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There are risks you can control… and everything else

Mar 13, 2023

Good morning! 👋

There are risks you can control and risks you cannot.

Stick to the former.

Here’s my playbook.

SVB

Imagine waking up and finding out that everything you owned was gone.

Your house, your car, your clothes, your stuff… your money.

All of it.

Gone with the wind.

That’s exactly what happened to more than 10,000 folks and their companies when SVB flamed out last week.

“Gut-wrenching” probably doesn’t even begin to cover it. Upgrade to Paid

The relief rally overnight may or may not survive past the opening bell. But volatility will be with us, and that means there’s an opportunity.

Remember, it is possible to make money in both directions—up AND down!

Could Musk buy SVB?

Tesla CEO Elon Musk tweeted Friday that he is open to the idea of buying SVB and turning Twitter into a digital bank. (Read)

That’s not as outlandish as it sounds.

As I have repeatedly pointed out, I believe Musk wants to turn Twitter into a long-term “super-app” on par with Tencent’s WeChat, which now has more than a billion users, BTW.

There is NO Western competitor.

That’s why I think SVB could be an unexpected opportunity for Musk—at the right price, of course.

MyPOV: Tesla investors would probably pitch a fit, but, then again, those who lack vision usually do.

$200 a share within the next 12–24 months.

Goldman says no rate hike in March

News broke shortly before I went on air with CNBC Asia of Goldman Sachs saying that stress on the banking system will result in the Fed NOT hiking rates in March. (Read)

I disagree.

NONE of the problems that existed pre-SVB have gone away.

I think the opposite is true, in fact.

The Fed still does not understand why its models are busted and why it’s not getting the inflation busting results it wants. That’s why I think Team Powell is far more likely to keep trying the same old thing while expecting different results.

Sigh.

Buying banks—yep—makes sense... but, obviously, pick carefully. Energy too.

The overnight markets, BTW, are acting like 50 bps is off the table, but that strikes me as a head fake.

Putskies and butterflies could work nicely as a speculative bet. So could adding to core positions if there’s a drop.

Buy low, sell high!

BTW: I agree with Bill (Ackman) in that there are other banks that could fail. That’s because we simply don’t know the extent of the counterparty risk yet. The Fed says it’ll backstop the mess, but it seems to me we’ve heard that before.

The #1 source of Chinese prowess

Spying.

That, and sponsoring academic think tanks and research labs.

You’d think that people would have figured this out a long time ago, but noooooo.

Lawmakers are just now evidently getting around to holding hearings on the situation... despite the fact that we’ve been talking about this for over a decade. (Read)

China wants to rule the world.

Period.

Invest accordingly.

Vaping creates a new generation of addicts

And from the Department of You-Just-Knew-This-Was-Coming…

Vaping was widely regarded as a “safer” alternative to cigarettes and other tobacco products. The thinking was vaping could finally help millions wean off their smokes.

As hard as it is to imagine, you could vape indoors, even in some hospitals!!!

Long story short, there’s a mounting pile of evidence that vaping is every bit as dangerous as cigarettes, perhaps even more. (Read)

Dividend investors may want to pay particular attention. Upgrade to Paid

OBAers: I recently recommended a change to the Fund Folio as a means of capitalizing on the situation. Be sure to check out the March portfolio review if you’re a fund or ETF investor.