The Monthly Compounder

$NVIDIA CEO Jensen Huang admits to infidelity following revelations of a relationship with a suspected Chinese spy. The US Secretary of State warned the Trump administration, and the board is launching an independent investigation.

Are you rich? Jim thinks for a bit and answers "You know what? I define rich as if you get more money, it won't change your life. Then you are rich."

Bank of America is warning clients about a market collapse because margin debt growth plunged from 53.7% to 31.4% in September. They claim 2000, 2007, and 2021 prove this is the absolute top. Once again, another giant trying to predict the next crash. Having invested through dot-com, the financial crisis, the oil crisis, and Covid, I lost count of how many corrections I have seen. This is just retrospective data-fitting to stay relevant. I filter it out. My 20-year plan is simple, always be structurally ready for a crash, but never bet money or alter positions based on predictions of what happens in 1 week, 1 month, or 6 months. Compounding requires ignoring the casino noise. Do you think margin debt is a reliable crash indicator, or just more noise? How do you prepare your portfolio for the unknown unknowns?

It often takes just 19 days for fear to climb to the top but over 100 days before the market calms down again. Do investors underestimate how long it takes for the market to calm down again?

$AAPL can also be one of the winners if the data center building slows down. Lower investment activity can lower the demand for memory chips and therefore reduce the cost pressure for the company.

Gridlock time! The Democrats won everything, not completely unexpected. I guess the financial markets will welcome this, neither of the parties has full control and stability is returning. Stocks love stability. It also means that the interest rate peak may have been reached and the national debt should calm down. I guess this will spill over to the rest of the world over the coming weeks. If you aren't invested going forward now, you could miss out on a lot of money!?!

Last time...

Technology stocks are back but still in correction mode trying to come over the -10% line (correction mode line). Semiconductor stocks lead the gains. Should the Democrats win, it could, according to CNBC, give us a red Wednesday, especially AI stocks. If the Republicans win, it could provide a short-lived relief rally. Ian Lyngen at BMO Capital Markets expects political gridlock. He believes the market becomes nervous about AI regulation the better the Democrats do. Historically, the months following midterm elections have been positive for stocks. Ryan Detrick, market strategist at Carson Group, believes the election can bring calm and gains. Once you are through it, it is a big relief, says Detrick.

The problem today, especially with the tech industry, is that when tech companies reach a certain point where expenses match revenues, then 95%+ of the next money coming in goes straight to the bottom line (the shareholders). When it comes to other sectors, revenues and costs follow each other much more. Because of this, we get these roller coaster market caps. It is very difficult to calculate, the way I see it. Do you find it hard?

Ryanair is probably the only airline that actually makes money :) O’Leary says the fight with Trump over Starlink gave Ryanair free advertising worth about 30 to 40 million dollars!! "I have no plans to make up with him. He thinks I am an idiot, and I know he is an idiot," O’Leary says. That is one way to do it...

I have always been interested in investing in India but never done it. The Indian indices (Sensex and Nifty) is over 1.6 percent today. Reliance Industries +11% on solid numbers. The rumours now are that the Indian authorities (SEBI) are considering removing the tax on long-term gains for foreign investors to boost the market. Time to invest?

The most expensive midterm election in history! The estimated sum is now 17 billion dollars for this midterm election. If you look at this historically, a midterm election has lost an average of around 26 seats in the House of Representatives and 4 seats in the Senate. At the same time, they are fighting for 36 governor seats in the whole USA! This will be interesting.

Gold prices are falling like a stone! What’s strange about this drop is that gold usually goes up when the S&P 500 goes down, since it traditionally works as a safe haven. But not this time! It seems to be driven by fear of long term high interest rates in the US, as inflation remains high, combined with a strong US dollar, which makes gold more expensive for other currencies. Maybe it is time to consider buying some gold soon?

This is interesting about Hormuz, Navy Admiral Cooper tells a little about what he sees in Hormuz now (he was flying over). And what he sees is increased ship traffic and no or very little Iranian military. So what investors are talking about now is if the Democrats win back the majority in Congress (upcoming week) and cut the funding for the operation in Hormuz. Meaning the blockade in the Strait of Hormuz gets weaker because of a lack of money, Iran can take full control of the strait again. Which can force international companies to negotiate directly with Tehran, and this can potentially send global oil and energy prices up again. So whatever happens energy/gas prices will go up?

It is quite sick, 20% of the S&P 500 is AI hardware. The microchip and processor part, Nvidia stands for about 80%. After that $AMD,$INTC and $AVGO plus $QCOM. Then we have server and infrastructure $SMCI and $DELL. This means that if $Google or $MSFT says, hey! we have enough chips now, we must start to earn money on the software instead. Then this creates a crazy chain reaction that can send the USA into recession. This has not happened yet, but I understand why investors are afraid. Are you afraid of this?

November to June strategy vs whole year…