative outperformance against the index.

This Week’s Trades

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$META is very cheap heading into earnings. Expecting a beat and raise…. And CAPEX guidance being less than feared.

Could see a strong rally after earnings.

Will include an earnings review in our end of week review.

Current portfolio:

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This is designed to be a quick update where we will cover the changes, quick bull/bear scenarios, and the full current portfolio at the end. Then Friday I’ll send the full weekly review with more thoughts and analysis on the stocks.

I added to Micron (MU) at $819.77, taking the position to roughly 19% of the portfolio. Memory stocks are in the middle of a sharp two-day selloff, with MU down more than 10% yesterday and again today, on fears around Chinese memory competition (the CXMT debut, progress on domestic chipmaking equipment) and a broader risk-off move in anything AI. None of that changes the thing that matters to me: Micron's high-bandwidth memory is sold out through 2026 and into 2027 on contracted pricing, and the Strategic Customer Agreements give real revenue visibility that past memory cycles never had. When a business I believe in gets cheaper on sentiment rather than broken fundamentals, I add. This is exactly that.

I also opened two small starter positions I plan to build over the next few months.

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No trades this week and I’m sitting at essentially no cash. There’s a lot of volatility in the market and specifically in the individual stocks that we have in the portfolio. Three key points that I can’t emphasize strongly enough are:

1. Don’t invest with margin
2. Don’t invest money we might need in the next 3 years
3. Don’t over-concentrate in any single stock - I can’t tell you what size that is. For some people it’s 5% or 10%. Personally, I don’t like any single position being over 20%.

By avoiding those 3 things, we greatly decrease our stress during pullbacks and increase our chances of success and building wealth as investors.

On to this week’s update.

This week we’re covering the full portfolio, company-by-company updates, and I’ve added watchlist coverage + Best Buys for the week at the end.

Micron ripped 16% and climbed all the way back above my cost basis after being down 14% seven days ago. Cerebras jumped 22% on two major partnership announcements. And Meta fell 9% into next week’s earnings, which is either a gift or a warning.

The lifetime numbers as of Thursday’s close:

• Total return since inception: +269%

• CAGR: 40%

• 1-year return: +93%

• YTD return: +56%

• 1-month return: +5%

• S&P 500 over the same period: +85%

CURRENT PORTFOLIO

As of Thursday’s close. No changes from last week other than price.

MU at 21%. $990.21, cost basis $987.07, up slightly. Was down 14% a week ago.

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Since the last update I added a little new cash to the portfolio and made three small purchases: added to CBRS, added to MU, and opened a brand new speculative position in ProCap Financial (BRR).

Today I’m covering those recent trades, sharing a full portfolio update, and giving you some background on BRR.

But first, I want to share a really important lesson that helps me stay calm when things are bad (and not get too excited when they’re going well).

Portfolio Performance as of Thursday’s close:

• Total return since inception: +262%

• CAGR: 39%

• 1-year return: +92%

• YTD return: +53%

• 1-month return: +5%

• S&P 500 over the same period: +89%

Roughly 173 percentage points of cumulative outperformance against the index.

The Most Important Lesson I Ever Learned About Surviving the Market

I want to start with something bigger than any single position, because a week like this one (memory names whipping around 15% in days) is exactly when it matters most.

Over a decade of learning from David Gardner of the Motley Fool, I internalized one of his key observations that changed how I invest.

Stocks go up more often than they go down, but when they go down, they fall much faster than they rise. Advances are slow and grinding. Declines are sharp and violent. Anyone who lived through this past week in memory stocks just felt both halves of that truth compressed into a few sessions.

So how do I actually apply it?

The first half of the lesson says the long-term game is clear. Being invested, and staying invested, is the smart move. The market’s long climb rewards patience, and time in the market beats timing the market. If that were the whole story, you’d simply buy great companies and never look at the screen again.

But there’s a second half, and it’s the one that actually keeps you in the game: we have to survive the short term to enjoy the long term. Because declines are fast and brutal, a single bad stretch can wipe out an investor who wasn’t built to withstand it. Surviving isn’t about predicting the drops. It’s about constructing a portfolio and a mindset that can take the drops without forcing you to sell at the bottom.

For me, survival comes down to a few non-negotiable rules.

I don’t use margin. Leverage turns a temporary decline into a permanent loss, because the market can force you out at the exact moment you should be holding.

I don’t invest money I might need in the next three years. Money with a short fuse doesn’t belong in stocks, because you can’t control when the market hands you a 30% drawdown, and you never want to be a forced seller.

I don’t go all in on a single stock. Concentration is how you get rich and also how you get wiped out. My largest position is meaningful but sized so that even a brutal decline in it (and MU is testing that right now) doesn’t threaten the whole portfolio.

Those three rules are the defense. But there’s an offense to this too, and it’s just as important. When you’ve built yourself to survive, you don’t have to be ruled by fear when things get painful. In fact, the painful moments are usually when you should be most interested in building and holding positions, not running away. The best prices come attached to the worst feelings. Being able to keep buying, or at least keep holding, when a name is down and the headlines are ugly is where a lot of long-term returns are earned.

There’s one important caveat. Buying weakness only works when the thing you’re buying is genuinely good and somewhat reasonably valued. It is not a license to catch every falling knife. Some stocks got so wildly overvalued in this cycle that “it’s down 30%” still leaves them expensive, and a cheap-looking price on a broken or absurdly priced business is a trap, not an opportunity. That’s actually why I moved the portfolio toward high-quality, profitable, reasonably-valued companies in the first place. It’s much easier to hold through a scary decline (and even add to it) when you know the business is real, the balance sheet is strong, and you didn’t overpay to begin with. I’d rather avoid excessively valued short-term stories entirely than have to guess whether their drops are opportunities or warnings.

Put it all together and the philosophy is simple, even if living it isn’t. Don’t get too excited when times are good. Don’t get too scared when times are bad. Build so you can survive the fast declines, and position so you can take advantage of them. Then let the long, slow, upward grind of good businesses do the heavy lifting.

That’s the whole game. This week was a small reminder of why it matters.

This Week’s Transactions

Added to MU at $905.90 and again at $847.44, bringing the position to roughly 19% of the portfolio at an average cost around $987. The memory complex kept selling off and I nibbled into the weakness. The position is now down about 14%, my largest and my most underwater.

Added to CBRS at $177.93, bringing Cerebras to roughly 6% of the portfolio.

Opened BRR (ProCap Financial) at $2.01, a small 1% speculative position. More on BRR below.

I also added a little new outside cash, so despite the buys the portfolio still carries about 2% cash.

Full Portfolio Review

Thursday’s close:

MU at 19%. $853.20, cost basis $987.07, down 14%.

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First, let me know if you like this format. If so I can make it a daily briefing for paid subscribers.

Portfolio Update: Added a very small (~1%) position in BRR which is down about 95%, is very speculative, but could work out well if Bitcoin rebounds.

I’ll do a deep dive on BRR for paid subscribers soon.

I’ll share a full portfolio screenshot in the portfolio watch section below.

Broad Market

Tuesday was a relief rally. The S&P 500 closed up 0.38% at 7,543.59, the Nasdaq jumped 0.9% to 26,107.01, and the Dow eked out a 9.63-point gain to 52,508.27, with chip stocks doing the heavy lifting after June’s CPI came in cooler than expected, a 0.4% monthly decline that pushed the annual rate to 3.5% against a 3.8% consensus. The one scar on the tape was IBM, which fell 25% after warning that Q2 profits will miss on soft software and infrastructure demand.

The CPI miss did real work on rate expectations. Odds of a July Fed hike collapsed to 17% from 42% the day before, though traders still see roughly 60% odds of a hike in September. The 10-year yield has been chopping around 4.58% to 4.62%, near two-month highs. Fed Chair Kevin Warsh testifies before the Senate Banking Committee today at 10am ET, his first congressional appearance since being sworn in on May 22. Worth watching closely given where rate expectations sit right now.

The wildcard is oil. The US reinstated its naval blockade of Iranian shipping as tensions in the Strait of Hormuz escalate again, and crude has responded: Brent gained 2% to $84.98 and WTI rose 2.1% to $79.79 on Tuesday, after Brent’s 9.6% single-day surge on Monday, its strongest daily move since May 2020. With strait traffic reportedly down to 5-15% of pre-war levels, some analysts are floating $95 crude if the disruption persists. That’s the real risk to the soft-landing story right now, not the Fed.

Tech & AI

Semiconductors did the reversing. The VanEck Semiconductor ETF (SMH) rallied 2.5% on Tuesday, clawing back Monday’s Iran-driven selloff, helped by data showing hyperscaler capex holding up and a cooler PPI print. AMD led with a 6% pop to $566.73 after ZTE, Kingsoft Cloud and other Chinese firms were cleared to buy its AI chips, with BofA lifting its target to $620. Nvidia jumped as much as 4% after Morgan Stanley reiterated it as their top semi pick and a Commerce official confirmed H200 shipments to China have begun, even if volumes so far are small.

Meta is the story I keep coming back to. It unveiled a new frontier AI model and launched Meta Compute, a cloud unit that puts it in direct competition with AWS and Azure, sending shares up 15% on the week. Zuckerberg confirmed the in-house Iris chip enters production in September as Meta scales toward 14GW of AI compute by 2027. Wolfe Research put a number on the monetization math: roughly 20% EPS upside for every gigawatt monetized at a $25B run rate, with an $800 target. The catch is capex. Wolfe flags 2026 spend closer to $200B versus the Street’s $160B, and floated the possibility of a capital raise. Earnings land July 29.

Microsoft is the mirror image. Despite beating on its last quarter ($81.3B revenue, +17% YoY, $4.14 EPS) the stock is down 20% year to date on AI spending anxiety. It’s committing $190B to AI and Azure infrastructure in 2026 while cutting about 4,800 jobs, including a chunk of Xbox, and standing up a new subsidiary, Microsoft Frontier Co., to sell AI engagements directly to enterprise clients. Notably, ByteDance is reportedly now its largest Azure/OpenAI customer in China at over $1B a year. MSFT reports July 29, the same week as Meta and Alphabet, with Amazon following July 30. That week is going to set the tone for the whole AI trade.

Also on my radar: Broadcom expanded its custom silicon partnership with Apple through 2031, and SK Hynix’s Nasdaq listing is drawing attention as one of the largest foreign IPOs ever, ahead of Samsung’s own earnings.

Portfolio Watch

Here’s the current full portfolio and important updates for our companies.

Performance since August 2022: +275% vs S&P 500 performance of +89%

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The lifetime numbers as of yesterday’s close:

• Total return since inception: +267%

• CAGR: 40%

• 1-year return: +103%

• YTD return: +56%

• 1-month return: +8%

• S&P 500 over the same period: +88%

That’s roughly 179 percentage points of cumulative outperformance against the index.

Today’s email has three sections.

First, a rundown of what actually happened at each company over the past couple of weeks, including a few stories that didn’t come from the companies themselves but matter a lot to what we own.

Second, the memory selloff, because it’s the single biggest thing affecting the portfolio right now.

And third, why META, AMZN, and NVDA are now roughly 43% of the portfolio combined, and why I think the market is making an obvious mistake by ignoring them.

Where the Portfolio Stands

Yesterday’s close:

MU at 19%. $937.00, cost basis $1,000.82, down 6%.

META at 17%. $656.73, cost basis $602.05, up 9%.

AMZN at 16%. $247.31, cost basis $221.88, up 11%.

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not trying to time the bottom, I’m simply taking advantage of normal volatility.

selling NBIS, IREN, and SNDK and raising a bunch of cash positioned us perfectly to stay calm and make opportunistic purchases

Here’s what I bought today

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Let’s start by looking at overall portfolio performance. I continue to be amazed by how strong the overall market has been and because we’ve been invested in AI beneficiaries, the portfolio performance has been even stronger.

We’re up 258% since august 2022 which is a CAGR of 39.25%. I do not expect this type of performance to continue and I genuinely hope investors realize how lucky we are to be benefitting from this type of overall market performance.

I certainly don’t take it for granted that my performance has benefitted from strong overall market performance.

I’ve continued adjusting the portfolio to reflect what I believe is the best way to invest in the AI Boom while trying to avoid getting caught up in too much hype.

In short, I believe the AI Boom is real (I’ve said that on many occasions) but the struggle is that there are many companies trading at excessive valuations based on hype and extremely high expectations.

There’s a chance those stocks continue just marching higher, but I believe we’re better off owning strong companies with strong balance sheets that won’t have to dilute shareholders and will still benefit from the growth of AI.

I sold ONDS, NOW, P, and RBRK in their entirety, and I rebuilt a full 10% position in Micron (MU) that I had exited before the earnings release.

I know that sounds crazy, but I’ll share the context behind my decision. I’ll also give you my current thinking on two new positions in the portfolo META and CBRS.

UPDATED PORTFOLIO & DETAILS ON CHANGES

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These are both meant to buy long-term positions. One is an immediate core position and one is a starter position that’s more volatile which I intend to build over time.

There’s a big story out today that Meta is planning to sell AI compute which is bullish for META and a bit bearish for Neoclouds like NBIS, CRWV, IREN, etc.

This was one of the reasons I was uncomfortable continuing to hold NBIS and IREN. I felt like they had benefitted from investors pulling a few years of perfect execution and business results forward and paying a premium multiple for them.

META is currently up about 9% on the news with NBIS, CRWV, IREN down roughly 10%

Here’s the article if you’d like to read it and then I’ll post the updated portfolio below.

https://finance.yahoo.com/technology/ai/articles/meta-sell-excess-ai-computing-125201412.html

PORTFOLIO CHANGES AND UPDATED PORTFOLIO

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Big day of activity in the portfolio today. I want to walk you through every trade, the reasoning behind each one, and what the full portfolio will look like when the market closes today.

Quick recap on context. After the major repositioning over the last couple of weeks (selling NBIS, IREN, SNDK, and MU), I built a meaningful cash position and added SQQQ as a tactical hedge. The hedge was designed to protect the portfolio against further weakness in the AI-memory and infrastructure names that I had just exited.

The SQQQ hedge is slightly positive from our cost basis of $40.46. I opened the hedge because I was expecting a bit of panic and the market has chopped sideways. So it wasn’t a super profitable trade, but we also didn’t lose money and because of the way the SQQQ decays, I don’t want to hold it over the weekend.

Even though I think the broader market is overvalued and we could certainly see a pullback, some very high quality companies have pulled back a lot and are currently trading at what I believe very opportunistic prices.

With that in mind, I think it’s a good opportunity to build positions in a few companies and look to add opportunistically.

I’ll cover everything below, but first, a performance update.

Performance Update

Total return since inception in August 2022: +245%

CAGR: 38%

1-year return: +106%

YTD return: +46%

1-month return: +2%

S&P 500 over the same period since inception: +84%

The portfolio is roughly 160 percentage points ahead of the S&P 500 since August 2022

Here’s exactly what I’m doing before the market closes today.

1. Closing the SQQQ hedge in full

2. Adding 2.5 percentage points to AMZN

3. Adding 2.5 percentage points to MELI

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I still have the SQQQ position open and it’s in the green for us. The fact that the NASDAQ is down after a huge MU quarter is very telling and confirms my feeling of caution around tech and the market right now.

https://open.substack.com/pub/austin/p/portfolio-update-237?r=8q6q&utm_campaign=post&utm_medium=web

Here’s something I shared on X this morning that I want to be sure you see. The MU quarter was a blow out in every way BUT I don’t think it’s as bullish for the future of these stock prices as everyone initially thought, especially considering how high expectations are and how high the stocks have gone.

All that to say, I’m still in the same mindset I was last week and sticking to what I laid out.

Here’s the x post:

Apple having to raise prices is probably what’s bringing the NASDAQ down today.

$MU quarter and long term deals are great but it’s unsustainable for:

- Memory prices to stay astronomical

- Customers continuing to pay higher prices and accept cutting into their margins

So it will force customers to raise prices (like Apple) and/or look for cheaper alternatives.

Prices can only be raised so much.

So essentially higher prices = the solution to higher prices because eventually they’ll have to come down.

What does this mean?

I think we’re past the explosive growth opportunity in $MU and $SNDK

Was I wrong on my call of MU going to $900 after earnings?

Yes, but

My logic has not changed. I think we’re closer to the end of the opportunity in these stocks vs the beginning and a lot of people who buy at ATHs will get hurt.

I was just wrong on short term timing (though it did get to around $980 before earnings.

Im not short and I won’t short Micron (I still have an $SQQQ position open). But I don’t want to own here.

Much more interested in $AMZN $MELI $NU and others

In my last two updates I shared some major changes in my own sentiment and changes to the portfolio after a few years of exceptionally strong performance.

I simply feel like there is beginning to be reckless/irrational hype about seemingly unlimited projected AI growth from investors and then we’re seeing companies like META, GOOGL, NVDA, and others being raising debt to fund growth for the first time in years.

I’m not concerned with those company’s balance sheets. I’m concerned with the pace they are going to set by causing other (weaker) companies to have to chase growth at all costs and run themselves into the ground.

Ultimately this will make the strongest companies even stronger but I think we’re in for a lot of pain (and better buying opportunities) along the way.

Here’s a link to my last update for reference:

https://open.substack.com/pub/austin/p/portfolio-change-new-position?r=8q6q&utm_campaign=post&utm_medium=web

And here are the changes I just made and the current portfolio after those changes.

Trust me, I’m not a perma-bear. I don’t even like being “bearish” and I’d much rather just hold on to great companies and do nothing. But when I see what I believe to be irrational behavior, I take a more active approach and I’ll always keep subscribers updated when I make changes.

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