If you don’t own it today, you will wish you did a few years from now

Good morning! 👋  

The selling that I’ve expected since Unka JPow first announced that he might be “thinking” about rate cuts is finally upon us. 

No worries. 

It’s perfectly normal ahead of holidays when short-term traders want to take risk off the table.  

Long-term investors can view it (and should) as an opportunity to add to stocks you perhaps missed on the last run higher or to start positions in stocks you’d like to own but don’t yet. 

There is always a way into the fight! 

Here’s my playbook. 

1 – People bellyaching about all the things that could go wrong would be wise to start focusing what what’s going right 

The S&P 500 closed yesterday within 1% of the intraday high it set in January 2022 and has risen 4.4% this month, 24.2% YTD. 

The Nasdaq is on pace for its best year since 2020. 

Many of the companies we talk about frequently are doing considerably better than that, a trend I see continuing as AI goes mainstream. NVDA, for example, has returned 247.22% YTD and that’s after all the recent selling. Tesla has tacked on 139.44%, again after all the selling. 

The markets are setting up for what could be a monster run in 2024 when the Fed finally gets out of the way. First, though, the pros are going to do what they do best and shake out the weak hands with a bout of selling. 

I suggest you take a page from their playbook. 

Now’s the time to think about harvesting profits using tactics like the FreeTrade or Selling Covered Calls to lock in gains, both of which are OBA Strategies for trading around core investments. 

Keith’s Quick Tip: Nobody ever went broke taking profits, but stories abound when it comes to those who have blown out taking losses. Better to be long than wrong! 

2 – I love Affirm but… 

Affirm stock popped 15% yesterday when news broke that Walmart is expanding its partnership with the company. (Read) 

The investor in me loves what I’m seeing but it also makes my blood boil. 

CNBC reports that Pat Suh, Affirm’s senior vice president of revenue, stated that 75% of consumers would either delay or not make a purchase without Affirm. 

Think about this for a moment. 

Affirm is effectively creating money from thin air and, in doing so, inducing consumer behaviour that wouldn’t otherwise be there.  

Who profits? 

The companies, not the consumers. It’s the same with car leases, student loans, certain kinds of annuities and more. 

Buyers who fall for schemes like this almost always wind up getting the short end of the stick. It’s one thing if you need something and there’s a credit mechanism available to help you buy it but we’re talking about big-ticket “nice to have” stuff like TVs, electronics, BBQs, etc. 

The other rub here is that companies like Affirm play a role when it comes to driving prices higher. That’s not a popular thought but it cuts to the heart of the collective financial illiteracy that’s ruining our country. 

Do you really think the average EV would have a price tag of more than $80,000 if consumers bought ‘em with cash? Or that an education would cost you over six figures if Uncle Sam wasn’t pimping student loans? 

No way in hell. 

You may as well be setting your money on fire! 

ECON 101 dictates that too much money chasing too few goods creates inflation. Credit payment schemes are nothing more than a fancy way of justifying buying something that will eventually be worth zippo and paying through the nose for doing so. 

Anyway, I’ll let myself out now. 🤦‍♂️ 

AFRM has tacked on 454.51% YTD so who am I to say the stock isn’t doing what it’s supposed to. Financial illiteracy can be just as profitable a trend as anything else. 

But, that has me thinking… putskies for the simple reason nothing parabolic stays that way forever. I can see $40 a share early next year without too much trouble. 

3 –  Apple will win the race to $4T 

Most investors don’t think about Apple as an AI player, but they should. 

Team Cook uses it in scores of things from autocorrect to Siri. What’s more, the new chips being introduced are being crafted to do everything better, faster, and more efficiently… a move that Apple wouldn’t make if it didn’t plan on introducing AI into everything the company does. And soon! 

There are reports swirling, btw, that Ajax GPT, Apple’s homebrew version, has outperformed ChatGPT 3.5. 

I see $275 a share within 12-24 months.  

What’s more, I think Apple wins the race to $4T, a remark I made recently on Mornings with Maria (Watch) that caught my colleagues by surprise. 

Anybody with me? 🤷 

4 –  REIT investors beware! 

It’s a huge problem. 

Office vacancies are skyrocketing post-Covid as legions of workers either refuse to return to the office or “coffee-badge” – a hot new trend I wrote to you about earlier this week. (Read) 

Class A office space is particularly at risk and, given that it’s long been at the heart of many REITs, investors who own ‘em are too. 

The better alternative is to invest in specialized REITs that are oriented around things we cannot live without… like long-term medical care and certain technologies. 

If you’ve got this under control, that’s great. If not, get busy because no amount of interest rate shenanigans are going to bring people back and boost rent rolls. I see dividends cut unilaterally in 2024. 

While we’re at it, I can think of several major metropolitan areas at risk of becoming modern ghost towns. 

5 – Single stock ETFs  - should you buy one?  

Most investors are familiar with Exchange Traded Funds – ETFs for short – and use ‘em to track indices or make broad sweeping investments in specific sectors. 

I’m considerably more interested in single stock variants. 

First introduced in Europe in 2018, they allow investors to focus specifically on stocks that interest ‘em. Like, for example, Apple, Tesla, Nvidia and more. 

They’re not for everyone, though. 

Single stock ETFs are typically leveraged and often include a range of strategies from derivatives to futures and swaps – so you’ve got to choose carefully and with very specific goals in mind. 

I’ve recommended two to date for the OBA Family and see a growing role for ‘em in 2024 as the markets narrow up. 

Stay tuned! 

Bottom Line  

Markets aren't the issue.  

Your mindset is.  

No excuses. 

As always, let’s MAKE it a great day – you got this! 

Keith 😊