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Why Big Tech stocks are like eggs

Jul 11, 2023

Good morning! 👋

The markets have opened “green” today, with traders beginning to wrap their heads around the looming inflation data. I’m not sure that’ll stick given another round of Fed Follies are on deck, but I’ll take it for now.

Big Tech, in particular, may soften up by the time you read this.

Here’s my playbook.

Why Big Tech stocks are like eggs

The markets have “narrowed” up considerably as the rally stalls.

For many, this is a worry because they perceive that the big can’t get any bigger... or they’re so brainwashed into conventional “market breadth and diversification” that they cannot grasp what’s happening.

This doesn’t bother me one bit.

In fact, it’s an opportunity.

The markets always narrow up at key inflection points. That’s how they work when the world makes a pivot. The best companies almost always continue to rise to the challenge and, logically, attract money as investors latch on, while the worst... 🤦🏻‍♂️

Imagine going to the grocery store to buy eggs...

If there are 1,000 eggs and 10 buyers, the price of eggs drops.

If there are 10 eggs and 1,000 buyers, the price of eggs skyrockets.

But—and here’s the twist that is today’s financial markets—if there are 1,000 eggs and 10 buyers but the buyers have each been given $1,000, the price of eggs rises because people want ‘em regardless of cost.

Value decouples.

Ergo... Buy the best, ignore the rest. 😊

Again, and at the risk of sounding like a broken record, I think Big Tech could run up another 10–15% from here by year-end. (Watch)

I hope I’ve got enough!

BTW... if you’ve got this covered, GREAT! If not and you’d like my take on which stocks to buy, how, why, and when, consider upgrading to One Bar Ahead®, my paid research journal, which I am extremely humbled to say now has readers around the world on board!

Microsoft layoffs

The company is now slimming down the number of salespeople, according to reports published in a variety of sources. (Read)

Definitely no fun if you’re one of ‘em, but this is a great sign that CEO Satya Nadella is super focused on the top and bottom lines.

Shares are down in the early going, but I don’t expect that to last for long.

$380 in 12–24 months.

There are so many ways to play... stocks, funds, LEAPs, bullish spreads. And there’s never been a better “in to win” opportunity for savvy investors with the right horizon. ChatGPT has changed the landscape and established MSFT at the very head of the class.

New era of cheaper cars ahead?

CNBC reports this morning that GM is gearing up to put out the 2024 models for Buick Envista and Chevy Trax—both in the low to mid-$20,000 range. In comparison, according to Cox Automotive, “the average price paid for a new vehicle this year has ballooned to upward of $48,600.” (Read)

This is definitely a step in the right direction, especially considering that many Americans are hanging onto their piston-clanking clunkers because even used-car prices have risen to absolutely mind-melting, wallet-crushing levels.

But I’m not buying GM... there are just too many other factors that make investing in that stock a wobbly proposition.

I’m with Unka Elon.

As the company is breaking ground at its Gigafactory in Mexico, Tesla has finalized the design for its Model 2, “which is going to be, as far as we know, the best electric and economic car in the world, and it is going to be a milestone,” teased Nuevo León Governor Sepúlveda. (Read)

Leave it to Musk to come up with something electric, efficient, AND affordable.

India is the new China

China has worn out its welcome, or at least that’s what an increasing number of high-tech manufacturers who are voting with their feet seem to think.

Taiwan-based Foxconn, for example, has applied for aid under India’s production legislation and has plans to work with the country long-term. (Read)

So?

What most people are missing is surprisingly simple.

Foxconn is the world’s biggest tech manufacturer, and it’s placing its money in India.

If the semiconductor market can actually hit the $63 billion mark that India thinks is possible, this could finally be India’s day in the proverbial sun.

Energy Demand +23% by 2045

I’m not the only one who thinks dino juice will be with us a lot longer than green advocates are prepared to believe. OPEC Secretary General Haitham Al Ghais spoke at a Nigerian oil & gas conference and forecast a 23% rise in energy demand by 2045. (Read)

Remember: Energy—oil in particular—is a continuum, which means the world will need it now, in the future and beyond.

Not for nothing, but one of my favourite Big Energy stocks has lately been beaten to smithereens and is priced like it’s going out of business. This, mind you, even though it just did a deal that added 10% to proven reserves at around $7 a barrel. Oil is trading at $73.68 as I type.

Can you spell p-r-o-f-i-t m-a-r-g-i-n-s?

The One Bar Ahead® Family has been on board for a while now and continues to accumulate shares.

Hooyah!