☕ Defense stocks are still a no-brainer

Howdy! 👋 

And we’re off with stocks rising ahead of the Fed meeting or so goes the official story. 

Really what’s happening is Nvidia’s rising, and all the indexers are having to keep up because it’s now one of the largest, most broadly held stocks in the world. 

It’s “caught a bid” in Wall Street Speak. 

Meanwhile and with your grace, I’ve got a meeting to attend this morning, so I’ll keep it super brief today. 

Here’s my playbook. 

1 – Meta would like to introduce you to several million of its new best friends 

Many folks have convinced themselves that AI is a passing fad or done for. 

Too bad because they’re already missing out on one of the most significant investing opportunities in human history.  

The latest? 

Meta just announced a multiyear, multigenerational infrastructure partnership with NVIDIA that includes deploying millions of Blackwell and Rubin GPUs, expanding Grace CPUs, and rolling out NVIDIA networking across its data centers. (Read) 

MILLIONS.OF.CHIPS. 

Meta is suddenly becoming the gold standard of AI execution. 

What’s happening is all about who they’re writing the checks to. 

You know what to do. 

I hope because, heck knows, we’ve talked about it enough. 

2 – Defense stocks are still a no-brainer 

BAE Systems — the British defense contractor that builds fighter jets, warships, missile systems and advanced military technology — has just announced record results. (Read) 

• Sales up 10%. 
• Operating profit rising. 
• A £83.6 billion order backlog.  

War, terrorism, and ugliness are all growth industries, unfortunately. 

Hopefully you’ve got this covered in your own portfolio like I do in mine. 

3 – If I’ve said it once, I’ve said it a thousand times 

The world’s most successful investors do NOT diversify. 

They concentrate. 

Case in point, the latest 13Fs – a key SEC filing – show that Berkshire’s top 5 holdings make up 70.88% of the entire portfolio and Pershing Square's top 5 holdings make up 72.16% of the portfolio.  

Keith’s Investing Tip: Intelligent diversification still works but diversification for diversification’s sake is something Wall Street cooked up to protect its own asteroids. These days you’ve got to be in to win… if winning is what you actually want to do. And that means adding a little concentration to your mix the way you add spices to a great meal. 

I’ll prove it to you. 

Imagine buying $1,000 worth of SPY, a popular ETF for many investors, ten years ago. 

It would have returned roughly 317% including dividends and reinvestment. 

Now imagine buying $900 worth of SPY and putting the remaining $100 in Nvidia at the same time. 

That combination would have returned roughly 3,015% including dividends and reinvestment. 

See my point? 

Keith’s Investing Tip: Diversification still matters, but adding a bit of very carefully targeted, concentrated exposure can make a big difference. 

4 – Money is like water and will always flow to where it’s treated best 

Palantir announced that they are moving their headquarters to Miami, Florida. (Read) 

Super simple reason here. 

Money, like water, flows to where it's treated best. 

Florida’s business climate offers attractive incentives including lower taxes, less regulatory drag, and a rapidly growing tech scene – pulling companies and capital further south.  

I’ve thought about it myself, in fact. 

5 – Time to buy Palo Alto? 

Palo Alto shares are sliding today after forward guidance came in weaker than the Street had hoped. (Read) 

Time to buy? 

I wouldn’t.  

I think the company has some unique challenges. 

However, and that said, I would buy a few other key stocks in the space. 

My fave, for example, has returned ~265.51% versus ~69.28% from the S&P 500 over the same time frame. 

According to the latest data… 

• There’s a cyber-attack every 39 seconds. 
• Corporate spending on cybersecurity will top ≈$474 billion by 2030. 
• The total addressable markets is ≈$2 trillion. 
• Cybercrime damages are expected to reach $10.5 trillion this year.  

Btw, if you’d like some help finding, buying and owning the world’s best companies, I’d love to toss my hat in the ring. People regularly tell me that One Bar Ahead® has changed their lives and honestly, that's humbling as heck.  

Bottom Line 

Companies that hesitate become footnotes but the ones that lead become empires. 

Guess which ones you want to own? 

Now and as always, let’s MAKE it a great day. 

You got this – I promise! 

Keith 😀