Episode summary
Big Tech’s Tipping Point Is Here: Jim Mellon On Biggest Short Of All Time
The Master Investor Podcast With Wilfred Frost
· · 45 min · Hosts: Wilfred Frost · Guests: Jim Mellon
Summary
Jim Mellon argued that markets are at a broad tipping point, with investor fatigue building around US mega-cap tech after the Magnificent 7 fell about 30% from their June highs. He said the SpaceX collapse from its peak was the clearest signal, calling it “the biggest short of all time,” and he expects large parts of US tech to underperform for a long time even if some names remain strong.
On geopolitics and commodities, Mellon was less worried than many about a renewed Iran conflict sending oil into a lasting spike. He said the world is already adapting around the Strait of Hormuz and that he trades oil tactically, but he remains constructive on North Sea oil and gas names such as Ithaca Energy. He has faded some broader energy exposure as prices improved and says oil is unlikely to reach 150 because demand destruction would intervene first.
Mellon also doubled down on his long-term bullish view on the Japanese yen, despite being early, arguing that Japan remains cheap, wealthy and likely to repatriate capital over time. He kept a similar stance on gold and silver: near-term pressure, long-term preservation value, with his preference now in gold miners rather than bullion. Beyond macro trades, he highlighted small-cap UK equities, China as potentially attractive, psychedelics, and novel proteins as major long-term themes.
Key takeaways
- Jim Mellon says the Magnificent 7 are showing investor fatigue, with average losses of about 30% from the June highs.
- He calls SpaceX “the biggest short of all time” and thinks it may mark a turning point for the US tech complex.
- Mellon is still bullish on North Sea oil and gas stocks like Ithaca Energy, but he has trimmed broader energy exposure after the rally.
- He remains long-term constructive on the Japanese yen, arguing Japan is cheap, wealthy, and likely to repatriate capital eventually.
- He prefers small-cap UK equities now, citing P/E ratios of 10 to 11, free cash flow yields around 9%, and dividend yields of 4% to 5%.
- He favors gold miners over bullion at current levels and says psychedelics and novel proteins could become large secular themes.
Notable quotes
“the SpaceX thing, which I I wrote in the master investor um letter was the biggest short of all time”
“I think it's a sort of a general tipping point in markets and I've been calling it too early”
“I think that the Straits of Hallmuse could end up being, you know, not as important as people think”
“I don't think oil is going to go to 150. I think demand destruction will be well well entrenched before then”
“I think you should be um pretty nimble on your feet at the moment in the current market”
How the episode opens
I think it's a sort of a general tipping point in markets and I've been calling it too early. You have seen that the uh US market has not done well this year actually compared to other markets around the world and I don't think most people appreciate that although the US market has done well over the last 5 years. It's been highly concentrated in what it's done now.
Well, it's really looking pretty bad. And I think the the main signal for that was the SpaceX thing, which I I wrote in the master investor um letter was the biggest short of all time. And so it has proved.
It's down 50% now from its high, which is incredible for such a big IPO and it exposed so many weaknesses in the US financial system. If I had to choose markets now, I would say UK smaller companies are extremely attractive and you can see UK companies being picked off one by one three or four a week, which is tragic, but hopefully there'll be other companies that come along and replace them, which is why I'm quite bullish on the UK. But we're talking there about P ratios of between 10 and 11, free cash flow yields of about 9%, dividend yields of 4 to 5%.
It's extraordinary attractive. I think we just repeat Muhammad Ali, dance like a butterfly and sting like a bee. You've got to be a gorilla in these markets.
If you think that you can lay down your portfolio for the next 20 years and you'll be fine, then I think you're making a big mistake. And if you feel hesitant about the markets, just don't go into them. Don't feel that you have to be involved at all times and just wait it out.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- magnificent 7 drawdown
- spacex short thesis
- strait of hormuz oil risk
- japanese yen valuation
- gold miners vs gold silver
Companies and tickers mentioned
- SpaceX
- Ithaca Energy
- BNY Investments
- Interactive Brokers
- The World Gold Council
- London Stock Exchange Group
Watch the episode
Watch “Big Tech’s Tipping Point Is Here: Jim Mellon On Biggest Short Of All Time” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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The Master Investor Podcast With Wilfred Frost, this episode and its artwork belong to Paradine Productions. Octagon is not affiliated with the show; this page is an independent summary.
