Thoughtful Money (with Adam Taggart)

Trade Call: Adding META on a Buy Signal

"We did all these trades Monday or Tuesday. We added a 2-3% to both our equity and sector models. We brought some positions up to where we wanted to. We added to Meta. We’ve been wanting to do that for a while and it sold off. It came on a nice buy signal so we added to it. We added to Kinder Morgan, that’s our pipeline. JP Morgan got beat up on earnings and we took advantage of that. And I believe we added a little bit to Amazon as well."

Michael Lebowitz describes a tactical rebalancing in which his team increased their exposure to stocks after a sell-off. He specifically mentions adding to Meta on the strength of a buy signal after the stock sold off, indicating a confident, trend-following approach in the near term.

Nvidia Bubble Warning

-2.81%current return

"You know, if you look at Nvidia, it's a market cap approaching four trillion and it's literally the same size as the whole Japanese stock market. Nvidia is like Cisco was to the telecom companies. And so if you think Nvidia is going to stay a 4 trillion market cap company in a notoriously cyclical sector, I got news for you. It's going to do what all classic bubbles do. It'll go down 80 to 90% when it's all said and done."

Ed Dow warns investors about Nvidia, drawing a parallel with Cisco during past telecom bubbles. He suggests that the current market-cap valuation of Nvidia is unsustainable and predicts a potential drawdown of 80-90%, implying that holding or buying Nvidia at these levels represents significant downside risk.

LAR Price Cuts Signal Shifts in Housing Market Dynamics

"Home builders have cut prices significantly. LAR, the second largest home builder in America, has cut their average selling price by about 24% over the last three years, LAR's average selling price net of incentives was 383,000. That's the lowest it's been at least going back to 2018. Some element of that is price cuts. Some element of that's the mortgage rate buy downs and closing costs. And look at this: LAR was selling at 491,000 in August 2022 and is now selling at 383,000. Lenar's order book is actually two times bigger today than it was in 2019."

Nick Gerli highlights that LAR, a major home builder, has aggressively cut prices (24% off over three years) while seeing its order book double compared to 2019. He uses this data to illustrate that the housing market is undergoing deflationary pressure, where new home prices are now lower than resale prices. This commentary underlines the importance for investors to monitor micro market trends and inventory dynamics within the housing sector.

Cautionary Commentary on AMD's Open AI Exposure

"Yeah, well, AMD just had to deal with open AI. >> Yeah, >> that's a whole different discussion. I probably should have included a graphic that's been floating around showing the relationship Open AI has with Nvidia, with AMD, with uh uh Coreave and many other companies. And this money is just circulating back and forth. And it's healthy in one respect because everyone is helping fund each other meet these goals, but it also creates an Achilles uh heel in, in, you know, a potential big problem. If one of those bigger companies fails, what does that mean for all the other companies? What if Open AI can't be competitive? What if they just can't produce revenue? So, so it's potentially a problem in AI, but for now it's like AMD is what up 30 almost 40%."

Michael discusses the interconnected exposure between technology players, noting that while AMD has rallied 30-40% following its Open AI developments, the revolving fund structure among companies like Nvidia, AMD, and others could create vulnerabilities. He warns that if Open AI fails to generate competitive revenue, the ripple effects could impact these larger companies.

Bullish View on Precious Metals via Agnico Eagle

"Agniko Eagle has been really a major holding now for a number of years just simply because of the quality of the management, the quality of the assets, the political stability in terms of where theya0are located. And ita0a0it's quite interesting if you actually look at a company like Agnico Eagle and you look at the free cash flow yield, currently, even though the price of the stock has gone a0tripled over the last couple of years, it's still trading the free cash flow yield at a higher rate than it was three or four years ago. And if you factor in maybe a $4,500 gold, $50 silver scenario over the next year if you are bullish on the metals, you can really justify like a 9 to 10% free cash flow yield in some of these stocks. What it's telling you is that they're incredibly profitable; with the increase in gold going up a couple thousand dollars, thata0all flows to the bottom line for these well-run companies."

The speaker highlights Agnico Eagle as a key holding due to its strong management, asset quality, and robust free cash flow yield, which remains attractive even after significant price appreciation. He explains that if gold prices continue rising (potentially reaching $4,500) and silver holds near $50, the free cash flow yield available in these stocks can justify a 9-10% yield, reinforcing the companies' profitability. This commentary supports a bullish stance on precious metals mining companies, particularly as a hedge against fiat currency pressure.

Profit Taking in the Silver Rally Using SLV

"If you find that you're feeling overly greedy as the daily moves in silver continue, consider taking profits by selling incremental portions -- say 10% at a time -- once the rally pushes prices significantly above key moving averages. Its a pragmatic move when your technical dashboards show that the silver rally, as represented by SLV, is stretched."

Mike Preston of New Harbor Financial recommends an actionable trade strategy in the precious metals area. He suggests that investors in silver, particularly those holding SLV, should consider incremental profit taking if technical indicators (such as breakouts above key moving averages) show the rally is becoming overextended. This action is intended to lock in gains during the current bull run while reducing exposure as the move nears exhaustion.

Buy Yen ETF (FXY) Amid Weak Dollar

-3.68%current return

"…that if you’re looking for a place to go to make money and also be in one of the few areas that probably would go up in an intense riskoff period, I think that’s the yen. You can buy the FXY."

The speaker highlights deteriorating fundamentals in the US dollar relative to other currencies and recommends buying the yen through the FXY ETF as a hedge and opportunity to profit from a potential devaluation.

Bullish Trade Call: Prospector Metals

+5.39%current return

"An exploration company that I like a lot is Prospector Metals. It is a drill hole play. It is the riskier of the riskiest sector, but I like what they're turning up in a target in the Yukon and they should have drill results out within days or a couple of weeks."

Brian London highlights Prospector Metals as a speculative but potentially high-reward exploration play. Despite the inherent risks of drill hole opportunities, he is bullish due to near-term catalysts such as imminent drill results in the Yukon which could trigger a significant re-rating if the findings are positive.