💰 My First Bet, Ten Years Later

THE MAIN EVENTMy First Bet, Ten Years Later 👀

About ten years ago, I walked out of J.P. Morgan for the last time.

Back then, I sat on an open floor, close enough to hear my bosses trade and close enough to hear everyone senior to me argue about how markets actually worked. Looking back, that was the best part of the job. I got to sit near smart people while they reasoned out loud.

I left with two conclusions that still shape how I invest.

Lesson One: Picking Winners Is Really Hard 🎯

Every piece of news on earth gets absorbed into stock prices almost immediately by millions of people trying to make a buck. The odds that you are holding an insight nobody else has considered are slim.

It happens, but usually because someone has real depth in one narrow corner of the market. What rarely works is the fantasy version: buy Amazon on sale, rotate into Nvidia, catch Micron on the way up, and repeat until you own a yacht.

Even the professionals struggle. Over the ten years ending in 2025, at least 80% of professionally managed equity funds underperformed their benchmarks after fees.

So my default conclusion was simple: buy the index.

But accepting that stock picking is difficult does not mean giving up every opinion about the future.

Lesson Two: You Don’t Have To Pick One Winner 🌊

Instead of asking, “Which stock will win?” I started asking a broader question:

Where is growth most likely to happen?

Answering that meant deciding what kind of investment I wanted. Take Coca-Cola, for example. You do not invest in Coke expecting it to reinvent the global economy. You buy it because the product is durable, the business generates cash, and people are probably not about to abandon carbonated sugar water.

That is a perfectly good bet, but it is a cautious one. I had decades ahead of me, wanted more growth, and was willing to accept more volatility to get it.

So I went looking for a sector where the growth felt almost inevitable.

The clearest answer, in my view, was technology.

I didn’t want to guess which company would win. I wanted exposure to the idea that software, cloud computing, digital commerce, and robotics would claim a larger share of the economy.

In other words, I wasn’t betting on one ship. I was betting that technology would lift the whole fleet.

The Scoreboard, Ten Years Later 📈

Ten years after leaving that desk, I went back to check my work.

Over the last decade, the tech sector (XLK) returned about 24.3% a year. The Nasdaq-100 (QQQ) did 20.8%. The S&P 500 delivered a very respectable 15.3%.

In dollars: $10,000 left alone for ten years became roughly $42,000 in the S&P, $66,000 in QQQ, and about $88,000 in tech.

The bet worked. But the lesson isn’t just “buy tech.”

Annualized returns and 5-year beta by sector

There Is No Free Lunch ❌

Look at that last column again. Tech didn't just post the best returns. It also carried the highest beta.

Beta is basically a sensitivity dial. Above 1.0, it amplifies the market’s movements. Below 1.0, it dampens them.

Tech sits at 1.34. To oversimplify, if the market rises 10%, you might expect tech to rise roughly 13.4%. If the market falls 10%, you might expect tech to fall around 13.4%.

In short, the extra upside comes with extra volatility.

The COVID crash hurt. The 2022 selloff was especially rough for tech. Investors who stayed patient eventually collected the recovery. Anyone who panic-sold experienced a very different decade.

Which brings up the least mathematical part of this piece. A lot of investing is emotional. Know thyself. I'm fairly level-headed. I don't enjoy drawdowns, but I can stomach them. If you can't, that genuinely should change what you own.

How I Think About The Balance ⚖️

So how did I actually express my bet on tech?

I kept the broad market as the core of my portfolio, then tilted part of it toward the trend I believed in. From there, the balance depends on what you are investing for and when you will need the money.

If you're at or near retirement, there’s an argument for diversifying beyond the S&P 500. A few directions people go:

• Adding bonds or short-term Treasuries

• Using an equal-weight version of the index so the giants don't dominate

• Tilting toward dividend or value funds

• Adding international exposure

• Simply holding more cash

If you have a longer time horizon and feel optimistic about a particular sector or long-term trend, you might tilt 10% of your portfolio in that direction.

Say the S&P returns 10% and your bet returns 30%. A portfolio with a 90-10 split would return 12%. You pick up an extra two percentage points without gambling your future on one idea.

Of course, the last decade cannot tell us what the next one will look like. The better question is why the last bet worked, and whether those conditions still hold.

For me, they do. You may have noticed my bias toward tech has not changed. Neither has my preference for investing in a broad trend instead of trying to identify its single biggest winner.

That’s how I play the markets without getting overconfident: start broad, form a view, size the bet responsibly, and give it time to work.

Here’s to decade two!

FAST FACTSBooms, Busts, And Blastoffs 🚀

🧬 Biotech Is Having A Monster Year: The XBI index is up about 36% in 2026 as FDA approvals accelerate, with 37 new drugs so far versus 29 a year ago. [Read]

🛢️ Oil Is Back On The Boil: Crude has jumped about 20% in a month, with Brent near $96, as renewed US-Iran tensions revive the supply-risk premium. [Read]

🤖 ChatGPT's Ads Are A $1 Billion Business: OpenAI's ad run rate hit 10 figures in under 200 days, up from $100 million in April. [Read]

🥇 Even Gold Goes Down: The metal is trading ~20% below its January record of $5,589, a reminder that the "safe haven" still has real drawdowns. [Read]

💰 The Typical 401(k) Is Smaller Than You'd Guess: The median US 401(k) holds just $44K, per Vanguard, proof that the "average" is skewed by big savers. [Read]

🔭 NASA Launched A Wide-Angle Camera: The Nancy Grace Roman Space Telescope began a million-mile trip to map dark energy and distant planets. [Read]

🤗 Nvidia Bought The AI Commons: Nvidia is paying $13 billion for Hugging Face, where 18 million developers share more than 3 million AI models. [Read]

🏦 The New Fed Chair Came Out Swinging: Kevin Warsh warned that inflation isn't beaten, sending September rate-hike odds from 35% to 66%. [Read]

CHART OF THE WEEKThe Golden Handcuffs Are Working 🔒

Fewer Americans plan to move than at any point on record.

Back in 2015, the typical household put its odds of moving in the next year at about 1 in 5. Today it's closer to 1 in 8.

The reason isn't a mystery:

• Nearly 80% of mortgages carry a rate below 6%

• Refinancing into today's rate would double what a typical 3.5% borrower pays in interest

So, homeowners are staying put. The typical owner now stays in place 12 years — nearly double the 6.5 years they did in 2005. The FHFA estimates this freeze has erased around 1.7 million home sales in just two years.

That's a lot of people deciding their next move is no move at all.

MARKET MOODAustin Gets Robotaxis, Sacramento Gets The Bill ⚡

Winners

Robinhood Markets ($HOOD) - Market Cap: $112.1B (Week-to-Date: +19.6%)

Robinhood's newest business is now its biggest. Letting people bet on everything from elections to Fed decisions brought in $156 million last quarter. That’s more than it brought in on stock trading ($129 million) and crypto ($100 million). Plus, it got there on fewer than 2 million users, roughly 7% of its customers. Morgan Stanley upgraded the stock and lifted its price target to $150.

Dell Technologies ($DELL) - Market Cap: $333.7B (Week-to-Date: +13.2%)

Nobody expected the laptop company to be the cleanest AI story of the week. Dell booked a record $61 billion of AI server orders last quarter and finished with a $95 billion backlog. Revenue rose 58% to about $47 billion. Management now expects roughly $192 billion in sales this fiscal year, up from the $167 billion it guided to just last quarter.

Tesla ($TSLA) - Market Cap: $1.49T (Week-to-Date: +7.9%)

Six weeks ago, Tesla was a Loser in this section, with no actual robotaxi. Yesterday it finally delivered one. Tesla unveiled the production Cybercab in Austin, a two-seater built with no steering wheel and no pedals, priced under $30,000 and meant to run on the company's self-driving software. The stock added over $100 billion in market value over the week.

Losers

Edison International & PG&E ($EIX / $PCG) - Market Cap: $21.7B / $30.7B (Week-to-Date: -19.8% / -15.9%)

California lawmakers closed their session after passing a wildfire bill that left out every protection utility investors were hoping for, including a $6 billion per-incident cap on wildfire fund withdrawals. The state's big utilities share a $21 billion pot that pays wildfire claims, and Edison's January 2025 Eaton Fire could empty it by itself. So Edison faces uncapped claims, and PG&E loses the backstop it was counting on for its own next fire.

Palo Alto Networks ($PANW) - Market Cap: $270.5B (Week-to-Date: -10.7%)

Palo Alto Networks, the cybersecurity company, reported a mostly good quarter. Revenue popped 34% to $3.4 billion, and earnings topped estimates. The issue was margins. Management said hosting bills are rising and memory and storage keep getting more expensive, so less of each sale becomes profit. As a result, the stock had its worst two-day slump in more than two years.

Take-Two Interactive ($TTWO) - Market Cap: $40.0B (Week-to-Date: -9.0%)

Grand Theft Auto VI gameplay footage leaked online in August, well before publisher Take-Two wanted anyone to see it. The game has already been pushed back twice, so investors worry the disruption could cause yet another delay. Executives insist the game will still drop on November 19. That hasn’t stopped investors from selling.

WORDS TO REMEMBERDon't Dilute Your Best Bets 🧠