Another bullish day... Strong, but slower growth for Nvidia... The AI bellwether... Time for forward thinking... Sentiment is bullish, but not euphoric – yet...
 Onward and upward...
It was another "almost everything was up" day in the U.S. markets... All the major indexes were higher, led by the small-cap Russell 2000 Index (up 1.5%). Ten of the 11 major S&P 500 sectors were higher, led by utilities, financials, and industrials. And in a sign of broad strength, the equal-weight S&P 500 was up 1.3%, with about 450 of the companies in the index closing higher. Gold moved up almost 1%... bitcoin was up another 4% in the past 24 hours – hitting new highs above $98,000... oil prices were also higher by 2%... and longer-term bond yields were little changed. But curiously, shares of AI darling Nvidia (NVDA) bounced around today – closing less than 1% higher. That's despite another blockbuster quarterly earnings report after yesterday's close. So what gives? It's getting tougher for Nvidia to keep up with sky-high expectations... As we mentioned yesterday, the AI chipmaker reported another banner quarter. Revenue soared 94% from the same quarter a year ago, while earnings per share more than doubled. Nvidia's net income of $19 billion in the third quarter was more than its entire revenue in the same quarter a year ago. Put another way, Nvidia made more in profit last quarter than it did in total sales in the same three months last year. And the company sees revenue growing by roughly $2 billion to $37.5 billion total in the current quarter – above Wall Street's expectations heading into yesterday's earnings report and outlook from Nvidia. On its post-report earnings call last night, Nvidia executives said that its new Blackwell AI chip is in "full production" and demand is stronger than the company anticipated. Soaring revenue, incredible demand, and a strong outlook would usually be enough to send any stock soaring higher. But Nvidia shares immediately fell more than 2% after hours. There are a couple things investors could be looking at here... First, while revenue nearly doubled, it's the lowest year-over-year growth rate for Nvidia since the AI boom began. In other words, the pace of growth is slowing down. And the company's outlook indicates that growth will slow again in the fourth quarter. Second, Nvidia's shares have soared more than 190% over the past year, including a 50% jump in just the past six months. Its price-to-earnings ratio stands at more than 50 times. As the pace of growth slows, more investors could be finding reasons to take profits. In any case, we'll keep watching Nvidia... The company is the bellwether of the AI boom. It boasts tech giants like Microsoft (MSFT), Alphabet (GOOGL), Meta Platforms (META), and more as customers. So investors look to Nvidia's results as a read-through on how these companies feel about AI. The stock's movement also matters for the broader market... Our colleague Dan Ferris has expressed his concerns about concentration in the "Magnificent Seven" multiple times in his Friday Digest essays (including last week's here). And Nvidia is the poster child for that trend. On December 15, 2023, Nvidia made up about 3% of the S&P 500. Today, thanks to the stock more than tripling since that day, it's the largest S&P 500 company by market cap at 7.16% of the U.S. benchmark index. Apple (6.95%), Microsoft (6.15%), and Amazon (3.78%) are the next three heaviest-weighed companies. So wild swings in Nvidia shares have the power to whipsaw the broader market, though that wasn't the case today. Last Friday, Dan compared the Magnificent Seven with the "Nifty Fifty" stocks from the 1970s... In 1972, the group traded at an average of about 42 times earnings. (Sound familiar?) Some traded above 60 times earnings. Like every extremely popular investment idea, the Nifty Fifty trade went south in short order. By the bottom of the 1973-1974 bear market, several of these stocks had fallen between 60% and 90%. That's not a prediction, but a warning for what could happen. For now, Nvidia's earnings results look like enough to keep the AI and tech bull markets heading higher. But the moment Nvidia's numbers disappoint, it could mark the beginning of the end for the good times. If your portfolio holds a lot of tech highfliers, make sure you have an exit plan for a downturn. When things are going well, it's a great time to do some forward thinking for when times change. Things are bullish, but not euphoric, yet... As we've written before, the time to evaluate your portfolio and take profits is when you see and feel euphoria in the market – when the crowd is jumping in at nosebleed valuations during the market mania. Amid the post-U.S. election rally, this idea has been on my (Corey McLaughlin) mind lately. In Monday's edition, you may remember we shared "two reasons for caution" about the short-term direction of the market. One was retail investor sentiment, which according to a pair of widely followed surveys is more bullish than average right now. The Stansberry's Investment Advisory team's proprietary Money Flow Gauge also shows public money flowing into mutual funds and exchange-traded funds at levels that have come before notable drops in the S&P 500 in the past. We also reported on various insider selling from the likes of Warren Buffett, Amazon (AMZN) founder Jeff Bezos (who sold about $2 billion of Amazon shares last week alone), and executives at AI darling Palantir Technologies (PLTR). So "smart money" is selling... That's another reason for caution as the public "crowd" gets excited about stocks once again. But while bullishness has certainly grown over the last few weeks, we're not at a "euphoric" stage of the market yet. So this broad bull run could have more room to run. Enjoy the good times, for now... As Stansberry Research senior analyst Brett Eversole explained in today's edition of the free DailyWealth newsletter, futures traders have become more bullish on U.S. stocks today than they have been in more than two years. This is a good reason to start thinking about how much longer this bull run will last. Because if "everybody" is bullish, who's left to push prices higher? As Brett wrote... Sentiment always follows price. The longer a bull market goes on, the more excited investors get to own stocks. It's not plain old excitement you have to worry about, though... It's euphoria. That's when high sentiment becomes a warning sign of potential pain on the horizon. Unfortunately, we're getting near that stage. That's according to the Commitment of Traders ("COT") report on S&P 500 E-Mini futures... The COT report shows what futures traders are doing with their money. And the E-Mini contracts on the S&P 500 are simply smaller contracts. They're where most of the action is in S&P 500 futures. Futures traders have a bad habit of piling into the same bet at the worst times. That makes the COT report a useful contrarian indicator. And recently, it showed that these folks were the most bullish on stocks they'd been in years. Take a look... 
The COT reading for stocks was at a low last year. It has exploded higher since then. Again, that's no real surprise. Stocks have been on an incredible run over the past couple of years. The S&P 500 is up more than 40% since the reading bottomed last year. Now, though, the market is getting frothy. The COT spiked after the election, with traders making the most bullish bets we'd seen since April 2022... That was right when a bear market was starting to take hold. The good news is, COT bullish bets are still below the level of early 2022. Plus, as Brett continued, other sentiment indicators today are "either in no-man's-land or just getting bullish." If bullish trends strengthen, it could signal tough times ahead for the broad market. But as Brett concluded, "we haven't hit euphoria yet. And that means stocks could still move higher in the months ahead." So we're not saying today is a time to go "all out" of stocks. The S&P 500 and other major U.S. stock indexes are still trading solidly above their short-term and long-term moving averages. But after the run we've already seen, it's not time to go "all in" either. As always, mind your stop losses... and take a look at your individual position sizes in big winners like Nvidia. If they've become a larger part of your portfolio than you've realized, now could be good time to take some gains off the table.
| Recommended Links: | |  'Civil War in America? It's Much Closer Than You Think' Most Americans don't believe another civil war is possible... because they have no idea what modern civil wars look like. Yet America's leading PhD scholar on the subject says, "We are closer to civil war than any of us would like to believe." Porter Stansberry says a civil war is not only likely, but inevitable. His recent interview details exactly what it could look like, how it will start, and why. This is a must-watch new interview. | |
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New 52-week highs (as of 11/20/24): CyberArk Software (CYBR), Electronic Arts (EA), Enterprise Products Partners (EPD), EQT (EQT), Comfort Systems USA (FIX), HealthEquity (HQY), iShares Convertible Bond Fund (ICVT), Intuitive Surgical (ISRG), Cheniere Energy (LNG), Magnolia Oil & Gas (MGY), ONEOK (OKE), Oracle (ORCL), Packaging Corporation of America (PKG), Planet Fitness (PLNT), and Texas Pacific Land (TPL). In today's mailbag, feedback on market sentiment... and thoughts on Target's (TGT) earnings miss, which we also reported on in yesterday's edition... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "Hi, it would seem post-election euphoria is making people very bad at math. Take MicroStrategy, who has 98% of the company's total value in bitcoin, totaling under $30 billion. But their market cap is [around $100 billion]. This means you are paying almost 3 times more than the true value of bitcoin for exposure to it. Tesla is currently at [112] times [forward] earnings and pays no dividend while its sales are slumping. Palantir is [135] times [forward] earnings. And there are hundreds more of these ridiculous valuations in popular stocks. It feels like we are in a giant pyramid scheme and the leaders are quietly cashing out. A fool and his money..." – Subscriber Darren N. "I can't help but wonder if part of Target's volatility might be a continuing result of their previous decision to step waist deep into the political fray. I may not be alone when I made the decision at that moment to take my business elsewhere. They reversed direction, but I haven't." – Subscriber Kathy D. All the best, Corey McLaughlin with Nick Koziol
Baltimore, Maryland
November 21, 2024
Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open stock positions across all Stansberry Research portfolios. Returns represent the total return from the initial recommendation. | Investment | Buy Date | Return | Publication | Analyst | MSFT
Microsoft | 11/11/10 | 1,365.9% | Retirement Millionaire | Doc | MSFT
Microsoft | 02/10/12 | 1,324.7% | Stansberry's Investment Advisory | Porter | ADP
Automatic Data Processing | 10/09/08 | 1,074.2% | Extreme Value | Ferris | BRK.B
Berkshire Hathaway | 04/01/09 | 731.3% | Retirement Millionaire | Doc | TT
Trane Technologies | 04/12/18 | 553.6% | Retirement Millionaire | Doc | WRB
W.R. Berkley | 03/15/12 | 541.0% | Stansberry's Investment Advisory | Porter | AFG
American Financial | 10/11/12 | 495.2% | Stansberry's Investment Advisory | Porter | SFM
Sprouts Farmers Market | 04/08/21 | 449.5% | Extreme Value | Ferris | TTD
The Trade Desk | 10/17/19 | 439.6% | Stansberry Innovations Report | Engel | HSY
Hershey | 12/07/07 | 437.0% | Stansberry's Investment Advisory | Porter | Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any Stansberry Research publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio.
| Top 10 Totals | | 4 | Stansberry's Investment Advisory | Porter | | 3 | Retirement Millionaire | Doc | | 2 | Extreme Value | Ferris | | 1 | Stansberry Innovations Report | Engel |
Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio | Investment | Buy Date | Return | Publication | Analyst | BTC/USD
Bitcoin | 11/27/18 | 2,406.9% | Crypto Capital | Wade | wstETH
Wrapped Staked Ethereum | 12/07/18 | 2,291.8% | Crypto Capital | Wade | ONE/USD
Harmony | 12/16/19 | 1,155.1% | Crypto Capital | Wade | POL/USD
Polygon | 02/25/21 | 735.3% | Crypto Capital | Wade | CVC/USD
Civic | 01/21/20 | 330.2% | Crypto Capital | Wade | Please note: Securities appearing in the Top 5 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the Crypto Capital model portfolio. The buy date reflects when the recommendation was made, and the return shows its performance since that date. To learn if it's still a recommended buy today, you must be a subscriber and refer to the most recent portfolio.
Stansberry Research Hall of Fame Top 10 all-time, highest-returning closed positions across all Stansberry portfolios | Investment | Symbol | Duration | Gain | Publication | Analyst | | Nvidia^* | NVDA | 5.96 years | 1,466% | Venture Tech. | Lashmet | | Microsoft^ | MSFT | 12.74 years | 1,185% | Retirement Millionaire | Doc | | Inovio Pharma.^ | INO | 1.01 years | 1,139% | Venture Tech. | Lashmet | | Seabridge Gold^ | SA | 4.20 years | 995% | Sjug Conf. | Sjuggerud | | Nvidia^* | NVDA | 4.12 years | 777% | Venture Tech. | Lashmet | | Intellia Therapeutics | NTLA | 1.95 years | 775% | Amer. Moonshots | Root | | Rite Aid 8.5% bond | | 4.97 years | 773% | True Income | Williams | | PNC Warrants | PNC-WS | 6.16 years | 706% | True Wealth Systems | Sjuggerud | | Maxar Technologies^ | MAXR | 1.90 years | 691% | Venture Tech. | Lashmet | | Silvergate Capital | SI | 1.95 years | 681% | Amer. Moonshots | Root | ^ These gains occurred with a partial position in the respective stocks.
* The two partial positions in Nvidia were part of a single recommendation. Editor Dave Lashmet closed the first leg of the position in November 2016 for a gain of about 108%. Then, he closed the second leg in July 2020 for a 777% return. And finally, in May 2022, he booked a 1,466% return on the final leg. Subscribers who followed his advice on Nvidia could've recorded a total weighted average gain of more than 600%.
Stansberry Research Crypto Hall of Fame Top 5 highest-returning closed positions in the Crypto Capital model portfolio | Investment | Symbol | Duration | Gain | Publication | Analyst | | Band Protocol | BAND/USD | 0.31 years | 1,169% | Crypto Capital | Wade | | Terra | LUNA/USD | 0.41 years | 1,166% | Crypto Capital | Wade | | Polymesh | POLYX/USD | 3.84 years | 1,157% | Crypto Capital | Wade | | Frontier | FRONT/USD | 0.09 years | 979% | Crypto Capital | Wade | | Binance Coin | BNB/USD | 1.78 years | 963% | Crypto Capital | Wade | | 
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