Big Tech’s Tipping Point Is Here: Jim Mellon On Biggest Short Of All Time
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What is Jim Mellon’s view on the current tipping point for US mega‑cap tech stocks?
I think it's a sort of a general tipping point in markets and I've been calling it too early. You have seen that the uh US market has not done well this year actually compared to other markets around the world.
How does the SpaceX short illustrate broader weaknesses in the US financial system?
And I don't think most people appreciate that, although the US market has done well over the last five years. It's been highly concentrated in what it's done. Now it's really looking pretty bad. And I think the the main signal for that was the SpaceX thing, which I wrote in the Master Investor um letter was the biggest short of all time. And so it has proved.
Why does Jim believe the Strait of Hormuz risk is less significant than feared for oil markets?
It's down 50% now from its high, which is incredible for such a big IPO. And it exposed so many weaknesses in the US financial system. If I had to choose markets now, I would say UK smaller companies are. Extremely attractive, and you can see UK companies being picked off one by one.
What is Jim’s strategy for investing in UK North Sea oil and gas companies?
Three or four a week, which is tragic, but hopefully there'll be other companies that come along and replace them, which is why I'm quite bullish on the UK. But we're talking there about P ratios of between 10 and 11, free cash flow yields of about 9%, dividend yields of four to five percent. It's extraordinarily attractive. I think we just repeat Muhammad Ali: dance like a butterfly and sting like a bee.
Why is Jim fading most of his other oil and gas long positions?
You've got to be a gorilla in these markets. If you think that you could Then I think you're making a big mistake. And if you feel hesitant about the markets, just don't go into them. Don't feel that you have to be involved at all times and just Wait it out. There'll be an opportunity to buy much cheaper.
Why does Jim remain bullish on the Japanese yen and keep cash in it?
Welcome to the Master Investor Podcast with me, Wilfred Frost, where we celebrate and learn from the success of the greatest investors, business leaders, and politicians in the world, giving you, our listeners, the edge. The Master Investor Podcast is sponsored by LSEG, Interactive Brokers, the World Goal Council, and BMY Investments. Please do remember the views expressed in this podcast are for general information. information purposes only. Nothing in the podcast constitutes a financial promotion, investment advice, or a personal recommendation. More on that in the show notes.
What are the investment opportunities Jim sees in psychedelics and novel protein foods?
My guest today is my great friend, podcast co founder and the legendary investor, Jim Mellon, who comes back to the podcast for the fourth time. I'm delighted to say. Jim?
Very happy to be here. Welcome. I'm very delighted that you didn't use the word veteran investor. No, but you just have. So I know I obviously I have a sore spot about it.
Um yeah, and that's not a very nice word to use. Um so I hope the other members of the press don't. But um Jim, great to have you back. And we want to get straight into the action.
What does Jim predict about cheaper entry points and market volatility ahead?
And I didn't know whether to rejig things with oil prices pulling back today, but maybe we'll get to that uh next. But but first off, we've had most of the mega cap tech earnings now for this quarter. Clearly haven't gone down that well with the market, one or two of them, massive single debt. sell offs like IBM and Google. What what's your your takeaway of some of those Earnings and reactions to them.
Yeah, well I I just looked up the Mag Seven performance since the June twenty-fourth highs, and they average looks like to be down thirty percent, which is incredible considering how big they are as a you know, uh a component of the S P and also in terms of their huge size and funds. And I guess it's basically because um there's investor fatigue setting in with the whole tech thing. There's an understanding that these companies are moving from being cash flow positive, we know this, to being generally speaking cash flow negative, and in some cases, maybe Oracle, in a pretty precarious place. And an understanding that there is no real sign that they're gonna make any money out of all the expenditure they're making.
So the business model has changed, not for the best, and the business they've gone into doesn't look like being a profitable one for a very long time to come, if ever.
Do do you feel like sentiment, whatever the sort of median investor is, has shifted to be net negative towards those business models yet, or is is it just a s the start of a tipping point?
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Chapters
8 chapters
1
What is Jim Mellon’s view on the current tipping point for US mega‑cap tech stocks?
0:00–0:09
2
How does the SpaceX short illustrate broader weaknesses in the US financial system?
0:09–0:30
3
Why does Jim believe the Strait of Hormuz risk is less significant than feared for oil markets?
0:30–0:48
4
What is Jim’s strategy for investing in UK North Sea oil and gas companies?
0:48–1:09
5
Why is Jim fading most of his other oil and gas long positions?
1:09–1:30
6
Why does Jim remain bullish on the Japanese yen and keep cash in it?
1:30–2:06
7
What are the investment opportunities Jim sees in psychedelics and novel protein foods?
2:06–2:39
8
What does Jim predict about cheaper entry points and market volatility ahead?
2:39–44:31
Speakers
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