The UNTHINKABLE is about to happen to Stocks

Market / Finance Thesis

• Rotation / “rubber band” setup in software: Software stocks have lagged badly versus the NASDAQ 100 (tracked by QQQ) over roughly the last two years, creating the potential for:
  • Crowded positioning
  • Forced buying (short covering) if price “snaps” upward

Claims about positioning

• Wall Street (per the narrator) is focused more on momentum than fundamentals, quality, and profits.
• Hedge funds are presented as betting software will fall, with a narrative framed as “AI will kill software companies.”
• The speaker argues this bearish bet has become extremely lopsided, increasing the odds of a sharp snap-back.

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Key Performance / Comparison Numbers Mentioned

• NASDAQ 100 (via QQQ): +70% over the last two years.
• Software “biggest software companies”: ~ -8% over the same period.

Example framing (hypothetical $10,000 investment)

• $10,000 in the NASDAQ in 2024 → ~$17,000 “by now”
• Equivalent $10,000 in software (given -8%) → ~$9,000

Oil anecdote (outperformance claim)

• The speaker claims they bought oil stocks 6 months before the Iran war started, gaining ~60%.
• They contrast this with the S&P being down only single digits, implying ~5x outperformance.
• They also state (in their phrasing) it was “like five times more than the market,” and cite “make 40%” versus about ~2%.

Hedge fund bet size

• “Just so far this year,” hedge funds made $24 billion betting software will go down, presented as a one-direction imbalance.

Timing window / cadence for the snap

• The speaker suggests forced buying can occur fast:
  • “days not weeks/months”
  • later clarifies: “This can be weeks, it can be months.”

ETF stats and holdings mentioned

• XSW: down about -7% in the last year (as stated).
• XSW holds ~136 leading software companies (as stated).

Stock drawdowns / levels cited

• BigBear.ai (BBAI): ~down 70% from all-time highs, described as bottoming near $3
• Unity Software (U): ~down 87% from prior lofty highs, described as bottoming around $17.50
• CoreWeave: described as breaking above recent highs; a cautious entry is discussed near $140 (“a few dollars above where we are trading now”)

Avis example (mechanics analogy)

• Avis is used as an illustration of squeeze behavior:
  • down ~50%
  • later surged “hundreds of percent”
  • then collapsed again
• The example is used to show how shorts/positioning can drive extreme moves.

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Instruments / Tickers / Assets Mentioned

Index / ETF

• QQQ (NASDAQ 100 tracker)
• XSW (software ETF; described as a “major software ETF”)
• XSSW (mentioned as an “index fund for this” / same general context as XSW; phrasing suggests possible confusion between tickers)

Individual stocks

• CoreWeave (ticker not explicitly stated)
• BigBear.ai (BBAI)
• Unity Software (U)

Other companies referenced (not necessarily tickers)

• Microsoft (Office, Windows; AI embedded)
• Google (Google Docs)
• Nvidia (partner/cap supplier context)
• Avis (squeeze analogy)

Sectors / themes

• Software / AI software
• AI infrastructure / GPU data centers
• Defense / national security AI spending
• Gaming / developer tools / AR / digital twins

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Methodology / Framework: “Rubber Band Effect” (Step-by-Step)

Core idea

Extreme crowding on one side (bearish positioning) builds pressure; eventually it “snaps” via a price breakout, creating forced buying (short covering).

Step 1: Measure positioning / crowding

• Track how many investors are betting up vs betting down.
• The speaker claims software is incredibly lopsided, with heavy shortselling, leaving limited room for further bearish piling.

Step 2: Identify the “crack” (technical breakout level)

• Watch for price breaking above a previously respected resistance/ceiling (“glass ceiling”).
• Example: XSW with a key level around $160; breaking above it is framed as the “crack.”

Step 3: Forced buying (short covering)

• As price rises, shorts face losses and must close positions.
• Closing shorts requires buying shares, creating mechanical demand and potentially fast price movement.
• Expected timing: weeks to months (not days).

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Explicit Recommendations / Cautions

Caution / non-advice

• The speaker explicitly states:
  • “I’m not a financial adviser”
  • “not a registered investment adviser.”
• They also state they are not telling viewers what to buy, but sharing educational insight.

Play construction (as described)

Simplest play

• Buy an index fund/ETF
  • Named as XSSW in one place
  • Discussed with XSW as the software ETF example

More aggressive play

• Three individual stocks:
  • CoreWeave (AI GPU training infrastructure; breakout setup)
  • BigBear.ai (BBAI) (defense/national security AI; early rebound near $3; resistance expected)
  • Unity Software (U) (gaming engine; described as “undervalued”; bottom near $17.50)

Risk framing

• Even for the ETF: “there is massive risk with everything.”
• The squeeze outcome is contingent:
  • If forced buying doesn’t happen, ETFs “probably won’t go down as much” as single stocks.

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Disclosures / Disclaimers

• The speaker repeats multiple times that this is not financial advice and not individualized investment guidance.
• Mentions a free research report download at felixfriends.org/software.
• Mentions a live seminar and provides a registration link at buyandgrow.net.

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Presenters / Sources Mentioned

• Presenter (unnamed): described as “I’m the guy who…” (no name provided in subtitles).
• References to Wall Street mentors, professional investors, and hedge funds are made generally.
• No other specific individuals are credited by name in the subtitles.