Happy belated 4th. My occasional reminder that the best gift you can give yourself and everyone around you is the awareness of index ETFs. 99% of investors cannot beat these incredible ETFs that provide exposure to the best companies in the strongest economy in the world, automatically rebalance to add winners / remove losers, can be held forever, and require you to pay little to no taxes. SPY: 13.8% compound return over 15 years. Up 11% YTD. Trades at 21x forward P/E vs 10 year mean of 20x. Average of 9% EPS growth over past 10 years. (If you want the SP500, buy VOO which has lower fees instead of SPY). QQQ (Nasdaq 100): 18.5% compound return over 15 years. Up 18% YTD. Trades at 24x forward P/E vs 10 year mean of 25x. Average of 13% EPS growth over past 10 years. SMH (Semi's): 24.8% compound return over 15 years. Up 71% YTD. Trades at 25x forward P/E vs 10 year mean of 20x. Average of 22% EPS growth over past 10 years. IGV (Software): 16.0% compound return over 15 years. Down -12% YTD. Trades at 20x forward P/E vs 10 year mean of 35x. Keep in mind this EPS also is a blend of consensus so excludes plenty of SBC depending on the company (just saying despite the SaaS-pocalypse, the group doesn't stand out as "cheap"). Average of 12% EPS growth over past 10 years. Think about that for a second. You can own QQQ which is America's best tech companies (and the world buys American tech) for 24x EPS or a 4.2% yield on NTM that goes to a 4.7% yield on Y+1 to a 5.3% yield on Y+2, ... And you regularly get to buy QQQ at 20x or a 5.0% yield that increases over time. To me, that's a shockingly good deal compared to a risk-free rate that pays you in devaluing USD and is taxed. It's kind of remarkable that vehicles that have provided better returns than 99% of the active management industry (and 100% of the industry on an after-tax basis) with pretty digestible downside volatility aren't at least 50% of everyone's portfolios. I guess there is no face to these vehicles out there promoting them non-stop and no fees to feed an eco-system of advisors / marketers / etc. Anyways, I just encourage people to actively think about VOO / QQQ. Have you outperformed it over 20 years on an after-tax basis? Have your fund managers? ...

I'm really curious to know what percent of $GOOGL / $AMZN ad spend consists of brands buying sponsored listings for their own search terms - basically spending to defend their own screen turf from competitive ads. See below for searches for Speedo Goggles: GOOGL: The entire visible screen is sponsored ads which Speedo has to pay for. The next screen down has Speedo in a thin organic result followed by a Deals market ad where Speedo again has to pay for shelfspace. Using Gemini search for "Find me speedo goggles" only showed Speedo branded goggles. AMZN: Speedo has an organic link in the bottom left and right, and otherwise is surrounded by competitive listings. Interestingly Speedo not paying up here (maybe realized using branded term this close to checkout means consumer is buying Speedo regardless). Using Alexa AI search for "Find me speedo goggles" only showed Speedo branded goggles. I personally find GOOGL / AMZN search results to be over-monetized w/ ads that don't add value - and, in fact, make it more annoying for me to find what I want. AI search for products on AMZN works really well for me fwiw so I must already be seeing far fewer ads simply by this usage shift. I don't really know what happens to this "traffic defense" spend in an agentic world. Feels like it would be less necessary in a world where agents need to be trustworthy to win consumer preference. So hard to imagine I ask an agent for speedo goggles and it spends 80% of the answer discussing competitive brands like regular search results do today... Maybe consumers always want choice so there is room for other brands to pay to be mentioned within the AI results - while still not being dilutive to the consumer's experience? Or, maybe agents can find the best 2-3 products so less need for brands to advertise within search and just put those dollars towards improving product quality / Internet posts to drive agentic preference? Random thoughts...

I tried Muse / Instinct for an upcoming trip to a dense metro. Ideas: Both were pretty good as far as providing 4-5 ideas. I realize that prompting for hotels is challenging because there are a lot of details I don't know I care about until I do a regular search. But I should probably create a long-form prompt for travel preferences. Selection: Both seemed to draw heavily from $BKNG / $EXPE which makes sense as far as time-to-market w/ good inventory selection. Pricing: A bit all over the place. Some listings included tax - others didn't, some were wrong, etc. But not wildly unreliable and I'm sure will get there. Ultimately, Muse told me to book a hotel via my loyalty app for the points. On one hand, maybe this is good for the OTAs as initial AI drives more bookings share, and smaller hotels continue to rely on OTAs for expanded value prop (coordinating AI purchases / cancellations / etc.). Or maybe it's bad for the OTAs because, over time, agents can simply go populate inventory directly off hotel websites, build even better review systems (as the AI agent asks for detailed feedback from your stay in order to do better next time, and anonymously pools this data), and AI agents participate in that 13-18% OTA take-rate pool at a much lower rate? Will the OTA's have their own agents? Yeah, but I guess they aren't exactly tech leaders and their customer relationship lacks context (calendar, email / messaging traffic related to trip, etc.) compared to $GOOGL / $META / etc. Also, their own AI agents are pretty mediocre right now. Pretty sure travel is $GOOGL's largest advertising vertical. And even when discovery has moved off their platform, they retain the monetization prize because of last touch attribution (ie users go Google the hotel they want to book and the eco-system disproportionately says Google brought the customer in). But if the discovery and booking move off $GOOGL, that's likely going to be a real issue. Random thoughts. Had to consider it as a contrarian long with $BKNG at 13x street 2027 GAAP EPS but probably too tough.

I'm going to date myself here but I remember a time when I was teenager, and the software functionality in the PC-era was advancing at such a rapid clip that it was next to impossible to keep up. Windows would have tons of new features every year, browsers advanced, email clients advanced, photo-editing tools advanced, etc. I don't know why my physician parents bought a computer but I'm really glad they did. I made sure I knew about every single feature / option across the hardware (I'd open it up and upgrade RAM, sound cards, etc.), operating system and apps. That was a time when you could buy books to learn Lotus 123 or Photoshop or whatever. And the books were super useful but also stale by the time you finished reading them. The mobile / Internet cycle for some reason felt slower to me. The AI cycle feels similar although maybe faster. Back in the PC era, my ability to use the new thing came down to my having the time / budget to go upgrade my hardware / software. Every time I log into Claude / Chat, there is a bunch of new stuff I haven't tried yet, new offerings weekly, etc. And it's all immediately available for basically free. This is a worthless comment but that "real functionality advancing far faster than adoption" was a 1995-1997 feeling, not a 2000 feeling. And there will be a time when Office kills off Lotus 123, Windows NT kills off Novell NetWare, Access kills off Borland, Adobe kills off QuarkXPress, etc. But maybe that's a handful of years out?

$QQQ forward P/E has averaged ~25x for the past 10 years. It currently trades at ~20x the 2027 EPS estimate. Let's assume a big recession in semis. I cut the 2027 EPS estimates for NVDA, AVGO, AMD, MU, LRCX and AMAT by 50%. $QQQ is then trading at 24.5x the revised 2027 EPS. Obviously, that isn't going to happen but shows that the market is already effectively pricing in an outcome like that already. [Maybe that's too optimistic and market would trade at 20x EPS in that scenario which would present 20% downside from here if it were to unfold]. I'm not smart enough to have a view on 2028 yet but doesn't feel like capex is going to get cut materially unless Anthropic / Open.AI growth dramatically decelerate. Separately, AI in Excel is pretty solid. Just obvious to me AGI is already here.

Further review of $DXYZ filings reveals some interesting points. Punchline is disclosed NAV is $34.30 today (6% upside from current price), conservative NAV is ~$35.31 (9% upside but only assuming Anthropic is 1t), and a reasonable NAV target might be $43.86 (35% upside assuming Anthropic is 2t and OAI is 1.3t). And some call option value on the equity doing something silly in advance of the IPO. 1. DXYZ is paying neither a management nor an incentive fee to Magnitude for the Anthropic position. See table below. Not paying fees for anything other than SPCX really. 2. DXYZ did not sell any Anthropic in the quarter. The N-PORT filings confirm it continues to hold 386,088 shares. 3. The value of the Anthropic holding only increased from 134m on 3/30 to 236m on 6/30. The stake was acquired on 1/26 for 107m. Assuming the 107m was invested at ~350b valuation, DXYZ is carrying Anthropic at ~770b valuation at 6/30 which equates to 14.4% of the NAV. 4. The valuation methodology for Anthropic is buried in the SPV valuation table. The Fair Value of $278,448 is only cleanly calculated by summing Magnitude, Goanna, and OAI. The methodology blends volume weighted average transaction price, index price and recent transaction price. The avg for these three investments was $651.51 over the qtr w/ the highest input being $766.76. A long way of saying this is another sign that Anthropic is likely being marked at a meaningful discount to even the 965b post Series H on 5/28. Scenario 1 (realistic cut as of today): Assume Anthropic 1t, OpenAI 850b, SPCX current price results in $35.31 NAV with position sizes of 46% cash, 18% Anthropic, 12% OpenAI. Scenario 2: Anthropic 1.5t, OpenAI 1t: $39.23 NAV with 41% cash, 25% Anthropic, 12% OpenAI. Scenario 3: Anthropic 2.0t, OpenAI 1.3t: $43.86 NAV with 37% cash, 29% Anthropic, 14% OpenAI 5. DXYZ sold 17m shares in the qtr at an avg price of $41.82. This is where the interests of DXYZ and investors diverge. Investors want exposure to the home-run investments w/o dilution. Meanwhile DXYZ has a business to run and wants to raise assets when the equity is at a premium. 5. The board approved a share repurchase program in August that allows them to buy back stock when it trades below NAV. So they now have a mechanism to raise capital when the stock is above NAV (bad for short-term traders of the stock), and buy the stock back to NAV when it trades below (good for short-term / long-term traders).

$NVDA at 14x 2027 EPS seems interesting. Yeah, yeah, I get it. World's biggest company, losing share to XPU, cliff risk in 2028, estimates already reflect massive guidance revision, stock not acting well. Just seems like their business needs to get cut in half in 2028 for this price to make sense. Certainly possible but hard to gauge how probable. And sentiment / positioning feels biased upwards. I know - 0 value post.

$DXYZ posted its 6/30 update. The good news is NAV is $34.30 which was above my estimate. The mediocre news is they raised cash so Anthropic is only a 14.4% position at likely a ~1t valuation. I guess that's the risk with these public VC funds - they can reduce positions and/or raise cash which diminishes the impact of home run investments. Was a fun run from investing below NAV in the low 20s. Claude estimates current fund is 47% cash, 14% Anthropic, and 12% Open.AI, and other names. It's basically at NAV now with upside based on Anthropic IPO. But maybe less squeeze potential given the NAV is half cash.

$WDAY Q2 was totally fine. Leading SaaS provider of HCM / FINS is building out their AI capabilities. Business is mature since they are highly penetrated in the market so growth depends on upselling additional products (40% new logos / 60% upsell) which results in ~10-12% revenue growth. Meanwhile, margins are finally a point of focus and have plenty of room to increase from 14% GAAP this year (they plan to keep headcount flat going forward). They previewed next year at exactly where street is (11% growth) which I think is meant to get ahead of having to guide below later this year, and will show 200 bps of margin expansion which is nice to see. Really not much of a revisions story which is probably why so many people were short it. The business hasn’t really changed in quite some time although the narrative went bonkers to the downside and is now normalizing. The business ought to continue growing 8-12% for a while w/ much faster profit growth. AI revenue is only 6% of the business although growing quickly – so unlikely this business materially changes even if AI monetization works. The real risks are just that big companies focus their investment outside WDAY into hotter technologies (Claude, new AI point solutions) which would slow their growth rate. But the Global 2000 isn't ripping this stuff out. You are definitely a loser company if your first thought in an AI world is to focus on your ERP software instead of more growth-oriented applications. No discussion of M&A which I’m sure is ongoing. The co-founders have voting control so comes down to them. I think it would be pretty insulting to shareholders to sell anywhere south of $250 and could even argue that’s too low. I don’t know what the right multiple is for this company. Would think 20x earnings power (see-through margin) isn’t crazy which equates to 30-35x GAAP EPS / NOPAT. Maybe it goes back down to 10x FCF although that was pretty crazy. It's good to see that the old rule of it being impossible to lose money buying a profitable, growing and recurring revenue business at 10x FCF or below still holds. Qtr Subscription rev of 2.47b grew 13% yy cc organic consistent w/ prior qtrs. Retention rate stuck at 97%. PF OM of 31.1% up from 29.0% last Q2. SBC of 17.4% up from 16.7% - not sure what’s going on – maybe retention bonuses for acquired teams. NOPAT margin of 10.9% up from 9.8%. Put me in coach. I could take it to 40% tomorrow. Sharecount is down 9% in three quarters. Good job with the buyback – well executed.

Quick note on $CRM: SaaS sentiment / positioning obviously dramatically overshot fundamentals to the downside and is in the process of course correcting. Is the story getting better or worse? Kind of hard to say since everything is very dynamic right now. These core systems of record are sticky and aren’t going anywhere quickly. But it also seems like the CRM built AI products are only slightly moving the needle, and most of the innovation / value creation / monetization is happening in the AI layer on top (ie Claude). Are numbers going up or down? The business is going to accelerate very slowly in the 2H but still remain an 8-11% yy cc organic grower so not “sexy”. Margins still have tons of room to move higher offset by generally poor execution and a need to defend their product innovation across 100 fronts (and a need to buy dilutive innovators). I’m not really differentiated vs street. How is risk / reward? The easy money from SaaS is dead is over (see prior posts) but it’s still reasonable on valuation. Trades at 18x CY2027 NOPAT for mid-teens profit growth. Not really leaping off the page in either direction. Does feel like this is now officially an “old” company. Plenty of legacy tech inside this (Tableau, Mulesoft, Informatica, Demandware, etc.), tip of spear AI development / adoption occurring outside them, etc. There was some point at which IBM turned into a boring company, and it feels like that moment has already happened for CRM. Notes Anthropic -Highlighted Claude on top of CRM AI -CRM Help Agent had 5m customer conversations w/ 64% resolved autonomously -50% of AI bookings coming from customers refilling the tank -Only 5% of knowledge workers that use sales and service have upgraded to higher-end editions – get 60-80% premium. Sales -Contract terms improved across all segments (from Q1? Q1 is a nothing qtr) -AI company spend on CRM is up 435% yy (duh, hiring more reps) -15k sales reps and still have to hire 1.2k more before end of year Regular vs headless monetization? -Working through headless. ITSM -Has 450 customers and claim some from NOW Life Sciences -Now has more than 140 customers including all top 5 pharma companies M&A -Slack was the best acquisition we ever made Numbers -On track for 2H acceleration -Guidance increase includes 200m of rev from acquiring Contentful and Fin

The estimate revisions this year have been absolutely wild at the index level. SPY EPS estimate for this year has increased from $31 on 12/31 to ~36 today. 16% increase vs historical average of EPS typically being revised downwards by 3% over the year. SPY up 13% this year so cheaper than the start of the year. QQQ EPS estimate for this year has increased from $24 on 12/31 to $27.44. 14% increase vs historical average of estimates being revised downwards by 1%. SMH EPS estimate for this year has increased from $14.53 to $20.44 currently. 41% increase vs historical average of estimates being revised upwards by 14%. And last, and also least, IGV EPS estimate for this year has decreased from $3.98 to $2.87. -28% revision vs historical average of -5%. Yeesh. SPY up 13% YTD, QQQ up 16% YTD, SMH up 54% YTD and IGV -4% YTD by comparison.

I had Claude do its best to find verified Anthropic / Open.AI ARR by month and interpolate the other months. I would think somewhat rough so monthly increments not that reliable. With that caveat, here is the net ARR added by month this year: Jan: 6b Feb: 6b Mar: 10b Apr: 16b (!) May: 11b June: 11b July: 16b Could argue July is even healthier as both companies participating nicely - simply validating model capabilities and end-market adoption. So total ARR was 29b at end of 2025, and run-rating monthly additions through year-end implies >200b run-rate at end of 2026. Good god - never seen anything like it. $DXYZ / $RVI.

Made some additional calls on $DXYZ. DXYZ holds Anthropic through Magnitude and word is this is a legit entity. 0/0 vehicle and people close to it expressed confidence that the transaction was blessed by Anthropic. As far as these private ETFs (DXYZ, RVI, VCX) go, I also heard that almost all the transactions are 0/0 (meaning neither an ongoing management fee nor a carry) but sometimes a one-time fee. So basically good news that these entities are entitled to what they have purchased and the underlying SPVs mostly don't add additional fee drag. This is all sort of downside technical stuff but does increase confidence that buying $DXYZ around here likely corresponds to an Anthropic mark ~1t. And it sure does seem like Anthropic is going to be valued a lot higher than that.

This August feels very different from last year. Last year: AI functionality was developing but still lagging relative to widespread, valuable use cases. Altman was predicting 1t in required infrastructure spend which worried the market. $SMH traded at ~25x NTM EPS and moved sideways before market realized spending was going up regardless of ultimate level, and gained ~28% over next two months. $QQQ traded at ~28x NTM EPS. This year: AI functionality now ahead of widespread, valuable use cases and monetization ramping at unprecedented rates for this scale. Anthropic reportedly profitable in the most recent quarter which is a sigh of relief and supports the accelerating / increasingly profitable situation underneath in hyperscalers / semis. $SMH trades at ~23x NTM EPS and rising after a recent 25% drawdown from peak. Again, maybe similar to last year, we don't know where and when this will all peak and all that matters is spending is going up for now. $QQQ trades at ~23x NTM EPS. Just feels like the current situation is night / day more bullish than last year. Gun to my head? Next 20% move is up. [Cue market falls 5% immediately:)]

I'm looking forward to attending the inaugural TomorrowX Summit. Pretty cool to see how investment research, discussion and networking are evolving / "democratizing" (kind of hate that word). Anyways, should be a pretty cool / informative event to attend. tomorrowxsummit.com/register…