Guess who wants to be a battery supplier?

Good morning! 👋☘️

The indexers are at it again today, which means there’s even more money than usual on the move.

Visa, Mastercard, Target, and other companies are being reclassified within the S&P 500. It’s also “triple witching,” which means today is one of four days a year that stock options, stock index options, and stock index futures all expire on the same day.

There’s a crap ton of money involved. For example, there’s an estimated $6 trillion (about $18,000 per person in the US) tied directly to the S&P 500 all by itself. And another $7 trillion (about $22,000 per person in the US) tied to ETFs. Still more driven by funds, bonds, and more.

Chances are most individual investors won’t notice, particularly if they’re passive investors. But I guarantee you that institutional managers and their computers will, which means there could be a jump in volatility and a few outliers that get put on sale.

Stay sharp!

Here’s my playbook.

3 easy steps to capitalize on chaos

Wall Street circled around its own with 11 banks bailing out First Republic to the tune of $30 billion in deposits. (Read) And just like that... poof.

The markets are all red again as I type.

This isn’t rocket science.

Not one of the problems that existed before SVB, Silvergate, First Republic, and now Credit Suisse has gone away.

Emergency liquidity is still an emergency.

3 easy ways to capitalize on chaos:

• Hedges up (again)
• Tactical putskies for speculative trades
• Play offense for core investment holdings

No investor should ever have to fear a down market

Repeat after me... this too shall pass.

Many investors blame the markets, the politics, the Fed, the banks, even the barking dogs that woke you up last night, etc.… when they don’t get the results they want.

There’s a far simpler explanation.

Most investors fail because they lack the long-term perspective and a proven framework needed to get through short-term chaos that knocks ‘em off course.

If you’ve got this covered, awesome. If not, I’d love to toss my hat in the ring. Upgrade to Paid

How SVB will cost you (and me)

The administration has been adamant... you and I won’t pay for SVB’s screw-ups.

Horse puckey!

Just who does the government think pays for its very existence?

Yep, us.

MyPOV: The regulators who were asleep at the switch and the leaders of all who were supposedly providing oversight should be held accountable. Criminally, if necessary. Certainly fired.

This happened on their watch, not ours.

Disgusting.

Guess who wants to be a global battery supplier?

Volkswagen has announced plans to invest in mines to bring down the cost of battery cells, meet 50% of its own in-house demand, AND become a global supplier selling to third parties.

I don’t think it’ll move the needle for VW’s stock, but it could set off a new wave of M&A as the world’s heavyweights go to war over increasingly scarce resources needed to meet woke… er, excuse me… politically expedient electrification targets.

A junior mining ETF might make sense under the circumstances because it’s too early to tell which mines and what resources specifically will be on the receiving end as the money starts to circle.

You may not get another chance

I made two predictions several years ago to a packed audience at the Las Vegas MoneyShow:

1. Microsoft would release AI in a move that would threaten Google’s dominance; and
2. Quickly integrate AI into their products, including specifically Office and Bing, to solidify the lead

The room went dead silent as people started thinking through the potential impact of what I’d said on their portfolios. Google, if you recall, has been in the “can do no wrong” camp for a decade.

Many, I would learn later, remembered similar remarks I’d made about Tesla being a game-changer years earlier (which also came to pass) and rued the fact that they hadn’t paid attention. But that’s a story for another time.

Fast forward.

Microsoft recently announced ChatGPT, and the world went bananas. Google instantly got put on the defensive, exactly as I suggested it would.

Yesterday, Microsoft announced—bada bing—that ChatGPT will be integrated into Word, Excel, and Outlook. (Read)

What’s next?

AI is now at an inflection point.

The genie will never go back into the bottle again.

MSFT, BTW, is up 29.41% off 52-week lows of $213.43 versus the S&P, which has tacked on 5.03% over the same time period.

Long MSFT/short GOOG… or use options to accomplish the same thing.

Either way, I hope you’re on board because the train is leaving the station.

Bottom Line

Many people worry about how far stocks can fall when the selling starts.

Flip that around.

The biggest bounces often come from quality stocks that get hit hardest.

Our job as investors and traders is to make sure we know how to find ‘em!

Keith 😊