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☕ Don't be an Apple Ballmer

Jun 11, 2024

Good morning! 👋

The markets are selling off as investors “gear up” for the Fed, or at least that’s the official story.

Not.

We’ve seen this movie so many times we know the script by heart.

The Fed will grouse about vigilance, inflation being stickier, tougher to deal with etc... none of which amounts to anything more than buzzword bingo.

The news will pick up on the so-called ‘dot plot’ and there will be an endless parade of experts on TV talking about what that means. Various Fed officials and governors will have ‘mic moments pontificating about why they think that there should be a cut, standing pat or even an outlier on a hike.

Traders will sell (which is happening this morning) because they believe recent inflation/jobs data makes it less likely the Fed will cut and the cost of all the debt they use to magnify their results more expensive. If the Fed says, meh... they’ll buy.

It’s a whole lot of mental floss, not much else.

Which is why smart investors – including you and me – will use the opportunity just like we always do... to play offense.

Why?

Because history shows very clearly that’s how you make the big bucks, build real sustainable wealth you can count on and - as the fabulous Suze Orman would remind you - “master your money.”

It’s very simple.

Play to win!

Or don’t play.

It is always YOUR choice and there’s always a path to profits!

Keith’s Investing Tip: Wannabes worry about being right. The world’s most successful investors focus on being profitable. Big difference!

Here’s my playbook.

1 – Oracle for the win

Oracle reports today after the bell.

A once legendary name, now it’s more like, ‘huh.’

Still, Oracle is really the only earnings report that interests me this week.

The company stands between the AI players (MSFT, NVDA) and enterprise software players like SalesForce.com who got pasted recently on a revenue miss.

Oracle's cloud business has been growing faster than AWS and Google Cloud so any news in that space could make things spicy. I’ll also be watching for anything regarding partnerships with Microsoft and Palantir.

Ordinarily, I’d take a hard look at a straddle to play the possibility of a rise or a fall simultaneously. But in this case, I think big money traders are using a recent ratings upgrade and AI hype to lay a trap for retail investors buying ahead of earnings. That suggests the real play from a trading perspective is a quick post-earnings downside move.

Remember... think like a shark, not a minnow!

Trade Idea: Buying ATM puts mid-day could work nicely under the circumstances if I’m right and particularly if there’s any kind of upside drive into the closing bell. Plan on exiting tomorrow no matter what. This is an in and out, not an investment.

Note: Please do NOT even remotely think about trying what I am suggesting if you have no idea what I am talking about. This is a speculative trade idea for those with the money to burn and the discipline to understand the risks involved.

2 – Don't be an Apple Ballmer

Apple rolled out its AI plans yesterday and the markets are almost totally underestimating the company’s plans imho. (Read)

Good.

Shares are still cheap, or at least inexpensive.

Make no mistake about it... what Apple is doing is very different from competitors and will spark an entirely new stream of revenue the markets don’t yet recognize.

Just like the iPhone did.

Don't be a Apple Ballmer (Watch)

3 – Pay with your finger

Mastercard has announced that it’ll stop requiring Europeans to enter their credit card numbers manually when checking out online. Apparently, you’re going to need just your finger (or some other biometric information) which, of course, will be duly tokenized. (Read)

The company claims it will dramatically reduce fraud.

I’m not sure I agree because bad actors will simply find another way to ply their trade.

Continuing to invest in cyber-security makes all kinds of sense.

One of my faves just hit a new record and shares have returned 547.96% over the past five years while the SPY has logged “just” 100.43%. The OBA Family, of course, knows all about it and I’d love to have you on board if that’s appealing. (Upgrade to Paid) If not, no worries.

4 – Harry Dent’s at it again 🤦‍♂️

Doomsayer economist Harry Dent is back. (Read)

This time around calling for the “crash of a lifetime” he says will be worse than the 2008 recession.

Should you worry?

Dent’s a smart guy and his argument is certainly alluring.

Just remember that Dent...

Predicted massive prosperity in 1994... and the stock market gained 1%.
Called for an astounding boom in 1999... and the Dot Com bomb blew up.
Said boom again in 2004... only to see the Global Financial Crisis roil markets in 2007-2008.
Predicted a depression of staggering magnitude in 2009... only to watch from the sidelines as the market doubled over the next 12 years in one of the single longest, strongest bull markets on record.
Called for Dow 3-5,000 if Trump won. It's currently 7X higher.
Said there would be a –45% downturn in June 2021, which he doubled down to a –80% decline by Thanksgiving that year. Instead, the markets hit new highs.
And last year said there would be a recession and another “big wave” to the downside. The S&P 500 returned 26.20%.

Eventually, Dent’ll get it right and claim vindication.

That's how permabears, naysayers, the doom and gloom crowd work.

Fear sells.

I’d rather see you focus on profits.

And investing in optimism is how you get ‘em.

Permabears positively hate this chart

No doubt you see my point, pun absolutely intended

5 – A dividend worth a look

Enterprise Products operates midstream energy infrastructure and uses a fee-based model that makes it like a toll road for dinosaur juice. (Read)

Q1 revenues are up 18% or so while income is +5%.

Might make the dividend appealing if oil prices stay flat. The shareholder yield is lower than I’d like at ~6% versus a stock I prefer but still, 7.2% listed yield is intriguing if it’s sustainable.

Double hmmm.