Oct 6 Post

Hi Again,

Last month the Federal Reserve, as expected, cut the interest rate by 50 BP but amazingly the

bond market kept raising rates! They are not going to get the desired effect. Mortgage rates are

linked to the 10 year treasury so mortgage rates have been rising too. The most popular ETF for

Treasuries is TLT- iShares 20+ Year Treasury Bond ETF (TLT). On 9/16/24 TLT was at $101

and by 10/4/24 it was at $95- 5.94% reduction in 18 days.

Carley Garner is an experienced futures and options broker with DeCarley Trading, a division

of Zaner Group, in Las Vegas, Nevada. Her commodity market analysis is often referenced on

Jim Cramer’s Mad Money on CNBC and she is a regular contributor to TheStreet.com and its

Real Money Pro service. Garner is also a regular on the speaking circuit and can be found at

TradersEXPOs and MoneyShows throughout the country. On 10/4/24 (CNBC), Carly stated

that most bond market professionals have a net short position on the 10 year Treasury as short

contracts increased by one million. Bloated budget deficits expected under Trump and Harris is

making bond gurus nervous. Carly expects these people to get hurt in the future as it is never a

good idea to “fight the feds”. When these people run to cover their shorts, we could see yields

going lower in a big way.

I sent my last newsletter on 9/2/24, and on 9/3/24 my predictions came true. On 9/3/24,

S&P500 was down 2%, Nasdaq was down 3% and the volatility index (aka Fear Index) was up

by 5%! My VIX call options were up by 21% in one day. Some of my put options on the

Nasdaq (QQQ) were up by 64%. On 8/16/24, I bought some call options on the VIX, expiring

June 2025, with a strike price of $20; and in 1 days, on 9/4/24, I sold them with a gain of 124%!

On 9/6/24, per Carter Worth (Carter Braxton Worth, a 35-year Wall Street veteran, is

the CEO/Founder of Worth Charting LLC. He was Head of Technical Analysis at Cornerstone

Macro Research beginning in 2016. Prior to his role at Cornerstone, he was Chief Market

Technician at Sterne Agee and at Oppenheimer Holdings Inc.) stated that the dollar has been

going down and oil has been going down and now the stock market will go down. He also

stated that Nividia is a good buy at this time and on a PE basis, it has not been this “cheap” in

about 2 years.

With the expected slow down in the economy and due to other factors (except for the 2 wars),

oil prices are expected to drop in the future. Saudis warned that if OPEC members cheat on

their contractual agreements, Saudis will bring down the price to $50. If China finally

stimulates domestic consumption, that could be bullish for oil traders. Most US experts believe

that oil will drop to $70. It is a triple top in the 5-year chart. High for the past 6 months was $82

and in 2020, it dropped below $25.

On 9/18/24, Fed Chair Jerome Powell stated:

 The economy is strong

 Inflation is at 2.2% (up to August 2024)

 The labor market had cooled

 Inflation has eased substantially

 Goals on inflation/employment is balanced now

 Now going to normalize rates without giving up on inflation (dual mandate)

 Consumer remains resilient

 Will make future decisions based on data (month to month).

 Not in a hurry to reduce rates

 Long term inflation expectations are well anchored

 All 19 members of the Fed Reserve wanted 3 more cuts in 2024

 The time to support the labor market is when the labor market is strong or else it is too

late.

 In the future, will not go down to 0% or negative rates.

Mr. Jeffrey Gundlach is CEO of DoubleLine. In 2011, he appeared on the cover of Barron's as

"The New Bond King." In 2013. After every Fed decision, Mr. Gundlach appears on CNBC and

this is what he had to say on 9/18/24:

 The Feds should have cut rates in July 2024

 Long end bond rates are up after the Fed cut as they are afraid that inflation might re-

ignite.

 Buy gold

 The Fed Fund rate will get to 3.5% prior to December 2025.

 They might cut another 50% in November (after the elections)

 They do not care about elections

 Job reports are about 75,000 overstated (per the Fed Reserve)

 Private Capital is in a bubble

 Expect weaker economic reports in the future

 Future evidence will show that a recession started in September 2024

 Powell quite confident of the future trend of inflation

 Powell does not expect a recession

 Long term bond yields will continue to rise

 Feds will lower rates by another 75 BPS

 No one knows what would happen to the housing market

 Long term Treasuries are the best hiding place for investors.

 Inverted to de-inverted yield curve is predicting a recession

 As the dollar is going down, buy foreign stocks. Gundlach is bullish on India

3

 Long bonds will not rally in the future

 Recession will be good for long bonds

 Rents are going lower but it will take time

 Private markets are bad as they do not have “market to market’ valuations

 Russell 200 will benefit more than the S&P 500.

Have a great month!

Fernando

September 2 Post

Hi Again,

I sent out my last newsletter on Sunday 8/4/24. Next day, Monday (8/5/24), the market opened

with a mini crash and for a couple of hours, no one was able to get in to their accounts at

Fidelity and Charles Schwabs. What is the VIX or the volatility index? VIX is the ticker

symbol and the popular name for the Chicago Board Options Exchange's CBOE Volatility

Index, a popular measure of the stock market's expectation of volatility based on S&P 500 index

options. Prior to 8/2/24, On 7/10/24, VIX was at 13. I bought some call options on VIX on

8/2/24 with a strike price of 50. On 8/5/24, market opened with the VIX hiking up to 65 but I

could not sell my options as Fidelity and Schwabs were both down due to heavy volume. This

all happened due to the unwinding of the “Yen Carry Trade” (mostly shorting the Yen, and

going long the NASDAQ via QQQ) as the Japanese central bank surprised the world with an

interest rate hike due to inflation in Japan. The Japanese market (Nekei) had its biggest drop

since “black Monday” in 1987. I do not believe that this story is over yet. After the Lehman

Brother went down in 2008, it took another 6 months or so for the “next shoe” to drop. Per

some experts, this event killed 3 financial institutions in the US. Per former Fed President of

Dallas, 1987 crash also was started in Asia. From 7/3/24 to 8/5/24, NASDAQ fell $2 Trillion.

8/5/24 was the worst day for S&P500 since 2022. On 7/29/24, Bitcoin was at 69,351 but on

8/5/24, it fell to 54,237. This too was a direct result of the unwinding of the “Yen Carry Trade”.

I do not believe in the Bitcoin concept (US should have banned it years ago) but on 8/5/24, I

bought some Bitcoin through an ETF. Joe Brusuelas has over 20 years of experience in finance

and economics. He specializes in analyzing U.S. monetary policy, labor markets, fiscal policy,

economic indicators and the condition of the U.S. consumer. Brusuelas provides a

macroeconomic perspective to help clients address unique issues and challenges facing their

businesses and the industries in which they operate. On 8/9/24, Joe Brusuelas stated that the

total “Yen Carry Trade” was worth $4.4 Trillion but with the leverage used, it would have a $28

Trillion impact on the global economy. For years, most experts were saying that gold and

bitcoin would act as a hedge against market crashes but we did not see this on 8/5/24. The

physical gold ETF, “GLD” was 225 on 8/1/24 and on 8/5/24, it was at 220.

September is the worst month for the market so do not be surprised to see volatility in the

market. That volatility could run for the next few months as we get closer to elections. It is

nothing more than a buying opportunity. Carter Braxton Worth is an American financial analyst

and stock market strategist. Each year since 2008, he has appeared on institutional investor's All

America Research Team, ranked as one of the Top 3 technical analysts on Wall Street. On

8/9/24, Carter Worth stated that we do not have volatility in Bull or Bear markets and when we

do have volatility, that is a sign that the market is in transition. He believes that we are

transitioning in to a bear market.

Have a great month!

Fernando

August 4 Post

Hi Again,

Look at the calendar! Historically the market peaks in August. September is the worst month of

the year for the market and most crashes take place in October. Put on your seat belts and get

ready for a ride! Market analysts talk about a “risk on” times and “risk off” times. We get the

best bargains during corrections. That's seemingly the credo for contrarian investing. Nathan

Rothschild, a 19th-century British financier and member of the Rothschild banking family, is

credited with saying that "the time to buy is when there's blood in the streets." This is why I

always advise everyone to have 25% to 50% of your portfolio in cash at all times. Even if you

have a real loss in one place, you can easily recover in the stock market. It is not that easy in the

bond market. For many months, the market astrologer Merriman has been predicting that in

November 2024, the US stock market will hit a 4 year low. Many countries had elections in

2024; and all those markets fell sharply in 2024. I always keep some put options on the

S&P500 (SPY) as hedges. As the market falls, I buy more hedges. Consider what happened to

the volatility index! On 5/11/24, it was at 11.80. On 8/2/24 it ended at 23! If I was smart enough

to buy call options on the VIX on 5/11/24, I could have easily made a 1,000% profit in 53 days!

During the past 5 years, the highest point reached by VIX was 65 (panic at the highest point).

Since 11/28/21, the highest point reached by VIX was around 30. Usually when the VIX is

between 30 and 70, it is a good time to buy stocks. On 8/1/24, the Dow (DJIA) had an intra day

low of 750 points and on 8/2/24, the intra day low was 898. Per CNBC, 8/1 and 8/2 volume

was mainly due to hedge fund purchases and sales. It is going to be an interesting Fall 2024! Be

defensive for the next 4 months.

I love studying stock and Index option tables. I find it very interesting to see what some are

buying and selling. When the covid crisis hit China, we were assured that covid will not get to

the US but it was unrealistic. When covid hit China, Disney was at about $150 and one put

option contract with a strike price of $50 (expiring in one year) was going for $90. I thought the

probability of Disney falling to $50 in one year was less than 1% but like buying a lottery, I

bought some-assuming that I will end up losing everything. In one week, the paper value

doubled and in 3 months when Disney considered opening their parks in China I sold my put

options. What I bought for $90, in 3 months, I sold for $850! That is the magic of options. Last

week I was amazed to find more than 100,000 put option contracts on the S&P 500 (SPY)

below $150 within the next 12 months. I heard that most of these were bought by hedge funds.

What does this mean? On 7/16/24 SPY hit a high of $565. For SPY to get to $150 within one

year, the market has to fall 73% within one year. In my opinion, the probability of that

happening is less than 1%. Per market astrologer Merriman we are long overdue for a 90%

correction. We cannot control what would happen but we can react accordingly. On 7/22/24, I

bought some SPY put options (expiring 3/21/25) with a strike price of $180. The probability of

losing everything was 99%. On 8/2/24, those options had a paper gain of 135% in 11 days!

2

For the past few months, Gundlach has been advising people to move from stocks to bonds

(especially, bond funds). That is a no brainer as interest rates fall, bond prices rise. Over the past

4 years I have gone in and out of bond fund ETFs and I have done very well. I prefer to use the

bond ETF known as “TLT”. iShares 20+ Year Treasury Bond ETF (TLT). Even though I

was very late to the party this time, I purchased some call option on TLT on 8/1/24 and on

8/2/24. On 8/2/24 alone TLT rose by 3%-which is rare for a bond fund. On my TLT call options

purchased on 8/1 and 8/2, I did not expect to make money till September 2024. On 8/1/24, TLT

opened at $95.14. On 8/2/24, TLT closed at $98.28. On 8/1/24, I purchased some TLT call

options with an expiry date of 4/17/25 with a strike price of $105. In other words, expecting

TLT to be above $105 on 4/17/25. Those call options went up by 105% in 2 days! On 8/1/24, I

also purchased some TLT call options expiring 4/17/25 with a strike price of $110-expecting

TLT to be above $110 on 4/17/24. Those were up by 61% in 2 days! Then on 8/2/24, I also

bought some TLT call options with an expiry date of 6/20/25, with a strike price of $110-

expecting TLT to be able $110 by 6/20/25. Those options rose by 12% in 8 hours! I do not

expect TLT to go up in a straight line. We are sure to have “counter trend” moves. Even though

I have been only trading TLT for bonds, now due to the “re steepening” of the yield curve, it is

better to go long on the short end; specifically, the ETF, “IEF”. iShares 7-10 Year Treasury

Bond ETF (IEF) .

On 7/30/24, for our portfolio, I replaced Intel with Nvidia (NVDA). When it goes down in price

I will purchase more and decrease the average cost. For the past 4 months, on a weekly basis, I

was selling “covered call options” (for each 100 stocks owned, selling 1 call option that expire

in 7 days) on Intel. For those 4 months, I got a 7.5% gain per month on selling these Intel call

options. Prior to 8/1/24, their lowest point was $30. The highest point for the past 2 years was

$50. Per company reports given prior to 8/1/24, most experts expected very good results from

Intel. In fact, apart from selling covered calls on Intel, I bought some call options on 7/11/24

and in one day, they were up by 18%. Then came Intel earnings on 8/1/24! It was terrible! Intel

had its worst day since 1974 and fell 33%! All what I earned by selling covered calls got wiped

out. Fortunately, due to the put options I owned on Intel as “hedges”, I recovered 1/3 of my

loss. I should have had more puts as hedges. In the future, when I sell covered calls (probably

not on Intel), I will have more puts as hedges. Even if those hedges go down to zero, those are

tax deductible. Learn and live! Some are comparing Intel to Boeing but most agree that Boeing

is in a better position. If Intel loses the billions it gets from the government, it might declare

bankruptcy.

Jeffrey Gundlach was formerly the head of the $9.3 billion TCW Total Return Bond Fund,

where he finished in the top 2% of all funds invested in intermediate-term bonds for the 10

years that ended prior to his departure. Whenever the Federal Reserve makes a decision on

rates, Gundlach comes up on CNBC. This is what Gundlach stated on 7/31/24:

 The stock market could go up now as the Feds signaled a rate cut in September.

 Jerome Powell was over-prepared for the meeting.

3

 Unemployment rate is going up and the Federal Reserve is keeping close tabs on it.

 Expect 3 rate cuts in 2024.

 In the second half of 2024, expect to see a lower rate of inflation- “seasonality of

inflation”.

 Feds will cut more than what the market expects.

 In September 2024, we .will discover that we are in a recession.

 People who are losing jobs cannot find other jobs.

 Government is hiring more to manipulate labor numbers.

 Hi Yield Bonds are very attractive. 8% can be found in safe bonds.

 Gundlach likes gold.

On 8/2/24, Citibank announced that we are already in a global recession

Have a great month!

Fernando

July 2 Post

Hi Again,

The 3 tech stocks we added to our portfolio on 6/1/24 (Adobe, Dell Tech and Salesforce) had an

average gain of 22% in June; which led to a 36.53% gain for the total portfolio in June. The

market had a pretty good first half of 2024. Everyone is talking about NVIDIA. Now the

biggest market cap stock in the world! $3T Mkt cap as of 6/30/24. On 6/10/24, it had to 10 to 1

split. On 6/11/24, I bought some call options expiring January 2025 and in 2 days, my call

options were up by 25%! Two years ago, I bought some NIVIDIA at $117, hoping to buy more

when it drops but it kept moving up. I do not like to buy more when the stock prices go up as it

increases my average cost. By 6/7/24, NVIDIA was up by 1000% !!

Larry Richard Williams (born October 6, 1942) is an American author, stock and commodity

trader, Williams is the author of 11 books, most on stocks and commodity trading. Williams has

created numerous market indicators, including Williams %R, Ultimate Oscillator, COT indices,

accumulation/distribution indicators, cycle forecasts, market sentiment, and value

measurements for commodity prices.[8][9] Williams won the 1987 World Cup Championship of

Futures Trading from the Robbins Trading Company, where he turned $10,000 to over

$1,100,000 (11,300%) in a 12-month competition with real money. On 6/14/24, on CNBC,

“Mad Money”, Larry stated that NVIDIA is close to a temporary top and it should fall to around

$90. On 6/18/24, it made an intra day high of over $140 and ended the day at $136. From

6/18/24 to 6/24/24, it fell from $136 to $118! Stay tuned! If NVIDIA goes down 25% to 50%, it

would be a perfect buying opportunity!

A couple of years ago, when everyone was bullish on regional banks, I bought put options to

short sell regional banks through the ETF, “KRE”. When the Silicon Bank failed in 2023, my

put options tripled in price. A few months ago, once again, expecting the Feds to cut rates, Wall

Street was bullish on regional banks. I do not agree. Even if interest rates go down, it is very

unlikely that we will see zero percent rates again. If we do, we will have a huge problem with

inflation and another global economic disaster. Regional banks are going to have crisis as the

office real estate crisis grows all over the US. According to one estimate, these real estate

companies have to increase rents by 42% to stay alive. With very high vacancy rates, that is not

possible. In my opinion, by the end of 2026, we should see this negative impact on regional

banks. Therefore om 6/12/24, I bought some put options (to short sell) regional banks (ETF,

“KRE”) that expire in December 2026. Once again I expected the prices to drop in the short run

so I can buy more and make a profit around December 2026. In just 14 days, on 6/26/24, my put

options were up by 51%! If the Feds lower rates later this year, regional banks (KRE) will go up

and my put prices will go lower; which will give me a chance to buy more.

Jeffrey Edward Gundlach (born October 30, 1959) is an American businessman, investor, and

philanthropist. He is the founder of DoubleLine Capital, an investment firm. Gundlach was

formerly the head of the $9.3 billion TCW Total Return Bond Fund, where he finished in the

top 2% of all funds invested in intermediate-term bonds for the 10 years that ended prior to his

departure. He was fired by TCW in 2009. In the aftermath, Gundlach and TCW sued each other

and went to jury trial in California; TCW alleged that Gundlach stole trade secrets (TCW

prevailed, but was awarded $0 for the claim), Gundlach sued over compensation claims

(Gundlach prevailed, and was awarded $66.7 Million). In 2009, shortly after his firing from

TCW, Gundlach founded Doubleline, along with Philip Barach and 14 other members of

Gundlach's senior staff from TCW. Barach was Gundlach's co-manager of the $12 Billion TCW

Total Return bond fund. In a February 2011 cover story, Barron's called him the "King of

Bonds" On 6/12/24, soon after the Fed decision, Mr. Gundlach made the following

observations:

 Powell is neutral now.

 Powell used the word “balance” quite a bit.

 Less confident of a rate cut in 2024.

 Powell is in a reactionary mode.

 Feds are tilting towards a rate cut but a rate hike is possible in 2024/2025.

 Labor market is weakening but not in a major way.

 We are receiving highly contradictory information on the economy.

 Next move should be a rate cut.

 Money Supply M2 is way above pre-pandemic levels and it is growing.

 Inflation depends on the life style of the person. Top 50% of people are doing well and

the bottom 50% are in trouble.

 Unemployment rate dipped below 4%-first time since 1960. Expected to be at 4.4% by

December 2024.

 Government might try to bring down gas prices.

 Some low risk bonds have a yield of around 8% per year.

 The stock market needs rate cuts to survive.

 Still bullish on Gold and India (strongest economy).

 Current situation is comparable to 1968.

 It would be suicidal to extend tax cuts which is a blow to deficits.

Have a great month!

Fernando

June 3 Post

Hi Again,

Have you heard of “Sell in May and go away”? If others sell, it would create an opportunity for

us to buy. We saw that in some tech stocks over the past few weeks. Salesforce (CRM) dropped

from $270 to $212 ! I bought some and when it goes down further, I will buy more. However,

on 5/31/24, CRM was up by 7%. Dell dropped from $179 to $131. I bought some and when it

goes down further, I will buy more. Since January, Adobe (ADBE) has dropped from $634 to

$444. Nathan Rothschild, a 19th-century British financier and member of the Rothschild

banking family, is credited with saying that "the time to buy is when there's blood in the

streets." As for our newsletter portfolio, I replaced Delta Airlines, Southwest Airlines and

WYNN with Salesforce (CRM), Dell Computers (DELL) and Adobe (ADBE). These will

appear in the July 2024 scorecard. I seriously considered adding Pfizer (PFE) as it has a chance

of doubling over the next 5 years. On my personal accounts, I have been making money selling

covered call options on Pfizer (PFE).

Have you been noticing that it was with great difficulty that the Dow (DJIA) went above

40,000? It only managed to stay above 40,000 only for 3 trading days! On 5/31/24, call options

on DJIA (DIA) at 40,000, expiring 6/7/24 is going for 2 cents or $2 per one contract (or 100

shares of DIA). This implies that no one expects the DJIA to be above 40,000 on 6/7/24.

According to CNBC on 5/28/24, Office Real Estate loans maturing in 2024 is at $30 Billion!

These loans are getting refinanced at high rates. If landlords want to break even, they have to

raise rents by 42%. Banks will sell debt creating a once in a lifetime opportunity. Prices are at a

25 year low. Probably, this is a good time to short regional banks (KRE) again.

The rise of private credit over the past decade has been nothing short of monumental.

But JPMorgan Chase CEO Jamie Dimon warned this week that parts of the burgeoning sector

have some of the same problems that the mortgage market had prior to the Great Recession of

2008, including questionable credit ratings from ratings agencies. “I’ve seen a couple of these

deals that were rated by a ratings agency, and I have to confess it shocked me what they got

rated,” he said at a conference Wednesday, per Bloomberg. “It reminds me a little bit of

mortgages.” Right after these comments, Dimon said when it comes to private credit, there's

been a similar dynamic at play today. The private credit market, where non-bank financial

institutions like insurance companies and hedge funds lend to corporate borrowers, has had a

renaissance in recent years with banks reducing their lending due to regulatory scrutiny,

inflation, and higher interest rates. Assets and committed capital in the sector surged from

around $500 billion a decade ago to $2.1 trillion last year, according to IMF data. And private

credit assets under management are expected to hit $2.8 trillion by 2028, according to  Preqin’s

2024 Global Report .on’t expect it to be systemic, but I do expect there to be problems,” Jamie

Dimon added. (Will Daniel, Yahoo Finance, 5/30/24)

Have a great month but do not sell and go away!

Fernando

May 6 Post

Hi Again,

Who is Jeffrey Gundlach?

Gundlach was formerly the head of the $9.3 billion TCW Total Return Bond Fund, where he

finished in the top 2% of all funds invested in intermediate-term bonds for the 10 years that

ended prior to his departure. He was fired by TCW in 2009. In the aftermath, Gundlach and

TCW sued each other and went to jury trial in California; TCW alleged that Gundlach stole

trade secrets (TCW prevailed, but was awarded $0 for the claim), Gundlach sued over

compensation claims (Gundlach prevailed, and was awarded $66.7 Million).

I have a lot of respect for Gundlach. After each Federal Reserve decision on interest rates,

Gundlach gets invited to give a talk on CNBC. On 5/1/24, here is a summary of what Gundlach

had to say:

 Powell hopes that inflation will continue to go down without another rate hike.

 We will get a rate cut (1) in 2024.

 Corporate bonds have a rate over 7% at this time. (Tough competition for the equity

market).

 This is a good environment for the moderate risk takers.

 Long end treasuries are not that attractive. The 10 year is better than the 30 year treasury.

 Gundlach agree with Powell that there is no indication or threat of stagflation. The

economy is not shrinking. Unemployment very low around 3%. During the stagflation

years under Jimmy Carter, unemployment rate was at about 10%.

 Gundlach will follow commodity prices on a monthly basis. This is how we can see what

will happen to the rate of inflation in the future.

 We will not have a recession in 2024.

 Corporate layoffs have been increasing but new unemployment claims have not being

rising. This implies that the labor market is strong and those who lost their jobs have been

able to find new jobs.

 Unemployment rate will go up.

 Federal Reserve may end up raising rates in the future.

 Gundlach is neutral on equities and he favors equities in Japan, Mexico and India.

 Gundlach is bullish on gold.

 If we go in to a recession, the dollar will weaken.

 Oil is stable around $80. If oil goes over $90, the Federal Reserve will have a problem.

No chance of a 2% inflation rate.

 The Fed confirmed that starting in June, it would slow the rate at which it's reducing the

size of its balance sheet. The Fed expects to lower the Treasury securities monthly

2

redemption cap from $60 billion to $25 billion, a slower-than-expected change in pace. –

This is like a rate cut.

We have to keep an eye on the commodity markets. Dow Jones commodity market index made

a short term bottom on 2/23/24; and thereafter it rose steadily to a peak on 4/29/24. If oil goes

over $100, we might have a recession but as soon as we expect a global recession, oil prices

will drop like a lead balloon.

We had a lot of volatility in the stock market over the past 2 months. VIX is the COBOE

volatility index. On 2/4/24, the VIX was at 12.93. On 4/14/24, the VIX was at 18.71! This

rarely happens! I should have bought some call options on the VIX around 2/4/24.

Larry Williams has taught thousands to trade the markets, and has been the only futures trader

in the world to repeatedly trade $1 million of his own money. On 4/24/24, Larry stated that the

equity market will bottom around 5/20/24.

Carolyn Boroden (“Fibonacci Queen”) , who is renowned for her expertise in Fibonacci price

and timing analysis, joined our ElliottWaveTrader analyst team in December 2019. On 4/4/24,

Carolyn stated that Apple will bottom in the mid-160s. She has been quite accurate on

predicting future prices of Apple.

Thomas Lee is a Managing Partner and the Head of Research at Fundstrat Global Advisors.

Tom Lee is one of the most bullish analysts and he has been one of the best during the past 3

years. Tom Lee strongly believe that the Russell1000 (small stocks) will rise by 50% within the

next 12 months.

As I have stated many times in the past, all the best “pundits” of Wall Street speak with one

voice at all times. I have made money by betting against these “pundits’. That is how I found

good bargains on Disney, Meta, AMD etc. For years, they were negative on MMM but when

they got a new a CEO, I purchased a call option on MMM on 3/13/24. On 3/21/24, Josh Brown

(one of the best on Wall Street) stated that this is a good time to buy MMM. By then (3/13/24 to

3/21/24), my call option had gone up by 40% in 8 days!

Around January 2023, as Tesla was dropping like a lead balloon, all the Wall Street “pundits”

stated that Tesla is good as dead (due to competition). I disagreed; one and only reason for the

drop was that Musk sold a big portion of his Tesla stocks to buy Twitter. I was able to buy

Tesla (TSLA) at $106 on 1/3/23. Then on 7/9/23, Tesla peaked at $281! Once again, a few

months ago, all Wall Street “pundits” started ganging up against Tesla and they removed it from

the “magnificent 7”. As it was going down I kept buying it. Tesla is not a car company; it is a

technology company. On 3/14/24, CNBC stated that they only get 40% of their revenue from

cars. On 3/14/24, Wells Fargo analysts predicted that Tesla would fall to $125. That would have

3

been great for me. This time I bought my last installment when Tesla was at $141.50 on

4/22/24. One day I got up too late to buy it when it fell to $139. On 4/29/24, Tesla rose to $194!

Why? Previous weekend Musk visited China and he was given an amazing reception by the

Premier of China and more freedom to test their “driverless” technology in China. Like Apple,

Tesla is in the process of developing a revenue stream through monthly subscriptions. Ford,

GM and others tried it but failed. Tesla could succeed.

In the Fall of 2022, all Wall Street “pundits” were extremely negative on Meta/Facebook and

Zuckerberg. They said that Zuckerberg is lost in his metaverse! From the day Facebook came

public, from time to time, this has been happening on Wall Street. On 10/31/22, Meta bottomed

at $90 and I managed to buy it at $98 on 10/27/22. Now all those “pundits” say that it should

not have gone that low in 2022. On 4/1/24, it peaked at $527! A few days ago, Mark

Zuckerberg told Wall Street that he is going to spend billions of dollars on AI research over the

next few years. Then these “pundits” stated that they will trust him and be patient with Meta. I

have my doubts. Quarter after quarter, year after year, when they report their financials, all

these “pundits” will gang up against Meta; and once again and run away from the stock. That is

good for us. That will provide another great buying opportunity! Just imagine it going down to

$100 and rising to $500 in another 2 years!

Have a great month!

Fernando

March 11 Post

Hi Again,

We had a 12.9% gain in February 2024.

Once again, after the Feds decision on 2/13/24, Jeffrey Gundlach (“New Bond King?”) stated

the following on CNBC:

 Now real interest rates are reasonable.

 Due to the high debt level, we cannot maintain high rates for long.

 If rates go up, we will have a volatile market.

 Market expected 6 rate cuts in 2024-simply absurd!

 The Federal Reserve care about “optics” so they tend to be less aggressive during election

years.

 3 month CPI annualized rate is going up.

 If PCE (inflation) go up, Feds cannot lower rates.

 2 Year yield shows that in 2 years, interest rate will be less than 1%.

 Last year, “big tech” expected a return of 11% but we only got 1%.

 Probability of a rate cut in May is low now.

 88% of states report unemployment rose over the past 6 months- only states like

Wyoming and North Dakota are doing okay.

 Most bullish on India.

 He recommends 40% in bonds, 25% in cash and 35% in stocks.

Apple after reaching $195 on 12/11/23, dropped to $169 on 3/7/24. China sales dropped by

25%. Less dependent on China is a good thing. If you do not own Apple, it is a good time to

start nibbling and buy more as the price drops. China has been disappointing investors for a

long time. Their youth unemployment rate is so high, the communist party stopped reporting

those stats. Since they cannot revive domestic demand, they are trying their best to tap in to

overseas consumers. Essentially, China (Peoples Republic of China) is exporting deflation.

Larry Williams has created numerous market indicators, including Williams %R, Ultimate

Oscillator, COT indices, accumulation/distribution indicators, cycle forecasts, market

sentiment, and value measurements for commodity prices.[9][10] Williams won the 1987

World Cup Championship of Futures Trading from the Robbins Trading Company, where he

turned $10,000 to over $1,100,000 (11,300%) in a 12-month competition with real money. On

3/5/24, Larry stated:

 This market will go from a “melt up” to a “melt down”.

 Expect NASDAQ to peak around 3/15/24.

 Expect NASDAQ to go down from 3/15/24 to 5/31/24.

2

If we have a serious market correction, before long, we will be able to get to a temporary

bottom. All the people who missed out on this rally are waiting for an entry point. As of 3/1/24,

CNBC reported that we have $6 Trillion in money market funds. People like Gundlach believes

that most of that money will go in to long term bonds but I expect a good percentage to get in to

stocks.

Now to the “darling” of the stock market- Nvidia. On 10/11/22, I bought some at $117. My

strategy was to buy more when the price drops; but I never got a chance. On 3/7/24, it reached a

peak of $926! On 3/18/19, it had a market price of $44! 3/7/24 to 3/8/24, NVIDIA dropped

from $926 to $875 and most “pundits” stated that this was the end of road for NVIDIA.

Nonsense! NVIDIA is the most active stock option in the option market and 3/8/24 was an

option expiry day-that was the cause.

Have a great month!

Fernando

February 12 Post

Hi Again,

Disney! Disney! Remember what I have been mentioning about Disney for the past few

months? Remember how all the best “pundits” and money managers lost all hope and

confidence in Bob Iger and the top managers of Disney? I kept buying (on my personal

account) according to my strategy. I bought one at a certain price when it went down further

(i.e. 10%) sold that and bought 10 at the lower price; and I kept doing this till I got to the

bottom. On 9/25/23 I found the bottom of Disney at $80.74. On 2/8/24, Disney hit $110! That

is a 37+% gain in 136 days!! Poor Josh Brown! He was waiting for Disney to hit $70 to buy !

Now it is difficult to find any “haters’ of Disney. What made Disney shoot up last week? Very

good news came out last week. 50% increase in dividends. Earnings to grow 20% in 2024 (over

2023). Many movies will come out soon. Entry in to the gaming world dominated by teenagers.

Finding partners for ESPN.

How about Meta/Facebook? I did the same with it and when all the Wall Street pundits were

negative on Zuckerberg, I found the bottom and bought it around $85. Experts were saying that

Zuckerberg has lost his way and he is a fool to invest so much on the Metaverse etc. and they

have no way of monetizing etc. That was nonsense. Meta/Facebook always had tools such as

Whatsapp (2 billion+ subscribers) to monetize. When they started laying off people, the stock

went up. Wall Street rejoices in human misery. Now all the experts are saying that Meta should

have never gone down to $85. Last week it hit 478!

Management is so confident in the company's prospects that Meta declared its first-ever

quarterly dividend of $0.50 per share, a yield of about 0.44%. Marketers pulled back on

digital ad spending -- which accounts for the lion's share of Meta's revenue. For the first

time in its history, the company experienced three consecutive quarters of declining

revenue growth, which sent its stock price plunging 64%. However, a rebound in the ad

market and excitement around artificial intelligence (AI) lit a fire under Meta Platforms last

year, sending the stock up 194%. As impressive as its performance has been, this could

be just the beginning. Let's look at several factors that could play into a banner year for

Meta Platforms and why there could be much more growth ahead. The macroeconomic

landscape aside, one of the biggest contributors to Meta's improving outlook was the

efforts it took last year to rein in spending, which CEO Mark Zuckerberg dubbed the

company's "year of efficiency." Initially, management expected full-year 2023 expenses in

a range of $94 billion to $100 billion. However, several revised estimates and much belt-

tightening later, Meta's expenses for the year, combined with the recovering digital

advertising market, had a dramatic effect on Meta's recent financial results. For the fourth

quarter, revenue of $40 billion marked 25% year-over-year growth, while its diluted

earnings per share of $5.33 represented a 203% surge. Meta has already said it expects

its full-year expenses to be higher in 2024, but existing cost controls have already set the

stage for higher profits.ar clocked in at just $88 billion -- which in turn helped boost the

company's bottom line. (Danny Vena, The Motley Fool, 2/10/24)

2

The secret to making money is easy but difficult to do. Over the past 40 years I have

noticed that most Wall Stret “experts” are on the “same page” – at any given time. Also,

known as the “herd mentality”. When you follow the “herd” and when the “herd” goes in to

the slaughterhouse, you also get slaughtered! I am going to love AI on Wall Street as I can

bet against AI and AI will create more of a “herd mentality”. AI is not the “voice of God”. AI

will be the summarization of the collective voice of Wall Street experts. The secret to

making money on Wall Street is to intuitively or analytically know when the “experts” are

wrong and go in the opposite direction-very cautiously, and slowly.

Irrational Wall Street! All the experts expected 8 interest cuts in 2024 with the first one coming

in March 2024! The probability of that happening is very low and if it does, we will have a

worse problem with inflation. As the experts expected rates to drop sharply and fast, the value

stocks, small caps and others that got left behind over the past few years rallied. It seems like

that was very short lived.

After every Fed decision, bond king, Jeffrey Gundlach come on CNBC. I have a lot of respect

for Mr. Gundlach. Here are some of the things he mentioned on 1/31/24:

 85% of the states reported that inflation is on the rise again.

 Yet, inflation is coming down so interest rates will come down.

 Feds took too long to normalize rates and now they might take too long to reduce rates.

 Probably the Feds will cut rates after June 2024.

 Powell not concerned about politics or holding on to his position.

 When people refer to the market as “goldilocks” or “nirvana”, it makes him nervous as

the same happened in 1999.

 Buy treasury bonds but keep away from other bonds.

 Still a 2024 recession is possible.

 Buy 2 to 5 yr bonds.

 ADP payroll data not good. Bonds were down.

 Fed policy of higher for longer is bad for banks; especially regional banks.

 Money printing and higher for longer will have negative effects but those move in slow

motion, taking a long time.

 2028 will be year when deficits will be the main issue in elections-not 2024.

 Treasury real rates are attractive now.

 The US Dollar will remain stable and get weaker when we hit a recession.

 People should invest in the Indian market as it is the most promising economy.

Did you hear that the US commercial real estate market is heading towards doomsday? The real

estate crisis in the People’s Republic of China is very severe. The real estate crisis in Germany

is expected to be worse than the US real estate crisis of 2007. Stay tuned!

Have a great month!

Fernando

January 3 Post

Happy New Year, Everyone !!

2023 was a good year for the “market”; especially for the “magnificent 7”. Our portfolio went

up 53.51% from 1/1/23 to 12/31/23. The “DOW” aka DOW30 went up 13.73% in 2023-

33,148.90 on 1/3/23 to 37,701.63 on 12/29/23. Even though I bought Meta/Facebook when it

reached $85, I did not add it to our portfolio; or else, our gain would have been much greater.

Top 100 on NASDAQ or the NASDAQ100 was up more than 50% in 2023-only second to

1999. As it happened in 1999, we could be getting “too frothy”. It is impossible to find anyone

on Wall Street that is not bullish about 2024. That is scary! As a hedge, I put a little bit of

money in to S&P500 (SPY) put options. Towards the end of the year, assuming that the Federal

Reserve is done raising interest rates, “value stocks” or the 493 S&P500 stocks that missed out

on the bullish run, took part in the bull market. Some expect rates to fall to 0% but that is just a

pipe dream. If we go in that direction, inflation will flare up again and the Feds will tighten

again. We saw this movie in the 1970s with Arthur Burns running the Federal Reserve. Powell

keeps saying that he wants to be more like Volker than Arthur Burns (to kill inflation) but no

one believes him. We have to be cautious. As Warren Buffet says, “ Get fearful when others are

greedy and get greedy when others are fearful”. Even small caps (Russell 2000) had a mighty

gain during the last part of 2023. Most brokerage firms predict that the S&P500 will end 2024

at 5200 and at 6,000 by the end of 2025. Tom Lee who had been the best bull on Wall Street,

predicts the Russell 2000 will go up by 50% in 2024. Professor Siegel is confident that value

stocks will dominate 2024. With all this optimism, we could have a serious correction in 2024

but that would be another buying opportunity. In other words, if the market goes up or down, it

is just a win-win situation. We have to stay calm and act rationally.

On 12/13/23, Josh Brown (good money manager) stated that we could have a recession in 2024.

The Federal Reserve should get the credit for getting rid of a 9% inflation rate with no

unemployment. Once again, we got lucky. Economic slowdown in China and some other

countries, created deflation that got exported to the US. Price of oil/gas is the best example.

One of the smartest people on the “Street” is the new bond king, Jeffrey Gundlach. After every

Fed decision, Gundlach shares his perspective on CNBC. In that tradition, on 12/13/23, he

made the following observations:

 We will have a recession in 2024.

 People expect $6 Trillion in “money markets’ (T Bills) to flow in to stocks but Gundlach

believes that most of that money will flow in to long term bonds.

 Feds will lower rates before inflation gets to 2%.

 Inflation, due to time lags, will go down significantly by June 2024.

 Feds may have to cut rates more than currently expected.

 The economy will undershoot on the downside so stocks and bonds will pivot in 2024.

 Studying trends in the commodity market, inflation could go down to 0% in 2024.

 In 2023, we had the biggest gain in bonds since the 1980s.

 Expect a year of great volatility in 2024.

 Stocks need bonds but bonds do not need stocks. By June 2024, bonds will not need

stocks and bonds will go up.

Have a great 2024!

Fernando

December 4 Post

Hi Again,

Look at our scorecard! In November 2023, our portfolio increased by 15.55%! Prior to August

2023 we had gains but 8/1/23 through 10/31/23 we had a total loss of 13.18% so our November

gain more than made up for our 2023 losses. Like clockwork, in most years, we get a bear

market August through October; and we get bull rallies during the November/December period.

Since the market gains were so strong in November, we should have a correction soon.

Disney! Disney! Time to brag! For the past few months, I mentioned how all “Wall Street

experts” hated Disney and yet I believed in Bob Igor and Disney; and I kept buying Disney on

the way down. Guess what? Now it is difficult to find a “Wall Street expert” who does not love

Disney! On 11/10/23, Yahoo Finance announced, “Disney has its mojo back”! On that day

alone Disney surged by 7%. At the bottom, I purchased Disney at $80.74 on 10/27/23, and on

11/24/23, it was at $96! That is a 19% gain in 28 calendar days! Retail investors listen to the

“market experts”; and even when experts get bullish, retail investors remain pessimistic. They

tend to buy when prices are too high and end up selling at a loss. Per CNBC, 69% of retail

investors are still bearish on Disney. On 11/15/23, CNBC announced that 2 billionaire activist

investors are taking a big stake in Disney. Even if you exclude all other businesses held by

Disney, their parks alone is worth $80 per share. One of the best on Wall Street, Josh Brown,

was waiting for Disney to go down to $70 to buy in to Disney. This is why we have to keep

buying on the way down. As it is said on Wall Street, no one will ring a bell at the bottom. On

11/30/23, after hating Disney for months, Jim Cramer announced, “Disney is my favorite

stock”. Better late than never!

Disney (DIS) stock surged roughly 7% on Thursday after the company reported strong

earnings the previous day and increased its annual cost cutting goal to $7.5 billion, up from the

previous $5.5 billion set in February. Analysts praised the move with Wells Fargo's Steve

Cahall writing the company has its "mojo back" — despite the stock continuing to face multi-

year record lows and another battle with activist investor Nelson Peltz. Cahall increased his

price target to $115 a share, up from the prior $110 — citing the cost cuts, coupled with positive

free cash flow guidance. He reiterated his Overweight rating.” Disney is our #1 media idea,"

Cahall continued. "Bob Iger has been under the hood for about a year now, and the strategy is

taking shape." On the earnings call, the company said it expects free cash flow to balloon to

pre-pandemic levels of approximately $8 billion in full-year 2024, assisted by lower content

spend. Disney expects to spend $25 billion on content next year versus the $27 billion spent in

full-year 2023. Moffettnathanson said the free cash flow guide was the "single most critical

take-away" from the report. Iger said the company will be focused on "four key building

opportunities" moving forward, which will include "achieving significant and sustained

profitability in our streaming business, building ESPN into the preeminent digital sports

platform, improving the output and economics of our film studios, and turbocharging growth in

our parks and experiences business." (Alexander Canal, Yahoo Finance, 11/9/23).

2

As I have been saying for the past few months, my other great find was being long on the ETF

called TLT; iShares 20+ Year Treasury Bonds. It is very difficult to see bond/ETF price

appreciation in the bond market; but we had the best bond market gains since the 1980s! As

rates/yield was going up I keep buying TLT (as bond yields go up the price level goes down);

and I bought my last purchase when the TLT hit $82.93 on 10/19/23, and on 12/1/23, TLT was

at $93- 12.9% gain in 32 days! Unlike what I saw with Disney and other stocks, most money

managers were buying in to TLT; but I got in before most of them got bullish on TLT. When

Bill Ackman was shorting TLT, I was buying TLT. When the Federal Reserve started raising

rates, I shorted TLT with put options and made some good money. This is what I call a “no

brainer”. If TLT goes below $82.93 with higher yields, I will sell what I have and buy more at a

lower price-Easier to monitor my portfolio that way. That is my market discipline. While I wait,

I get a good yield; and this is the 100% risk free instrument in the world (US Treasuries)!

Now for the defense stock RTX. A few weeks ago, all the Wall Street experts got negative on

the stock; and Jim Cramer shouted “sell, sell”. So around 10/2/23, I bought a few shares; and

my strategy was to buy as it declined more. Then came the Middle East war, and the rest is

history. On 10/2/23, RTX was at $70 and on 12/1/23, it was at $82! In just 59 days, it rose by

17%! Now Jim Cramer is shouting that RTX is well reserved for their potential losses and we

all should buy RTX! Better late than never!

Sept 14 (Reuters) - Aerospace giant RTX Corp (RTX.N) on Monday told airlines hundreds of

their Airbus jets would be grounded at any one time in coming years to check for a rare

manufacturing flaw, souring the mood in an industry that was only just experiencing some relief

from supply chain pressures. It is the latest manufacturing defect to hit planemaking this year,

after separate quality issues with another big supplier Spirit AeroSystems (SPR.N). RTX unit

Pratt and Whitney's popular Geared Turbofan (GTF) engines were designed for better fuel

efficiency and fewer emissions. The engines have become popular and now compete with the

LEAP engines produced by CFM International to power the Airbus A320neo. But concerns

over its performance have swirled in recent months after engines faced problem with durability

in hot and dusty climates, requiring more frequent maintenance. In July, RTX disclosed it had

found microscopic containments in powdered metal, used to manufacture high-pressure turbine

discs that are part of engine's core, and presence of which could lead to cracks in the engine.

RTX said at that time that 200 engines would require "accelerated inspection" with 60 days to

fix each engine with a contamination issue. However, on Monday RTX widened the scope of

inspections, to pull around 600 to 700 engines off their Airbus jets and projected repair work to

last up to 300 days per engine. (Pratyush Thakur, Reuters, 9/4/23)

On 11/14/23, CEO of J P Morgan, Jamie Dimon stated that even though inflation is going

down, we are no where close to a desired level; yet on 11/14/23, CPI going down raised the

S&P 500 index. Health insurance went down by 35% but that was due to the new way the

government is making these calculations. Mere cosmetics! Market advances to market decline:

10:1. Very impressive and proof that the market is broadening. Russel 2000 outperformed the

S&P500 by 3.5% on 11/1/4/23- and in history, that has happened only 3 times and only once

3

since 1987! Since 10/27/23 (to 12/1/23), Russell 2000 rose 14% in just 31 days! I think it is

premature; and I rarely invest or trade in “small stocks”. The market is expecting the Federal

Reserve to cut rates in 2024 Q1 but Chairman Powell keeps reminding that rates will continue

to be higher for longer. Even the Regional Bank Index KRE rose by 21% within the past 31

days! I am still shorting the KRE. On 11/10/23. CNBC announced that trillions in commercial

residential real estate will become due in 2024. If interest rates do not go down, there will be

many bankruptcies.

Remember the Fibonacci Queen? Carolyn Boroden, who is renowned for her expertise in

Fibonacci price and timing analysis, Boroden joined the ElliottWaveTrader analyst team in

December 2019. She is a technical analyst and author of Fibonacci Trading, published by

McGraw-Hill in early 2008. Carolyn has been involved in the trading industry since 1978,

starting on the floor of the Chicago Mercantile Exchange. Her work is often featured on the

"Off The Charts" segment of CNBC's Mad Money with Jim Cramer. Carolyn provides analysis

of U.S. Stocks, Equity Indices, Precious Metals and Oil in her Fibonacci Markets & Stocks

service in our ElliottWaveTrader Trading Room. The specific indexes she covers are the S&P

500, Nasdaq 100 (cash/futures), Gold (GC), and Oil (CL). The specific stocks are AAPL,

AMZN, GOOGL, NVDA, and TSLA, plus over a dozen Bonus Stocks, when Carolyn sees a

setup.

On 11/28/23, Carolyn Boroden stated that the S&P500 will go even higher from the current

levels; but it will not go up in a straight line; and any correction we should see it as a buying

opportunity. Boroden also predicts that Tesla will go up to $328. On 12/1/23, Tesla closed at

$239.

Have a great month!

Happy Holidays!

Fernando

November 6 Post

Hi Again.

Historically, worst months for the market: September and October; that is behind

us! We had a reasonable correction; but I expected more of a correction. I made use

of the correction to increase my holdings. On 10/26/23, as a hedge against a big

correction, I bought some “PUT options” on the S&P500 (SPY) index. In just 16

days, they were up by 45%! On 10/3/23, my SPY puts were up 65% in 6 hours!! I

did not sell them as I was not trying to hedge against a minor correction. At all

times, I have a bit of money on “market hedges” so if we have a long, deep

correction as we did in early 2020, I can keep selling and buying more puts to make

use of the correction. As I have stated in the past, many months ago, when most

Wall Street pundits were bullish on banks and regional banks, I was sure that they

are mistaken so I bought 3 Put options to short sell regional banks with the ETF,

“KRE”. When the Silvergate bank collapsed, as I told you in the past, I made a

150% profit on one of those put options and the gain was bigger than the cost of all

my 3 put options so I did not sell the other two. Once again, “higher interest rates

for longer” belief brought down regional banks and on 10/27/23, one of my KRE

put options had a paper gain of 92%. I am not surprised that we had a major rally

around the beginning of November. At that time, the stocks shorted were at an 8

year high! Market crashes do not happen when so many investors and traders are

pessimistic about the future of the market. Over the past 40 years, I have learned

some valuable lessons when it comes to market trading. At times, “wall street

pundits” ask people to buy a stock (or an ETF) when they are ready to sell; and vice

versa. Long before Bill Ackman stated that he was shorting the 20 year Treasury

ETF known as TLT, I was doing it and I mentioned it here. In fact, as TLT was

going down, I kept buying to be “long” on TLT. It is a “no brainer”. In a couple of

years, Feds will lower rates and there will be capital gains on these TLT purchases;

and at the same time, the yield is pretty good(getting paid to wait) . On 10/19/23, I

purchased TLT, ETF at $82.93 per share and on 11/3/23, TLT was at $87.75- that

is a 6% gain in 15 days! It is very uncommon to make so much money in a short

period of time using a bond fund! On 7/1/20, TLT was trading at $171 per share;

imagine going to that level in the future! I do not expect it to happen. For 15 years,

the whole world was at 0% or close interest rates which will cause huge problems in

the world in the future. Now we have to get used to a new paradigm of “higher for

longer”. I was hoping to see higher interest rates on TLT so I can buy more at a

lower price. On 10/25/23, Bill Ackman said that he was selling his TLT shorts as

2

interest rates have peaked. I do not know if interest rates have peaked but most

probably this is a “counter trend rally”.

For the past few months, I have been talking about Disney and that it is better to

buy Disney before the “pundits” change their minds and realize the value of Disney

as a long term buy. Now it is starting to happen! On 9/25/23, I got Disney at $80.72.

On 11/3/23, it was at $85.14- 5% gain in 39 days. On 10/9/23, Billionaire and

market expert Peltz stated that he is putting billions in to Disney. The best is yet to

come. I intend to make a good profit in about 5 years. Money managers have to

make money in the short run; or they can lose their jobs so we have an advantage

over professional money managers. As Treasury yields were rising utility stocks

(where people were hiding for a higher yield) declined rapidly. Why take a risk with

utility stocks when Treasuries gave you such high yield? On 10/3/23. Josh Brown

(astute money manager) stated that XLU (ETF for Utilities) was down 75% and at it

is at its lowest point ever! If the Feds are really at the end of the interest rate hiking

cycle, it would be a good time to think of buying the XLU ETF.

Have you heard of the VIX index? VIX index is the CBOE Volatility Index. As a

general rule, when the VIX index is too low, it is time to expect volatility to go up

and hedge against higher volatility with low premium options on the VIX or buying

the VIX index shares. On 10/16/23, VIX was at 15.72 and on 10/23/23 VIX was at

22- 40% gain in 7 days!

Have a great month!

Fernando

October 2 Post

Hi Again,

Something interesting happened on 9/29/23, at market close; Disney closed at

$81.05! Why is that important? Disney on our portfolio has an average cost of

$81.05! Exact to the penny! Now as Disney goes lower, we can buy more and

lower our average cost and expect bigger returns within the next 5 years. Let us talk

about Disney and investing/trading strategies. Disney is having talks to sell the

ABC network and also trying to get in to a partnership with Amazon. I have

confidence in Bob Igor and not in the Wall Street “pundits”. Beware! I expect to

make a profit in 5 years! If it happens within 12 months, it would be great but we

must have realistic expectations. Why are the Wall Street “pundits” so pessimistic?

Money managers have to show a profit within the next few months or they can get

in to trouble with their ”bosses” and customers. On 3/7/21, Disney was at $197!

Need I say more? The Disney chart is still making “lower highs” and “lower lows”

so the current trend is to the downside and that will give us more buying

opportunities in the future. Looking at the 3 month chart, it seems like it is going to

make a double bottom: which is very bullish for the future.

Now we are in October! The month of terrible market crashes! If we are ready for

the worst, then we are ready for anything. Market is all about “mass psychology”.

Most people trade on emotions. That is why many people jumped to their death

during the 1929 crash. Extreme greed to extreme fear! How can you prepare

yourself for a crash (if it happens or not)? Play mind games with yourself. Mental

body runs the emotional body. If you invest/trade with emotions, you will end up

losing everything. How do you measure your “paper loss”? Most people compare

the last all time high with the current prices. That is all wrong. Recently I heard so

many complain about the September 2023 losses of companies like Boeing ($236 to

$191), King of all stocks, Nividia ($496 to $434), Netflix ($436 to $377) etc. etc.

One year ago, Boeing was at $126. Netflix was at $296 around 1/1/23. Now for the

star of the market- Nividia! Just 6 months ago, Nividia was only at $280 and then it

rose to $493 on 8/31/23!! Now people complain about Nivida going down to $434

during September (historically the worst month for the market)? Their growth is so

high that if you value the stock on a price to earnings (P/E) basis, this is a very

cheap stock even at this level. What will I do if we have a crash? First, as the crash

is happening, as I did in 2020, I will sell my index put options at a profit and buy

more to the downside. I will keep an eye on “good stocks” (i.e. Apple, Meta,

Google, Microsoft, etc.-“The Magnificent 7”). If those drop by about 50%

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(approx..), I will not only buy the stock, I might even get in to long term call

options. After a crash, there will be a “recovery”; which is called a “countertrend

rally”. Depending on macroeconomic conditions (not so good now), on some of the

stocks we hold, we should sell them before they reach their previous highs. This is

the other mistake made by most people; they wait till they “get their money back”.

Getting out with some losses is better than losing most of your money. During the

initial part of the 1929 crash, Mr. J P Morgan Jr. stated that he had confidence in the

market and poured “millions” in to the market and the trend reversed. Then on the

next leg down, Mr. Morgan kept putting “millions” but it did no good as it was like

standing in front of a tsunami! So the market went down 90%. In 1930, the “Dow”

ended at about 50 (from a high of 350). Around 1938, the “Dow” got back to about

200. Did most people get out at this stage? Oh No! They were waiting for the “good

old days” to return. Around 1940, it was down at 100 again. Then it rose to 200

around 1945 and prior to the it made a “double bottom”. If you had money in the

market in 1929, you only got your money back around 1960! We get in to positive

thinking and wishful thinking but it is better to be prudent with our investments and

trades. It is all about a “calculated risk”. Who was able to avoid the 1929 crash?

Joseph Kennedy; who had a bad reputation but one of the best market players of the

1920s. Just before the crash he was getting his shoes shined; and his shoe shine boy

gave him advice on what to buy/sell on the market! Joe Kennedy knew that the

market bubble was at a top so he sold off his holdings and avoided the crash. Hope

he rewarded that poor shoe shine boy! Probably, like most who lost money in the

market in 1929, that poor shoe shine boy never got back in the market again.

A surging stock market powered U.S. household wealth to a record high

of more than $154 trillion in the second quarter, aided by a rebound

in property values, Federal Reserve data out on Friday showed. Household net

worth rose 3.7% to $154.28 trillion in the period from April through June from

$148.79 trillion at the end of the first quarter, the Fed said in its quarterly snapshot

of the balance sheets of households, businesses and federal, state and local

governments. The data showed households have fully recouped the wealth losses

generated by a crushing bear market for stocks and weaker real estate values

through much of last year as the Fed kicked off an aggressive campaign to rein in

inflation through large, rapid-fire interest rate increases. The Standard & Poor's 500

total return index (.SPXTR), including reinvested dividends, delivered an 8.7%

return in the second quarter, its largest gain since the final three months of 2021.

The equity market's rally added $2.6 trillion to household net worth, accounting for

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nearly half of the overall wealth gain in the quarter. Real estate was the other large

driver, with property values rising for first time since the second quarter of 2022,

contributing $2.5 trillion to the increase in net worth. Household wealth at the end

of June exceeded the previous record high of $152.49 trillion set in the first quarter

of 2022 by about $1.8 trillion, or 1.2%. The data showed the size of households'

cash warchests - comprising a variety of bank deposits and money market mutual

fund holdings - continued to dwindle, declining for a record fifth straight quarter to

$17.7 trillion. Debt levels for households, businesses and governments kept rising

in the second quarter, though the pace of increase varied widely by sector. Total

nonfinancial debt increased at an annualized rate of 6.3% - the fastest since the first

quarter of 2021 - to $71.2 trillion, with households and businesses each accounting

for roughly $20 trillion and government $31.3 trillion. Business debt growth,

meanwhile, moderated substantially, climbing at just a 1.9% annualized rate in the

second quarter, its slowest growth since the final three months of 2020. (US

Markets, Reuters, 9/8/23).

If you have been following “markets”, I am sure that you heard that we are once

again having a bull market in “oil”. In June 2022, I looked at the charts of the 2

“oil” ETFs XLE (Energy Select SDR) and XOP (SPDR S&P Oil & Gas Exploration

& Production) . Chevron and Exxon dominate XLE; and I bought a few shares and

both ETFs went up for more than a year. On 6/2/2023, looking at the 2 charts I

determined that XOP was more bullish than XLE. I was correct! In 2 months, XOP

rose by 20%!

I believe that I am very good at noticing trends. During the past 2 weeks, on most

days the yield on the US Treasury rises by 6.30am PST and then started falling off

during the day. This is a dream come true for traders. I have been using the ETF

known as TLT (iShares 20+ Year Treasury Bond ETF). Over the past few years I

have used options to trade around interest rate fluctuations. This trend will last for

the next 2 to 3 years. On 9/28/23, TLT ended at 88. How low can it go? Since TLT

started in 2003, the lowest level TLT reached was $81 in 2004. It is safe to assume

that we are close to a bottom. Lower it goes, higher the yield! The risk is extremely

minimal. Even if it goes down to 60, I do not mind. More the better! May to August

2020, TLT made a double top around 170! Making money on TLT is close to a

“sure thing”!

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Are we heading for a recession? Federal Reserve will not lower rates till we have a

meaningful recession. Initially the unemployment rate increases in California and

then the rest of the country follows. In August 2022, California unemployment rate

was at 3.8% and in June 2023, it was at 4.6%. I expect a recession in Q1 to Q3 of

2024.

Enjoy October!

Fernando

September 28 Post

Hi All,

Don't Panic!!!! Market crashes are fantastic!  20 year Treasury yield (interest rate) has been going up daily and ETF (TLT) value has been going down daily. I am doing great trading TLT. This is the very thing that happened prior to the 1987 crash! Feds are increasing rates, Chinese and Japanese have stopped buying treasuries, we have had most our  crashes in October (peak in August, down September). Now more and more people will sell stocks and buy bonds. Some sound corp bonds are supposed to fetch 6% to  8%.  If we have a crash, it would be a great buying opportunity! Let us hope and pray for a 90% crash (like in 1927-Otober crash)! Don't panic! Don't panic! This is why I always say that we should always keep at least 25% in cash. I was keeping 50%+ in cash. Good luck!

Baron Rothschild, a British banker and politician from the wealthy international Rothschild family, once said that the best time to buy is “when there is blood in the streets.” In simple words, when everyone else is selling, it's a great time to purchase.

September 4 Post

Welcome to September

Historically the worst month for the stock market. I personally prefer a major

correction or crash; as that would enable us to buy in to good stocks at a good price

and make a healthy gain in 1 to 5 years. What is the VIX index? It is the CBOE

Volatility Index. On 9/1/23, it was at a very low 13.09. During August 2023, the

chart made a triple top. Last time it went below this level was on 1/5/2020.

Historically, when the VIX is so low, it is the time to buy a hedge against future

volatility/correction/crash at very low premiums. On 1/5/20, VIX was at 12.10 but

then came the covid scare and on 3/15/20, the VIX was at 65.54! With call options

on the VIX, we could have made a lot of money. Even if you put in $10,000 in to

VIX shares/stocks on 1/5/20, it would have grown to $54,000 by 3/15/20. Probably

with option trading, you could have turned $10,000 in to $500,000 by 3/15/20. At

that time, I did not have much faith in the VIX but in February 2020, I refused to

believe that we were safe from the covid crisis so I put money in put options to

short sell the market and some stocks in other ways; and I turned $3,000 in to

$40,000 in 4 months.

Over the past few months, on a monthly basis, I stated that Disney (DIS) was at a

multi-year low around $85. For several months. It would hit $85 and rise again. As

I stated in the past, it seemed like $85 was a temporary “floor” for Disney. I also

stated that if a stock (or a market) go below a given “floor”, that previous “floor”

now becomes a new “ceiling”. In other words, if Disney stay below $85 for long

enough, the probability is high that it will not rise above $85 for a while. On

8/24/23, Disney fell under $85. After 8/24/23, it never rose above $84.69. On

9/1/23, Disney closed at $81.64. I love this! As it falls, I keep buying. One of the

most astute money managers, Josh Brown stated that if Disney falls below $80, he

will buy Disney. Now most of the big money managers are out of Disney; or they

are on their way out. As it always happens in these situations, as the stock price

falls, more and more so-called Wall Street experts come out of nowhere to say that

this stock will never come back again. We saw this happen with Boeing, Twitter,

Tesla and so many other stocks. If you are astute enough to understand that these

experts are probably wrong and make a calculated risk, you have a chance to make

a lot of money in the market. In 2023, I did this with several stocks; and a good

example is Meta/Facebook. All the experts were saying that Mark Zuckerburg has

lost his way and since he is spending too much money on the Metaverse, their

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stock will remain low for a long time. I knew that it was utter nonsense. There are

plenty of untapped resources for Zuckerburg-i.e. whatsapp. Therefore, I got in to

Meta at that time and I was hoping it would go down further so I could buy more

but it kept rising. Rarely do I buy more of the same stock when the price rises as I

want to keep my average cost low. My paper gain in less than 6 months is more

than 300%. Now coming back to Disney, I will keep buying as the stock sinks and I

am willing to wait for more than 5 years to make a profit. As with Meta, when big

money managers decide to come back in to Disney again, the price will explode to

the upside. Imagine Disney going down to $50 and then eventually rising to $150!

That is how the sausage is made! Wall Street guru of the 1970s/1980s, Peter Lynch

asked people to get in to turnaround stories before the big guys got back in again.

Remember what Lynch did with Chrysler? With respect to Disney, I have

confidence in the CEO, Bob Igor as I did with Mark Zuckerburg.

During the past few months, I also talked about the short-term trading opportunities

in long-term bond ETFs as interest rose very rapidly within a very short period of

time. As I stated in the past, this is a win-win situation as long as we do not get too

greedy. The ETF or the vehicle I used for this purpose was the ETF known as TLT

(iShares 20+ Year Treasury Bond ). When the Feds started increasing rates I made a

lot of money short selling TLT by buying put options. Now I have a different

strategy. As TLT went down (with the yield rising), I kept buying shares in TLT. I

started this strategy as I do not believe that the rates could go much higher.

However, if that happens, I will keep buying. My last purchase was around 8/20/23,

when TLT went down to about $93. I was hoping and I am still hoping that it would

go below $85. After that TLT rose to $96 and closed 9/1/23 at $94.85. On 8/22/23,

technician Carly Garner stated that Treasuries are too cheap as the 10year Treasury

just hit its highest level since 2007. She is expecting to see a “double bottom” (very

bullish) within the next 12 months. However, in my opinion, with the Congress not

being able to agree on the budget, yields could go much higher than people can

expect at this time.

Most experts expect the market to go down in September; and then for the market to

rise sharply from October to 1/1/24. I do not think it will go down that much for the

“magnificent 7” (the 7 best that carried the market higher) as so many people who

missed out on this bull run are waiting for an opportunity to get in. In the same way,

we may not have a bullish period at the end of the year. Yet most experts expect a

bullish end to 2023 due to “window dressing” where funds start buying the major

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winders for 2023 so as to give the impression that they were in those stocks all

along- another Wall Street gimmick. Whatever happens, take advantage of the

situation. You can do it if you have 25% to 50% in cash.

Have a great September!

Fernando

August 9 Post

Hi There Again,

Historic trends matter. Most of the time, the market peaks in August. Usually,

September is the worst month for the market. It will be interesting to see if history

will repeat itself. If there is a significant correction in the market, it will be a buying

opportunity. Whether one makes money in the market or not depends on one’s

discipline. Once again people have gone back to their old system of “buying high

and selling higher”. That is a dangerous strategy. If a good stock (i.e. Apple,

Microsoft. Meta, Tesla, AMD, Nividia) drops by about 50%, then I consider that to

be a good buying opportunity. I bought some of them a few months ago and some

have doubled or tripled within a short period of time. The probability of those going

down to the level I purchased them is very low. I hope they will go even lower so I

can buy more. I rarely purchase more at higher prices and increase my average cost.

I always keep 50% in cash. It is never about maximizing returns but making healthy

gains on your investments/trades.

On 8/2/23, on CNBC, market timer, Larry Willams stated that he expects the

market to go down till mid-October and then rally till 2025. The Dow went up 13

days in a row, and everyone expected it to close higher for another day and break a

120-year-old record streak for the Dow but that did not happen as it went down on

7/27/23.

Last month I gave my analysis on Disney;;and I stated that it has not gone below

$85 in about 14 years. Since I wrote that, during the month of July 2023, twice

Disney hit $85 and bounced back from $85 without going any lower. Right now

Disney is a good buy but it could take years to go much higher but we cannot afford

to wait as we have to buy before the “big money” moves in and take Disney to new

highs. That is how we can make money in the market. Peter Lynch, market guru of

the 1980s, used to tell people to find turnaround stories in the market and buy

before “big money” moves in. I bought Meta/Facebook about 6 months ago when

all the market gurus were negative on the company and now, I have a gain over

200%. If I waited till Meta announced their restructuring changes, it would have

been too late to make money off Meta. In other words, I bet on Mark Zuckerburg

and not on Wall Street pundits. In the same way, with Disney, I am getting on Bob

Igor, the CEO who came back, rather than the Wall Street Gurus.

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In the past, I also talked about Intel. Intel has been dead in the water for years but I

thought that it was close to a bottom. All semiconductors are not equal but Intel

produces about 70% of all chips. AMD, Nividia, TSM are all better and I have

made money on all that but there is a lot of money to made in “turn around” stories

(per Peter Lynch). A few months ago I stated that I started buying Intel and I was

shocked that even Intel call options expiring in December 2025 were so cheaply

priced; which meant that most people were bearish on Intel. Not only did I buy

some Intel stock, I also bought some call options expiring in 2025. I made a 20%

profit on my options and sold them prematurely. If I kept them for a few more days,

when they had their Wall Street call, I would have made a 300% profit (a few

weeks after my initial purchase).

Now the yield curve in the bond market is becoming steeper again. That is

dangerous for the economy and the market. It is normal to see big shifts in the stock

market but that is not so for the bond market. When that happens in the bond

market, we have to pay attention. Are there opportunities? When the Feds were

increasing rates, I made good money shorting the 20 year Treasury through the

ETF, TLT. However, I should have started that years ago. In other wors, I was late

to the party. Then a couple of months ago, I liquidated my “bond shorts’ (TLT puts)

prematurely! Just like what happened with the Intel call options! Take a look at the

TLT chart for the past 12 months. Very interesting! Since 1/8/23, 3 times. It reached

108 and fell! Talk about a triple top! These all show that it is headed lower-lower

long-term bond prices and higher yields! Last week Bill Ackman said that he is now

shorting long term bonds. Maybe he is saying that to attract new investors so he can

sell his positions. In 2020 when the Corona virus crisis took place, he put in about

$70MM in to credit swaps and in 6 months, turned in to $1Billion+! Very clever

investor/trader! I started buying in to the TLT ETF. The option premiums are too

expensive so the risk is not worth taking buying options. If TLT go down further, I

will buy more. From 7/19/23 to 8/3/23, TLT fell from $103 to $94!! This is truly

amazing! That kind of move is very rare in the bond market. Unlike a stock, as it

goes down the yield will continue to go up. Win-Win. On 5/1/2020, TLT was at

$168!! Let us consider this scenario; let us assume the Feds keep raising rates and

the TLT falls to $70 and then due to a severe recession, the Feds lower rates to zero

and TLT shoots upwards to $170! It need not happen in that manner to make money

off the ETF, TLT (ETF for 20year Treasuries). One of the best technicians, Carley

Garner, stated on CNBC on 8/3/23, that Treasuries are bottoming. I bought my TLT

shares 6 hours before I heard her comments.

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Have a great month!

July 5 Post

Hi Again,

Happy 4 th of July!

Take a look at our scorecard! Our scoreboard shows a gain of 8.7% for June 2023!

And a net gain of 39% since 1/1/23! Our portfolio is well diversified; but we hold a

lot of technology stocks that did very well during the past 6 months. Per CNBC,

NASDAQ had the best first half of the year since 1983! In our portfolio, you cannot

see anything that is at a loss. Looking at the scoreboard, the stocks with the best

performance (from the initial purchase date) are as follows: Apple -737%, AMD-

210%. Uber-201%, WYNN-195%, TJ Max-159%, Microsoft- 152%, Delta-148%,

Goldman Sachs-146%, Boeing-137%. Google-137%, GE-133%, Netflix- 131%,

Facebook/Meta- 109%, Tesla-102%, JP Morgan-89% , Southwest, Disney and

Intel are between 9.5% and 24%. This is a good time to buy all those 3. More about

Disney later.

On a daily basis, a million times over, CNBC anchors ask “Wall Street experts”, “Is

this a new bull market or is this a counter rally in a bear market?’. My reply, “it

does not matter; focus on your strategy and discipline”. That is the way to make

money in the market. There is no “stock market”; it is just a “market of stocks”. My

strategy is when a “good” stock go down by 50% or so, start buying it in small

installments. Sooner or later, it will bottom out. If you kept buying more and more

shares as it went down, you will be in a good position when the stock bottoms out.

There is a saying on Wall Street that, “no one rings a bell when the market or a

stock hits a bottom”; but if you listen intuitively, you will hear that “bell” in your

mind/heart. On my personal account, using that strategy, I made over 100% on each

of the following stocks; Tesla (bought when Elan Musk sold shares to buy Twitter),

Meta/Facebook (when market wrote off Zuckerburg for not cutting expenses),

AMD (when the stock fell to $65 as Wall Street chastised it for having an inventory

problem), Neflix etc. Sometimes one has to wait years to get the desired results;

and that is what I had to do with Boeing. If these stocks fall below my initial

purchase price, I will buy more so it a win-win situation. The secret is to keep 25%

to 50% in cash at all times and not to try and maximize gains on your portfolio. On

my portfolio, I have 60% in “cash”.

Greed and “FOMO” destroys many investors and money managers. What is

FOMO? Fear of Missing Out. For individual investors, it is mostly greed. When

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others get a better return on their investments, it is difficult to be satisfied with

one’s portfolio or gains. For professional money managers, FOMO is a huge

problem. Let us assume that a money manager, due to his “discipline” and

“wisdom” does not take part in the market during a bullish period; then his bosses

as well as his customers will lose faith in that money manager which will lead him

to the unemployment office. A good example of this is the summer of 2020. Now

all prudent market analysts state that the market going up during the summer of

2020 was totally irrational. Due to covid, there was no sports betting during the

summer of 2020; and with the trillions of dollars that went out by the government,

sports betting people and companies started using Wall Street as a casino. That was

the first stage. Then computer programs based on trends moved the market higher.

Thereafter, money managers joined in.

Now as promised, let us focus on Disney. Over the past 5 years, I have gone in and

out of Disney. It looks very attractive now. As with Meta/Netflox/Tesla/AMD, all

“Wall Street Gurus” are negative on Disney. For me that is a good sign. Get in now

and when the trend shifts, your gains will increase. Recently Disney got hit by

many waves of bad news. When a stock gets hit by waves of bad news and yet stop

going down further, it is a vey good sign that it is close to a bottom. Selling pressure

is close to getting exhausted. Only the long-term believers are left. During the

month of June 2023, Disney has been moving between $88 and $93. According to

the chart, last time Disney fell below $85 was in 2014! 9 years ago! In technical

chartist lingo, there is a “floor” around $85 for Disney. Let us assume that Disney

falls below $85 to $70 or below and stay there for a few months; then according to

chartist lingo that $85 level becomes a “ceiling” for the Disney price. In other

words, at that stage, it is safe to assume that Disney will not go higher than $85 for

a long time to come. In fact, according to the chart, if Disney falls below $85,

Disney could even go down to $25-which is extremely unlikely. This is how you

can make a “calculated risk”. All Wall Street experts are negative on Disney but

that is music to my ears as I know that as always, they are WRONG! If we lose on

Disney, it is not a big deal; losing a few “battles” to win the “war” is not a problem.

With respect to new trends, I have a different strategy. With this AI (Artificial

Intelligence) craze, I put in a little bit of money in to several AI stocks and ETF’s. I

am waiting for them to go down to buy more but they all keep shooting up. There

again it is a win-win situation. Even though Nividia (best in AI) has been always

too expensive (very high PE), I bought some Nividia on 10/11/22 at $117 per share;

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on 6/30/23, I had a “paper gain” of 260%! Experts expect Nividia to fall soon but I

do not think it will fall more than 25% from it’s 6/30/23 high. I am praying that

Nvidia will go below $150 so I can buy more! A calculated risk! Most (5) of my

other AI stocks/ETFs were bought between 5/26/23 and 6/13/23. On one of those I

have a 5% gain and the losses on the rest range from -3% to -1%. When those

losses exceed -25%, I will buy more.

Have a great month!

Fernando

June 4 Post

Hi Again,

I sent out my last newsletter on 5/1/23; and in that I mentioned that per Jim Cramer,

the banking crisis was almost over but I disagreed. I agree with Jamie Dimon, the

CEO of JP morgan that the fallout of this crisis will go on for years to come. On

5/2/23, at 9am PST, the Regional Bank index was down 7% in 2.5 hours! That was

the lowest level for the KRE index since 2020! When the Regional Banking crisis

started, I sold one of my 4 KRE put options (to short sell KRE) at a 150% profit and

I kept the rest as I expected the KRE index to fall further in the future. On 5/2/23,

9am PST, my 3 puts had a paper gain of 140% to 199%! For the past few months,

Wall Street were only focused on the problem faced by Regional Banks due to high

interest rates on short term Treasuries compared to long term Treasuries (now the

Federal Reserve is assisting banks with the capital they need); but my focus has

been on loan losses that are yet to come. On 5/3/23, for the first time Wall Street

started worrying about future loan losses of these Regional Banks.

Plenty of analysts have said the inversion of the yield curve, traditionally seen as

a sign that a recession is coming, no longer matters. Bond King' Jeffrey Gundlach

thinks they're wrong. On 5/3/23, Gundlach stated that banks are paying 50% of

the Treasury Bill rate so many banks will go insolvent in the future; as he stated,

“this is not the last chapter of the regional banking crisis”.

The market is extremely “top heavy” as only a few big mega stocks are responsible

for the market performance in the recent past. As Josh Brown stated on 5/3/23,

the market cap of Apple is bigger than the UK market cap and it is double the size

of the German market cap! Jason Hunter of JP Morgan stated on 5/11/23, that

comparing S&P100 to the S&P500, it is very clear how most investors are shifting

towards a few mega cap stocks. He termed this as a “flight to quality”. According

to Jason this “flight to quality” will be followed by a “flight to cash”; which will

bring down the market to 3500 on the S&P 500 (SPY). Great! A buying

opportunity!

What is the latest craze on Wall Street? Artificial Intelligence (AI) stocks and

ETFs! Some compare this craze to the “crypto craze” we had a few years ago and

some compare this to the “dot-com” craze we had around 1998/2000. All agree

that we are in the “early innings” and this will unfold for years or decades to

come. In my personal account, I put a little bit of money in to some of the AI

stocks and ETF’s even at high prices and if the prices drop in the future, I intend

2

to buy more. Investing or trading is all about taking a calculated risk. As long as

the overall gain is acceptable, we have to live with some losses. In my opinion, it

is always wise to have 25% to 50% in cash to take advantage of sudden

opportunities that appear in the market – as we saw over the past 12 months

when Tesla, Neflix, AMD, Meta/Facebook fell about 50%. On most of those

names, I made a 100% profit within a few weeks or days. Now that Treasury Bill

rate is around 5%, keeping 50% in cash or liquid assets is much easier than it

used to be since 2008.

I feel that we will have an interesting market during the summer of 2023

Good luck!

Fernando

April 30 Post

Hi Again,

I sent out my last newsletter on 4/4/23; and I stated that the banking crisis is not

over. Two days later on 4/4/23, Jamie Diamond (known as the best bank CEO-J P

Morgan) stated, “Banking crisis is not over. Aftershocks will be felt for years”. Yet,

a few days after that, many Wall Street experts started saying that the banking crisis

is over. Last week, the banking crisis was on the news again.

Regulators Prepare to Seize and Sell First Republic. JPMorgan, PNC and Bank of

America are said to be interested in acquiring the troubled lender after it is seized

by the Federal Deposit Insurance Corporation. Federal regulators were racing over

the weekend to seize and sell the troubled First Republic Bank before financial

markets open on Monday, according to people with knowledge of the matter, in a

bid to put an end to a banking crisis that began last month with the collapse of

Silicon Valley Bank. The effort, led by the Federal Deposit Insurance Corporation,

comes after First Republic’s shares tumbled 75 percent since Monday, when the

bank disclosed that customers had withdrawn more than half of its deposits. It

became clear this past week that nobody was willing to ride to First Republic’s

rescue before a government seizure because larger banks were worried that buying

the company would saddle them with billions of dollars in losses. The F.D.I.C. has

been talking with banks that include JPMorgan Chase, PNC Financial Services

and Bank of America about a potential deal, three of the people said. A deal could

be announced as soon as Sunday, these people said, cautioning the situation was

rapidly evolving and might still change. Any buyer would most likely assume the

deposits of First Republic, eliminating the need for a government guarantee of

deposits in excess of $250,000 — the limit for deposit insurance. As of Sunday

(4/30/23) morning, at least a few bidders had been told that they had until noon

to submit their offers, according to two people familiar with the matter. The

Federal Deposit Insurance Corporation did not comment. It’s possible that an

agreement won’t be reached, in which case the F.D.I.C. would need to decide if it

would seize First Republic anyway and take ownership itself. In that case, federal

officials could invoke a systemic risk exception to protect those bigger deposits,

something they did after the failures of Silicon Valley Bank and Signature Bank in

March. If officials decided against that, some economists warned that the

consequences could be serious. “The government needs to act in a way where the

uninsured depositors get their money out in whole,” Lawrence Summers, a

former Treasury secretary now at Harvard, said in an interview on Saturday,

either through a takeover or by a government guarantee.

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Failing to do so “runs a substantial risk of setting off a wave of further

withdrawals from all but the largest of institutions,” he added. The F.D.I.C.

started sounding out potential buyers late last week as it became clear that there

were few options outside a government takeover, one of the people said. By

Friday, it had asked potential bidders to submit binding offers by Sunday, this

person said. Those potential bidders have been given access to detailed

information on First Republic’s finances, one of the people said. (The New York

Times, 4/30/23)

On 4/28/23, Jim Cramer stated that after the seizure of the First Republic Bank

by the FIDIC, this banking crisis will be over. Even though I have a lot of respect

for Jim Cramer; I disagree 100%. I am in the Jamie Diamond camp as I believe

that there will be fallouts for years to come; especially as the Feds tighten

monetary policy to combat inflation. Or else, as the Feds stated, “inflation will

destroy everything”. Former Fed Governor Dennis Lockhart stated that in 2007,

the Fed balance sheet was at $800 billion and now it is at $9 Trillion. I am

surprised that inflation is not more of a problem at this time. It is going to take a

long time and a bad recession (or worse) to bring inflation down to 2% (Fed

target). Probably the worst part of the recession will hit us by the end of 2023 or

in 2024. On 4/20/23, CNBC reported that 20% of US consumers are buying

groceries with credit cards. According to bond experts, when expectations of a

recession rises, junk bond yields will rise (not high enough at this time), and

when that happens, it will be a good time to get in to high yield bonds. At this

time, we have to be patient and be on the lookout for opportunities In all

markets. When we see an opportunity, we have to start buying/nibbling (little at

a time) on the way down and decrease our average cost. Most people rush in and

buy prematurely due to “FOLO” (fear of losing out). It is okay to miss

opportunities. As it was said in a movie about love, “it is like waiting for a bus;

when you miss one bus, all you have to do is to wait for the next bus”. It is just a

matter of time! We must never get in to overvalued stocks-even if it has been

good to do so in the past. Apple has a high PE of 28; while the PE for Amazon is

extremely high at 72! High multiples come from expectation of robust revenue

growth. Can that happen in a recession? Then we have to be careful about some

industries. Oil and Gas is not a good long term bet as the whole world is moving

away from that industry. Also, we have to be careful of the airline industry. Delta

is the best in the field. On 4/13/23, Josh Brown quoting Warren Buffet said,

“Someone should invent a time machine, and for the sake of capitalism, go back

in time and kill the Wright Brothers”.

Have a great month!

Fernando

April 3 Post

Hi again,

March was a rocky month for the market but our portfolio gained (net) 7.24% in

March. Over the past 3 months, our portfolio had a net gain of over 28%. Look at

our scorecard.

Did you hear about the Silicon Valley Bank failure? If not, you were living under a

rock. I always have a small percentage of my portfolio in options; some as a hedge

and some to take advantage of a special situation that might arise in the future. I

never get in to short term options. Prior to March 2023, all Wall Street “pundits”

were saying that it is safe to invest in bank stocks. I did not expect bank failures but

I expected heavy loan losses for regional banks. On 4/21/22 I bought 2 put option

contracts on the Regional Bank ETF known as KRE and then again on 10/18/22, I

bought 2 more put options on KRE to short sell Regional Banks through KRE.

These options expire in 2024 and 2025. I did not expect to see loan losses till the

end of 2023; the latest. In fact, a week prior to the Silicon Valley Bank failure, I had

a paper loss of about 75% on my “short sell” put options. I expected that. Then

came the Silicon Valley Bank failure and KRE dropped from $60 to $42 in about 10

days! On Friday, 3/10/23, I had an average “paper gain” of about 50% but I did not

sell any of my put options. Next Monday, 3/13/23, panic grew, and I sold one of my

put options with a gain of 150%! I still hold the other 3 options. The gain I got from

the option I sold is enough to cover the cost of all 4 options. As CNBC Jim Cramer

likes to say “ I am now playing with the casino’s money”. On the other hand, I do

not believe that we are done with the “after-shocks” but I do not expect to see that

for many months/years. I also have some put options on the S&P500 (SPY) at all

times as a hedge against a big correction or crash. On 3/9/23 (with an expiry date of

Sept 2023) was at $2.15 (or $215 per contract of 100 shares). On 3/13/23, it was at

$4.30 – 100% gain in 4 days! Also, this crisis is going to lead to tightening of credit

at regional banks. That is going to make the recession worse. Recently we had

massive layoffs of highly paid white-collar workers who will now get about $450

per week in unemployment benefits. Also, regional banks losing their deposits to

the big banks will worsen the upcoming recession as most small businesses (who

employ more than 80% of the US labor force) depend on regional banks for their

banking needs. On 3/24/23, CNBC reported that we had the “biggest rush to cash”

since the 2020 covid crisis as people moved $145 Billion to cash and other assets

such as gold from the time Silicon Valley Bank failed. Federal Reserve also

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reported that big bank deposits increased by $300 Billion and regional bank

deposits fell by $300 Billion since the Silicon Valley Bank failure. Decades ago, it

was very beneficial to get in to pre IPO stocks as almost all IPOs had tremendous

gains when they went public. Then when some companies went public, they got

‘hair cuts” so they remained private with unrealistic prices. On 3/16/23, Jim Cramer

reported on CNBC that Silicon Valley Bank was (1) the biggest inflation creator (2)

allowing the private equity firms in Silicon Valley borrow against their over valued

stocks and buy real estate which were already bloated. On 3/15/23, the “Big Short”

movie guy (excellent movie about the 2007/2008 banking crisis) stated “Don’t’ be

a hero”; meaning do not buy bank stocks at this time. On 3/13/23, CNBC

mentioned that 25% or $45 Billion of Silicon Valley Bank deposits were withdrawn

over a 48 hour period! Due to this crisis, I watched the movie “Big Short” again.

In that movie they showed 2 guys who got information that we are headed for a

banking crisis so they were able to turn $100,000 in to $30 Million in “shorts”! In

that movie, those 2 guys stated, “ People think positive so they under estimate the

negative things that could happen” So true! According to Wall Street experts, all

depositors, borrowers and mangers of the Silicon Valley Bank were in high school

or college during the 2007/2008 banking crisis. As I mentioned in my newsletter

many months ago, when bitcoin was at $60,000, “young people” had 75% of their

assets in Bitcoins and Cryptos! Then Bitcoin fell to $15,000! Live and learn!

Since 1993, I have been working in Credit Risk. Around 2006 I had a friend who

had a problem managing his personal finances and on a monthly basis he had to

borrow from family to make ends meet. He always paid his bills on time to keep his

FICO score at 800. He told me that with a perfect FICO score, with no income and

with no downpayment, he can buy a house. Not only that! His real estate agent

made a deal with the seller and “others” to inflate the sale price of the house by

$50,000 and split it between all parties! I was confused as that goes against all

principles of credit. The argument was that housing prices never go down. Simply

absurd! I did not expect a bankimg crisis and a severe recession but I should have

shorted bank stocks etc.! There will be plenty of opportunities in the future. As we

all know “history repeats itself”.

On 3/14/23, Josh Brown (“Market Guru”) stated that the next crisis will be in

commercial real estate. Most people work to work remotely. We have an over

abundance of commercial real estate. Some are getting converted to residential real

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estate but with the coming recession and bloated prices, that shoe too will drop

soon.

Stay tuned!

Have a great month!

Fernando

March 7 Post

Hi Again,

During February 2023, S&P500 declined by 2.6% and the Dow declined by 4.2%;

however, our portfolio gained by 0.79%.

The stock market has been range bound for more than a year. The Federal Reserve

keeps saying that they will maintain higher interest rates “higher for longer”; but

bond market gurus believe that the Feds will pivot in 2023 and lower rates by year

end. It does not matter what happens, we should look for opportunities and pounce

on them when we see them. On 2/21/23, Josh Brown stated that following computer

driven algorithms is very risky as those computers are programmed to follow the

trends of the past few days. I agree with that statement. Recently the bond market

has been acting prudently and increasing rates in line with the guidelines given be

the Federal Reserve. Interest rates as well as inflation is rising in the US as well as

in Europe – Look at US Treasuries as well German bonds. No one know if this

trend will continue. To take advantage of interest rate changes, I trade the ETF

known as TLT ( iShares 20+ Year Treasury Bond ETF  ). I have made some good

money by “buying put options” to short-sell TLT. If you look at the 6 month chart

of TLT, you will notice a triple top (12/7/22, 1/18/23 and 2/2/23) which could lead

to lower prices in the future. On 12/7/22, TLT was at $109.47 and on 3/2/23 it was

at $99.39.

Most people recognize Jamie Diamon as the most respected bank CEO (Chase).

CEO Jamie Dimon said Thursday that containing inflation remains a work in

progress for the Federal Reserve, while noting the U.S. economy continues to show

signs of strength. “I have all the respect for [Fed Chair Jerome] Powell, but the fact

is we lost a little bit of control of inflation,” Dimon said in an interview with

CNBC’s Jim Cramer during the “Halftime Report.” It’s the first of a two-part

interview with Cramer, with the second installment airing later Thursday on “Mad

Money.” Dimon’s comments came one day after the Fed released the minutes from

its Jan. 31-Feb.1 meeting, which showed members remain resolved to fight

persistent inflation. “Participants noted that inflation data received over the past

three months showed a welcome reduction in the monthly pace of price increases

but stressed that substantially more evidence of progress across a broader range of

prices would be required to be confident that inflation was on a sustained downward

path,” the minutes said. Dimon himself said he expects that interest rates could

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“possibly” remain higher for longer, as it may take the central bank “a while” to get

to its goal of 2% inflation. “The U.S. economy right now is doing quite well.

Consumers have a lot of money. They’re spending it. Jobs are plentiful,” Dimon

said. “That’s today. Out in front of us, there’s some scary stuff. You and I know

there’s always uncertainty. That’s a normal thing.” Those comments contrast with

Dimon’s previous remarks in October. At that time, he said the U.S. economy will

likely fall into a recession in six to nine months. In December, he said higher

inflation was eroding consumer wealth, which would lead into a recession this year.

We can always learn from our past mistakes or “missed opportunities”. In the

future, we can make use of those lessons to better ourselves and make money. All

the best Wall Street Wizards will testify that it is a never-ending process. We must

always keep 25% to 50% of our portfolio in cash to make use of such opportunities.

The biggest missed opportunity for me was not to short sell the over-valued stocks

that had a big debt to equity ratio while and incurring losses year after year. When

the Feds started increasing interest rates, these companies had no choice but

increase their interest payments to survive. With a potential recession, having a

detrimental impact on their revenue, it was a double whammy. Take Carnival

cruises (CCL) for example, it was at $19 on 4/11/22 and on 3/2/23, it is at $10.70.

DocuSign (DOCU) was at $310 on 8/29/21 and on 3/2/23, it is at $61.03. At the

money put option is around $1 ($100=1 contract). Let us assume I bought $1,000

worth at the money puts on DOCU on 8/29/21, today my puts will be worth

$250,000!

In my last newsletter, I mentioned that I gained a lot by investing/trading in to

“good” stocks that fell about 50%- for example, Tesla, AMD, Netflix,

Facebook/Meta. At this time I am closely watching Disney (DIS). On my personal

account, I bought DIS when it went down to $85. On 2/2/23, DIS was at $112. On

3/1/23, it fell to $98. I keep experimenting with strategies. At times, I buy 1 share

and when it goes down another 10%, I buy 2 more shares and keep doing that till

the price hits a temporary bottom. This works! Market gurus say that when the

market or a stock, bottoms, no one will ring a bell; but we can create our own bells

in this manner.

Have a great month!

Fernando