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

_______________________________________________________________________________________________________________________________________________________________________________

‍

Bit of a snapback so far this morning. Keep an eye on rates.....

‍

Fed minutes are today as well.

Themes

‍

Quantum Computing

‍

‍

Quantum names all selling off on this. My sense is there will be a dip buying opportunity but probably not right away. A name like RGTI has still gone from under 2 to over 18 in a month.

‍

‍

This is one of the reasons that A-Asymmetry is part of the H.E.A.T. Formula. One of the things I like about options is that your risk is clearly defined as your amount of premium. You can then define exactly what that is. Personally, for more speculative stocks it's less than it is for less speculative stocks. Currently, the only quantum name I'm in is IONQ, which is down 9% pre market. If you hold a portfolio of stocks and one is down 9% that can be a big drag, with options it's usually not as much of an issue.

‍

This did get me thinking though, if quantum computing is a ways away it is still being worked on. That may not be helping the obvious first order quantum names, but they would be buying the products and services they need to develop it.......

‍

"If quantum computing is 15 to 30 years away from being viable what companies are involved in providing the products and services to the companies that are currently working to make quantum computing a reality" Chat GPT Pro

‍

The query gave me a long list of names, as the summary points out though quantum is currently a small part of what they do, still something to keep an eye on...

‍

Summary

To invest in the suppliers behind quantum computing’s R&D today (knowing commercialization may be decades off), look for:

1. Cryogenic & Vacuum System Providers
2. Test & Measurement Equipment Specialists
3. Semiconductor Fabrication Toolmakers
4. Photonics & Laser Companies
5. Advanced Cooling & Gas Suppliers
6. HPC & Hybrid Computing Infrastructure
7. EDA & Simulation Software Vendors

Most are multinational, diversified tech or industrial companies deriving a minority of revenue from quantum research. However, if quantum computing matures into a major industry, these suppliers could see significant incremental demand, creating a long-term growth opportunity.

‍

AI

‍

‍“AI agents are a multi-trillion dollar opportunity.” — Jensen Huang, Nvidia CEO

‍

“If i think AI agents are a greatinvestment opportunity whatcompanies do I want to consider?” Chat GPT Pro

‍

When considering AI agents—software programs or services that can understand user queries, generate content, perform tasks, or automate workflows—you’ll want to look at companies building or enabling this technology directly, as well as those that provide essential infrastructure, frameworks, or specialized hardware. Below are several categories and representative names to explore:

1. Tech Giants Leading Generative AI & AI Agents

1. Microsoft (MSFT)
   • Why: Major investor in OpenAI (creator of ChatGPT).
   • Integrates AI agents (e.g., Copilot) across productivity software (GitHub Copilot, Microsoft 365 Copilot).
   • Azure cloud competes strongly in AI services and large-scale model hosting.
2. Alphabet (GOOGL, GOOG)
   • Why: Google’s Bard, LaMDA, and other large language models feed into assistant-like products.
   • DeepMind and Google Brain research arms focus on fundamental breakthroughs in AI.
   • Potential to integrate advanced AI agents into Google Workspace, Android, and more.
3. Meta (META)
   • Why: Focuses on large-scale AI models for content moderation, the metaverse, and generative text/image/video.
   • Released the Llama family of open-source LLMs.
   • Potential for AI agent integration across Facebook, Instagram, WhatsApp, and VR/AR platforms.
4. Amazon (AMZN)
   • Why: AWS is a top cloud provider for AI training and deployment.
   • AI-driven tools (e.g., CodeWhisperer for coding, Alexa for voice assistance).
   • Ongoing investments in generative AI agent capabilities and developer tools.
5. Apple (AAPL)
   • Why: While Apple’s AI strategy is more secretive, it invests heavily in on-device AI.
   • Siri could evolve with next-gen LLM technologies to become a more capable agent.
   • Strong hardware-software ecosystem could be a big advantage for integrated AI experiences.

2. Leading AI Chip Makers & Infrastructure Enablers

1. NVIDIA (NVDA)
   • Why: Dominates the market for GPU-based AI training and inference hardware.
   • Every AI agent needs massive compute power to train and run advanced models.
   • Also offers software stacks (CUDA, cuDNN) and cloud partnerships.
2. Advanced Micro Devices (AMD)
   • Why: Competes with NVIDIA in GPUs and custom computing solutions.
   • Increasingly relevant for AI workloads and data center acceleration.
3. Intel (INTC)
   • Why: Working on AI accelerators, specialized chips (Habana Labs, Movidius) for inference.
   • Though behind in the AI GPU race, Intel’s data center market share is still substantial.
4. ASML Holding (ASML)
   • Why: Manufacturer of advanced lithography equipment for semiconductors.
   • AI chip demand drives more advanced fabrication processes and higher equipment orders.

3. AI-Focused Cloud / Software Platforms

1. Salesforce (CRM)
   • Why: Rolling out Einstein GPT, a generative AI agent for CRM and marketing.
   • Integrates GPT-like functionality across its ecosystem (Service, Sales, Marketing).
2. Twilio (TWLO)
   • Why: Offers APIs for communications (SMS, voice, email) that AI agents can plug into.
   • Generative AI features could enable automated customer interactions and contact center solutions.
3. Adobe (ADBE)
   • Why: Incorporating generative AI (e.g., Firefly) into creative and marketing tools.
   • Potential for AI “agents” to help with design, content generation, and workflow automations.
4. ServiceNow (NOW)
   • Why: Develops workflow automation and enterprise service management.
   • AI-driven “agents” can automate IT help desks, HR processes, and more.
5. Palantir (PLTR)
   • Why: Offers data analytics platforms for government and commercial clients.
   • Integrating AI agent capabilities (e.g., Palantir AIP) to automate data insights and decision-making.

4. Emerging, Pure-Play AI Agent & LLM Companies (Mostly Private)

1. OpenAI (Private; major investor: Microsoft)
   • Why: Creators of GPT models, ChatGPT, and foundational research in large language models.
   • Unavailable for direct public investment, but you can gain indirect exposure via Microsoft.
2. Anthropic (Private; major investor: Google)
   • Why: Developer of Claude (an LLM-based AI agent).
   • Google’s investment gives it partial access to Anthropic’s research and IP.
3. Stability AI (Private)
   • Why: Best known for Stable Diffusion (text-to-image model). Potential expansions into text agents and broader generative AI.

(Keep an eye out for IPO or SPAC announcements if these private AI firms go public.)

5. Tools & Platforms that Complement AI Agents

1. GitLab (GTLB)
   • Why: DevOps platform integrating AI-based code suggestions and automations.
   • As AI agents become more common, tools like GitLab that automate software pipelines could see increased adoption.
2. Datadog (DDOG), Splunk (SPLK)
   • Why: Observability and monitoring platforms. AI agents will generate significant data and logs that need performance monitoring.
   • AI-driven analytics for complex, distributed systems.
3. Cloudflare (NET), Fastly (FSLY)
   • Why: Edge computing and content delivery networks (CDNs).
   • AI agents that run partially at the edge or handle global user requests can benefit from robust edge infrastructure.

Considerations & Risks

1. Long-Term Versus Short-Term:
   • AI agents are still early. Some of these stocks may see near-term volatility as hype cycles ebb and flow.
2. Competition & Regulatory Environment:
   • AI regulation is heating up globally (data privacy, security, potential for job displacement). Stricter policies could impact how quickly or broadly AI agents can be deployed.
3. Valuation:
   • Many AI-related stocks have run up significantly. Conduct fundamental analysis to avoid overpaying during hype phases.
4. Diversification:
   • AI is a powerful theme, but concentration risk is real if you only pick a few highly volatile names. Spreading exposure across multiple companies or using thematic ETFs (e.g., robotics and AI ETFs) can mitigate some risk.

Bottom Line

• Household Tech Giants (Microsoft, Alphabet, Meta, Amazon, Apple) already embed or plan to embed AI agents across their ecosystems—offering diversified bets on AI agent adoption.
• Chip & Infrastructure Leaders (NVIDIA, AMD, Intel, TSMC, ASML) provide the hardware backbone essential for training and running AI agents at scale.
• Enterprise Software & Cloud (Salesforce, Twilio, ServiceNow) are weaving AI agents into CRM, DevOps, and workflow automation.
• Private Innovators like OpenAI and Anthropic remain crucial, though public investment routes are mostly indirect.

A balanced approach might include several large, well-capitalized tech companies plus selected infrastructure providers (chips, cloud) and software ecosystem enablers to cover the broad and rapidly evolving AI agent opportunity.

‍

European Defense

‍

Trump Sparks Moves in European Defense and Renewables Stocks-Bloomberg

Makers of tanks and missiles got a boost after Trump called on NATO members to spend the equivalent of 5% of their economic output on defense, more than double the current target. Shares in Norwegian missile maker Kongsberg Gruppen ASA gained as much as 4.1%, while Sweden’s Saab AB was up 5% and Germany’s Rheinmetall AG rose 5.3%.

New vs. Noise

‍

No alpha in fundamental analysis.....

Active mutual funds struggle to beat large-cap stock benchmarks — again-MarketWatch

‍

__________________________________________________________________________________________________________________________________________________________________________________

‍

Before you go: Here are ways I can help

‍

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-Coming Soon
5. Weekly investing podcast-Coming Soon
6. Wealth Management-Coming Soon

‍

‍