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☕️ What d’ya know, Apple IS an AI leader

Feb 25, 2025

Howdy! 👋

All three indices are down hard this morning as I type.

The official narrative is that consumer confidence has given up the ghost.

While that may be true, it’s not the real impetus here.

Big money traders are driving prices down to clean out the weak hands and buy – yes BUY – shares in names they want to own. Names we talk about frequently.

Mark my words, the next big move will be a rip higher when the Fed – yep, remember those guys 🤦‍♂️ - comes out with something about the need to lower rates as a way of addressing flagging consumer confidence and slack market conditions.

Remember, uncertainty always gives way to clarity.

Profits follow.

Here’s my playbook.

1 – Chegg v Google is the first of many challenges

Chegg, an educational tech company known for homework help, digital and physical textbooks and tutoring, has sued Google, claiming that Google's AI-generated search summaries have harmed its website traffic and revenue by reducing the need for users to click on Chegg's content. (Read)

Ya think??!!

Of course it has.

But that’s the rub and something our legal system isn’t yet ready for.

It's also a key reason why I continue to avoid Google... because I think that this type of challenge is the tip of the iceberg and that the company doesn’t understand its own exposure.

Continue to avoid – there are bigger, better fish to fry.

2 – Forget retail, unless there’s an edge

Home Depot reported, narrowly beating both EPS and revenue estimates. (Read)

As expected and noted in yesterday’s Five with Fitz (See #2), inflation and spending are a) still very much a problem and b) online sales were a bright spot.

What catches my attention is that this was the first positive comparable sales in two years and the company raised the quarterly dividend by 2.20%.

Should you buy it?

Lots of people think it’s a great choice but the numbers tell a different story which is why I’ve repeatedly encouraged you to avoid it.

Seems like I might have been on to something.

HD has returned 9.15% over the past 12 months while the two retailers I prefer have turned in 43.03% and 66.41% in the same time frame because they have a much bigger edge, are far more inflation resistant and have gone considerably farther into AI that is already translating to the top and bottom lines.

MyPOV: At the risk of sounding like a broken record, AI isn't just a tech, it is the tech of all time. Every business on the planet will adapt, adopt, or die. Most investors could double their allocation to it and still not have enough. Construction and DIY aren’t even remotely second fiddle.

3 – What d’ya know, Apple IS an AI leader

As much as I hate to say I told you so, I did.

Last April I said in no uncertain terms on CNBC that Apple is much farther along in AI than people expected. (Watch)

If you recall, people were almost universally negative about Team Cook because they thought Apple was falling behind, not involved etc. In fact, many of the same sentiments you’re hearing about Palantir and Nvidia today were applied to Apple back then.

I said buy.

Was I correct?

Apple has returned 48.04% since my interview versus the S&P 500 which has chalked up a respectable 19.06% as I type.

Wait till you see what happens next!

Keith’s Investing Tip: If you are going to invest by committee – meaning that you are going to invest based on what’s popular or the prevailing thinking – chances are good you will lose every time. Or at least fall behind. The world’s best investors think for themselves, which is why I encourage you to do the same thing.

4 – Hims: betting on one-trick ponies is more dangerous than ever

Hims & Hers reported a better-than-expected Q4 quarter. (Read)

Yet, shares are down ~27% on the day news that the company will likely discontinue compounded semaglutide, a key part of its weight loss offerings, after Q1 2025.

Makes sense.

Smaller companies like Hims live and die by a handful of revenue streams. Yank one, and the whole business can unravel—fast. It’s like pulling the wrong Jenga block and watching the tower collapse in slow motion.

Big companies like those I deliberately prioritize for the OBA Family offer amazing balance sheet strength, high liquidity, and a much broader, more stable revenue streams. Not surprisingly, they tend to do well far longer and under a far wider range of investing conditions.

Hopefully, you're thinking along similar lines.

Keith’s Investing Tip: Too many investors chase small-cap stocks, convinced they’re a straight shot to big profits. Most aren’t worth the paper their stock certificates are printed on. If you’re going to play in this space, choose wisely—because the market sure as heck won’t save you when things go south.

5 – To hedge or not to hedge, that is the question

Just like clockwork.

Every time the markets dip for a few days lately, I get flooded with questions about hedging.

Before you go down that path, there are three things you'll want to sort out in your own head:

1️⃣ What’s your goal, and do you have the skills to execute?

Are you fluent in options strategies? Do you understand portfolio risk? Do you have a solid quantitative background? If not, hedging may do more harm than good.

2️⃣ Are you willing to sacrifice potential profits?

Most investors think hedging is about eliminating risk, when it’s really about shifting it. For example, buying put options may cap downside, but it also eats into returns when markets recover—just like paying for home insurance you never use and cable TV channels you never watch.

3️⃣ Are you playing not to lose... or playing to win?

The world's best investors play to win. Wannabes and amateurs focus on playing not to lose. Hedging can help stabilize a portfolio, but if it keeps you from making bold, smart moves, you’re missing the bigger picture.

I’ve been involved in global markets a long time and if there’s one thing I’ve learned over the past 4 decades it’s that playing offense is always better even if you must think defensively to do it.

Perhaps not surprisingly, the OBA Family tackles risk using four simple steps that are in play at all times:

✅ Buy the best, ignore the rest.

Owning world-class stocks is the first line of defense. The best companies tend to fall less, stabilize faster, and roar back when markets recover.

✅ Think long-term.

Wall Street thrives on short-term panic. We don’t. The odds of a higher close tomorrow? About 53/47. Stretch that to 3–5 years, and it jumps to 80%+. A decade? 93%+. Missing opportunity is always more expensive than trying to avoid risks you can't control.

✅ Use the right tactics at all time.

This isn't rocket science. Wall Street wants you to believe that investing is complicated and that you need them to do it "right." I urge investors to keep it stupid simple using powerful, effective tactics that maximize profit potential and compounding while also controlling risk as part of the buying process, not as an afterthought which is how most people think about it if they do at all.

✅ Use specialized inverse funds when necessary (and if you want).

Select inverse ETFs can help stabilize risk, protect returns, and keep you in the game when markets get rough. They’re not a panic button—they’re a strategic tool.

If you’re an OBAer and you want to know more, I wrote the 5 Minute Guide Hedging Guide which is included in your OBA Membership for free via the OBA portal.

If you’re not an OBAer and this is of interest, you can buy your copy here separately.