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Why I won’t buy a 5% Treasury—yet

Oct 02, 2023

Good morning! 👋

There’s not a lot in the news that we haven’t talked about ad nauseam.

So, let’s keep it brief.

The budget is a sideshow and sadly, as my ace editor SJ has pointed out, more “Here we go again” rather than “Hooray, they did it.” Congress thinks all the posturing builds credibility, but what they fail to realize is that that was gone a long time ago in the eyes of the average taxpayer.

Anyway, you can’t let that kind of stuff keep ya down.

This isn’t our first rodeo, and we know how to make it to the buzzer!

Here’s my playbook.

Billionaire Bill Ackman says Fed likely done hiking

Is he right? (Read)

I wouldn’t take that bet until JPow has a “transitory” moment and realizes that he’s crashed the party yet again.

Meanwhile, I’m going to be hunting for great companies with rock-solid dividends, low beta, and muuuuuuuuch higher-than-indicated yields. Upgrade to Paid

OBAers, keep an eye on your email because I’ll explain exactly what I mean AND give you two examples that should put a huge Cheshire Cat grin on your face. Or at least that’s what I’m hoping will happen! 😊

Why I won’t buy a 5% Treasury… yet

The fabulous Stuart Varney asked me this morning whether or not I’d buy a 5% Treasury in pursuit of safety. It’s a GREAT question, and I certainly understand why many investors find that an appealing idea.

Here’s why I’m not. (Watch)

Yet.

In case you’re wondering…. Yes, the day will come when we begin to play on the long end of the interest rate curve, but that’s not quite here.

History shows very clearly that the more immediate concern for any investor with a 3-5 year horizon at moments like the present should be missing opportunity rather than trying to avoid risks you cannot control.

Huawei’s revenge and Washington’s naivete

The US has made no bones about keeping China in the dark ages when it comes to chips because of concerns related to military, AI, and ongoing supercomputing development.

China didn’t get the memo.

China’s newest Huawei phone is only about 4 years behind in terms of chips, despite egregious sanctions, controls, and manufacturing restrictions. Not to mention those inside the Beltway who have deluded themselves into thinking they can keep Beijing a decade or more behind the proverbial 8-ball.

I’m not surprised.

Huawei’s new phone is a signal saying that “in terms of chip production, we will not be stopped.” (Read)

Ya think??!!

According to Bloomberg, “The Chinese government has laid out plans to spend more than $150 billion in its domestic semiconductor industry between 2014 and 2030.”

Meanwhile, anybody making custom silicon here is a reasonable bet; I have my favorites and hope you do too.

Tesla delivers 435,059, and that’s bad??!!

Tesla reported 435,059 deliveries, which is lower than the 461,640 expected, according to a poll by StreetAccount. Production, meanwhile, was 430,488 vehicles. Barron’s jumped on board quickly saying, “they are bad,” as did other financial news sites with stories about how the company “missed” or something similar.

No doubt the stock will drop in today’s session.

If this bothers you, let me ask a really silly question.

Do you really think a bunch of analysts who are surveyed by a pollster really know Tesla better than Tesla’s executives? Or that a journalist like Allen Root of Barron’s—who by the way IS a fabulously intelligent and great reporter with real industry brokerage experience—does?

They might, but I wouldn’t bet on it.

What I would bet on is Tesla.

The only thing naysayers have gotten right from the beginning is that they’ve consistently underestimated Team Musk. At the risk of sounding like a broken record, betting against Musk today is like betting against Jobs back in the day.

Tesla stock has returned 1,317% over the past 5 years and 1,866% over the past 10, according to FinMasters. The SPY, a popular index fund tracking the S&P 500, has chalked up a very respectable but far less 59.96% and 203.90%, respectively, over the same time frame.

Goldman Sachs adds Nvidia to “conviction list”

Talk about a day late and a dollar short. (Read)

NVDA has returned 524.59% over the past 5 years, even after all the selling, according to FinMasters data.

I wonder when the company will add Apple because it’s getting into medical devices, a story I broke in 2014, but who’s counting??!!

Nvidia will report on November 21, just ahead of Thanksgiving. I think the numbers are going to be a lot stronger than people expect, which is why picking up a few shares now makes sense.

My guess is that big-money traders are just about done shaking the weak money out, which is why they’ll shift to an upside drive into November, a repeat of the pre-earnings behaviour we’ve seen quite a bit of recently.

Longer term, I also believe that the company’s earnings could ignite a bull run into 2024 that catches anybody not in the game by surprise. An opinion I share with tech star and colleague Dan Ives of Wedbush.