☕ Will Elon’s court case hurt Tesla stock?

Howdy! 👋 

No surprise… all red again this morning, at least in the early going. 

Zoom out. 

As of last Friday, 96% of S&P 500 companies have reported with 73% of ‘em turning in positive EPS surprises and 73% turning in positive revenue surprises. (Read) 

What’s more, the blended growth rate is now 14.2%, up from around 8% coming into earnings exactly as I suggested would likely be the case. In other words, America just nearly doubled expectations. 

I’m not brilliant and will never pretend to be, but after 45 years in global markets I’ve learned that one thing matters more than almost anything else. 

Staying focused on the big picture. 

And what am I focused on? 

That’s the fun and potentially very, very interesting part. 

My research suggests that there will be more profits created in the next 10 years than the last 50 combined.  

Sure innovation may slow, and geopolitics may complicate the plot for a while, but it will not change the outcome barring a complete meltdown in which case the financial markets will be the least of our worries. So focus on the positive! 

Investing optimism still makes plenty of sense. 

Here’s my playbook. 

1 – Time to buy Berkshire Hathaway? 

Newly seated CEO Greg Abel just bought $15M in stock according to a report on CNBC. (Read) 

Tech execs have done this for years and it’s important because it’s a sign that Abel is willing to eat his own cooking. 

Leaders who have skin in the game weigh opportunities and risks differently, which is why I have long prioritized CEO actions as part of my investment analysis process. 

Buffett, in fact, has always preached this, and Abel just proved he was listening. 

Is that enough to make me buy Berkshire? 

Probably not. 

I believe that Berkshire is missing the AI race because it remains heavily in insurance, railroads, energy and legacy consumer names. All great businesses, no doubt, but not needle movers like those I prefer. 

Keith’s Investing Tip: The best CEOs behave like owners because they ARE owners. 

2 – Broadcom: $100B in sight 

Broadcom reported earnings, beating both top and bottom-line estimates. (Read) 

• Revenue came in at $19.31 billion, a 29% YoY increase 
• AI revenue hit $8.4 billion, a 106% YoY increase 
• Announced a new $10 billion share buyback program 

And then CEO Hock Tan basically drew a circle around the future: they now have “line of sight” to more than $100 billion in AI chip revenue by 2027. 

Good for the simple reason that I’d be seriously worried if the company didn’t. 🤷‍ 

3 – Robinhood just turned dividends into payday loans 🤦‍ 

Robinhood announced a slate of new features during its “Robinhood Presents: Take Flight” event. (Read) 

One of them is something called Early Dividends, expected to roll out in April. 

The pitch is simple: get your dividend cash before the official payout date — in some cases up to a month early. Robinhood says investors will receive dividends about 17 days sooner on average across a broad list of companies. 

The idea is to give investors faster access to cash for reinvestment… or whatever else they want to do with it. 

Here’s the catch. 

Robinhood fronts the dividend from its own balance sheet right after the record date once you’re confirmed as the shareholder. Weeks later, when the company actually pays the dividend, Robinhood collects it and squares up — presumably minus a fee for their trouble. 

Naturally the company hasn’t explained that particular detail but that doesn’t surprise me given that this is the same crew who convinced the investing public that $0 commissions were “free” all the while raking in roughly $1B a year from the likes of Citadel and other market makers who pay handsomely for order flow that they can then analyze, internalize, and trade against the very same unsuspecting retail investors who think they’re getting something for nothing. 

My guess is the economics probably stem from one of three sources… Robinhood Gold subscriptions that unlock the feature, more order flow/ecosystem activity because users are incentivized to reinvest or trade sooner, or simply the float and balance sheet economics from advancing payments. 

In other words… 

Robinhood’s just turned dividends into another version of payday loans. 

Ay, caramba! 

Dividends are supposed to be boring, predictable cash flow that magnifies compounding quietly over time, and smart investors know that. Turning ‘em into another fee-generating financial product says a lot about who the target audience really is.  

Keith’s Investing Tip: Anything that is “free” tends to cost you a lot. 

4 – Unka Elon goes to court, because apparently buying Twitter wasn’t expensive enough 

Unka Musk testified in federal court yesterday regarding allegations that he publicly hammered Twitter about bots and spam — and signaled he might walk away — which critics say helped drive the stock down while the 2022 buyout was in limbo. (Read) 

If he loses, he could be ordered to pay damages to investors who can show losses tied to that alleged conduct. 

Will this spill over to Tesla? 

Maybe... but that will undoubtedly translate into fresh opportunity. 

5 – DC’s new side hustle: betting on wars, coups and chaos 

Senator Merkley is proposing a prediction market ban for government officials after Maduro and Iran bets. (Read) 

Frankly, and imho, he’s aiming too low. 

What we really need is prison time for any government official caught betting on events they might influence or know about ahead of time. And yes, including insider trading. 

That’s really the problem here, and one that nobody wants to talk about in polite conversation. 

Prediction markets like Polymarket allow people to wager on geopolitical events, military strikes, elections and even deaths. In several recent cases, traders made huge profits placing bets just hours before real-world events like the capture of Venezuela’s Nicolás Maduro or strikes linked to Iran — raising serious concerns about insider knowledge being used for profit.  

It’s information laundering dressed up as “democratizing investing” or the “wisdom of the crowd.” 

Keith’s Investing Tip: Go to Lost Wages, aka Las Vegas, if you wanna gamble. But buy the world’s best companies if you really wanna make bank for at least the next decade or more. Just sayin’. 

Bottom Line 

Many people feel the compulsion to “do something,” especially if they’re new to investing or trading. 

Not true. 

In fact, some of the best decisions are to do nothing at times like the present. 

Owning the right stocks can give you the confidence to do so even if there’s more selling ahead. 

You got this – I promise! 

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

Keith 😀