☕ AMD and NVDA – now what?
Jan 19, 2024Good morning! 👋
All three indices are green in the early going and I love what I’m seeing on top of yesterday’s record setting session.
Here’s my playbook.
1 – Investing in optimism beats pessimism every time
The S&P 500 and the Nasdaq are now in positive territory for the year. As a matter of fact, the broad market barometer came into today’s opening bell just 0.33% from its all-time closing record. Meanwhile, Apple lead the tech heavy Nasdaq yesterday which jumped 1.33%.
To be fair, we’re only 3 weeks into the new year so you can’t extrapolate much beyond that.
You can, however, very clearly see that the markets are beginning to refocus on the upside exactly as I said they would coming into the year after shaking out the weak money to the downside.
My year-end S&P 500 target is 5100+.
2 – AMD and NVDA new record highs
“AI is a passing fad,” they said.
“The stocks are too expensive,” critics charged.
“Overbought,” the analysts cautioned.
Uh-huh.
Both stocks closed yesterday at record highs and, yes, there’s still plenty of profit potential ahead.
Every $1 in AI chip tech spend may translate into $5-10 of real world spend, perhaps more.
Keith’s Quick Tip: People freak out because stocks are expensive but really that’s an excuse because they don’t have a plan to deal with a company that took off without ‘em. At the risk of sounding like a broken record, there’s always a way into the fight if you want one... DCA/VCA, use options, buy fractional shares, etc.
Btw, we talk about stocks, funds, strategies and tactics like these frequently in my paid research, One Bar Ahead® and you’re welcome anytime if that’s of interest.
3 – Disney’s getting “Peltzed”
Activist investor Nelson Peltz has it out for Disney because he believes he can do a better job turning the company around than re-re-returned CEO Bob Iger. (Read)
I’m not willing to take that bet.
Don't get me wrong... Disney was a favourite of mine for years.
Now, though, the company has alienated formerly diehard fans, the once fortress-like brand portfolio has been squandered, and I can’t recall the last time I heard anybody who thought paying $109-$159 for a single day theme park entry ticket was a good deal.
4 – If you want to know where AI’s going, watch who’s buying
I’ve long said that the real way to identify an investable trend or theme is to figure out who’s buying.
Literally.
In this case, it’s El Zucko who apparently can’t get enough Nvidia AI-enabling chips. (Read)
In case you’re wondering, I still won’t touch META as long as he’s in the chair, but this is great for all things AI and other companies we talk about frequently.
5 – Macy’s: Don’t take the bait
Legendary retailer Macy’s is planning to lay off 3.5% of its workforce, or roughly 2300 positions, while also closing 5 stores. (Read)
Shares are up on the news but don’t take the bait.
The company failed to embrace technology when it had the chance, and this move is very unlikely to do anything for the stock in the long term.
The era of big retail is all but dead... just ask anyone who used to shop at Sears, K Mart, or JCPenney.
There is only one retailer worth owning in my opinion. Shares have returned 47.72% over the past 12 months according to Koyfin versus just 23.78% from the S&P 500 over the same time frame.
Focus, focus, focus.
Bottom Line
Success in the markets doesn’t come from anything you do occasionally.
It comes from what you do consistently.
Let’s finish the week strong – you got this!
Keith 😊
PS - Thanks to every sharp-eyed US-based M5er who very kindly wrote in to let me know about a typo in yesterday’s edition. I intended to suggest you consider the Global X Cybersecurity ETF (BUG) but didn’t catch that what got published was the Global X Cybersecurity UCITS ETF USD Acc (BUGG) which trades on the London Stock Exchange and our UK-based M5ers love. Either way and regardless of which side of the pond you're on, McKinsey suggests cyberattack damage may hit $10.5T by next year – yikes!
