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Yes, I’m sticking with the rally

Aug 10, 2022

Good morning!

‍The markets are set for a higher open after futures jumped on a “lower than expected” inflation print. And yes, I’m sticking with the rally for as long as the markets want to give me one.

Here’s my playbook.

Musk strikes again

News broke that Tesla CEO Elon Musk has sold a few billion dollars of Tesla stock and that’s got a lot of people talking this morning. 7.92 million shares worth $6.88 billion to be exact.

I think it’s a brilliant move for reasons I explained to the fantastic Maria Bartiromo who kindly asked for my take this morning. (Watch)

Additional thought bubble: My take on tech and why pricing chips like they’re going out of existence is a monster mistake. And yes, I’m sticking with the rally.

Inflation is “only” 8.5%

The boffins are already in full peacock mode saying that the print was lower than expected.

Don’t kid yourself! A trip to the grocery store will easily dispel that notion.

Why you should care: Prices will not drop even if inflation does. In fact, inflation will get worse as long as supply chain challenges remain, and government spending continues.

The best investments are still those companies making “must have” products & services the world cannot live without. Nice to haves – like Sweetgreen, Allbirds, Bed Bath and Beyond - are melting down faster than an ice cube on a hot Texas afternoon.

You know what to do!

Disney’s results will define streaming market

Wall Street will go to great lengths to defend stocks like Disney. The conjecture is that anything over 10 million “adds” is bullish for streaming. (Read)

Moot point: There’s more competition than ever at a time when consumers are increasingly interested in living life, not watching it stream by.

Complicating matters: The company tried to anger nobody with woke policies earlier this year but wound-up angering nearly everybody.

Disney stock is a non-starter for me at this point.

Coinbase is still an “avoid”

Coinbase posted a loss of $1.1 billion yesterday and shares understandably got hit hard. Keep in mind that this same quarter a year ago, the company reported a $1.6 billion profit. (Read)

The dog ate my homework: The reasons given range from “we’re in a recession” to an SEC investigation, but the largest driver is the crypto meltdown that started late last November and the subsequent liquidations/collapse of so-called stablecoins.

Still a hard pass from me. Crypto will have its day, but I’m not convinced that the bad actors have been completely bled from the system yet. Plus, I’m simply not too keen about the stock volatility that comes from such an inherently unstable market.

This is THE big deal of the day

I’ve been screaming from the rooftops for the past few years that healthcare is the next investing goldmine … but not because it’s health care.

It’s the transition to tech that’ll be the springboard. Tech companies are going to enter medicine, not the other way around like most people think. The latest deal is one of the most interesting.

Bytedance (TikTok’s parent company) is acquiring Amcare Healthcare, one of China’s largest private hospital chains for $1.5 billion. (Read)

This is a big deal. Beijing has been cracking down on “disorderly capital expansion” since late 2020, kiboshing big acquisitions that the likes of Alibaba and Tencent were planning. The fact that this one is going through means ByteDance likely has Beijing’s full support.

Why you should care. People are still acting like I’m insane when I say that big tech will drive tomorrow’s healthcare innovation. That’s too bad … for them.

Crazy like a fox. Apple, Amazon, Microsoft, they’re all already on board and, incredibly, most investors cannot change their thinking which is why they’ve probably already missed the next great investing gold rush even though that’s what many are desperately seeking.

Do yourself a favour. Think thematically. Conventional diversification and sector allocation models will not allow you to harness structural changes in the way our world works.