The Software Vs Nasdaq Gap

SPEAKER_00 0:00

Software stocks have barely moved in two years, while the Nasdaq has exploded up by 70% in the same period. And that has created a powder cake opportunity for us. I'm the guy who bought oil stocks six months before the Iran War started. Not because I have a crystal ball, but because I could see the big money moving into oil stocks, and I'm up about 60% on that while the SP is done single digits. So I made like five times more than the market. And I believe this rotation could be even bigger and faster. Why? Because I noticed that the big money is moving faster and faster from bucket to bucket, from sector to sector. They hop. And the truth that nobody tells you is that Wall Street no longer buys stocks for their quality. They don't care about their profits. They don't care about management. That time has passed. All they care about now is momentum. And it may sound fickle, I know you're used to this buy and hold philosophy, right? We've all been taught it, our parents were taught it. But if you don't understand this, you will get left behind. You will hold software stocks and you'll make 0% while the Nasdaq does like 70%. Or you'll play it safe with the SP and you make 2%, like the six months before the war started, and people like me make 40% because we bought oil stocks on the right moment. So in the next 20 minutes, I'm going to explain this opportunity to you. I'm going to give you both an ETF, so an index fund, and three individual stock opportunities. And if you want to understand that, stick around. I warn you though, the video is going to be fairly information dense, even though I'm on the move here in London in a hotel room. But to make sure this really lands for you, I'm going to give you more than just this video. I'm going to give you a full bonus free research report on everything that I'm covering here, plus more than we have time for in this short video. You can download that at felixfriends.org/slashsoftware. Software. So it's free. And I mean truly free, it's just there for you. Take advantage of it. Link is down below in the description. Let me show you something first that most people are missing. Over the last two years, two things have happened that created a crazy mismatch. The NASDAQ 100, tracked by QQQ, if you're an index fund investor, it went up about 70%. So if you invested$10,000 to the Nasdaq in 2024, by now you'd have about$17,000, which is pretty good, right? But software stocks, the biggest software companies in America, they didn't just go up slower, they actually went down in the same time period. So we're talking about a decline of about 8%. So instead of$10,000 turning into$17,000, you'd be sitting at just$9,000 and a bit. And that's exactly why this is creating an opportunity. Of course, the question becomes why does this gap exist, right? Why would professional investors, the people managing billions of dollars, deliberately bet against software? The answer will tell you everything you need to know. There is a narrative going around Wall Street right now, and it's a very powerful narrative. Powerful enough that hedge funds, the smartest money in the world, are betting billions of dollars against it, and they've been doing it for two years. They made lots of money on this. And the narrative is this AI is going to kill all software companies. Why? Because AI can do what those software companies do, but better and faster. And it kind of sounds scary, that right here, a software investor. So hedge funds decided to make money on the fear. They probably also created the fear, right? So those hedge funds, just so far this year, have made$24 billion betting that software stocks would go down. Think about that.$24 billion on just a one bet. And when that much money is betting on one direction, it creates an imbalance. Think about it this way. If all your friends are standing on one side of a boat, what happens? You move the whole boat. Everyone is crowded on one side and the boat gets, you know, lopsided. But here's the thing about boats. The more crowded one side gets, the more likely this is to tip the other way because people will notice and go, oh my god, they're gonna fall over, let's run to the other side, and then everybody runs to the other side, and you do the opposite. Now, this video is not about convincing you that AI will or will not kill software. It doesn't matter to us. I'm here to show you how to potentially profit from what happens next, regardless. The bottom line is that investing used to be like planting an oak tree. You'd buy a famous company, you'd plant it in your breakerage account, you'd ignore it, and you check back in 20 years, and what a beautiful tree she would be. But today, the world changes too fast for that because of AI and rapid technology shifts. A company that looks like a mighty oak today can be chopped down to nothing in just two years. So if you just buy and hold one company forever, you might end up holding it all the way down to zero. So what do the Wall Street pros do instead? They surf. Instead of marrying one stock, I always say don't marry the stock, marry the girl. Wall Street has one simple rule you need to learn today. It's called follow the money. And it's so important. I'm literally gonna hold a free live seminar this weekend. And it's called why buy and hold is dead in 2026 and what Wall Street does instead. I'm gonna hold it live this weekend from France. Get yourself a free seat. There's a link down below at buyandgrow.net, not buyandhold.net, buyandgrow.net. And the strategy that build your parents' wealth, it just won't build yours. So come and learn what replaced that strategy. Get your free seat, and this will work for you, whether in the U.S., in the US, in the UK, or in Europe, just be on time. There'll be no replace, don't ask for them. And if you're worried about stock picking, because it sounds complicated, right? Look, this can be done with index funds. It is simple, it isn't complicated. So I'm gonna teach it to you, grab yourself a seat. And if you're grabbing yourself a seat for that live seminar, write the seminar in the chat down below, and I'll know you've actually booked it. But right now, I'm gonna teach you a framework that professional investors use to spot opportunities like this. We're then gonna look at what index fund we can buy to take advantage of this and what three individual stocks we can buy to potentially take advantage of this. So the framework is called, well, I call it the rubber band effect. And it works because human nature doesn't really change. Imagine a rubber band, right? When you stretch a rubber band really, really far in one direction, what happens? What happens? It gets tight, right? The further you stretch it, the more pressure builds up inside of it. And eventually that pressure becomes too much and suddenly snap. It whips back in the other direction, it snaps even harder than when it was stretched. The stock market works very much the same way. When everyone gets crowded on one side, all betting on one direction, you're stretching the rubber hand. The more extreme the crowding, the more pressure builds up. So what we're seeing with software is a rubber band stretched about as far as I've seen it in years. And professional investors know this. So they're watching and they're waiting for the snap. And what's really beautiful about this is you don't need to guess. There is a process to identify when the snap's about to happen. And if you know the steps, you can be ready when it does. So let me give you let me give you the big picture three steps here. We're gonna go much, much deeper on this on the weekend if you join me there. The first step is figuring out exactly how crowded is one side of the boat. Professional investors, they track something called positioning. And this is basically a measure of how many people are betting up versus how many people are betting down on a particular stock. Normally positioning is pretty balanced, right? So you have some people betting it up, some people betting down. It's like having people on both sides of the boat. But right now, the software, it's incredibly lopsided. Way more money is betting down on software than it's betting up. And here's a simple way to think about it. Usually the ratio of people betting down to betting up is pretty, pretty small. It's pretty similar. But in software, that ratio has gotten crazily extreme. We're talking about short selling, which is when people bet the stock will go down at levels we haven't seen in years. I mean, you see positioning this extreme, it tells you something. Everyone who wanted to bet software would go down, well, they've already met the bet. There isn't much room left for more people to pile on. So if information comes out that makes people think software isn't going to disappear, I mean, have you cancelled your Microsoft subscriptions? Probably not, right? Because the reality is that yes, it is much, much easier to make software nowadays, but to acquire millions of subscribers, like Microsoft has, that is just as hard as it was before. The second step is to look for the crack. I don't want any jokes about that in the comments section. It's the first sign that the boat is about to tip over. And it's when the price of a stock breaks through a level where a lot of people thought it would stay below it. And if I may honorify you with a stock chart, this is the uh a major software ETF called XSW. And it's trading right now pretty much exactly where it was in February. It's done like really absolutely nothing at all, you can see. But it's breaking through a level here. We're gonna get a little bit more into that on the weekend if you join me there, but don't worry, this is this works for like all levels of understanding of investing. You see, we had a high here, a high here, and a high there. And right now we're at that same point again. And that point sits at basically$160. We break above that, it changes things. It's like the rubber band starting to slip from the hand that was pulling it. And when a price breaks through a level like this, it sends a signal. And when your industry has been stuck for months and months and months at the same level, and you break through that glass ceiling, that's the crack we're looking for. That's the first time you heard this, brilliant. Um, right first time in the comments, and I know that's it's landing for you. But then there's a third step to this. And the third and the final step is the scariest part. It's when the boat actually tips. So once you spot the crack, the final step is understanding what comes next. And it is called forced buying. So here's how that works. Remember all those people who bet software would go down? Well, when the price starts going up, they have a problem. If they don't act, they're going to lose money. So what do they do? They rush to close their bets. And the only way to close a bet that a stock will go down is to buy the stock. You might have heard about shorting. This is what this is. You're shorting a stock, you're selling it. You don't own it, you've sold it. So you're minus a stock in your portfolio. The only way to go back to zero is to buy a stock to get back to zero. And it creates a rush of buying. And these guys are not buying because the stock of the industry is getting better. It's just mechanical buying. It's forced buying, it's the rubber band snapping back. And when this happens, the move can be fast. I mean, we're talking really, really fast. Let me give you an example of one of these, a recent one. Who's heard of Avis Car Company? Really, really boring stock, right? But this is what forced selling looks like, or rather forced buying. They were closing their positions, right? So people hated Avis. They thought it was going to go down a lot. And in fairness, they made a lot of money, money doing it because it actually went down about 50%. But then when it started going up again, first gradually, and then really, really, really, really, really rapidly, right? Hundreds of percent. And then, of course, it collapsed again. And the smart investors are ready for this on software. So the simplest play, and I'm not a financial advisor, I'm not a registered investment advisor, I'm not telling you what to buy. I'm just sharing with you some research and some insight and some education that I got from my Wall Street mentors. The simplest play is always to buy an index fund, right? It's the easiest way to do this. Now, the index fund for this that I'm looking at is called XSW. And if I go into our ETF tool here and I see XSW there, I can click on that and I can see exactly what it does. You can see it's done, it's actually down 7% in the last year. You can see it's mostly invested in the US, which is what we want. You can see the top holdings here, and some winstant explanations of what it's actually all about. And it holds basically 136 of leading software companies out there. And it's the safer, if that was a word one can use for investment. Of course, there isn't risk with everything, there's massive risk with everything. Um, but it is a safer play than buying an individual stock. So if the squeeze happens, if the money pours into this, the whole thing will go up. And if it doesn't happen, it probably won't go down as much as if you pick an individual stock. So what could actually trigger this? Well, it could just be no real news and just money slowly, gradually pouring into the industry as people are closing their short positions. It could also be a good earnings support from one of the software majors. It could just be that the fear thing around AI goes away because you know, Microsoft has just built AI into their software offering. Nobody cancelled their offer subscription because someone came up with a free word processor, right? I mean, Google did. There's Google Docs, it's the same thing, it's free, right? Did that impact Microsoft's offer? No, it didn't, because everybody's on that subscription, everyone's got Windows, and Microsoft, you know, offers installed. Companies are not going to change their software because someone else does it a little bit cheaper, because there's a pain in the neck to train everybody. So just don't do it. Uh, but yeah, the the key thing, of course, what will make this the biggest would be forced buying. So we get those margin calls, we get those shorts closing, and then you get panic, and then you can go and get yourself in theory, like you know, what happened to Avis, just one of these crazy, crazy stories, right? How quick does this happen? We're not talking about days. This can be weeks, it can be months. But I also want to walk you through, because I promised you, the three stocks that I'm actually looking at here, three individual stocks. And those are CoreWeaf, Big Bear AI, and Unity software. So I'm gonna give you a straightforward explanation for those. We're gonna look at the stocks, the chart together as well. And again, I'm not telling you to buy them, I'm just saying, look, this is how I look at opportunities, and this is the here is why. And CoreWeaf is essentially a specialized cloud for AI training sort of company, right? So they're not your average Microsoft or Amazon style cloud provider. They instead build a massive network of data centers packed with just the world's most powerful GPUs, which is exactly what AI companies need to train and run their biggest models. Sort of they're kind of the premium fuel when you get petrol. You know, it's just built for the AI boom. And AI computing power demand is just growing faster than pretty much anybody expected. These guys have long-term contracts, massive backlog of future revenue. They've also partnered with NVIDIA, they're expanding your capacity aggressively, and basically the whole AI industry needs more of what they sell. So if AI adoption keeps going on the way we're seeing it, then these guys are gonna collect a lot of money. If you look at the chart here, what do I see? Well, we've just broken out over slightly the recent highs here, right? Now there's a little bit further to go, and if you wanted to be a little bit more cautious on this, you'd be looking more at like the$140, which is a few dollars above where we are trading right now, and that would be a cleaner kind of breakout. But what we are seeing is that we are gradually moving up again, right? So the the big sell-off is over, and we're gradually repositioning here in a good way. Stock numero do is Big Bear AI. And I'm as cautious as anybody of companies that put the word AI in their title because it reminds me of dot-com. It's down about 60% from all-time highs. And actually, it's no, it's down a lot more than that. It's down about 70% from all-time highs. And I actually quite like that because it's possibly overdone. Big Bear AI builds AI software that helps the US military, federal agencies, you know, process massive data. And so there's a sort of thing, logistics, predictive intelligence, that kind of stuff. And the ball case is simply the US government is in the middle of a major push to integrate AI into national security, uh, and the defense budgets for AI are just growing, you know, as quickly as anybody would have thought. So these guys, BBAI, have been winning key contracts. They've got a backlog, uh, they've got real contracts with the US government, and it's a pretty small name still that could become a meaningful player in the whole sort of defense tech space that that's out there. Um, and what are we seeing? Well, we're seeing a stock that seems to bottom out around$3 and is actually moving back up. You can notice that yellow line there. We talk about more on Sundays, starting to move back up, right? Now, there will be resistance on the way up. It won't be a straight line up because as you get into these sort of zones here, the soccer support here, they're gonna sell at zero, right? Um, but it is moving, it is showing early signs of this could be an interesting one, which is why I'm mentioning it. Again, I'm not telling you to run out and buy it. The third stock is called Unity Software. And it's the engine that millions of developers use to build video games, training simulations, AR experiences, all that stuff, and even digital twins for automotive industries, architecture, and so on. And they've got some new AI tools called, like Unity Vector, for example, that help games and apps generate revenue more efficiently through ads in app experiences and so on. And the gaming industry isn't shrinking, right? People are still playing games and it's actually evolving faster into virtual worlds and so on. And Unity dominates the created tools market. They've been streamlining the operations uh to reach more profitability. And a lot of people are looking at this and going, this is actually an undervalued stock right now, right? And again, this is this has come down from uh some pretty lofty highs here, right? And I quite like that in these sort of setups. It's down about 87%. Talk about being punished, right, for being software. And what are you seeing again? It appears to have bottomed out around$17.50, which is pretty much the same level we were at the previous year, 2025, 2026. And we seem to actually be looking at potentially a meaningful rally here. Now, of course, you have to know when to sell and how to set it up, and you have to response for position sizing and everything else, and think about how it fits into your portfolio and all of that. But the quick bull case here is for each of these core weave, Powers AI, infrastructure, boom, big bear AI writes the wave of AI spending and defense, and Unity is sort of at the center of game development. Now, are there more layers to this, onion? Yes, of course there are. I can't I can't teach you everything there is about investing in these sort of momentum plays in a in a 20-minute video, um, and which is precisely why I'm I'm running a live training for you guys on the weekend where you can ask me questions, where it'll be you know live and interactive, and I'll walk you through the more detailed setups that work not just for software, but like for everything and have been like that for many, many years, because I very, very firmly believe that the old playbook, the buy and hold playbook, it doesn't work for stocks. It doesn't even work for sector index funds. It probably works for the S P 500. I think that's very fair to say, because that's in the long run always going to go up. But if you're someone who is buying individual stocks, you're buying an AI ETF or a tech ETF or something, quantum ETF or whatever it might be, you need to realize you can't just buy them and forget about them. Because the speed at which money moves around now is greater than ever. And it's largely because interruptions, technology interruptions, are just faster and bigger than ever before, right? I mean, we used to have the leading phone company in the world was called Nokia, right? Then it was BlackBerry for business, they're pretty much out of business. You know, Cisco was the most exciting software company uh uh around. Um, and you can think of you know thousands of such examples. And the money went into them, and the money left, and it found somewhere better to make money. So come and join me on the weekend. It'll be free, it'll be live, it'll be live from France, it'll be fun. Buyandgrow.net, and I will teach you the exact system that I use every single week. It doesn't mean it matter whether you're a trader, whether you're buying stocks or index funds. If you're just interested in how to sponsor grow your investments further, come and join us. Link is down below in the description. You got some value from this. You think someone might get value from the live seminar? Send them the link, share it with the people, and I wish you all the best.