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☕ Palantir to the Nazzy and what that means for your money

Nov 15, 2024

Good morning! 👋

Fed Chair Jerome Powell is such a buzzkill. 🤦

Yesterday he said that the US Central Bank doesn’t need to be “in a hurry” to reduce rates and, of course, the markets have responded with all three major averages in the red this morning as I type.

However, that’s NOT the real reason the markets are in retreat.

And what is?

Funny you ask…

Here’s my playbook.

1 – Biggest SPX options expiration in history

November’s expiration – which happens today - is one of the largest options expirations in history with more than $2.9T in notional value set to expire… some $1.4T in SPX (S&P 500 Index Options) alone.

Source: Tip o’the hat to my friend and colleague, the super sharp @Mayhem4Markets who also picked upon this.

What does this mean for your money?

If you’re a trader, you ought to be in legendary hog heaven because volatility is your lifeblood.

If you’re an investor, this spells O-P-P-O-R-T-U-N-I-T-Y.

Get your buy list ready.

You do have one… right!?! 🤷‍♂️

Keith’s Investing Tip: I’ve been telling you since the beginning of the week that traders are itching for an opportunity to engineer a takedown, and this is what one looks like. It’s not a problem nor is it something to fear. Two reasons why: a) the markets have a very defined upside bias over time which means this kind of stuff is like unexpectedly finding a sale at your favorite store and b) short term market noise has nothing to do whatsoever with the business case for owning the world’s best companies, which I might add, is getting stronger in many cases.

What’s next?

That’s where it gets interesting.

Big expirations are often a precursor to more volatility so it’s next week’s session that we’ll want to watch carefully. 😀

2 – Ron Baron and I agree: Tesla 3-5X

Love Musk or hate Musk, I agree with billionaire investor Ron Baron. (Read)

Tesla may well be $5T+ in a decade, perhaps more.

I’ve made no bones about that during numerous TV appearances over the past 24 months and I hope you’ve been paying attention.

This may be the last opportunity you have to buy shares on the cheap before Tesla sets up another massive run higher.

The chips are all on the table.

3 – Alibaba still a big “nope”

I am often asked about Alibaba which reported today, having focused on it successfully in the past, but it’s still a big “nope” for me for two reasons:

Investing “because of China” rather than “in China” with three notable exceptions is the better play; and,
Free cash flow has declined 70%

Declining free cash flow is a serious problem especially in China where accounting artistry is a national sport.

If you're not familiar with the term, “free cash flow” is the amount of money a company has left over after paying for capital expenses and operating expenses.

A decline in free cash flow can limit a company's ability to invest in growth opportunities, pay dividends, or repay debt.

And finally, a decline in free cash flow can also indicate declining profitability which – excluding AI – seems to be the case with BABA’s numbers.

Btw, if you’d like to know what the three exceptions are and how to get on board with what I think could be significant profit potential – blue chips in the making really – I’d love to toss my hat in the ring. (Learn more)

4 – Palantir to the Nazzy!

Palantir will be moving from the NYSE to the Nasdaq stock exchange and expects to be trading as a Nasdaq-listed company on November 26, 2024. (Read)

It’s not like I’ve been telling this would happen… but I have. 🤷‍♂️

This is great because it means that indexers will now need to buy shares and institutions will too. So will funds and endowments potentially.

Shares are +6.5% as I type today and 216% over the past 12 months. The S&P 500, by comparison, has returned 30.65% over the past year.

5 – Mike Tyson vs. Jake Paul tonight

I am hard pressed to remember a more interesting fight and, mind you, I am not generally a boxing fan.

You see, I fought full contact karate back in the day.

I can only imagine what’s going through Tyson’s head as he prepares to step back into the ring to face Paul who is 31 years his junior. I don’t know that I could do it; in fact, I am pretty sure I couldn’t.

No question that Tyson’s a force of nature and always has been. But Paul is young, brash and full of beans. That makes him dangerous because it means he’s unpredictable and may use tactics Tyson hasn’t seen before.

The situation was much the same for me in the early 1980s when I squared off against a considerably older opponent named Danny I. He was a more advanced fighter, stronger, taller and smarter.

I definitely took my share of it that day… but I won anyway for two reasons.

First, I’d decided I was going to win and there was no question in my mind that would be the outcome before I stepped into the ring.

And second, I chose tactics Danny didn’t expect by getting inside his defenses, picking a path he didn’t anticipate, and ultimately landing a blow he didn’t see coming.

Investing today is a lot like that.

Two Keithisms – what long time 5 with Fitzers refer to as “FitzWit” – apply particularly well: