☕ What should investors do now

Good morning! 👋 

No sense in crying over spilt milk. 

We’ve done the whole bull/bear debate so many times. 

It’s moot.  

The selling will stop when the fear creeping in around the edges subsides.

If you’re worried about what happens over the next 24 hours, you’ve got a 51.3% probability that the S&P 500 closes higher. I know because we run these numbers nightly as part of our analysis. But go out 5 years, now you’re talking 81%. 10 years and you’re talking 93.2%. 

Structurally, the markets are ready for take-off but NOT all stocks are going to be treated that way. The list of companies I want to own continues to get narrower and narrower.

People arguing for diversification this morning are playing to not lose (which, I am sure you have noticed doesn’t work when everything gets carried out feet first) but the real secret is playing to win.

Do yourself a favor... buy the best, ignore the rest. 

Your portfolio WILL thank you eventually, even if it doesn’t feel that way now.

Here’s my playbook. 

1 – What should investors do now 

The super-savvy Stuart Varney invited me back for a conversation ahead of this morning’s opening bell and asked me three questions straight away: (Watch) 

• What should investors do now? 

• What am I buying and why? 

• Why not go to Treasuries? 

Remember, the strong feed when the meek retreat. 

Keith’s Investing Tip: I don’t mean to make light of all the selling or the fear that inevitably surfaces whenever Wall Street gets in a foul mood. Just understand this. Any fear you’re feeling is a catalyst for growth, knowledge and yes, profits. Contrary to what people think, it’s not something to be exploited at your expense but an emotional input you can learn to recognize, overcome, and use to your advantage. 

**OBAers, Hopefully you're enjoying the August issue including the new recommendation intended to profit from the dramatic recent rise in volatility. Talk about what just may be perfect timing - well done, everyone!

2 – Read this if you are scared 

Millions of investors are flipping out this morning because they’re figuring out the hard way (yet again) that they’ve been speculating. 

Thankfully we – you and I - don’t have that problem. And to make sure we don’t fall into that trap, I want to give you some homework. 

Pick an annual report from one of the great names we talk about frequently. Apple, Microsoft, Costco, Palantir... heck even Meta. 

Read it. 

Not scan it, not gloss over it. 

READ it. 

I think you’ll agree that there are some darn smart CEOs running great companies.

Assuming you want to do something about it, now’s your moment. 

3 – Speaking of Apple ... 

People are falling all over themselves because Unka B. sold out. 

There is no other way to say this except to be blunt.  

Are you flippin’ kidding me!?!?!?!? 

He didn’t “sell out” nor did he abandon Apple. 

• Buffett is STILL a top shareholder. 

• His "leftover" Apple position is roughly double the size of his next largest holding, BofA. 

So why would he sell? 

For the same reasons any other rational investor – aka you or I – would. 

My guess is one of three things: 

First, Buffett could simply want to reduce concentration risk – that's normal. 

Second, Buffett could want to buy something else so he’s raising cash, harvesting gains, minimizing taxes etc – that's normal. 

And third, he might simply have taken a hard look in the mirror after Munger’s death and realized that selling a bunch of Apple now minimizes problems for whomever takes over after he passes – that, too, is normal. 

If you’re tempted to fawn all over the man, I get it. 

Just remember that Buffett famously “missed” Apple for years before realizing the error of his ways and subsequently becoming one of its largest shareholders. 

4 – Palantir reports 

Team Karp reports after the bell. 

Hooyah! 

Simple proposition. 

1. Palantir plays a critical role in our national defense... and that’s not going away any time soon. If anything, it’ll grow as threats mount in an uncertain world. 
2. 95%+ of companies are spending money or will spend money on big data analytics, a multi-trillion-dollar opportunity annually growing at double digits for at least the next decade. 
3. Customers cannot get enough AIP which is an amazingly brilliant way to expose and convert customers who immediately get a taste via bootcamps.  

I think we could see $700+B in sales this quarter. I’ll also be watching margin. 

Sell off? 

No. 

On sale? 

Yep. 

5 – An observation  

I've been doing this a long time and without fail when everything is getting sold by everyone, somebody’s in trouble. The rumor mill is strangely quiet which only reinforces my gut instincts.  

If I had to guess, somebody – probably a sovereign wealth fund from a “less than friendly state actor” - may have gotten caught offsides. Historically these crews tend to love leverage and lack the tools to manage it. 

This smells like a forced de-leveraging on par with the Archegos situation in 2021 or Long Term Capital Management in 1998. 

Just sayin’. 

Bottom Line 

People have doubts about themselves, about the markets, about life.  

That’s normal.  

However, that’s also why I insist you MAKE it a great day.  

Don't let anybody or anything stop you, not in life and certainly not in the markets. 

You got this – I promise! 

As always, let’s MAKE it a great day and a great week – thanks for reading along. 

Keith 😊