Worried about an Nvidia rug pull?

Good morning! 👋

Tech is back in the driver’s seat ahead of NVDA earnings, with the Nasdaq tacking on 1.6%, its biggest advance this month.

No surprise.

The Investment Company Institute reports that total assets in money market mutual funds have now hit a record $5.57 trillion for the week ended August 16. (Read)

Talk about a contrarian signal!

Research from Barron’s, DALBAR, and others shows very clearly that individual investors usually do exactly the right thing at precisely the wrong time… meaning they buy when they should be selling and sell or seek safety when they should be buying.

Use that to YOUR advantage, or somebody else will!

To paraphrase the late Sir John Templeton, an investing legend and mentor, the best time to buy is when others are selling despondently or, as the case may be at the moment, in search of safety.

Here’s my playbook.

NVDA pre-earnings boost—watch for the rug pull

AI giant NVDA reports tomorrow, and analysts expect fireworks, according to The Street. (Read)

Fireworks may be an understatement.

As I noted yesterday during an appearance on Varney & Co, I see $700 a share in 36 months or less, perhaps a split as well. (Watch)

Meanwhile and tactically speaking, I can smell a rug pull coming.

What would that look like?

Simple.

Traders know that FOMO rules, so they’ll push prices up as high as they can ahead of the report to suck in the FOMO crowd. Then orchestrate a rug pull using some variation of the 0DTE Options I wrote to you about last Friday or similar shenanigans to accomplish a sharp move lower.

Investors who don’t know how the game is played will freak as prices drop, especially those who were among the last to buy.

That’s almost always a monster opportunity!

If you’re a trader…

1. Ride the FOMO for a few points if you’re long, then sell covered calls just ahead of tomorrow’s closing bell to lock in profits or capture higher-than-normal call-side volatility.
2. Purchase a few speculative putskies ATM (at the money) by mid-day as a way to harvest any sharp, quick downside shenanigans.
3. Sell cash-secured puts “deep and steep” if there is a rug pull to capitalize on higher-than-average volatility.

If you’re an investor, continue to accumulate shares!

NVDA has returned 642.83% over the past five years while the S&P 500 has tacked on a very respectable but still far lower 67.16%, according to Koyfin. I can easily envision more upside.

Deepfake AI imposter scams a $10T problem... err, opportunity

According to FTC Chair Lina Khan, AI-based schemes are “being used to turbo-charge fraud.” Since COVID, online banking has exploded... and so has the level of financial crime. (Read)

For example, fraudsters used to make calls pretending to be a family member in urgent need of money. AI is able to “clone” the voices of your kids so perfectly that they’re indistinguishable from the real person.

We’ve talked about this extensively over the years and, in fact, prepared accordingly in One Bar Ahead®. Upgrade to Paid

Meanwhile, the takeaway is that you had best be investing in companies that help fight cyber-crime because it’s about to be a $10 trillion problem.

Or an opportunity of epic proportions.

Dick’s reminds me of Sears

Dick’s Sporting Goods just biffed it—and badly at that—while reporting misses on both the top and bottom lines. Shares got torched in pre-market trading as they fell 20%. (Read)

CEO Lauren Hobart says, “Despite moderating our 2023 EPS outlook, the enthusiasm we have for our business and the confidence we have in our long-term growth opportunities have never been stronger.”

You’ve heard me say a dozen times that retailers will struggle, particularly when it comes to big-boxers like Dick’s. No matter how much money they invest in “talent and tech,” they cannot prompt consumers to spend money they don’t have.

Short or, preferably, avoid entirely.

Reminds me of Sears, Bed, Bath & Beyond, Party City, and a dozen other once-proud names that have seen better days.

S&P bank downgrades in firm command of the obvious

S&P Global has become the latest ratings agency to demonstrate that it’s in firm command of the obvious by downgrading multiple banks. (Read)

Begs the question... two, actually:

1. Where were these people before the you-know-what hit the fan earlier this year when SVB roiled markets??!!
2. What are the regulators—you know, the guys with the rulebooks—actually going to do about it?

Ratings are bought and paid for and, as is the case with a lot of the financial system these days, a complete waste of time.

We’ve been talking about rising real estate, lending, and business risk for over a year now. Moreover, I have repeatedly encouraged you to sidestep the entire mess—and I hope you have.

There’s only one bank worth owning right now—and I recommend that you continue to accumulate shares! Upgrade to Paid

Props to El Zucko

As much as I love to hate META, I’ve gotta give it to CEO Mark Zuckerberg.

Threads is now available on the web, which means—you guessed it—his cage fight with Elon Musk just took on an entirely new front. (Read)

Interestingly, Meta is not planning to monetize the Threads app “until its web version is more established,” which strikes me as Zuck-speak for having a plan in place to data mine every last pixel for profit.

Not that I’m cynical or anything. [face palm]

I’m still not planning to own the stock but may have to take a hard look at using Threads, even though Twitter is still the only game in town.

Bottom Line

People talk about having conviction all day long when prices are rising.

But here’s the thing.

You don’t prove conviction on the mountain tops.

You prove it in the valleys.

As always, let’s MAKE it a great day.

Keith 😊