February 9, 2023

 

Tuesday morning
February 7, 2023

Good morning/afternoon

Chairman Powell has just spoken, and the market liked what he had to say.

He said, “The disinflationary process, the process of getting inflation down, has begun…”

This was enough to rally the market, tank the dollar, rally Gold and Oil and crypto.

The forecast is that it will take well into 2024 to get inflation down to 2% - the target eyed by the Fed.

Zoom has become the next tech company to lay off thousands of employees. 15% of its workforce or 1,300 people will be laid off soon. But don’t expect these people to be found in the unemployment lines. Tech hiring is still on fire in the U.S. and most of these employees will be swallowed up by new start-ups and other burgeoning ventures, else these employees will work from home on their own businesses.

A tech stock that should be in everyone’s portfolio is Tesla. Ron Baron, who runs one of the best performing funds, says Tesla could hit $1,500 a share by 2030. But we don’t need Baron to tell us that when John echoes those targets all the time. Bull-call spreads, buy the stock, buy the LEAP – John has been begging you for years to take the step and pull the trigger on this stock or trade. Just buy small parcels of the stock on dips, and put it in your bottom drawer and leave it.

Baron’s fund includes a 30% portfolio weighting in Tesla, the biggest holding in his portfolio. The fund has notched up a five-year total return of 26.5% on an annualized basis and 10-year return of 20.9% making it the top performing U.S. equity fund over the long term, according to Morningstar.

Baron started investing in Tesla in 2014, when the company was rolling out 31,000 cars a year …but Barron thinks 20 million cars could be reached by 2030.

Baron called Tesla “the safest car ever built in the world”; he believes that producing a lower cost model will make the company worth seven to 10 times more in the future.

Barron also speaks highly of Musk’s SpaceX company. He explains that “it used to cost you $100 million to get to space, $200 million more for a satellite. For us to get to space now, it costs…we can use a rocket over and over and over again …$20 million, its’ about to cost $6 million. The cost to get to space is going to be nothing.”

He goes on to say that the satellite as the backbone for the internet is an investing opportunity worth a trillion and a half dollars.

Mimic Baron - don’t worry about the volatility. Let your view be long term.
And mimic John too – dance via trades with the volatility – use it to your advantage. That way you won’t see yourself a victim of it.

You won’t get it right all the time, but that’s the price you pay of doing this business.

Another asset to hold is cash. If it is burning a hole in your wallet, put it into 90-day Treasury bills or 6-month Treasury bills. Last I looked they were earning 4.5%.

Wow! What a spike that was.
The Nasdaq spiked up to 12710 and has cratered back down 12460 in a 30-minute period.
The Fed speak will do it every time.

Book Recommendation: Thinking, Fast and Slow by Daniel Kahneman. An eye-opening insight into why we make the choices we make. It will change the way you think and the way you see yourself.

Happy mid-week. Celebrate life – Cheers Jacque