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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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Coming into this week a few areas don't look extended. Gold miners is one....

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China....

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Coal....

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Copper....

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Themes

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Tesla and Bitcoin Have Soared Since Election Day. We Size Up the Valuations.-Barron's

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Be careful with "valuations". Among the "smart money" TSLA is one of the most hated stocks on Wall Street because of the valuation. People who have been short are getting crushed. I believe investors have always gravitated to larger than life characters on Wall Street. It used to be star money managers like Warren Buffett and Peter Lynch. Then Cathie Wood, which didn't end well. I think the era of star money managers is over, now it's larger than life CEOs. Today we have Elon Musk, Michael Saylor, Jensen Huang, and to an extent Donald Trump with DJT. Not saying these stocks won't go down, and not saying they may not go down a lot. What I am saying is that if you short or avoid these stocks based solely on valuation you could be making a big mistake.

Politically Neutral

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Corporate America Launches Unorthodox Campaign to Gain Trump’s Attention-WSJ

To break into the unusual circle of influence that surrounds Trump, chief executives are discussing whether to try to secure an appearance on Joe Rogan’s podcast. They are buying the Trump family’s cryptocurrency token and emailing tips about spending cuts to Vivek Ramaswamy. Some lobbyists are instructing companies to scrub their websites and corporate policies of language that favors Democrats and instead tout GOP-friendly issues such as job creation.

ESGX

Crypto

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Trump’s Return Heralds Litigation Peace for Crypto-WSJ

Trump’s return to the White House will mean a new era for crypto—with fewer government hurdles. The president-elect, shedding previous skepticism of crypto, has pledged support for the digital-asset industry, whose leaders embraced his campaign. He also wants to curb the independence of agencies such as the SEC and the Federal Reserve.

Bitcoin on track for best November since 2020 – should you invest in it and how much?-MarketWatch

“With the new Trump administration, I feel very comfortable with people investing not just 1% of a portfolio, but up to 5% of the portfolio. For some particularly aggressive investors, who have the financial means to tolerate significant losses, their allocation can even go beyond 5% if they choose to,” according to Edelman.

If you are the traditional buy and hold type of investor I think Edelman's advice makes sense here. I would also do this with an ETF. If you follow The H.E.A.T. Formula then you would do it with options. I've been holding options on our 2x Bitcoin and Ether but there are now options available on the 1x's. You figure out what a "unit size" is for you, pick the strike and the expiration ( I prefer in the money or near the money and as far out as you can afford) and you are done. You max loss is the cost of the option and your gains are potentially unlimited.

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If you are trading Bitcoin it's probably a bit extended here but with all that's going on it could easily get more extended. Here's a chart of our 2x, you could look to see if you can get a dip into the 10 day moving average.

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Same with Ether...

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Weight Loss Drugs

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White House Proposes Big Expansion of Medicare, Medicaid Coverage of Obesity Drugs-WSJ

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Eli Lilly and Novo Nordisk’s Obesity Moat Just Got Stronger-WSJ

Data from their most serious competitor, Amgen, suggests the biotech won’t upstage market leaders

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These charts actually look pretty good if you are a short term trader. Longer term I think you need to see what RFK Jr. and team is going to do here.

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AI

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The AI Race Is Entering a New Stage. Nvidia Won’t Be the Only Winner This Time.-Barron's

Thus far, the generative AI race has been met with a rush to stock up on chips to enable the training of ever-larger models. As the race moves to actually using the models, investors need to be ready for a new set of winners—even if they’re not yet entirely clear.

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Agreed. I think NVDA is a must own, but you need to apply first order, second order, and third order thinking to AI. First order is the obvious names like NVDA, second order thinking is what else do you need to make AI work? That's the data centers, the power, etc. Third order is who are the losers likely to be. Basically anyone who sells information that I could basically get for free with AI.

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Keep an eye on this. Anyone who's used Grok or ChatGPT knows that traditional Google search is now obsolete.....

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Google Search Will Be Unrecognizable in the Future. That’s Just Fine for Alphabet Stock.-Barron's

Barron’s believes Alphabet’s Google business unit will navigate its challenges successfully. It can continue to grow as the kind of questions users ask changes, and as the mix of technologies and revenue sources evolves. We wrote positively about the stock recently and see the potential for shares to reach up to $260 in the coming years.

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I continue to own the stock, but keep an eye on the 200 day moving average here. If it breaks I would probably look to at least cut some exposure and see if I could buy back on an undercut and rally around that 147.5 area.

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Nuclear Energy Wins New Fans—Even in New York State-Barron's

Now, there’s another set of buyers warming to the idea of putting lots of small nuclear reactors all over the country—state governments. New York, Texas, Virginia, Washington and Tennessee have lately started to join the bandwagon. If states fully jump on, it could turn this nascent “advanced nuclear” technology from a buzzy investment idea into a significant source of baseload energy in the country.

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Argentina

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May be? Were have you guys been?

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Argentina’s Markets May Be Turning a Corner. How Trump Could Help.-Barron's

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I still own a few Argentine names, but this market looks extended.....

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