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One to own into 2025 practically no matter what

Oct 23, 2023

Good morning! 👋

The US 10-YR has topped 5%, and the major indices are all down just like clockwork.

While that’s an attention grabber, it’s also a powerful reminder to stay focused:

  • 17% of S&P 500 companies have reported as of last Friday, with 73% reporting positive EPS (earnings per share) and 66% reporting positive revenues, according to FactSet.

We’ve seen this script before.

The headlines will make you think the end of the financial universe is upon us because of China, Russia, the Middle East, politics… whatever.

Yet, profits are always the currency of success.

Here’s my playbook.

How much of your money are you putting in T-Bills?

How much of your money are you putting into T-bills now that rates have topped 5%, the venerable Stuart Varney wanted to know.

“My excess cash.” (Watch)

Investing Tip: Many people think about safety and, no doubt, that’s important—but the real key is making sure that your money is available for any pullback or bargain hunting. Earnings of 5%+ while you go shopping strikes me as a dang good deal!

What I expect from Microsoft earnings

Analysts expect EPS of $2.52 on revenues of $51.72B or so, compared to $2.35 and $49.61B last quarter. I’m thinking we might see $2.55+ and $52.33B+, perhaps a bit more. (Read)

Most people are going to focus on Azure (Microsoft’s cloud platform), but the real fireworks are going to come from Copilot (an AI tool for Office 365 users) that could generate an extra $5–$35+ a month per user. If I’m right, that could put as much as another $9–$10B on the top line.

Guidance, of course, will be key.

There’s a possibility CEO Satya Nadella could softball the numbers, but there’s not very much incentive to do that. Unless, of course, he wants to juice buybacks, in which case I suggest you consider taking a page from his playbook.

Meanwhile, MSFT has returned 37.35% YTD, even after all the selling. The S&P 500 has tacked on 11.32% by comparison.

Chevron’s mega merger

I suggested recently that ExxonMobil’s Pioneer Natural merger would be the first of many moves in this space as the bigger, more powerful players go on a shopping spree.

No sooner said than done.

Chevron has agreed to buy Hess in an all-stock transaction valued at $53B or $171 per share, based on Chevron’s closing prices as of October 20. (Read)

It’s a super-smart move, and the timing is perfect.

The purchase diversifies Chevron’s portfolio while also giving it access to the Stabroek Block in Guyana and the US/Canadian Bakken assets, which further plays to domestic energy security. There’s Permian assets, too.

I expect the purchase to generate significant free cash flow for the foreseeable future. That’s great for the dividend and the true shareholder yield, which is about 10.10% as I type versus the listed 3.65% most investors will see on their favourite public investing websites.

You know what to do, or at least I hope you do.

I’ll have more in today’s OBA Update. Upgrade to Paid

No, Apple didn’t miss AI

I had a good chuckle this morning when I saw CNBC’s headline, which read—and I’m paraphrasing here—that Apple got “caught by surprise” in the generative AI boom and now plans to spend $1B a year to catch up. (Read)


Apple’s business strategy is never to be first in.

In fact, it’s perfectly content to let companies like Google, Amazon, and others race to innovation. Jobs wanted to create products that work best across the Apple ecosphere, a move he set in motion with the iPhone in 2007. Cook’s now building upon that legacy in spades.

Apple’s strategy is to let companies like Microsoft spend big early in the race, then come in and clean up the wreckage at far higher margins. The iPhone, the watch, iPods… all played second fiddle for a while… then took over and continue to blast the competition.

AI will be no different and with 2B installed devices in use around the world, I submit, one heckuva move.

The game is just getting started.

How to position for a Gaza invasion

I will have an exclusive update for the One Bar Ahead® Family later this morning.

What happens next is key. Upgrade to Paid

Bottom Line

Many people find themselves glued to their iPhones, computers, tablets… whatever… right now. And I get why they feel that way.

Respectfully, think about this for a second.

Wall Street has spent billions learning to push your buttons while rigging the game at the expense of anybody who gets caught up in the short-term lottery mentality that is so pervasive right now.

The real flex is being able to walk away from your screens.

Just sayin’.

Now and as always, let’s MAKE it a great day—you got this!

Keith 😊

Straight to your inbox from Keith himself!

*Trusted by 20,000+ savvy investors in 36+ countries (and counting)


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