The H.E.A.T. Formula
December 12, 2024
December 12, 2024

The H.E.A.T. Formula

All The News That Isn't Fit To Print

Click Here to subscribe to The H.E.A.T. Formula Newsletter

________________________________________________________________________________________________________________________________________________________________________________

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

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

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.

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.

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

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

______________________________________________________________________________________________________________________________________________________________________________

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

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

Register Below:

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

_______________________________________________________________________________________________________________________________________________________________________________

CPI was in line with expectations and with the market being a big oversold we saw a rally back in the momentum names. This sets the stage for a rate cut next week. I still think the Fed is clueless, as does Mike O'Rourke is seems.............

There is no defensible reason the Federal Reserve should lower rates next week. Chairman Powell has admitted the economic forecast that prompted the easing has been wrong with economic strength exceeding expectations. Changing one's opinion when the facts change does not appear to be a trait of the Powell Fed. In recent weeks, Powell has talked about the US economy being the envy of the world, and affirmed that the United States is at maximum employment. Chairman Powell and his colleagues have argued that monetary policy is at restrictive levels but have provided little more than their opinion to back such statements. In the Fed's "restrictive" monetary policy environment of the past two years, GDP grew 3.2% in 2023 and is set to grow 2.7% in 2024. Those readings are much stronger than the 1.8% GDP growth that Fed officials see as that longer run trend growth rate for the US economy. Financial markets have exhibited exuberant enthusiasm since Election Day. While we can understand the Fed not tampering down on the speculative frenzy, it should not be fueling it. That is exactly what is occurring when an inflationary CPI report that meets the consensus forecast is viewed as cause for celebration because it means the FOMC will lower rates next week.

If the Fed is behind the curve I continue to like precious metals and miners, which rallied yesterday on the CPI news....

The small nuclear plays may have bottomed yesterday....

SMR for example had an undercut and rally at it's 50 day and could be buyable here.

Yesterday, I mentioned quantum and computing and the Google news. Spoke about it with Larry Connors, who is a genius about being ahead of major market themes, he thinks quantum could surpass AI. Interestingly, IONQ continued to drop....

And, RGTI continued to climb....

As did GOOGL. This has been a core holding and still think it should be. Also still kicking myself for not adding when it bounced at the 200 day.

Quantum-computing stocks are soaring as investors place bets on ‘the next big thing’ in tech-MarketWatch

But there is one important distinction between quantum computing and AI that investors should keep in mind. Although there is hope that there could be synergies between the two technologies, quantum computing is still years away from producing a commercially viable product.

Natural gas names perked up yesterday with both EQT and AR having undercut and rally moves.....

PPI is this morning, not expecting any surprises here. Market slightly in the red. I am short a handful of the momentum names, may cover a bunch today.

60/40 and target date are stupid, but this is equally as dumb.....

100% stocks for retirement? A new study says dump the 60/40 portfolio and target-date funds.-MarketWatch