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☕ Buy tech ahead of earnings? – that’s the wrong question!

Jan 29, 2025

Good morning! 👋

The markets are in a holding pattern ahead of the Fed.

Nothing new there.

Keep your eye on the ball and on great companies.

And remember no matter what happens… rates are for traders, profits are for investors.

Here's my playbook.

1 – A short list of everything the Fed will accomplish when it meets

The Fed meets for the first time on President Trump’s second watch.

Here’s a short list of everything they’ll get done…

…

Sorry, couldn’t resist. 🤦‍

Team Powell got transitory wrong, failed to grasp inflation as it ripped through our financial system, repeatedly sought to destroy our jobs base by raising rates and now threatens to wreck things again.

Experts, mostly academics and pontificators with little or no real business experience whatsoever, say the right thing to do is nothing. But real people who are struggling to make ends meet, who can’t get a mortgage or who cannot operate their businesses have a very different opinion.

And that, my friends, is the crux of the issue.

The Fed doesn’t understand natural market driven interest rates, nor does it understand short-term market movements. Its models are busted – so it does not make sense to count on ‘em.

Financial heresy, I know.

The sooner you get it through your head that the Fed is a sideshow, the sooner your portfolio can thank you.

AI, quantum computing, biotech breakthroughs, digital finance and more will shape the next century—not the Fed's 25 basis points here and there.

Still and for what it’s worth in case you need a Fed fix anyway, expectations are that they’ll hold rates in the 4.25% - 4.50% range, at least according to CME data. (Read) 🤷🏻‍

Keith’s Investing Tip: Wannabes focus on being right, but the world’s most successful investors focus on being profitable (even if they’re wrong). Let that sink in.

2 – ASML just deep sixed DeepSeek fears

Dutch company ASML reported a Q4 double beat – meaning the company beat top and bottom-line estimates. (Read)

Net bookings reached €7.09 billion, +169% QoQ.
Net sales hit €9.26 billion, with net profit reaching €2.69 billion, +28% YoY.

Oh, and btw, China is no longer ASML's biggest market.

DeepSeek my asteroids.

The stock’s up 6.97% as I type but still down -20.71% over the past year. My favorite chip choice, on the other hand, has returned 111.41% over the same time frame.

Hopefully, you’ve got this covered and know how to sort the wheat from the chaff in a situation like this one like members of the OBA Family do. If not and you’d like a helping hand with that kind of analysis, I’ll be here.

Btw, ASML’s CEO sees low-cost AI models driving more demand, not less.

Yep.

Think about it.

There isn’t a single NVDA chip that will go unused because DeepSeek exists, for example. 🤔

3 – Buy tech ahead of earnings?

Tesla, Microsoft and Meta all report today after market close.

Scores of folks are asking ‘Should you buy ahead of earnings?’

Wrong question.

Flip that around… ask yourself why you shouldn’t and what you’ll miss if you don’t.

There’s no sense in being penny wise and pound foolish.

Keith’s Investing Tip: Wall Street’s merry marauders have turned earnings into a carnival sideshow and they’re hellbent on taking you for a ride if it means they can make a buck by doing so. I say don’t give ‘em the chance by using tactics that take away their edge and adopting a longer-term perspective that guides you like the north star through all the shenanigans.

Again, I’ll be here if you need me or would simply like some help. And if you’ve got this covered, cool beans – well done!

4 – Connect a satellite with your iPhone

Apple has partnered with SpaceX and T-Mobile to integrate Starlink satellite connectivity into iPhones. (Read)

For now, this will allow iPhone users - like yours truly when I’m on my motorcycles in the boonies - to send messages, request roadside assistance or even emergency services when we’re beyond Wi-Fi or cellular service. Voice and data will come later according to T-Mobile.

Most investors are going to focus on Apple, SpaceX or even T-Mobile with the news but, in doing so, miss the point.

Global connectivity is the real opportunity here.

Grandview Research estimates the market at $1.98T as of 2024 but sees it growing to $2.87T by 2030, a figure that I think is an order of magnitude low.

5 – Starbucks: Dead money or simply bad coffee?

I popped into a Starbucks the other day, hoping for a quick caffeine fix.

What I got was one of the worst cups of coffee I’ve had in years, handed to me by employees who seemingly couldn’t have cared less if I dropped dead in the drive-thru or at the counter.

Maybe it was a fluke. Maybe it wasn’t.

I’m inclined to think it’s the latter.

Management just reported declining same-store sales, shrinking global revenue, and falling order values. That’s not exactly the recipe for a turnaround like Wall Street would have you believe. (Read)

Putskies, short, or just steer clear.

$75 a year from now or sooner.

Hmmm.