☕️ Buy the best, ignore the rest: Palantir & Nvidia

Howdy! 👋 

We had some green on the screen as the markets opened this morning, but both the S&P and Nasdaq have since rolled over. 

Makes sense. 

Market makers and brokers are undoubtedly clearing out a boatload of orders either left over from Friday’s sellers or those who got nervous over the weekend that it would continue. 

Good! 

That means better prices for the stocks I want to own, better compounding from reinvesting and better upside ahead. 

Trust the numbers! 

As I noted in last night’s short, the S&P 500 has sold off more than -1.71% in a single day (like it did Friday) ~142 times since 1929. And 72% of the time it's been higher a month later, 77% of the time it's been higher a year later and virtually 100% of the time higher a decade later. 

Here’s my playbook. 

1 – Buy the best, ignore the rest: Palantir & Nvidia 

I sat down with the venerable Stuart Varney who asked me why I’m still buying Palantir and Nvidia ahead of this morning’s opening bell, here’s what I had to say. (Watch)  

While we’re on the subject, Nvidia’s upcoming earnings report may be the single most watched call all season. 

There’s no question in my mind that the numbers are going to be strong but it’s the rate of growth that’s going to be the media’s focus. I’ll bet you will be able to hear a church mouse when the call starts but I digress. 

The spreadsheet crowd is already blathering on about the law of large numbers, PE ratios and valuations because they’re looking for reasons that Nvidia’s growth (which many have missed) cannot be maintained. They also continue to apply boom and bust type thinking which is a classic mistake when it comes to tech and to AI specifically. 

Nvidia has a lock on supply (which is accelerating), 80%+ market share (at a time when usage is exploding) and is now so critical to AI that it’s likely booooooooommmmm for a lot longer than people expect. 

I hope I am smart enough to buy considerably more shares in the months ahead. 😏 

And on a related note… 

2 - Sometimes what you don’t buy is every bit as important as what you do 

In this case Home Depot and Lowe’s which also report this week. (Watch) 

I visit both chains every week because I think what I see there is better than any government inflation or spending indicator.  

MyPOV is that inflation and spending are still a problem as long as customers continue to buy sinks rather than redoing their entire bathrooms. 

Both companies are probably going to report modest growth, higher expenses and perhaps a slight decline in earnings.  

Home Depot has the edge online and a larger pro base than Lowe’s which is more exposed to the DIY bunch of which I am a card-carrying member.  

I would not be surprised to hear discussion from either/both about how the immigration crackdown may impact sales given the number of illegal workers reportedly in the construction trade in recent years. It will be interesting to see how both CEOs tackle that one. 

Keith’s Investing Tip: Investing successfully over the long term requires carefully balancing your alternatives. Why for example, would I buy HD or LOW and be content with 4-6% growth a year when I could pick up shares in Palantir that have done 291.85% over the past 12 months and could easily double again from here in the next 24-36 months to $200. No doubt you see my point. 

3 – The biggest investment in America yet 

Apple is committing $500 billion over the next four years to expand manufacturing, AI, and R&D in the U.S. (Read) 

This includes opening a 250,000-square-foot server facility in Houston to manufacture servers for Apple Intelligence. 

Two thoughts here: 

1. Smart move by Cook to defend against tariffs and compliment the current administration’s push to promote US leadership in AI and tech innovation; and, 
2. Helps train up another generation of manufacturing expertise which will undoubtedly be predisposed to the “Apple way.” 

On a related note, there’s a report breaking that Microsoft is unwinding AI data centre leases, but I haven’t had time to dig in. My first thought is that this could be a problem for the whole nuclear data centre fan club and stocks like Okla but, again, I’ll need to take a deeper look.  

Don’t forget that Tesla is also reportedly working on making its own chips. 

I also continue to think that this could be the end of Intel as we know it. 

4 – Why Berkshire is really sitting on $334.2 B in cash 

Berkshire Hathaway posted operating profit of $14.53 billion in Q4, representing a 71% increase YoY. According to the numbers, Team Buffett is sitting on $334.2B in cash. (Read) 

People are quick to jump to the idea that Buffett sees something the rest of us mere mortals don’t, but I have a hard time imagining that’s true. 

I think there’s a far simpler explanation. 

Buffett is undoubtedly keenly aware his days are numbered and he’s simply raising cash so that the next generation of managers isn’t held back by the nagging question WWWD – What Would Warren Do after he’s gone. 

I expect Berkshire to drop when the time comes and may just have to think about buying a share or two if the sale is steep and deep enough. 🤔 

5 – The needle vs. the haystack: Why digital clearing outshines Cryptocurrency 

First Coinbase, now Robinhood. 

Robinhood is reporting that the SEC has dismissed its crypto investigation which is being widely interested as a sign of easier regulation for industry. (Read) 

I agree. 

But I’d rather invest in digital clearing. 

Crypto’s great and all but it’s still “just” an asset that depends entirely on the vision those who own it have. Put another way, the intrinsic value of cryptocurrencies remains tied to market sentiment and the vision of their community.  

By contrast, digital clearing – at least as I define the term anyway - represents a strategic investment in the foundational technology that supports the entire global digital economy and, as such, encompasses broader applications such as central bank digital currencies (CBDCs) and other digital financial instruments. 

My favorite choice has returned 45.27% over the past 12 months versus the S&P 500 which has chalked up 18.07%. 

I hope you’re thinking along similar lines when it comes to your investing. There’s a big difference between buying the needle and buying the haystack. 

Btw and as always, I’ll be here if you need me. 

Bottom Line 

Your job as an investor or trader isn't to figure out where the markets go next.  

It's to recognize that they're in motion, then act on the signals created. 

As always, let’s MAKE it a great day. 💯 

You got this – I promise!  

Keith 😀