Financial Markets
The past couple of weeks, our financial markets have been rough. The S&P 500 fell about 2% mainly due to the fear of a possible recession. Another reason that the market fell was because of poor earnings reactions from multiple companies, the most notable being the semiconductor giant Nvidia worth $3 trillion dollars which lost about $400 billion dollars in valuation during these weeks.
The Nvidia posted phenomenal earnings with revenue up 122.4% year over year, net income up 168.24% year over year and diluted earnings per share up 168%. For comparison the world’s most valuable, Apple, had a 4.87% revenue increase, 7.88% net income increase, and 11.11% increase in diluted earnings per share.
Despite posting these triple digits gains the stock fell 20% this week losing tons in value. The stock price fell from the $130s to around $103. This drop was most likely due to investors having even greater expectations, but these numbers were still phenomenal which is why this is a great chance to dip buy Nvidia for the long term. The company still has price targets of 140, 150, 135, 180, and 200 by multiple financial institutions such as Goldman Sachs, Bank of America, JP Morgan, Citadel, and Bernsteins. Though these price targets should be taken with a grain of salt as these institutions often lie to cheat investors, we can still tell that there is a bullish sentiment towards the stock.
Another stock/ETF (exchange traded fund) on watch for this week is going to be TLT (20 year Treasury Bond) due to the fear of a recession and the need for the federal reserve to cut interest rates. Oftentimes when interest rate cuts occur, treasury yields increase meaning that TLT will start going through the roof when the federal reserve cuts rates during our upcoming September, November, and December meetings. TLT is trading at around the $95-100 dollar level as of now, with a price target being $120-135 by March 2025. The reason these treasury yields go up during rate cuts is because rate cuts cause the demand for these bonds to go up due to increased cash on hand for investors. The market is pricing in a 25 basis points cut for September’s meeting, but lately due to the risk of a recession the probability of a 50 basis point rate cut has increased exponentially.
My positions:
SPXL (Daily S&P 500 Bull 3x Shares) 24%- Long Term holding. This is a leveraged ETF meaning that it does 3x of what the market does. This ETF tracks the S&P 500 and 3x its return or loss. It’s a little riskier but overall it’s an index fund bound to be in the green in 5-10 years.
Nvidia 20% of total portfolio- Long term holding which I plan on selling in 5-10 years. The company has extraordinary growth powered by the increased demand for AI technology.
Apple 15% of total portfolio- Long term holding which I plan on selling in 5-10 years. The best balance sheet of the major tech stocks. Iphone 16 is said to be one of the best selling phones in a long time due to “Apple Intelligence”, Apple’s version of A.I
Nike 8%- Long term holding and short term. I have trimmed my stake in the company by around 90 %, but continue to hold a decent amount. The reason I decreased the stake was to transfer money from Nike into Lockheed Martin. I still believe in this stock though and I am trading it through options. I am trading this through options which are basically bets that something will go up. The option is a 90 Strike Call Option expiring March 21st, 2025. I also have some shares, which provide a solid passive income through dividends.
Coca Cola 8% of total portfolio- Long term holding. One of the safest stocks in the market with incredible dividend growth, providing solid passive income, and backed by the best investor of all time Warren Buffet.
Lockheed Martin 8% of total portfolio- Long Term holding. Powered by a strong balance sheet, high dividend yield, and government contracts; this stock is the ultimate defense stock that pretty much never crashes. Especially great due to the rising tensions in the Middle East which will require weapons.
Tesla 8% of total portfolio- Long term holding. Tesla is the most sold car in multiple countries around the world. It has a ‘robotaxi’ being launched in October which is supposed to transform the taxi world. The company also has an affordable EV being launched soon. It also has humanoid robots called Optimus being launched in late 2025-2026.
TLT ( 20+ Year Treasury Bond ETF) 5%- This is a short term holding which I plan on selling around 2025. I am trading this through options which are basically bets that something will go up. The option is 97 Strike Call Option expiring January 17, 2025.
Intel 4%– This is a stock that has been crushed, they have lost tons of money, but I still believe in the company due to a strong balance sheet and the government’s reliability on the company meaning it will be bailed out. The company is also receiving tons of money from the U.S. Chips Act. Trading this through the option 23 Strike Call Option expiring December 18, 2026. Very Risky!!
