Welcome to The Alpha Report 👋

You only have to get rich once. Now is your time.

Major News Today:

• Tesla moons on the back of a report that Trump is going to make it “easier” for the RoboTaxi to get approved mainstream.

• Palantir dips 6.8% (much needed).

• Market opportunity is emerging.

• 30 year fixed mortgage unchanged & 7.10%, same at Friday.

• 10 year treasury bond yield falls slightly to 4.41% from 4.44% Friday.

Million Dollar Lesson:

If you are putting your hard earned money into something, know EXACTLY what you are getting in return and the valuation level the stock is at.

Is The Stock Market A Bubble?

Here Is My Thought Process👇

• I feel we are over valued by roughly 10% for the SP500 and Nasdaq, but how much does that matter?

• I’ve been saying for months we’re a little lofty and we need a dip.

• Either a dip, or earnings need to go up to justify the valuation.

• If the market runs up too much too fast, that sets up for a larger correction potentially.

• That doesn’t mean the market has to immediately correct and take a dip, but but valuations do matter with respect to what the company earnings are doing.

• The market is like a pendulum, it swings from fear to greed and often very fast.

• Also keep this in mind, QQQ is about $500/share right now.

• If I assume a 11% annual return for 20 years, the non split adjusted price per share of QQQ would be $4,511.

• So everything is noise.

• If it dips to $400, I won’t care. I’ll buy more.

• I have my eyes in the future at $4500+

• Being patient will reward you.

• The plays I do in the meantime help me acquire more shares to have as many as I can.

Palantir Crashes

Currently trading at $61/share

• Q3 24 EPS: $0.10

• Q2 24 EPS: $0.09

• Q1 24 EPS: $0.08

• Q4 23 EPS: $0.08

• Total TTM EPS: $0.35

• 61/0.35 =172 PE trailing.

• EPS same quarter last year was $0.07 vs $0.10 now. That is 43% YoY earnings growth

• Revenue same quarter last year was $558m vs $725m now. That is 30% YoY revenue growth

• The stock is up 225% in the last year.

• GAAP net income of $144 million, representing a 20% margin.

• For a stock growing its revenue by around 30%, that valuation is pretty extreme. While Palantir is a great company, at some point valuation does matter. CEO Alex Karp seems to recognize this as well, which is why he has accelerated his selling of the stock in recent months.

• I will not be buying PLTR at these levels

• People loveeee to see stocks go up but I promise you that if they ever miss earnings at a 172pe, the stock will get clobbered.

THE OBVIOUS PLAY APPEARS TO BE BUYING PUTS. (I did at the market open today)

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)

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

• PLTR buy puts 3 month duration

KEEP IN MIND, I MAKE ABOUT 2 TRADES EVERY WEEK.

BELOW IS MY ROI OF MY TRADING ACCOUNT SINCE 2023.

TOTALLY DOMINATING THE MARKETS.

Current Valuations & Price Targets

• The S&P 500 (Ticker: VOO) at a PE ratio of about 22 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 is a tad lofty also.

• 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:

Just because you have the ability to make a trade does not mean you should make a trade. Only make trades when you have a margin of safety and you’re buying a great company at a great price.

Current Value of My Trading Account:

• I think we are about 5-10% over valued as a whole, so if the market takes a dip, that’s 100% normal.

• So I consider the intrinsic value of my trading account to be somewhere around $800k, not $879,404

Final Comments:

• Palantir is coming back into reality.

• Elon and Trump are besties and that is viewed as great for Tesla, but not really a huge needle mover in my opinion.

• I see the market at 5-10% over valued.

• Tesla volatility continues.

• Keep your emotions in check on pumps and dumps.

• Continue to DCA into quality stocks/ETFs at good prices.

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

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