The economy as of 4/2023

Disclaimer: All my books and views are for educational purposes only. Consult your financial advisors before taking any actions. All the links are the opinions of the authors, not mine. I am not responsible for any errors and/or opinions. All information and prices are subject to change without notice.
 

This article covers the economy, investing and globalization as of 4/2023. Here are my random thoughts/comments triggered by a 1.5-hour YouTube video by two knowledgeable gurus, whose ideas you may not find in major media.

https://www.youtube.com/watch?v=Q6NIDJZdQH4

 

·         Our banking problems. They are due to the careless decisions of the Federal Reserve Bank. They raised interest rates in order to fight inflation, but they did not consider the consequences. If Biden did not take actions fast, it could be another global banking crisis.

Easy money allowed corporations buying their own stocks that boosted up the stock prices and hence the managers’ stock options. You are lucky if you have mortgages with long-term, low-interest rates. I bet that many sectors including the housing sector would take a long time to recover. If you have a 5-year mortgage, you will have a tough time to pay the interest at a higher rate.

·         Globalization allows the country that produces the best products at the least costs. China does that. She ships the products to us, and in return we pay China with our USD, that are printed recklessly. It forces China to buy our treasury bonds. It cannot last forever. In addition, China would not help us to buy more treasuries as she did in 2008. Actually China has dumped our Treasuries from 1T to the current 750B.

·         China’s digital Yuen could take over. It is already so to some small extent, particularly after weaponizing the USD and seizing assets of foreigners / countries we do not like. We can only turn around by cooperating with China, ending the war and solving our many internal problems such as our falling infrastructure.

·         It will be hard to bring back manufacturing to the US. Our restaurants and similar sectors are begging for workers, while we are laying off good-paid professionals. Many factories are moving from China to developing countries, and most of them cannot afford our high-tech products and airplanes.  

·         My biggest investing plunder is: I reacted too early when the fundamentals were bad but ignoring the good technical. If I followed my own books, I would not buy contra ETFs betting the economy would collapse, as the market was peaking in 2021 and 2022. Learn this lesson.

 

Links: War with China: https://www.youtube.com/watch?v=ou30FgekLFc

 

----

The above is from my book "Investing lessons: successes and plunders" from Amazon.com.

Link for my book "Best Stocks for 2023"

 Created  on July 15, 2023.

7          AI recommendation

 

The following recommendation is on 7/15/2023 and posted it in my web as mentioned in my previous book.

 

Today’s market is quite risky. I cannot find too many stocks to recommend. I believe the future is with AI (Artificial Intelligence) stocks. The following AI stocks will not be included in my future performance at least for the next two years. I believe it will perform well in the long run if AI is materialized and widely applied.

 

Here are the four stocks. The metrics are based on 7/15/2023.

 

Stock	True EY1	FEY2	Fidelity3
GOOGL	6%	4%	6
JPM	7%	7%	4
MSFT	4%	3%	8
NVDA	1%	2%	8

 

¹ It is the reciprocal of “EV/EBITDA”. It is obtained from Yahoo!Finance (under Statistics).

² EY is the reciprocal of Forward P/E (guessing the future earnings). The above considers debts and cash while Forward considers earnings estimates.

³       Fidelity’s score with 10 the best.

 

The following two articles have more info on AI.

 

7.1 ChatGPT recommendation

 

You can create a free account. I asked “best stocks for now”, and it gave me the following stocks. It gave me FB instead of the new name META and made me suspicious of the accuracy of the rest of its database. The current database was updated to 2021. Most of the recommended stocks are high-tech and all are large companies. It could lead to many asking the same questions and it would result in these stocks rising consequently.

 

ChatGPT’s recommendation is based on 01/03/2022. My estimate on the performance.

Stock	6 Months	12 Months	18 months
AAPL	-22%	-31%	6%
AMZN	-33%	-50%	-23%
GOOGL	-22%	-39%	-17%
JPM	-30%	-16%	-9%
META	-50%	-63%	-16%
MSFT	-21%	-28%	1%
NVDA	-50%	-52%	41%
TSLA	-42%	-72%	-30%
XOM	33%	68%	69%
Avg	-26%	-32%	2%
SPY	-21%	-20%	-7%

Only XOM passed my proprietary score, and the above proves my scoring system works at least this time. Oil prices affecting XOM would be reduced in demand when electric vehicles replace combustion cars. JPM would suffer from the reduced number of IPOs in the current market conditions. The recent rise of NVDA and MSFT is due to ChatGPT. GOOG would benefit using AI in their products.

 

More info from ChatGPT

 

Use MSFT for illustration. Type “Microsoft MSFT stock”, then “Fundamental Analysis”, “Technical Analysis” and lastly “Buy or sell”.

 

 

7.2         ChatGPT           

 

Besides Finviz and Fidelity as the major sources for gathering information, today we have ChatGPT, which is AI based.

 

Screening stocks. You can create a free account. I asked “best stocks for now”, and it gave me 10 stocks. It gave me FB instead of the new name META and made me suspicious of the accuracy of the rest of its database.  Currently, the database is updated to 2021, and hence it is not good to use it to evaluate stocks. Most are high-tech and all are large companies. It could lead to many asking the same questions and it would result in these stocks rising consequently.

 

Analyzing stocks with MSFT as an example.

Enter “Microsoft MSFT stock”. It would give you general information about the stock.

Enter “Fundamental analysis”. It would give you the most fundamental data on MSFT, which are appropriate for long-term holding.

Enter “Technical analysis”. It would give you the most common technical data on MSFT, which are appropriate for short-term holding.

 

Most sites provide duplicate data. The following lists some unique data or data that can be easily accessible from the following sites. 

 

Use Fidelity’s equity summary score and at least one report for further evaluation. Comparing its P/E to the industry’s P/E is helpful. As of 2/2023, comparing to the average 5-year P/E is not available.

 

Finviz provides most data. Insider Transaction, SMAs, Shorting % … are quite easily accessible.nYahoo!Finance provides EV/EBITDA under Statistics.

 

When there are many followers on stocks such as AI in this case, they would surge and some would plunge if they are no longer recommended. I would recommend a small portion of your portfolio in AI stocks. I would recommend large companies that would benefit such as NVDA in hardware, MSFT and GOOGL in direct applications and the companies that would benefit from AI such as JPM. The smaller AI companies would return either handsomely (esp. when they are acquired by larger companies or poorly (most likely due to running out of money and/or their products are not competitive).

 

 

Disclaimer: All my books and views are for educational purposes only. Consult your financial advisors before taking any actions. All the links are the opinions of the authors, not mine. I am not responsible for any errors and/or opinions. All information and prices are subject to change without notice.