Samwise Quick Reference Handbook
To streamline our daily blogs and conserve space, we’ve organized key resources into a convenient, collapsible dropdown menu below. A sort of Quick Reference Handbook if you will -- as our friends in aviation might call it. By clicking the menu below, you’ll have qu...
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Sam
I’m curious if the bond market sell off and rising 10year influences your thoughts on equities sustainability of rallying. my worry is the bond market pulling down stock market
Is it correct to assume we are not going to see any major moves up until there is some form of resolution between the U.S. and China?
IMHO. If we’re basing it off trade information? I think we will get movement, when an announcement comes that we have a deal with South Korea, Japan, Taiwan, etc. country by country. Showing that progress is being made. I think the biggest movement will happen with the first deals- to show it’s possible.
Bull Hammer
Curious purely from a learning perspective – in hindsight would it have been better to hedge after Tuesday’s explosive rally to high 560’s, or is there now even stronger conviction about a rally?
So it’s both too early in time and volatility is too high. We’ll overpay.
Here’s what I’m confident about and as long-term portfolios are concerned.
Regardless of how things play out in the next few weeks, we’re going to see a rally up to $480+ minimum. From low to high, a minimum of 20%. That’s inevitable.
Since we’re talking long-term portfolios here, the longer we wait, the better the hedge.
By waiting, we get volatility to come down along with theta decay.
We want to hedge during a multi-week rally when the $VIX has had an opportunity to drop back down to 20 at least.
So for now, we wait. We’ve purchased our position at a massive discount.
The Arryn portfolio is up 80% right now. Its overall costs basis is now probably near $400 or lower because of the hedge.
How long before we see $480?
next Wednesday, mark my word !
Im joking lol
Bank earnings looking good
Hello Sam,
Is there a significant risk that the strategy will fire all its weapons a little too quickly?
Could the LQQ fall by much more than 50%? How would you react if China banned trade with the US on Monday?
Best
Karl
For all intents and purposes, China has already banned trade by imposing a 125% tariff. They said they won’t raise tariffs more, because trade between the two countries has essentially halted.
Except for semiconductors made in Taiwan.
https://content.govdelivery.com/accounts/USDHSCBP/bulletins/3db9e55
more good news
this is what takes us to $500
Trump pause tariff for chip : https://content.govdelivery.com/accounts/USDHSCBP/bulletins/3db9e55
????
WTF!! Trump just made a complete U-turn. Market will crash tomorrow.
https://www.hindustantimes.com/world-news/us-news/trumps-u-turn-on-tariff-exemptions-potus-says-no-execptions-announced-on-smartphones-laptops-101744573748895.html
????????????
Nasdaq futures are up 172.
AAPL $211 is back.
At this point, news are just there, as Sam said, to explain the market not the other way around. The market will still have upcoming multi-weeks rally. Short term movement is just noise.
Yeah!
The markets seem unresponsive yet… they are obsessed with what’s happening in the bond markets, with the 30-year yield exceeding 5%, a level not seen since 1981. Even the Japanese 30-year yield is reaching a 21-year high, exacerbating fears of a liquidity crisis.
Sam, Here is my thinking. I don’t think we will make a new high this year, simply because when QQQ was at 540, I think valuations were way too high. It was like irrational exuberance. Don’t get me wrong. I wasn’t selling at the high. I wish I did. I figured that even though valuations were high, I would just ride the wave. You know the old expression, “valuations don’t matter, until they do.” So now that we’re in a new environment, I think valuations become more important. That being said, I still think we could hit a new high next year, if inflation comes down, we get a soft landing, and we get a few rate cuts. Next year we will be using 2026 EPS estimates. Assuming they are higher than 2025, then higher market caps would be justified. Here is my question. If I am right and we can get more of a trading range this year, if QQQ runs up to 480-500, what kind of pullback should we expect? Maybe to the 440-450 ranger?
Then what is the fair market price? Based on what?
The fair price certainly isn’t the all-time high, when everything looked great and people didn’t mind paying 35x earnings for stocks that used to sell for 25x earnings when they had more growth. When the growth rate of a stock goes down, the PE should go down, not up. I think the new normal is around the current level, maybe like 440-480 on QQQ. All I can do is give it my best guess, based on historical valuations over the last 10 years or so. The one stock that actually looks like a bargain on valuation is NVDA. It’s selling at a way cheaper multiple than normal. I think the best short out there is Tesla. It is true that they have some exciting products that will launch in the next couple of years. However, when the company was doing great 2-3 years ago and had huge growth, the stock was selling for around 35x earnings. Now they have negative growth. They sold less cars last year than the year before and they’re going to sell less cars this year than last year. Their saving grace is that their energy storage business is doing well. But despite that, this year they are only going to do around $1.90 in EPS. Next year they’re going to do around $2.70 in EPS. So the stock is selling at 134x 2025 estimates and then around 95x next year’s estimates. And it’s not like they’re going to do great in 2027. In 2027, they’re expected to do $3.60 in EPS. And I’m looking at the estimates of 5 star analysts, who have been right on the money with their past earnings forecasts for TSLA. It’s not until 2028, that earnings are expected to increase to around $7.00-$8.00.