What the hell is Prospero.Ai?
3/17/24 Prospero.Ai Investing (106th) Edition (Weekend)
Happy Sunday everyone, this is a special edition of the letter because it is all about how Prospero can help YOU.
I (George Kailas the CEO and one of now 3 authors of this letter) told Matt (once editor now primary writer) to explain his journey below because it is powerful. My goal is always to teach, so at the expense of embarrassing him a little, I'll share one detail he didn't. When I first met Matt, he was responding to my letters telling me our signals were excellent, but my writing ability was…let’s just say to be generous, less than excellent. I ignored the first email, but the second time he told me my writing was not his cup of tea he offered to help. We met on a Zoom call and even I didn’t expect our call to be as great as it was. Matt and I have since become friends and he has since been a great help to Prospero. I practice a lesson I am always preaching: You (or I) don’t know everything. You have two ears and one mouth, so you should be listening twice as much as you talk. I could have ignored someone who was telling me my writing was subpar. I could have told him that on a bad week 7,000 people read my letter, and he could shove his opinion of me where the sun don't shine. But I recognize I’m not the best at everything, and I'm open to help even from people firing off insults at me. (I love this part of the story because myself and Matt's wife seem to think it is hilarious, and he seems embarrassed by it, probably because for a long time he was a preacher.) I like the story because it is a monument to everything that makes Prospero great. I'll never be "too smart" to be open to learning from anyone, and I doubt any of you are too smart for that either. I see a lot of retail investors roaming the internet as if they have everything figured out. Don't be them, be a learner. Skip past his intro if you want the normal letter but if you are serious about learning how to become a better investor I'd highly recommend it!
“COULD SOMEONE PLEASE EXPLAIN TO ME HOW THIS PROSPERO THING WORKS, ANYWAY!?”
This week’s letter is aims to answer questions we get a lot. If you’ve ever been confused about how Prospero works, or you just want to better learn how to use our tools to help you succeed in investing, read on.
Here’s some of the subjects we’ll address today:
Quick Introduction and heart behind Prospero.Ai
Explain the difference between our Trading and Investing letters, as well as the investment strategies of each.
Frequently asked questions about the use of Prospero.
Real life examples of how Prospero is used on a daily basis.
Market Update, Sector Analysis and Weekly Picks
Introduction and Heart Behind Prospero.ai
“Is Prospero a silver bullet that guarantees riches? No.
But is it a powerful tool that radically increases your odds of success and teaches you how to be a better investor along the way? Absolutely.”
My name is Matt Carter and I’m one of the writers and content editors here at Prospero. (for the record I am compensated in equity, not cash, like many at Prospero.Ai) Our CEO George Kailas asked me to introduce myself because I’m writing this more informal letter, from the perspective of a person who not only uses Prospero on a daily basis, but whose investment journey has been radically changed by it.
Over the last couple of years, Prospero has experienced some incredible growth. Because of that, George brought me on to help with the weekly newsletters. I have a Doctoral Degree in Communications and have authored seven nationally published books with companies like Multanomah and Zondervan. But what makes my involvement with Prospero unique (and unlikely), is that I’m not a Wall Street Analyst by trade. I’m a Vice President of a large non-profit organization, a dad, a husband and (just like many of you) a retail investor.
I began my trading journey because I had two kids in college and frankly, I needed the extra income. I’d heard all the stats about how many traders and investors failed, so I went on a journey to find something that might help me beat the odds. Over the next couple of years, I spent thousands of dollars paying for online services that promised the world, but never delivered. Then one day, I stumbled across Prospero.Ai. Since then, Prospero has not only vastly improved my knowledge as an investor, but it's also improved my success rate. For the first time since I began trading, I actually started consistently making money. Needless to say, I was hooked.
Before we jump into the nuts and bolts of how Prospero works, let me tell you a little bit about the heart of the guy that made all this happen: George Kailas. Since the day I joined the team at Prospero, George has become a mentor, a coach and a friend. Because of that, I can say with all sincerity that George Kailas didn’t start Prospero with the primary goal of making money. He started Prospero to help YOU make money. This guy could be one of those Wall Street guru’s making millions of dollars. But instead, he’s made his life’s work, to develop tools that help the “little guy” succeed. That’s Prospero.
Is Prospero a silver bullet that guarantees riches? No. But is it a powerful tool that radically increases your odds of success and teaches you how to be a better investor along the way? Absolutely.
2. Explain the different tools available from Prospero.Ai
Free Prospero.ai App (iOS and Android). This is our core product that gives you real time information about specific stocks or ETF’s. The App provides A.I. driven analysis and data signals on each stock and how it changes throughout the day. This offers a REAL advantage to the everyday investor – merely a dream before Prospero. Five years ago, the only way you knew if an institution was bullish on a stock, was AFTER the price action occurred. Now, it’s possible to know before it happens. You can learn more about how to use our products HERE:
Prospero’s Free Sunday Investing Letter. In this letter, we provide the reader valuable information on the overall market, as well as give our highest conviction weekly stock picks. The weekly letter has the following sections: Market Update, Macro Economic Update, Sector Analysis, QQQ and SPY updates and the reasoning behind which stocks we add or drop throughout the week. If you’re not taking the time to read our free Sunday letter, you’re missing out. Our team does extensive research to find you the most pertinent information possible on the overall state of the market. One of the best ways to prepare yourself for the coming week is to take a few minutes and read that letter.
Paid Investing Letter Add on. This has a “bonus” section in the Sunday letter and we send out at least one extra letter Wednesday/Thursday that builds on the moves outlined in our Sunday letter. It’s a little more advanced and offers more suggested “buy and hold” picks, as well as our recommended market hedge.
Paid Trading Letter. This is our most advanced letter. Here we publish moves every day, often many times a day. We update these same moves via our Substack and Discord / live streams sometimes. These picks go into what we call our “model portfolio” which is only available to our Paid Trading Letter customers. It changes rapidly and can be used as a source of valuable information throughout the day. It works best for traders and people who have the ability to work with their portfolio throughout the day.
3. Frequently asked questions about the use of Prospero.
“Our ultimate goal is not to spoon-feed you picks… but to help make you a better, more educated investor. That’s when the real magic starts to happen!”
Question #1 WHICH LETTER IS BEST FOR ME?
Our Free Sunday Investing Letter is an incredible source of market and macro-economic information for EVERYONE. But, from an individual investor perspective, it’s intended for people who don’t have time to trade as often. We offer you high conviction stock picks (long and short) based on Prospero’s analysis of our signals (Upside/Downside Breakout, Net Options Sentiment, Dark Pool Rating and Short Pressure) that you can change in and out of at the beginning of the week and have high confidence that the picks will be good throughout the week. We do change some of the picks. Those changes are based on rapidly changing market conditions.
Our Paid Investing Letter Add on is for more active investors that want to stay on top of what the market is doing and make adjustments in their portfolios. This letter is great for the “Advanced Beginner or Intermediate Level” investor who wants to “graduate” to learning the nuances of hedging and other more advanced investing practices. Markets can change rapidly, so for the price, this is definitely worth it.
Our Paid Trading Letter is our most advanced letter and is for day traders or anyone who has the time and ability to daily stay on top of their portfolio. It’s also great for beginners who simply want to learn how to become a better trader. Our CEO George Kailas will often give you his reasoning behind our stock picks, as well as why he feels like we need to drop one. It’s a great way to learn why you’re trading. We actively trade and update this portfolio based on real time information from our Prospero signals. You can purchase our Paid Trading Letter HERE:
Why does George give update so often? Isn’t that hard for a retail investor to follow?
You can read more about the evolution of our strategy HERE. At the end of the day, we’re not expecting you to follow each and every pick. It’s really about giving you multiple IDEAS to choose from. This teaches you, in real time, how to personally use the Prospero data. For example, when you see our team make a change and pick a stock because it just had a huge surge in “Upside Breakout”...and then the stock price goes up two hours later. What just happened? You learned something! You learned to recognize that when there’s a sharp uptick in Upside Breakout, that is often followed by an uptick in price action. One way to think about our stock picking philosophy is this…
For $499 a year, Seeking Alpha gives you two stock ideas per month. For $200 a year, Prospero gives you 100 ideas a month based on real time AI driven data.Then YOU get to decide which of those stocks makes the best sense for your personal portfolio. (P.S. our reported performance albeit in a smaller sample period is better than theirs)
Why do we do it that way?
Because our ultimate goal is not to spoon feed you picks, but help make you a better, more educated investor. That’s when the real magic starts to happen!
4. Real life examples of how I use Prospero on a daily basis.
“The extra money I made that day, paid for my daughter’s wedding dress. That doesn’t happen every day, but it’s one example of how Prospero made a real difference in my family’s life.”
Story #1: When I learned the hard way to pay attention to QQQ Net Options Sentiment.
These are my own personal stories (Matt Carter) of how I use Prospero and how they’ve been a game changer for me. Even though I have a full time job, Prospero affords me the time to be an active trader. And while I've been actively investing for years, I started consistently day-trading during the beginnings of the Bull Market of 2023. It was during that great run that I learned to use Prospero’s signals and started picking stocks based on George’s recommendations. For example, when Tesla went on its huge run in 2023, Prospero saw it coming BEFORE it really ramped up, and I was able to benefit from it. Honestly, it was a great time to be an active trader. It seemed like everything I picked made money. But then one day, George sent an emergency letter before market opening, saying he didn’t like the looks of the QQQ Net Options Sentiment trend and felt like a downturn was imminent. I ignored it because I didn’t want to miss out on the regular gains I’d been making. Well, as soon as the market opened, everything turned red. I didn’t sell because everything always turns around in a few minutes, right?? But it didn’t. The market kept going down. It was one of those significant corrections we experienced in 2023. That day, I learned two things the hard way. One, (important safety tip) if George Kailas gives a special update, he’s right a lot more than he’s wrong, and I need to listen. Two, I learned to actively and regularly check QQQ and SPY Net Options Sentiment on the Prospero App. IT’S SO IMPORTANT! I actually look at them several times a day as I’m trading. More times than not, you’ll see the QQQ and SPY Net Options Sentiment be a lead indicator of the direction of the market on a weekly, and even daily basis.
Story #2 How an abrupt Upside Breakout Signal Changed my Portfolio.
I subscribe to the Paid Trading Letter and through Substack, I follow CEO George Kailas’s picks on a regular basis. I don’t follow every trade George makes, but I’ve learned to pay attention when George gets excited and has a high conviction pick. Let me give you an example. As many of you know, SMCI has gone on a massive run lately. I owned a few shares during that run, but Prospero suggested getting out of it because of volatility. I did. Great call. It started going down aggressively a day later. Well, one afternoon about an hour before market close, I was in an airport about to fly home from a business meeting. I got an update from George over Substack that said: “Our signals show that SMCI just had a massive rise in Upside Breakout…go long SMCI”. Hesitantly I bought several shares. (that’s a lot of money for me). Well, over the next 30 minutes, I watched it go down. Then it went down some more. I was starting to freak out…then all of a sudden, out of the blue, the price turned green and began to shoot up FAST. It rose a ridiculous amount over the next 10 to 15 minutes into the closing bell. I made several hundred dollars profit. Pretty cool huh? Well, let me get personal for a second. My daughter is getting married this summer! That extra $700-$800 bucks I made that day, paid for my daughter’s wedding dress. That kind of success doesn’t happen every day, but it’s one example of how Prospero made a real difference in my family’s life.
Prospero continues to have superior performance for the year. We are currently beating the S&P 500 by 218% with a win rate of 69% against that benchmark.
Regular livestream times this week! Tomorrow 3/18 at 11 AM EST and Wednesday 3/20 at 3 PM EST. Simulcast from our X/Twitter page. Also you can listen / watch after we air because we are now on Spotify!
Don’t have our app yet? Use it to track your investments with Prospero’s proprietary AI tech.
Last week’s Net Options Sentiment levels from the 3/10 letter:
For Tech: QQQ Net Options Sentiment > 40 = Bullish. < 30 = Bearish.
For Non-Tech: SPY Net Options Sentiment > 40 = Bullish. < 30 = Bearish.
Market Update:
QQQ returned -1.16% this week vs - .37% for SPY.
The Market is finally showing signs of taking a breather. Counting two red weeks for SPY that are redder by fair margins for Tech. After a historic run, both the S&P 500 and the Nasdaq 100 both finished lower for the second straight week. That hasn’t happened in a really long time. But there are other signs of weakness beginning to show. Let me give you 3 macroeconomic examples. One, Global equity funds saw an inflow of over $22 Billion Dollars, which is the largest inflow of cash since February of 2022. For those of you who haven't been around investing that long, February ‘22 was the beginning of a historic bear market. Savvy investors were making a “flight to safety” before a downturn.
It’s important to note, Global equity inflow doesn’t always signal the market is going to tank or a recession is imminent. But what it does mean is that American investors are growing increasingly concerned about a market correction (at best) or the beginning of a recession (at worst). Here’s another concerning data point, (per CNBC). Job layoffs rose to their highest level since February 2009! Again for those of you too young to have been paying attention in Feb. 2009, that’s when we were in the throes of the “Great Recession”. The longest economic drawdown since the Great Depression of 100 years ago. Finally, according to Bloomberg, the average consumer credit score in the U.S. dropped last week for the first time in a decade. There’s a lot of negative data hitting the wire!
From a technical perspective, the market is also beginning to show signs of a possible correction. For the last 5 months, on the daily chart, the SPY and QQQ have been forming very tight, neat, up-and-to-the-right ascending wedges. On Friday, both SPY and QQQ dropped through their bottom support channel. It could certainly bounce back up, but with the FOMC on Wednesday, anything could happen, including a sharp downturn if the Fed sounds hawkish. If they suggest rate cuts could be delayed, it could get ugly. If you haven’t diversified your portfolio (even slightly) into different sectors, wisdom would say it’s a good time to do that. There’s a difference between trying to “time the market” and being wise about what’s right in front of your face.
In addition to the FOMC meeting Wednesday, there’s another catalyst that could have a significant impact on the market, either positively or negatively. I’m talking about Nvidia's GTC ‘24 Conference. On Monday, Nvidia's CEO, Jensan Huang, will kick off the conference with a 2 hour keynote speech. Yes, you read that right. 2 hours. It’s been speculated that he will announce a new chip architecture called “Blackwell” (B100) that will advance Nvidia’s AI chip capabilities significantly. This announcement (or something else unforeseen) could kickstart the market and we could be off to the races. In addition, if the Fed were to announce anything dovish, the market just might explode into a huge rally. If Nvidia’s CEO underwhelms in his presentation, that might kickstart the aforementioned correction. All that to say, be ready, because on Monday morning there could be some serious fireworks!
SPY Net Options Sentiment Graph Analysis
See the graph below. What stands out to us is that SPY Net Options Sentiment is continuing to perform much better than the QQQ. It’s held steady, and is even moving slightly with an uptrend. It’s because of SPY Net Options’ strength, that leads us to diversify into different sectors other than technology and communications.
We are short on real estate this evening, click HERE for SPY and QQQ Net Options Sentiment Graphs
See the above graph. QQQ Net Options Sentiment has us concerned. It’s showing a definite pattern trending downward with a series of lower highs. As we looked at last week’s QQQ Net Option Sentiment daily averages, they dropped from an average of 45.59 on March 3rd, to an average of 40.58 on March 13th. An average that drops 5 points over the course of 13 days is a trend moving in the wrong direction. As we mentioned earlier, all this could change with a few words from Nvidia’s CEO Monday morning, but we will make some changes to our portfolio to prepare for the worst case scenario.
For Tech: QQQ Net Options Sentiment > 40 = Bullish < 30= Bearish.
For Non-Tech: SPY Net Options Sentiment > 40 = Bullish < 30 = Bearish.
Sector Analysis
Take a look at our Sector analysis chart. On a negative note, Tech and even more so Communications had a horrible month. (We’ve been warning about Communications being the next domino to fall after Consumer Spending stocks get hit with recession worries) This makes sense in light of the outflows we are seeing in Technology stocks and Magnificent 7 heavy ETFs. Healthcare and Real Estate continue to disappoint, as well as Consumer Discretionary, which saw almost a Billion Dollars worth of outflow from CD heavy ETFs. This kind of negative action certainly keeps us on the lookout for shorting opportunities. Energy and Materials continue to have a strong showing. Because of the strength of Materials, we made the decision to enter into REMX, which is a rare earth material ETF. So far it’s performed pretty well. We believe that will likely continue for the foreseeable future. As you can also see, Energy had its best month in awhile. Keep in mind that seasonally, Energy will typically slow down toward the end of spring and then pick back up in the heat of the summer. But we will try to capitalize on the Energy trend as well as some others in our portfolio.
Portfolio Strategy
Things are a bit wacky this week. We are holding NVDA and SMCI because of GTC day tomorrow, we do not want to miss that potential upside. But to mitigate the risk we will also hold short 3! tech stocks.
Color us concerned. Not only are we pairing back our positions but we are swinging slightly short. 6 longs and 7 shorts + our REMX index long.
Long / Bull Adds - Link to Below Picture
Long / Bull Moves
Because adds, keeps and drops are so intertwined this week we are putting them together! Let us know what you think, especially if you like the old way better. You can always find a link to our current / historical portfolios in the intro to the letter FYI.
META, LLY, AVGO, BLK, EXP and COST are all getting the ax because of technical flaws. Some markets we will throw out technical flaws in favor of our signals but as we said we are concerned and when we are we go into risk minimization mode.
You haven’t met the 3rd writer yet, she’s in college and training and prefers to remain anonymous for now but she took a first hack at the picks this week and I actually chose GOOGL over META after some research we did. GOOGL is now at a 24, 2023 P/E vs. META at 24. So that + the better technical setup tips the scales.
We explained why we are holding SMCI and NVDA above. That just leaves GE which is the best stock when you combine technicals and signals this week. And FANG which gets the add with a Sell Oscillator and as a 2nd Energy stock because that is the only Sector we are Bullish on as of this writing.
Short / Bear Moves - Link to Below Picture
Short / Bear Moves
KW despite being the best in the screener makes us nervous with a Buy Oscillator, especially because we saw a lot of Sells in our Bull Screener.
You saw above that we are overweight on Tech because we are balancing out the risk of holding SMCI and NVDA.
SFL we like to balance out GE because the Industrials Sector overall doesn’t get us too excited.
LEG does not impress us with its techicals when we look deeper at the 4 hour and 1 hour charts (the above is 1D techincals)
WISH was the only tough call but the 11 Net Options Sentiment made me more comfortable with it vs. LEG.
Portfolio Allocation
7 Longs: TRGP, SMCI, NVDA, FANG, GOOGL, GE, REMX (ETF)
7 Shorts: SBGI, HSBC, LPL, XRX, WISH, GRGS, SFL