👋 ICYMI
U.S. markets struggled through a volatility-dominated week as AI-related fears extended into new sectors, dragging tech and software names sharply lower. Brokerage and financial firms also slid amid concerns that AI-powered competitors threaten traditional advisory and back-office roles. Despite pockets of relative resilience in industrial and value names, tech-led selling pushed major indices modestly lower by week’s end.
🔁 Market Movers
💻 Tech & Software Rout Persists
Technology and software segments, particularly SaaS and enterprise tech, extended their losses as investors debated whether elevated AI capital expenditures will translate into near-term earnings improvements.
🏙️ Broader Sector Weakness on AI Disruption Fears
Industries beyond pure tech—like commercial real estate, trucking, and logistics—saw notable declines as AI-driven automation concerns spread into traditionally stable business services.
💼 Financials & Value Names Weather the Selloff
While growth and large-cap tech lagged, banks and select industrial or value names outperformed relative to the broader market, reflecting rotation into cash-flow-focused sectors amid volatility.
👀 Signals I’m Watching
🤖AI Narrative Shifting Toward Returns Over Spending
The market’s reaction last week suggests investors are no longer rewarding AI capex narratives alone—they want clearer evidence that spending is improving margins or accelerating monetization.
📊 Earnings Surprises Aren’t Enough
Despite a seasonal uptick in companies beating earnings, markets remain sensitive to guidance and outlook rather than headline beats, particularly for high-multiple growth names. That’s a classic signal of valuation discipline returning.
💼 Labor Data Supports Slowdown Narrative
Although U.S. jobs data surprised to the upside earlier in the week, recent mixed employment indicators keep the Federal Reserve’s policy path ambiguous—balancing inflation progress against potential cooling in labor demand.
To all new readers of The Latte who may be wondering who’s behind this newsletter, let me briefly introduce myself.
I’m George Babis, a digital entrepreneur and long-term investor. I’ve built three 100% self-funded companies in my early and mid-twenties, but my real passion has always been investing — not reacting to markets, but understanding them over time. That’s why I passionately write The Latte every week and run our Investment Club.
Last week’s market pullback was uncomfortable for many investors. Moments like these often test conviction and tempt people to quit at exactly the wrong time. But meaningful returns are rarely built in calm, straight lines — they’re built by staying invested through volatility with a clear, long-term framework.
My portfolio performance since October 2022
Since late 2022, my personal portfolio has grown nearly 300%, not by chasing short-term moves, but by focusing on high-conviction ideas and letting time do the heavy lifting. The chart above reflects that long-term journey — including the drawdowns along the way.
I share all my trades, portfolio holdings, and ongoing thinking with members of our Investment Club.
If you’d like to learn how we approach the market with a long-term mindset, and the stocks we buy you’re welcome to join us here.
— George
⚠️ Red Flag to Note
Valuation Discounting Outpaces Earnings Momentum
Last week’s market action highlights a disconnect: even strong earnings beats aren’t insulating stocks from downside if guidance or capital deployment isn’t convincing. When valuation resets precede economic deterioration, breadth can deteriorate fast—especially in sectors subjected to rapid structural change like tech and software.
🔍 Insider Transactions I’m Watching
Ticker | Insider | Action | Value | Why It Matters |
|---|---|---|---|---|
Eliasek M. Grier (COO) | Buy | ~$2.75M | Prospect Capital’s COO purchased shares in the open market — a large, conviction-style buy at depressed valuation levels. | |
David Zaslav — CEO | Sell | ~$3.4M | A large CEO-level sale in a major media/entertainment firm amid broader tech/media rotation | |
Shelley O’Connor — EVP & Director | Buy | ~$820K | Open-market accumulation by a top executive in consumer staples highlights confidence in defensive cash flows. |
📬 Closing Note
Last week reinforced a familiar pattern: a market that rewards fundamentals over narratives. AI isn’t disappearing — it’s maturing. Consumers aren’t collapsing — they’re choosing. And investors aren’t panicking — they’re recalibrating.
That’s not a market to fear — it’s one that rewards patience, selectivity, and long-term thinking.
Until next Sunday,
George ☕️
