An unlikely safe-haven stock hiding in plain sight

Good morning! 👋

The markets are up in early going, even though the so-called “Swiss Rollup” fails to cut the mustard.

Perhaps not surprisingly, banking officials are stressing that the takeover was a commercial solution, not a bailout.

Whatever.

The fact that they feel the need to make that distinction almost guarantees that there isn’t one.

🤦‍♂️

Here’s my playbook.

What should investors do?

Ride it out or head for the hills?

History says the former, especially if you own the right companies, meaning those at the very top of their game and in line with the world’s most powerful investing themes that I call the “5Ds”—digitalization, defense, diffusion, distribution, and dislocation.

Why are these things so important?

Simple.

Each of ‘em is backed by trillions of dollars that will get spent practically no matter what the Fed does next, no matter who’s in the White House, and no matter how Wall Street tries to manipulate markets in its own interest.

If you need cash, that’s different.

Meanwhile, here are my thoughts from Varney & Co, when the super-savvy Stuart Varney asked me about exactly this topic this morning. (Watch)

An unlikely safe-haven stock hiding in plain sight

The overwhelming majority of investors are doing what they’ve been taught for a generation… diversifying. Unfortunately, these days, that’s a lot like buying cable TV and having to pay for the channels you don’t want to get the channels you do.

Instead, concentrate on very specific companies tied into ultra-strong themes.

Like AI.

It’s a “safe haven” hiding in plain site that most investors will miss.

For instance, NVDA is already +137.91% off 52-week lows—and it’s just one of three AI-driven stocks in the OBA portfolio poised for great things, even if the banking system goes to heck in a handbasket. Upgrade to Paid

I hope you’re on board, for the simple reason that the AI genie is never going back in the proverbial bottle.

There’s only one thing that could stop the banking crisis cold

There’s only one thing that could stop the global banking crisis in its tracks.

A Fed pause.

As I have noted many times this year, the bond markets are screaming for Team Powell to take a break... but I’m not exactly on the chairman’s speed dial list, so there is that.

Remember: The Fed failed to recognize this crisis in formation, denied it as it emerged, and now cannot fathom why its actions are having no effect.

I’ll be keeping my hedges in place.

Putskies and bearish spreads, tactically speaking.

However, I’m also staying net long—for the simple reason that a Fed pause at this point could produce what I called a “rip your face off rally” this morning. (Watch)

Mr. Xi goes to Moscow

China’s charm offensive continues with President Xi on a 3-day field trip to Moscow where he’s meeting with Russian President Vladimir Putin.

Buy defense stocks.

Dirty ashtrays and new cars and dinged batteries—oh my!

This story from Reuters strikes me as a lot like the old joke about a rich guy who buys a new Mercedes because his ashtray is full. Except that these days, it’s a dinged battery. (Read)

Apparently, EV battery packs are so hard (if not impossible) to repair that, if you crush or even slightly damage one in an accident, you can basically throw away the car. The reason: It can cost up to $15,000–$20,000 to replace the battery, which is a third to half the price tag of an EV.

According to Reuters—which, I submit, leans heavily towards the “establishment” and is therefore quite anti-Musk—Tesla might have trouble fixing its batteries. Quote: “Sandy Munro, head of Michigan-based Munro & Associates, which tears down vehicles and advises automakers on how to improve them, said the Model Y battery pack has ‘zero repairability.’”

Three things come to mind.

First, that’s what “they” said about Toyota’s hybrid Prius back in the day. Anecdotally speaking, I drove mine 135,000+ miles before I sold it and never required a battery replacement.

Second, many shade-tree mechanics are figuring out how to do the job for a fraction of that. There are plenty of YouTube videos and a cottage industry of EV mechanics emerging. Competition lowers prices.

And third, I’m not too worried about Tesla. Musk’ll find workarounds for every problem he encounters. That’s part of what the establishment finds so annoying and yet more reason NOT to bet against the man. In fact, I won’t be surprised one bit to see Tesla debut an indestructible battery pack or a cheap drop-in solution shortly.

Meanwhile, I hope I’m smart enough to buy more Tesla AND the best dinosaur juice providers I can.

You?

Bottom Line

It’s pointless to do what everybody else does and expect different results, especially lately.

History shows clearly that it’s people taking the opposite side of the trade who frequently change the rules.

Profits and success often follow with appropriate risk management.

Keith 😊