☕ Buffett's company bought more – should you?

Good morning! 👋  

One of the coolest things about the 5 with Fitz and One Bar Ahead® Families is the people reading along. 

You, me – everyone who’s here – has a story to tell and lessons to share. From newly minted investors who are just getting started to grizzled pros with billions at their fingertips – and from all walks of life, too. 

Honestly and not to get all mushy on ya’, I had no idea that the Family would be what it is today when I started sharing my thinking on a lark. But here we are with tens of thousands of wonderful people reading along in 40 countries... every single morning. 

Talk about humbling – yowza! 

Anyway, the reason I bring this up is that yesterday’s #5 – my bit about car companies collecting our data struck a chord. Quite a few of you took a moment to chime in. 

More in a moment. 

First though, the markets are split as investors continue to digest Nvidia's AI conference. That’s to be expected. 

Now, all eyes are on the Fed.  

Here’s my playbook. 

1 - Nvidia rocks it 

I found myself nodding in amazement with each new key takeaway as NVDA CEO Jensen Huang made his remarks kicking off the company’s annual GPU tech conference yesterday. 

Three of the biggies: 

1. The world’s most powerful chip – the Blackwell: It’s more powerful than the prior gen, called Hopper. What makes it cool is that it can run generative AI models consuming 25X less cost and energy yet is faster and more efficient on every metric. I felt like I was watching Batman talk about new toys, err, tools. 
2. Ominverse to Apple’s AI: NVDA’s Omniverse is a special computing platform that will allow teams and individuals to develop 3D applications and workflow and it’s going to use NVDA’s global Graphics Delivery Platform to stream advanced 3D experiences to Apple Vision users. Gotta get my hands on one! 
3. AI Humanoid Robots: NVDA is building what it calls foundational models for general humanoid robots which will enable roboticists worldwide to come together and achieve bigger, faster breakthroughs. Reminds me of when Intel’s Ajay Bhatt invented the USB that helped kickstart PCs. 

Huang also disclosed plans for next generation data centers, expanded a key partnership with Oracle and a new 6G cloud platform that will allow researchers access to RAN tech – radio access network – that will connect trillions of devices with cloud infrastructure.  

So why is NVDA down this morning as I type? 

This is a headfake of epic proportions designed to separate the weak hands from their money. 

Stick to the plan! 

MyPOV: If you think like the herd, you're going to get results like the herd. If, on the other hand, you think independently, you can often get the results you want. And yes, they can be considerably better than the herd. 

Case in point, NVDA has returned 498.60% since October 2022 while the SPY has tacked on 42.63% over the same time frame which, btw, is still one helluva move. The fact that Goldman just raised its target to $1,000 is laughable... great, but laughable. Sigh. 

2 – Betcha dimes to sushi BOJ is in cahoots with the Fed 

The BOJ – Bank of Japan - has been the only central bank in the world to maintain negative interest rates for quite some time now. Yesterday, that came to an end when it raised short-term target rates to... drum roll please... zero. 

Policy wonks are falling all over themselves about what an earth-shattering event this is, and I guess that’s true if you’re into that sort of thing. 

What catches my attention is that the Yen promptly sold off and now stands at 150 or so to the dollar.  

Tread lightly. 

US and European advisors have been encouraging people to “diversify” into Japanese equities over the past few months. Most of ‘em, I’d be willing to bet, have never spent time there or lived there like I have for much of the past 30+ years. 

High inflation continues to reduce Japanese domestic demand and private consumption - meaning Japanese are cutting back. The restructuring many are blathering on about may not amount to much when it comes to Japanese stocks. 

The other thing to think about is that this move happens ahead of the Fed’s next shenanigans, errrr, interest rate decision later this week.  

I’d bet dimes to yen and a few pieces of sushi, that this isn’t random.  

Trade Idea: Might be worth lightening up or shedding Japanese stocks now. Puts on EWJ might make sense too if you’ve got the skills and the risk tolerance. 

3 - Saudi Aramco CEO: Give up the “fantasy” 

I’ve been waiting for this.  

Saudi Aramco CEO Amin Nasser said Western policy makers should give up the “fantasy” of phasing out oil and gas. Then, laid out an argument that matches my own almost point for point. 

Like it or not, reality is that a) EV tech isn’t ready for prime time and b) demand for dinosaur juice continues to accelerate globally. 

Nasser also reinforced something you’ve heard me talk about many times... the need to manage realistic demand assumptions rather than the delusion of EV acceptance. 

Think about it. 

The world has invested nearly $10T over the past 20 years in alternative energy but still can’t displace dinosaur juice at scale. 

Invest accordingly. 

Big energy companies are particularly attractive at the moment, having been beaten to smithereens in recent months. My favorite continues to make astounding capital investments capable of paying off for years to come, pays a great dividend and has just returned record amounts to shareholders. 

Not for nothing, Buffett’s company just bought more shares recently. 

I hope you’re on board like members of the OBA Family are or that you have a comparable choice in your portfolio. 

Dinosaur juice isn’t going away any time soon. 

4 – AI bubble bigger than 90s tech bubble? 

I’ve seen a litany of charts lately highlighting how and why the current AI “bubble” may be worse than the tech bubble of the 1990s, especially when it comes to PE ratios. 

Not true. 

The 1990s tech bubble was driven by three things: 1) unstable IPOs with no revenue and no customers, 2) leverage, and 3) astoundingly high cash burn rates. 

This time around the “tech” is being led by large, tremendously profitable and established companies like NVDA, MSFT and others. The losers are still private so the investing public isn’t on the hook because, for the most part, they can’t be. And the leveraged up to your eyeballs mentality of the past simply doesn’t exist in current C-Suites, at least the ones I’m familiar with. 

Not for nothing and to close the loop here, but the PE ratios that most critics are yammering on about don’t accurately reflect tech nor do current accounting regulations – something I’ve spoken about several times on CNBC, FBN and other networks in recent months. 

In fact, I would submit that seemingly high tech PE ratios are a “go” sign, not a harbinger of doom when it comes to breakthrough tech. Not all tech is the same if you know what you’re looking for. 

5 – Insurance and your data 

Okay, now for the fun part. 

I let loose on car makers selling our data yesterday and, as part of that, noted the potential misuse of our driving data by insurance companies to raise premiums. 

J. very kindly took a moment to let me know I didn’t have it quite right. 

Turns out he’s the retired CEO from one of the very best insurance companies out there, which is why I wanted to share his take with you. 

“If you think about how we historically rated auto insurance it was to develop proxies for driving behavior - age, gender, motor vehicle incidents, credit etc.. Telematics actually lets insurers gauge real driving behavior without the need for proxy. As you can imagine with all that data it's a screaming need for AI to help parse and predict the future likelihood of accidents. Rural vs. urban really doesn't matter other than urban tends to have more accidents (frequency) at lower cost (severity) and rural is the opposite less frequency more severity. Rates go up because the things insurance pays for goes up, it's not the most profitable of industries. Progressive is an exception and the clear winner from an equity perspective. If you're a safe driver it's in your interest to use a device, if you're not, not so much.” 

Thanks tremendously, J! 

I hadn’t fully considered the cost of things that insurance pays for going up as a function of premiums. And, as frustrating as that is, it makes total sense. 

That said and very respectfully, I’m still not putting one of those things in my car even though I have hundreds of thousands of safe miles under my belt. Big brother and all that... 😊 

Bottom Line 

If you can't explain what your stock does in words that a 5-year-old would understand, chances are good you don't know what you own... and just masking it with b------t.  

Do not buy b-------t stocks. 

Just sayin’. 

As always, let’s MAKE it a great day! 

You got this – I promise. 

Keith 😊