The wrong emphasis on the wrong syllable

05/01/25 Prospero.ai Investing (216th) Edition (Midweek)

We are seeing a lot of enthusiam in the market this morning. And we are a bit concerned with how severely this could turn. The newsletter is titled this way because yes, MSFT and META crushed their earnings. And this didn’t neccesarily surprise us. We held META through earnings. But META crushing earnings is expected in recent memory. You know what isn’t? A number of companies, especially in the Consumer Discretionary space are removing their forecasts. Now that is very scary to me. Readers may recall on 02/09/25 we issued a warning: DID WE DISCOVER THAT INSTITUTIONAL RISK APPETITE IS FALLING OFF A CLIFF!? And we view this similarly. Companies not wanting to wager on a forecast at all is not a good sign. Because removing estimates is generally seen as a bad thing so if that is their preference that is worrisome.

Not to mention GDP for this quarter contracted .3% vs an estimate of .4% growth that is a pretty huge miss. And Goldman Sachs is now projecting the most inflation and least growth for the US amongst all of these developed nations, by a good bit.

To be fair we also are seeing a lot of momentum/swing trading in this recent Bull turn so there is certainly money to be made. We will just advocate as we always to be prepared with your hedges (our reccomended SQQQ and SCC) and be ready to flip on an instant.

We may have overreacted yesterday when we got rid of our VRT long. It is looking very strong this morning especially. But at the same time we took some big losses earlier in the year from hanging on to too many of these growth stocks as -5% day turned into -10 or -15% pretty quickly. We’d rather miss out on some gains than get hit with the heavy losses and that is our reccomendation for everyone!

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The wrong emphasis on the wrong syllable

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