Billionaires are buying, exactly as I said they would
Good morning! 👋
Futures are ever so slightly in the green as the markets try to put on a third straight weekly gain. The S&P 500 and the Nasdaq are both on pace at 2%+ through last evening while the Dow has turned in a slightly lower 1.9%.
All three are moving exactly as I suggested they would earlier this year and at the beginning of this week when lowered US inflation data caused investors to become more accepting of the possibility that the Fed may lighten up on its rate hike madness.
To be clear, I don’t think the Fed will “pull a ground hog” and go into hibernation until mid-Q1 2024, but there has definitely been a change in psyche.
Here’s my playbook.
I mentioned yesterday that Alibaba was unusually blunt when it gave reasons for chucking its widely anticipated cloud spinoff.
Looks like the markets agreed with me.
CNBC is reporting that BABA shed $21 billion in market cap as a result. (Read)
I expect the selling to accelerate today if the story gains traction. There could be some bottom fishing, so tread lightly if you are a trader. If you are an investor, now is the time to make a decision about whether or not you want to own it.
Again, this story is not about Alibaba or its cloud business. What happens next is far more important. China will put on a charm offensive in an attempt to gain further access to the very chip technology that’s holding Alibaba back.
US chip makers are a strategic priority, which is why you want to invest accordingly.
Rolls-Royce shares up nearly 190% over past 12 months
Every once in a while, you run across a stock that you just knew you should’ve purchased but didn’t.
That’s the case with Rolls-Royce, which I brought to your attention nearly a year ago. At the time, I thought that CEO Tufan Erginbilgic’s turnaround plans were overly optimistic.
Evidently, though, the markets had another opinion and have handsomely rewarded the stock. I can certainly understand why… current half-year earnings are up 5X YoY.
So now what?
It’s NEVER a good idea to chase a stock, especially when it has this kind of a run. But that doesn’t mean you are out of luck.
Simply changing your tactic can mean the difference between winning and losing, especially if you’d like to turn lemons into lemonade. Selling Cash Secured Puts could work nicely in a situation like this one, as would a few well-placed LowBall Orders.
Incidentally, I will be teaching a two-hour Masterclass at the Las Vegas MoneyShow in February if you’d like to learn more about how to do this. (Learn more) I hope to see you there!
Buy your next car on Prime?
There have been a lot of attempts over the years to sell cars online. Most, if not all, have failed or are in rapid decline, as is the case for CarMax and Carvana, just to name two.
This is different.
Amazon will allow Hyundai to start selling cars directly starting in 2024. Apparently, customers will be able to choose between picking up their wheels or having them delivered by local dealerships. (Read)
I don’t think that this is going to be a major needle mover for Amazon or even the car companies. However, this move could potentially give car makers the ability to indirectly compete with Tesla’s direct-sales model.
As usual, though, there will probably be a regulatory challenge, and probably at the state level where automobile sales are tightly regulated. Amazon is undoubtedly prepared for this, which strikes me as the real key here.
Remember how Amazon competes—it will attack any business segment where there are fat margins up for grabs. The company has devastated retailers in every category over the years and is pushing into health care, music, and all sorts of other industries.
I don’t think this move will lower the cost of cars themselves, but it will sure as heck result in dealerships being a lot more flexible with regard to all the garbage fees they charge when you buy something.
Another reason to buy cyber security stocks
I am astounded that this story has been almost totally unreported in the West.
China’s biggest bank—the ICBC—got hit with a ransomware attack that prevented the bank from settling some of the trades it had made in US Treasuries. (Read)
To be fair, ICBC handles only about $20–$25 billion in total assets, of which a fraction would have been available to buy new US Treasuries last Thursday at auction.
But what catches my attention—and what you want to pay attention to—is that the attack should wake up many investors the way it woke up Treasury traders… US Treasuries are not truly a risk-free asset like people think and many financial advisors will tell you.
MyPOV: ALL investing involves risk, and there is just no getting around that; it’s part of the game. Conventional thinking will have you believe that diversification—including Treasuries as a safety valve—is the answer, but my research shows very clearly that it has not worked the way people thought it would for over a decade. So, you’ve got to think about how you handle risk using a different lens. Upgrade to Paid
Billionaires can’t stop buying this stock
Most investors have never heard about a “13F”—it’s the form asset managers with $100+ million under management are required to file with the SEC quarterly.
Well, guess who’s buying?!?!
Two Sigma Investments snapped up 4.5 million shares, Renaissance Technologies snatched up 3.8 million shares, and Coatue Management, Millennium Management, and Susquehanna International all picked up mid to high six-figure share counts. (Read)
I’ve been pounding the table on Palantir for a long time, saying that the company would eventually put up such good numbers that Wall Street could not ignore it or stomp on it much longer. I have also repeatedly encouraged you to pay attention to the big money, which I said would decisively use the smackdown to pick up shares at a discount.
That’s happening now!
The stock has rocketed up 240.92 % off 52-week lows and is now trading at $19.85 per share.
My target is still $50 per share.
There is still time to get on board, but I will not be serving cheese with any wine(ing) that I hear a few years from now if you don’t. 😊
Tune out the noise.
Keep your eyes on the prize.
Your portfolio will thank you.
As always, let’s finish the week strong.
You got this!