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I had the honor of doing a podcast with Ari Gutman last week. I talk about the H.E.A.T. Formula and a bunch of other things.....

Open Your Eyes If You Are Trying To Get Wealthy With Dividends

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Tuesday's episode of The Watchlist

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Our Next Webinar:

Topic: How to Determine the Best Potential Investment Themes.

When: Oct 24,2024 11:00 AM Pacific Time

Register in advance for this webinar:

https://zoom.us/webinar/register/WN_nicbiSSlTwqTDXqOmfd1cA

Why Things Like Factors, Asset Classes, Styles, and Market Cap Diversification are Stupid.

Why most thematic ETFs suck.

How to use first-order, second-order, and third-order thinking to pick stocks and ETFs with the best potential upside.

One below-the-radar theme that could end up being extremely relevant regardless of who wins the election.

For Investment Pros Only

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Tough day in the markets on the back of geopolitics. From a market perspective I don't really worry about war in the Middle East, if I did then I would be in cash almost all the time. I think it creates dip buying opportunities and opportunities to buy puts on VIX ETPs. If you have hedges on and structure your trades and your portfolio for asymmetric risk then nothing much to worry about.

Themes

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Geothermal

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A new theme I am on is Geothermal....

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Geothermal Energy: Unlocking Earth’s Limitless Potential

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Why Geothermal is so Hot Right Now-Spotify

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Fervo is private, but there is Ormat Technologies...

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China

Chinese stocks could be headed for a ‘megarally’ with gains of up to 100%, veteran analyst says-MarketWatch

However, whether the rally can continue will likely depend on whether or not policymakers in Beijing can deliver the combination of monetary and fiscal stimulus that international investors have come to expect.

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Traded out of my FXI counter trend positions yesterday, of course China up big again so far this morning. Not going to chase, some times you miss these smaller themes. If this is going to be a larger theme there will be other entry points, in the meantime I will continue to buy FXI on dips.

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Stanley Druckenmiller says he’s shorting U.S. bonds and staying out of China-MarketWatch

Speaking at Grant’s Annual Fall Conference on Tuesday, the investor said he has “no interest” in China “as long as Xi Jinping is running” the country as he also said short bets on U.S. government bonds now account for around 15% to 20% of his portfolio, according to reports from conference attendees.

On Argentina,

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he described Argentina as a “great investment opportunity” with a “brilliant leader” in the form of right-wing libertarian Javier Milei, who was elected president of the country last year.

Still looking to get back into Argentine stocks when they find some support.

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Gold

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Maybe, but he's a perma bull on Gold, nothing to see here......

Peter Schiff Exclusive: Gold To $26,000?-ZeroHedge

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AI

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NVDA and AAPL made up 46% of the S&P 500 decline yesterday. Each one had cautious analyst comments that most likely led to declines. For AAPL, both Citi and Barclays made comments about soft iPhone 16 demand.

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Apple falls as Barclays flags 'weak demand' for iPhone 16; Citi cuts estimates-Investing.com

Apple Inc (NASDAQ:AAPL) may have reduced its iPhone 16 production orders by approximately 3 million units at a key semiconductor component supplier for the December quarter, Barclays analysts said Tuesday, suggesting “weak demand” for the newest model.

On NVDA, Mind-Chi Kou said....

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Nvidia halting development of GB200 NVL36*2 (dual-rack 72 GPUs version); long-term AI and Nvidia trends remaining positive, but frequent product plan changes likely softening short-term trading sentiment

Long term these are two stocks you need to be in, short to intermediate term the better action in AI is probably in the second order companies.

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Still believe that healthcare and biotech is going to the next AI boom. Not there yet, but when we get there it is going to be massive......

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Here's how AI is set to disrupt healthcare — albeit slowly-Yahoo

According to Morgan Stanley's healthcare forecast, the company's head of US biopharma research Terence Flynn estimates that “[every] 2.5% improvement in preclinical development success rates could lead to an additional 30-plus new drug approvals over 10 years," which would represent around $70 billion.

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PAYX is a stock I happen to own in one of our counter trend models. Going to sell it today as the model has a profit target, which it hit yesterday. They announced earnings yesterday and had some interesting things to say about AI.....

We are excited to announce the introduction of several new products: Paychex Flex(R) Engage, Paychex Flex Perks, and Paychex Recruiting Copilot. These digital and artificial intelligence ("AI") driven solutions are designed to help our clients attract, retain, and engage their most critical asset, their workforce, and will strengthen our ability to achieve our mission to help businesses succeed."

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Nuclear

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Politically Neutral

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ESG Aims to ‘Push Politics Into Business,’ CEO Says-Daily Signal

Stakeholder Capitalism/ESG: A Bank CEO Forgets Whom He Works For-National Review

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ING is a large, listed Dutch bank. That means that its purpose is (or ought to be) to deliver return to its shareholders. And yet, it appears that its CEO believes that it is part of the bank’s purpose to fight the fight against climate change. It’s not. That’s a matter that is up to individuals, should they choose to give up this or that, and, if for anyone else, democratically elected governments.

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Nike’s Sales Fall 10%. It’s Working Off a Jordan Hangover.-WSJ

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Edges

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The contango in VIX ETPs is a structural edge. Add in the fact that VIX needs a reason to stay elevated and you have something that is basically designed to go to zero over time. Doesn't mean you should be shorting it, as days like yesterday show. However, I almost always have VIX ETP puts and love to add or buy them on VIX spikes.

Asymmetrical Risk

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Mark Spitznagel warns we’re in ‘black swan’ territory now, and diversified portfolios are a ‘big lie’-Fortune

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Are we in "Black Swan" territory now? You will know after the fact. That's why we advocate always having hedges in place, being agnostic long vs. short, and structuring your portfolio and your trades for asymmetric risk. Portfolios diversified by style or asset class are definitely a big lie. You need to diversify by:

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1. Methodology: Incorporate methodologies with historical edges like counter trend systems. Integrate with long term themes.
2. Time Frame: Have trading methodologies and long term. If you have options, diversify them by expiration.

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