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WELCOME TO THE MOMENTUM CIRCUS…

Wall Street’s fund managers love to talk fundamentals. You know—earnings growth, cash flow, leverage ratios—stuff that’s supposed to “drive value.” But watch their trading, and the real story quickly emerges: momentum-chasing is king, while fundamentals are ignored.

The hottest stocks in 2025, like Super X AI Technology Ltd. (SUPX +1,620% YTD), a supposedly AI infrastructure company that favors the Dotcom frenzy that sports a mere 3.6 million dollars in revenue as of June 30, which happened to have been a penny stock, trading at $3.65 back in March, currently trading at $58.14. The sad part is that the lucky will think they are the skilled, when vindicated by such a one-in-a-million lightning strike, only to potentially lose it all on a company whose momentum comes from retail investors chasing the greater fools theory.

And secondly, Diginex Ltd. (DGNX +2,719% YTD), which owes its fireworks more to momentum traders riding tech’s waves than sound valuations.

Retail investors are quick to salivate over another penny stock momentum favorite, especially when a company goes from 45 cents to 20 dollars a share in under 11 months.

And while scores like this are miraculous, it's truly a case of easy come, easy go, as the gambler is never as pragmatic as the investor. So, the money will most likely be lost as quickly as it was made due to indecision, poor stock selection, and emotion.

Institutional investors are the true momentum monkeys. In Q3 and Q4 2025, with Fed rate cuts lowering capital costs and the economy showing bifurcated growth, funds flocked in herds into tech-heavy indices and high-multiple momentum plays.

The lure was quick gains by riding short-term price trends that technical tools like Moving Average Crossovers and RSI signals easily spot.

Why does this matter? Because retail investors get treated like cannon fodder in this momentum circus. Institutions have access to “black box” alternative datasets like satellite imagery, credit card transaction flows, real-time social sentiment, and dark pool trade prints that retail investors cannot access.

Then add in faster-than-the-speed-of-sound algorithm execution and proprietary AI forecasts, and you have a playing field as uneven as it gets.

One concrete example of data asymmetry is 13F filings. Institutional funds report quarterly holdings with a mandatory 45-day delay, but crafty managers often file last-minute disclosure amendments timed perfectly to game public perception.

This “window dressing” makes fund portfolios appear more aligned with hot momentum stocks or index benchmarks at quarter-end than they truly are during trading. Retail investors, relying on delayed public filings, buy after funds have already piled in and started exiting quietly.

Beyond filings, institutions leverage a slew of inside-like:
• Pre-market dark pool trades signaling large block sales or purchases
• Internal analyst models with non-public company metrics
• Early access to macroeconomic forecasts and Fed insights
• High-frequency trading signals correlated with order flow imbalances
• Machine-learned predictions on sector rotations months in advance

The retail crowd? Mostly stuck relying on lagging fundamentals data, generic news, and late snapshots from 13Fs. By the time they react, institutional momentum players have shifted gears.

Meanwhile, the herd mentality among funds amplifies momentum distortions. Managers fear career risk associated with deviating from benchmark-like holdings lest they underperform in the short term. It’s closet indexing masked as active management, with fees intact. Studies repeatedly show that net of fees, most active managers fail to beat the S&P 500 over a full market cycle, yet funds scramble to buy the same momentum favorites as each other, creating bubble-like feedback loops.

Yet even if retail investors earn nominal returns of 10% annually in such momentum-charged markets, inflation gnaws away real wealth. The Federal Reserve’s own PCE core inflation forecasts near 3%, meaning your 10% nominal gain dwindles to roughly 6.8% real return before taxes and fees—hardly a financial victory considering market risks and volatility.

Over a decade, that erosion is profound, especially for households relying on steady retirement income.

This false sense of security feeds overconfidence in momentum’s “easy money”—but history warns us otherwise. Past momentum crashes—from tech in 2000 to crypto rebounds in 2021—show how quickly price euphoria turns into a bloodbath, and Investors who chase after the fact get burned to a crisp.

Just take a look at the iShares MSCI USA Momentum Factor ETF (MTUM) it saw inflows north of $2.8 billion this year as funds poured into the hottest momentum plays, fueling further gains.

But momentum stocks like Rigetti Computing and IonQ have faced abrupt 6%+ weekly drops recently, a reminder that momentum is a fickle bedfellow.

Mega-caps like Nvidia, long a momentum darling, double-dipped into consolidation phases despite stellar fundamental AI growth, catching even pros flat-footed before making new highs.

What's abundantly clear is that  Wall Street’s supposedly smart money is really a sophisticated blend of momentum chasing, herd behavior, and data advantages that retail players can barely see, let alone compete with.

The illusion of expertise cloaks a risky dance with price trends that can turn on a dime.

For retail investors, discerning true fundamental value amid the noise is the only sustainable edge.

That means ignoring the siren calls of last-minute 13F window dressing, flashy momentum plays without earnings backing, and the herd’s latest shiny object. It means demanding transparency, focusing on balance sheet health, and demanding returns that outpace inflation, fees, and taxes—not just headline percentage gains.

Ultimately, the game is rigged for the fool to lose all of their ill-gotten gains to the house of marked cards.

WHEN INVESTING BECOMES A LIFESTYLE YOU WEAR IT!

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IS OPENAI ANOTHER TRIPPY FANTASY…

Is OpenAI a mushroom Fantasy or a Future Reality?

What in anyone's right mind says OpenAI’s valuation should be a trillion-dollar company besides investors overpaying for their inflated piece of AI candy?

As OpenAI cruises toward a reported $1 trillion valuation, the skepticism meter is tipping. On paper, paying ten figures for a company with $13 billion in revenue and mountains of debt raises a few eyebrows—and for good reason.

Let’s break down the numbers that question this valuation fantasy.

When Apple hit the $1 trillion market cap milestone in August 2018, its annual revenue was around $265 billion, driven largely by its iPhone ecosystem, which generated over $250 billion in revenue that year with more than $50 billion in profit.

Microsoft reached its $1 trillion market cap earlier in 2019, with revenues in the range of about $125 billion annually, fueled by its cloud business and enterprise software segments showing strong growth [general knowledge.

NVIDIA crossed the $1 trillion valuation mark in 2024-2025 while its annual revenue was approximately $40-50 billion, bolstered by rapid growth in AI chip demand and data center sales, though its profitability was strong compared to pure software players.

This contrasts with OpenAI’s current situation in 2025: targeting a $1 trillion valuation with only about $13 billion in revenue and substantial debt, highlighting a much steeper valuation to revenue gap compared to these tech giants when they crossed the trillion-dollar mark.

In other words, the market is a little delusional because it will take years for OpenAI to fold into this valuation.

Just look at the Revenue to cash Burn, OpenAI’s latest financials show roughly $13 billion annualized revenue—impressive, yet dwarfed by its cost structure.

The company reported a staggering $11.5 billion quarterly loss recently, largely driven by $6.7 billion in R&D expenses in just the first half of 2025 and billions more in stock-based compensation.

They’re burning cash faster than a Silicon Valley fire sale.
At this rate, the path to profitability is uncertain and murky at best. The markets tend to reward growth, but at some tipping point, even the most bullish investors demand real earnings, not just future potential.

OpenAI is the elephant in the Data Center, piling on heavy debt to bankroll its hyper-growth and runaway compute expenses, including massive rounds of private funding totaling over $40 billion in 2025 alone.

This debt load adds substantial risk, potentially diluting future shareholder value and raising questions about financial stability.

because it involves issuing new shares or converting convertible securities that increase the total number of outstanding shares.

This increase reduces the ownership percentage and voting power of existing shareholders, which means each share represents a smaller fraction of the company. Consequently, shareholders’ proportional control and earnings per share (EPS) decline, potentially reducing the perceived value of their investment.

This dilution can happen through new funding rounds, the conversion of safe notes (SAFEs), or expanding employee option pools.

Although dilution often signals the raising of capital intended to grow the company, if the capital raised does not effectively increase the company’s value, the dilution will lead to a lower share price and diminished shareholder value. Ultimately, the risk lies in whether the proceeds from dilution are used effectively to enhance the company’s growth and value; if not, shareholders face a net loss in value and influence due to their now smaller ownership stake.

A $1 trillion valuation implies not only dominance but nimble financial management. Given the current losses and heavy interest obligations, the risk-reward equation looks lopsided.

At roughly 38x 2025 revenue ($13 billion revenue, $500 billion to $1 trillion valuation range), OpenAI’s multiples dwarf even the tech industry’s most hyped IPOs and mature giants. The projected revenue growth and intense AI market hype fuel this gap, but history reminds us that blown valuations can implode when expansion slows or capital dries up.

AI is indeed a revolution, and OpenAI stands at its epicenter. The company’s user growth and product expansion are spectacular, fueling investor fantasies. Yet, the current valuation is more a bet on the promise of AI’s massive disruption than a reflection of today’s economics.

OpenAI could be the Tesla of AI—transformative yet volatile. But paper valuations like $1 trillion built on cash-burning and no profit might be the emperor’s new clothes. Savvy investors should require a clearer path to profitability and manageable debt before embracing this astronomical valuation.

Right now, OpenAI looks like the Amazon of AI in that it dominates the growing market and commands a sky-high valuation fueled by visionary investor bets. However, unlike Amazon’s diverse business with multiple profitable revenue streams and a structural moat built on logistics and AWS, OpenAI currently operates with a single product line relying heavily on compute-intensive models with high operating costs that scale linearly with usage.

Amazon’s economy of scale works by lowering marginal costs as customer volume grows, whereas OpenAI faces rising costs with more users. Amazon’s multiple profit engines and customer lock-in stand in contrast to OpenAI’s dependence on external funding, mounting debt, and fierce competition from multiple players including big tech and open source.

While OpenAI embodies Amazon’s ambition and market-disruptive potential in AI’s early innings, its business model shows more challenges around profitability, cost structure, and moat defensibility.

The comparison underscores OpenAI’s need to evolve into a broader platform or infrastructure provider with diversified offerings and sustainable economics, rather than remaining a high-burn, single-line software provider.

If OpenAI can navigate these hurdles, it might eventually build the kind of scale, cash flow, and ecosystem Amazon enjoys, But until then, it’s a long shot based on the data with a 10X payoff.

WHEN INVESTING BECOMES A LIFESTYLE YOU WEAR IT!

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Kevin Davis Founder of Investment Dojo and Author of The C.R.E.A.M. Report