Welcome to The Alpha Report 👋

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Major News Today:

• Market pumps yet again on the heels of the trump win and bullish Fed.

• Tesla stock pumps 30% this week.

• 30 year fixed mortgage rate at 6.96% from 6.98% yesterday.

• 10 year treasury bond yield at 4.30% from 4.35% yesterday.

• Nasdaq pumps 5.5% this week.

• Feds Jerome Powell sends bullish signal to markets.

• Valuations continue to get lofty but still opportunity.

Million Dollar Lesson:

Why most investors lose money investing.

1. They invest with emotions

2. They get FOMO (fear of missing out) when stocks go up they aren't in.

3. They panic sell on the bottoms.

4. They did not do the homework on the trade.

5. They don't trust themselves and are easily swayed by people that claim they are "experts" but are actually the opposite. 

Why Tesla Is Mooning:

• Trump and Elon are now besties

• This is welcomed by the market because it’s assumed Trump will take an “easier” stance on EV’s.

• It was feared Trump will eliminate many of the EV tax credits that will make it harder for EV’s to compete with gas vehicles.

• Also, this is also good for regulatory approval for teslas RoboTaxi network that is expected to roll out next year.

• Overall, do I feel the big move in the stock this week is justified? Absolutely not.

  So what's the play on Tesla?

  If you can pass both of these tests, it’s ok to buy in my opinion.

1. You must hold the shares for a minimum of 5 years from right now.

2. You must be ok to stomach 60% swings in the share price.

   Short term, it will be bumpy, long term it can be astronomical.

   My 2030 price target is $1,200

Why Trump Winning Actually Matters:

• The biggest reason isn't even about trump. It's about Kamala.

• The market is now unpricing all of Kamala’s policies.

• Some of the policies such as unrealized capital gains tax & just straight up raising the corporate tax rate is now out of the picture.

• So now the market is actually pricing in the opposite.

• Trump proposed to lower the corporate tax rate to encourage more companies to come back to America. Companies can be more competitive with lower tax rates vs shipping jobs overseas.

• Trump is also viewed as “pro business” & “pro stock market” so it’s expected he will accommodate the market if it takes a dip. (but I do think valuations are a little stretched now so a dip is ok)

Potential New Trades:

• Google 1 yr+ play (buy calls/sell puts)

• Amazon long term play 3+ yrs (sell puts/buy shares)

• Nvidia on dip (Buy Shares)

• TLT 1yr calls (This is one of my favorite plays)

Current Valuations & Price Targets

• The S&P 500 (Ticker: VOO) at a PE ratio of about 22.5 right now, we are a little lofty. (But not crazy expensive) BUT, rates are expected to fall and I agree with the expectations. Rates are like gravity on the market. If rates fall, stocks become the only game worth playing, which will push up valuations.

• The Nasdaq 100 (Ticker: QQQ) at a PE of 31.6 is a little lofty also. So how do we value that? What do we price in? How much will Ai play into this growth? All things that nobody on earth knows 100% Me personally, I feel the earnings growth of the Nasdaq (QQQ) will be higher vs what the SP500 does. That is why QQQ is justified to get a higher PE ratio. Being its priced at a PE of 31, that is not crazy over valued in my opinion. Especially in an environment that is expecting lower interest rates. Most people do NOT put enough emphasis on how big of a deal rates are...

• Rates are gravity. We are currently at 4.75% fed funds rate now. We are expected to be at 4 in a year. 1% is a decent cut and that will make a difference.

2025 QQQ Price Prediction End of Year: $530

2025 VOO Price Prediction End of Year: $580

Tip of The Day:

Do not lose money. Do not do anything that can wipe you out.

It sounds so obvious but how come so many people get wiped out…

Current Value of My Trading Account:

• Went from a value of $825k this Monday, to over $890k today. NOT BAD!

Final Comments:

• Teslas pump is irrational (don’t FOMO in)

• Market is a little lofty but still opportunity

• Trump should be good for the market (at least better vs Kamala)

• Jerome Powell @ Fed feels good about the economy (Expects a solid 2025)

• Continue to DCA into quality stocks/ETFs

• When you find undervalued companies, use options to magnify gains

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