There are No Teams

05/08/25 Prospero.ai Investing (218th) Edition (Midweek)

The Royal Tenenbaums is one of my favorite movies. And this GIF is one of the reasons why. Royal’s son says “we are on the same team” and this was the response. Sometimes we experience this feeling in rather unfunny ways but this scene is equal parts horrifying, funny and in my mind, somehow a little endearing.

I often feel this way when I’m writing this letter. How do I mix the harsh realities from years on Wall St. (many I hope no one will have to learn) in a way that makes the subject approachable?

“There are no teams” is increasingly my overarching feeling about our markets and economy today. Nvidia stock rises on report Trump administration plans to repeal Biden’s AI chip curbs. This law was put in place primarily to prevent China from accessing our advanced chips. (One of the decreasingly few advantages we seem to have in the AI race). Critics might ask: “How do we make sense of this when all we hear is about how we have to fight China and sacrifice our wallets in the short term to do so?”

My point isn’t to comment on the tariffs or this as overall policy decisions, but that they have seemingly conflicting goals as it relates to our ability to compete with China. It’s these kind of issues that impact the market today and are causing volatility and unpredictability. The market changed directions 4 times yesterday on differing headlines.

Our readers know one of the things we often talk about is understanding concepts through numbers like our signals, but at the same time needing to match that up with a larger understanding of the macro direction.

Take this simple logic exercise. You look at NVDA and you could easily say there is huge binary risk to it. Chips are one of our most important exports, and obviously China has such a demand for them that we pass laws like the ones above to thwart them getting more than we want them to. So NVDA looks like a very clear long if tensions diffuse and short if they escalate. But hold on a moment, who is making it easier for China to obtain chips illegally through other countries on their bingo card? Not me and it isn’t really a rational thought given everything the Trump administration has said.

China and the US are talking so it would certainly make sense to see an official deal for Chips directly into China but why loosen things up and undercut one of your biggest bargaining Chips right before? Hopefully there’s a good reason behind it, because on the surface it’s hard to understand.

We discussed this on our livestream yesterday. It doesn’t matter how well your long term or technical strategies have worked in the past if you aren’t watching the markets closely, you’re exposing yourself to huge risks. We’d recommend checking your portfolio at least 4 times a day. Set up news alerts from major publications on your phone or alerts for your key holdings. This is a new era for the markets. I’ll leave you with one story.

I made my first investments when I was 13. My Uncle who is about 18 years older than me and from the institutional world gave me a stock tip. The tech bubble happened and I saw him and asked him when our stock might recover. He goes “oh, I sold that a while ago.” I was a little pissed and he stops me dead in my tracks and tells me that I shouldn’t be and I just learned the most important lesson I could. Do not depend on others to time your decisions. My Uncle has been a great mentor to me and I’ve been mentored by many great people. But in the world of finance everyone has a lot on their minds and things change very fast. It isn’t that no one is ever on your team, but if you aren’t prepared to be on your own team, you are unprepared.

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There are No Teams

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