Just When You Think It Can't Go Higher, It Does

We're now on a shopping spree. Buy, buy, buy.

The essence of trading or investing is to have strong opinions, loosely held. I was very bearish in October and into the new year, only to see the market shake off bad news and continue to climb. I now believe (once again) if you’re not long, you’re wrong - and here is why.

• In the last 5 weeks, received multiple hot inflation reports, but yields point to lower and assets point to higher. Just remember, in a bull market, bulls shake off bad news. And in a bear market, bears shake off good news.

• Pull up a 6 month bar chart (where each candlestick is 6 months) and you will see MAJOR sell signals on yields, which means they’re going down soon; which means asset values will go up soon.

• If you look at the underlying breadth of the market, you will now see that more and more companies are participating in the rally, beyond the Magnificent 7 dragging indices higher…

• The leader, NVDA 0.00%↑ despite a parabolic rise in price, still only has a P/E of 60 (price-to-earnings ratio). For an insane growth company like them, that’s pretty low. And what’s that tell me? NVDA has much more room to go higher, because it’s not that overvalued; and you can bet any pullback will be bought-up. This is NOTHING like the Dot Com Bubble… NVDA can justify its rise because of insane earnings. After all, what else are equity investors really buying? Hint: real, fast growing, earnings.

• Artificial Intelligence and Private Credit are booming. AI is bringing more efficiency to the economy, and private credit is filling the gaps left by traditional banking. This efficiency and new access to capital has arguably staved off a recession. It’d be super interesting to see data on this…. that’s just my gut speaking.

• In private credit, banks are now jockeying for leveraged buyout deals which have been filled by private credit lenders the last few years. This means that private equity will now have access to cheaper bank lines of credit in order to buy other businesses. There’s no gap to be filled; it’s just that banks are putting out money at cheaper rates… dragging yields lower.

The stars seem to be aligning fundamentally in public and private markets…

The Price-to-Earnings Ratio (P/E) is an indicator of how much investors are willing to pay for $1 in profits. Here, they’re willing to pay $66.70, or a P/E ratio of 66.70. For a high growth company like NVDA, this is not high. For a growth-oriented investor, this means now is the time to buy, as the P/E scales even higher. Any pullback in price will be bought up. In other words, NVDA’s rise is totally justified by earnings, unlike the Dot Com Bubble….

Expect the Market Will Buy Every Dip

We are firmly in a “buy the dip” market. Look for the pullbacks. Buy the dips. Save for any outliers, expect asset values to go UP.

Here is what I own right now. Me personally, I only like to own high revenue growth companies with earnings. Each one here fits that, for the most part.

SWAV 0.00%↑ heart disease tech that uses vibrations to clear arteries

ARRY 0.00%↑ solar mounting systems selling to manufacturers et al

CENX 0.00%↑ aluminum company with nice money flows on a MAJOR base-low

URA 0.00%↑ uranium ETF which, like aluminum, is coming off of a major base-low with rising money flows

SWAV and ARRY I’ve held on to for a while, and CENX and URA are new purchases.

I’m looking to add PANW 0.00%↑ DKNG 0.00%↑ BRZE 0.00%↑ DT 0.00%↑ FROG 0.00%↑ OWL 0.00%↑ PCOR 0.00%↑ and SQ 0.00%↑ in the coming weeks.

Buy, Buy, Buy - But Be Careful

Bull markets climb a wall of worry. My worry is less now. Save for any outlier event in the Middle East or otherwise, you can expect markets to go higher. Money flow is insane, and lots of good companies are coming off high money-flow lows.