17 Nov 17th November 2025

Index Movement Last Week

We saw a bit of selling in AI names last week, but then gains in Health Care and Industrials at the same time which indicates it was just traders taking profits in high flying AI stocks and buying the unloved sectors.

This is absolutely normal behaviour and not the beginning of the end as some media would like you to believe.

One story that has been promoted on a large scale is that Michael Burry, of The Big Short fame, took bearish positions in NVidia and Palantir.

Burry became famous for correctly predicting the mortgage credit crises before it happened in 2008. He took bearish positions and when the market crashed he made a huge profit. What a genius. He saw it before it happened. And now this genius is predicting the AI trade is about to fail. Is he right again?

No.

Since 2008 Burry has made a series of bearish calls. All of them wrong. His fund now has just $155million under management. Completely insignificant and less even that this publication following years of losses.

So why anyone would listen to him beats me.

In fact, he is giving up stating he is not in tune with equities any more

That is example number one of what happens to bears.

Example number two is a guy named Jim Chanos.

Jim correctly predicated the downfall of Enron and Worldcom in 2001. His fund, Kynikos Associates was worth about $200 billion in 2008 but he shut it down in 2023, returning just $200 million to investors following repeated bad bets against Tesla (TSLA).

Being bearish never works. Or at least it never works long term. One lucky call does not make you a good investor

The other side of these guys is a fellow you might have heard of named Warren Buffett. His latest report showed he has further trimmed his holdings in Apple (AAPL) and has taken up big positions in Alphabet (GOOGL) better known as Google and increased his stake in United Health (UNH). He buys when prices are lower.

That is what good investors do. They know good companies will reward investment in the long-term so any short-term weakness should not be viewed as a time to panic and sell, but as a time to buy, regardless of what bears in the media are saying.

Nvida (NVDA) is now 8% off its highs. Google (GOOGL) is 5% off. Meta (META) is 22% off and screaming buy me here.

Now that the Government shut down is over, we will start to get economic reports once more. These will confirm the economy is still on a strong footing and when you consider that 82% of companies reported better than expected earnings investors will likely start buying into these stocks whilst prices are depressed very quickly.

On Wednesday this week NVidia (NVDA) will report earnings. The result here will likely define the path for the rest of the month.

The bears have been talking a fair bit about how the AI trade is feeding off itself and this isn’t sustainable. For example, NVidia said it would invest $100billion in OpenAi and OpenAi would use the money to buy more Nvidia chips. There have been several other similar announcements between the massively profitable hyperscalers like Microsoft, Alphabet, Google and Meta and the smaller Ai developers who need cash.

It makes a lot of sense to me for NVidia to do this. They are basically funding a start up to get them going and ensure OpenAi does not fall over while trying to walk. Because NVidia wants OpenAI to get through this stage and then learn to run. At which stage OpenAI will have significant revenues and be able to continue to buy more and more Nvidia chips without further funding from NVidia.

Ai is a new dynamic. It needs a lot of capital to build it out. But it will be a decades long theme whose story will go through changes along the way.

For example, a very common theme with new innovation is following the initial surge of optimism, reality sets in and the theme goes though a consolidation period. The media will be full of stories of the trade being over. This is likely to happen to AI too. I can’t say when, but I can say with certainty that the AI trade will not be a smooth path higher and that there will be pullbacks along the way.

This chart is from Bespoke Premium. They update it every now and then. It shows how the Nasdaq is performing since the introduction of ChatGPT as compared to what the Nasdaq did following the release of the world’s first web search tool – Netscape.

The red line is now, the blue line starts back in 1994 with the Netscape release.

Three observations about this chart.

1. So far the move has been eerily similar.
2. Note where we are now and what happened at this stage before. I have put a red circle around this.
3. Note the move for the blue end at the end. That is what a bubble looks like. The current move looks nothing like this.

Regarding the red circle. As I stated before, it is very common for hot trades to lose some initial heat at some stage, but it does not mean the trade is over. If AI stocks continue to come under pressure, similar to what happened in the 90’s, it is just a temporary pause and there will be another leg higher.

I will end this week with a lesson in patience. Making big profits from stocks takes patience.

Back on 26th June 2023 I dropped a little stock tip in this newsletter. You can read that past newsletter here

The stock was Iress Energy, taking under ticker IREN. At the time it was around $4.50

That same stock was trading at the start of last week over $68. That is a gain of some 1500% (Edit – It has since pulled back to $48 but it was $68 when I was writing this piece last week)

Nice. But it took more than 2 years to get there.

This is the reality of stocks. Good things happen. But they take time so forget about making money this month and think more about where things will be 5 years from now.

Warning

Stock values can go down as well as up. It is possible to lose 100% of your investment in a stock. Any advice given by Capital 19 is general advice only and does not take your personal circumstances into account and might not be suitable for you.