☕ Handicapping the race to $4T, what to buy next

Good morning! 👋 

Treasury yields continue to decline after the PPI fell last month. (Read) This, of course, gives big traders reason to buy. 

The headline story will be about how inflation is slacking or lessening. 

Don't fall for it. 

The real story and the one you want to focus on is that big traders think what's happening will make the Fed less likely to hike and potentially encourage ‘em to cut faster. 

I doubt it, but hey, don’t shoot the messenger. 

Play offense, even if you must think defensively to do it. 

Here’s my playbook. 

1 – Tesla: common sense prevails 

Early reports are that Tesla CEO Elon Musk will get his pay package reinstated. (Read) 

Good. 

If that’s true when the official results are presented, he can get back to doing what he does best and we can reap the benefits as shareholders. 

Tesla stock has returned 1,124.94% over the past 5 years through last night even after all the selling that began in earnest in 2022. The SPY has returned 103.07% by comparison.  

People say, “so” ... 

Exactly. 

As in soooooooo... that’s a 10.9X advantage and enough to turn every $1,000 invested into $12,249.40. 

Just sayin’ 

Oh, and not for nothing, there are 10-15 Tesla’s out there right now. 

Hopefully, you own at least one of ‘em. 

Keith’s Investing Tip: I hear from people constantly who want to “wait for confirmation” or “pullbacks” at which point they swear up, down, and sideways they’ll buy in. Most don’t and, on days like today, are caught flatfooted on the sidelines again. Tesla shares rose $11 in the overnight markets and could be considerably higher by the time you read this if there’s follow-through. The real path to profits – and the one you want to be on if you’re an investor – is being in to win. Or, odds are, you won’t... win. 

2 – Roaring Kitty's made two significant mistakes 

Millions of folks are enamored with the Roaring Kitty, believing that he’s on to something and that they’ll make their money yet. 

I wouldn’t bet on it. 

Mistake #1. 

The vast majority of Roaring Kitty’s prognostications haven’t come true according to Reuters. (Read) So, fundamentally, there’s a good case to be made that he’s off base. 

My research agrees. 

We’ve talked many times about how the online world is increasingly cannibalizing anything in the physical one. Physical game sales are down markedly and may never return. 

Mistake #2. 

Roaring Kitty disclosed his positions which means that other bigger, more sophisticated, and far better capitalized traders know his pain points. So, they’re going to use every trick in the book to jack him around knowing that he probably doesn’t have the staying power. 

Market makers will worsen the problem. They’ve undoubtedly hedged their bets by buying GME shares even as they sold Roaring Kitty his options contracts. And, while they’re at it, anticipated that prices would fall back to earth at which point they’ll be net sellers because they no longer need to offset the risk. 

This further weakens the stock. 

MyPOV: I told you repeatedly a few years ago when the whole meme stock thing got going and again recently when the Roaring Kitty reappeared that the real money would get made to the downside. Now you know why. 

Knowing what to buy isn’t enough these days. Situations like this show very clearly that you’ve got to know HOW and WHY, too. I'll be here if you need me. 

3 – Ford ends big bucks EV dealership program 

This just in. 

Ford is terminating its much-vaunted EV dealership program. (Read) 

Is anybody surprised? 

Really. 

I still won’t touch Ford stock. 

4 - Handicapping the race to 4T 

It's pretty simple. 

The race will come down to four companies: Apple, Microsoft, Tesla, and Nvidia. 

I said last year on Mornings with Maria that I think Apple wins the race but I think NVDA and Microsoft will increasingly duke it out for 2nd. Tesla is a complete wildcard. 

You know what to do. 

5 – Sony: what the ramen??!! 

I’ve spent more than half my adult life closely involved with Japan as a consultant, analyst, investor and trader. Not to mention a husband, father, and part time resident for more than 30 years. 

Sony’s latest has me wondering what the ramen??!! 

Sony is buying Alamo Drafthouse (the 7th largest movie chain) in the US because it’s going to develop films differently using AI and in “more efficient ways” while exploiting “the craft of filmmaking and theatrical experience ... held in high esteem.” (Read) 

Oh boy. 🤦‍♂️ 

Buzzword bingo is not an investing strategy. 

Movie tickets are down 26% and falling nationwide according to Comscore. 

So why would Sony make the move? 

I think it comes down to furusato, a term that loosely means hometown values or longing for the familiar hometown life. 

Sony has its roots in media and, in fact, pioneered the CD, the Walkman, various PlayStation stuff, flash memory and more. But like many Japanese companies, they held on too tight. 

The company is so desperate to control the format as a way of maxing profits that even loyal customers figured out that buying a Sony approved blank CD, stick, memory module, etc just to use a Sony product was more hassle than it was worth. 

Knowing this, my guess is that Sony execs think they’re bringing us the future but are really longing for a past that even they don’t believe in. 

Short or avoid Sony. 

Bottom Line 

You don't need anybody's permission to change your life, especially when it comes to investing. 

What are you waiting for? 

MAKE it a great day. 

Start now. 

You got this – I promise. 

Keith 😊