☕ Believe it or not, conditions are right for a melt up

Good morning! 👋 

The sensationalists are at it again. 

CNBC’s main headline this morning proclaims, “Stock futures rise as Dow looks to recover from worst session since March 2023.”  

It’s a button pusher, nothing more. 

The real story – and the one you want to focus on as an investor - is that great companies and great stocks continue to plow higher despite it all. 

Companies like Nvidia lead the charge for a reason. 

They’re more than capable of putting up great numbers, can protect margins and make stuff that the world can’t live without. 

Not only are they still cheap in the scheme of things, but there’s still plenty of gas in the tank! 

Volatility is a travelling companion, nothing more. 

Focus! 

Here’s my playbook. 

1 – Now come the price target and earnings revisions 

Most investors focus on price itself but there’s another important element. 

Analyst targets. 

As you know, I’m not particularly fond of ‘em for a variety of reasons but that’s neither here nor there. 

What matters today is where the herd thinks they’re going, not the specific dollar values of any given target. Put another way, where the “cool kids” are hanging out. 

Nvidia caught a lot of ‘em by surprise, which means they’ve got to play catch up so it’ll be interesting to see where they cluster next.  

Then, look higher. 

Just like I did when I first put $1,000 and a split on the map and “they” were still telling you the company was hopelessly overvalued or too expensive. 

History suggests very clearly that there are 10-15 Nvidias out there right now. 

Speaking of which... 

OBAers take note: I will have specific NVDA related instructions in today’s AMAs a few hours from now. 

2 – Conditions are right for a melt-up 

I popped by for a late session chat yesterday with the fabulous Liz Claman and my colleague Stephen Suttmeier who is BoA’s chief equity technical strategist. He took the words right outta my mouth saying that conditions are right for a “melt-up.” (Watch) 

I agree. 

Buy the best, ignore the rest. 

And, for the love of profits, do yourself a favour and stick to large cap, ultra-liquid names. 

Keith’s Investing Tip: I know it’s a popular thought to go for small caps right now but do so at your own risk. There are specific exceptions, of course, but those are few and far between. The smart money is staying with big caps because they know – like we do – that those companies have the financial strength needed to grow despite it all. Anything else is a risk you don’t want or need in your portfolio imho. 

3 – This is so stupid as to defy the imagination 

The house just voted to block the Federal Reserve from creating its own digital currency. (Read) 

Talk about stupid. 

There are 13 countries in the process of creating digital currencies, substantially all of which are farther down the line than the US at this point. China leads the pack. 

People worry that the USD will lose reserve status but fail to grasp that boneheaded moves like this will all but guarantee that outcome. 

Now for the interesting part. 

And the opportunity. 

The real money won’t be in crypto itself like people think but in digital clearing.  

My favorite choice in this space is well known to the OBA Family and it’s a story line we’ve been tracking since 2017. Profitably, I might add, for anybody who owns it and who’s following along as directed. 

If you’ve got this covered, excellent.  

If not, “yuan-a” get busy – pun absolutely intended! 🤦‍♂️ 

4 – Digital ad spending will rise 5X but that’s NOT the real story 

Global digital media spending will rise 5X in the next few years according to one report I saw recently. 

I can’t help but roll my eyes. 

Why? 

Because the constant barrage of helpful updates, reminders, and other crap we see everywhere from gas pumps to shopping carts will get worse. Smart phones, especially. 

The first company that figures out how to block the schlock will make bank. 

And I’ll be among the first to buy shares if I can. 

You? 

MyPOV: I increasingly believe there’s a new investment theme on the horizon. I haven’t yet figured out what to call it, but society increasingly craves peace and quiet, not overstimulation, disagreement and rudeness. It’s logical to see a new form of luddite appear. 

5 – The end of Boeing seems more likely than ever 

I made the comment a while back that we could be witnessing the end of Boeing as we know it and that the stock could drop all the way to $150 or even lower as cash flow problems worsened. 

So, yesterday’s announcement that the company says its cash burn is even more serious than thought doesn’t surprise me one iota. (Read)  

There’s gonna be a realignment in global air. 

• Continue to short or avoid BA but buy Airbus and/or Embraer as previously recommended – a pairs trade idea for anybody who wants to own airline manufacturers. 
• China will use this as an opening of epic proportions. Mark my words, you will see a major national flag carrier, perhaps several, buy Chinese aircraft shortly and take delivery within the next few years. The Saudis and Emirates – which I identified as likely first buyers months ago – are now both reportedly in the running.  
• I also can envision European flagged carriers operating Chinese aircraft within the decade. 
• Boeing’s defense contracts will keep the company alive, but just. I could also envision splitting operations in two if management can’t resurrect the civilian aviation component. 

Bottom Line 

Investing is a journey.  

First, you learn how to lose.  

Second, you learn how to learn.  

Third, you make money using what you've learned. 

Let’s finish the week strong – you got this! 

Keith 😊 

PS: We’ll be closed Monday in observance of Memorial Day so let me wind up today’s 5 with Fitz by wishing you a wonderful, peaceful weekend as we remember those who stepped forward when others couldn’t or wouldn’t. Thank you one and all for your service.