Knowing When To Press Your Bets
Last week I laid out my case for a top in long rates on US Treasury Bonds. This week, I’m growing more confident that an important low in the price of US Bonds has been made. However, I’m still a fair weather fan, so I’ll be out in a heartbeat without remorse if my stops are hit. It’s been my view that we are in the contraction phase of the business cycle, and if that view is correct, we should see growth and inflation expectations start to come down for 2027. This shifting dynamic is what can finally put a bid under US Bonds. This is because there will always be demand for income. When I was running an equity portfolio for a small RIA shop, I had to stretch way out the risk curve far beyond where I was comfortable playing to get the portfolio yield just barely into the 3% figure. I was buying foreign telecom OTC equities to get there. This was during the financial repression of the QE era, and it was not a good time to be a dividend portfolio manager. Today, we are being offered higher yield, even above what I had to stretch for back then, in a money market. You can lock in way higher than that if you are willing to extend duration a decade or more. The TLT, my preferred way to play the top in yields, pays a monthly div of ¢33, about 4.7%. This may not look exciting compared to the gains you can get from a well placed equity trade, but believe me, 4.7% return with no risk is nothing to shake a stick at. The unfortunate reality is that at the moment, there is nothing more attractive than US Bonds for my irreplaceable capital. I’ve been in about 75% cash since March, 2026 when I peeled off the last of my gold miners I was willing to part with (I’ve still got my core position in the big 5 miners) so I’ve been looking for another core position in which to allocate. Stocks are just not attractive other than trades right now because they are all trading at about 20x pretax earnings across the board; no matter what sector you look at, every single stock worth owning trades at basically 20x what you can expect it to earn every year. The only exceptions are the oils like XOM and CVX which trade about 15x and my favorite fertilizer, NTR, which trades about 12x what I estimate is an average of earnings over a cycle. These names can still offer potential for reward with the small chance of an energy or grain price spike, but the risk is shifting to the downside as the Iran conflict seems to be nearing a conclusion, or at the very least, a de-escalation. Any way I analyze the attractiveness of stocks for ownership, I come up lacking any justification for anything other than renting specific names for a trade. In an environment like this, it’s best to just stick with the easy trade, and for me, TLT is the easiest one out there. If the lows of this week hold in TLT, then my focus will shift towards deciding where to add. Proper speculation requires only averaging up, never down. Stan Druckenmiller said the key to his success was forming a trade idea, putting on a position, then really stepping on the gas and levering up when his position started to work. I want to apply the same logic to TLT. The first step is seeing the TLT hold the lows of this week at about $81.75. The next step would be to see some strength above $83. A weekly close above $83 on strong volume would be some indication that it would be time to press on TLT with tight stops below $83. This TLT play feels a lot like my gold trade that won me the ability to trade for myself, but this time, I’m going to apply the lessons I learned from that campaign. I did almost everything wrong during that speculative campaign: I averaged down, didn’t have a trade plan, didn’t use stops, had no risk control, etc. The only thing that made the trade work out for me was size. I was 90% long in one sector because I was confident in my analysis. I used 8th grade math to plot the dollar value of US debt going back 50 years, and used an R-squared regression to get a y=mx+b equation. I plugged in the year 2030 for “b”, and got $45T for our debt. I then took the current portion of foreign held debt outstanding at 20%, and I asked, if even 1% of that dollar value shifts to gold, what would the supply and demand balance look like? It turns out, that at the time I performed this basic analysis in 2023, the new demand for gold would be 4.5 tons at the $2,000 price gold was then, and new supply would be only 2 tons by 2030. It was a no brainer, and the trade worked out. This time around, I’m going to still rely on my analysis that we’re in the contraction phase which means growth and inflation should be coming down, but I’m going to adhere to strict risk controls to put on my TLT allocation. Each time I see a higher low hold, I’ll treat that as a new tactical spot to buy stock to add to my strategic core position. Like Druck’s playbook, if the trade starts to work, then and only then will I add. The reason I can be so confident in my analysis that we are in the contraction phase, is because all the signs I’ve been looking for are appearing. I’m relying on signs to form a checklist approach to pinpointing the turn in the cycle rather than hard data points because a data-driven, statistical modeling approach is notoriously wrong at turning points. Modeling
Continue Reading -->AI Just Went Bonkers
What a week! We had a jobs report, a massive earnings beat from Dell (DELL), and a big Tesla (TSLA) Robotaxi event. So let’s dig in: Skip Ahead! Dell & the Gang Confirmed AI Demand Is BonkersMemory Is Back on TopEuphoria Is Missing In ActionThe Great Rate Debate ContinuesNext Week Is Oracle and Econo-themedThe Pristine Mentorship Is Open Dell & the Gang Confirmed AI Demand Is BonkersNvidia (NVDA) impressed with its incredible guidance on its August 26 earnings report. And Dell (DELL) did the same on Tuesday, forecasting full-year revenues 11% above consensus. We also had strong AI-driven results this week from Broadcom (AVGO), Ciena (CIEN), Snowflake (SNOW), NetApp (NTAP), and Hewlett-Packard Enterprise (HPE). Demand for AI infrastructure is just bonkers. As good as industry earnings are, they’d be even better if not for shortages of inputs like memory and good old-fashioned electricity! Remember, Nvidia guided for 70% revenue growth vs. Wall Street expectations of 44%. But its growth would be more like 100% if it could actually meet demand. And this is a company that is facing increasing competition from its own customers, who are racing to build chips in-house! David Prince of T3’s Inner Circle discussed Dell and other key names in this video: Memory Is Back on TopWith all the bullish AI news, it’s no shocker that memory & storage stocks are leading the market to start September, with the Roundhill Memory ETF (DRAM) up 4%.DRAM has become one of the most popular ETFs in the market, trading over 23 million shares per day. SanDisk (SNDK) in particular had a big day on Friday, up 10%. Maybe we should have listened to Sami Abusaad Tuesday when he made SanDisk his #1 name. Euphoria Is Missing In ActionThe latest AAII Sentiment Survey shows that 39.7% of investors are bullish.This is the first week of above-average bullishness since July 15. So does that mean the crowd is positive? Not exactly. 39.7% isn’t even in the neighborhood of euphoric, and it’s not far from the long-term average of 37.5%. Plus, CNN’s Fear & Greed Index is at just 42/100.This is because many of Fear & Greed’s inputs like new 52-week highs are at historically low levels. Euphoria is missing from this market.The Great Rate Debate ContinuesOn Friday, President Trump told the Fed to cut rates. Or else he’ll stop trade with certain countries that have surpluses. But what is the market pricing in? The CME’s FedWatch Tool shows the market is now pricing in a 58% chance of a 25 bps rate hike this month. And it’s pricing in an 86% chance of higher rates by year-end. Next week’s CPI and PPI reports should impact expectations.Next Week Is Oracle and Econo-themedEarnings season is slowing to a crawl following this week’s biggies like Dell (DELL), Palo Alto Networks (PANW), Broadcom (AVGO), and Snowflake (SNOW). Next week, Oracle (ORCL) is the one to watch for three big reasons: 1) It’s an AI bellwether2) Investors are worried about the company’s debt load3) It will give insights into enterprise software demand But the real action will be in economics with CPI, PPI, ADP Employment, and the ECB rate decision coming in. Not to mention, markets will be watching bond auctions because of ongoing concerns over interest rates and the FOMC.The Pristine Mentorship Is Open Sami Abusaad and James Rich Young’s Pristine Mentorship is open! In this video, they take you through how to build a trading plan, then tell you all about the program. Highly recommended:
Continue Reading -->Dell Is Going to 600
Dell (DELL) hit fresh all-time highs after crushing earnings expectations and releasing huge guidance this week. David Prince says the name is headed for $600, but it all depends on the market: David also goes over: Strength in software stocks after Salesforce (CRM) earnings Why Nvidia (NVDA) is an investment stock Why Micron (MU) looks ready for a breakout How this is a market of stocks not a stock market His favorite setups right now And more! Work with David inside the Inner Circle VTF®
Continue Reading -->SanDisk #1
ATTN: Sami Abusaad and James Rich Young’s next Pristine Mentorship is on the calendar for October through December 2026. Spots are limited so check it out. We asked Sami to name his favorite idea. And he said SanDisk (SNDK): Sami also goes over: Why Apple (AAPL) remains bullish Why he likes SpaceX (SPCX), even though it’s not a perfect situation And more! You can also watch the full extended video here.
Continue Reading -->I Bought This Broken Retailer
ATTN: Sami Abusaad and James Rich Young’s next Pristine Mentorship is on the calendar for October through December 2026. Spots are limited so check it out. Dick’s Sporting Goods (DKS) fell -31% after earnings last week. Then Sami bought the stock. And then he bought more. See why: Sami goes over: Why follow-through is key for the market now What makes IWM different from SPY and QQQ A buy setup in Tractor Supply (TSCO) Why he likes Spotify (SPOT) Bearish setups in names like Advance Auto Parts (AAP) And more!
Continue Reading -->Are You In The Biggest Trade In The USA?
There’s an aspect of human nature that makes us want money for nothing. Even the workaholics among us would gladly find more leisurely pursuits for their high-strung energy if the money rained down and into their coffers. Speculation is hard work, but many novices get into trading thinking all they’ve got to do is turn on the computer, open a brokerage account, and the money will come pouring in. If you’re reading this, you know that’s not how this works. As traders, if we want to make money, we’ve got to do the work and take risk. Taking risk is hard, because it makes you vulnerable to loss, but risk is a necessary part of reward. There is simply no way to earn a profit from the market without taking risk… Or is there? The concept of the “risk-free” rate always bugged me. They taught us this concept in university finance class, but I always thought it was a little bit bogus. It never made any sense to me that you could earn profit without any risk. I always felt the professors were neglecting to teach us about the real risks hidden in the risk-free rate. If you’ve gone through graduate or CFA level finance curriculum, or just used common sense, you’ll agree that my suspicion was correct. The truth is, even in the asset that we call risk-free there is still risk to your wealth if you own it. Of course I’m referring to US Treasury Bonds as the risk-free asset. When you buy a bond, you know exactly the return you will get if you hold it to maturity, so in that sense only is it a risk-free asset. The real risks you take on when you buy a bond are duration risk and reinvestment risk. If you buy a short term bond, there’s very little duration risk and some reinvestment risk, but with long bonds, there’s absolutely tons of duration risk. But for a trader, anytime you hear risk, you should think reward. There is no reward without risk, so when you hear risk-free, you should think “reward-free.” Short term US Bills are fairly risk-free, so that doesn’t interest me. However, the question I keep asking when trying to determine how to allocate my irreplaceable capital is: does the risk inherent in long duration US Treasury Bonds currently represent a great reward-to-risk setup? The best trades are the ones where the perceived risk is way higher than it actually is. Right now, we have a bit of a paradox occurring in the market: the supposedly risk-free asset is perceived to have the highest risk of any asset out there. Every conversation in the financial media is now centering around the riskiness of the risk-free asset, our debt. There’s too much of it is the oft repeated phrase. I agree, but the problem is, that was a concern for 2023. The time for worry has passed. Gold has doubled, and with that move from $2,000 to $4,700 (which I think will prove to be a short term top followed by a trip down to $3,825 before price moves much higher by 2028) we’ve already gone through the pricing in of a bad debt situation. Markets don’t price something in twice. We were already compensated for the risk of an out of control debt situation by owning gold since 2023. The debt level shouldn’t be traders’ focus any more, but interest rates should be. My view is that we are in the contraction phase of the business cycle, and if I’m correct, we should see long rates come down as they price in lower growth and lower inflation next year. This is where duration risk can become duration reward for a willing trader. The TLT has tons of duration. Being a 20+ year bond ETF, it has the longest duration of any of the heavily traded bond instruments. You’re getting paid for taking that duration risk as well. TLT pays a monthly dividend from the underlying bond coupon payments of 4.7%. That’s as close as you’re ever going to get to “money for nothing” in my opinion. But how can a money for nothing opportunity exist? It’s because too many market participants are on the same side of the trade now. Everybody is bearish on US bonds and thinks rates can only go higher. Even Lacy Hunt finally threw in the towel and said he’s bearish on bonds. Where was he in 2020 when rates on the 10yr were 0.4%? From my vantage point, that was the time to be bearish on bonds, not now when they are at 4.7%. We haven’t seen rates this high in a long time. When rates on the long bond were last here, it was October 2023, and the Fed had completed its first full rate hike cycle since 2008. Inflation was out of control because checks were getting sent to every American man, woman, and child. Nothing remotely similar to that is happening now, but virtually all market participants are of the mind that inflation is coming, and more money printing is about to commence. The liabilities of the US Government have no where to go but up, they say. I’m not sure whether that’s true or not, but what about the asset side of the balance sheet? No one ever talks about the assets that back up that debt. It would be like talking about the guy with $350K mortgage debt, without ever mentioning the house that backs it up. The debt is only one half of the equation; the other half is the assets. The USA holds vast resources that exist as part of the invisible asset side of the balance sheet. Those assets include both natural resources and our productive labor. The physical assets of our country are in need of some capex maintenance, to be sure, but a conscientious revamp of our country’s federal land use policy, fiscal policy, regulatory policy, interstates, water rights, and airports would
Continue Reading -->Nvidia Is Going to 300
Nvidia (NVDA) rallied big after reporting earnings on Wednesday. So JR Romero put a new price target on the name: Learn: Why JR is “very impressed” with NVDA‘s guidance If traders can get excited about the stock again NVDA‘s impact on memory names like SNDK and MU And more!
Continue Reading -->Why SpaceX & Spotify Look Great
ATTN: Sami Abusaad and James Rich Young’s next Pristine Mentorship is on the calendar for October through December 2026. Spots are limited so check it out. Today, Sami identified two stocks with serious upside potential. First, he once again gave the bull case for the hated SpaceX (SPCX): $SPCX is not perfect. But Sami bought it anyway. See why, and get his FREE technical analysis ebook: https://t.co/n8wz7FCJqA pic.twitter.com/mTGcOe74VU — T3 Live (@t3live) August 25, 2026 Yes, there is potential for IPO lockup expirations to derail the stock. But the chart says it’s going up. Sami also shared why his top play right now is music streaming platform Spotify (SPOT): Sami Abusaad is bullish on $SPOT. See what he sees on the chart: pic.twitter.com/z8LLMliPdb — T3 Live (@t3live) August 25, 2026
Continue Reading -->Trading Nvidia Requires No Brains
Nvidia (NVDA) is about to report earnings and JR Romero has a super-simple strategy for playing the reaction. (fast forward to 3:55 for JR’s take) This is so simple you can’t believe it: Learn: What Nvidia tends to do after reporting earnings Why now is not the time to buy Nvidia The bull and bear cases for the controversial SpaceX (SPCX) How to fight the temptation of FOMO in this environment Our favorite names right now And more!
Continue Reading -->How to Trade SpaceX Right Now
ATTN: Sami Abusaad and James Rich Young’s next Pristine Mentorship is on the calendar for October through December 2026. The market is sluggish but there are still opportunities. Like in Super Micro (SMCI) and SpaceX (SPCX). Watch and learn: Where Super Micro and SpaceX are going next Why Sami’s old favorite Twilio (TWLO) looks fantastic A cannabis name with serious upside potential The bull case for small caps And more!
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