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The H.E.A.T. Formula is a radically different way to look at investing your portfolio.

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H- Hedges, you should always have hedges and be agnostic as to being long or short. Bonds are not a hedge

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E-Edges, you should always look for edges. Preferably these are edges with some sort of psychological underpinning, structural edges, or some sort of barrier to entry.

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A-Asymmetric. Everything you do, be it trades or your overall portfolio, should be designed so that heads you win a lot, tails you lose a little.

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T-Themes. You should always be invested in the top themes. Most everything else is just noise.

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We will continue to build out our resources here to help. In the meantime we have a model Hedges and Edges ETF portfolio.

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Our Next Webinar will be January 23,2025 at 2pm EST.

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How to Make Money In Markets During 4 Years of Trump

-Three Major Investment Themes Nobody is Talking About

-Why Crypto is a Must Own and How to Trade it With Asymmetric Risk

-Three ETFs That You Want to Almost Always Be Short

-Dangers of Covered Call ETFs and a Better Approach

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Register Below:

https://attendee.gotowebinar.com/register/980141392770803292

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We are doing something new, we will be hosting The Watchlist every Thursday. Jeremy Vreeland (Bullish Bears) and I will be discussing stocks we are currently watching, buying, or shorting. We will also be discussing how to structure trades for asymmetrical returns and we will take your questions. Click below to register:

https://register.gotowebinar.com/register/1497212025166258773

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Going to be on the Schwab Network tomorrow at 9:45AM EST

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https://schwabnetwork.com/

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Just published an article on Seeking Alpha about using AI in trading, it's behind a paywall though unless you are a subscriber:

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The New Trading Frontier: How AI Keeps You One Step Ahead

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Yesterday's selloff at the open was extended and snapped back on the S&P 500, but under the surface a lot of the momentum stocks got crushed. Little bit of a rally this morning, but PPI is today and CPI is tomorrow. Watch rates, going to be hard to get a meaningful bounce if they keep moving up.....

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Another area Jensen talked about last week was self driving cars....

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I asked GPT for the winners......

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If self-driving cars truly become a multi-trillion-dollar industry—as Nvidia’s CEO Jensen Huang suggests—the top beneficiaries among publicly traded companies heavily reliant on AV technology could include:

• Mobileye (vision & ADAS solutions)
• Luminar/Ouster (lidar sensors)
• Ambarella (vision processors)
• Aurora & TuSimple (pure-play autonomous trucking)
• Tesla (FSD software subscription model)

Nvidia is also poised to capitalize on the AI-hardware demand—though automotive is a smaller part of its broader AI empire. Ultimately, each of these companies depends significantly on the success and scale-up of autonomous vehicles, making them high-risk, potentially high-reward plays if (or when) self-driving truly takes off.

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Of course this is still highly speculative.....

Why AI Investors Should Worry About the Self-Driving Car Crash-Bloomberg

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Cadiz (CDZI) was recently brought to my attention......

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It's a speculative play on the California wildfires.....

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1. Quick Refresher on Cadiz Inc. (CDZI)

• Business Model:
  Cadiz Inc. is primarily focused on water resource development and conservation in Southern California. It owns significant land in the Mojave Desert and has long promoted a project to store and deliver water to drought-prone urban regions.
• Why It Could Be Relevant Post-Wildfires:
  California’s wildfires often highlight the state’s broader climate and water-management challenges. In theory, efforts to rebuild and better manage resources could increase focus on water infrastructure and storage solutions—potentially benefiting companies like Cadiz if policymakers and municipalities emphasize new water supply projects.

2. Key Factors to Consider for CDZI

1. Project Approvals & Regulatory Environment
   • The viability of Cadiz’s water project(s) depends heavily on regulatory approvals and legal challenges. Historically, these have been hurdles (e.g., environmental concerns, pipeline permitting).
   • If state or local authorities push for additional water infrastructure to improve resilience, that could be a tailwind—assuming Cadiz is well-positioned to supply or store water for fire-prone regions.
2. Financing & Partnerships
   • Large-scale water projects are capital-intensive. Cadiz’s ability to secure funding, form partnerships with local utilities, and finalize off-take agreements is critical.
   • Investors might watch whether new legislation or post-wildfire funding packages allocate resources that could help Cadiz’s project move forward.
3. Timing & Uncertainty
   • Even if wildfires increase awareness of California’s water scarcity, bureaucratic and legal processes can be prolonged. Immediate wildfire rebuilding efforts may focus on power lines, housing, and other infrastructure before water initiatives get traction.
   • Short-term catalysts might be limited unless the company secures a major permit or wins a legal battle, which can rapidly change sentiment.
4. Market Sentiment & Volatility
   • Cadiz has a history of stock-price volatility tied to headlines about its water project. Positive news on permitting or legal wins can lead to sharp rallies; negative or delayed news can cause sell-offs.
   • It remains a relatively niche, speculative play compared to more diversified utility or infrastructure companies.

3. Pros & Cons in Light of the Wildfires

Pros

1. Heightened Awareness of Climate Resilience
   • Wildfires underscore California’s broader environmental challenges (including drought). This can drive political momentum for water infrastructure, where Cadiz may benefit if its water supply solution is adopted.
2. Potential Infrastructure Funding
   • State or federal disaster-relief/infrastructure bills might include water projects or new funding mechanisms. Cadiz could see ancillary benefits if it aligns with public goals.
3. Long-Standing Asset Base
   • Cadiz owns significant desert land and water rights. If demand for alternative water sources intensifies, that asset base could gain strategic value.

Cons

1. Regulatory Hurdles Remain
   • Environmental groups have opposed Cadiz’s project for years, citing ecological impacts. Wildfire rebuilding alone doesn’t guarantee streamlined approvals for new water extraction pipelines.
2. Uncertain Short-Term Financial Gains
   • Even if sentiment around water projects improves, it can take years for deals to finalize and for revenue to flow. Investors may not see immediate returns.
3. Project-Dependent Business Model
   • Cadiz’s success is tied almost exclusively to the ultimate success of its flagship water project. If it stalls or encounters new legal roadblocks, the stock can underperform regardless of broader climate narratives.

4. Conclusion: Is CDZI “a Good Investment Here”?

• Speculative Opportunity:
  • If you believe California’s climate challenges will lead to expedited water infrastructure solutions—and that Cadiz’s project will secure necessary permits and partnerships—CDZI could see a significant upside.
  • The post-wildfire focus on resilience might bolster political will for such projects.
• Risk Factors:
  • Cadiz faces ongoing legal/regulatory uncertainties and has historically seen slow progress.
  • The stock can be volatile and often moves on news about the project’s legal/political status, making it risky for more conservative investors.

Final Take:

• CDZI might be positioned to benefit if the wildfires spur accelerated action on water infrastructure and if Cadiz’s project wins the regulatory race. However, it remains highly speculative. Investors considering it would likely want to:

1. Monitor permitting/legal developments closely.
2. Assess the company’s financing and partnerships.
3. Be prepared for potential volatility and delays.

Whether that risk-reward profile suits your portfolio depends on your time horizon and risk tolerance. If you’re comfortable with speculative plays tied to a single major project, CDZI might be interesting. But if you prefer a more diversified approach to climate resilience or water infrastructure, there may be less project-specific alternatives with lower regulatory risk.

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I've been short regional banks for a bit now (SKRE) but did asked GPT for a specific list of publicly traded regionals that could be impacted by CA wildfires....

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Bottom Line

PacWest Bancorp, Banc of California, Pacific Premier Bancorp, CVB Financial, and East West Bancorp each serve Southern California, potentially giving them some exposure to wildfire-risk areas through residential and commercial loans. However, actual credit risk from wildfires can be mitigated by insurance requirements, diversification, and possible loan securitization. As always, investors should review official filings and management commentary for specifics on each bank’s loan portfolio distribution and fire-related risk management.

(PacWest was bought by somebody, think BANC, GPT doesn't always get it right)

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Another Mag 7 CEO talked down quantum stocks.....

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Zuckerberg is no ‘expert’ — but still sparks plunge in quantum-computing stocks-MarketWatch

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I did buy some dips and I understand that these names are highly speculative, so if you do buy make sure you size accordingly.

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I asked GPT about suppliers to Quantum computing, figuring even if it is years away from being viable, if you are working on it then you ought to be buying stuff from other companies. Nothing interesting yet, but something to watch......

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Currently, there is no large, publicly traded “supplier” that gets the majority (or even a substantial percentage) of revenue from IonQ (IONQ), Rigetti (RGTI), Quantum Computing Inc. (QUBT), or D-Wave (QBTS). Most real “quantum supply” names are either:

• Private (e.g., Bluefors, Qblox, Toptica), or
• Large, Diversified Corporations (Keysight, Oxford Instruments, Coherent) where quantum sales are only a minor line item.

For investors seeking an indirect quantum supply chain play, exploring bigger, diversified public names like Oxford Instruments or Keysight might be a partial angle—just note that any quantum-related revenue is not a dominant factor in their overall valuation at this time. As quantum computing scales, these suppliers could see incremental benefits, but near-term, their core businesses lie in other domains.

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Bond-market selloff fuels options-trading frenzy as bets on a rebound surge-MarketWatch

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I'd suggest a different trade, using a call credit spread on TLT to finance calls on TMF (3x TLT).  You need a big move, just like you do on the out of the money TLT calls, but if TLT continues to drop you could break even on this trade.

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Before you go: Here are ways I can help

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1. ETFs: We offer innovative ETFs that cover all aspects of The H.E.A.T. Formula, Hedges, Edges, and Themes.
2. Consulting: I'm happy to jump on the phone with financial advisors at no charge. I've built a wealth management firm and helped other advisors grow their practices through the use of substantially differentiated investment strategies. If you want to talk just send me an email at mtuttle@tuttlecap.com
3. Monthly investing webinars
4. Weekly trading strategy podcast
5. Weekly investing podcast-Coming Soon
6. Wealth Management-Coming Soon

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