Nvidia’s $500 Billion Drop & Diversification Explained

Welcome back to our weekly chat of all things markets, and we're going to focus on Nvidia because, as you might well have read, they did shed more than $500 billion in market cap after briefly becoming the most valuable company last week. They have actually come back about a third from that sell-off, and There's been lots of talk about insider selling, and so we can discuss about what does that mean. There's a little bit of tie here to some of the compositions in various ETFs, and then also has anything fundamentally changed with Nvidia? So we can dive into that. We're also going to take a look at the, just the general stepping away from that. What does the market look like from an S&P sector basis, and how are we performing in the context of a traditional economic cycle. And I know Piers on the call with me today has got some really great insights as to stripping out AI, what does the world actually look like? And there's some really interesting observations, and that will also tie in people like Warren Buffett, who the Oracle of Omaha has been taking a bit of, bit of stick from his investors because he's sitting on a whopping pile of cash. But I think when we break it down, or, and Piers explains further, you might well be a supporter of Buffett and the reason why he's still one of the legends in the investing community, even at the age of 159. So, yeah, Piers, great to have you back on. And perhaps we could start from the top then with what happened to Nvidia?

Yeah, well, you— I mean, your stat you just said there, so it kind of— yeah, it shed $550 billion worth of market cap. Now this is kind of coming off, off its high. So, so its high was— current high, I should say— was 20th of June, and it hit $140. Um, then over the next sort of like, like 2 or 3 trading days, it dropped to $116, which was the kind of the the low of this move so far. Um, and yeah, that's a 16% sell-off, right? And I guess what's, what's, what's, why is this kind of headline newsworthy? It's because it's the biggest correction, pullback that we've seen, uh, in this stock, you know, since the AI kind of boom revolution began, which was really, I guess, defined when ChatGPT got launched to the masses. Um, I mean, we can talk about in a second the fact that, well, actually Nvidia is up 700% since ChatGPT got launched. So there's obviously a lot of people out there that would, uh, say that, you know, a pullback is warranted. But $550 billion, right, it lost in market cap in 3 days. Do you know, just to put that into context, that is the same value of the entirety of JPMorgan Chase. The biggest bank in the world is valued at $560 billion. So yeah, Nvidia just kind of chopped, um, a JPMorgan-sized lump off, off its belly, um, over the last few days. So that's putting it into context. Obviously, at its zenith there when it hit $140, it was the most valuable company in the world. Um, and yeah, smashed through Apple and Microsoft to become the, the largest company in the world. So, you know, we, we know all this story. This is, you know, NVIDIA has been the poster child of this AI boom, you know, right from the get-go. And it's just, yeah, noteworthy that this is the biggest move to the downside we've seen in this whole time. So it's got people thinking about, well, you know, is this the end then of this first phase of AI-driven stock market booms. And actually, the trigger— well, you know, people, once it's sold off, people will kind of try and look back and piece through the details and try and figure out, well, hang on, what was the catalyst for this? What is the biggest correction lower? And, you know, there's always little bits that people can find. I don't necessarily buy into this. I'm going to list off a couple of stats. So one is that Jensen Huang, who's the CEO, um, and founder, he sold $95 million worth of stock, um, in the days prior to then this correction starting. So this is one FT article that was kind of citing this. Yeah, go on, you've got a point.

Well, look, I don't want to belittle $95 million.

I would if I were—

that is tiny. Yeah, I mean, what's his actual holding? I mean, that must be a fraction.

I mean, it's a good point. I actually don't know what the stat is on that. I don't know what percentage of the company he still owns, but that— yeah, that is a tiny, look, like, if you look at the other— well, there's two things about why this story is entirely irrelevant. Um, I think first it's the, the amount of stock we're talking here, which is tiny. If you think about, like, um, uh, Musk and Zuckerberg, um, and the like, you know, they're, they're— over the last couple of years, they've been selling steadily billions of dollars worth of stock in their respective companies. So if you're talking less than $100 million here, you know, relatively speaking to the other kind of those other equivalents, it's nothing. Secondly, these guys, and I kind of repeat myself, these guys are selling stock quite regularly over the last 2 years. They're regularly selling stock. There was actually only the anomaly was 2022 when actually the rate at which these big founder CEOs were selling stock actually just dropped sharply because markets were down. And so actually they stopped selling stock. But then 2023, they got back to it. 2024, the same. They're regularly selling stock. In fact, they have to kind of announce this ahead of time. So there was what's called a scheduled Rule 10b-5-1, which is basically a form you've got to submit to say, right, this is a filing to the SEC to say, right, I'm selling stock. So this, this, this sale that happened mid-June. He filed for this in March. So it's not a surprise, right? So this is a journalist just looking back and trying to fit one story to a certain bit of narrative. And then there's talk of one notable kind of fund manager said, right, I'm going to start selling here. I think this is the top. But look, that's not the first person that said that. I think for the whole last 12 months, people are going, this is the top, I'm selling, and then have regretted it spectacularly when Nvidia then kind of sets off on its next kind of big trajectory higher. So look, I mean, why has it sold off? If you can point to reasons, I don't know. I mean, look, it's people booking a bit of profit, you know. Obviously, there's— the higher this thing goes, the more it looks like it's a bubble. And when you— I think the kind of— I think the Personally, I think it's the broader point about when it became the biggest company in the world. You know, I mean, really? I think that's when people kind of went, well, look, we've ridden this pony all the way up here, but hang on.

I think you're right. I think there is a little bit of human behaviour behind this. There's the kind of round figures of $3 trillion. There's becoming number one. Yeah, there was the stock split, a little bit of a retail push in the last fortnight just to juice it up a little. Yeah, so a little bit coming off the top.

There was an FT article about a couple of days ago, and they were quite— I don't know where they get these people from, but they were quoting this guy who basically works in retail, just an average Joe on the street. and they plucked him, I don't know where from. And he was quoted as saying, yeah, I've just bought into Nvidia because I got a hot tip off a friend of mine. And actually, he was pronouncing Nvidia wrong. He was saying it— basically, he knew nothing about the company. I'd never heard of it before, but his mate had said, ah, have you heard about AI? Right, this is what you need to buy. Spectacularly failing to realize that this company's already up 700%. So yeah, I think you've had that. Last little kind of retail inflow that kind of took it up through $3 trillion. And now you're getting that correction.

But yeah, I was going to say, like, fundamentally then I was kind of looking at, okay, so has anything actually changed? And then what is Nvidia doing to safeguard against things like increasing competition from the other big tech firms? And so on. And it came to mind because I obviously do the Corporate Finance episodes with Steven and he talks a lot about vertical integration.

Yeah.

And you know, the thing that stood out when I was just doing a bit of fact-finding around preparation for this episode was this kind of classic Cisco, is this Cisco? And I was looking at the numbers associated with that because Well, you will know, some of our listeners might not remember because this is going back to literally the year 2000, which is, by the way, before my career started.

So this is actually pre— I started in the industry in, what would it have been? September 2001. So post-dot-com bubble bursting.

Thanks. Yeah. So for those perhaps who weren't around at the time, Cisco, the networking equipment maker, you might see it still if you're in an office environment on the kind of large telephone sets with the pre-dials and so on. They were the most valuable company in the world. I think peaked March of 2000, but they famously lost about— and this was the stat, but I didn't quite realize the scope— it was 80% of its value in the subsequent year. I was like, wow.

Yeah.

And yeah, they slashed their spending on you know, infrastructure, so on and so forth. The thing then that I thought was interesting that may, I think, makes NVIDIA very different, not going to talk about the underlying tech of AI, which I think is very different in terms of its wider application and importance of where we are technologically at the moment. But this vertical integration idea was about them getting into software. And the reason why is because Stephen often talks about this, and we were talking about this with the pharmaceutical industry. And how someone would normally go in and they're working in R&D in medicine and creating like the actual products, and then they start actually selling them. And so they own the entire distribution supply chain to the consumer. And what's happening is Sanofi last week, they're looking to spin off their consumer arm because at that point then it goes through this like life cycle of, of, of business units. And one of the things I was reading about Nvidia is them focusing more on developing robust software platforms to complement their hardware.

Yeah.

And I just think that that's the natural evolution. But what that means is then it just, as a, as a corporate user of their hardware, it becomes very difficult to leave that ecosystem of what they're producing. So you kind of lock people in and you monetize them all the way through from buying your hardware, kitting out your warehouse, to then the software interfaces and everything in between. So yeah, I think it's really interesting how they've tried to do that. And the other things what I read were fostering relationships with smaller cloud computing firms, looking to invest in, and this is another thing that Steven highlighted, NVIDIA invests in a lot of the AI startups. It's pretty much got its fingers in every single AI firm from—

It's like a machine gun approach, just spraying money at everything.

Yeah.

The intention that 90% of them probably will fail, but then the 10%, you know, they're the ones that make it, right? Yeah.

And, and, and I think strategically you're diversifying your customer base and also you are able to influence AI technology trends because you are part of the involved in this, in the ownership of these firms. And there you are sitting there on the hardware side. Um, and it just means that they can work closely with these AI labs and they can stay, you know, they, they've just made so much money that they can put themselves in a position where they can really try to maintain that competitive kind of first-to-market advantage by being involved all the way from the infancy level of the new tech coming out through the hardware, through to the end software to the corporate user. Yeah, I think it's—

here's the problem. I think there's a gap now, um, the gap between what has happened already and then all of this good healthy stuff you're talking about where they're kind of investing in building out that kind of more vertical sort of growth plan and, and the time it will take for that strategy to really start to come through in kind of meaningful revenue. Behind us, um, they have 72% market share when it comes to these chips that are being used to build out all of this compute power. And the problem is their customer base is very narrow. So 40% of NVIDIA's revenue comes from 4 companies, okay? Microsoft, Meta, Amazon, Google. So that's an unhealthy sort of reliance on a small set of companies, right? And so it only takes one of those four to say, actually, you know what, maybe they change up their strategy and say, right, actually, we're going to start to kind of invest less because the amount of money they're investing is just off the scale, right? So it wouldn't take much for that, you know, a little bit of an economic downturn, Google's ad revenue starts to decline, for them to go, actually, you know what, we're going to scale back on our kind of investment. And that has a big impact on kind of NVIDIA's ability to generate continued revenue growth. So they're very over-reliant on 4 companies. And so, yeah, I wonder whether we've had that first phase, we hit $3 trillion, we're going to pull back now. And whilst all that good stuff you're saying is great for the future, I think maybe people in the short term might be thinking, well, all right, that's enough for now, and, and let's now see how this kind of all plays out. And like, when you're thinking about the future, uh, thinking about the sort of expected revenue growth of Nvidia over the— in 2025, let's say, then actually right now you're getting analysts who are saying that Nvidia is expected to have a $100 billion sort of revenue growth. Well, that's kind of looking back at really '23, '24, '25, right? But basically the point is the revenue growth expected from analysts when they're looking at Nvidia doesn't match up with the expected CapEx investment from those big 4 companies. There's basically a mismatch here where you've got $100 billion of revenue growth from Nvidia, but these 4 companies, analysts are saying they're going to increase spending by $54 billion, but that's CapEx spending entirely. So there's only a portion of that that's going to get spent on Nvidia chips. And so there seems to be this big mismatch between Nvidia expectations and actually expected outlay from these big 4 companies. So something's got to give here. Either that revenue growth expectation's inflated, and it needs to be revised down, and right, Nvidia stock share price continues down. Or these, these big four companies in, in the earnings season that's going to come in the weeks, you know, in July, really important earnings season where we get again news from these big four about, right, how much are they looking to spend on things like Nvidia chips. So I think July is going to be a really important month here when we get this, this kind of update.

Um, yeah, one thing I was listening to on the FT, and I've dug out a similar piece that perhaps you could shed some light on. They were talking about the fact that the collapse in the shares in the past week in Nvidia means that there's a lot of funds that then can reenter the market to do with their portfolio exposures and so on. And there was one Reuters piece that was talking about one of the world's largest technology funds who are setting up to basically increase their exposure to Nvidia. And so the mechanics of that were there's a $72 billion technology select sector SPDR fund. It's managed by State Street and they're looking to buy $10 billion of shares of Nvidia while slashing their holding in Apple. And so the changes here are being made so that the fund can bring its holdings in line with pending changes to the one it tracks, which is the S&P Dow Jones Tech Select Sector Index. And index and portfolio construction rules I read mean that only 2 of the 3 technology giants can be held at a full weight, full being 21% in the ETF. Any other large positions. So if you think about the big 3, so Microsoft, Nvidia, and Apple, for example, not all 3 can have full exposure in the, in that fund.

Oh, interesting.

So Apple's going to get and has been slashed to 4.5%, whereas Nvidia and Microsoft are at 21%.

Right.

Meaning then some of the explanation was there was one day a few days ago where Apple was down and Nvidia was up, and there was no real obvious reason for that, but there was a percentage difference of about 4% on that one day.

Right. Well, look, the timing again. So this is actually providing another really strong reason as to why maybe you're getting a bit of downside on Nvidia because we're coming towards the end of Q2. So in the kind of asset management, portfolio management, ETF management sort of industry, this is where you're getting portfolio managers starting to what's called rebalance. So this is where they're, they're looking at their current portfolios, they're looking at the percentage weighting of their holdings, and they're what's called, well, rebalancing or window dressing. They're basically— because all of these, they do it once at the end of each quarter, right? That's 3 months. That's a long time. And obviously these, their holdings within their portfolios can move around, you know, with quite a lot of divergence, especially if you got the tech stocks in there kind of motoring to the upside. And we'll talk about the broader index, uh, in a minute. But just the headline stat is, if you took the 5 companies that was what's now being billed as the Fab Five, um, which is, you know, Nvidia and then its four biggest customers: Microsoft, Meta, Amazon, Google. If you take those out of the S&P 500, so if you look at Q2, the index— that's the whole S&P 500 ex those five— is down 2%. So when you're at the end of the quarter, if, or if most of your holdings have gone down in value but your handful of tech stocks have motored to the upside, then what that means is the percentage of your portfolio made up of tech has now gone up, and it's actually probably gone up quite sharply. So basically, you're now carrying too much tech exposure relative to your own portfolio strategy. You might have started out the quarter back in at the end of March going, right, for quarter 2, you know, I will have— I'm going to make up some numbers now— 20% of my, my of your fund is going to be tech stocks. Okay, end of quarter 2, well now because of their outperformance, it might be 25% of your fund is tech stocks. You haven't traded, it's just that natural shift and movement as these share prices move and diverge, right? So what you have to do at the end of quarter 2, you rebalance. That means you bring back your weightings in your portfolio back to your strategy. So your strategy is 20% tech, but you've got 25. So, right, I need to get in there and sell some of my, some of my tech positions to bring down that overall percentage, um, weighting. So that's definitely, I think, a part of this. And what do you sell? Will you get in there and sell the ones that have pumped and outperformed the most, which is Nvidia, right? So I think there's a certain amount of end of quarter, uh, rebalancing, and that might continue to play out. You know, we've still obviously got, um Uh, well, what is it, two— where are we, 20? Yeah, yeah, we've got two days left today and tomorrow, right? Two days left, trading days left, I mean, um, of quarter two. So you might— it'll be interesting to see what happens in markets over the next couple of days.

So talk, talk to me a little bit more about this non-AI, um, and what you're observing under the bonnet. So stripping out— it's almost like when we talk a lot on this, this podcast about inflation and you're always talking about, okay, so here's the headline number, but then there's the core number, then there's the services number. So it's almost like looking at the S&P 500 as the major benchmark stock index.

Yeah.

And then stripping off the Fab Five.

So we look at, yeah, I mean, what, so if you're an equity investor, then ultimately you're thinking about firstly different sectors. So you're kind of breaking up the, uh, the companies into different sectors, and that's just based on obviously what that company and what that business is doing. Um, and so, you know, you have sectors like, I don't know, energy and real estate and, uh, financials and healthcare and all the rest of it, right? There's generally speaking 10 different sectors that we look at. And if you take the Fab Five out, then yeah, as I said, overall the index is down. But when you, when you go even deeper, right, how are the different sectors performing, then actually starts to get really interesting. Because what we've seen in the— in Q2, the outperforming sectors, ex the Fab Five tech, the outperforming sectors are utilities and consumer staples. And in fact, they're the only two sectors that are up And actually utilities, they're up north of 5%. Now utilities, you know, this is your electricity companies, your gas companies, right? They're normally very stable. They're what's called defensive stocks. The volatility of their share prices is quite stable. Why? Because their revenues are very stable. Why? Well, we use electricity every day, and our electricity usage, you know, only changes because of the seasonality, right? So this is all baked into the share price. But ultimately, you know, we're going to turn on the lights, we're going to charge our phone, we're going to watch TV, and, and our consumption of electricity doesn't actually change much, which means the revenues for these businesses doesn't change much and is actually just a a function of how the electricity price changes. But so it seems it's defensive. They're often dividend payers, these stocks. So in times of uncertainty, in recessionary periods, you'll tend to see investors move their money towards defensive sectors like utilities. The other key defensive is consumer staples. So that's your, I don't know, your, your the producers of stuff that we're going to buy all the time. So the basic essentials of life, right? So I don't know, toothpaste, right? So you're going to buy toothpaste, okay? Irrespective of the economic environment. So Colgate and producers of that kind of product are seen as consumer staples. And so again, their revenues are very stable even, and so they're kind of stable, uh, and not particularly sensitive to the economic cycle. So in time, when the economy's swinging down, then you get investors moving their money to these defensives. They're the outperformers. And healthcare is the next one. That's— that has dropped, but it's dropped the least out of all the others. So basically, the point is, take out the Fab Five, and what you've got is a setup here where it feels like a recession. I mean, a recession isn't happening though, but you've got positioning in these sectors that looks like investors have got a quite a defensive play. Now, there is one maybe counterargument to all of that because there is an argument to say that the AI boom has even reached as far as the utility sector because the argument is all of these big tech firms need a huge amount of energy to run these massive compute platforms they're building. So therefore, actually, energy demand, electricity demand, has actually sharply gone up as well. So there is an argument to say the Utilities Act performance actually isn't defensive recessionary play. It's actually even they're benefiting from the AI boom. So look, it's not quite as straightforward as you might, as you might think.

Yeah, I get that latter argument. But wouldn't that have been a pattern occurring throughout that sector performance prior to the last quarter? Why so? Yeah, that doesn't really— that could explain a partial reason for utility, but it doesn't— when you look at the breakdown of the sector performance in the past quarter, I mean, it's a sharp outperformance and it's not like the consumption of those AI cloud services and things like that have shot up or changed. It's probably got bigger.

And actually, to further support your argument, the worst performing sector of the whole lot in the S&P in Q2— energy. So those utilities, you might thinking the electricity companies, right? But energy sector, that's like your big ExxonMobil and your oil producers, right? They're down 5% on the quarter. Now you might think, oh well, isn't that to do with the oil price then? But actually the oil price is higher now today than it was at the start of the quarter. I mean, it's been a very, it's been a volatile quarter for, for oil. We had a sharp upside in April, um, and a big downside, and now we've rebounded. But, but anyway, um, so yeah, energy sector being the worst performer perhaps, yeah, does maybe lean towards this idea that if it wasn't for the Fab Five, then actually it looks like investors are kind of, kind of gearing towards a recessionary setup in their portfolios.

So when it comes to, say, single stock sector— or not single stock, sector selection— are you not just better as like a non-sophisticated investor just buying an S&P tracker? Because isn't that in itself diversified across all 11 S&P sectors?

Yes, yes, with a caveat. But let's just start with the yes part first. Yeah, I mean, look, if you don't know about this stuff, and look, most people don't, right? They don't know about, or they're not thinking at that level. They're not delving deeper and going, right, what are the different sectors? Okay, what are these companies doing? Right? How is that business linked to this part of the economic cycle? What even part of the cycle are we in anyway? And, you know, are they going to perform, outperform, underperform? And right, how, how do I alter my asset allocation in my portfolios? You know, that, that's kind of what the industry professionals are doing. But if you're sat there going, well, I don't know anything about that, then the S&P 500 is where you should be, where it's got built-in diversification, where you've got exposure to absolutely every single sector, um, and 500 different companies, right? So this word diversification Um, that's a key part of portfolio management where you're spreading your risk, where you've got money invested in a whole load of different companies so you're not overexposed to any one. Because look, who knows, right? History has shown us that no matter how solid and amazing a company looks, there is a tiny, you know, non-zero risk that something's lurking around the corner that could lead to you know, that company and their share price collapsing, right? So you want to avoid overexposure to any one or a handful. But the problem, I guess the one issue has been that the S&P 500 is becoming progressively less diverse because of the outsized boom we've seen in tech. I don't even know where we're up to now, but I think tech broadly. And, and the fab— I actually don't know the latest stat, but it's probably north of 30%, right, of the S&P index is made up of tech. So, you know, I mean, it's not, it's not the NASDAQ, but, um, you know, it's getting progressively closer.

Okay, then, and then, so let's talk about— you mentioned recession environment, and I, I guess the natural theory being if that were the case, then you would revert to cash for the time being before you would deploy that into the market at that point in time. Is that the natural investor process, if you like, through economic cycles? And thus then Warren Buffett taking some heat, you know, is he right? Is he wrong?

It depends who you are, right? But generally speaking, um, the line always gets wheeled out that, you know, no matter where we are in the cycle, you know, you should be fully invested. And that's because over the long, long, long term, being fully invested leads to, you know, strong returns. If you start to try to be short-term tactical, and I'm going to— right, I'm going to go all to cash and I'm going to wait that's then difficult. Timing this market is very, very hard, and it's only the few that have managed to be able to do that consistently over the long term. So timing it, I don't know. So normally what you'll find is most of these asset management firms are looking to be fully invested at all times. Now, they might have a portion of cash, but they tend to keep it very low. But it may be that the cash proportion of their portfolios now, yeah, you're probably looking at it becoming the highest it's been for a long time, but that might be like no more than 10% for most of these money managers, right? But 10% is cash, and look, you can get 5% return on cash, um, and so that's the best return you've been able to get on cash for like 20 years. So that's actually an attract— almost like an attractive asset class again, to an extent, which is why portfolio managers are happy to hold an outsized cash portion than they used to. But yeah, we're talking 10%. Now you've got others who have a bit more control. So Buffett's a great example. So, you know, those that have been able to consistently outperform the market for decades, well, of course Buffett is your man. He is kind of in some ways quite unique, right? In that ultimately what Buffett says happens. So at the moment, he's carrying a lot of cash and he's getting some grief from his shareholders. Why aren't you taking some shots here? Why aren't you getting some of that cash deployed? His argument's simple and it's, look, I don't think the time's right. He's basically, you know, forget about the Fab Five, he's looking at the rest of the index and going, well, look, you know, conditions aren't looking great, you know, opportunities— I'm not seeing any attractive opportunities out there, and I'm gonna wait. And you, when you're a long-term investor, patience is often one of your most powerful kind of assets, right? And he's gonna wait, and he's gonna wait for things to correct, which he thinks You know, he's talking about, you know, if it's such a narrow rally, right? And we've seen Nvidia get pegged back a bit. I mean, just very quickly as an aside, it does look like a lot of that money is going into the other tech stocks though, because if you look at Q2, um, Apple's up 25%, Alphabet's up 30%, Microsoft's up 11%, Amazon's up 10%. You know, these big tech stocks— I mean, so some of the money's getting rotated, I guess, like you were saying with that ETF. If you're only able to hold 2 of them at 21%, and you want to bank some profit on one. So you might be selling some Nvidia and then you're moving that into Apple, right? And look, there's reasons why Apple and Alphabet have performed well with Apple's announcement where they're kind of bringing in ChatGPT onto the iPhone. Will that trigger a kind of wave of people upgrading their handset and will iPhone sales growth come back to the fore? Alphabet kind of getting their act together a bit now with Gemini and, and starting to enter this AI race in a meaningful way. Fine, there, there's rationale for that, right? But Yeah, but ultimately, yeah, I think Buffett sat there going, look, I'm going to wait and I'm happy to wait at 5%. 5%, that's basically— you got to realize since the financial crisis, getting 5% on a safe asset has been nigh on impossible. But now we're back to those days where bond yields are higher, money market rates are higher, deposit rates in your bank account are higher. So it's actually, it pays to wait now. So Buffett sat there and just deflecting all of this criticism going, what do you know? Look, I'm in charge here and I'm sitting on my cash. Thanks very much.

I'm assuming he's a one-off case though. And because he's such a, you invest in his fund, you're investing in him.

Yeah.

And I know you do that technically with all funds. In terms of the fund manager's performance, but he is a different proposition, I would assume, and can have the respect and patience of his investors that others wouldn't.

Yeah. And he's right. The risk of sitting out with a load of cash is that you are wrong. And actually this isn't the beginning of what's going to be, you know, Buffett's talking about a 40% correction. What happens if you're wrong and actually what happens in the next 12 months is the market goes up 20% and you're sat on the sidelines out of the action? If you are not Warren Buffett, then your investors are going to go, well, all right, that's been a bit of a cock-up. Maybe you don't know what you're doing. You know what? I'll have that cash back, please. And I'll invest it elsewhere. But of course, with Buffett, he's got decades and decades and decades of track record. And fine, he might miss one or two here or there, but ultimately the idea is your money with him is safe and it's going to outperform. You might miss a couple of shots here or there, but longer term, it's noise.

Okay, final question just to conclude then. We're going into Q3, so given what we've just discussed of Q2, given what we know The Fed have come out and kind of penciled in one cut. That's probably not going to happen till right at the end of the quarter. All things being equal as they stand at the moment, you've got the election looming, of course, in Q4 for the US. Geopolitics seems to be somewhat more stable in terms of as much as it can be given all the things that are going on. So what do you see in Q3? Is there anything that you're thinking?

Um, I think it's more of the same, um, in that we're still waiting for the Fed. Um, it'd be interesting to see what— you know, the things I'll be looking for are the labor market, you know, what happens there. Does it stay strong? We've started to see a couple of chinks. Uh, jobless claims are on the up, and it's like, okay, well, you know, maybe things are turning. Um, are we going to see the US economic outperformance, um, dissipate? Um, and fine, that'll bring in the Fed and get them cutting, but, you know, I'll— you know, is that underlying S&P index right? You know, aren't fund managers positioning for a looming downturn? Are they right or not? And, and that's, that's the big— that's, that's the, that's the one story, okay, which is thinking about the majority of, of your portfolio if you've got a diverse one. The other seemingly entirely detached story is, right, what are these big tech earnings going to look like? What's Nvidia going to be talking about with regards to their forecasts for into the end of 2024? And what are these big other tech firms going to say about their infrastructure spending and their CapEx spending going forwards? I think then that's going to start to play. What happens to iPhone sales? Does Tim Cook start to get a bit more confident that iPhone sales might go back on the upturn? What's the revenue that Amazon— sorry, Alphabet are generating from Gemini? All this kind of stuff, it's almost like an entirely unrelated, detached story. So you've almost got two big themes to be thinking about. This earnings season, which will get going kind of mid-July when we hear from all of these tech firms, Well, actually not Nvidia, right? Nvidia are out of sync. We won't actually hear from them until I think probably August, actually. But we'll hear from the rest. So yeah, I think earnings season, the next few months of jobs data, what are the Fed talking about? Is Buffett right? Are we going to get a 40% downturn? Are we going to get a recession into the end of 2024 or not? I think that's what Q3 will be about. Revealing more information about that, that ultimate direction into year end.

Great stuff. All right. Well, what I'll do is on Spotify, if you're listening on that platform, I'll put a poll. S&P 500, is it going to finish the end of Q3 higher, the same, or lower than where it finishes Q2? And I'll let you all listening decide. But Piers, thanks as ever for your insights and explanations, and I'll catch you next week.

Catch you later. See ya.