Anpanman - Market Liquidations, VIX Rules, and the SpaceMobile Connectivity Shift

[00:00:06] Speaker A: This is the AST SpaceMobile Podcast. It will just basically come to your phone and be seamless regardless of where you are. We don't want the user even to know that it's connected by satellite. Listen, the opportunity that we have is very, very, very large.
[00:00:28] Speaker B: Hey everyone, I figured I'd catch up before going to bed ahead of tomorrow. It looks like, as I mentioned in a tweet earlier, it looks like there's some pretty serious liquidations going on after hours, um, which is pretty natural. I mean, it's not, it's not good for people who are getting liquidated, but, uh, it's the system working. You know, there's people who are probably too levered and have gotten margin calls and are being forced by brokers to either come up with the cash or sell positions. And so you saw some of that happen after hours today. And, you know, I saw it happen with AST where stock closed at $93 and then there was just forced selling all the way down to maybe it was like $86 or so. And then it's kind of stabilized and came back and overnight I guess it's at $90, but I would expect this action to keep going tomorrow morning because there's going to be additional margin calls. People who didn't post collateral, they're going to have to sell. And so there's going to be perhaps more of this in the morning and perhaps at the open as well. And then, you know, we'll see how things go from there. So nothing to freak out about. It's just part of markets. There's been across-the-board de-risking. And I think taking a step back, if you look at crypto, I mean, it's pretty crazy what's happened. Well, pretty crazy in the sense of this whole idea that crypto was becoming more institutional and widely held, and perhaps this time was different. And this administration was supportive of crypto as well. And so you had Bitcoin moving to $126,000. I think that was the top. And now we're at $64,000. So it was basically cut in half, which I think for people who were either new to crypto and who are also institutional investors, maybe this is coming as a big surprise to them. But for anyone who's been in crypto in multiple cycles, which I have, It's not a surprise. It's actually just part of being in crypto where, you know, once you hit all-time highs, everyone always thinks like, okay, this time will be different because X, Y, and Z, so many more people have adopted it. It's becoming a more stable, you know, asset. And then people expect something different to happen, whereas you, eventually get a pretty severe drawdown, right? So at least historically, that was somewhere between 80 to 90%. And because I remember, I think I mentioned earlier today that I had Bitcoin at maybe $5,000 or $6,000 average. I don't think that's right actually. I think it was around, maybe it was around $8,000 or $9,000. But I remember buying back in, I remember my sister telling me about Ethereum like at $70. And then Bitcoin, I guess it was like at that time, I forget exactly how much it was, but I didn't get involved until, and I remember poo-pooing cryptocurrencies, but I got involved in Bitcoin. I think I bought my first at like $11,000 and then I kept buying up to $20,000. And then of course it immediately collapsed and I bought all the way down. I started buying at $11,000, $9,000, $6,000, and then I bought like a pretty big slug at $3,000. And I remember just being down and feeling like a complete sucker. And that was like a winter. That was crypto winter for quite some time. I owned, I think it was like 45 Bitcoin and I owned, I think it was like 200 or 300 Ethereum and I was down bad on that. And then I remember just holding on and then eventually it rebounding and getting— I remember selling, like I told a number of people on the Discord I used to be on, that I, when it hit like $64,000, I sold like two-thirds and then I was like, oh, I'll keep a third of it. And then I thought better of it. I just remembered like my experience and how awful I felt when it was down to $3,000. And so I sold the rest at, I think it was like $55,000 or $56,000. And then And then that's when I started getting involved in SPACs and other things. But I remember when it did pull back to, I think it was like $20,000 or so, looking at it, I was like, oh, maybe I'll buy some. And then I was like, no, I don't ever want to touch it again. And then of course it went on to hit $125,000, $126,000. And so how far can it go now? Who knows, right? I think obviously there's much more interest behind it. I mean, probably a decent amount of interest will evaporate just like every cycle, right? Like you have these extremes in crypto where people really believe in it and then they, a decent amount of, I guess, tourists or new people, they give up on it when you have these really violent drawdowns. And then for the people that hold and they continue to, you know, you have this like continued innovation of different apps and what have you, eventually it does come back. And so is it going to get back to $128,000? Probably at some point in the future, but can it keep going down? Yeah, that's also a possibility. Like maybe it gets back down to $30,000 or $40,000. But yeah, I mean, would I buy it there? Yeah, I might buy a little bit. But it's not an asset that I want to hold in size. Like, I think anybody who's involved in cryptocurrency, like, it should not be something that you own in size. It's something that maybe you own out of interest and just like a few percent here or there. But anyway, but yeah, the big drawdown in cryptocurrency I think is having a pretty big impact on markets. And then of course you've got all the confluence of all these other these other things that are putting pressure, whether it's the fears of AI. And so it's kind of funny, some people had posted, rightly so, the paradox right now, which is for software companies that have any potential inkling that they might get disrupted, they're getting completely punished. And I was joking with someone today that maybe if you're a smash-and-grab short seller, you should just, your thesis for any company, you should just put out there is, and it should be written by AI, by the way, you should put out a thesis that, hey, this company's going to get impacted by AI and then the stock will crater and then you can cover. I mean, that's what happened today for all these financial data services companies, FactSet, S&P, Moody's, Morningstar, like these companies. I guess it was, maybe it was Anthropic that came out today and said, hey, we're going to release this new model that can put together a very comprehensive research report that would take a human analyst a number of days to complete, but we're going to do this and we're going to release that. And that caused a tremendous amount of pressure on all these companies, which I guess I can kind of understand. But on the other hand, like this, the idea of this product has been out there and you can basically, I mean, there's people doing it on Twitter now. You can basically create prompts, whether that's in Gemini or ChatGPT or Anthropic or whatever, I mean Claude, you can do that already. And it's, you know, these reports are okay primers. Maybe what Anthropic is doing is probably better than the stuff that you can do yourself. But, you know, I think there is some value in that work, but at the same time, I don't, at least me, maybe I'm just old school. Um, I, whenever I see, and I've tweeted about this before, whenever I see stuff that's generated by AI, I, it just starts, my eyes start glossing over it because it's just so structured and I don't know, it's expected. Like, um, there's no human element or judgment or, um, yeah, I, I don't know what it is, but when you read AI-generated stuff, um, it's helpful and it helps like multiply your ability to do leverage— or sorry, leverage, Freudian slip— it multiplies your ability to do research. But then, um, when you read it, it's— it— I don't know, it just comes across as very flat. And, um, I'd start losing attention for whatever reason. So, um, at least for me, I mean, I, I still like doing my own research, and of course I use AI to, to help organize information and data, but But yeah, I like putting together my own analysis in a spreadsheet. I'm the type of person that has to do something to learn. Like when I spread a company's financials, like if I just look at a research report and look at financials, like I don't actually absorb it. I actually have to put it into a spreadsheet. And as I do that, then I actually understand the numbers and I get down in the nitty-gritty and that's how I actually understand concepts, which is like when I did some work on T1 Energy and I just laid out the numbers of like, oh, the equity offering they did and the convert, and then the funds that they raised from 45X tax credit sales. Like I could read a research report and, or have AI try to do that for me and it probably would spit out some slop. But actually going through that process makes— made me learn it and understand it better, if that makes sense. And so I think there's some things, at least for me, going through that manual process actually is very helpful and it's a way that I learn. But yeah, I think the— what's happening in the market today, obviously there's like an— there's all these different factors that are coming into play, which is You know, the Fed, Kevin Warsh, people are talking about like how this guy is hawkish, but I guess in my opinion, for him to make it this far, and this is like his last chance, I think he's going to be completely aligned with Trump. And so whether that's cutting rates or being accommodative, and it's actually a very useful foil that this guy has a hawkish background because then if he makes decisions, people, he'll be able to say, well, I'm a hawkish person and I, from what I see, it's a time to cut. It's like there's all these layoffs that are happening and AI's deflationary and so we need to lower rates. And I did tweet earlier today that if you look at, I'm actually a pretty big believer in Truflation. They They provide real-time inflation data and they collect thousands of data points and they provide what real-time inflation is doing. And that hit this past month. It actually went under 1%, but today it was like at 1%. And so if you look at their inflation information versus what the Fed follows, they're about 1 to as far as 3 months ahead of where the Fed is. And so today, the reason why I posted that today is there was some Fed governor who's still jawboning that inflation is very stubborn. And so they're going to have to continue to be very cautious. Whereas like the real-time data is saying, oh, we're actually about to hit, go into a deflationary environment. Like year over year inflation is at 1 and looks like it's going to go lower. And if you look at one of my concerns about inflation was like, well, what about these precious metals? They keep going higher and higher. Well, they're actually going in reverse now. They're getting completely demolished. And so yeah, I do think like there is, it seems like we should be on this path to cut rates further. And I think the markets, unless of course there's like exogenous events, like maybe we go attack Iran, And if we do go attack Iran and nothing, something positive comes out of that, maybe like a Venezuela type of outcome, then maybe the markets will be okay. Or if it's, even if it's a, and when I mean positive, meaning like there's no nuclear accident or reaction or some kind of attack, But if it's conventional and there's regime change and it's done in a— actually, I'm not, I mean, I'm not a policy expert, but typically like wars are good for the economy. And that's, I know that's a really, that's not a good thing to say, but typically that's what happens. And so of course there's like the uncertainty leading up to it, but yeah, I mean, we're in this weird spot right now where Obviously there's a lot of factor moves right now, and yet the S&P is not that far off of its high. And so what you've seen happen is all this factor rotation going on. The big high beta winners, which is like growth, momentum, revisions, those are selling off very heavily. And then all that money is moving more into defensive sectors, dividend, consumer staples, things like that. And so yeah, it's a really interesting time. We've had these types of tantrums before and right now, for example, as I mentioned before, software is like an area that's getting absolutely demolished, which for the longest time, like software was the place to invest because it was a key enabler of economic growth and it was transforming industries. And then all of a sudden software's getting or at least people feel that software is getting disrupted. And I think just my gut tells me, like, I think we're probably, we've swung too far off into the people projecting, you know, the destruction of software and all this uncertainty. It's just like back in April when people are like, oh my God, these tariffs are going to destroy the US economy. And then lo and behold, like, yeah, the market sold off. There was a knee-jerk reaction, but since then, And I'm not trying to put forward a political view here, but just looking at the markets, like, yeah, there were scares about tariffs and obviously costs have gone up. It's been an impact on inflation. Like Powell has said many times that he would've cut rates earlier and more aggressively had we not have tariffs, but then the Fed had to wait and see what the the potential reaction and impact would be on the economy. And tariffs actually weren't really a hindrance to the economy. Like if you look at where markets are now, I think the S&P bottomed like just below 500. Sorry, I'm just looking at SPY. So SPY bottomed just below 500 and now we're at like, at what? We almost hit 700, but we're at 677. And so tariffs didn't have the negative impact people thought they would. And in some respects, like, you know, I was not positive on tariffs, but the whole impact of forcing companies to reshore manufacturing in the US, in retrospect, that was actually quite good, right? Like bringing fab, new semi-fabs here and bringing, you know, T1 Energy is the name I'm involved in, but forcing companies to, in that instance, acquiring some Chinese IP, but then building US production capacity for solar. Like these are all positive things, I think. But yeah, it's, I think oftentimes in, and this is kind of investing, right? In periods of uncertainty, like in software, there's probably going to be quite a few names that will rebound nicely over the next few quarters. because everything's been sold off. Now, obviously there are probably companies that are being disrupted and may not make it back, right? But I don't think AI is going to disrupt all these companies. And it's not as if, you know, like I'm just thinking about my own and maybe it's not a good analogy, but I still use Google applications and the Microsoft Office suite and all these things. I use AI as well, but I still use these apps. And, and I haven't even started to scratch the surface of utilizing the built-in AI tools for these things. But, um, but obviously I'm not an enterprise. I don't buy enterprise software. And, and, you know, I guess there is this possibility that, um, for some software applications, like, there's no need for them. Whether, like, if you're, if you're doing legal work and you, you're trying to use a software application to do searches, that might get disintermediated by AI. And so, yeah, one thing it did make me think about today is the fact that if you are concerned about AI, then you should be investing in more hard physical industries. And so energy would be one. Space is another one. I was just thinking about ASD Space Mobile, where I don't think AI agents can build multi-ton satellites and then go launch them and put them in space. They could help operate them, but there are some things that AI can't do. And so Strata Critical is another small company that I'm invested in. AI can't do organ transplants and logistics. It's just something not possible. But AI can, you know, do, uh, research for legal cases and it can give you, um, you know, an edge in those areas. Or if it's like something software-related, trading-related, um, you know, something that's more ephemeral, I guess, um, that, that always could be potentially disrupted by AI. But, um, but yeah, we're in a really weird time in the market. Um, I think I, I posted this before and it's, it's a rule of thumb that I've learned in my career. I don't think we're get going there, by the way. But VIX closed today up, what, 17% at 21? And so can it go higher? Yeah, it can certainly go higher. Like VIX can go to 30, 35, 40. What does VIX measure? VIX is the measure of volatility on what people are paying for option premiums, which is typically in periods of dislocation, it will be people buying puts on the S&P, right? And so my rule of thumb that I learned back during the financial crisis, during the US credit downgrade, during COVID during the April tariff tantrum is that when VIX gets to above 50, like that's usually a time when you want to be aggressive in allocating capital because that's when the markets are at a point of extreme fear. And then when you get to the point of, and this, it's only happened at least in my career twice, which is COVID and the great financial crisis. When VIX gets above 70, 80, those are times when you, I hate to say it because I always talk about like not doing margin or any of those things, but that's when you go all in. That's when you've reached the absolute bottom. There's max pandemonium, there's fear, and you have to buy that. I mean, you You wouldn't mortgage your house, but you would try to liquidate things and just put it into the market. You could just buy the indexes or whatever it is, but that's typically like the absolute bottom and that's where you buy it and you're going to have this like major rebound. Right? And so I tweeted that because I think it's important to— oftentimes people are like, well, is now a good time to buy? And it's like, well, no one's going to be able to tell you exactly when, because we might rebound tomorrow, like after the liquidations happen pre-market and at the open, and you might rebound and maybe things get back to normal to some degree. Or today was obviously quite a bit of deleveraging. You have retail getting margin calls. There's probably hedge funds that have been taking pretty significant losses, and so they're degrossing their books. And so they're selling their longs, they're covering their shorts. But like I was saying before, I mean, that rule of thumb generally holds true, right? Like, so if we get to the point of VIX going above 50, that'll be a good time to start allocating like aggressively. And then if you ever hit that crazy time of 70, 80, 90, I think during COVID it hit like 84, during the great financial crisis, I think That was a really scary time. I remember it hitting like 90 or so. And those were days when the market was swinging like 5, 6, 7, 10% sometimes, 10% on the downside. And then the next day would be up 8%. And so, and that similarly during COVID we saw some of that as well. But yeah, that's kind of a rule of thumb. You always, in these type of market environments, as we've talked about before, Do not be on margin. The times to use margin are when you do it tactically. You have a point of view, you think you have some edge on a position and you're like, hey, I think this stock is going to go up because of this catalyst in the next day or two. And so I'm going to be on margin temporarily. And I think margin, someone Someone had asked, is 20% too much or is 15%? That's really high, especially if you have high beta stocks in your portfolio. That's way too high. But using margin, it should be something that's done judiciously where you're tactical about it and you set risk limits like, okay, if this thing doesn't work out in 2 days, I'm going to close out the margin. But for people who are who are margined, like it's something that they just do generally. I guess that's okay if you have low beta stocks, but if you have high beta names, like high growth names that are subject to high level volatility, like you will ultimately get tapped out at the wrong time. And so, and oftentimes when people have margin, like they're like, okay, well I'll just buy a little bit here. And then it grows and grows because like, oh, well I liked it I liked it yesterday and the stock is down 5 or 10% today. So I love it more, so I'm going to buy more on margin. And then I've seen this with people. I was talking with some people in the chat about the old days of AST when we were on this death march all the way down to $2 and people were on margin and they were buying all the way down and then they just got tapped out. they got wiped out at whatever it is. If they were— they had held for a pretty long time and they were buying at 10, 8, 7, 6, 5, and then they got tapped out at 4, which is brutal, right? Because obviously the stock went even lower, but had they just kept a fixed number of shares and they weren't on margin, they would've made it all the way through, which is pretty painful. And so think like, you know, it's important to understand if you want leverage, like you can always use options. You can use calls or you can use call spreads. And there's like various strategies too. I mean, obviously, you know, you can, and sometimes people talk about selling puts, which I don't like, especially in environments like this. The reason, and I guess I'll just talk briefly about it.
[00:25:31] Speaker A: Yeah.
[00:25:32] Speaker B: When you sell puts, people are like, well, here's a stock that's at $50 and I'm going to short this put and it's at, I don't know, I'm going to short this put at $20. And so I'd be happy to collect a dollar and basically have a cost basis of $19 if I get put the stock to me. Right. And so what they don't understand is during periods like this, let's say VIX goes from 20 to $1.50, that put, even if the stock stays where it is, the value of that put is going to explode, right? Because implied volatility is going to go up. And so what you shorted at $1 could end up being worth $3, right? And it blows up in your face even though the stock hasn't moved. And so then the other thing is like when you short puts and you're let's say you're long stock and you're shorting puts, you're actually increasing the risk that you have, right? Because when the stock price goes down, not only are you losing money, but you're picking up, you're getting long that stock by that put expanding in value, right? And then one thing that, which is the narrative that people say, well, if you sell puts, you'll be happy to own it there. That's not true. Like if a stock gets cut in half and you're all of a sudden that put is now in the money and you're going to have to take delivery of this stock, you have to ask yourself, well, why did the stock get there? Why did the stock get cut in half? Is it for a good reason? Probably not. It's like, I mean, a classic example is like biotech, right? Like maybe something, a trial failed or something. There's some adverse reaction that happened for the drug in some subset of the population. And so the drug is being reviewed or it got black labeled. And so maybe you don't want to take delivery of the stock. Like the stock getting cut in half is not a good thing. Now, if it's just beta, like the market going down because maybe there's some economic uncertainty or healthcare gets beaten up, then maybe yeah, you want— and nothing fundamentally has changed about the company, then sure, like you could take delivery of the stock. But then Yeah. Often ask yourself this question, like when you're selling puts, you're selling insurance. And if the stock gets to that level, why did it get to that level? And are you going to be comfortable holding that stock? Which I think there's probably, I mean, if you look at, I'm just looking at my Bloomberg now, just looking at all this red, like there's probably plenty of put sellers here that are regretting having sold puts, right? Because they're Now they've got to take delivery of that stock and they've got to pay for it and they have to deposit funds or they have to sell other stock to pay for it. And so the other thing is like this idea of like selling covered calls. And by the way, like if you do, if you sell covered calls and that's fine if it's for some small part of your position, but I think people also kind of had this false sense of security that selling calls is risk-free and selling calls too. You're basically selling— when you sell a call against a long stock position, you're selling— you're basically shorting a synthetic in-the-money put. And so you have limited upside, you have all the downside, and you're hoping— and it has this weird psychological effect where you're hoping that this thing that you believe in that you're long doesn't go up a lot because then you'll get the stock called away. And so I think selling calls for some level of income for a portion of your position could make sense. But yeah, it makes— I think in general, when you're shorting puts or selling calls, which is the same thing, you're creating these potential risks in your portfolio that during periods of time like now can be pretty toxic, right? And so I think it's important, like if you're, you know, there's, if you read Twitter, like there's a lot of people who are pretty stressed out right now. Yeah. Take stock of your portfolio and think about, okay, if the market, and by the way, like the major indices, they're not down that much. Obviously high beta names are down quite a bit, more hated industries like software are down a lot and seem like they're not bottoming. But yeah, think about if you have margin, what does that do if you're down another 5%, another 10%? Because that's possible, right? And so you have to be prepared. But that said, I will say that the liquidations that we've seen, it's been somewhat orderly and it's been across the board. And so I don't think we're going to get to this point where VIX is going to get to 40 or 50%. Maybe we get to 30, which I mean, we're not that far off. We're at like 22. And so in a day you could get to 30. But yeah, I mean, I think for example, people who are invested in the space sector, yeah, you're still up a lot on your positions. And so I know sometimes people have this, they feel like, for example, AST got to like $130. And so they have this idea that the stock belongs there, like it needs to be there. And so I'm not, if they're in margin, they're like, well, I can't sell any because it's going to go there. And so they kind of sit tight, right? But they don't take care of their margin balance. And then if the stock gets to $70, all of a sudden they've got to sell shares and they lose parts position. And so as I said before, I think you've got to be judicious with margin and not put yourself in a position where you compromise yourself. And so in times like this, you want to have some level of cash or a plan. And so what a plan could look like is if you're fully invested right now, but you're You're not using margin. That's good because then you don't really have to do anything. Like you can, and one of the hardest things to do is like when you see all this red, you're like, oh man, I wish I want to do something. I want to buy something or I want to move things around. Oftentimes the right answer is to do nothing and that's okay. Like you're, it's not as if you're missing out on something. You know, sometimes people feel the need to trade, which can get them into trouble. But yeah, if you are, I've mentioned this before, but if you are, let's say you have a portfolio and you've got like 10 ideas and you have like 4 names of conviction and 6 things that are kind of marginal. When you have a pullback like this and everything is trading at a correlation of 1, like everything's down the same amount, then you might decide to consolidate your positions, right? You might consolidate some of those marginal ones into the more high conviction stuff that you have. especially if they're down the same amount because then you're upgrading your portfolio basically, right? And as I've mentioned before, like you in those times too, like for the names that you don't, you know, they might be more speculative and you don't really know them that well versus your high conviction stuff. Yeah. I mean, that's also a reason why you typically don't, unless it's just for a speculative trade or something. But when you enter these types of periods, it's oftentimes those marginal ideas that get cut, right? And that's where you can lose a lot of money where you don't know a situation very well. And so the first inclination is to cut it because you don't really know it versus like, oh, this is actually— I feel good about this position. I might add to it or I might just hold it, right? And so, but yeah, I think during periods like this, like you, there is this opportunity to upgrade your portfolio, like to the more high conviction stuff, especially as everything trades down together. And then the other thing too is if you want to increase your risk, but you don't have any capital, this, you know, as we kind of move down, there might be opportunities to, you know, sell shares and then buy buy options, right? And so you could do that in a way that's cheap and premium. Like you might buy stuff that's in the money that's not too far out. And so in that respect, like you actually, if you structure it the right way, you can actually limit your downside or cap your downside and increase your leverage on the way up by selling some of your stock. And it's not something like I think you should do a complete stock option replacement. But if you're looking to add more torque, if you think like you've reached some bottom, like that's one way to do it. Again, don't do margin. I'm just talking about options. And there's also some cost-effective ways to do that too. One way is like if vol is really expensive and calls look expensive, you can buy a call spread. You can buy, let's say if you have a stock that's like $100 and maybe you buy a call spread that's like 3 months out because you think that there is a rebound or there's some catalyst that will bring the stock back. You might buy a call that's like 10% of the money and then short a call that's like 40% of the money. And by doing so, you've like lowered the cost to do that. You've obviously capped some level upside. But generally speaking, like if the market rallies back and the stock price moves up, those calls actually, the vol will get crushed to some, or not get completely crushed, but it'll come in. And so by being short that top call, you'll actually get, oftentimes when people buy calls in a high, when you have a big drawdown, you end up paying a lot for those calls because volatility is very pumped. But if you buy a call spread, you buy a lower strike call and short an upper strike call, you at least make that purchase cheaper. And in some respects, like when there is a market rebound, you end up— you might be able to buy that top callback for a much more reasonable price as vol collapses when things calm down. But yeah, those are like some potential things that you can do, which sometimes for me, when they're I remember when, I mean, here's like a trade that I did. I remember when AST went down to 50 and it was like very frustrating. This is in November. And I did sell some other things, but then I also sold some stock at that level and I bought call spreads. What were they? I think that I bought some, like maybe it was December, December or January. No, it was maybe, I think it was January call spreads. And I bought a pretty decent amount of them because I was like, oh well, I'll just sell some shares. So I think I sold like 2,000 or 3,000 shares and I bought some call spreads. I think that was the amount. And then those call spreads ended up doing quite well. Like I think I made, I think it was like $2 or $3 million. And so at that point in time, yeah, it was, I was it was a point where, yeah, I didn't want to sell the stock at $50, but I was like, well, I'm going to increase the upside because I think the stock has pulled back too far. And by the way, the amount of shares that I sold was pretty small in terms of percentage of my position, but by being able to— but by taking— selling down there, I didn't like the price that I was selling, but then I got exposure to call spreads. I was able to make quite a bit when the stock rebounded to, I guess it was at the time that I monetized those calls, I think it was like at 90 or something. But yeah, those are some things that you can do if you don't have cash, but you do have positions and you might be down on them. You might sell, I don't know, a few percentage here or there just to increase some upside if you think like you've bottomed. But yeah, I think we're in this weird period. I think it's important to stay in the game and not, again, don't be on margin. I keep saying this over and over again and it's pretty brutal because I think like the crypto people, I don't know, it's pretty wild to see that people were running 50 times leverage, 20 times leverage on Bitcoin, like a really volatile asset, which I guess when it got to the $120, it was kind of trading in a very tight range. So maybe people were trading with high leverage. They were trading small moves, but obviously going from $120 to $60 is so destructive. Like if you have leverage for any asset, right? Getting cut in half, like that's, you're pretty much going to be out of the game. But yeah, I think You know, tomorrow there's probably gonna be, my guess is like a rough open and then you might be tradable. But just keep your head, you know, keep your head on top of your shoulders. Like don't overtrade things or don't panic. Definitely, you know, remind yourself like why you own a particular situation. Like AST, there's a lot of great catalysts that are coming up And the company's on the cusp of launching commercial service. You've got all this defense work that's coming up. And then obviously space is a key focus of this administration. And so I'm super bullish. These price movements don't really affect me. I think someone was like, well, oh my God, I think the stock is probably going to go down to $70. And it's like, well, okay. I mean, I'm a long-term investor, so I've been around since the 2s. it going to 70 is not— it's not going to— am I going to be happy about it?
[00:39:42] Speaker A: No.
[00:39:43] Speaker B: But am I going to lose sleep over it? No. Because it's kind of, in some respects, like I've lost— I'm not really affected by the volatility in this particular name because I have a high level of conviction in it. But I do think to the extent that there are people out there that have very concentrated portfolios in AST. Like it's always good to, and I keep telling Cook this and he doesn't listen to me, which is fine. It's his own thing. But if you have, you know, make sure you have a plan, you have goals. And so, you know, if you think that a certain, whether it's like your original net worth or, you know, some number you have in mind, like if you ever hit that, then, you know, set aside some portion of what you own, right? There's people who've made multiple times of their net worth and it's like, hey, well maybe you should sell a little bit next time we get to 100 or 130 or whatever. You pick your number. I don't know, 150. Sell a little bit to cover your original net worth. And of course, set aside money for taxes. And then the next time you have a drawdown, you're not going to care. For me, that was when, and I've talked about this many times, but when I had to exercise my warrants. You know, I had to sell a number of them and then I also set aside some money for taxes and then, yeah, and then I exercised the rest, which makes up the majority of the shares that I own today. And in that process, I, when I set aside some money, you know, I paid off like, you know, I had a mortgage on our house and we needed a new car and a number of other things. And I did all those things. And I also had cash left over, which then I, you know, I've talked about SPACs before, like that was when I started buying T.1 Energy because I was like, oh, I have all this cash, so I'm going to like look at some new ideas. So I bought T.1 Energy. I also bought Satisfye, which ended up— that was the fun trade that I've talked about where I bought warrants for, I think it was like $47,000 and they ended up being worth $1.8 million. But those are, you know, because— but I guess the point of the story is that because I did take some profits, and this was like when stock was in the 30s, when— this is for AST. So when we had that drawdown all the way down to 18, it didn't impact me at all. Like, I was like, well, I did take something off at the top and then— or near the top. It wasn't exactly the top. I think it was like the high 20s. When I took something off, like mentally I was able to say, oh, I took some profit and I had this win. And so when the stock went down to 18, like I had some money and I bought on the way down, but also it didn't impact me. And then of course, like there were other people involved who were, man, it was like brutal mentally for them to have seen AST hit 39. I think it was like, was it August 2024? It hit 39 and then it came back down to 18 and then there was just like absolute dejection, right? Where people are like, oh God, I wish I'd sold some or did this or that. And it's like, yeah, that's why you got to have a plan. Like it's fun to watch the stock price hit certain levels, but, and it's okay. Like if you're riding it to 200, then there's nothing for you to do. But If you have a plan and you're like, oh, well, I'll sell a little bit at $150 and you execute on that, then when the stock does have its inevitable pullbacks, then you're not going to feel bad about it. And so like today for AST, for it to be down at $91, $92, and then hit $87 after hours, like, oh yeah, I'll buy some here or there, but I don't feel awful about it. because I know what I own and I know like there's especially heading into the SpaceX IPO, like I think the upside is going to surprise us, right? In terms of how the market— on the one hand, the rational side of assessing how big the comms market, the military market is, and also looking at the data center opportunity. But then the euphoria that inevitably is going to come. Like, it's not obviously, you know, it is, people are going to say, well, you're hyping it up or you're pumping it. It's like, no, it's just human psychology. Like there's this massive watershed event, this, the SpaceX IPO and a ton of interest, and it's going to bring attention to the sector. And so, you know, we, if you had asked me back when we were at $2, like, hey, in 2026, the stock is going to hit $130, I would've laughed at you. Like, I would, it wasn't something that would've been in the realm of possibility in April of 2024. However, what was not in the realm of possibility either was the fact that the company would sign not only AT&T, which that we could underwrite and we knew that was going to happen, But Verizon, that was like the gotcha moment. That was just like, what? I remember seeing that and calling Cook that morning. He was like, you will not believe what just happened. Verizon signed an MOU with the company. They're investing $100 million and they contributed their 850 megahertz spectrum. I would've never dreamed that in a million years because yeah, AT&T, Verizon, they don't work together. I thought AT&T had exclusivity in the US and yeah, and so that laid the foundation for where the company is today because that opened up military or that opened the dam and all the military interest started to come after that because it's like, oh, they're working with AT&T and Verizon. There must be something real there. And so that was something that you couldn't have priced in.
[00:45:59] Speaker A: Right.
[00:45:59] Speaker B: And so I think that's something when SpaceX does go public, the interest in it and the folks that are going to be writing about AST, that's something that you can't fully price in or understand what is going to happen, right? And so like when I wrote about Apple today testing with AST, like even I learned something new because I had totally forgotten So Apple, for those that don't know, Apple has been testing their iPhone 17 with the frequencies for satellite supplemental coverage from space in the frequencies that obviously AST SpaceMobile covers, which is 700 and 800 megahertz. And so that would be with AT&T and Verizon. And this application that the FCC, I believe, is the basis for the article in October from the information where the authors claimed that, and it was leaked, I'm sure, by SpaceX, that SpaceX was secretly working with Apple to test their phones, right? So with Starlink service, and of course, in that application for testing, there's 1.9 gigahertz, which is T-Mobile spectrum. T-Mobile uses that spectrum is utilized by Starlink to provide service. It's a small 5x5 MHz channel, but yeah, Apple's testing with Starlink to make sure that Starlink works, and that's something that T-Mobile would ask Apple to do that, and conversely, Verizon, AT&T will ask Apple to make sure that AST SpaceMobile works on 700 and 800 MHz, but what I forgot and I guess tweeted about it later because someone in Space Mob was nice enough to point it out to me. In that testing, there's also 600 MHz, which Starlink can't use because their satellites don't— they're only solely focused on mid-band spectrum, but at least as of this morning, in my mind, I was like, oh yeah, that's owned by T-Mobile, but then I forgot that AT&T is buying EchoStar's nationwide 600 MHz spectrum, which is 20— it's virgin, unused 20 MHz by 20 MHz spectrum. And so yeah, like I wouldn't be surprised if AT&T lights that up for AST to use. And so that's a game changer. I mean, 20 MHz by 20 MHz, like if they actually open that up for AST to use, that's really going to differentiate AT&T service. And I'm sure Verizon's going to look at that and say, okay, you know what? I need to dedicate some level spectrum for AST as well. And so again, these are things that the market isn't pricing in and it's what's ahead. So when the headlines come out that Apple is testing with AST SpaceMobile, what does that do? What does that do to the stock? Or like if Apple, if I was Apple, I would do this. Apple should be making a strategic investment in the company because It, you know, the news that Elon Musk, I think it was like 3 sources close or familiar with the matter, which is typically when you look at journalist speak, if it's sources close to the matter means, or familiar with the matter, that's usually like outside advisors. And so it could be like an outside consulting firm. It could be bankers, it could be attorneys, lawyers, whatever. But the fact that there was like from 3 different sources saying that Starlink is working on a mobile phone and mobile service, like I think that's pretty— and Elon has hinted as such and also talked about it openly, but then today he had to walk it back because I'm sure someone who's in charge of MNO partnerships is like, come on, man, you're making my life hard. Like how am I supposed to sign up MNOs if we're eventually going to compete with them? But if you're Apple, it's, yeah, the writing's on the wall. Like, you, what are you going to do? You need to have control of your destiny. Like SpaceX is going to come to eat off your plate. They're going to create hardware. And so whether it's Apple or Google, and I know some people are like, well, I don't think SpaceX will create their OS, their own OS. What do you mean? Of course they're going to create their own OS. Now, it's not, it's not going to be easy, but it's not as if this thing called xAI was easy. Like, Elon created his own, you know, artificial intelligence platform from scratch. So, and because we know, like, how, I guess, how powerful AI is at coding, you know, could you also see a situation where they're going to develop their own OS? Yeah. I mean, that's what Elon does. That's Tesla. You pick any one of his companies, like he's building his own stuff. He's not going to be leveraging anybody else's technology. And so I think, as I mentioned before, it's going to become more and more apparent that the strategic value for AST is going to go up and up in the next few months. And so yeah, today it sucked. The last few days it sucked. Like, of course everybody wants to be at above 100 or 130, 120, you pick. But yeah, this is just market volatility and it's part of the investing process. And for some people it can be pretty scary. But yeah, I think, let me just, make this comparison here. So last time, let me just look at Bitcoin. Bitcoin. So let's see, when, when was Bitcoin at $60,000 last? Okay, so Bitcoin, that was September of 2024. Yeah, right before Trump was elected. So it was around $60,000, and back then AST was at September 2024. I mean, that was the run, but AST was like at $24, right? And so Bitcoin is rerated back down to 65. With that, there's been a ton of deleveraging and risk taken out of the markets, but yet AST is now at 93 or overnight, I guess 90. And so we made a lot of progress, right? And so I think it's good to keep that in perspective. And to not lose sight, I know people, yeah, it's difficult to lose money. And looking at Reddit, like there's, and on Twitter, there's people that are worried or panicked or the doubts, like whenever you have a drawdown, the doubts seep back into your mind, like what things can go wrong with this company? Or why isn't the stock going up? Or why haven't they given us an update on Bluebird 6 unfolding or the batch? the, the next few batches being sent down to Cape Canaveral. And, you know, we've talked about all this stuff over and over again, but, um, but yeah, it's, it's funny, like stock price, um, nothing drives sentiment as much as stock price, right? And so I think zoom out, look around, look at the entire space sector. I mean, every name with exception on my screen of one is, is red, like heavily red, um, and you pick the sector If it's like next generation nuclear technology companies, critical minerals, let's see, data centers, quantum names, everything is just completely smashed. And so yeah, we're not that different, but then just keep in mind, you know, the stock is at in the 80s and 90s versus where it was before, which is 20 in the 20s back when Bitcoin is at 65. And so that should give you some comfort. The company has made a ton of progress and the story has changed quite a bit in terms of hitting milestones. And there's a lot more to come. And so yeah, I'm super optimistic and bullish and market volatility is not going to change that. And yeah, there's a bit of uncertainty ahead of us, whether that's, I guess, this new Fed chair, which I don't I think that's kind of a nothing burger. Or potential conflict with Iran. That's a real problem. But oftentimes, as we've seen in the past, the market actually has this reaction of uncertainty, but then can see through it as long as there's something really bad that doesn't happen. But we'll find out, I guess, in the next few weeks. And then beyond that, Yeah. I mean, AI is scary and it's disrupting a lot of different industries, but I would say space, I don't believe is going to be disrupted, famous last words, to be disrupted by AI because a lot of the stuff that these space companies do requires very certain expertise. We're talking about physical hardware, making satellites, microns, putting together processors, solar panels, making sure that these things are hardened for space. It's not something that you— just like building semiconductors or hard drives or flash memory or DRAM or high-bandwidth memory, like this stuff is not something that AI disrupts, it's actually something that AI needs. And ultimately what AST is doing, which is communications to mobile phones, that is something that AI can use. And then ultimately data centers as well. So anyway, I've been rambling now for quite some time. It's 12:45. I'm getting tired and just like the rest of you, I got to get up for the open tomorrow. But yeah, hopefully this is helpful in just kind of thinking about the markets and the volatility. I think again, we're in this period of degrossing and deleveraging. And so when you see everything basically correlated, It's not like there's anything wrong with a particular company. It's just risk is just coming off across the board. And I think try not to fall into this trap of trying to explain why your particular company is down. All companies are down and risk is off. And so keep an eye on VIX and some of these indicators, like maybe perhaps software starts turning around. And maybe that shows some level of bottoming or crypto might lead us back out of this. But also be prepared. We might have additional days or weeks of this. And so just be ready, which means don't be margined. But anyway, I'm going to go to bed. Thanks everyone for joining, and we'll talk again in the morning. Take care.
[00:57:12] Speaker A: Thanks for Thank you for listening to the AST SpaceMobile Podcast. If you enjoyed this episode and you'd like to help support the podcast, please share it with others, post about it on social media, or leave a rating and review. To catch all the latest news about AST SpaceMobile, make sure to subscribe. Thanks again, and I'll see you next time. We're doing something very, very big, and I think we need to know it. we can really affect a billion lives. AST SpaceMobile is the only company that has proven technology to deliver cellular mobile connectivity directly from space to the everyday smartphone. People will just basically turn on their phone and be seamless. Regardless of where you are, we don't want the user even to know that it's connected by satellite. Our role is to bring this into reality. Listen, partner, she did the animal. Listen. Mmm, waffles.