Alpha Report Issue #94

• Current read is 64 on the fear greed index vs 59 last week.

• This index moves very fast and I feel like it should still be on the high side of the greed category… (somewhere around 70)

• The market is still lofty and greedy IMO.

• Market Fearful = Potential Opportunity/Deals. (buy calls/sell puts/buy shares)

• Market Greedy = Potential Over Valuation. (buy puts/sell calls/sell shares)

• Remember, I like to be bullish when there is extreme fear & bearish when extreme greed.

• So right now, I am being VERY careful!

• Opportunity will come. BE PATIENT!

• 30 year fixed mortgage rate falls to 6.46% Today, vs 6.48% last Sunday.

• 10 year treasury bond yield climbs to 4.32% Today, vs 4.28% last Sunday.

• 2 year treasury bond yield falls to 3.75% Today, vs 3.76% last Sunday.

• Interest rates were pretty flat this week.

• Inflation data did come in a little hot but the market is seeing that as a transitory thing.

• So rates did not skyrocket on the hotter than expected inflation data.

• Remember, as interest rates/bond yields INCREASE, stocks become LESS attractive because bond yields go UP which makes the risk free bond look more attractive.

What’s up everyone!
Hope you’re having a great weekend!

As always, let’s talk about what matters in the market right now to make some money and capitalize on all the craziness.

• This week we got inflation data that came in both good & bad.

• CPI came in at 2.7% YoY and 2.8% was expected.

• The feds target is 2%.

• Jerome Powell did say the June and July numbers are expected to be a little hot cause of tariffs being priced into the economy.

• This is expected to be temporary.

• Since the CPI data wasn’t too bad, the market views this as ok.

• Again, doesn’t mean the market “must” go up, but it means the data was better than feared

• Now, for the data that came in HOT, that was PPI.

• PPI came in at 0.9% MoM, which was expected to be 0.2%

• So why do we care about PPI?

• Cause this is often a leading indicator to CPI.

• So since PPI came in hot, it’s possible the next few CPI reports will be a little hot too.

• Remember, inflation is a MAJOR factor in determining where interest rates will fall.

• More inflation usually = Higher interest rates.

• Less inflation usually = Lower interest rates

• It’s all a game of using interest rates to keep inflation in check.

• Why do we care about interest rates?

• Cause the higher they are, the lower the stock market valuation usually is.

• So at a time right now where things are expensive, we NEED rates to fall to support the lofty valuation.

• Also, the fed needs to balance “higher ish” interest rates with a labor market that is weakening too…

• So it’s a tough juggle to balance.

• Side note, I have been pounding the table in discord about United health.

• I won’t say what plays we made, but let’s just say that we are CRUSHING it on that one.

• Classic case of good company at a beat up price.

• I still expect lot’s of volatility, but that is 100% fine.

• Warren Buffett also agrees since BRK bought.

• I wouldn’t be surprised if they bought more in Q3 (cause the 13f finding we got was for Q2 only)

• Be sure to check out the economic calendar below to check out all the big stuff happening this week!

My Current Positioning:

• Portfolio = 100% long equities.

• I do have some hedges in place that will do well if interest rates fall and pay a good yield in the mean time.

• Leveraged options exposure = low right now. (cause the market is a little expensive, but there are pockets like UNH that I had for a few weeks now)

• This is a cautious offensive stance.

• I’m ready for upside but keeping ratios well in check to capitalize on potential downside since valuations are a little high.

Long Term View: 

• 5+ years out, I’m very bullish.

• The AI revolution will create massive winners – but also massive losers.

• Short term (under 5 years) will be a volatile ride.

• I have lower expectations for returns since the market is already starting from this higher valuation level.

• In English, a lot of growth is already priced in to the market.

• If we get it, great, but if we do not, expect downside.

Key mindset: Market will hit new all time highs again over time, but you’ve got to be mentally and financially prepared for the dips. Buy great companies at good prices. Keep your ratios in check. Don’t YOLO into hype. Be patient!

Side note, I am now a Financial Advisor and I will be taking on new clients in about a month. I partnered with a firm in Vegas, but anyone in the US I will be able to take on. I am only going to bring on 100 people initially to ensure everyone is taken care of on a DEEP level. If you are interested in me managing your investments, tax planning, estate planning, insurance needs, access to private equity, ect… Please reply to this email and I will add you to my list. More details to come on this as we get closer!

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