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Feds rip, NVDA dips, here’s how NOT to get clipped

Jun 28, 2023

Good morning! 👋

Not surprisingly, traders are taking profits this morning as they claim some of yesterday’s big runup for themselves.

Good!

You can’t have buying without selling and vice versa—it’s normal!

Stay focused on the bigger, more important picture.

This year is the best in 40 years for the Nasdaq, and the fact that so-called “mega caps” lead the way is a sign of strength, not weakness.
The S&P 500 is UP 14% YTD, and the Nazzy has tacked on 29%.

Could things reverse?

No doubt... and that’s why a) you pick great companies and b) control risk using tactics that take away Wall Street’s advantage.

Here’s my playbook.

NVDA dips as the feds rip China

The federal government is reportedly thinking about imposing further export restrictions with regard to AI-capable chips and China. (Read)

You’ll notice China isn’t really protesting this the way they have in the past.

Why?

Because chances are good they’ve already stolen or otherwise procured everything they need to make those chips anyway.

This is about protecting next-gen technology; it’s also—I submit—long overdue.

And a chance to buy more if you missed the most recent run.

AMD, same song, different dance.

Private sector wins again! $TSLA $VLVLY

I’m not one to say that I told folks so, but in this case, I actually did... just over a decade ago, in 2012, when Tesla began installing the Supercharger network.

Now people are waking up.

Tesla’s chargers could become the industry standard, and I’m not the only one who thinks so. Plenty of other companies agree. (Read)

Volvo is the most recent company to accept Tesla’s design as the go-to, completely sidestepping the government’s plans for their own chargers. Ford, Rivian, and GM are already on board.

One more win for the private sector. More contracts for Tesla, fewer costs for the other companies, and profits all around.

I think it’ll add a minimum of 20% to share prices by 2030.

People wonder why I don’t like airline stocks

This about sums it up.

No matter how hard “they” try, stuff like this happens.

More than 1,500 total cancellations and delays and counting this morning. Arrrggggh. (Read)

Investing takeaway: You can buy the “best” company in the world but still not turn a buck because they can’t overcome business variables beyond their control.

General Mills: Analysts get it wrong again

General Mills reported Q4 23 numbers, and the Street isn’t happy because the company “missed.” (Read)

Predictably, shares are off 5% in the premarket as I type.

I’ll bet you dimes to dollars that the company is just fine with the results.

Zoom out.

Shares of GIS have returned 108.53% over the past 5 years... vs. 60.79% for the S&P 500. A huge part of that return is the dividend, which in my calculation is covered 1.83X on a forward basis after these “disappointing” earnings.

Speaking of which, GIS just increased the dividend by 9%—and, not for nothing, net sales exceeded $20B for the first time in the company’s history.

Personally, I’m thrilled.

Pass the Cheerios!

Warren Buffett and I agree: Japan’s different this time around

I think there’s a good case to be made for Japan coming back, not as a play on the dollar or even the yen like many think, but because of the rise in regional trade. I believe that a good many companies are going to bail on China and set up shop in Japan, particularly in the technologically dense manufacturing arena.

My choice is one of Japan’s key financial players; shares are still under $10 and could be in the right place at the right time, particularly if you’re patient. Upgrade to Paid

On a personal note, I’m super glad to see this happening... finally. I’ve spent more than 35 years closely involved in Japan as a businessman, a husband, a father, and a resident at least part-time every year.

What’s more, I’m thrilled to see that Unka Warren has recently upped his stake in Japan’s trading houses. (Read)