Most Intriguing Investment Idea of the Day Thread

[ChpBstrd]

Interesting find, @Michael in ABQ .
My first thought was why would regulators allow this merger if they wouldn't allow US Steel?

[reeshau]

Interesting find, @Michael in ABQ .
My first thought was why would regulators allow this merger if they wouldn't allow US Steel?

Because it's an EU buyer, and not a Japanese one?

Also, only 678 employees.  Are they unionized?

[ChpBstrd]

Asset: NVDA at-the-money covered call at 142 strike expiring January 17, 2025
Price: $14,200 one hundred shares stock - $1,495 short call at 142 strike = $12,075 $12,705 (correction)
Rationale:
Nvidia is both the poster child for the AI revolution and the whipping boy for the AI bubble. The stock is up 187% year-to-date and has a forward PE of 49. They seem to have locked the AI industry into their standards, have a technological lead, and face merely distant competition from Intel, AMD, or other smaller players.

The extreme volatility of the stock this year and extreme investor greed has created a scenario where an at-the-money call option (142 strike) expiring in three months sells for 10.5% of the stock's price. 10.5% would be your 3-month return if NVDA is either flat or goes up. If NVDA goes down, you would not start losing money until it was down 10.5%.* That's an intriguing bet!

If you sold calls deep in the money, at the 121 strike, you'd make 4.2% (in 3 months) unless NVDA fell below 120.08. You wouldn't start losing money until NVDA fell below $108.45. That would require a -23.5% drop from the current price just to drag the position down to breakeven*. Seems like a very reasonable tradeoff of risk - the downside is owning NVDA at a forward PE of 37.

*If the correction occurred while there was still significant time left on the option, you'd have the opportunity to exit the trade early and the option would still be worth something, reducing your total loss.

[MustacheAndaHalf]

Using $NVDA's pace YTD, if $NVDA keeps the same pace, it would gain +33% before that option expires (*).

In 2020 and 2021, Nvidia's forward P/E ratio was even higher: 46 and 56.  It doubled both years.  The current forward P/E ratio isn't an obstacle to Nvidia's growth, if 2020-2021 is any indication.

(*).
Right now, $NVDA shows as up +194% YTD, which is roughly 11 months. The math I've done suggests NVDA rises 10% per month (compounded).
(1.10)^11 = 2.85 (+185%).
(1.10)^3 = 1.33 (+33%)

[ChpBstrd]

Asset: iBonds
Price: Yield is 4.38% until October 31, 2024. Includes a locked-in 1.3% fixed component, the highest since 2007.
Rationale:
In this post on another thread, I discussed two possible "doom loops" that could lead to higher inflation. Each starts with tariffs, and either an appropriate Fed response triggers money printing to pay interest on an escalating national debt or a politically-influenced Fed refuses to raise rates and loses all credibility, like what happened in Turkyie.

Bond markets are priced for a 5-year inflation breakeven of about 2.3%. The S&P500 is priced at a PE of 29.65 and a CAPE of 37. Imagine if the market's and Fed's assumptions of 2% inflation and a longer-range FFR in the 2.5-3.5% range are violated, with stock and bond valuations where they are.

The rate shock of 2022 might not be an ideal comparison because inflation was already falling fast and everyone felt rate cuts were maybe a year away. How do markets react in a doom loop scenario, where policy makers seem to have little control over the outcomes, or are in fact enacting inflationary policies like tariffs?

Neither stocks nor fixed-income look very good in that light. However, we're in an interesting window of opportunity in which the yield on inflation-hedged bonds like iBonds is roughly equal to what one can earn taking all the inflation risk of a 10-year treasury.

It's a counterintuitive move in these times of massive economic growth, lots of good economic metrics, and a 23% YTD total return on the S&P500 as of late October! The intrigue comes from the possibility that iBonds could be the only asset class to produce positive returns in the doom loop scenarios discussed. Even if the doom loops don't occur, it's not dead money - you're earning what others are earning while taking the risk of treasury bonds. Even in a future world where the Federal Reserve refuses to raise rates in response to inflation, iBonds would still raise their rates along with CPI... not the FFR or SOFR like other variable instruments.

You can only invest $10k per calendar year in iBonds, plus up to $5k in paper iBonds if the money comes from a tax refund. So this is no substitute for an option-hedged stock portfolio. However, given the policy implications of a political sweep with inflationary policy to follow (odds ~25%) these iBonds may be a better place for ten grand than bond funds with more rate vulnerability and no inflation protection, like BND or AGG. As for TIPS, I hope we all learned a valuable lesson about duration in 2022.

[vand]

Asset: USO
Price: $69.53
Rationale:
Should oil be selling for only $67.34/barrel, just prior to what seems likely to become an Israeli air war or ground invasion into Lebanon? Such an event would probably escalate Houthi and Iranian harassment of vessels in the Persian Gulf, Gulf of Oman, Gulf of Aden, and Red Sea, and it might lead to additional attacks on U.S. bases in Iraq, Syria, and Jordan.

Maybe none of that happens. 2nd quarter US GDP growth still came in at 3% and is forecast to be running at 2.9% at the moment. Rate cuts could incentivize speculation, lower the cost of stockpiling oil, and increase demand. Also, EV sales are fizzling, so a Wall Street narrative could emerge that oil is too cheap.

Maybe none of that matters, and the price of oil continues bouncing around in its post-pandemic range. Oil has exceeded $80 three times in the past 12 months. There's a reasonable chance it could do so again in another few months. On the downside, oil hasn't fallen significantly below today's levels since mid-2021. So just based on the historical probability alone, investors in oil could be set to make 18-20% within the next few months.

Would USO fall in the event of a recession in the US or EU? Probably. But the idea is you'd make a double digit return within the next six months, and a recession is less likely than another upward spike in the same timeframe.

Ignoring USO, I do think oil is getting too cheap to ignore.  Gold/Oil ratio now at 41 - only during the bizarre events of 2020 was it cheaper priced in real money.

https://www.macrotrends.net/1380/gold-to-oil-ratio-historical-chart

The world is not using less oil - 2023 was a new record high, and 2024 is well on pace to exceed it.

I'm not entirely sure what the best way to play it is, though - traditional oil stocks don't look that cheap, and nowhere near as attractive as they were in 2020. 

[ChpBstrd]

Asset: USO
Price: $69.53
Rationale:
Should oil be selling for only $67.34/barrel, just prior to what seems likely to become an Israeli air war or ground invasion into Lebanon? Such an event would probably escalate Houthi and Iranian harassment of vessels in the Persian Gulf, Gulf of Oman, Gulf of Aden, and Red Sea, and it might lead to additional attacks on U.S. bases in Iraq, Syria, and Jordan.

Maybe none of that happens. 2nd quarter US GDP growth still came in at 3% and is forecast to be running at 2.9% at the moment. Rate cuts could incentivize speculation, lower the cost of stockpiling oil, and increase demand. Also, EV sales are fizzling, so a Wall Street narrative could emerge that oil is too cheap.

Maybe none of that matters, and the price of oil continues bouncing around in its post-pandemic range. Oil has exceeded $80 three times in the past 12 months. There's a reasonable chance it could do so again in another few months. On the downside, oil hasn't fallen significantly below today's levels since mid-2021. So just based on the historical probability alone, investors in oil could be set to make 18-20% within the next few months.

Would USO fall in the event of a recession in the US or EU? Probably. But the idea is you'd make a double digit return within the next six months, and a recession is less likely than another upward spike in the same timeframe.

Ignoring USO, I do think oil is getting too cheap to ignore.  Gold/Oil ratio now at 41 - only during the bizarre events of 2020 was it cheaper priced in real money.

https://www.macrotrends.net/1380/gold-to-oil-ratio-historical-chart

The world is not using less oil - 2023 was a new record high, and 2024 is well on pace to exceed it.

I'm not entirely sure what the best way to play it is, though - traditional oil stocks don't look that cheap, and nowhere near as attractive as they were in 2020.

I was eventually sold on the idea that options on USO is the best way to play it. If US GDP is really growing at 2.8% as forecast, and China is flooding their market with stimulus, oil demand is going up not down, and everyone has inflation concerns about the policies of either presidential candidate, then, I agree, $68 per barrel might be low.

I don't think oil stocks are particularly expensive, even for an almost no-growth industry. PE ratios are all in the 10-15 range compared to the S&P500 at about 30:

COP: 11.4
XOM: 14
CVX: 14.7
SHEL: 11.6
TTE: 7.25
SU: 9

Crude oil dropped almost 6% earlier this week on suspiciously the same day (10/25) when Tesla announced an earnings, revenue, and margin beat. Despite what you may have heard from social media influencers, Hybrid and EV adoption is exceeding forecasts, especially in China and Europe. In the U.S. the EV/PHEV market share hit 10% in 2023 - and that makes the U.S. a laggard! If Tesla can grow revenues, earnings, and margins after slashing the prices of their products, then perhaps economies of scale will soon tip EVs into a position where they are permanently cheaper to build and to own than fossil burners. It's a classic Innovator's Dilemma disruption scenario coming to fruition, so maybe investors are pricing the overhead-intensive oil industry to shrink in the future. I'm not hearing much excitement about the sector from anybody, and that's odd during what appears to be an economic melt-up.

In the short run, though, "calling the dip" in USO might work if you give yourself enough time to catch the next normal fluctuation.

[ChpBstrd]

Asset: Mexican CETES (treasury notes)
Price: Yields 10.5% for a one-year certificate
Rationale:
CETES are zero-coupon treasury notes issued by the Bank of Mexico and denominated in Mexican pesos. Maturities range between 7 and 728 days. They can be purchased in very small increments directly through a phone app, "cetesdirecto", or cetesdirecto.com. Think of these as Mexico's answer to treasurydirect.gov. These tools also allow users to purchase longer term Mexican government bonds.
 
Proof of legal residency (which can be a temporary resident visa) and a Mexican bank account are eligibility requirements to purchase CETES. More details are described in this blog. Also, deposits are limited to 23k pesos per month (about $1350 USD). So it's not something you could quickly reallocate your portfolio around!

The intrigue is that they are currently yielding 10.5%. Mexican core inflation was most recently reported at +3.8%, so some quick mental math reveals a very attractive +6.7% real rate. Rate cuts are on the way, but for now eligible investors can lock in very attractive real yields. A tax rate of about 1% on the interest is automatically withheld, but is refunded if the rate of inflation exceeds the interest rate.

The other intriguing thing is how someone with anxieties about the quality of US governance or the US dollar could put together a 4-year "bug out plan" with a Mexican temporary resident visa plus a maxed out account at cetesdirecto.com. The temporary resident visa can be obtained under the "economic solvency" pathway if you can show you're worth $62k USD. The fees add up to a little over $300 for one year, up to about $560 for four years. These costs would eat much of your interest gains, but it's cheaper than watching canned goods and ammo reach their expiration dates, lol.

If Mexican rates fall, as they are expected to do, you might not earn much on the net from your $1350 USD per month investment into CETES. So the main value of this strategy would be for (a) someone wanting a "bug out plan" with a combined currency hedge and physical escape method, or (b) someone interested in medical tourism. 

[ChpBstrd]

Asset: GLD bear put spread at 231/233 expiring February 21
Price: $0.60 per share (order not yet filled, mid is $0.63)
Rationale:
I've never met a liberal who owned gold. It's only conservatives and libertarian types. The latter individuals just experienced a massive reduction in anxiety, and so my hypothesis is that they'll pivot from buying gold to buying stocks.

Will liberals take their place in the anxiety trade? No, they don't do that kind of stuff. So gold will fall - at least a little bit - between now and inauguration.

It doesn't hurt that CPI just came in at expectations, further reducing anxiety and making it harder to justify gold after its recent, massive run-up (GLD is up 25% YTD!).

I also think longer-term yields in the bond market could keep rising - by a little bit - as the new government's policy plans come into focus. Low inflation plus high real yields are negatives for gold. GLD is already down 7% since October 30, and I think the same catalysts have farther to run over the next 3 months.

This spread doesn't need a massive move to deliver a large return. Assuming I am executed at 60 cents, the upside is another $1.40, or 233%, if GLD falls to 231. 231 is less than 3% lower than the current price. If you wanted immediate execution and bid, say, 65 cents, the upside would be only 208%. The downside, as always with spreads, is -100%.

I've always thought gold ETF options seemed unusually cheap for the volatility. I guess people try to scalp call premiums to earn at least some yield while they wait. And there are no earnings surprises to deal with!

[Financial.Velociraptor]

Asset: GLD bear put spread at 231/233 expiring February 21
Price: $0.60 per share (order not yet filled, mid is $0.63)
Rationale:
I've never met a liberal who owned gold. It's only conservatives and libertarian types. The latter individuals just experienced a massive reduction in anxiety, and so my hypothesis is that they'll pivot from buying gold to buying stocks.

Will liberals take their place in the anxiety trade? No, they don't do that kind of stuff. So gold will fall - at least a little bit - between now and inauguration.

It doesn't hurt that CPI just came in at expectations, further reducing anxiety and making it harder to justify gold after its recent, massive run-up (GLD is up 25% YTD!).

I also think longer-term yields in the bond market could keep rising - by a little bit - as the new government's policy plans come into focus. Low inflation plus high real yields are negatives for gold. GLD is already down 7% since October 30, and I think the same catalysts have farther to run over the next 3 months.

This spread doesn't need a massive move to deliver a large return. Assuming I am executed at 60 cents, the upside is another $1.40, or 233%, if GLD falls to 231. 231 is less than 3% lower than the current price. If you wanted immediate execution and bid, say, 65 cents, the upside would be only 208%. The downside, as always with spreads, is -100%.

I've always thought gold ETF options seemed unusually cheap for the volatility. I guess people try to scalp call premiums to earn at least some yield while they wait. And there are no earnings surprises to deal with!

Interesting take.  They told us in Grad School (MBA) that the long term Beta of Gold is literally zero.   No economist or statistician can find something it reliably tracks.  I'm a liberal and I used to own a little gold and little more than that of silver.  Not because I believed in zombie apocalypse 'money' but because I considered it prudent diversification and inflation hedge.  Around 2015, I converted it to 60% bitcoin and 40% ethereum (held for the same reasons plus some others.)  Now that Ethereum has yield, I think precious metals are sort of a stupid inflation hedge. 

So, I can see you maybe having the true Conservatives right here.  In addition to bearish bets on GLD, you might look into short gun and ammunition manufacturers as they tanked last time Trump won and the "Hilly is gonna take our guns and put us in camps" crowd stopped stockpiling. 

The true libertarians hate fiat money and the Fed.  But they at least recognize that if you take away their (fed) independence and put the money supply and interest rates in the hands of a protectionist, inflation is going to soar.  True libertarians also recognize that tariffs are inflationary and just sort of plain stupid.   Take the alarmist marketing coming out of Stansberry Research the last 6 months.  They have been pounding the drum that whoever won, inflation was the dead certain result (and you need to pay us 5000/yr to pick stocks that can defend against that like only we can...)

[MustacheAndaHalf]

Shorting MicroStrategy froth.

At the end of 2023, MicroStrategy held $8.4 billion in Bitcoin, and had a market cap of $12 billion.  They had 0.66 exposure to Bitcoin, far below the CEO's goal of 1.5x Bitcoin exposure.  Since then, it's Bitcoin holdings have increased 3x to 4x, but its market valuation has increased 8x.  It now has closer to 0.3x Bitcoin exposure.  YTD, Bitcoin doubled while MicroStrategy stock went almost 6x.  The company's goal, and its holdings, trail far behind its performance.  Eventually that will collapse.

I'm using ETF $BITU to gain 2x Bitcoin exposure, to cancel out the exposure of my other holding.
I'm holding $MSTZ to have -2x MicroStrategy exposure, which in theory should mean -3x Bitcoin exposure.

BITU: $53.75/share (1 share gives $107.50 Bitcoin exposure), $53.75 invested
MSTZ: $0.72/share (50 shares gives $-108 Bitcoin exposure), $36 invested

Two flaws in this thesis:
(1) MicroStrategy is acting like a meme stock.  Buyers treat it like it has 3x exposure, the CEO's goal is 1.5x exposure, and the company's assets are closer to 0.3x exposure.  As long as buyers are in control, my arbitrage isn't enough.
(2) Leveraged ETFs suffer volatility losses.  Even though I have opposite ETFs, I could lose additional money from volatility.

[ChpBstrd]

@MustacheAndaHalf very intriguing play on the pets.com of the 20's!

Do you have a holding period in mind or a target/loss limit?

[MustacheAndaHalf]

@MustacheAndaHalf very intriguing play on the pets.com of the 20's!

Do you have a holding period in mind or a target/loss limit?

Probably a matter of weeks, since the ETFs I bought are so flawed.  Over the weekend of Oct 11 to Oct 14, MicroStrategy stock gained +19%, and the -2x ETF fell -35%.  After big moves like that, the arbitrage is lost - they no longer cancel each other out.  I really wish I could use call and put options, which don't suffer from daily repricing and volatility decay.  But put options on MicroStrategy contain a 40% time premium, and if that collapses, the first 40% of the drop earns nothing.

My guess is that I sell in Dec 2025 at a loss.  The worst case is a steep rise in MicroStrategy stock, destroying my -2x MicroStrategy ETF, followed by a sharp drop in Bitcoin, destroying my now larger 2x Bitcoin ETF.  It reminds me of March 2020, when I sold part of my portfolio to prepare for the crash - and bought things almost as bad.

[MustacheAndaHalf]

Better change that holding period from "weeks" to "hours", as I sold about a day after I bought.

I thought BITU would hedge Bitcoin gains while I waited for MicroStrategy to fall, using a -2x ETF $MSTZ.  Hours after I bought, Citron Research announced a short position on MicroStrategy while also saying they were long on crypto.  The meme buyers tried to fight it, but MicroStrategy stock sunk rapidly today.

My one day return was +7.5% for BITU and +41.8% for MSTZ, according to trades in my brokerage account.  I guess in this case, I acted on information available to others, but got there fast enough that short sellers hadn't announced yet.  Luck made a nice contribution here, but I'm still keeping the profits.

There may still be room for MicroStrategy to fall further.  It has a total of about $33 billion worth of Bitcoin, which is $117 billion short of what it needs for 1.5x leverage.  But it has been volatile enough today that I'd rather not press my luck.

[BicycleB]

Better change that holding period from "weeks" to "hours", as I sold about a day after I bought.

I thought BITU would hedge Bitcoin gains while I waited for MicroStrategy to fall, using a -2x ETF $MSTZ.  Hours after I bought, Citron Research announced a short position on MicroStrategy while also saying they were long on crypto.  The meme buyers tried to fight it, but MicroStrategy stock sunk rapidly today.

My one day return was +7.5% for BITU and +41.8% for MSTZ, according to trades in my brokerage account.  I guess in this case, I acted on information available to others, but got there fast enough that short sellers hadn't announced yet.  Luck made a nice contribution here, but I'm still keeping the profits.

There may still be room for MicroStrategy to fall further.  It has a total of about $33 billion worth of Bitcoin, which is $117 billion short of what it needs for 1.5x leverage.  But it has been volatile enough today that I'd rather not press my luck.

Well played, @MustacheAndaHalf!

[vand]

Asset: GLD bear put spread at 231/233 expiring February 21
Price: $0.60 per share (order not yet filled, mid is $0.63)
Rationale:
I've never met a liberal who owned gold. It's only conservatives and libertarian types. The latter individuals just experienced a massive reduction in anxiety, and so my hypothesis is that they'll pivot from buying gold to buying stocks.

Will liberals take their place in the anxiety trade? No, they don't do that kind of stuff. So gold will fall - at least a little bit - between now and inauguration.

It doesn't hurt that CPI just came in at expectations, further reducing anxiety and making it harder to justify gold after its recent, massive run-up (GLD is up 25% YTD!).

I also think longer-term yields in the bond market could keep rising - by a little bit - as the new government's policy plans come into focus. Low inflation plus high real yields are negatives for gold. GLD is already down 7% since October 30, and I think the same catalysts have farther to run over the next 3 months.

This spread doesn't need a massive move to deliver a large return. Assuming I am executed at 60 cents, the upside is another $1.40, or 233%, if GLD falls to 231. 231 is less than 3% lower than the current price. If you wanted immediate execution and bid, say, 65 cents, the upside would be only 208%. The downside, as always with spreads, is -100%.

I've always thought gold ETF options seemed unusually cheap for the volatility. I guess people try to scalp call premiums to earn at least some yield while they wait. And there are no earnings surprises to deal with!

Trying to sell short a market that is at all time highs during a secular bull market sounds might well be the worst idea you've ever put forward... not sure if that makes it intriguing, though.

Like they say, there are bold traders and there are old traders, but there are no old and bold traders.

[BicycleB]

Asset: GLD bear put spread at 231/233 expiring February 21
Price: $0.60 per share (order not yet filled, mid is $0.63)
Rationale:
I've never met a liberal who owned gold. It's only conservatives and libertarian types. The latter individuals just experienced a massive reduction in anxiety, and so my hypothesis is that they'll pivot from buying gold to buying stocks.

Will liberals take their place in the anxiety trade? No, they don't do that kind of stuff. So gold will fall - at least a little bit - between now and inauguration.

It doesn't hurt that CPI just came in at expectations, further reducing anxiety and making it harder to justify gold after its recent, massive run-up (GLD is up 25% YTD!).

I also think longer-term yields in the bond market could keep rising - by a little bit - as the new government's policy plans come into focus. Low inflation plus high real yields are negatives for gold. GLD is already down 7% since October 30, and I think the same catalysts have farther to run over the next 3 months.

This spread doesn't need a massive move to deliver a large return. Assuming I am executed at 60 cents, the upside is another $1.40, or 233%, if GLD falls to 231. 231 is less than 3% lower than the current price. If you wanted immediate execution and bid, say, 65 cents, the upside would be only 208%. The downside, as always with spreads, is -100%.

I've always thought gold ETF options seemed unusually cheap for the volatility. I guess people try to scalp call premiums to earn at least some yield while they wait. And there are no earnings surprises to deal with!

Trying to sell short a market that is at all time highs during a secular bull market sounds might well be the worst idea you've ever put forward... not sure if that makes it intriguing, though.

Like they say, there are bold traders and there are old traders, but there are no old and bold traders.

Have been following this for education. With GLD at 250 (249.84 at close today) it's not off to a good start, but the majority of the period is in future, so maybe it could turn around.

Its original logic seemed US-based, though, while gold is an international market. Maybe other factors predominate, not US CPI?

PS. ChpBstrd's ideas are usually pretty good, and always informative. One of my favorite posters - I highly value his contributions to these discussions.

[ChpBstrd]

Asset: GLD bear put spread at 231/233 expiring February 21
Price: $0.60 per share (order not yet filled, mid is $0.63)
Rationale:
I've never met a liberal who owned gold. It's only conservatives and libertarian types. The latter individuals just experienced a massive reduction in anxiety, and so my hypothesis is that they'll pivot from buying gold to buying stocks.

Will liberals take their place in the anxiety trade? No, they don't do that kind of stuff. So gold will fall - at least a little bit - between now and inauguration.

It doesn't hurt that CPI just came in at expectations, further reducing anxiety and making it harder to justify gold after its recent, massive run-up (GLD is up 25% YTD!).

I also think longer-term yields in the bond market could keep rising - by a little bit - as the new government's policy plans come into focus. Low inflation plus high real yields are negatives for gold. GLD is already down 7% since October 30, and I think the same catalysts have farther to run over the next 3 months.

This spread doesn't need a massive move to deliver a large return. Assuming I am executed at 60 cents, the upside is another $1.40, or 233%, if GLD falls to 231. 231 is less than 3% lower than the current price. If you wanted immediate execution and bid, say, 65 cents, the upside would be only 208%. The downside, as always with spreads, is -100%.

I've always thought gold ETF options seemed unusually cheap for the volatility. I guess people try to scalp call premiums to earn at least some yield while they wait. And there are no earnings surprises to deal with!

Trying to sell short a market that is at all time highs during a secular bull market sounds might well be the worst idea you've ever put forward... not sure if that makes it intriguing, though.

Like they say, there are bold traders and there are old traders, but there are no old and bold traders.

Have been following this for education. With GLD at 250 (249.84 at close today) it's not off to a good start, but the majority of the period is in future, so maybe it could turn around.

Its original logic seemed US-based, though, while gold is an international market. Maybe other factors predominate, not US CPI?

PS. ChpBstrd's ideas are usually pretty good, and always informative. One of my favorite posters - I highly value his contributions to these discussions.

It's definitely not going well here in week 1.5 of 14.5!

Perhaps the error was that US-centric rationale.
Ex-US investors may start buying with both fists if they expect trade wars will increase inflation or default risks in their countries. And there may be more such investors than there are Republicans in the U.S. selling GLD and IAU.

Alternately, it could just be the bull market in all risk assets, as alluded to above. Financial conditions are loose and getting looser, enabling trades that would not be available in tighter times.

[Forticsec]

I'd say think about the startups that utilize these tools tend to be more organized and prepared, often making them safer bets. Plus, early-stage investments in startups can offer high-risk-adjusted returns if you’re careful about selecting the right opportunities.

[ChpBstrd]

Asset: UMAC Unusual Machines Inc.
Price: $18.73
Rationale:
The U.S. military and other militaries are ready to start applying the lessons learned in Ukraine, and that means establishing a domestic base for drone manufacturing. And no, the Trump administration will not be importing from Ukraine. While big defense contractors like LMT, BA, and GD focus on the big drones, it remains to be seen who will produce the little FPV drones that have been so effective in Ukraine. An obscure outfit called RedCat (RCAT) was recently awarded several million in contracts for various drones, sending their penny stock up over 1,200% YTD. They are now worth $888M, with only $18.8M in ttm revenue.

However, UMAC is the more appealing drone microcap speculation because:

• UMAC only has a market cap of $155M (as of Friday) versus $3.56M in revenue. Thus its price/revenue ratio is slightly lower (43.5x) than RCAT's (47.23) although these could change on a dime.
• UMAC's stock is "only" up 368% since going public in February versus RCAT's 1,237% increase in 2024.
• Donald Trump Jr. was recently appointed to UMAC's advisory board.

The signal that sent UMAC up almost 400% in the past few days was the news that Trump Jr. was investing in and joining the company. Obviously, this is all about corrupt politics. Don Jr. will steer government contracts toward UMAC in the one-party environment of the next few years, in exchange for equity appreciation and a symbolic salary. This is actually a bigger win than RCAT's recent contracts. They literally have a lobbyist onboard who is a crony and nepo-baby within the Trump administration, in a governance environment unencumbered by corruption investigations, trials, impeachment risks, or even much residual media to investigate what's going on. And Don Jr. might even be the 2028 nominee for president. All the incentives are aligned for UMAC to start getting massive contracts steered to them, starting in 2025.

UMAC is less than one fifth of RCAT's current market cap, but I think they've worked the political connections to eventually outflank their competitor in a near future with more cronyism and corruption than we're used to in the United States.

[chasesfish]

Well, this $UMAC has been a volatile stock.   Interesting to take a flyer on.

[chasesfish]

My latest idea / bet is a quasi banking play:  Rocket Mortgage - $RKT

I think long term rates are going lower, at least in the short term.  I think we're going to see a few year window where inflation slows to deflates, primarily driven by lower GDP due to tarriffs.   Taxing the masses is a straightforward solution to inflation.   They are also the economic equivalent of gouging one of your own eyes out as long as you can take two from your enemy.

Americans also consistently spend above their means and need to tap their homes as piggybanks.   This is the player that wins on a refinance.   The stock chart also moves like a juiced up version of a long term bond fund.   

Buy in the $14s, sell in the low $20s and move on.

[reeshau]

My latest idea / bet is a quasi banking play:  Rocket Mortgage - $RKT

I think long term rates are going lower, at least in the short term.  I think we're going to see a few year window where inflation slows to deflates, primarily driven by lower GDP due to tarriffs.   Taxing the masses is a straightforward solution to inflation.   They are also the economic equivalent of gouging one of your own eyes out as long as you can take two from your enemy.

Americans also consistently spend above their means and need to tap their homes as piggybanks.   This is the player that wins on a refinance.   The stock chart also moves like a juiced up version of a long term bond fund.   

Buy in the $14s, sell in the low $20s and move on.

If the trade war is strong enough to cause a recession, anything real estate is going to get ugly.  And those who have levered into a mortgage recovery might not survive.  UWMC is weaker, and these businesses are the kind where you only have to be faster than the other guy, not the bear.  (Ironically, both are headquartered in the Detroit area, not far from each other)

If they survive, though, they should turn out well.