Transcript:
Caroline Woods Joining me now, Matthew Tuttle, CEO at Tuttle Capital Management. Matthew, welcome back. Great to have you. Happy Friday.
Matthew Tuttle Thank you very much for having me. All right.
Caroline Woods So you were last on in August and you basically said that 5% Treasury yields and above 90 could threaten this bull market. How are you feeling with the tenure at 5% in at 102 right now?
Matthew Tuttle Yeah, I mean at 102. Still a problem. Still could mean higher inflation. Fed raising interest rates. Rates are interesting here. So you know bond rates went way way up. And we’ve had a really serious bounce. The question is why. You know and I don’t think it was a flight to safety. I don’t think it’s people saying, hey, the fed isn’t going to cut.
Matthew Tuttle So, you know, I’m a little bit worried there that that’s going to turn around. I think it’s an opportunity. If you wanted to short something like PLT to take that opportunity, I do think we’re going to see higher rates. And I think the bounce we’ve seen is, you know, just rates went too far up too fast.
Caroline Woods So is the bull market still intact.
Matthew Tuttle Bull market is still intact. Definitely still intact. You know the economy is still humming along fine. What I’m more worried about is a 2022 type of situation. Higher inflation, higher rates, fed rate hike cycle. And then that will impact some of the more speculative technology names, you know, especially in the AI trade. So you do need to be careful.
Caroline Woods Do you look at sell offs like today as buying opportunities?
Matthew Tuttle I do, but it depends where you fall into the curve. So if you are an intermediate term long term investor, I think you definitely use these sell offs as buying opportunities. You don’t want to be too heavily allocated to a lot of these AI and momentum names. You know, we’re telling people five, 7% of your portfolio or so in these names by the dips on this.
Matthew Tuttle If you’re a trader, you’re probably waiting for some sort of confirmation that we’ve hit a bottom and are moving back up. But, you know, certainly these dips are going to happen. I would use them to get into the areas you want to be in.
Caroline Woods But if you’re watching all of these warning signs, with rates and inflation potentially ticking higher and all ticking higher, why should investors be buying stocks right now?
Matthew Tuttle So because you never know. There’s always warning signs. There’s always a reason to be pessimistic. And you know and they’re always going to be the bears. And the bears sound really smart and make great arguments. But over time the market tends to go up. So you’ve got to be careful what you own. You’ve got to be careful of your position sizing.
Matthew Tuttle Make sure you’re actually diversified, not fake diversification, which you know a lot of people. I’ve got all these things in my portfolio. I think I’m diversified and then they all go down at the same time. So you’ve got to be careful. But if you were selling every time a scary headline hit you would you wouldn’t be doing so well.
Caroline Woods So break it down for us. What does a portfolio that’s actually diversifying look like?
Matthew Tuttle So what you want you want some of these AI bottleneck traits. But like I said 5 to 7%. You want to have what we call halo stocks heavy asset low obsolescence, traditional value companies that aren’t going to go bankrupt from AI, that could use AI to help themselves or that are added to AI like utilities and energy. You want to have property and casualty insurance companies.
Matthew Tuttle Boring. Take a look at what they did in 2022. Take a look at what they did in 2008. They’re great. Diversify. You want to have what we call Lindsay stocks. These are companies that have been around 50 to 100 years.
Caroline Woods Jim means.
Matthew Tuttle Lindy is a term that Porter Stansberry, the guy who taught me about Lindy Stocks, came up with. I think it’s based on a deli sandwich he likes or something like that. But I like the term. We’re probably going to end up doing an ETF for it because I like it so much. But it’s basically like you’re Hershey’s, you’re Coca-Cola staples.
Matthew Tuttle Staples. But you know, companies that have been around for a very, very long time figuring if you’ve been around 50 to 100 years, you’re doing something right versus like, you’ve got a lot of these AI names. It just like happened in the internet bubble. Five years from now, they’re not going to be with us anymore. Coca-Cola, McDonald’s, companies like that, they’re going to still be here five years from now.
Matthew Tuttle So you do that. You have some gold, you have some Bitcoin, you have some treasury bills. You do some sort of tail risk hedging, which you can do with options. Or we for example, just launched a fun today QCD that integrates downside hedges into the Nasdaq. And there you go. There’s your diversified portfolio.
Caroline Woods But AI bottlenecks only get 5 to 7% of that portfolio. What about big tech? Where does that fall within that portfolio? I guess what’s the total percentage of your well-diversified portfolio that you want exposed to technology and AI? Overall?
Matthew Tuttle No more than 10 to 15%. That’s all you need. I mean, these stocks I mean, we’ve seen it. They’re going to move. So you have a small amount of them. You take advantage of those moves, but not so much where a day like yesterday wipes you out.
Caroline Woods So would you say then that the sell off that we’ve been seeing within tech is a healthy reset? Or is it because cracks are actually starting to form around AI spending, AI debt, competition from China?
Matthew Tuttle Yes and yes. So and it’s the way markets work, whenever something goes up in a parabolic up move, you’re always eventually going to give a lot of that back. You just don’t know when. And the market needs an excuse for that to happen. So you’re not going to give a lot of it back when everything is rosy and everything is great going on.
Matthew Tuttle It’s going to be when there’s bad news. And then there’s a reason for big hedge funds investors to sell. So it’s it’s unfortunate but it’s how markets work. And if they didn’t work we’d all be billionaires.
Caroline Woods What does that mean for investors who have a lot of exposure to the S&P 500 and have more than 10% exposure to tech just through the S&P 500 alone?
Matthew Tuttle You know, it depends on your risk tolerance, your age. I would say you don’t want all of that exposure. You want to diversify in all these different areas that I talked about. But you know, if you’re younger, if you can handle that volatility, you know, fine. I would just be very, very careful. You know sometimes people. Oh SMP 500.
Matthew Tuttle It’s 500 stocks. Technically yeah. But it’s like 50% in ten stocks. And then a little bit and you know another 490. You’re not as diversified as you think you are with that.
Caroline Woods Okay. You did bring a bunch of picks with you. So we’ll get to some individual names in just a second. But if you’re saying diversify your portfolio with gold, which is down, what, 30% year to date or 30% off the highs with names like Coca-Cola and, you know, does that mean we have to reset our expectations and what total returns could look like for the market?
Matthew Tuttle No. Not really. So if you look at it over time, 8 to 12% now, I think you can do better than that. I think you could do 10 to 14%. The problem is when you’re really chasing after those returns, what happens is again, you give a lot of that back. So, you know, I teach it to people this way.
Matthew Tuttle Like the market gives you a certain rate of return when you are earning more than you think you should be. That’s when you need to be cautious, because you’re going to give it back when you’re earning less or you’re having negative returns. That’s when you start getting excited because then the market can go back up. But it’s going to be very, very hard for an investor to consistently make 14, 15, 16, 18, 20%.
Matthew Tuttle And you see that where, you know, a lot of people post on social media like, I’m up 1,000% this year and I’m just thinking, take your profits, hedge, do something. And I know they’re not going to the same reason why you’re up at the blackjack table and you don’t walk away, and then you end up giving it all back.
Matthew Tuttle Investors do the same thing. So I think you chase reasonable returns, and you get scared when you’re making more than you should, and you get greedy when you’re making less.
Caroline Woods So for some of those investors who are holding names like microns, Western Digital, SanDisk that have had these huge parabolic moves to the upside but are well off the highs, they should take profits here.
Matthew Tuttle It depends on what part of your portfolio that makes up. If you’ve got, you know, more than say, 3 to 5% or so in memory, I would cut it down. I don’t know that I would use a day like yesterday where all that stuff got crushed. To cut it down. I would use an up day if we have one again.
Caroline Woods Okay, so let’s get into some of your picks. None of the picks that you brought were mag seven. But first I want to know which of the mag seven do you definitely want in your portfolio. We obviously have, you know, more earnings coming in next week. We have some mag seven names like alphabet Amazon just taking a look at the calendar here.
Caroline Woods Microsoft all coming in next week. Which do you want to own especially ahead of next week.
Matthew Tuttle So my favorites are Microsoft, Meta and Google. You know, I think you ought to own all the mag seven again, not too much, but you own all the mag seven. But Microsoft, Google and Meta are my three favorites.
Caroline Woods Okay. You said you still like the AI bottlenecks, memory, photonics, space, energy infrastructure, which has the strongest pricing power out of those and which are most vulnerable to oversupply.
Matthew Tuttle So right now, I think the one that I would have the most confidence in being able to have a parabolic move would be photonics. I think, you know, in those stocks sold off hard yesterday, I would definitely be using that as a dip buying opportunity in names like coherent AI, ann a. Oh, I, you know, names like that, I would definitely be a buyer of, you know, came out a couple of weeks ago and said they’re sold out through 2029.
Matthew Tuttle So I like that area. I like the energy infrastructure area. It does not have the same potential upside, but there’s some diversification benefits there to having the energy stocks, the infrastructure stocks.
Caroline Woods What are some names in the energy infrastructure space that you like?
Matthew Tuttle So names like you know, Eck, Bloom Energy Chevron oxy by core, which is not really energy infrastructure. But, you know, their product helps the data centers use energy more efficiently. And they’ve also got a royalty model, which is extremely interesting to me.
Caroline Woods Victor, though, is down 10% this week, 40% this month. So would you buy it today or would you wait for some of the selling to start settling down?
Matthew Tuttle I’d be buying again. If I’m in intermediate term long term investor, I’d be buying by core here.
Caroline Woods Why that over some of the other big losers that we’ve been seeing this week. I mean, I have a whole list of AI stocks that that are in the red this week. This month, Lam Research is down 15%. This week G Nova is down. Big metas down 10%. Corning. Any of those names look attractive to you?
Matthew Tuttle Corning definitely does. That’s an photonics type of name G. Nova is a name historically I’ve liked the lot. You know, space was talking about maybe some sort of competitive pressure on them. So I’m a little bit more cautious there. And yeah, I mean lam research doesn’t really do anything for me over and above some of these other names.
Caroline Woods Are there specific parts of the AI trade that you’re avoiding at this point, or is it just, you know, stock specific?
Matthew Tuttle Yeah. I mean really more stock specific, like a core weave. I’d be careful with an oracle I’d be careful with. So we don’t own any of those in any of our portfolios. You know, there are certain software areas that, you know, AI is going to crush, but, you know, then I love the Microsoft’s, the CRM, and, you know, cybersecurity.
Matthew Tuttle We just saw, you know, AI is now hacking into people’s bank accounts. So I mean anytime you can by cyber stocks I would do that too.
Caroline Woods Okay. We have Microsoft Alphabet and Amazon all on tap next week for earnings. Which of those do you think has the most to prove.
Matthew Tuttle Most approve probably Amazon I would think has the most to prove out of those. But all of them are going to be equally important. You know we’re seeing the big earnings moving the market. So we had a little bit of an update the other day. I think that was mostly space related. Yesterday’s down day. I think meta had a lot to do with that.
Matthew Tuttle So I mean, all of those earnings are going to be very, very important to the market.
Caroline Woods Do you think? Well, actually before I get to that, which would you be most comfortable buying? Head of earnings.
Matthew Tuttle I don’t like buying stocks ahead of earnings, but if I had to choose one it’d probably be Microsoft.
Caroline Woods Okay. Do you think that big tech earnings could do enough to actually turn the sell off that we’ve been seeing around? Or do you think that some of these concerns are real and we need more of a shakeout before we see that?
Matthew Tuttle Yeah, I don’t think we need more of a shakeout. I think if all of the hyperscalers come out and, hey, we’re going to continue to spend hand over fist, everything is great. Not all of these problems are no big deal for us. Then I think the market’s going to suck that up and be fine.
Caroline Woods So do you think we’ve seen the lows for the AI trade?
Matthew Tuttle I hope we have. I mean you know, there’s no way to know. You know it doesn’t feel like we have I would be certainly ready for another round of selling here. But I’m very interested to see what these earnings reports come out next week.
Caroline Woods We did have Jensen Wong say that capital is becoming scarce for the AI buildout. You’re clearly bullish on some of the companies that are benefiting from all of that spending. So what happens to your picks if money does start to dry up and people aren’t spending as much? How vulnerable are those picks then?
Matthew Tuttle Very. I mean, anything in AI is going to be extremely vulnerable. A lot of this has all been about the CapEx. If the money dries up for that, the AI trade basically dries up, at least in the short term for medium term. So again, something you’ve got to be ready for, which is why we say keep your position size in check.
Caroline Woods What’s the first sign that you would see that that’s happening.
Matthew Tuttle So I think it’s going to be a multitude of signs. And again it’s going back to these earnings reports where you start seeing companies talking about that. So you know Jensen Wong talking about that. That’s a big deal. You know AMD’s CEO talking about some of the aspects of the AI trade. That’s a big deal. I mean, these are the people that are on the front line.
Matthew Tuttle They’re seeing all the numbers go back and forth. Whereas, you know, the Wall Street analysts are just trying to, you know, trying to catch up. So I really want to hear what are these CEOs saying? And that’s either going to make me more bullish or more fearful.
Caroline Woods If you keep hearing it and become fearful, what’s the first thing you’d sell?
Matthew Tuttle So I would definitely cut down everything in AI. I still want it because AI is the future. And if you look at the internet bubble and if you were in the wrong stocks, yeah, you got crushed if you’re in Pets.com and CMG, but if you were in the right names, you’re sitting here now, you’ve done very, very, very, very well in 2000 to 2002 was a bullet.
Matthew Tuttle So I still think you want to be in the AI trade. You just want to make sure you’re in the right names in the right areas and you’ll be fine.
Caroline Woods But the hardest part is how do you know if you’re in the right names? So is it better to just cast a wide net and have as many names as possible, either through stock picking or through an ETF, or just really high conviction stock picks?
Matthew Tuttle So it depends on your knowledge and your level of expertise. Because the problem is today’s best names might not be tomorrow’s best names. So this is something you’ve always got to be looking at every single day. What’s going on. You know so ETFs I mean obviously I’m an ETF guy I think you want to be careful where you don’t just you know in 2023 you could just buy an ETF that’s at AI in it.
Matthew Tuttle And you were fine. Now I think you want to be more discerning. You want to pick your areas, which is why I think it’s memory photonics, space, energy infrastructure. And be careful in look and see what the ETF owns. It may not it may say something in the name, but the holdings may not perfectly reflect what it is you want to get.
Caroline Woods Final AI question. And then we’ll move on to some of the other areas of the market. What is your highest conviction name? Obviously I’m asking an ETF guy this, but what is the one stock you think okay, I’d be comfortable buying this and owning it for the next 510 years.
Matthew Tuttle I mean, probably would go back to vicar, you know, it’s more under the radar screen name. It is. Come in quite a bit. You know, I love where it is in, you know, in the energy kind of infrastructure area, making energy power more efficient. and I love royalty companies.
Caroline Woods Most everyone else answers Nvidia for that. Why VI Corps over Nvidia?
Matthew Tuttle Because everyone knows Nvidia. Everyone owns Nvidia. Whether you want to own the video or not, you own a bunch of Nvidia. If you’re in the cuz, you’re in the spy, or pretty much any other ETF you’re in, you own a bunch of it. I think the video is a 2023 trade. I think Nevada is a must own. But if you’re looking at where am I going to get the most alpha, the most bang for my buck over the next five years, I don’t think it’s in the video.
Matthew Tuttle You want to own it, but I don’t think, you know, everybody knows that.
Caroline Woods So that’s just assuming everybody already owns it. So it’s necessarily apples. Okay, let’s move on to property and casualty insurance. Another area of the market you say you want exposure to. You brought your top pick there. That’s W Berkeley up 10% this month. So still meaningful upside here. Did we miss the boat and you’re in it.
Matthew Tuttle I mean certainly up 10% in a month for a property and casualty insurance stock is you know a little bit rich. You’d probably if you were buying that today want that to come in a bit. But I love the diversification benefit of property and casualty. So property and casualty insurance stocks were up in 2022 when bonds and stocks were down.
Matthew Tuttle W.R. Berkley I think was up somewhere in the 30s in 2022, which is huge when you’re looking at diversification. W.R. Berkley was also up in a like 4%, which again, huge if you’re looking for diversification. So what I like about property and casualty insurance stocks, I like them as a bond replacement because, you know, everyone you know for Wall Street, traditionally bonds are the lever in upping risk or reducing risk in a portfolio, which is fine unless the Fed’s raising interest rates.
Matthew Tuttle And we saw what happened in 2022. Stocks and bonds went down together. And depending on what bonds you had, your bonds lost more than your stocks lost, which when you’re trying to diversify, that’s not fun. Property and casualty insurance companies take your premium and they invested in bonds. The difference being and what W.R. Berkley did in 2022 is they took the duration of their bond portfolio, basically their interest rate risk down to basically zero.
Matthew Tuttle A bond fund can’t do that. They’re benchmarked against something. They’re going to have interest rate risk. That’s why W.R. Berkley did so well in 2022. So we like property and casualty insurance stocks as a bond replaced.
Caroline Woods What’s the biggest risk to them though?
Matthew Tuttle I mean the biggest risk to them is they’re still stocks. You know they can still sell off. They’re still going to be more volatile than bonds are. Certainly you want well-run companies. If you’ve got a company that maybe all of its exposure is in like one area of Florida and there’s a hurricane, you could have issues there. So, you know, a stock is a stock.
Matthew Tuttle There’s always going to be risk. I just I love the lack of correlation and I love what they’ve done in previous sell offs. Past performance done predict future results. And we just did an ETF for this PC a couple of weeks ago okay.
Caroline Woods I’m assuming the next pick is a halo stock heavy asset. Low obsolescence right. Yeah that’s CSX. Railroads aren’t exactly where I would think an investor would run to for growth. But I was taking a look at the chart up 9% this month for CSX, up 40% this year. Not too late for CSX.
Matthew Tuttle Yeah, again, I’d wait for a little bit of a dip. You know, yesterday was a great day for CSX. And we’ve got a halo ETF H that did well yesterday partially because of what CSX was doing.
Caroline Woods A little bit of a dip means what.
Matthew Tuttle I mean a stock like that 2 or 3% okay. You know it’s not it’s not going to move like a memory name where maybe you, you know, you wait for a 10% dip on a memory name. You’re, you know, 2 or 3% dip, you know, you don’t buy a stock like CSX. I think it was up like 6% yesterday.
Matthew Tuttle You probably don’t buy it up 6%. You wait for it to pull in a little bit.
Caroline Woods And why railroads.
Matthew Tuttle So the whole halo idea heavy asset, low obsolescence. Basically it’s value stocks that either AI is not going to crush, that can use AI to help them or that are additive to AI in some way. So like a railroad AI is not going to do anything to railroads. And a railroad can use AI to become more efficient. So when you see kind of a rotation with AI fears railroads or one beneficiary of it.
Caroline Woods Do halo stocks run the risk though of or do investors run the risk of overpaying for halo stocks, though, because they’re what’s perceived as safe or not AI play.
Matthew Tuttle So they’re not necessarily. And you always run the risk of overpaying for anything. You know, you’ve always got to kind of watch your entry points and what you’re doing. And all the studies show, I mean, if you get in here, you don’t do as well, but if you get in here, you do much, much better. You’ve always got to watch that.
Matthew Tuttle I don’t know that they’re perceived as safe as much as when money comes out of AI, but it’s not a fear like I’m out of everything. I mean, cash, it goes somewhere and typically where it’s going to go as value stocks. What I like about Halo is we’re excluding the value stocks that are value stocks because AI is going to crush them.
Matthew Tuttle So I don’t think what you want to do is say, hey, I’m going to go out of AI. Just I’m going to buy a value ETF to buy is like low PE because I would argue I could be low PE because Wall Street doesn’t understand the story. People have missed it. Or is it low PE because AI is going to take it and put it out of business?
Matthew Tuttle That’s why I like doing the Halo trade.
Caroline Woods Okay, final pick you brought was Royal Gold RG l d it’s underperforming the broader market this year. Gold of course is 30% off the highest almost y that over treasuries.
Matthew Tuttle So I think treasuries. And by treasuries I mean anything with duration risk T-bills are fine. I think treasuries are still at this point you’ve got fed most likely raising rates. You’ve got our debt situation, which I mean, I’ve been investing since 1981. People have been telling me that that is going to crush us. You know, our government is very good at kicking the can down the road.
Matthew Tuttle But at some point that road ends. I don’t know when that is. But, you know, I think treasuries are right now with the interest rate environment like gold is a diversified but within gold. I love the royalty company. So Royal gold is one Franco Nevada, Wheaton Precious Metals. And if you look at the royalty companies as a whole.
Caroline Woods Royalty companies means.
Matthew Tuttle So these are companies that aren’t actually mining for gold. They are getting royalties from the companies that are. So they don’t do the heavy lifting. They don’t need all the people. They don’t need all the equipment, they don’t need all the all and gas. They just sit back and they make money based on what gold is doing. And if you look at it, the royalty companies have crushed gold and of course, just owning the gold miners.
Matthew Tuttle So I love the royalty companies here. I like gold as a diversified, you don’t want to have too much. Again, gold is not what it used to be where gold used to be like almost the perfect diversified. Now, you know, you wake up some mornings, you see what’s going on in the market. You’re like, all right, gold is going to be up.
Matthew Tuttle And you’re. Oh my God, it’s down 3%.
Caroline Woods Last year it was up at the same time the stock market was up. It doesn’t make a whole lot of sense.
Matthew Tuttle Yeah. And there are factors in the gold market just like there factors in the oil market.
Caroline Woods But if the fed raises rates again what would that likely mean for gold.
Matthew Tuttle It depends. You would think.
Caroline Woods The viewers are going to pick up on these. Depends I will tell you that you would you.
Matthew Tuttle Would think it would be bad for gold. But then also you look at gold. Is it kind of a currency debasement trade, which it is sometimes the problem with gold is sometimes it’s a currency debasement trade, sometimes it’s a risk off trade, sometimes it’s a risk on trade. I think you want to have, say, 12.5% of your portfolio in gold.
Matthew Tuttle I think it ends up being a good diversified.
Caroline Woods Only 3% of your portfolio, three more percent in AI than gold. If you’re 15%. Okay, I want to circle back on a few things and then we’ll get to our rapid fire round. So this will be the kind of the kick off of the rapid fire you had said. You think you can get 10 to 14% returns with sort of your diversified portfolio that you were talking about?
Caroline Woods Is that this year or next year?
Matthew Tuttle So that’s over time. You know, the thing is some years and it’s the way the market works, like you’re going to get 8 to 12, you’re not getting 8 to 12 every single year. You’re going to have an up 30% year. You’re going to have a down 30% year.
Caroline Woods But the reason I ask is, do you think that the market this year will close higher and lower than where we are now?
Matthew Tuttle So I think it will close higher. I want to see these earnings next week. I want to see what the fed says. I don’t think they’re going to raise right away, but I want any type of hint to what they’re looking at later in the year and into next year. But I do think you’re going to get kind of that year end rally.
Matthew Tuttle I’m a little more worried about next year than I am the rest of this year.
Caroline Woods Okay. How what changes would you make to your portfolio ahead of next year that you’re worried about it?
Matthew Tuttle So I think if you are an investor and you don’t have any type of tail risk protection in your portfolio, I would have that. And that’s one thing most people do not have.
Caroline Woods Tail risk protection. Looks like what.
Matthew Tuttle So tail risk protection can look a lot of different ways. So we just today launch H. It’s the Nasdaq with tail risk protection built in where we’re using a bunch. And it’s complicated. But we use a bunch of different put strategies where we’ve got puts on the on the QQ Hughes. But we’re using strategies to pay for most of that.
Matthew Tuttle Most people aren’t going to be able to do that themselves. You could go out and buy put spreads on the Nasdaq by put spreads, maybe on something like Dram, which is a memory ETF. And you know in all those out but just have something where if you wake up tomorrow on the markets down 20% that you know it’s going to go.
Caroline Woods Up okay. All right. And then just to kind of pin you down a bit on the position sizing, you said I think 15 to 18% in AI.
Matthew Tuttle no not 15. So really more.
Caroline Woods You know, technology.
Matthew Tuttle Yeah I mean really tech and AI 7 to 12.5 seven.
Caroline Woods To 12.5 okay I got that wrong. So almost you could potentially have less tech exposure in your portfolio than, than gold.
Matthew Tuttle You could very well okay. So but I want you to have more stock exposure than gold I just want your stock exposure to be spread out.
Caroline Woods So as we think about so you say 12% in tech and AI 12% in gold. What are the other biggest positions in this portfolio out of all the other areas.
Matthew Tuttle And so let’s break the portfolio down. So our kind of course and we do ETF model portfolios. We make them available to advisors and individuals. Our core is 25% stock not including property and casualty I’ll get to property and casualty. So our core is 25% stocks. And that’s a mix of AI, tech, Halo, Lindy, those types of things.
Matthew Tuttle And it’s balanced out pretty much where half AI in tech, half Lindy and Halo, you get that good balance. Then we’ve got 25% and what we call beyond bonds, that’s where we throw 12.5% property and casualty, 12.5% in things that are called pre-merger SPACs, special purpose acquisition companies, which are basically sitting in T-bills. And you’re hoping that the operator of the spec can find a company to take public and you get more than you put in, but your baseline is T-bills.
Matthew Tuttle Then we’ve got 25% in what we call our hard money hedge. That’s half gold, that’s half bitcoin. But half of that bitcoin exposure then what’s called digital credit. So things and we’ve got an ETF for that cap which invests in stretch and say to pays you like 11.5% and doesn’t move like Bitcoin moves then 25% in tail risk.
Matthew Tuttle That’s kind of the option strategies. We talked about managed futures and T-bills so that that’s the portfolio right. That’s the core portfolio.
Caroline Woods That’s yours. The everyday retail investor that equities exposure should still only be 25% plus property and casualty. Yes okay. All right. There’s so many more questions to ask on that front. We’ll have to bring you back because we’re running out of time here. But what’s the one thing that would make you turn bearish on the overall market?
Caroline Woods And what would make you more bullish and say, okay, up your tech exposure.
Matthew Tuttle So I would to really turn bearish I would need to see something structural. You know, like we saw in a way. So some of this private credit, some of the credit default swaps which are not unlike the credit default swaps we saw on mortgages in oh eight. I’d have to see that start to really blow out. Maybe there are some bankruptcies, maybe a core weave or something goes to zero.
Matthew Tuttle Things like that would make me very, very concerned about the market. You know, more than you know. The other thing would be the fed on a rate hike cycle. But even then.
Caroline Woods It is I mean.
Matthew Tuttle It is, you know, 2022, it was bad, but you came back really, really quickly from that. I’m more worried about a 2008 situation, which takes you like five years to get back to even.
Caroline Woods And what makes you more bullish and say, you know what? My tech exposure, my even just overall stock exposure, but not in a defensive way. But like, you know, my growth exposure is too low.
Matthew Tuttle So I want to see some of this bad news subside. And I’d want to see signs that the market has the AI market has really bottomed out. So, you know, things you kind of look for like after a day like yesterday, maybe the AI stocks open up down huge and then just buyers come in and you know, something that really feels like a bottom like that.
Matthew Tuttle Like that type of action okay.
Caroline Woods All right I think this is a great time to pivot to a rapid fire round of this or that you’ve played before. You know it put questions, quick answers, no hedging. Are you ready. All right. Here we go. Market pullback almost over or just getting started. Almost over an eyes bigger problem. Too much debt or too much competition.
Matthew Tuttle Too much debt.
Caroline Woods Better investment over the next year. Companies building AI or companies using AI to replace workers.
Matthew Tuttle Companies using AI.
Caroline Woods To replace.
Matthew Tuttle Workers to replace workers.
Caroline Woods Bigger opportunity. Overlooked stocks or beaten down stocks.
Matthew Tuttle Beaten down stocks.
Caroline Woods Better recession. Hedge insurance stocks or gold?
Matthew Tuttle Let’s say gold.
Caroline Woods Better earnings dipped by Meta or Netflix. Bigger risk in 2027. Owning too much cash or too many stocks.
Matthew Tuttle Too many stocks.
Caroline Woods More attractive here Tesla or Space X.
Matthew Tuttle Space.
Caroline Woods More dangerous buying a falling stock or chasing a soaring one.
Matthew Tuttle Chasing a soaring one.
Caroline Woods Better contrarian bet beaten down software stocks or struggling consumer stocks. Software one software name you definitely by here. That’s not Microsoft CRM. What changes your mind faster? A broken stock chart or broken investment thesis? Oh.
Matthew Tuttle I’m a chart guy. Broken stock chart.
Caroline Woods One stock you liked earlier this year but you wouldn’t buy here.
Matthew Tuttle Core.
Caroline Woods We’ve most overrated investment theme right now.
Matthew Tuttle Overrated investment theme right now. Wow.
Matthew Tuttle I mean, everything has been hammered so much. Yeah, I want to I want to say memory, but it’s already come down so much. But that’s the best that can come up.
Caroline Woods One stock that everyone is selling right now that you’d buy.
Matthew Tuttle Stock everyone is selling right now that I would buy, bike or.
Caroline Woods One stock you’d buy and hold for the next five years. That’s not vicar space. One stock you’d have entirely heading into 2027.
Matthew Tuttle Oracle.
Caroline Woods One word to describe how you’re feeling about the market heading into your end.
Matthew Tuttle Cautiously optimistic.
Caroline Woods That’s okay. We’ll take it. What about heading into 2027?
Matthew Tuttle More cautious.
Caroline Woods Because.
Matthew Tuttle Ben.
Caroline Woods How many hikes would make you turn bearish.
Caroline Woods Three okay we’ll leave it there Matthew Tuttle, CEO at Tuttle Capital Management. Always a pleasure to have you. Thanks so much for playing along for all of your picks and your perspective.
Matthew Tuttle Thank you.
Caroline Woods If you enjoyed this street talk, check out my interview with Sam Stovall. He breaks down what history tells us about where the market is headed next, which sectors look most promising, and whether a year end rally is still in the cards. Check it out.
