☕ Zuck cancels the Metaverse just in time for AI to pay the bills 🤦‍

Howdy! 👋 

Four days higher and – yep – the markets are flirting with new records (again). 

I really feel sorry for the permabears, clickbait artists and naysayers.  

Roughly 95% of the S&P 500 has reported with 83% of ‘em reporting positive EPS surprises and 76% of ‘em reporting positive revenue surprise. 

Oh yeah and not for nothing, the blended YoY growth rate is 13.4% and – if it holds – the 4th consecutive quarter of double-digit earnings growth. 

Always remember… 

Investing in optimism over time beats cowering in pessimism at moments in time. 

Here’s my playbook. 

1 — Netflix just bought an $82.7B headache 

Netflix just dropped $82.7B to swallow Warner Bros. Studios and HBO Max — snapping up Harry Potter, Batman, Game of Thrones, and Casablanca like it was clearing out the bargain bin at a liquidation sale. (Read) 

Hollywood romantics are calling it a dream merger. 

I think it's more like a multi-billion dollar migraine. 

Why? 

Simple. 

If the "legendary" library were a real money printer, it wouldn’t have been on the clearance rack to begin with. 

Paramount’s attorneys are already crying foul, firing off a letter questioning the “fairness and adequacy” of the sale process — which is corporate-speak for “we lost, and we’re salty about it.” 

Regulators are sharpening their knives because this could be an e-ticket ride straight to antitrust h---. 

Sigh. 

Trade Idea: If you must play NFLX, forget about the price of the stock. I think there's a good case to be made that NFLX short-term volatility is seriously misplaced and that’s what you want to focus on. Or at least I do. 

One way to do that is to target short-dated straddles because you're tactically going after abnormally high volatility, not making an investment play. Elevated IV often snaps back like a rubber band. And when you sell a straddle, you can make money even if the price doesn't move a lot because falling IV crushes options values. 

What's more, you don't need NFLX to calm down... just be "calmer" than expected. 

The key in situations like this one is disciplined "sizing" - meaning that you want just enough exposure to catch the volatility pop without blowing up your account if you're wrong.  

Again, purely tactical, not an investment play. 

Keith’s Investing Tip: Many folks consider themselves to be investors only to find out the hard way that they’re speculating. Knowing who YOU are can help determine how you play a situation like this one profitably. Or not. 

2 — Zuck cancels the Metaverse just in time for AI to pay the bills 🤦‍ 

Team Zuck is reportedly slashing up to 30% of its metaverse budget — yep, the same division that’s burned over $60 billion since 2020 and gave Wall Street the corporate equivalent of motion sickness. (Read) 

This is the same “Reality Labs” division that: 

• has lost more than $60 billion since 2020 

• has produced very little revenue in return 

• has repeatedly frustrated investors 

• became a running joke on Wall Street because of how wildly expensive — and unprofitable — it’s been 

MyPOV is that there are finally some adults in the room. 

Even so and as much as I love to hate the stock, Wall Street will defend it to the end of time. 

Probably $1,000 or more in the next few years. 🤷🏻‍ 

3 — Dilution Isn’t a Four-Letter Word… if you have the math covered 

SoFi shares fell nearly 6% after hours after announcing a $1.5 billion stock offering — and the weak money is apparently shocked. (Read) 

I’m not. 

SoFi has had a monster run — the market cap has nearly doubled this year; the stock is up more than 6x since late 2022. That kind of performance is like an engraved invitation for management to raise money while the getting’s good. 

This is where Keith’s Rule of the Back Page comes in: Don’t trade the headline — trade what it means.  

In this case, the headline screams dilution – which most investors misunderstand anyway - but the back page says that management thinks the business is strong enough to put fresh capital to work at presumably high(er) returns. 

Keith’s Investing Tip: Contrary to what many investors believe, new shares are not a fire sale if you can make the case that the money raised will grow faster than it dilutes my slice of the proverbial pie. 

4 — Brussels fines X… and still thinks everyone cares 

Brussels just slapped X (formerly Twitter) with a $140M fine for “deceptive” blue checkmarks, messy ad transparency, and not giving researchers enough access. (Read) 

Not surprising. 

EU regulators have been circling Musk’s platforms like seagulls at our ferry dock which is why I can only grin. 

MyPOV is that Brussels may make the rules, but the market always writes the narrative. 

X’s real time reach wins. 

5 — It’s “Issue Friday” 

Please keep an eye on your email if you’re an OBAer… the December issue drops later today. 💯 

I’ll be sharing a new recommendation and why I think there’s a good case to be made that our timing couldn’t be better. It’s a great complement to the broader portfolio imho. We’ve also got a comprehensive look at the art of profit taking, a packed portfolio review and more. 

If you’re already dialed in, terrific! And if you’re tired of settling for Wall Street’s table scraps but uncertain what to do next, you know where to find me. People regularly tell me that what they’ve learned as an OBAer has changed their lives in ways they couldn’t have imagined.  

Humbling as heck – thank you! 🙏 

Bottom Line   

Most people worry incessantly about everything that could go wrong. 

The world’s most successful investors focus on what could go right and put their money to work accordingly. 

Big difference. 

You got this – I promise! 💯 

As always, let’s MAKE it a great day and finish the week strong. 

Keith 😀