Summary
Highlights
Stocks crashed recently due to renewed trade war tensions, but the speaker believes this isn't the trigger for the next bear market. While the AI bubble will eventually pop, the video will outline three scenarios that could cause stocks to tumble, including one as early as October 29th. The market is currently historically expensive, but catalysts are needed for a crash.
A recent scare for Oracle, with rumors of massive drops in cloud business profitability due to expensive NVIDIA chips, highlights concerns about lower returns in big tech's cloud and data center investments. While data centers take years to build, declining profitability could threaten the AI revenue boom and the bull market. This is likely a buying opportunity, not an immediate threat.
The DeepSeek mini-crash in January, where a Chinese startup trained an AI model for significantly less cost, suggests that if more efficient AI training methods are found, the need for massive AI investment spending could decrease. This would impact revenues for companies like NVIDIA and Oracle. Neither this nor the first scenario is likely to cause a crash by year-end.
To protect against these less immediate risks, investors should diversify into non-AI related sectors like real estate, consumer staples, and energy. Examples of ETFs include XLE (energy), XLP (consumer staples), and XLR (real estate).
China's escalation of trade tensions, particularly regarding rare earth elements and soybean purchases, could lead to a major market crash. The key issue is China's demand for a change in US policy on Taiwan's independence, which could be discussed at the APEC Summit. Taiwan Semiconductor (TSM) manufactures a significant portion of the world's chips, making a Chinese takeover of Taiwan a critical concern for the global tech supply chain.
To protect against this specific risk, investors can consider assets tied to agriculture, such as the Techreum Soybean Fund (SOB) or the VANC Agribusiness ETF (MO). A more leveraged approach involves buying deep out-of-the-money put options on Taiwan Semiconductor Manufacturing (TSM) as a hedge against a potential crash, with December 19 options at a $200 strike price suggested.
The speaker is relaunching an ultimate options course to help investors learn how to use options for protection, amplified returns, and income. The course includes video lessons, a strategy finder, and an options calculator, offered at a discounted rate.
Ford Motor Company (F) plunged due to a fire at a key aluminum supplier and ongoing tariffs. Despite appearing as a value play with a high dividend, the speaker recommends avoiding these shares due to unknown costs, persistent tariffs, weak consumer spending, and flat revenue expectations.
Ally Financial (ALY) is favored for its valuation and fintech leadership, trading at a much lower book value compared to SoFi, despite exposure to auto lending. UiPath (PATH) is highlighted as an example of having confidence in research; its shares are up significantly due to its leadership in AI process automation and major deals.
Last week, most stock sectors fell, with utilities and consumer staples providing safety. Utilities, surprisingly, have been strong, but the speaker suggests healthcare, real estate, and consumer staples for future safety. Third-quarter earnings are expected to show profit growth, and tech deals could further boost investor enthusiasm.
Gold has seen a significant rise this year, initially due to dollar debasement but now signaling a broader erosion of trust in central banks and fiat currencies globally. Silver, Bitcoin, and Ethereum are also performing well as currency hedges. Ethereum is a favorite due to its role in stablecoins and tokenization.
REITs (XLRE) are highlighted as an undervalued safety asset, underperforming other asset classes despite representing hard assets that hedge against inflation and a falling dollar. Favored REITs include American Tower (AMT), Digital Realty Trust (DLR), Public Storage (PSA), and Equinix (EQIX).