Squeeze Day into NVDA Earnings or Head Fake?Insider buying picked up and breakout stocks approached zero. With NVDA on the docket... look for a wild day of investor positioning against the most important earnings report of the year.
Good Morning: This week, we’ve covered two extremes. Monday brought us the Buffett world… companies with fortress balance sheets, high capital efficiency, and predictable cash flows that reward actual analysis. Yesterday, explored the volatility junkies who chase liquidity’s tidal shifts with 2-3x leverage, caring more about motion than meaning. Today is different. Today, we examine the quiet giants: companies that get bought even when nobody decides to buy them. Welcome to the world of Passive Capital… It’s much bigger than most realize. More than half of all U.S. equity assets now sit in vehicles that don’t pick stocks. They replicate models. They mirror indices. They don’t evaluate CEOs or product launches. They favor size, liquidity, and index eligibility. That’s it. When a paycheck flows into a 401(k), a pension hits its allocation model, or a robo-advisor deposits cash into an index fund, no research happens. There’s no thesis or conviction formed. There’s no debate about valuation. There’s simply a rule… If money comes in, buy the basket. If the basket grows, buy more. This is the most powerful flywheel in modern finance. The Triple Benefit PhenomenonMost people think passive investing means “index buying,” but that’s only one hydraulic in this machine. Funny thing… A large-cap company can receive at least these three separate, automatic capital streams without a single individual deciding to own it…
When Nvidia rises into the top weights of the S&P 500, trillions of indexed dollars must buy more. Then every Tech ETF must buy more. Then every AI ETF must buy more. Then every “automation,” “machine learning,” “foundry,” or “data center” ETF follows suit. Nobody chooses it. The plumbing requires it. Managers don’t just buy Alphabet, Amazon, Microsoft, and Meta… They’re replicating something else… You know how Hollywood keeps remaking the same movies over and over? They have nothing on Wall Street… This place is the least original business on the planet. But they do it for one reason… It pays. That’s because structural demand that doesn’t need a bull case, only flows. The Valuation Speed BumpPeople still debate whether a stock is “overvalued…” Why are we doing this? In a flow-driven market, valuation is no longer a forecast… it’s a speed bump. Passive capital doesn’t care if a stock trades at 30x, 40x, or 70x earnings. It only cares whether the stock exists inside the model… Is it large? Is it liquid? Is it index-dominant? Is it Thematic? “Cool… buy it and let’s slap a 30-basis charge on this ETF and go eat sushi…" That multiple might matter to a hedge fund analyst, but it’s irrelevant to the $4 trillion cycling through index funds, target-date funds, pension allocators, factor ETFs, and systematic retirement products. These buyers cannot stop buying unless people stop saving… They only stop if workers stop contributing… The machine only grinds if capital stops recycling through passive systems. The flows are on autopilot, and autopilot doesn’t argue about price. Buffett’s Alphabet Buy Reflects RealityWhen Berkshire added Alphabet, it wasn’t because Warren got excited about paid search margins. I think people are waking up to the reality of the markets… Alphabet represents everything that I’m debating here…
Alphabet benefits from both Buffett’s discipline and everyone else’s systematic indifference. You don’t need millions of stock pickers when trillions roll down a passive slide. Just do this… Look for… as investors and traders… (following momentum rules…)
These companies aren’t owned because people love them. They’re owned because financial infrastructure forces ownership through societal saving, pension rebalancing, and payroll systems that move money like plumbing. You don’t need to beat the market. You need to understand who actually buys it today. In 2025, the buyers are robots, allocation models, and the government retirement system… They’re not analysts, day traders, or even people like Buffett... It’s all a fugazi…
What’s NextOn Friday, I’ll dig deeper into stocks that sit in our three-circle intersection: Value Arbitrage, Leveraged Momentum, and Passive Powerhouse. Not a stock list or personal favorites, but names mathematically reinforced by global capital’s plumbing. Understanding that plumbing transforms the market from a casino into a river. You need to build your dock in the right spot. Tomorrow, we’ll show you when to start building and the key indicators you need to know when it’s time… Now then… Let’s get to today’s market preview…... Continue reading this post for free in the Substack app
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