When Bombs Start Flying, We Start Buying Pt 3.

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OUR MAIN INVESTMENT THEME

Rotate out of the digital and into physical.

Focus on companies and assets such as hardware, infrastructure, cigarettes, and energy — things that cannot be disrupted by AI, because it will happen.

Look at what already happened to software. That industry is done and will continue to decline. Cybersecurity will be next.

AI cannot disrupt physical assets. (Don’t forget about collectibles)

We continue to invest in AI infrastructure and Capex/Supply Chain bottleneck beneficiaries — cooling, electricity, processing. Examples include Samsung Electronics, ASML Holding, SK Hynix, Johnson Controls, Chemours, Moog Inc., Coherent Corp, and hardware leaders like Google, Tesla, Nvidia, and Advanced Micro Devices.

Use this volatility as opportunity.

Levels to watch on the S&P 500 (this chart hasn’t changed for months)

Howmet: A new name we are following. This company makes the turbines Elon is ranting about.

AI cannot disrupt McDonalds.

AI cannot disrupt Tesla.

AI cannot disrupt Cigs and Zyns.

Levels on Meta to monitor.

If Bitcoin bounces, it bounces here.

Software is done. 6 years of performance gone in 2 months.

LEARN SOMETHING

IMPORTANT: Correlations between asset classes are asymmetrical; they behave differently in good times versus bad. Essentially, diversification tends to work well when you don’t want it to (during rallies), but it fails to protect us during downturns. This challenges the traditional investment strategy of diversification, highlighting the need for a more nuanced approach to managing portfolio risk, especially in volatile markets.

Risk Barometers to use yourself.

Leading Indicators

Nice info-graphic.

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