To gain an edge, this is what you need to know today.
AI As Consequential As Electricity
Please click here for an enlarged version of the chart of JPMorgan Chase & Co JPM.
Note the following:
- This article is about the big picture, not an individual stock. The chart of JPM stock is being used to illustrate the point.
- JP Morgan is the largest U.S. bank. Its CEO Jamie Dimon is the most influential banker in the world. Prudent investors pay attention to what Jamie Dimon says. Prudent investors recognize that Dimon has access to more private data than almost anyone else.
- Jamie Dimon said, “We are completely convinced the consequences will be extraordinary and possibly as transformational as some of the major technological inventions of the past several hundred years: Think the printing press, the steam engine, electricity, computing and the Internet, among others.”
- The trendline on the chart shows the strong up move in JP Morgan stock since the last earnings.
- A quick look at the JPM chart shows that JPM is doing significantly better than popular stocks such as Apple Inc AAPL and Tesla Inc TSLA.
- JP Morgan will kick off the earnings season on Friday, April 12.
- As full disclosure, JPM is in the ZYX Buy Model Portfolio from The Arora Report and is long from $34.14.
- A part of the rise in JPM stock is due to AI. This illustrates the point that we have been sharing with you that the beneficiaries of AI are far beyond popular AI tech stocks such as NVIDIA Corp NVDA.
- The Arora Report was one of the first to say that a fortune is to be made in AI all the way to 2030. However, making a fortune from AI is not going to be a straight line. It will be treacherous at times. To emphasize the importance of making a fortune in AI, along the way, The Arora Report has continuously reinforced this message. The purpose of this article is to reinforce this message again with information from JP Morgan.
- The stronger your conviction about AI and the more knowledge you have, the more money you will extract from the markets. At the same time, two points are important.
- There is too much AI hype. This over-hype can cause you losses.
- There are also many gurus calling AI a fad. You will be doing yourself a disservice by believing such gurus.
- Here are the key points from Jamie Dimon’s letter to shareholders:
- The importance of AI simply cannot be overstated.
- JPM has 300 use cases in production today.
- AI has helped JPM significantly reduce risk in retail business by reducing fraud.
- JPM has 2500 professionals working on AI and supportive tasks.
- The markets are taking a sigh of relief that over the weekend, Iran did not attack Israel.
- In The Arora Report analysis, prudent investors should not join the momo crowd in being oblivious to the potential of a wider Middle East conflict. In The Arora Report analysis, the response from Iran is likely to be a surprise and at a time of Iran’s choosing and certainly not based on what stock market traders think.
Magnificent Seven Money Flows
In the early trade, money flows are positive in NVDA, Amazon.com, Inc. AMZN, Meta Platforms Inc META, and TSLA.
In the early trade, money flows are neutral in Alphabet Inc Class C GOOG and Microsoft Corp MSFT.
In the early trade, money flows are negative in AAPL.
In the early trade, money flows are positive in SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust Series 1 QQQ.
Momo Crowd And Smart Money In Stocks
The momo crowd is buying stocks in the early trade. Smart money is inactive in the early trade.
Gold
The momo crowd is like a yoyo in gold in the early trade. Smart money is inactive in the early trade.
For longer-term, please see gold and silver ratings.
The most popular ETF for gold is SPDR Gold Trust GLD. The most popular ETF for silver is iShares Silver Trust SLV.
Oil
The momo crowd is selling oil in the early trade. Smart money is inactive in the early trade.
For longer-term, please see oil ratings.
The most popular ETF for oil is United States Oil ETF USO.
Bitcoin
After the weekend hype, retail investors are aggressively buying Bitcoin BTC/USD ETFs. This time it is the retail buying and not bitcoin whales that is running up bitcoin. Bitcoin has moved above $72,000.
Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror.
Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider a protection band consisting of cash or Treasury bills or short-term tactical trades as well as short to medium term hedges and short term hedges. This is a good way to protect yourself and participate in the upside at the same time.
You can determine your protection bands by adding cash to hedges. The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive. If you do not hedge, the total cash level should be more than stated above but significantly less than cash plus hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash. When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks. High beta stocks are the ones that move more than the market.
Traditional 60/40 Portfolio
Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.
Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of seven year duration or less. Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.
The Arora Report is known for its accurate calls. The Arora Report correctly called the big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally to 30,000 when it was trading at 16,000, the start of a mega bull market in 2009, and the financial crash of 2008. Please click here to sign up for a free forever Generate Wealth Newsletter.
This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
