Dan Niles: This Isn't the Top, It's a Speed Bump

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Dan Nathan (1:10)

Welcome to the Risk Reversal Podcast. I am Dan Nathan. That is Dan Niles. He is the founder of Niles Investment Management. Dan, welcome back to the podcast.

Dan Niles (1:19)

Pleasure to be on again, Dan.

Dan Nathan (1:21)

All right. Well, I just heard from Amanda. This is our lucky number 13 on nearly six years. I really, again, I appreciate, Guy appreciates, our whole team appreciates how you have just been that giving of your time over all those years. So I appreciate it. And not only that, I think our listeners, I know our listeners really appreciate it because you're a very, very unique guest for us. You were in the tech industry in the 90s. You went to the sell side. You were an II No. 1 ranked computer hardware semiconductor analyst and you've kind of worn different hats. And then you obviously went on to be an investor.

Your approach and I think your opinions are very unique and we really appreciate that. So I'll just leave all those accolades right there.

Let's hit, this is Thursday afternoon and you're probably listening to this Friday, you know, we had the Fed announcement and the press release or the press or Wednesday afternoon, we had I think somewhat of a muted reaction in the bond market and the equity markets. But today is a different story and you know, we have the market is kind of raging. We have a VIX at fifteen and a half. We still have crude oil above 100 The stock market doesn't really care. So let's talk a little macro and then let's talk some tech and you've had some really, really timely calls this year, nuanced calls within tech and within the AI kind of ecosystem. And I think it's really important for our listeners. Remember, it's not just me talking about it because you've been on this is the second time this year. You are amazingly transparent. You put out very long tweets, I think on Sunday nights for the most part, kind of dictating or detailing where you are in the markets. And it's not just thematically, but you're also talking about individual names. So let's just start on the macro because I think again, coming from where you sit, I think it's really helpful. You're not a big macro strategist, but it's a really important part of your thematic investing.

Dan Niles (3:18)

I always say like, you don't want to fight the tape and seasonality works for a reason, right? Where if you look at the data and you go, wow, this is the way it's acted over the last 60, 70 years. I tend to look at the S&P stats from 1957, which is the inception of the modern day S&P. And then I'll look at shorter term periods and go, wow, if this is kind of the seasonality or these are the patterns, then I don't want to fight that. And I don't want to fight the Fed, right? That phrase exists for a reason. And I definitely don't want to fight the bond market. As the famous saying goes, when I get reincarnated, I want to come back to the bond market because I can bully anybody. That's the James Carville famous quote. And so right now I feel like you have all three of those things between the Fed, the bond market and seasonality with September being the only month since 1957 that's down on average and is down more often than it's up.

All that's a problem with bond yields hitting and multi-decade highs across the globe in some cases.

Dan Nathan (4:32)

For the listeners who might have to go Google who James Carville is, he was the campaign manager for Bill Clinton going back to 1992

That quote has been famously used many, many times, but I think the way in which you are using it right now is really important because we're entering this midterm election in about five or six weeks. Let's be clear, what's going on as far as the economy is concerned, is probably front and center for most voters.