🗞 How a Crappy Company Can Still Make You 50%+

WHILE YOU POUR THE JOE… ☕️

Global stock market valuations are at near all-time highs. 📈 

Which is fine as long as there’s enough growth to sustain them, and in the US, this is becoming a real issue, as we pointed out in our last newsletter.

Here’s the interesting thing, though:

Global yields are on the rise as well; even China’s is up, which had been a staple of lower yields in developed economies worldwide.

What this means is, despite rate cuts across these nations, bond traders are calling for a different reality.

That reality is inflation. 🔥 

Also, bond yields often act as a ceiling for growth and valuations moving forward, so unless the US can deliver on outsized EPS growth, these yields may become an issue.

You’re probably wondering how you can make money from all of this.

Which is an answer you will get during day 3 of our free 5-day email crash course.

We took our entire long/short equity process and boiled it down into the most valuable concepts and lessons.

This way, you can take data like this (included in the free Excel) and profit from it by landing on the most profitable trade setups.

Sign up for your first lesson tomorrow ✅ 

Speaking of making money, let’s get on with today’s email 📧…

BLACK AND WHITE
Pick The Right Vehicle

We all aspire to be like Buffett when we get into investing, so we study the art of value investing.

But,

We fail to remember a couple of things here:

• Times have 100% changed

• Information now spreads faster than ever before

• Investing is no longer what it used to be (for most people)

Let me explain what I mean, and this applies for everyone who has under $5 million in investable assets, specifically in the stock market.

*** Warning, this newsletter will be a different tune than most. We’ll be back to normal programming after this one. Enjoy 👍️ ***

Times Have Changed

When Buffett started his first partnership, he raised $100,000 and started averaging annual returns above 25% immediately. 📈 

Which is great, no matter how you look at it.

Here’s the thing, though..

Back in the day, with only two years of collected fees on this growth, he was able to buy a home for roughly $31,500. 🏚️ 

So in many ways, being an investor is not the same as it once was.

That is, unless you have multi-millions available to you and generate 20% returns per year to afford a decent lifestyle in today’s world.

Information Speed

For modern investors, here is something you need to keep in mind.

When Buffett found juicy deals, information wasn’t spread at the pace it is today, not even close.

Think about it,

Twitter, CNBC, YouTube, Newsletters like this one.

They all carry thousands of capable analysts to break down company financials and valuations on a daily basis.

How do you compete with that?

The answer is you can’t, so you have to settle for either the “risky” plays or be happy with meager returns. 👎️ 

Which again sucks if you don’t have the size.

Investing Has Changed

Imagine buying Intel in 2024 because it fell to such a low valuation (from $51 down to $17.67).

That’s a 65% drop. 😨 

Most value investors would be salivating over this deal. I know I would if I were hunting for value.

Here’s the problem.

Think of all the mess you would have had to deal with for a whole year:

• Tariffs with China

• Declining earnings

• CEO leaving

And a bunch more, which by all means makes Intel a headache rather than an asset in your portfolio.

And let’s be honest,

Most of us don’t have the patience (or the stomach) to hold a losing stock through all this drama.

Why Did I Like Intel Then?

Intel failed all five pillars of a sound stock to buy:

• Declining (negative) EPS

• Negative FCF

• Contracting margins

• Losing market share

• Elevated valuation multiples despite price falling

But, as a trader, I loved this setup for the following reasons:

Markets were placing Intel at a massive premium next to other semiconductor peers, and I think that premium was justified by the expected EPS swing higher in the next 12 months. 📈 

Even if the growth came in short of expectations, its PEG ratio of 0.1x still creates enough room for it to still rally significantly.

This is where a guy like Steve Cohen would beat most fundamentalists.

Yes, this bald guy is one of the best traders in history, outside of the quants like Jim Simons or macro traders like Paul Tudor Jones.

Cohen was an order flow trader who often went into long/short equity. 👀 

Yet he’s not as famous as Warren Buffett, and there’s a reason for that.

• Becoming a good trader will keep you in and out of the casino, not stuck in it.

Suppose you and I try to emulate the buy-and-hold method we got from Buffett. In that case, we’re going to LIVE in the casino, often worrying and overtrading our portfolios for no reason other than not knowing what’s happening.

We spotted that trade setup for Intel on August 12th.

Guess who was already buying? ⬇️ 

Those at Corient Wealth and several other institutions were getting in by the millions, and that’s just what was reported as of the 13-F filing dates.

This happens more often than not throughout our idea-generation process.

Most BS advice out there leans on a false claim of “trading like the banks”.

Who will you believe?

Someone who has never even seen a Manhattan bank bathroom, or someone who spent three years talking with hedge fund analysts and sell-side traders?

You don’t have to answer that (hopefully)… Anyway.

Just like Intel, you can check institutional buying activity through the many ideas we’ve pitched in our media channels and find that the two are often aligned.

Where does that leave you?

Well, you have two simple choices:

1. You can rely on us for ideas and join our WhatsApp deal room ✅ 

Or

2. I can copy and paste everything I learned at Goldman Sachs over a six-month intensive mentorship called The Sovereign Trader ✅ 

It's up to you, my friend, but be aware that doing nothing will eventually kick you out of the game entirely.

Using the same methods we showed you above (and throughout our newsletter and YouTube series), we landed on a long bias for $RKT stock.

$17.50 turned into $22 within a couple of weeks, that’s 26% upside. 🔥 

No drama, no having to wait for months to find out if you were right or not.

Oh, and the best part ⬇️ 

Ameriprise Financial built up an $11.8 million position right as the stock came up in our long filter as well. 💰️ 

Coincidence?

Not really, if you are looking at the same stuff these institutions look at all day, shouldn’t you expect to end up with more or less the same positions?

Not saying you can trade like the banks, but hey, it’s pretty close.

To your success,

G 🫰 

GO AND MAKE IT HAPPEN
Lights, Camera, Trade

Speaking of long/short equity ideas.

Give me 20 minutes, and I will break down one of my latest, from top to bottom although compressing most of what we teach inside our program.

A perfect way to spend your weekend is to sign up for this free 5-day email crash course, download the attached Excels, and follow along the video.

Oh, and don’t forget to grab your free 7-day trial for our WhatsApp deal room ✅ 

Trust me, it will change your trading career forever.

To your success,

G. 🥃