Global Market Comments
April 20, 2023
Fiat Lux
Featured Trade:
(HAS AI REPLACED THE BLOCKCHAIN CRAZE?)
(TSLA), (META), (GOOGL), (MSFT), (NVDA), (BBAI), (BZFD), (AI), (RTX), (BKR), (LPSN)
CLICK HERE to download today's position sheet.
Artificial Intelligence (AI) has become a crowd-pleaser and is taking oxygen away from crypto and blockchain.
What has initiated this trend?
Sam Altman and Open AI’s ChatGPT.
Altman wanted to create a non-profit that would use AI technology for the greater good of humanity. His mission was backed by Tesla’s Elon Musk and LinkedIn co-founder Reid Hoffman, thereby ensuring the success of its genesis.
Upon its launch, in just one week, one million users quickly signed up.
ChatGPT can create persuasive marketing messages, ad copy, and complex computer programs.
Altman’s venture may be even considered a challenge to the most established tech giants, such as Google (GOOGL). At a $29 billion valuation, Chat GPT is grabbing attention. Venture capital firms are already in negotiations to acquire a stake in OpenAI.
Despite the NASDAQ’s decline, OpenAI has achieved unprecedented success and a remarkable valuation.
Is ChatGPT only for the sophisticated investor?
No, you can invest in this space via a publicly traded fund that has indirect exposure to ChatGPT. Deep pockets are not necessary.
Microsoft (MSFT) has recently made a $13 billion investment in Open AI, which will cement the tech giant’s partnership. This new alliance will provide critical funding to OpenAI and enable could computing power to run increasingly complex models. Microsoft plans to use OpenAI’s technology in a variety of products, including Bing’s search engine and Microsoft Design.
Nvidia Corporation (NVDA) plays a pivotal role in the tech industry. It is best known for its production of top-end graphics chips, which serve as an important source for AI software models, but its role in the technology space may evolve rapidly as it expands into the developing AI industry.
Although we are in the early stages of the AI movement, many businesses have already grabbed AI and strapped it to their core business. It has become a growing trend and is making those businesses a ton of money. AI is growing far faster than anyone realized and the impact on corporate earnings will be enormous.
BigBear.ai Holdings Inc. (BBAI) has seen its share price increase fivefold because of its use of AI to assist clients in data analysis.
A media company called BuzzFeed Inc. (BZFD), saw its stock price increase more than 300% in just two days after announcing its plan to integrate AI-based content into its “core business.”
C3.ai Inc. (AI) is one of the top-performing software makers, with a 77% rally last month, driven by customers like Raytheon Technologies Corp (RTX) and Baker Hughes Co (BKR).
Another company, LivePerson Inc (LPSN), is attracting much notice with its plans to integrate generative capabilities from OpenAI, causing its shares to surge by as much as 19%.
Baidu (BIDU) also has plans to launch its own version of Chat GPT, but its stock price isn’t impressed yet.
ChatGPT offers impressive advances in the field of AI, which can be helpful in performing various personal and professional tasks. Growth and innovation in this area is certain.
AI technology is powerful, useful, and beneficial for our modern society if used responsibly.
Investment in this area should be done thoughtfully and after much careful research. Microsoft (MSFT) and Nvidia (NVDA) would be excellent choices to start your investment in this space.
“If Lake Tahoe doesn’t cure what ails you, I will bury you at my own expense,” said the 19th century humorist Mark Twain.
Global Market Comments
April 19, 2023
Fiat Lux
Featured Trade:
(FRIDAY, MAY 19, 2023 BOCA RATON, FLORIDA STRATEGY LUNCHEON)
(WATCH THE JOHN THOMAS LIBRARY OF CONGRESS INTERVIEW)
(PLEASE USE MY FREE DATABASE SEARCH)
CLICK HERE to download today's position sheet.
This is part of a Congressional effort to support veterans. I ramble onward about my career of fighting in seven wars over 55 years. Please excuse the beard, it was still early in the pandemic. Now you know why I still set off metal detectors. It’s official! Now, even the US government considers me a museum-worthy relic.
The original purpose of this letter was to build a database of ideas to draw on in the management of my own hedge fund.
When a certain trade comes into play, I merely type in the symbol, name, currency, or commodity into the search box, and the entire fundamental argument in favor of that position pops up.
You can do the same.
Just type anything into the search box with the little magnifying glass found on the home page on the upper right-hand side, and a cornucopia of data, charts, and opinions will appear.
Even the price of camels in India should show up (they’re falling).
The database goes back to February 2008, totaling 10 million words, or 12 times the length of Tolstoy’s War and Peace. Watching the traffic over time, I can tell you how the database is being used:
1) Small hedge funds want to see what the large hedge funds are doing.
2) Large hedge funds look to see what they have missed, which is usually nothing.
3) Midwestern advisors to find out what is happening in New York and Chicago.
4) American investors to find out if there are any opportunities overseas (there always are).
5) Foreign investors to find out what the hell is happening in the US (about 1,000 inquiries a day come in through Google’s translation software).
6) Specialist traders in stocks, bonds, currencies, commodities, and precious metals looking for cross-market insights which will give them a trading advantage with their own book.
7) High net worth individuals managing their own portfolios so they don’t get screwed on management fees.
8) Low net worth individuals, students, and the military looking to expand their knowledge of financial markets (lots of free online time in the Navy).
9) People at the Treasury and the Fed trying to find out what the private sector is doing.
10) Staff at the SEC and the CFTC to see if there is anything new they should be regulating.
11) More staff at the Congress and the Senate looking for new hot-button issues to distort and obfuscate.
12) Yet, even more staff in the White House gauging the president’s popularity and the reception of his policies.
13) As far as I know, no justices at the Supreme Court read my letter. They’re all closet indexers.
14) Potential investors/subscribers attempting to ascertain if I have the slightest idea of what I am talking about.
15) Me trying to remember trades that I recommended long ago but have forgotten.
16) Me looking for trades that worked so I can say ‘I told you so.’
It’s there, it’s free, so please use it. You can find the search box on my homepage on the upper right-hand side.
“As an investor you’re not looking to avoid corrections, you’re looking to avoid bear markets, said Liz Young, Sofi head of investment strategy.
Global Market Comments
April 18, 2023
Fiat Lux
Featured Trade:
(WHY SPACS ARE A SCAM)
(PSTH), (SPAK), (NKLA)
CLICK HERE to download today's position sheet.
Every investment bubble creates its own special instruments of self-destruction and this one is no different.
There were highly touted leveraged commodity and gold funds during the seventies, portfolio insurance during the eighties, money-losing tech companies with lots of “eyeballs” in the nineties, and subprime lending in the 2000s.
In this cycle, we have the Special Purpose Acquisition Companies, otherwise known as “SPACs.”
The goal of a SPAC is to raise money first on some generalized investment theme and then merge with a target company to achieve those goals.
SPACs have their advantages for some people. It enables start-up companies with no track record to go public faster without the costs and regulatory scrutiny of the burdensome public IPO process. Promoters promise to get investors into the next Amazon (AMZN) or Facebook (FB) early.
Easier said than done.
Some $162 billion was raised for SPACs in 2021 followed by a much more modest $15 billion so far in $2022. The largest has been hedge fund manager Bill Ackman’s Pershing Square Tontine Holdings Ltd. (PSTH) at $4 billion. There is even a SPAC for SPACs, the Defiance Gen SPAC Derived ETF (SPAK).
The performance of SPACs so far has been dismal. There have been 915 SPACs created since 2015. Only 93 managed to invest their funds in a target company and only 29 of those have produced a profit. This was during one of the greatest runaway bull markets of all time.
You would have done better to simply buy the cheapest Vanguard index fund. In the meantime, the issuers of SPACs for the most part became wealthy.
The quality of the management who had stepped forward to run SPACs has been mixed at best, including Ackman himself, who recently ran two gargantuan money-losing years back to back. They include former House Speaker Paul Ryan and NBA Hall of Famer Shaquille O’Neil, not exactly known as financial wizards.
Then there’s Nikola (NKLA), an electric/hydrogen vehicle company that has promised to take on Elon Musk, unfazed by the complete lack of a functioning vehicle. These shares have cratered by 92% since their market peak among multiple fraud allegations aimed at the founder.
The risks and limitations of SPACs are legion. You are essentially betting on the good faith and judgment of a single individual unmoored by any filings with the SEC. There are no guarantees they can achieve anything. These disclosures to the government are there to protect you. Without them, you are dancing naked.
The conflicts of interest are enormous. SPAC issuers get to buy the equivalent of call options on their funds at deep discounts prior to issue. When issuers make fortunes overnight with little money upfront you want to run a mile.
And here is the big problem with SPACs. They are essentially roach motel investments, easy to check in but impossible to check out. Liquidity going in is unlimited but coming out is nil. You can often only redeem your investment at a huge discount, or if another buyer is willing to take it out at any price. That makes marks to market challenging at best.
Suffice it to say that if PT Barnum were working in the financial markets, he’d be up to his eyeballs in SPACs.
Personally, I’ll give them a pass. You should too.
The Problem is that it’s a Dummy
Global Market Comments
April 17, 2023
Fiat Lux
Featured Trade:
(MARKET OUTLOOK FOR THE WEEK AHEAD, or PREPARING FOR THE NEXT LIQUIDITY SURGE)
(JPM) (BA), (TLT), (TSLA), (BAC), (C), (IBKR), (MS), (FCX), (CCJ), (NXE), (UEC), (UUUU), (FDX)
CLICK HERE to download today's position sheet.