Editor's note: Don't put all your eggs in one basket... The broad market has performed well so far this year... despite inflation remaining well above the Federal Reserve's 2% target rate. But according to Joel Litman – chief investment strategist for our corporate affiliate Altimetry – this bullish outlook is primarily driven by artificial-intelligence ("AI") mania... That's why Joel stresses investors must avoid getting too comfortable in this technology-driven market. He believes embracing this false sense of security could cause you to miss out on moneymaking opportunities once the AI hype wears off. In today's Masters Series, adapted from the March 25 issue of the free Altimetry Daily Authority e-letter, Joel compares the excitement surrounding AI with the market environment during the dot-com bubble... explains how tech stocks are uplifting the entire economy... and reveals how you can profit in the long term if you avoid getting caught up in the AI hype...
Even AI Mania Can't Rewrite History By Joel Litman, chief investment strategist, Altimetry Get ready to lose money on Nvidia (NVDA) twice as fast... The GraniteShares 2x Long NVDA Daily Fund (NVDL) caught on like wildfire earlier this month. It's an exchange-traded fund ("ETF") that only invests in Nvidia. Its gimmick is that it doubles the stock's performance. It does this by investing with leverage. It borrows money to double how much of the stock it can buy, giving investors twice the gains... and twice the losses. As if there wasn't enough mania surrounding the chipmaker already. In all fairness, NVDL has been around since late 2022. However, it has been making headlines lately... because in just one week, it took in more than $250 million in new investor funds. That brought the entire fund above $1.4 billion. Folks, this is a warning straight out of the dot-com bubble playbook. Don't let yourself get caught up in the hype... The market got far too concentrated during the dot-com bubble... At the peak, 25% of the S&P 500 Index's market cap was in just 10 stocks. Everyone was betting the same way... which only works for so long. Investors were buying into a "great minds think alike" narrative. Then the tech bubble popped. The S&P 500 dropped 49%. And the tech-heavy Nasdaq Composite Index plunged 78% from its all-time high. If you think that's bad... last year, we surpassed the dot-com era's level of concentration. The top 10 stocks in the S&P 500 comprised 32% of market cap by the fourth quarter. And that percentage has kept rising. The "Magnificent Seven" tech stocks now account for 29% of this weight by themselves. When you see this level of extreme concentration, you start to hear another narrative – the "winner-take-all market." You hear how Nvidia will power all AI. And Microsoft (MSFT), Alphabet (GOOGL), and Amazon (AMZN) will be the platforms that all AI is built upon. Don't get us wrong... these are good companies. All of the Magnificent Seven are rich in cash and highly profitable. However, good things don't last forever. Investors have gotten way ahead of themselves today.
| Recommended Link: | |  Here's What You Missed This Week A rare market anomaly just caused one company to jump 275% in only two weeks... and another to skyrocket 170% IN A SINGLE TRADING DAY. It has nothing to do with the "Magnificent Seven" or the presidential election... and it doesn't involve trading options or bitcoin. Yet two renowned experts believe it may be the absolute biggest "no brainer" moneymaking opportunity of 2024. Get the full details here. | | |
So has GraniteShares, the maker of NVDL... Following that fund's success, GraniteShares is building other leveraged tech ETFs as fast as it can. You can now buy the GraniteShares 2x Long AAPL Daily Fund (AAPB)... the GraniteShares 2x Long META Daily Fund (FBL)... and the GraniteShares 1.25x Long TSLA Daily Fund (TSL). If left alone, the S&P 500 could find itself even more lopsided than it already is. It can be tempting to dive headfirst into these big, established AI beneficiaries and ignore everything else. However, that would be a big mistake... U.S. business is centered around creative destruction. Competition is destined to come in. Some of today's small players will dethrone the current giants. It's unclear how much longer this tech-driven market will last, so it's important to keep an open mind in order to avoid missing out on the chance to take advantage of this unique setup. Once this opportunity is gone, we might not see another one like it for decades. With the Magnificent Seven running out of steam by all appearances, this could be the best investing opportunity you'll see for the remainder of 2024. Remember, the market doesn't seem to think the music will stop for today's champions. Anyone who pays attention to history knows better. Don't put all your eggs in one basket. And don't count out smaller companies in less-popular industries. When the AI hype dies down, those hidden gems could end up taking the cake. Regards, Joel Litman
Editor's note: Joel isn't the only one who's fascinated by this phenomenon... Stansberry Research founder Porter Stansberry has been tracking it closely and agrees that this situation shouldn't exist – and says it probably won't in a few more months. That's why they recently teamed up to explain exactly what's going on and reveal how investors can capitalize on this once-in-a-lifetime market anomaly. Click here to catch up on the full details... | 
No comments:
Post a Comment