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Feb 18, 2026
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LONG
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Schwab stock dropped 10% on news that a competitor (Altruist) released an AI tax tool. The market's reaction suggests a fundamental misunderstanding of the industry. The idea that a single AI tax feature would dismantle the moats of massive custodians like Schwab, Raymond James, or LPL is "a joke." The sell-off is an irrational "recency bias" event where algorithms are selling on AI headlines without understanding the business durability. Continued algorithmic selling or genuine disruption in wealth management fees over the very long term. |
The Compound News
Is AI a Mistake? | Animal Spirits 452...
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Feb 18, 2026
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LONG
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Software stocks like Salesforce and ServiceNow have crashed recently due to fears that AI will replace their business models (the "AI killing SaaS" narrative). The market is over-extrapolating. Enterprise buyers don't just buy software for features; they buy it for "career risk" management (i.e., "You don't get fired for buying Salesforce"). Incumbents have distribution, data, and support teams that a "vibecoded app" created over a weekend cannot replicate. Michael bought these stocks during the drawdown, viewing the valuation compression as an overreaction to the AI threat. The stocks could remain "dead money" for years if the market refuses to re-rate them higher, or if AI actually does erode their seat-based pricing models faster than anticipated. |
The Compound News
Is AI a Mistake? | Animal Spirits 452...
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Feb 18, 2026
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LONG
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Michael distinguishes between software companies with "proprietary data/regulatory lock-in" versus those without. While generic data providers (like FactSet) might be at risk from LLMs, S&P Global has a regulatory moat. An AI cannot issue a credit rating that satisfies regulatory requirements; only a licensed agency can. Michael explicitly stated he plans to buy SPGI, viewing it as immune to the disruption facing generic SaaS. Regulatory changes or a shift in how credit analysis is consumed. |
The Compound News
Is AI a Mistake? | Animal Spirits 452...
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Feb 18, 2026
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AVOID
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Silver is down significantly (crashing) while other assets move. Michael admits to losing money on this trade ("Software and Silver" are his current pain points). He characterizes the price action as "strange." The trade is not working; implied sentiment is frustration/avoidance until momentum changes. A sudden reversal in commodities could leave sellers behind. |
The Compound News
Is AI a Mistake? | Animal Spirits 452...
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Feb 18, 2026
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LONG
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Robinhood CEO Vlad Tenev stated we are at the beginning of a "prediction market super cycle" that could drive trillions in volume. Robinhood is positioning itself to capture this volume, viewing prediction markets as a new asset class that fits their retail trader demographic. Bullish on Robinhood's ability to integrate and monetize this new trend. Regulatory hurdles for prediction markets in the US. |
The Compound News
Is AI a Mistake? | Animal Spirits 452...
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Feb 18, 2026
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WATCH
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DraftKings reported earnings and showed prediction markets (like Polymarket) currently have only 1% wallet share, but the stock got "smoked" (down ~60% drawdown). While currently small, prediction markets are in a "super cycle" (according to Robinhood's CEO) and could cannibalize sports betting wallet share over time because they offer better odds/utility than traditional sportsbooks. Cautionary stance as the stock price reacts negatively despite revenue growth, potentially signaling fear of this new competitive threat. Regulatory crackdowns on prediction markets could send users back to traditional sportsbooks. |
The Compound News
Is AI a Mistake? | Animal Spirits 452...
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Feb 18, 2026
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LONG
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Michael mentioned he "finally pulled the trigger" on Netflix during a drawdown. Despite the competitive landscape, Netflix has won the streaming wars. The thesis parallels the "prediction market" consolidation where too much competition eventually favors the dominant incumbent. Long the winner of the streaming sector. Consumer spending slowdown or saturation in subscriber growth. |
The Compound News
Is AI a Mistake? | Animal Spirits 452...
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Feb 13, 2026
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WATCH
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These commercial real estate service firms (CBRE, Jones Lang LaSalle, Cushman & Wakefield) were sold off aggressively (market cap wiped out) because the market assumes AI chatbots will replace their brokerage and data services. The selling is described as "indiscriminate" and "wild." The market is pricing in immediate obsolescence based on fear rather than earnings reality. These companies possess proprietary data and physical management capabilities that a chatbot cannot replicate. The sell-off represents a potential overreaction/mispricing due to AI panic. AI actually disrupts their brokerage moats faster than anticipated; commercial real estate macro headwinds persist. |
The Compound News
The Baddest Hedge Fund in the World | TCAF 22...
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Feb 13, 2026
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WATCH
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Logistics stocks like C.H. Robinson and J.B. Hunt lost billions in market cap because a penny stock (Algorithm Holdings/Karaoke company) announced an "AI freight product." The market is reacting to "tape bombs" and headlines from non-credible sources. If established logistics giants are selling off due to a penny stock press release, the selling is irrational and likely to mean-revert once the "threat" is debunked. Potential recovery play as the market realizes the "disruption" threat was noise. The freight recession continues; genuine AI disruption eventually emerges from credible competitors. |
The Compound News
The Baddest Hedge Fund in the World | TCAF 22...
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Feb 11, 2026
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LONG
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Bitcoin crashed to the $60k range, and sentiment is described as "the worst ever." Put volume and share volume spiked, indicating capitulation. This is a classic "liquidation break." Michael prefers buying into panic selling where sellers are exhausted. Tactical long (bought IBIT at $66k). Plan to sell on a bounce to $72k or stop out at $63k. If it crashes to $50k, he would buy for the long term. Crypto continues to trade like a high-beta software stock (correlation with IGV is high). |
The Compound News
What Would You Do With $3 Million? | Animal S...
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Feb 11, 2026
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LONG
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Software stocks have crashed violently (IGV -33%, MSFT -25% wiping out $357B). There was a "panic liquidation" and "puke" in volume on Thursday. While the long-term moat of SaaS is legitimately threatened by AI coding agents (deflationary pressure), the short-term sell-off is an emotional overreaction. When a sector is "held underwater" this long and sellers exhaust, it acts like a buoy and pops back up. Buy the panic for a tactical bounce. The structural bear case (AI replaces SaaS) is true; margins compress permanently. |
The Compound News
What Would You Do With $3 Million? | Animal S...
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Feb 11, 2026
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WATCH
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BDCs and Private Credit firms have high exposure to software loans (ARCC has 24% in software/services; industry average ~22%). If the "death of SaaS" narrative gains traction, the collateral backing these loans (recurring revenue software businesses) becomes questionable. Be cautious of BDCs with heavy software exposure during this sentiment shift. Software companies prove resilient; default rates remain low. |
The Compound News
What Would You Do With $3 Million? | Animal S...
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Feb 11, 2026
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LONG
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Alternative asset managers like Blackstone (BX), KKR, and Blue Owl (OWL) have sold off (OWL down ~50%) due to fears over their Private Credit exposure to software companies. The market is pricing in a systemic failure of software loans within private credit portfolios. Michael views this contagion fear as "way overdone" for the top-tier managers. Blackstone specifically is a "screaming buy" at these levels. Significant defaults in private software loans. |
The Compound News
What Would You Do With $3 Million? | Animal S...
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