This in-depth analysis covers the following topics:
- US Presidential Election 2020 Forecast Review
- Seeing Stock Market New Highs Through the Prism of AI
- Stock Market Dow Quick Take
- AI Stocks Buying Levels and EC ratio Explained
- Top 10 AI Stocks individual analysis i.e. for Google, Amazon, Apple etc.
- AI Stocks Buying Levels Q4 2020
- The Next IMMINENT Global Catastrophe After Coronavirus
US Presidential Election 2020 Forecast Review
Congratulations to President Elect Harris, I mean Biden, though Joe is looking pretty frail at 78, not looking like a man that can take one of the toughest jobs on the planet regardless of his 8 years experience as Obama's VP. A Biden Presidency is definitely going to end up being short lived at least terms implementation of a Biden agenda if not short lived in duration. So Americans need to prepare themselves for their First female ethnic President Kamala Harris. Anyway lets hope that Biden at least makes it to his inauguration day! I am mean he has worked so hard towards becoming President he should at least get to enjoy that day.
On the plus side it looks like the republicans have not lost control of the Senate, so checks and balances remain in place to keep Harris in check just as the Trump Presidency was largely kept in check by Nancy Pelosi much to his and Trump supporters anger that should now play out in the rights favour.
US election night proved to be a nail biting event, one of Biden taking an opening lead that evaporated within hours where by Midnight US time it looked as though Trump could pull off another election miracle like 2016 though if one turned down the volume and looked at the MSM presenters on the likes of CNN then the faces told a difference story, it's as though they knew Trumps lead was temporary, like they were trying to pull the wool over the eyes of their viewers as they guided them calmly towards towards a Biden election victory all whilst ridiculing Trump in ever more abusive language.
Where the betting markets are concerned Biden's opening odds of 1.4 to 2.9 for Trump that had persisted for over a week going into close of the polls soon evaporated with the odds gyrating all over the place eventually giving Trump an early lead by around 3am UK time, even extending at one point to Biden trading at over 4 on Betfair on the return from which I could not resist putting another bet on Biden to win at 3.1. Given the poor odds in the lead up to the election and short lived volatility, I did not bet as heavily as I had last time on Trump, nevertheless a Biden win still converts into profits.
I hope those who followed my analysis and forecast conclusion managed to pick up an opportunity to bet on Biden north of 2.0 on Betfair, even though the opportunity did not persist for more than a few hours on election night, that once more by 5am resolved towards suggesting a Biden victory ahead of Trump's statement some hours later that the election was being stolen from him.
Yes, no election is clean, there will be some electoral fraud out there, likely on both sides, but it would be necessary for fraud on an epic scale to overturn this electron result. So regardless of what happens over the coming weeks, I don't see evidence materialising to the magnitude necessary to over turn this election result, at most there are likely errors that could swing it in Trumps favour by a couple of thousand votes in total, when what Trump needs to win is an error / fraud that is a 100 fold that number.
Election Night Chaos Was Expected
My video of Tuesday 3rd November some 8 hours before the polls closed warned to expect a highly Chaotic season finale to the Trump Show, one of Trump taking an early polls lead that would prompt him to declare himself victorious and then to go to war against the count of the Mail in Ballots.
So the pollsters got another election badly wrong, so much for the 8%-10% lead and resulting 400+ landslide electoral college projections that the likes of MSNBC and Nate Silver were peddling in the run up to election day.
A reminder my forecast as of 31st October stated that whilst Biden would win, however that the polls were WRONG, skewed against conservative opinions in general and definitely Trump, as the establishment were not taking any chances and so had gotten their vote out and pumped every propaganda tool at their disposal to the hilt which of course includes opinion polls. Hence my forecast concluding in a far narrower gap between Biden and Trump of 2.7% rather than the 8% to 10% of MSM propaganda
Whilst the current state of the play has Biden winning on 51% to Trump on 47.2% in an election that had the independent vote squeezed, a 3.8% spread vs pollsters 8%, against my forecast of 2.7% that is likely to conclude in a final tally for Biden of 306 electoral college votes..
Any forecasting lessons to be learned for next time?
An election result of Biden winning on 3.8% as opposed to Biden winning on 2.7% ahead of Trump, we'll where election forecasts are concerned, they can't get much better than that. The only variable I will seek to incorporate next time is whether the Independant vote will get squeezed or not, which depends on the degree of difference between candidates, i.e. the greater the difference then the more squeezed will the Independant vote become.
Whilst in terms of the electoral college then that will continue to be based on the average polling percentage conclusion as it is beyond the scope of my interest in US Politics to start delving into what is going on in individual state elections.
Overall I am pleased with the performance of this elections analysis that proved accurate in outcome and in size of election victory for Biden, and hope to replicate again in future elections.
Seeing Stock Market New Highs Through the Prism of AI
Stock markets are soaring on the back of vaccines that herald the end game to the Covid nightmare that as I speak is hitting new highs in the US and fast worsening second peaks across Europe. However, much as was for the March crash, the vaccines, covid-19 are all mere blips in the long-term trend trajectory that is being driven by AI and it's full spectrum application. For instance these are the key areas that I identified to focus upon some 5 years ago, though the number is always expanding as AI encroaches on every aspect of our lives which is why my focus is on core AI itself rather than derivatives of AI.
The bottom line is that we are on exponential curve in terms of technological developments, which means expect things to change FAST! And likely most of us won't even beware of most of critical changes as they take place given the rapid pace of development, just that the implications of the developments WILL be discounted by the stock market through higher stock prices.
For instance, imagine a world where super conductors operate at room temperature! We'll that world could start becoming manifest as early as next year with EXPONENTIAL CONSQUENCES across a wide spectrum of sectors starting with applications that currently require liquid nitrogen cooling such as Quantum computers. Another key sector that is waiting on room temperature super conductors to deliver several orders of magnitude of efficiencies is in electricity generation, transmission and storage (batteries).
And here's a reminder of the stock market BIG PICTURE, where basically I am expecting AI stocks on average to increase 6 fold on where they were trading in June 2020 by 2027. (Machine Intelligence Quantum AI Stocks Mega-Trend Forecast 2020 to 2035!)
Yes there will be stocks that over perform and stocks that underperform as illustrated by AMD currently Killing Intel in the CPU market, a trend which I have been iterating for a few years from now, and it looks like Intel's in for another couple more rough years.
However, Intel IS leveraged to AI, SO I do expect Intel to eventually start performing, for which I am keeping an eye out for signs of, forget 2021, possibly 2022. Anyway both are on my list.
Also remember folks the AI mega-trend favours the tech giants for the tend to be exposed to multiple AI derivative sectors given the advantage that AI gives them over the rest.
And they have very deep pockets SO can BUY up any small or medium cap that shows promise. So unlike mega-trends of decades past, think BIG TECH! And regardless of what happens, even a deep depression courtesy of a once in a century global pandemic, good AI stocks will not only survive but PROSPER, which is pretty much what I stated going INTO the Pandemic crash of 2020 and warned not to make the mistake of SELLING AFTER the initial bounce.
This trend is only just beginning for we have yet to pass human level intelligence after which it's off to the races! When AI is smarter than us, you, me, even the smartest guy in the room! In respect of which all we can do is to?
OWN THE AI! Or a small piece of it via the stock market.
So think of each stock holding as owning a piece of THE AI. Where whilst on the surface they may appear as individual corporations fronted by CEO's under the hood they will become ONE AI, and most people won't even be aware of that fact.
So GET INVESTED and KEEP INVESTED then at the least we will protect our wealth and at best get mega-rich, easy money. In fact I could retire today (metamorphically since I am my own boss) and then 6 years down the road cash in my stocks portfolio for a SIX TIMES return (on June 2020 valuation). It's literally that easy. I've done it before over the decades and know the secret to investing is to REMAIN INVESTED in Mega-trends, buy when cheap and then forget it, if the stock is good then it WILL deliver! Hence my educational investing articles, 20%, 30% even 100% stock gains are nothing to what to expect, regardless of crashes or even bear markets as March 2020 illustrates. Go back and read my articles AND comments during March 2020 and you should see how to think about investing, there is no doubt, if the market is dumb enough to offer AI stocks at 30% to 40% DISCOUNTS then BUY! I ploughed every penny at my disposable into AI stocks during March, though the crash in sterling to below $1.20 limited my window of opportunity to throw more sterling at the market, which is why I like to keep a good chunk of my liquid cash in dollars as I primarily invest in US tech stocks, cannot trust chinese corps and anything else of value eventually gets bought by a US tech giant!
Of course becoming six times more wealthy is not of much use unless there is tech around the corner to use it to capitalise upon, exponential human longevity which should start materialising during the 2030's as I covered in my following article of Mid 2019 (Investing to Profit and Benefit from Human Life Extension AI Stocks and Technologies). I'm up for cybernetic implants during the 2030's. Becoming a literal six million dollar man as I alluded to in my 2016 video.
It's going to happen, so get invested and get rich so we can buy the health tech that is coming a decade or so down the road courtesy of AI and then maybe we'll all see out the 2099 New Year together.
Stock Market Dow Quick Take
My pre election forecast was for a relatively mild sideways trend into the end of the year awaiting a stream vaccine good news during January 2021
However, the stream of vaccine good news has come a couple of months early and sent the Dow soaring to a new all time high of 30,000. My understanding of the process for the roll out of the vaccines is that they are unlikely to make much impact until Spring, so despite the covid relief rally, the virus will continue to ravage the US population and economy for several more months. A quick technical take suggests the Dow is likely to fill that Pfizer induced gap, so we could see the market trade down to around 28,500 as the market digests Covid vaccines reality though volatility is high.
(Charts courtesy of https://stockcharts.com/ )
What about the tech stock heavy Nasdaq?
We are seeing a deviation to the downside against the Dow which suggests to expect a deeper correction than what's in store for the Dow, to at least likely to fill the series of chart price gaps down to 11,250 which should offer an opportunity to accumulate into AI tech stocks that are trading at or near fair value.
AI Tech Stocks Buying Levels and Valuations for Q4 2020
My last look at AI stocks buying levels early September had some of the must own AI stocks trading at ridiculously high valuations for instance Amazon was trading on an EC of 148 against a target maximum of 100! Which prompted me to HIT the SELL button on over 50% of my holdings despite the promise of huge gains in revenues as the pandemic sales and profits came in.
Firstly what are buying levels?
Buying levels are high probability technical levels that a stock 'could' trade down to during a correction i.e. it's an achievable technical chart level that could be used to for instance to put in buy limit orders at just above the buying level if one is looking to accumulate more stock in any particular company i.e. the Buying Level for Google (Alphabet) was $1395, so a limit order at $1395 or higher would be the objective depending on how eager one is to gain exposure to the stock i.e. If I really wanted to buy more Google then the limit order would be OVER $1400 as stocks tend to find support at round numbers.
Stocks Expensive or Cheap Indicator (EC)
This basically condenses down some 12 financial indicators I track for most stocks to determine if they are expensive or cheap (EC), as stock prices are usually not a good indicator of value.
At it's most basic the higher the number the more expensive a stock is and conversely the lower the number the cheaper a stock is. Where a reading of 20-60 tends to be the sweet spot for most AI stocks as it implies earnings growth coupled with sustainable speculative interest and thus results in good trending charts with support during corrections, where value tends to be fair so as to enable one to accumulate stock.
Whilst readings above 60 increasingly indicate high levels of speculative interest in future earnings growth. However, this does not automatically mean that a stock trading over 60 should not be bought or sold, it just means that there is a lot of speculative interest in that stock so expect greater price volatility as investors are more likely to react to news events. So I would still invest in a stocks trading over 60 if they have a good reason to justify such speculative interest i.e. such as AMD and Nvidia as being higher risk stocks. Or Amazon of a say 6 months ago that was set to greatly profit from covid-19 lockdown's.
Over 100 is where stocks are becoming a bit to hot to handle where holding let alone buying depends on understanding what's in the pipeline, what it is driving the stocks into the stratospheric valuations such as AMD first killing Intel and now giving Nvidia a run for it's money. Whilst there will be some such as Amazon, I can't quite fathom the high valuation hence reduce my exposure to.
Whilst readings Under 20 suggests little speculative interest to drive stock prices significantly higher, so likely to expect trading ranges and thus tend to be sleeping giants in the AI mega-trend. Also could be signaling problems with the stocks i.e. such as Intel losing the CPU war to AMD which has has made Intel a disliked stock to hold whilst AMD has been heavily bid up into fever making it an expensive buy.
1. Google (Alphabet) $1742
The key thing about primary stocks is that we don't want them to give us shocks and surprises instead we want them to gradually trundle along their exponential trends so basically all we should be concerned with is whenever an opportunity occurs to add to holdings as was the case during the March pandemic panic crash.
So Google is primary because it is SAFE, it does not warrant much attention as long as the valuations remain sensible in which respect Google is a tad bit more expensive today than in my last update, trading on an EC of 48 (37), though still within it's accumulate range. So on the EC metric Google remains in it's BUY zone.
A safe trillion dollar corporation that is up by over 70% on it's March low makes you wonder why people waste their time gambling on penny stocks, the next big thing that usually turn out to be a flop when safe stocks such as Google deliver such gains without much long-term risk.
Google delivered it's buying opportunity late September, so if you were looking to buy but failed to act to pull that trigger when Google traded down to $1400 then you only have yourself to blame!
Google's break above it's previous high of $1530 is propelling the stock towards the next major milestone / resistance area of $2,000 as Google continues to trade within it's post pandemic crash channel. Currently retreating from the upper end of the channel and eyeing filling the gap at $1675. In terms of the lowest Google could trade down to during a correction then $1600 is possible which would thus be Google's next achievable buying level.
2. Amazon $3099
Amazon had soared into the stratosphere, literally doubling in price from its March low, breaking above $3400 early July putting Amazon on an eye watering EC level of 148, prompting me to sell over 50% of my holdings which I flagged ahead of time in the comments, following which Amazon did correct down to $2900 though not to anywhere near it's buying level of $2525. Following which Amazon did manage to break to a new high of $3552, but again it was not able to hold the levels due very high valuations which currently has Amazon trading down to $3099 and it looks like I'm not the only one who thought Amazon had become a bit too expensive as Jeff Bezos sold another $3 billion of Amazon stock early November bringing his total sales for 2020 to $10 billion.
(Charts courtesy of https://stockcharts.com/ )
Clearly the Amazon stock price has been marking time as valuations play catchup, in respect of which the current EC for Amazon is 91, which is huge improvement on 148 and which implies that downside should be very limited and thus Amazon now warrants a higher buying level.
Amazon is in a converging triangle with the resolution likely to be to the upside. Though I doubt we are going to see the Amazon stock run higher at it's earlier pace of going from $1700 to $3400, Instead a gradually rising trading range is more likely. In terms of a buying level, the best the chart implies is $2960. i.e Amazon has rising support from $2871 to $2950. So in a best case scenario for buyers is a fleeting dip into this area that could be possible if not probable. So unlike Google, I am not seeing much downside for Amazon, at best 4% off the last close.
3. Microsoft $210
Microsoft is currently trading on an EC of 55 up from 50, basically awaiting earnings to play catch up to the stocks earlier spectacular bull run from a low of $131 to a high of $232. Where revenue growth is concerned AI is at it's very heart in terms of it's Azure cloud services platform revenues which are growing at a spectacular pace of approaching 50% per year much as Amazon's growth is increasingly being fuelled by AWS.
Microsoft stock price appears to be in a similar phase as Amazon i.e. a stock that's awaiting corporate earnings to play catchup to digest the earlier bull run, and there's not much downside visible on the price chart. At best Microsoft could trade down to $197, though more likely would bounce off of $200, so like Amazon don't expect more than about 4% to 5% off the current price therefore Microsoft's Buying Level is a not too distant $201.
4. Apple $117
Apples EC has rocketed higher to 76 up from 55. which on face value makes Apple an expensive stock to buy right now. However, when one actually looks under the hood at what's going on at Apple then one finds the reason why Apple has been bid up to such lofty levels, where it's current price even after the recent correction is more than double where the stock was trading during March. The answer lies in Apple's 2 year transition away from using former best buddy Intel's CPUs which has started off with a BANG following the launch of the the M1 Mac Book laptops just a few days ago. what's the M1? It's Apple ditching intel for it's ALL in one chip that includes a 8 core CPU, 8 core GPU, 16 core neural engine and memory all on one SOC die that is basically a souped up version of the A14 chips found in Pads and iphones.
What does this mean? Well it means that Apple has actually innovated for a change rather than bamboozling it's followers with marketing hype, though there's still plenty of marketing hype coming out of Apple. Nevertheless the M1 results in a huge performance increase due to reduction in latency between components such as the CPU, GPU and Memory as these are now all burnt onto the same 5 nanometre M1 chip. In terms of benchmarks Apples M1 mac book performance depending on what test one runs ranges from a boost of between 30% to 100% over the preceding intel based Mac Books whilst at the same time delivering a whopping 50% increase in battery life! So contrary to much pre launch skepticism out there that the first generation of M1 Mac books would fail to deliver due to being Apple silicon's first generation devices, which instead were expected to lay the ground work for the real innovations in later generations of Apple processors, instead Apple HAS delivered and further driven a nail in Intel's coffin, as Apple Mac computers to be launched during 2021 will be based on the same M1 technology and are thus likely to deliver similar performance increases over the use of separate components i.e. Intel CPU, Nvidia / AMD GPU's and memory which are now all on one APPLE M1 chip.
Furthermore there is huge reduction in costs of manufacture as illustrated when one dissembles a M1 Mac book pro that bolls down to 2 small PCBs, though on the downside Apple has completed erased the ability of Users to upgrade anything on their systems, as there are NO expansion ports! So choose your specs wisely as you cannot add to anything later!
And here's what's inside an M1 Mac mini computer that costs $700.
Even more sparsely populated with again absolutely nothing that's remotely upgradeable, effectively a ipad in a small computer case.
How did Apple achieve this apparent performance miracle? well the trend was is in motion for over a decade where it all boils down to the failure of Intel to innovate which has allowed others such as Apple to both catch up and now PASS Intel in terms of processing power of mobile chips compared to Intel's CPUs as the following graph illustrates. Though in reality it would be better to label the graph Intel vs Apple (ARM).
Take another look at the above graph, from 2015 to 2020 Intel processors have improved by about 40% in performance, whilst Apple processors have improved by 200% in performance. However, even that does not tell the whole picture for instance the 10900k out of the box consumes 125 watts of power, whilst the better performing Apple A14 consumes just 5 watts of power hence Intel requires being plugged into a mains socket with a lot of cooling to dissipate the heat given off whilst the Apple works in small mobile devices working off batteries all without any active cooling.
So basically Apple M1 Mac Books are now effectively large smartphone's comprising as few as possible discrete components so as to maximise efficiency and cost of production, technology that they are set to bring to their desktop Mac Pro computers during 2021 and 2022, which means to expect much more powerful Mac computers compared to what we have grown accustomed to, all whilst consuming much less power so will run quieter than Intel Macs. Though with little ability for users to upgrade so the Mac echo system won't be killing off the Windows Desktop PC's anytime soon given the flexibility that they continue to offer, that and AMD's innovations have prevented that market from dieing along with Intel. That and not wanting to be locked into the highly restricted Apple echo system that up until the release of M1 systems did not represent good value for money in terms of performance vs cost. Also that the M1 Mac books now effectively only match similarly priced Intel laptops such as the Dell XPS in terms of performance per cost which just illustrates how bad a value for money Apple hardware tends to be, despite which a large segment of the public continued to buy into Apples marketing hype, happy to get ripped off, basically paying DOUBLE for the same performance as over a Windows system, hence Apples huge profit margins and why the market is valuing Apple stock so highly.
And another reason to avoid Apple tech was brought home to iphone users during 2017 when they discovered that Apple was deliberately slowing down old phones so users would be more eager to upgrade to the newer models! In fact if I were going to use Mac O/S I would use a x86 hackintosh system. What's an hackintosh? It's basically a Windows PC that dual boots a hacked version of Mac O/S. So you get a MAC without paying more than double what a similar performing MAC would cost.
But now Apple with its M1 processor has pulled one out of the hat, and we can only eagerly await what M1x is likely to deliver to the desktop arena during 2021, for instance I can imagine Mac desktops comprising several M1x chiplets much as AMD processors comprise 8 core chiplets. It could be as simple as taking 2 M1 processors and linking them up to result in a 16 core machine, which is basically what AMD has done with it's Ryzen, Threadripper and Epyc processors. And why stop at 16 core?, 24 core, 32 core even 64 core processing monsters could just be around the corner that Apple could charge inflated prices for, which I am sure is what Apple are working on right now. For it has already been done by AMD just not in terms of the whole package of processor, gpu and memory all on one die. In comparison the most powerful desktop Mac Pro today comprises the 28 core Intel Xeon that starts at £5,500 for the 8 core machine! Opt for the 28 core Xeon and the price jumps to £12,500! Which in my opinion is total a rip off. For instance I could configure a more powerful 32 core Threadripper build for less than half the cost of a £12,500 Mac Pro. In fact the build would come in at about £5000 or at 40% of that which Apple charges for it's Mac Pro's which is why I have never owned anything with an Apple sticker on it.
Anyway that's the past the future is Apple silicon M1 and beyond 64 core Macs are definitely coming if not in 2021 then in 2022 which I am sure Apple will sell at inflated prices as Apple customers appear content to continue to get ripped off which is good for Apple stock holders.
And even worse for Intel is that NONE of this was necessary for Intel HAD the opportunity way back in 2006 to develop and supply the processors for Apple's then new smartphone's, the Iphone but turned Apple down due to forecasts of lack of volume to justify the investment and thus sowed the seeds for today's total departure from Intel due to Apple porting over their Apple / ARM / Samsung smartphone technology to laptops and during 2021 to Mac desktops, the decision for which was likely taken on launch of Intel's sky lake processors in 2015 that were just bad, full of bugs, prompting Apple engineers to conclude that they could do a better job than this crap and the rest is history, as Intel's failure to innovate has continued since resulting in Apple silicon now passing Intel processors, all whilst consuming far LESS energy due to being smartphone technology being ported over to laptops and soon desktops.
So Apple is definitely not a stock to listen to any doom merchants out there as it benefits from it's AI division delivering huge leaps in performance on developing it's M1 processor that incorporates neural engines right into every laptop and desktop that help boosts performance in machine learning tasks. Meanwhile Intel continues do die its slow death not only at the hands of AMD but now also at the hands of Apple due to FAILURE TO INNOVATE! And it is even possible that the M1 chip could mark the beginning of the demise of the x86 processors which means that AMD in the not to distant future could also be fighting for survival if Apple continues on it's current trend trajectory, something to definitely keep an eye and a reason why Apple stock is primary.
Anyway if you are thinking of buying a desktop Mac Pro then DON'T! Because the next generation will be vastly more powerful than what's being sold today with processing power of upto 64 cores!
Don't be surprised that the Apple stock price has not reacted higher to the launch of the M1 Mac books, as the stock had already been bid up to a very high EC valuation of 75. In terms of the chart then we are seeing the near exact same pattern as for Microsoft and Amazon i.e. a holding pattern as the market digests the recent bull run waiting on corporate earnings to reduce valuations before the next leg higher.
The reaction from the $137 high is corrective, unwinding a heavily overbought state that looks like has just about run it's course, so just like Amazon and Microsoft the downside looks limited, perhaps eyeing no more than a move to $110, and 106 at best. Therefore the buying level for Apple is $110 before the next bull run begins though at a more measured pace then earlier this year.
5. Johnson & Johnson $146
The last primary and the first big pharma stock on my list, a sleeping giant pending the revolutionary AI mega-trend rewards that extension to human longevity promises to deliver in a pill a day to slow the ageing process and not to forget that J&J is also developing it's vaccine to cash in on the pandemic where the difference for the J&J version over the others is that it only requires one dose as opposed to two dose vaccinations separated by a month. Where the market is clearly awaiting news of clinical trail success before marking the stock price higher.
J&J on an EC of 19 remains cheap, though it could remain cheap for many more years before the breakthroughs we are betting on come through, still in the meantime J&J does pay a healthy 2.7% dividend.
J&J is clearly in a tight trading range pending covid vaccine good news. Where the previous buying level of 140 was achieved during late October and remains unchanged for J&J at 140 with little downside visible on the charts as the trend trajectory targets a the highs along 154.
6. Facebook $266
The recent big news for Facebook was the launch of the standalone VR headset Quest 2, which IS a significant improvement on the Quest 1 and from what I can see has NO serious competition, so Facebook currently dominates the growing VR market. Furthermore Facebook is tightening it's grip on the tech by demanding that users have facebook accounts in good standing to enable them to use the Quest 2. Failure to have an facebook account in good standing has been resulting in many Quest 2 owners being locked out of their VR headsets.
Having personally used the Quest 2 I can confirm that it is a significant improvement on the Quest 1 in terms of resolution and performance whilst being sold at a lower price than Quest 1 (£399 vs £499) so should further tighten Facebook's grip on the VR market because as far as I can see it does not have a competitor in the standalone VR market. Plus one can connect the headset via a USB cable to use PC VR games that run better in terms of speed and detail than those running just off the Quest2.
Clearly Facebook is working towards a future where many millions if not billions of people plug themselves for hours per day into VR online facebook communities where they can meet family and friends in virtual environments which is going to happen and for which Facebook is way ahead of the rest with the next big innovations likely to take place in the augmented reality space i.e. merging of the real world with the VR world that Quest 2 headset is at the very beginnings of i.e. a virtual office that includes, keyboard and computer monitor, so it's not long before one can sit down and do their work in front of a virtual their desktop computer anywhere in the world, all without having to carry around anything more than a VR headset, we are perhaps no more than a year away before that starts to become possible with say Quest 3 or even the Quest 2 in limited manner.
Facebook's current EC is 50 (41), so in a sector of rising valuations the stock does look like better relative value for money than most, though nowhere near as cheap as where it was trading say 6 months ago (34).
The stock price at $266 is still up near double where it was trading during March, even after having retreated from a late August peak of $304. The downside appears limited to between $244 and $258, with the next support lower around 240. So much of any expected downside has already happened for Facebook therefore the buying level range is $256 to $260, However it could take some time before we see a return to new all time highs, so either way Facebook is likely to mark time before see it trading above $300 as valuations play catchup.
7. IBM $118
IBM on an EC of -3 (-4) remains dirt cheap as IBM remains out of favour with investors. What do I do when a stock is dirt cheap, BUY! Unless I am missing something obvious. Can't get much cheaper than current valuations, clearly IBM is not on most tech stock investors radar which has been the case for many tech giants at various times, for instance I remember when the financial media was proclaiming that Microsoft was not a good buy when it was trading at $40 many years ago due to the expected demise of it's Window O/S market. It's funny in a away given that these two tech giants have been CONVERGING over the past few years as they morph into cloud computing services companies it's just that the market has not woken up to that fact yet and still think of IBM as what it was 10 years ago so definitely a sleeping giant awaiting cloud computing success. In fact last month IBM announced it was ditching it's slower growth IT services so that it could focus on cloud services and AI which is clearly causing some uncertainty for IBM stocks immediate future i.e. what the split means for stock holdings in each business, however the split will solidify IBM's long-term presence on this AI stocks list, so I will be looking to sell any stock in the split corporation in favour of concentrating in the AI division.
Anyway I don't expect IBM to do a Microsoft anytime soon, a case of accumulate when cheap and let the AI mega-trend work it's magic in due course and don't forget the 5.6% DIVIDEND YIELD! Where else can you get a 5.6% yield in a safe stock that will eventually come good in terms of capital gains that is trading at dirt cheap levels right now?
The stock price continues to trade in a trading range of between $130 and $114 with my last Buying Level of 118 being hit several times over recent months and presently parked right on it. Yes we could get marginally better prices at say $114 therefore the new Buying level is marginally lower at $116. whilst IBM remains parked in it's trading range. And above all don't forget IBM is an AI stock immersed in the likes of Quantum computing and machine learning, in my opinion the market is under pricing iBM.
NVIDIA - AMD - INTEL
AMD is CRUSHING it's competition into smithereens, namely INTEL, which I have been flagging the the demise of at hands of for several years and there is no sign of any end to Intel's CPU woes anytime soon, not for 2021, and I don't see any thing visible for the first half of 2022 either, maybe by late 2022 Intel will have managed to pull a rabbit out of its hat and begin it's fight back? We will have to wait and see. in the meantime the AMD gold rush continues, where the stock has literally risen from pennies a few years ago to eye an assault on $100!
However, AMD was not done with delivering Intel a knock out punch for they firmly eyed loosening Nvidia's iron grip on the GPU market and so on release of 6000 series of RDNA2 GPU's AMD has caught up to Nvidia, matching Nvidia blow for blow, roughly where AMD was against Intel 2 years ago. This must have Nvidia worried because AMD's 6000 series are performing much better than anyone expected! For instance before release I imagined AMD would come in at roughly 15% to 20% behind in performance, instead AMD is neck and neck with Nvidia! And remember this is AFTER Nvidia beat expectations with its RTX 3000 series cards released only 2 months ago! So for AMD to come up from way behind Nvidia and match their newest cards is truly remarkable! Its been literally well over a decade since we have seen such developments in the desktop PC world, with likely more innovations to come over at least the next 2 years, all courtesy of the increasing deployment of AI in design of processors.
Of course where GPU's are concerned Nvidia is still the market leader as it will take at least a couple of years of AMD beating Nvidia to get the market to start to make the shift, just as 2 years ago AMD had less than 20% of the desktop CPU market, whereas today it has likely just passed the 50% mark on release of the Ryzen 5000 series of processors.
So for AMD to do to Nvidia what its done to Intel is going to take similar leaps in performance in future generations AND Nvidia stagnating in it's own product development for which there are no signs of at this time, so it does not look like AMD will do to Nvidia what they have done to Intel but instead will take greater market share of an ever increasing market pie so both companies should continue to win, especially when one looks at the prices they are both charging for their GPUS, for instance the RTX 3080 costs at LEAST $699 and the 6800XT costs at LEAST $649 because given unprecedented demand most people looking to buy today are being forced to pay a premium depending on what AIB stock is available.
Following release of RTX 3000 I was gong to get an RTX 3080 for my next PC build, but now I am not so sure, especially given Smart access memory that allows AMD CPUs to access all of their GPUS memory rather than in small chunks, which gives a further small performance boost of upto 4%. Though AMD is still a generation behind Nvidia's DLSS (neural net resolution up scaling, that's right Nvidia GPU's have out of the box active machine learning!) and Ray tracing, that and most productivity software is optimised for Nvidia GPU's cuda's etc. So even if one of my primary applications was not machine learning then I would still go with Nvidia which I guess is what most people weighing up the pro's and cons will also do regardless of what some benchmarks suggest in terms of gaming FPS.
Anyway we are in for at least a couple more years of fast pace development in both the CPU and GPU world due to intense competition prompting innovation that follows CPU's innovation having stagnated for a good 6 years and GPU's for a good 3 years due to lack of market competition. AMD has won the CPU war against Intel and are right now engaged in a GPU war with Nvidia that as things stand Nvidia is still just managing to be winning.
So this IS a great time to consider upgrading your ageing desktop machines to a new rig!
In terms of stock price prospects then there is a small fly in the ointment and that is lack of supply of CPU's and GPU's, both AMD and Nvidia are failing to meet demand which is several orders of magnitudes greater than supply i.e. from, X10 to X50 supply for CPU's and GPU's so which of the two can get their act together and ramp up production sooner will reap the rewards in terms of surge in revenues, for revenues cannot surge if they are unable to manufacture enough stock to meet demand.
Which stock has performed the strongest since the great corona crash? NVIDIA! Up over 225% to it's recent high of $589 all discounting it's latest 3000 series RTX GPU's that unlike Intel delivered what they promised which as I pointed out at the time of launch in September means Nvidia can literally print money, sell as many GPU's as it can produce! Unfortunately supply has been lacking to meet even 10% of the demand for these ground breaking GPU's. Which despite AMD also excelling, still are the market leaders.
Nvidia trades on an eye watering EC of 173 up from 134, clearly a stock that has been built up on the hype of the RTX 3000, and that's after the stock has already corrected some $60 from it's highs!. Nvidia is expensive, but unfortunately could continue to remain expensive for some time given the lack of supply of GPU's with perhaps Q1 2021 being when the revenues surge enough to make Nvidia a more reasonable buy. Still the long-term trend trajectory for Nvidia remains for much higher stock prices as long as Nvidia continues to beat GPU expectations. Given it's growth rate if the stock did nothing then Nvidia's EC would halve to about 85 in a years time, which implies that Nvidia will trade to new all time highs above $580 during 2021.
The Nvidia stock once more illustrates the point of I have been making all year that of being very careful when contemplating selling out of the best AI stocks as the pre corona crash peak of $316 is fast being becoming a minor blip on the chart, so all those weak longs who sold out at say the $350 new high will be kicking themselves for making that mistake. Nvidia stock tends to trend well which is a sign of a corporation that delivers consistently strong earnings growth so definitely an AI stock to have exposure to and given the continuing demise of Intel, Nvidia nudges higher to number 8 on my list.
Nvidia has fallen out of it's uptrend channel which should not be so surprising given it's unsustainable nature that has pushed Nvidia to extremely overbought valuations that are now likely to have Nvidia parked in it's current channel of between $580 and $480 for at least a quarter whilst earnings play catchup. Therefore Nvidia's buying level is at $480.
9. AMD $85.3
AMD is on a roll, thrashing Intel in the CPU market which looks set to continue into at least early 2022, whilst succeeding in playing catchup to Nvidia's GPU's. AMD's eye watering valuation has been moderating in the face of a surge in earnings that looks set to continue for a good 15 months with the EC falling from 317 to 137. ! In fact just like Nvidia AMD is unable to meet demand for either it's Zen 3 processors or 6000 series GPU's with any stock on the market selling at inflated prices well above MSRP.
As was the case from April to July, it looks like that AMD is set to trade in it's current range of $94 to $75 for some months before the next surge higher to well above $100. So those still looking to accumulate in this emerging chip giant have a short window of opportunity to do so especially given the amount of revenues AMD looks assured to achieve during 2021. Therefore the new buying level for AMD is $78.
Given what you have read so far then it should not come as much of a surprise as to why Intel stock is trading at not much distance from it's March crash low of $43 whilst most other AI / tech giants are trading away from recent all time highs. In terms of EC valuation Intel is now -1 which illustrates investors having jumped ship from a potentially dying stock that has FAILED to deliver in competitive CPU innovation for a good 5 YEARS! Which is the real reason why Intel is dying, as AMD has come from nowhere and took Intel's place as the new x86 CPU giant.
The chart shows Intel is suffering the PAIN of losing in the CPU war to AMD. With another major nail in Intel's coffin being Apples shift to using it's own ARM processors. However, before you all rush to sell, in financial terms Intel is cheap on an EC of -1 (8)! That's a lot of bad news baked into the stock price, so any good news would send Intel stock soaring, it's just that I can't see anything on the horizon until at least early 2022. So investing in Intel is betting on Intel eventually pulling a rabbit out its hat perhaps during 2022.
There is heavy support at $43i.e. just below the current price of $46. Add to the fact that Intel on an EC of -1 has the market already discounting a lot of bad news which means downside should be very limited and so Intel could surprise to the upside on any good news event that the market is not expecting. In terms of a buying level, anything less than $43 has a low probability of being achieved, therefore the Buying level for Intel is a close by $44, as even though Intel is slowly dying it's far from being dead, in fact both Apple and AMD have been in far worse shape in the past than where Intel is today. Though I personally would not buy any more Intel stock until I see signs of life in this dying tech giant.
AI Stocks Buying Levels Q4 2020
The bottom line is that unlike what some clearly inexperienced prominent tech commentators out there are stating this is NOT A Tech BUBBLE! Stocks are trading higher due to real revenue growth, earnings and innovation that the market is discounting. The developments that are taking place in the tech world are REAL and thus the current valuations are sustainable for most of the tech giants on my AI list as we firmly remain on on upwards trend trajectory cutesy of the exponential AI mega-trend.
And here are the updated buying levels and EC valuations for all of the stocks on my AI stocks list.
So what am I doing during Q4?
IBM is dirt cheap, I cannot resist buying more, I am sure several years from now many people will be kicking themselves for not picking up IBM when it was trading so cheaply. Next would be to try and add some more Google and Facebook given it's continuing VR market success. And maybe pick up some Amazon if it trades below $3000.
Whilst I already have decent exposure to Apple, I would be eager to buy more on any serious sell off that takes Apple down to say $104, a low probability event at this time but something to keep an eye out for in case it happens as Apple is definitely onto a winner with it's M1 all in one RISC processors that could be the disruptive technology that even comes to dominate the Windows PC market in a few years time given the pace of innovation.
I will probably also pick up some more AMD given the moderation in its valuation.
Whilst TSM continues to present relative value on an EC 46 despite a huge run up in it's stock price, so any correction to around $87 would perk my interest to finally add some of stock in this emerging tech giant.
The Next IMMINENT Global Catastrophe After Coronavirus
So the inevitable pandemic in our lifetime that most of the world including the whole of Europe and North America were totally unprepared that had moronic government scientists spouting in the early months that the general public should not wear masks which was due to lack of PPE stock, whilst prime ministers and presidents laughed it off as something that would magically disappear before Easter, instead has had a severe economic and social impact on all of our lives this past year. However given the fast materialisation of vaccines should soon start diminishing in significance of future impact.
So what else is out there lurking in the near mists of time about to have en equal if not greater impact on our everyday lives?
Asteroid impact? Inevitable yes, for instance Apopthis (named after the Egyptian snake god of chaos) is due for a very close rendezvous with Earth in April 2029, which is one of thousands that cross Earths orbit, but the range of probabilities span decades to tens of thousands of years, so not something that can be assumed to be definitely imminent in terms of a catastrophic impact.
So what is the next PROBABLE catastrophic event that we are largely unprepared for, well what comes to mind are coronal mass ejections (CME), which may not do human and other life much harm directly but could bring an end to our electronic civilisation within hours of a direct hit by a major CME that fries our satellites (No more GPS), transformers, wipes data such as bank records and kills general electronics from smartphone's to sending planes dropping from the sky's onto buildings below.
How probable is such an CME event?
VERY probable as the Sun comes out of a solar activity cycle low as measured by sun spot activity, Likely imminent, just as warnings of a pandemic spanning the past 10 years set the scene for an imminent pandemic to plan for that few governments did. The Earth being hit by a massive solar storm within the next 10 to 15 years is VERY PROBABLE, a 80% probability! One only needs to look at the sun spot activity to see that the sun has been relatively quiet for the past 20 years just at a time when smartphone technologies have taking off globally, with many hundreds of satellites going up during this solar quiet time period virtually none of which would survive being hit by a CME.
The sun's quiet period is coming to an end and we are going to see spikes in solar activity that could see a solar mass ejection coming Earths way. The greater the solar activity then the higher the probability of Earth being hit by a solar storm, and it IS going to happen, the Earth WILL be hit by charged particle storms from the Sun the only question mark is the magnitude and will we get a direct hit or glancing blows. Where a glancing blow would still cause some damage and outages whist a direct hit would send us immediately back into a pre electricity age for anywhere from a few days to likely several months! Depending on what electronics failed such as transformers for which there is little backup stock, perhaps only enough to get a few cities up and running whilst most of the rest of the nations remained in blackout.
We have seen what a few hours without electricity can do to some inner city populations, sending them rioting and looting, what will happen if the outages extend to several months! In a world without ANY communications, no internet, no TV and likely NO RADIO due to ionisation of the atmosphere, a complete communications blackout with perhaps the police patrolling on horses with loud speakers to order populations to remain indoors.
Information silence and food shortages within days as every none essential person is forced to stay at home with the army soon patrolling the streets whilst the government organises emergency food rations to prevent starvation. So the Earth being hit head on by an coronal mass ejection will be catastrophic with the impact likely many times worse than the Pandemic we have just experienced perhaps with the world not getting back to normal for several years!
When Did the Earth Last Take a Hit?
The Earth was hit by a glancing blow in March 1989 that knocked out power across large sections of Quebec.
In 23rd July 2012 the Earth had a near miss with a solar super storm that would have knocked the Earth in technological terms back to 18th century. This should have acted as a wake up call for governments but apparently not, maybe the more far sighted tech giants such Google have contingencies in place to protect their data but most small and medium sized corporations are blind to what's around the corner.
How to Protect Your Tech from a Solar Storm
Whilst we have no control over protection of satellites, power stations, transformers and other electronic infrastructure.
However we could all look into how to protect our personal electronic devices from an CME storm that would risk wiping them clean of all data and likely worse make them inoperable.
The easiest first defence is to have them unplugged from the mains, after all there could be as much as 30 minutes advance warning of a CME heading our way. So maybe leave valuable tech switched off and unplugged at night would be a good starting point.
Next would be to have or make a faraday cage from metal mesh, you all already have one of sorts in your homes, your microwave which could save data such as on hard drives and your smartphone during an CME just as along as they are unplugged. So don't throw your old microwave away, keep it in the garage with any external hard drives kept inside it.
Ensure you have a stash of cash because there won't be any electronic banking for a while.
What about a small petrol powered generator, a quick look on Amazon shows generators starting at £230 for a 6500 watt, 3.4kva generator rising to £530 for a 7,500w, 9.4kva generator. And of course you'll need some fuel storage.
Some walking boots? Because you'll want to keep that fuel in your tank (if it's petrol) to power the generator and don't forget no traffic lights for a while.
Your Analyst, wondering if Youtube would be wiped clean following a CME.
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