Latest / The Bear Market Podcast with Fexingo: Surviving Downturns, Buying the Dip, and Long-Term Resilience / How Jamie Dimon and Elon Musk Are Playing the Same Game Differently
Transcript
- Lucas: So Jamie Dimon came out yesterday and said — not for the first time — that he wouldn't buy stocks or Treasurys at current prices. And at the same time, Elon Musk is warning short sellers they 'won't survive' as bets against SpaceX hit 32 percent of the float. Two very different messages, but I think they're actually telling us the same thing about how to think about markets right now. Luna: Interesting. Dimon's always been the cautious banker, but Musk is leaning into the fight. What's the common thread? Lucas: It's about conviction and time horizon. Dimon sees risks that are underpriced — geopolitical tension, the yield curve still steepening, the VIX at 17 but not reflecting real tail risk. He's saying, 'I don't have to play this hand.' Musk, on the other hand, has extreme conviction in his own companies, so he's willing to take on short sellers who bet against him. Both are saying: know what you own and why. Luna: Right. But for the average investor, it's not that simple. We can't just tweet at short sellers. Lucas: No, but we can borrow the framework. Let's start with Dimon. He's been consistently bearish on stocks since late 2023, and he's been right about the macro risks — inflation staying stubborn, rates higher for longer, and now the U.S.-Iran conflict heating up again. But he's also been early. The S&P 500 is at 7,509 as of this morning, down 0.8 percent in five days, but still near all-time highs. So his caution has cost investors who stayed fully invested. Luna: That's the curse of being a macro forecaster. You can be right about the direction but wrong about the timing. Lucas: Exactly. And that's where Musk's approach offers a counterpoint. He doesn't try to time the macro. He focuses on building businesses he believes in, and when people bet against them, he sees it as a signal that the market misunderstands the value. SpaceX short interest at 32 percent is enormous for a private company — it means a lot of people think the valuation is inflated. Musk's response isn't to sell; it's to double down. Luna: But SpaceX isn't public, so retail investors can't buy it. How do we apply that? Lucas: We can apply it to public stocks we own. If you've done the research and you believe in a company's long-term moat, short-term price drops or bearish headlines shouldn't shake you. The key difference is that Musk has insider knowledge and control; we don't. So we have to be more disciplined about position sizing and diversification. Luna: Speaking of diversification, Dimon's bank, JPMorgan, is actually a pretty good example of concentration done right. They're a single stock, but they're so diversified internally — retail banking, investment banking, asset management — that it's almost like a mini-index. Lucas: That's a great point. And it ties back to what we were saying about knowing what you own. If you own JPMorgan, you're betting on Dimon's management and the U.S. financial system. If you own SpaceX, you're betting on Musk's vision and the private space economy. Both are concentrated bets, but they're backed by deep understanding. Luna: So where does that leave the average listener who's looking at the S&P 500 down 0.8 percent this week and the VIX up 8.8 percent to 17.05? Are we in a bear market or just a correction? Lucas: I don't think we're in a bear market yet. The real GDP growth was 2.1 percent annualized in the first quarter, up from 0.5 percent in the prior quarter. That's not recession territory. But the VIX jumping to 17 and the VVIX at 96.34 — those are warning signs that the market is starting to price in more uncertainty. The yield curve steepened again, with the 10-year at 4.60 and the 2-year at 4.21, a spread of 37 basis points. That's not inverted anymore, which historically has been a late-cycle signal. Luna: So Dimon sees that and says 'I'm out,' but Musk sees it and says 'I'm in.' Who's right? Lucas: Both, in their own context. Dimon manages a bank with billions in capital requirements and fiduciary duties. He can't afford to be wrong. Musk manages a company that's disrupting industries; he can afford to be volatile. The lesson for us is to understand our own constraints. If you're investing for retirement in 30 years, you can afford to tune out the noise and hold. If you need the money in five years, you should be more like Dimon. Luna: That's practical. So how do we decide which camp we're in? Lucas: First, look at your time horizon. Second, look at your conviction level. If you can't explain why you own a stock in one sentence, it's probably a noise trade, not an investment. Dimon and Musk don't trade on noise. They trade on thesis. Luna: And the thesis for the market overall right now? What's the bull case and the bear case? Lucas: The bull case is that the economy is still growing, inflation is cooling, and the Fed will eventually cut rates. The bear case is that geopolitical risks, like the U.S.-Iran conflict, could spike oil prices, and the lag effects of rate hikes haven't fully hit yet. Dimon is leaning bear, Musk is leaning bull on his own companies. The market is somewhere in between. Luna: I think that's a healthy way to look at it. You don't have to be all in or all out. Lucas: Exactly. And that brings me to something I've been thinking about. If our conversations here help you think about your own decisions more clearly, that's the goal. This show is ad-free, and it stays that way thanks to listeners who support us. If you find value in what we do, you can buy us a coffee at buy me a coffee dot com slash fexingo. It helps us keep doing this without chasing sponsors. Luna: Yeah, we really appreciate it. Every bit helps us stay independent. Lucas: So back to the market. Let's talk about the VVIX specifically. It's at 96.34, up 4.9 percent in five days. That's the volatility of volatility index, and when it rises above 100, it often signals a regime change. We're not there yet, but we're close. Luna: And we saw the VIX itself jump 8.8 percent to 17.05. That's not panic territory, but it's a clear step up from the low teens we had earlier this year. Lucas: Right. And the VIX term structure is starting to steepen. That means options traders are paying more for protection further out. That's a classic sign of uncertainty about the future, not just a one-day event. Luna: So what's the play? Buy puts? Buy the dip? Sit in cash? Lucas: I don't think there's a one-size-fits-all. But if you're a long-term investor, this is exactly the kind of environment where rebalancing makes sense. If your portfolio has drifted to 70 percent stocks because of the run-up, trimming some winners and adding to bonds or cash isn't market timing — it's risk management. Luna: That's the Dimon move, in a way. He's not saying the world is ending; he's saying the risk-reward isn't attractive enough for him to add exposure. Lucas: Precisely. And Musk shows that when you have high conviction, you can lean in. The trick is knowing which situation you're in. Luna: I think a lot of listeners might be in the middle — they have some stocks they love, but also some doubts about the macro. That's okay. Lucas: It's more than okay. It's honest. And honestly, that's probably the most sustainable approach. You don't have to be a hero. You just have to be consistent. Luna: Alright, so to wrap up: Dimon says be cautious, Musk says be bold. The real answer is somewhere in between, tailored to your own goals. Lucas: Exactly. And keep an eye on the VIX and the VVIX. If those numbers keep climbing, it might be time to tilt a little more toward caution. But if you have conviction, don't let the noise shake you. Luna: Thanks, Lucas. Good conversation. Lucas: Thanks, Luna. Talk to everyone next time.