My last look at AI stocks buying levels late November 2020 had some of the must own AI stocks trading at high valuations for instance Apple was trading on an EC of 76 against a target of 50, Nvidia on 173 against about 100! Whilst IBM was dirt cheap on -3, so I could not resist buying more where I am sure several years from now many investors will be kicking themselves for not having had the foresight to pick up IBM when it was trading so cheaply. Next I picked up some more Google as numero uno and Facebook given it's continuing VR market success despite the dying lame stream media lobbying governments to get the tech giants to share ad revenues with them. And I also sought to pick up some Amazon on trading below $3000.
As well as looking to pick up some more AMD given its moderating valuation in response to unlimited demand for it's CPU's. With Nvidia still a little pricy to prompt fresh buying despite the success of it's RTX 3000 series of GPU's that literally allows Nvidia to PRINT MONEY! Sell as many GPU processors as it can produce (most Nvidia GPU's are made by third parties using their GPU processors).
And lastly there was TSM that I was eager to buy despite not being exactly cheaper on an EC of 46, nevertheless to gain exposure to another company that can literally print money then one needs to bite the bullet and hit the buy button to gain exposure.
This analysis will seek to act as a major update to my AI stocks portfolio in terms of a reordering of the layout as well as seeking incorporate a number of higher risk smaller cap tech stocks that I have been researching over the past couple of months, though remember that I consider sub $100 billion small caps, and not sub $1 billion stocks which I consider high risk penny stock gambles to steer well clear of. Nevertheless incorporating higher risk stocks at a low % of the portfolio for the long-run should add some spice to the portfolio, where hopefully we can achieve some of the buying levels else like TSMC be forced to bite the bullet and pay top dollar for a top stock.
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.
Coronavirus Pandemic Vaccines Indicator Current State
The UK and US continue to recover well from the pandemic with the EU experiencing a slower rate of recovery from the pandemic though from a much lower January peak. Meanwhile the likes of Brazil are doing their own thing and are heading towards new pandemic highs, where it should be noted that the quality of testing is far lower than in the UK, US and Europe so the number of cases are likely many times official figures which thus pose a risk of more variants appearing and spreading over the coming weeks and months.
The vaccines indicator gives the reason why the UK has managed to go from one of the worst infection rates to one of the least in less than 2 months having now vaccinated 30% of the population. Whilst the United States has done well to play catchup under Biden's administration to total near 22% of the population. Meanwhile an inept dysfunctional blame everyone else EU is unable to get its vaccinations act together and stands at just 7%vaccinated. Whilst Brazils covid chaos is explained by the fact that only 4% have been vaccinated.
Successful vaccinations programmes are also being born out in the falling number of daily deaths and explains why Brazil remains on an upwards deaths trend trajectory and the lag in reduction of the number of daily deaths in the EU and US, which on this chart shows an up tick which likely is due to delayed reporting due to the snow storm that hit southern US states.
So regardless of the anti-vaxer noise in the blogosFear the vaccines are clearly working if not in preventing infections then in terms of hospitalisations and deaths as the following graph illustrates where the UK now has 1/3rd the covid patients in hospital (237/mill) than at the peak and the US half (163/mill). Whilst the likes of France are at 400 against a peak of 500/mill and Spain 500 against a peak of 670/mill.
Though there is a fly in the ointment where the US is concerned and that is the London variant which is expected to become dominant over the comin weeks, so depending on the speed of vaccinations the US could yet see a spike of sorts in hospitalisations and deaths.
Meanwhile France and Germany have finally given the go ahead for the Astrazenica vaccine to be used in the over 65's. This after a month of no other than the French President Macron himself bad mouthing the cheapest vaccine of the lot. Macron and all of the other EU critics should get on their hands and knees and apologise to the hard working scientists of Oxford / AstraZenica. Yet it is the French, German and european peoples who have paid the price in lives lost due to the incompetence of a corrupt and inept European Union's mishandling of the vaccinations programme.
And whilst those like me who are still waiting for the vaccine knock on the door, then I continue to take 4000iu of Vitamin D most days.
Post Pandemic Summer 2021 Social Unrest ?
I know the US has already experienced social unrest in the wake of the Black Lives Matter movement and in the run up to and aftermath of the US presidential election. But here in the UK things have been relatively calm and collective despite the stress to the system caused by the pandemic.
However, even with near 5 million UK workers on furlough, UK youth unemployment has soared, lifting the UK unemployment rate to 5% that once furlough ends could easily increase by another 50% to 7.5%.
Worse still is that black and asian unemployment rate is DOUBLE that of the official unemployment which is sowing the seeds for a post pandemic summer of discontent, demonstrations descending into rioting and looting in Britains major cities. Trends that are likely to be replicated across the western worlds major cities in a summer of jobless youth discontent.
Furthermore looking at the raw deal students have gotten so far i.e. forced to pay for £9,250 for SCAM University courses that are basically delivering learning worse than one can get off youtube then there is definitely a great deal of anger brewing in that segment of the youth population.
Hopefully governments will be able to read the writing on the wall and take preventative action, though looking at the actions of governments in the handling the pandemic then that seems highly unlikely, so a summer of youth discontent is more probable than not.
Get Ready for Inflation Mega-trend to Surge 2021
So the US looks set to approve stimulus spending of $1,9 trillion for the US economy during 2021, with economists singing it's praises of how basically you get a free lunch, one of huge deficit spending at zero interest rate and no inflation. Understand $1.9 trillion is 10% of the US Economy! This for an economy that has already recovered from the covid depression and was destined to grow by about 3% in 2021. So what happens when one throws 10% of GDP at an economy that is growing by 3% per annum. No you don't get GDP growth of 13% per annum, yes it will boost US GDP for 2021 but not by 10%, perhaps by another 3%, so where does the other 7% or $1.5 trillion go? Into HIGHER PRICES, INFLATION! Some of which may be reflected in the official inflation indices.
$1.9 trillion will INFLATE ASSET, COMMODITY AND CONSUMER PRICES. With similar deficit spending sprees taking place in many nations which means to expect a surge in global inflation. The bond markets despite Fed massaging of the yield curve is already starting to discount future inflation with the yield on 10 year bonds rising from 0.5% to 1.5% over the past few months.
So folks contrary to the fools that populate the mainstream financial press, I once more iterate to prepare yourselves for HIGH INFLATION, how high is very difficult to say, but I am sure with the benefit of hindsight a year from now many will be looking in their rear view mirror to explain why inflation had soared to well above all expectations,
The AI Megatrend Big Picture Reminder
Stock markets are soaring on the back of vaccines that herald the end game to the Covid nightmare. However 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 over 5 years ago, though the number is always increasing as AI encroaches into every aspect of our lives which is why my focus primarily on core AI stocks rather than applications 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 Mid 2020 by 2027. (Machine Intelligence Quantum AI Stocks Mega-Trend Forecast 2020 to 2035!)
So GET INVESTED and STAY INVESTED then at the least we can protect our wealth and at best get rich.
The AI Mega-trend ensures that investors can make mistakes, buy stocks at the wrong time and still win in the long-run. So understand the secret to investing is to REMAIN INVESTED in Mega-trends, buy when cheap and then basically forget about your holdings. That's my basic advice, invest and forget for the next 5 years if you want to follow the easy route.
Of course, like most including me, we think we can time purchases to maximise returns such as the opportunity that the March crash gave us. But the simple truth is this, GOOD STOCKS rarely give buying opportunities. We basically got lucky in March. So all we can do is look for anomalies and follow the rule of the greater the deviation from the high then the greater buying opportunity being presented i.e. such as what Intel has been offering for the past 6 months., as it most definitely is an AI stock but it's behaving like some high street retailer. Of course when one looks under the hood one see's reasons why its under performing, as there are always reasons why a stock goes up or down that are usually clear with the benefit of hindsight, nevertheless Intel IS an AI mega-trend stock so PRIMARY is to UNDERSTAND THAT FACT ABOVE ALL ELSE!
Basically what I am saying is that to ride the AI Mega-trend one needs to the exposed to AI mega-trend stocks, and that there is a huge margin of error built into this trend in that YOU CAN MAKE MISKATES AND STILL PROFIT IN THE LONG-RUN i.e I am pretty sure Intel will come good in the long-run.
Human Brain vs High End Desktop PC in 2021
Where do we stand on the path towards your desktop computer becoming more intelligent than you! Currently the best retail desktop GPU is the Nvidia RTX 3090 that carries an MSRP of $1500, though the crypto boom means right now it is very difficult to get hold of and even then prices start at $2000 typically rising to $2200. Still it is easier to obtain then the lower skew RTX 3080 that us supposed to sell for $699 but instead available supply is typically being sold on on ebay for $1200-$1400!
Nevertheless how does the processing power of an RTX 3090 GPU compare to that of a human brain. The RTX 3090 has 10,496 parallel processors and operates at 1.7ghz. That converts into 36 teraflops of raw processing power.
The human brain has 80 billion parallel processors (neurons) and operates roughly at 30hz that converts into roughly 1 exoflops of processing power.
Which means the human brain has about 27,778 times the processing power of an RTX 3090 GPU. Though of course this is not taking into account -
a. Energy usage, the human brain operates at about 25 watts per hour whilst the equivalent number of RTX 3090 GPU's would require 9,722 kwatts of power per hour! That's enough to power about 10,000 homes!
b. Memory, an RTX 3090 has 24gb of GDDR6X memory against the human brain which likely has more than 1 million times that!
So we are some way from the point when a high end desktop is going to come anywhere near matching the processing power of a human brain. In fact looking at the above numbers, I think sooner rather than later we will start seeing biological computers, where parallel processing at low power wattage is done trough the use of human neurons. In fact there are already startups such as Cortical Labs working on such solutions.
Meanwhile the primary route towards post human level intelligence remain the super computers where today's top dog is Japan's Fugaku that is twice as powerful as the next system on the list (Oak Ridge Summit) and has 7,630,848 cores with processing power of 442 peta flops, or about HALF that of a human brain!
Back in 2016, I concluded in a video that super computers would start passing the processing power of the human brain during 2021, we'll that forecast will soon become a reality which coupled with Deep learning (AI) means we are soon going to be living in a world where machine intelligence exceeds human understanding and ability to control, and that the trend is exponential from half to equal to ten times within a few short years, so we are fast approaching the point of no return.
And don't forget the impact of Quantum Computers which are pending several breakthroughs such as room temperature super conductors, and multi million qubit machines, where my best guess will start to deliver on what they promise in about 12-15 years time, though given the amount of money that is going to be thrown at the sector could happen sooner, say in 10 years time.
Nevertheless the time to invest in Quantum Computers is NOW, and NOT AFTER the breakthroughs, for the more one researches quantum computing the more one realises how great the potential is of QC has to change every aspect of our lives in terms of modeling that which cannot be modeled accurately today such as the behaviour of molecules hence why I am not worried about the lack of stock performance to date by the likes of IBM and Intel because I know what's coming down the road.
For instance Google in 2016 simulated a pair of Hydrogen atoms using their 56 qubit chip, in 2017 IBM simulated Lithium Hydride (Li-H), and IONG in 2019 simulated water (H2O).
AI Stocks Investing 2021
I have reorganised the AI stocks portfolio into 5 sections with rough guides on what percentages to hold.
- Primary - 60%
- Secondary - 12%
- High Risk - 8% (work in progress)
- Sleepers - 10%
- Funds - 10%
Apart form usual buying levels of where stocks 'could' trade down to during a correction. i have also included a Buy percent indictor on how good of a buy a stock is right now which is primarily based on valuations though does take into account of trend. So 100% means a VERY GOOD BUY, whilst 0% means a bad buy with 50% neutral. Note this is in terms of BUYING and NOT SELLING! So understand 0% is NOT a SELL rating, it just means that it's a good time to buy a particular stock in terms of price and valuation right now.
Again the key thing to remember is to HAVE exposure to the AI mega-trend stocks.
1. Google (Alphabet) $2021 - Deep Mind
Google stock has just rocketed higher after under performing it's brethren, and coming from it's last great buying opportunity low during September that saw Google trade down to $1400. This illustrates the primary point that we don't know precisely WHEN an individual stock will surge higher i.e. the AI stocks are not going to all move in lock step together. So it is pointless to ask questions such as why is Amazon soaring but Google is not, if a stock is good then eventually it will come good in terms of price performance and Google is literally PRIMARY which means that Google is likely to be the first mega-corp to be run by an AI in all but name. So the existence and scope of the AI's control and management needs will need to be inferred where one big clue will be inexplicable to most stock price movements that to me reveal the handiwork of post human intelligence - DEEP MIND!
Despite the 15% surge in stock price, in valuation terms Google is cheaper today then when it was trading at $1700 with EC falling from 48 to 44, and putting Google on a Buy rating of 75% (remember 50% is neutral, 100% Very Strong and 0% Bad Buy).
Google delivered us it's last big buying opportunity late September when Google traded down to $1400.
Google reached and broke above it's next resistance level of $2,000. In fact Google gapped through $2000, where this gap does give Google some support though which I would expect Google to fill before going higher, so it looks like Google is going to trade below $2000, to fill the gap from $1970 with Google's major support zone between $1820 and $1930 which is where I would expect Google to trade into before preparing for it's next leg higher. Whilst nearest trend line support is at $1930. Which could terminate any correction. This is a tough call, $1930 is significant support, though which could see a short lived spike under it to run stops, which resolves to a Buying zone of $1820 to $1930 with the midway point being $1875. Though if you really want to own Google. The question an investor would need to ask if Google were trading at $1930, do I want to risk not buying google with a Limit order at $1875, some 0.3%?
2. Amazon $3092 - PRIMEDAY SALE
First Amazon stock soared into the stratosphere and now so have Amazon earnings doubling, sales up 44%.Gone is Amazons EC of 148! Gone too is the relatively pricey valuation of 91 of November 2020, and here we now stand barely 3 months on with Amazon priced on par with Google trading on an EC of just 42. What does this mean, it means Amazon is CHEAP! And thus the Buy Percentage is 100%!
Unfortunately this means the odds are stacked against all those looking for lower prices. Of course we can get lucky and the market panics and takes the likes of Amazon with it but in technical and valuation terms seems very unlikely.
(Charts courtesy of stockcharts.com)
Amazon has broken out of it's converging triangle to the downside, which is a bearish signal which implies a down leg to below the 2871. However all things considered I expect this to be a false break lower as the amazon stock price is clearly consolidating ahead of its next big move which given the fundamentals should be upwards! My existing relatively nearby buying level is 2960, which Amazon has come close to achieving though just missing which is a sign of strength. Therefore the new buying level has to be lifted to a level which is actually achievable to $3050, which is where Amazon traded earlier in the week. So as I stated back in November, I still don't see much downside for Amazon especially given the fact that fundamentals have caught up with the earlier stock price surge. So all those waiting and hoping for Amazon to revisit the low 2000's need to delete that expectation from their mind as likely in the not too distant future they will be hoping for Amazon to revisit the low 3000's!
And just as I stated when Amazon was trading below $2000 in 2020, that I would not be surprised if Amazon trades at $3000 before the end of the year, similarly now I would not be surprised if Amazon trades to over $4000 during 2021!
So was I wrong to sell half my Amazon stock holdings in early September 2020? No, because Amazon is still trading well below the price I sold the stock at. And in GBP terms has moved a further 10% in my favour since (fx only matters when buying or selling). Whilst it's overbought state as measured by the MACD no longer exists. And in the meantime Amazon's valuation have moved in the stock prices favour. So I did the right thing at the right time for the right reasons.
3. Microsoft $232
Microsoft stocks risen by 10% since my last update but the valuations have stayed constant on an EC of 55, which is why Microsoft remains a great primary stock that stealthily continues to deliver as AI is driving this tech giants exponential growth continuing to beat Wall street expectations after all the analysts think linear whilst the trend trajectory is exponential. With Microsoft AI Azure cloud computing division growing by 50% per annum, converts into a Buy rating of 65%.
Same old story in technical terms, a stock that does not have much downside to it. Microsoft is currently trading at trendline support around $230. Below which are a series of previous highs from 224 to 227. So there is heavy support under Microsoft. It's difficult to see Microsoft trading much lower than where it currently is, perhaps $220 is possible. Therefore a probable buying level for MSFT is $226.
4. Apple $121
As anticipated in my last update, Apple has under performed the other key AI stocks, little changed from Novembers $117 due to being over valued, a stock that remains pending earnings to play catchup to the stock price, current EC is 73, against 76 before. Yes, APPLEs earnings growth is good, but overall fundamentals are still a tad bit expensive thus implies Apples going to find it difficult to sustain new highs hence why the stock is back down at $121. Therefore the Buy rating is a fairly neutral 50%.
Apple was unable to hold on to it's January new high of $145 in advance of earnings, since which it has given up all of its gains for 2021, returning the stock firmly to it's trading range of $107 to $137. Other than having unwound an overbought state, I am not seeing any significant technical signs that Apple could resume it's bull run to new highs any time soon. Having tested the upside the stock appears to be gravitating towards testing the downside where support exists at $103 and $106. Therefore Apples Buy Level remains unchanged at $110 as the stock looks like it's going to take a breather for at least the first half of 2021 to continue to digest 2020's gains.
However don't take this luke warm analysis as a reason to make the mistake of selling out of Apple, remember Apple remains a Primary AI Stock riding an exponential trend!
5. Facebook $258 : AI WAR on Australia
Through the prism of the AI mega-trend. Why would facebook do that? Why would facebook go to war against Australia? IF AI is a true AI corp. which they should be given the data on 3 billion users they collate and analyse then Facebook will have game played what is going to happen and thus the outcome will be to Facebook's advantage, if not than that will be a red flag that Facebook is not as robust a corp as I perceive it to be.
The way I see it at each crisis the governments of the world have given up more and more power. I don't want to go to far back in history but Nixon taking the US off the gold standard comes to mind which created the monster that is the F/X market, floating exchange rates.
Then the governments gave power to the bankers, with the first modern action being Nixon's though there were a number of events since too numerous to list. Such as the Savings and Loans saga, Scrapping of banking regulations during the 1990's (Glass Seagull?). Tony Blair's government handing over power to the Bank of England etc and we all know how all that ended in 2007 when those twoo Hedge Funds went belie up in June 2007 and started the financial crisis ball rolling.
And the Rise of power of Silicon Valley is just the latest manifestation of Governments handing over power to the Tech giants.
Each time they did it for the same reason. The perception that it would herald financial and economic stability when instead all of the decisions tend to eventually blow up in their faces as will the AI mega-trend i.e. Post human super intelligence.
Thus Facebook has WON regardless of the spin politicians put on whatever is eventually decided because governments want only one thing, stability in the present and immediate future, they don't tend to ever connect the dots to see what are the natural consequences of their actions years or even decades down the road, China comes to mind, again it was the banking crime syndicate that started and encouraged the globalisation china factory of the world mega-trend that would strip the West of over 100 million jobs! Which is one of the reasons why I expected Trump would win in 2016.
Why would they do something so stupid? It's because THAT IS what governments DO! And understanding this alone will make you RICH! If you understand the government is stupid then you know they will F things up!
Then again I could be wrong and am giving Facebook too much credence, anyway the stock charts don't lie.
Facebook's EC has fallen to 28 from 50, following a stellar earnings report that beat wall street expectations which on face value makes Facebook at current values CHEAP! Therefore resolves to a Buy rating of 85%, so second only to Amazon. I am definitely tempted to buy both Amazon and Facebook stock, but what do the technical's say?
A falling wedge, a corrective pattern. Facebook remains in full corrective mode with investors too scared to to expose themselves to Facebook in it's war on Australia. So on the one hand we get good earnings and on the other hand the stock is weak, usually that says that something wrong is going under the hood.
Facebook stock has strong support at $244, So there is not much downside. Basically the technical picture for Facebook is very similar to November, downside limited to between $244 and $258, with next support at $240. There should not be much downside, Therefore my buying Level remains largely as before at $254. Similarly to my November update, upside is limited. We are not likely to see $300 anytime soon.
MAYBE WE WILL GET LUCKY and the market takes fright and sends Facebook below $244 support towards $210. At this point that is a low probability event but there is something under the hood that I am not quite perceiving properly. THOUGH once more - AI EXPONENTIAL MEGA-TREND, any decline would be TEMPORARY! Especially given Facebook's Ace card, virtual reality the future of social media and gaming!
6. NVIDIA $548 - ARMED!
Where Nvidia is concerned there is good news and then there is GREAT news! The Good news is just as I stated when Nvidia launched their RTX 3000 series of GPU's in September 2020, is that it would allow Nvidia to literally PRINT MONEY, sell as many GPU cores as Nvidia can produce, which has been the case for the past 6 months since launch! YOU JUST CANNOT BUY AN RTX 3080! I should know as I am still waiting for the latest additional to my computer room to materialise, an RTX 3080 5950x 64gb system that hopefully should be making an appearance by Mid March after being bought and paid for early January.
As for the GREAT news, or should I say potential great news is Nvidia's $40 billion bid for ARM, which if successful would solidify Nvidia into being up rated to becoming PRIMARY AI STOCK! No longer a sidelines GPU player but PRIMARY, and likely soon to be trading on similar $1trillion+ market caps as the other primaries on my list.
But it is going to take time to overcome all the regulatory and national security road blocks on the way to ARM acquisition success, where we are so far 6 months down the path, and likely at least another year to go. I expect such uncertainty to continue to act as a damper on the prospects for Nvidia as the market reacts to M&A good and bad news events along the way and despite continuing GPU market success.
Nvidia's GPU boom is starting to feed through into corporate earnings that finally is seeing Nvidia's eye watering EC level towards a less volatile level falling from 173 to 107. That's a BIG drop and illustrates that Nvidia is literally printing money so it's definitely good to be holding a stock that can print money! My expectations were we could see Nvidia trading on an EC of 85 by late 2021, I now think Nvidia is going to get there much sooner which means much higher stock prices to come! So as I stated in November, Nvidia is going to make NEW ALL TIME highs during 2021 on a new wave of buying on the repricing of Nvidia and so Nvidia makes into becoming a Primary AI stock on my list. In terms of my Buy rating then Nvidia stands at 75%.
Nvidia continues to consolidate it's gains of 2020 as earnings play catchup .Nvidia will breakout to new highs until then it is an positively sloping trading range between $600 and $530, so not much downside against the current price of $548. At best Nvidia could briefly trade down to $515. Therefore the buying level for Nvidia is $530.
SECONDARY - 12%
1. AMD $84.5
AMD profiting from it's Zen 3 processors if not it's 6000 series GPU's due to lack of supply has meant that AMD's eye watering valuations have evaporated. Gone is Mid 2020's EC of 317, gone is Novembers 137, AMD not stands on an EC of just 56! Which means AMD IS CHEAP! Thus gets a buy rating of 100%.
AMD is correcting which is good news given the fact that I consider the stock to be cheap in valuation terms. However with heavy support at $74, there is not much downside form the current price of $84. The current downtrend is pending reversal which could happen at any time. AMD's buying level remains at $78, though do take note that the Buy rating is 100%, so personally if I were looking to buy AMD stock then I would at least buy some at the current price with perhaps a limit order to buy more at $78.
2. SAMSUNG $1850
What do you expect a good stock to do during a pandemic? Increase earnings and so as been the case with Samsung, profits up 30% on the year! However the surge higher into January to $2060 was a little rich and despite the correction EC still remains elevated at 18, unless the market is re rating Samsung. is possible given the huge demand for chips right now. The buy rating for Samsung is 60%.
The samsung stock price is continuing to correct after surging to a January high of $2060. An achievable buying level is $1700.
3. Johnson & Johnson $158.5 - Vaccinate!
J&J vaccine has now been authorised by the FDA, though the stock price has hardly budged on the news, why? lack of production. On the plus side it only requires one shot rather than 2 as is the case with virtually all of the other vaccines. Also it can be stored in ordinary fridges so it should prove a popular product once it can be produced in high enough quantities. In technical terms the vaccine is similar to Astrazenica's and priced at $10 dollars per shot so relatively cheap.
J&J like it's vaccine remains relatively cheap on an EC of 20, 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 2.5% dividend. In terms of a buy rating I would put it at 60%.
The break above $153, was a sign that JNJ is attempting to trend after have spent the whole of 2020 in a trading range. There is immediate support at $158 and then $153, so downside should be limited where the expected pattern is for JNJ uptrend to soon resume and target a break of the $172 high .Therefore the Buy level for JNJ is $158.
HIGH RISK - 8%
A new section for the portfolio incorporating what I deem to be high risk more volatile tech stocks that generally tend to be smaller caps and skewed towards AI derivative sectors such as Fin tech, Gaming and Gambling. The aim is to have 6 stocks in this section as more speculative holdings, but definitely NOT penny stocks.
Starting the ball rolling with a recent addition to my stocks portfolio, the stock has soared which is not surprising nevertheless is high risk given that there's a war coming with China and Taiwan is one of the primary flash points. The degree to which TSMC can survive what's coming down the road depends on the degree to which TSMC can offshore it's chip manufacturing, especially to within the borders of the United States.
TSMC despite its fabs running flat out cannot meet demand, estimated demands is 30% greater than supply. Everyone even auto manufacturers are ramping up production in advance of the post pandemic boom, and again TSMC supplies critical chips for a number of automakers.
TSMC on an EC of 54 which is about 20% over valued, and thus the Buy rating is 55%, Even after the recent correction $126 is a bit rich, and I thought I was over paying for TSMC back in November at $98!
The chart shows support at $121, so downside is limited. TSMC is a in a strong bull trend which means the stock should soon resolve to the upside and trade to new highs and thus become even more over valued so it does not look like TSMC is going to allow people to invest at a fair price, so a case of if one wants exposure then one is going to have to pay top dollar. The Buying level is nearby support at $121.
Again this is a work in progress that I aim to complete as an additional "High Risk Tech Stocks" article during March. Where I am in the process of whittling down my short list of stocks that currently stands at 17. Nevertheless in advance of my next article in this series here is my short list of high risk tech stocks from which I aim to select 4 or 5 stocks.
Adyen N.V. (ADYEY)
Afterpay Limited (AFTPY)
CrowdStrike Holdings, Inc. (CRWD)
CuriosityStream Inc. (CURI)
DraftKings Inc. (DKNG)
DocuSign, Inc. (DOCU)
Green Dot Corporation (GDOT)
MercadoLibre, Inc. (MELI)
Opendoor Technologies Inc. (OPEN)
Pinterest, Inc. (PINS)
QuantumScape Corporation (QS)
Sea Limited (SE)
Shopify Inc. (SHOP)
Square, Inc. (SQ)
StoneCo Ltd. (STNE)
Tesla, Inc. (TSLA)
Unity Software Inc. (U)
SLEEPERS - 10%
Stocks in the dog house. See Portfolio table for Buy ratings and Buying Levels.
1. IBM $118
2. Intel $61
Intel has finally ditched their awful CEO Bob Swan and hopefully is now on the right track in terms of innovating. EC now stands at 7, which illustrates Intel was dirt cheap when trading on an EC of -1. Of the sleepers Intel is definitely the better buy of the lot and thus has a buy rating of 75%.
3. Roche $41.1
4. GSK $33.6
AI Stocks Portfolio Table 2021 (March)
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 sales and earnings growth 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 curtest of the exponential AI mega-trend.
And here are the updated buying levels, buy ratings and EC valuations leading the way in terms of which stocks represent the best value for accumulating into during March.
So what will I be doing during March?
I consider Amazon and AMD cheap right now so I will be buying some more of these two stocks. Next should be Facebook, but I'm not sure I want to buy more right now, maybe if it took a panic tumble to $210.
Next on my target buy list would be Google and Nvidia.
I want to buy more TSMC, but it's over valued.
As for the sleepers, I am tempted to buy some more Intel because it looks like Intel finally might be getting their act together which I am sure the market will eventually discount by pricing Intel a lot higher than it's recent trading range.
Stocks Bear Market / Crash Indicator (CI18)
Current Risk Remains VERY LOW: 15%
The Crash Indicator is one of the neural nets I am working on as my AI takes baby steps into understanding how to interpret the stock market. It's task is to state the current risk of a bear market or crash being imminent i.e. within the next couple of weeks or so. So an independant technical indicator that acts as a warning to HEDGE stock portfolios ahead of a high probability drops in the market. Where my preferred hedging tool is to go short stock index futures so as to capitalise on any drop without selling any stock holdings, and delivering fresh funds to buy more AI stocks at deep discounts just as I did during March 2020. The last time this indicator triggered a warning was late February 2020, so it is NOT a trading indicator but instead advance warning that a correction could turn into something worse so my stocks portfolio needs to be hedged.
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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.