Main financial assets discussed in the article:
1. Apple (AAPL) stock
2. Amazon (AMZN) stock
3. Etsy (ETSY) stock
4. Expedia (EXPE) stock
5. Booking Holdings (BKNG) stock
6. Uber (UBER) stock
7. DraftKings (DKNG) stock
8. Flutter's Fan Duel stock
9. US Treasury debt
10. VIX futures
Top 3 key points:
1. The author believes that the market was steeply overbought, with Apple being the catalyst for the recent selling. The stock was considered overvalued but could fall lower if August and September perform as expected.
2. Q2 earnings showed that there was no major downturn in consumer spending, with some companies outperforming and others underperforming. Around 80% of reported earnings beat expectations.
3. The author expresses concern about the lack of visibility for the upcoming week due to the volatility in the VIX and the 10-year Treasury yield. The movement of these indicators and their predictive power for the market is unclear.
Recommended actions:
- **Buy**: The author suggests hedging and potentially buying "insurance" in the form of hedges to protect against potential market volatility.
- **Sell**: The author mentions closing out long Call options for profits if the market climate is placid.
- **Hold**: The author plans to hold onto certain long positions, such as DKNG, UBER, DDOG, ORCL, and PLTR, with the intention of taking profits in the future. They also mention adding shares of certain stocks during market selloffs for medium and long-term holding.
Inferred possible actions:
- **Buy**: Nibbling on shares of stocks every day during market selloffs for long-term holding.
- **Sell**: Potentially closing out long Call options if the market climate is not favorable.
Main financial assets discussed in the article:
1. Bank of America (BAC)
2. Network-1 Technologies (NTIP)
3. Archer-Daniels-Midland (ADM)
4. Qualcomm (QCOM)
5. Kraft Heinz (KHC)
6. Meta Platforms (META)
7. Vanguard S&P 500 ETF (VOO)
8. Schwab U.S. Dividend Equity ETF (SCHD)
Top 3 key points:
1. The article emphasizes the importance of having a diverse set of mental models and valuation considerations when making investment decisions.
2. The author provides analysis and recommendations for various stocks based on different valuation models, such as the Graham Number, PEG ratio, and owner earnings model.
3. The author also suggests overweighting favorite ETFs, such as VOO and SCHD, to reduce downside risks and ensure exposure to broad-based market gains.
Recommended actions:
1. **Buy** Bank of America (BAC) as it is considered a stable and well-run bank with a diverse client base.
2. **Buy** Network-1 Technologies (NTIP) as it is trading close to net current asset value and has potential upside.
3. **Buy** Archer-Daniels-Midland (ADM) as it is undervalued and has strong earnings growth potential.
4. **Buy** Qualcomm (QCOM) as it has a high cumulative score of return on invested capital plus earnings yield.
5. **Buy** Kraft Heinz (KHC) as it is undervalued and has potential for debt reduction and fighting inflation.
6. **Hold** Meta Platforms (META) as it is still within range of having moderate upside despite a recent run-up.
7. **Buy** Vanguard S&P 500 ETF (VOO) and Schwab U.S. Dividend Equity ETF (SCHD) to reduce downside risks and ensure exposure to broad-based market gains.
Main financial assets discussed: Berkshire Hathaway (BRK.A, BRK.B), Apple (AAPL), Occidental Petroleum (OXY), Activision Blizzard (ATVI), Valero (VLO), HF Sinclair (DINO), Armanino Foods of Distinction (AMNF), short-term US Treasuries (TFLO)
Top 3 key points:
1. Berkshire Hathaway has a cash management strategy that aims to invest excess cash in businesses that offer quick returns and future growth opportunities. The company typically holds around 20% of its market cap in cash.
2. Retail investors can learn from Buffett's approach by considering their own cash management strategies. Holding cash can be beneficial when there are no attractive investment opportunities or when stocks are overvalued.
3. The decision to hold cash or invest in stocks depends on individual investment goals, risk tolerance, and the availability of attractive opportunities. Investors should establish their own return thresholds and consider factors such as market conditions, earnings potential, and inflation.
Recommended actions: **Hold** cash when there are no attractive investment opportunities or when stocks are overvalued. Consider investing in stocks when they are undervalued and offer good returns. Adjust cash management strategies based on individual investment goals and market conditions.
This article does not mention any specific stocks. The author's advice is to rotate out of historically overvalued financial assets and into historically undervalued critical resources. The author's core argument is that there is a high probability of a recession in the next twelve months, and they believe that the Fed's policies will contribute to this recession. The author also highlights potential risks in the junk bond market, the private equity industry, and the banking sector.
Norfolk Southern's stock performance is undervalued and a good buying opportunity according to Jim Cramer, while Sofi's stock has doubled and is expected to continue to rise; VinFast is not recommended due to poor performance and lack of sales, PG&E is positively regarded, Arrowhead Pharmaceuticals is not recommended due to losses, Accenture is praised for its CEO and expertise in technology, and Alnylam Pharmaceuticals is not mentioned in the text.
Summary: Despite the recent market volatility, three underappreciated stocks - Rivian Automotive, Apple, and Lululemon Athletica - have the potential to be lucrative investments for savvy investors in a market pullback.
