3-Rock Trading Rule 💎| SpaceX IPO Prep | AI Vision & Top AI Infra Winners | 🚀

The speaker begins by introducing the "three rock rule," a core part of their trading philosophy, where each "rock" represents one trade, and once three trades are made, the trading for that period (week or month) is over. This rule encourages selectivity, patience, and discourages emotional reactions or "chasing" trades. The speaker also introduces the "three layer rule" for buying, emphasizing never buying at the top of a market. Instead, investors should wait for dips and layer into positions, buying a small amount at the first dip, triple that amount at the second dip, and ten times the initial amount at the third, deeper dip. This strategy, when applied to winning assets with bright futures, significantly increases potential ROI upon rebound. Addressing a question from a young investor experiencing their first market downturn, the speaker advises planning, not chasing, and layering into positions by investing only 1-2% of the portfolio per buy. They also recommend setting "traps" by creating numerous alerts on various assets, ensuring that some opportunities will arise. Regarding NPhase, the speaker notes they sold it last year and are not currently invested. They highlight concerns about NPhase's financials, including flat European installs, eroding micro-inverter premium due to competition, and high stock-based compensation (paying out nearly double their profit in stock-based compensation). While acknowledging the impact of higher electricity prices on solar payback periods, the speaker suggests there are better investment opportunities, though "nibbling" under $28 might make sense for interested parties. A question about smaller AI infrastructure companies (under $100 billion market cap) like VRT, Iris Energy, and APLD is then discussed. While acknowledging their impressive performance in the past year, the speaker emphasizes the high risk associated with small caps compared to larger, safer bets like Nvidia and Tesla. Reviewing the financials, Iris Energy is noted for its clever pivot to AI but has alarming debt. APLD is described as "scarier" due to continuous debt issuance, declining revenue, and consistent losses, with a high bankruptcy risk. VRT, however, shows better financials with growing revenue and steady debt. The speaker expresses concern about the broader private credit market, noting massive redemptions and liquidity crunch, which could impact highly leveraged companies. They advise against making these volatile, high-beta companies core holdings, recommending they constitute no more than 5% of a portfolio. The speaker also warns of potential future "blow-ups" within the AI space (referencing companies like Oracle, Blue Owl, OpenAI) that could significantly impact the market. The discussion shifts to Elon Musk's XAI and the potential for a vision-based AI solution. The speaker agrees with the idea that Elon's focus might be on vision rather than solely code or language, highlighting Tesla's existing use of vision for self-driving and Optimus robots. Vision models are described as far richer and more complex than traditional LLMs, requiring training on spatial and temporal prediction for real-world physics. This "real-world model AI" is considered a significant edge for XAI, especially given the data density of video compared to text. The speaker believes Grock will be the best AI, citing Grock Imagine's superior image and video creation capabilities. On the topic of Tesla LEAP options, the speaker breaks down the math of buying three December 2028 LEAP contracts with different strike prices ($340, $380, $500) versus owning 300 shares. They explain that these contracts, even blended, would not fully mimic 300 shares due to delta values. Higher CAGR (Compound Annual Growth Rate) is required for out-of-the-money options to become profitable (e.g., 20% for the $500 strike). Using analyst price targets for 2028-2029 (average $1733, bull case $3100, bear case $814), the speaker demonstrates that LEAPs can offer significantly higher ROI than owning shares, especially with higher stock price appreciation. However, they caution against going "all in" on LEAPs, recommending they constitute a maximum of 20-40% of an equity bag due to the risk of losing money if the stock stays flat or declines. Regarding a potential SpaceX IPO in June 2026 with a $1.75 trillion valuation, the speaker dismisses investing in funds like ARC Venture Fund due to high expense ratios. Instead, they favor specific options on proxies, like their current position in EchoStar (SATS), which holds 2.8% of SpaceX. For the IPO itself, the speaker advises caution, suggesting that only 15-25% of allocated funds be used at the IPO price, with the remaining "dry powder" saved for potential post-IPO dips. When asked about tokenized stocks, the speaker advises extreme caution, calling crypto the "wild west." They highlight risks such as not buying the true stock, terrible spreads, and the possibility of losing everything (as seen with recent crypto events). While acknowledging that tokenized stocks might offer better returns than cash if those are the only two options, they warn of tax implications and settlement issues. The speaker also points out that holding cash is beneficial during Black Swan events or recessions, noting a 32% chance of recession. For those tight on margin wanting to take advantage of market sell-offs, the speaker advises against selling existing stocks to buy LEAPs due to increased structural risk and tax implications. Instead, they recommend selling covered calls against existing shares to generate fresh capital, which can then be used to buy options. Finally, the speaker evaluates Nabius Group, an AI data center company. While noting strategic partnerships with Meta and Nvidia and potential for growth, they express significant concern about the company's poor financials, including declining revenue, escalating debt (nearly $5 billion), and poor-quality earnings. They reiterate their risk-averse approach, preferring AI plays with specific "moats" like vision AI, and would not invest in Nabius Group. In contrast, for Digital Realty Trust, another data center play, the speaker notes high debt but likes their profitability and growing revenue, deeming them the best among the discussed data center companies despite the debt concern.