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The one quantum computing stock worth a punt IMHO

Nov 30, 2023

Good morning! 👋

I know I sound like a broken record, but the markets are flirting with yearly highs again.

Investors who have failed to go along for the ride now have an extremely tough choice to make because they’ve already missed many of the best bargains as stocks have rolled off their lows…

do they throw caution to the wind and pile into Wall Street’s grist mill using FOMO as their guide, or
do they smarten up by changing their tactics to overcome the risk that’s now present?

Hopefully the latter—but far more predictably, it’ll probably be the former.

Investors have a remarkably consistent and predictable history of doing exactly the right thing at precisely the wrong time—meaning they buy high and sell low.

Good!

Their actions (and oversight) create amazing, often overlooked, bargains in world-class stocks.

Here’s my playbook.

The biggest risk from AI is one the world doesn’t see coming

Imagine you’re an HR hiring manager and you’ve got a choice between two otherwise identical applicants for a job you’re looking to fill.

One is a super-bright individual, but the other, who is also super bright, has the latest XYZPDQ brain chip implant, which makes him/her able to process significantly more information at faster speeds and with dramatically higher accuracy.

I know who I’d hire.

You?

Forget about robots; they’re not the half of it.

Our legal system and, specifically, our labour laws are not even remotely ready for the challenge—which, btw, I see happening within the next 5 years, perhaps 10 at the most.

On a related note, I think Nvidia CEO Jensen Huang is on the right track with recent comments saying “five years are all we’ve got” before AI is fairly competitive to human intelligence. (Read)

Ford: Me too!

I have a sneaking suspicion that GM stole Ford’s thunder yesterday when CEO Mary Barra threw down the proverbial gauntlet saying that the company is reinstating guidance, boosting the dividend, and initiating a $10B buyback.

Ford’s out with a “me too” this morning.

Of sorts.

The company has reinstated guidance while noting that the UAW strike cost ‘em roughly $1.3B in earnings because of lost production on roughly 80,000 vehicles.

Consumers will get the short end of the stick.

New labour agreements include a 25% jump in wages that is expected to add about $900 in cost to each vehicle by 2028, says Ford.

I think that’s low.

The tally will probably be more like $5,000 by the time you add in everything at the retail level.

I was looking at putskies on GM, but this news from Ford makes me think that’s too risky for now. Wall Street will have a vested interest in defending both companies, especially if Stellantis makes a follow-on announcement shortly along the same lines.

Elon drops the F*** bomb

Unka Elon is as feisty as they come.

Yesterday, he dropped the f-bomb during an interview at the 2023 DealBook Summit in NY while responding to a question about advertisers who pulled away from X following antisemitic posts he amplified. (Watch)

Many were quick to judge him, but he’s since called those tweets “one of the most foolish if not the most foolish thing I’ve ever done on the platform [X—formerly Twitter],” and says he’s sorry for that.

Unfortunately, that’s as far as most people are going to get when it comes to his commentary. I get how they’d feel that way, but one of the most important things an investor can do is learn to keep personal feelings at bay.

The really important stuff came later…

On unions… they create lords and peasants pitting workers against management. “If Tesla gets unionized, it will be because we deserve it and we failed in some way.”
On leverage against him… hate away. “If we make bad products that people don’t want to use, the users will vote with their resources and use something else.”
On OpenAI… he has mixed feelings about Altman personally, saying that he feels Altman has too much power, a remark that caught me by surprise considering Musk was on the board until 2018.

I hope I have enough shares.

Keith’s Quick Tip: Visionary CEOs are often controversial because they play by their own rule book. Our job as investors isn’t to judge by emotion but to identify fact-based opportunity.

Jobs was famously petulant and impatient, for example. Oracle CEO Larry Ellison is incredibly ruthless and aggressive. Marissa Mayer has a reputation for being brilliant but an insatiable micro manager. Jamie Dimon is an incredibly quick thinker who will often subject subordinates to extended Q&A sessions some liken to an inquisition. It’s considered a badge of honour to survive one, I am told.

You asked about pre-IPO and early-stage recommendations—here’s my answer

My take on pre-IPO and early-stage companies got a lot of people’s attention yesterday. Many of you wanted to know which funds I’d recommend as a way to gain access.

Respectfully, I’m going to withhold that information because sharing that name wouldn’t be fair to the One Bar Ahead® Family who pay for my research. Upgrade to Paid

I will do you one better, though.

I own a few hundred shares of IonQ, a company that’s developing quantum computing hardware and software intended to bring quantum computing out of the lab and into the market.

Microsoft and Amazon both make IonQ quantum computers available through the cloud. Google Cloud Marketplace is a partner.

The company began trading on the NYSE in 2021 and is still far too tiny and too uncertain to be anything but a speculative punt for the most aggressive investors. Further, it does not meet the stringent hurdles needed to make it into the OBA portfolio, which is why I have not recommended it in my premium research.

My plan is to simply tuck shares away on a shelf and leave ‘em alone for a long time. If they double at some point, I’ll sell half to pay for my cost and—hopefully—repeat the process with another gem. OBAers will be quick to recognize this as a profit-boosting, risk-reducing tactic I call the “FreeTrade.”

Keith’s Quick Tip: I will often buy a few shares of something that interests me, just to keep an eye on it. Heck, sometimes even just 1 share. Doing so makes me pay attention to earnings, price action, and the whole shebang when it would otherwise get lost in the daily noise. I’ve found quite a few surprising companies over the years.

Is Amazon looking for a new home?

Bloomberg reported that Amazon is apparently looking for office space in Miami, which—ta da—is also Jeff Bezos’s intended new home. (Read)

Not that I’m surprised.

Rumours have circulated for years that Amazon is fed up with Seattle’s shenanigans, and this would be par for the course.

It’s not without precedent, mind you.

Boeing famously caused a snit in 2001 when the company pulled up stakes and moved its HQ from Seattle to Chicago after spending 85 years in the Emerald City.

The USPS reported earlier this year that more than 2,000 businesses left Seattle during the pandemic and—thanks to the rise in crime, homelessness, and general scummyness downtown—are not returning.

Target, Nike, Amazon Go locations… all gone.

The Seattle PD reported 13,103 calls from the top 100 retail locations in Seattle requiring more than 18,000 hours of response time. Seattle recently broke its own 44-year record for homicides, a sad reflection on what was a once great city.

Meanwhile, I’m sure the new 7% capital gains tax here in Washington had nothing to do with Bezos’s decision personally… [doh]

Bottom Line

Many people who went to the sidelines last year thinking it was “safe” are now increasingly regretting that decision as FOMO creeps in around the edges.

As always, that brings its own challenges, so keep your guard up.

Let’s MAKE it a great day!

You got this—I promise.

Keith 😊