Latest / Stock Picking with Fexingo: Individual Equities, Research, and Building a Concentrated Portfolio / How the S&P 500 Could Hit 8000 and What Stock Pickers Should Watch
Transcript
- Lucas: So the S&P 500 closed above seventy-seven hundred today, up nearly three percent on the week, and I saw a stat that made me stop: traders on Kalshi now think it's likely we hit eight thousand before the end of the year. Luna: Eight thousand? That's a four percent move from here in less than five months. That feels aggressive. Lucas: It does. But that's exactly the kind of sentiment data that gets interesting for stock pickers. When the crowd starts pricing in a melt-up, you have to ask: is this a momentum signal or a contrarian warning? Today I want to drill into that question with a specific lens — how you build a concentrated portfolio when the tape is screaming higher but the macro backdrop is genuinely uncertain. Luna: And the tape is really diverging. NVIDIA up almost nine percent in five days, Microsoft up six and a half. Meanwhile Chevron is down nearly four percent. That's a pretty stark rotation. Lucas: Right, and that's the puzzle. You've got tech ripping, but the Fed is talking about a potential hike — Governor Cook said she's 'prepared to act' on inflation. If rates go up, the whole growth narrative gets tested. So I want to walk through a framework for thinking about this as a stock picker, not a market timer. Luna: Let's start with the obvious: NVIDIA. It's up nearly nine percent this week, but it was in the middle of a selloff just a month ago. What's driving that? Lucas: The AI capex story is still the core engine. But the interesting nuance is that the market is becoming more selective. It's not just any AI stock — it's the ones with real earnings and a moat. NVIDIA's dominance in data center GPUs gives it pricing power that most of the pack doesn't have. That's why it's rebounding faster than some of the higher-flying names. Luna: So momentum is rewarding quality first. But how do you weigh that against valuation? NVIDIA is trading at a premium that would make a value investor wince. Lucas: That's the crux. You can't just look at the price to earnings ratio in isolation. You have to ask what growth is embedded. For NVIDIA, you're paying for a compound annual growth rate that has been nothing short of extraordinary. The risk is whether that growth decelerates. But for a concentrated portfolio, you have to be willing to hold through the noise if your thesis is intact. Luna: And then you have the other side — Chevron dropping almost four percent this week while energy broadly is weaker. Is that a buying opportunity or a warning sign? Lucas: I'd say it's a reminder that commodity-linked stocks are a different beast. Chevron's fate is tied to oil prices, which are influenced by geopolitics, OPEC decisions, and global demand. In a market that's rotating hard into tech, energy can get left behind even if the fundamentals are stable. The key is to know why you own it — if it's for diversification, then a pullback isn't necessarily a reason to sell. Luna: So how do you decide what belongs in a concentrated portfolio right now? You can't own everything. Lucas: The first step is to define your edge. What do you understand that others might be overlooking? For me, it's about identifying businesses with durable competitive advantages and a clear path to cash flow. In this environment, I'd lean into companies with strong balance sheets and pricing power — the ones that can weather a rate hike or a demand slowdown without breaking a sweat. Luna: And you're seeing that in names like Microsoft and Apple, which have held up well compared to the broader tech selloff earlier this year. Lucas: Exactly. Microsoft is up over six percent this week, Apple a more modest but steady gain. These aren't just AI plays — they have diversified revenue streams and fortress balance sheets. When the Fed talks about hiking, they have the margins to absorb the hit. That's the kind of resilience you want in a concentrated book. Luna: But what about the cyclical side? If we're heading to eight thousand, the financials usually do well. JPMorgan and Bank of America are up, but not as much as tech. Is there an opportunity there? Lucas: Financials are an interesting case. A rate hike can actually boost their net interest margins, so they're a natural hedge against the Fed's hawkish tilt. But you have to be selective. The big money-center banks have more regulatory and economic sensitivity. Regional banks are a different risk profile. For a concentrated portfolio, I'd rather own the high-quality compounders than chase the beta. Luna: So it comes back to quality. But how do you avoid the trap of just buying what's gone up? I mean, NVIDIA has had a monster run — is that a reason to be cautious or a sign of strength? Lucas: It's both. Momentum can be a self-fulfilling prophecy, but it can also reverse quickly. The trick is to separate the trend from the fundamentals. If a stock is up because the market is rewarding real earnings growth, that's different from a speculative bubble. For NVIDIA, the earnings are real — they're growing at a pace that justifies a premium, at least for now. Luna: And yet, the Fed's rhetoric could change that in a heartbeat. If they hike, the discount rate goes up, and all those future earnings are worth less today. Lucas: That's the crux of the whole debate. Higher rates compress multiples, especially for long-duration growth stocks. That's why you're seeing this divergence — the market is pricing in a lot, but it's also nervous. The Kalshi betting on 8,000 suggests traders think the Fed will hold off or that the economy is strong enough to handle it. But it's a coin flip at best. Luna: So what's your base case? Do you think we're headed to 8,000, or is that just a momentum signal? Lucas: I'm not a market timer, and I don't think you should be either. The better question is: if the S&P does hit 8,000, will your portfolio benefit? That requires owning the right names, not just being in the market. I'd rather own five high-conviction stocks that I understand deeply than twenty that I'm unsure about. Luna: That's the concentrated approach we've talked about before. But it's scary when the market is this volatile. How do you stay disciplined? Lucas: You have to have a thesis written down. When you buy a stock, you write a one-page explanation of why you own it, what could go wrong, and what would make you sell. Then you review it regularly. That discipline keeps you from making emotional decisions when the tape is moving fast. Luna: That's a practical takeaway. And it's something our listeners can do tonight, not just talk about. Lucas: Exactly. And that's also why we keep this show ad-free — we want to share ideas without trying to sell you something. If you find value in these conversations, and you want to help us keep it that way, you can support the show at buy me a coffee dot com slash fexingo. Luna: Yeah, it's a simple way to say thanks, and it helps us keep doing what we love. No strings attached. Lucas: So back to that thesis. For me, the next few weeks will be telling. If the Fed delivers a hike, I expect a pullback in the high-flyers. But if they hold steady, the melt-up could continue. Either way, I'm sticking with my process: focus on the businesses, not the noise. Luna: And maybe that's the ultimate lesson — the S&P could hit 8,000 or it could stall at 7,500, but your portfolio's success depends on the names you own and the discipline you keep. Lucas: Well said. So today, take a look at your holdings and ask: do I have a clear thesis for each one? If not, that's your homework. Because in a market this uncertain, the best anchor you have is your own process.