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☕ Jamie Dimon says what everybody’s thinking

Jun 27, 2024

Good morning! 👋

I’ve got two full days of meetings and presentations ahead, so please forgive me for being brief.

Ai miei illustri visitatori, ti vedrò presto!

Here’s my playbook.

1 – Jamie Dimon says what everyone is thinking

The Fed’s stress tests are a joke.

Noted Dimon – and I’m paraphrasing here – bank stress test losses should be a lot higher than what the Fed disclosed. (Read)

I agree.

A LOT higher.

There’s only one bank I want to own and Dimon runs it.

Buy the best, ignore the rest!

2 – Walgreens – the dog ate my homework

Walgreens blames a “challenging” consumer environment for crummy results and an even crummier forecast. (Read)

That's the grownup version of the dog ate my homework.

What investors should be asking is why management has missed the boat so consistently and for so long. Then, hand ‘em their walking papers.

I’ve told you repeatedly to short or avoid the stock and I hope you’ve done that.

Shares are down 70% over the past 5 years.

3 – Most successful product in history

That’s how Nvidia CEO Jensen Huang described the company’s Blackwell chip. (Read)

I think that’s a distinct possibility.

The game is a looooooong way from over.

I raised a lot of eyebrows a while back when I said that AI will be the single largest investing theme in recorded human history on CNBC, FBN and other networks.

Now, the narrative is becoming well understood.

Nvidia shares have returned nearly 500% since I brought it to the OBA Family’s attention (again) in March ‘22. The SPY – a super popular ETF choice for many investors has turned in 35.03% over the same time frame.

Some 3,043.50% over the past 5 years versus 103.43% from the SPY.

28,403.81% over the past decade versus 233.82%.

The only way to beat the markets is to buy stocks that actually beat the markets.

Just sayin’....

And if you’d like some help doing that, I’m here. I may not be the brightest bulb in the bunch, but folks tell me that my perspective and research has helped ‘em considerably. I’d love the chance to earn your trust, goodwill and business just like I’ve earned theirs. (Learn more)

4 – Disney’s skip the line tickets remind me of TSA Pre

Remember when TSA Precheck debuted?

Give us your information and skip the line.

Now everybody seems to have Pre, which is why my family and I use Clear.

Disney’s gonna offer newly revamped, more expensive “skip the line” passes. (Read) The pitch is that you can plan ahead but the real driver is more money imho... for Disney.

No thanks.

I’m with Arizona Tea CEO Don Vultaggio.

There’s simply no need to bleed customers dry. “Why have people who are having a hard time paying their rent pay more for a drink?” (Watch)

You start prioritizing profits over people and suddenly food makes you sick, planes fall out of the sky and legal drugs displace health. Not that this gets under my skin or anything. Yeesh. 🤦‍♂️

5 – Clarifying yesterday’s Tesla trade idea

Most investors see the markets or a trade idea like this, in one dimension.

Professionals often think in multiple dimensions.

For example, I see the TSLA like this... as a series of bubbles.

Bigger concentrations of risk and opportunity are represented by bigger bubbles reflecting open interest and $ at risk. Calls – bets on prices rising - are to the right. Puts – bets on prices falling – are to the left.

Market makers will be adjusting all the way up if Tesla continues to approach $200 because that’s their job. You can do the same thing if you have the chops but that’ll require scaling and considerably more attention.

Most individual investors and traders would be better served by waiting until prices are “moving up and through $200” for two reasons:

because that’s the point at which prices will be statistically stretched and the probability of a short-term reversal is highest (based on data in play at the time I did my analysis). That's why the big red bubbles are so pronounced.
they lack the time, focus and discipline to manage the position in real time like a market maker

Buying the $200+ puts as price crosses into the $200 - $205 range will be cheaper, too as volatility and intrinsic value drop (which is what will happen as TSLA prices rise, if they continue to rise). Both translate into a higher probability of profits mathematically speaking.

If prices do not rise above $200, sit on your hands and do nothing!

Honestly, this is where most people lose both literally and figuratively. They are in such a rush to do something, make a trade, get in the game – whatever – that they fail to grasp the need to wait and the advantage doing so gives ‘em.

There is NO rush, a point you hear me make often.

Note: Do NOT attempt a trade like this if you haven’t got a clue what I’m talking about. This is a speculative trade idea intended for a quick in and out and those who are comfortable with options, the possibility of loss and an understanding of the risk that comes with it.

Btw and in case you’re wondering, you do NOT need to use options to be successful in the markets. Many investors do just fine without ‘em but, like steak sauce, they can add some spice to your meal.