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☕ Buy this stock before it splits

Jan 08, 2024

Good morning! 👋

It’s got the potential to be a very wild week. There are big bank earnings, the terrifying Boeing/Alaska window blow-out, various FOMC members are speaking and, on top of it all, we get both PPI and CPI data.

Here’s my playbook.

1 – Nothing but Fed

There’s an expression, “nothing but net” – signifying a clean, accurate shot often seen as a mark of excellent shooting skill in basketball.

Reading the Fed is the same thing.

I’d love to tell you that earnings matter, but the “net” is that nothing matters this week except what FOMC officials say when they take the mic and how traders believe they will interpret the CPI and PPI data when we get it.

If the data is hot, the go-fast crowd will see that as reason for the Fed to justify holding rates higher longer… and start selling. If the data suggests inflation continues to weaken, they will see that as reason for the Fed to justify cutting rates or at least holding ‘em steady for longer. And buy.

MyPOV: When in doubt, zoom out. This kind of debate is nothing more than mental floss and for short term traders only. It does not interfere with the case for investors who want to own great stocks making “must have” products and services the world can’t live without. Use any pullback to your advantage and do a little shopping!

2 – What to do with Boeing

I travel a lot and the situation that Alaska airlines passengers recently faced when a door panel blew out in midflight is simply terrifying. No two ways about it, especially since I often sit in exit rows to get a little extra leg room.

Not surprisingly, Boeing shares were down 9% in the pre-market; volatility has expanded dramatically. (Read)

Remember… chaos is almost always an opportunity.

Longer-term, we cannot live without airlines and airplanes. They’ll be back so the question is what you do as the headlines rage. Situations like this one are tailor made for bargain hunters.

Potential Tactics for BA today:

Enter LowBall Orders to buy at a deep discount. Set prices so low that your neighbors think you’re bananas or tell you that’ll never happen. A quick look at the chart suggests that prices could tag $210ish if there’s not a quick rebound at these levels today. That’s the last major support technically speaking, and an area last visited pricewise in early 2023.
Sell Cash Secured Puts steeper and for more premium than you could otherwise. I think $175ish or so might be compelling. This effectively allows you to get “paid” while you shop for shares at a discount.
If you’re really aggressive, I could make the case that buying calls could be good, too but that’s a far dicer proposition best reserved for those who know exactly what they’re doing and with speculative capital ONLY.

3 – Buy this stock before it splits

Normally, I don’t like to buy stocks ahead of a split but in this case, I think it could be foolish not to if I’m right about NVDA. I laid out my thoughts during a conversation ahead of the opening bell today with the venerable Stuart Varney. (Watch)

NVDA has an 80%+ market share
AI is expanding at an unprecedented rate
Management knows exactly what it’s doing

Splitting within the next 12-24 months would make NVDA more accessible to a broader swath of investors, allow more funds to latch on and provide the company with additional financial strength needed for even faster growth.

Keith’s Quick Tip – Investors worry constantly about chasing stocks that have gone straight up and I get it. However, consider this… how many stocks have gone straight up and continued to do so over time. I can think of a dozen or so great names off the top of my head that many investors let get away from ‘em over the years. Change up your tactics… slow down your buying, buy shares in concentrated ETFs, use options… there are dozens of different strategies to choose from. There is always a path to profits!

4 – Audacy is a canary in the coal mine

The headlines are all about Audacy going bankrupt from a massive drop in advertising revenues but the real takeaway here is much bigger. Customers – me included – have simply had it with the advertising model.

All I want to do is watch something when I want to watch it, not get obliterated by advertising, popups, banners, and schlock.

As surely as the sun comes up tomorrow, AMZN, NFLX and streaming companies are going to face similar problems down the line. Other bankruptcies will follow.

The companies that win – and yes, I am already watching a few possibilities – are those whose customers aren’t thinking about “watching” anything. They’re participating in a lifestyle.

OBAers… we’ll be talking about ‘em in the months ahead 😊

5 – Bitcoin ETF decision this week

The SEC is approaching its first deadline to approve or deny a Bitcoin ETF this Wednesday. Expectations are that the agency will approve several at once to ensure an even playing field. (Read)

No such thing.

Wall Street suddenly wants bitcoin ETFs (after fighting ‘em for so long) because they’ve figured out how to make money. Otherwise, they wouldn’t be pushing ‘em so hard.

Think about it.

If you’re trading bitcoin, buckle up… prices could rip in either direction.

Meanwhile, I’ll be watching from the sidelines to see if there’s an opening after the dust settles.