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☕️ What does Nvidia know?

Feb 21, 2025

Good morning! 👋

The Nasdaq was green in early going but has now turned red along with both the Dow and the S&P 500. Not a surprise given the economic crosswinds.

If you’re uncertain, I get it.

Just remember that missing opportunity is always more expensive than trying to avoid risks you can’t control – like rates, tariffs, the Fed etc.

So focus on what you can control – like buying great companies making “must have” products and services the world can’t live without and using the right tactics to control risk every step of the way.

If you’re not sure how to do that, a) you’re not alone and b) it’s a totally fixable problem; I’d love to toss my hat in the ring if that’s helpful.

Here’s my playbook

1 – What does Nvidia know?

I am a big fan of what I call “Keith’s Rule of the Back Page” – meaning that it’s almost always more profitable to invest in stories that are still on the back pages and nobody knows about ‘em before they move to the front pages and everybody does.

Like, for example, Nvidia selling out of Sound Hound, Serve Robotics and Nano-X Imaging. Then buying shares in Nebius Group (previously Yandex which provided Internet and search in Russia).

What catches my attention is that Nebius sold out of Russian interests and relocated to the Netherlands where it’s made a pivot into cloud and AI services for an increasingly global client base.

Three things come to mind.

First, it wouldn’t take much to go back to Russia and I have to believe that’s on the table if peace breaks out in Ukraine.

Second, the EU for all its faults is making noises about getting serious with AI and that means more AI-centric infrastructure will be built shortly.

And third, there’s a tremendous amount of Nebius-related clickbait that’s surfaced in the last 24 hours which means that caution is merited for anybody who wants to buy shares.

Hmmm. 🧐

2 – DeepSeek: now the truth comes out, and it’s not far from what I suspected

DeepSeek rocked the world with newer, cheaper, faster to build AI models in January.

American tech experts (who are spending billions) said, “no way.”

I told you, “Watch and see."

China was very likely to have used American know-how and our open-source AI models as part of the workup to train its models. Just like insisting that “partners” doing business in China are required to reveal critical trade secrets that Beijing “borrows” - to put it gently – as a way to build native industries.

Reports this morning suggest I may have been on to something. (Read)

Chinese researchers apparently used a technique called “distillation” to hoover information from larger, top tier models that was then, in turn, used to train smaller, cheaper and faster to build versions.

Silicon Valley researchers were gob smacked but then recreated the scenario.

CNBC reports “researchers at Berkeley said, they recreated OpenAI’s reasoning model for $450 in 19 hours last month. Soon after, researchers at Stanford and the University of Washington created their own reasoning model in just 26 minutes, using less than $50 in compute credits, they said. The startup Hugging Face recreated OpenAI’s newest and flashiest feature, Deep Research, as a 24-hour coding challenge.”

My guess is that global intelligence organizations are very aware of what’s happened, but that information will never see the light of day for a variety of reasons.

It’s a tough row to hoe.

The West built AI then proudly trumpeted the fact that it was “open source” which is a lot like waving an all you can eat sign in front of a ginormous, hungry Viking looking for dinner.

Keith’s Investing Tip: Technology is accelerating at a tremendous pace and every investor who is thinking in terms of what was will be left behind by what “will be.” Most investors could probably double their tech allocation and still not have enough.

3 – SEC drops Coinbase case

This is a biggie.

The SEC charged Coinbase with operating an unregistered securities exchange and for failing to properly register its crypto staking program.

Now, Coinbase CEO Brian Armstrong says that the case has been dropped and the company will not pay any fine. (Read)

Naturally, the SEC has declined to comment.

Like that’s a surprise.

The SEC was all but making it up as it went along when it came to enforcing regulation that even its people didn’t grasp.

MyPOV: This finally sets the stage for regulatory clarity while moving the notion of digital currencies forward.

Many folks are going to focus on bitcoin and other crypto, but the real prize is digital clearing which is a viable multi-trillion-dollar opportunity that’s already in play. My fave choice has returned 52.61% over the past 12 months, more than double the SPX which has logged 22.75% over the same time frame.

Hopefully, you’re on board with this thinking, too.

Digital currencies are the future and, at this point, very likely UII – unstoppable, imminent and investable.

4 – WSJ reports DOJ investigating UNH billing practices

Shares are down on a report that the DOJ is probing UnitedHealth’s Medicare bilking – err, billing practices. (Read)

They should be.

It’s a civil fraud investigation into whether the company is recording diagnoses that trigger extra payments to its Medicare Advantage plans, including at physician groups. Some of the more egregious examples of UnitedHealth’s billing potentially include upcoding, phantom services, or unnecessary procedures.

I suspect this kind of behavior is far more widespread than just UnitedHealth. In fact, I’d be shocked if most health insurance providers weren’t engaged in similar tactics at some level.

Case in point, my bride recently underwent physical therapy for a shoulder injury, and the bills have more than doubled from the provider—despite no apparent change in services, treatment, or diagnosis. She’s asked for clarity and gotten crickets. 🤔

I’m tempted to invest if it helps clean things up.

In the DOJ.

Meanwhile, I continue to avoid the entire health care insurance market. Putskies for the win are mighty tempting.

5 – James Bond about to get Primed – and not in a good way

Source: Reddit, unknown author

James Bond, the world’s suavest and ageless spy, known for martinis, Aston Martins, and an almost pathological ability to escape certain death, is now in the hands of... Jeff Bezos’ delivery empire.

Under a new joint venture, longtime Bond gatekeepers Michael Wilson and Barbara Broccoli will co-own the Bond franchise with Amazon’s MGM Studios which it picked up for a cool $8.45B. (Read)

Now, Amazon has apparently gained creative control, too.

Sigh.

Get ready for 007 with next-day delivery, Bond villains replaced by maddening customer service chatbots and AI not to mention a Prime-exclusive series where Q’s latest gadget is a Fire Stick with just enough functionality to push Amazon content.

Bond might still have a license to kill but expect M to spend half the movie reading terms and conditions first. No word on whether Alexa will play Moneypenny. 🤦‍♂️