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☕ Profits are always the currency of success, so focus on ‘em

Jul 15, 2024

Good morning! 👋

The markets are off to the races quickly today in the early going.

All three indices – DOW, SP500 and Nasdaq - are in the green and flirting with record levels. I have no idea if they’ll stay there by afternoon but, then again, I don’t care much.

Longer term there is no doubt in my mind that’ll be the case.

Here’s my playbook.

1 – Profits are always the currency of success, so focus on ‘em

One of the hardest lessons for any investor or trader to learn is that profits are always the currency of success. Headlines come and go.

Here is what I mean.

The news is constantly filled with things that would make you believe it’s a terrible time to invest. Yet, history shows that it is almost always a great time to invest.

Especially if you’re:

buying the right companies to maximize profit potential

using the right tactics to minimize risk

taking action at the right moment

MyPOV: Too many people today think that success in the financial markets comes down to luck. Not true. Building life-changing wealth comes down to three things anybody can harness: proper education, knowledge, and tactics. If you’re waiting for luck to smile upon you, you’re gonna die poor. And if you’d like some help because you have no idea where to start, how to find right stocks or lack the confidence needed to play the game, I’m here.

2 – The markets care more about the Fed and rates than the assassination attempt

The venerable Stuart Varney asked me this morning which matters most to the markets... the Fed and interest rates or the recent assassination attempt.

Hands down, the Fed. (Watch)

For three reasons:

Inflation is coming down, not in our wallets but the Fed's (flawed) calculations
Fed is getting benched even though it may not cut rates by elections
$3-5T, perhaps more, realizing that it's trapped offsides and that they are going pay dearly for having gone to the sidelines in search of safety when they could’ve had opportunity

If I've said it 1,000 times, I will say it again... you must be in to win or you won't... win.

3 - Microsoft is still one of the most undervalued AI investments out there

Microsoft has invested $10B+ in AI.

The average investor still doesn’t grasp the opportunity which is, of course, a huge part of the opening we’ve talked about for quite some time.

Copilot and Azure could add $25 - $50B by next year all by themselves.

People ask me constantly about Google and Amazon, but those companies pale in comparison to what Team Nadella has on offer.

$500 a share - a target I set well before anybody even though that was possible - is just a few % away at this point. After that it’s $550-$600 or so.

My only fear is that I don’t own enough shares.

Here’s a great NYT article on CEO Satya Nadella and what makes him tick. (Read)

4 – Google buying Wiz is a bigger deal than you’d think

Google is buying cybersecurity company Wiz for $23B in what is being billed as the largest deal in Google’s history. (Read)

Makes sense.

Wiz gives executives and companies using it visibility into the “cloud footprint” - meaning a comprehensive view. Current tools are piecemeal.

Here’s why this is a bigger deal than you’d think.

Google/Alphabet faces growing regulatory and consumer ire which suggests that the company needs to prove it’s serious about security. The deal could help move the business model away from advertising but also position Google to compete with the likes of Microsoft, Oracle and even Amazon – all of which continue to lead the charge.

MyPOV: This is an unpopular view, but I think Google/Alphabet is in far more serious trouble than the investing public realizes which is why I continue to avoid the stock. I'd consider shorting it or buying puts – a bet that the stock declines – but Wall Street has a vested interest in defending all things Alphabet. There are better options, pun absolutely intended.

5 – Amazon gets nasty (again)

CNBC is reporting that sellers have been penalized by Amazon after the company’s algorithms found they were offering the same products for less on Target's online marketplace. (Read)

I wish I could say I’m surprised.

Amazon’s algorithms are at the core of an FTC lawsuit that accuses Amazon of using an anti-discounting strategy and constantly crawling the web to stifle competition. Naturally, Amazon’s lawyers don’t agree and say that its algorithms are a normal part of running a business.

I call bull feathers based on first-hand experience.

Amazon all but obliterated my bride’s skin care company by rejiggering rankings, pricing, and advertising practically overnight after her products began outselling Amazon’s offerings. She hung on for a while but ultimately hung it up as a result.

Keith’s Investing Tip: Every investor needs to come to terms with the companies they own. I won’t touch Amazon or Google for the same reasons I won’t touch Meta... I don’t believe the executives can draw a line between permissible business behavior and ethically proper decision making. You may feel differently, and I respect that.