| Dear Louis, Today, we are going to take advantage of the recent market rally to close two positions for a profit and sell a half position to recoup our initial investment and let the remainder ride essentially risk free. First, we are going to close out Meta Networks (META) for a 18% profit. Investors have become nervous about CEO and founder Mark Zuckerberg's obsession with building out a metaverse. It’s clear that any revenue from this is still years down the road. But the company continues to sink billions of dollars a year into building its metaverse capabilities. Investors worry that this will limit the profitability of Meta over the coming years. And they are right. But the initial reaction was clearly overdone. I urged subscribers not to panic sell after the stock plummeted after its earnings report in late October. Since then, shares of Meta have doubled. We were right to hang on. But it’s smart for us to take profits off the table given this rally. We haven’t seen the last major selloff of Meta Networks. The metaverse is still years away from generating revenue. And we’ll have an opportunity to reestablish a position, at a better valuation, as we see progress towards its metaverse continue. Another company with a huge rally over the past few months is BorgWarner (BWA). It jumped from a low of $31 dollars in October to around $50 today. This brought BWA back to an above average valuation for the company. And that’s our cue to sell. We’ll close out the position for a 14% gain. We are excited about the growth of the EV industry. But it’s likely that BWA, which provides parts to many of the largest automakers, will see its sales dip as sales to consumers fall in the coming year. Our last action to take today is to sell half a position in Infineon (IFNNY). We are up over 100% in this company and by taking half the position off, we can recoup our original investment. This way we can let the remainder of the position ride essentially risk free. To be clear, these are all great companies, but in these current market conditions I feel it is important to take a more defensive stance with our portfolio. The reality is that economic policy has not improved, and the Federal Reserve is hell bent on raising interest rates much higher, which means we’re in for more trouble ahead. I believe that will happen within the next few weeks, which is why I believe this is a good time for us to close some positions. We will also be reinstituting stop losses for all equity positions going forward. Readers may remember that we removed stop losses during the irrational fear-induced selling of March 2020. That was the correct decision at the time. Markets recovered and we enjoyed a historic bull market in growth stocks. My mistake was not reinstituting stop losses as the market began to turn in late 2021. If I could do it all over again, I absolutely would have. But now, we must look forward. Putting stop losses on our equity positions in our model portfolio will help protect us from any more volatility in the months ahead. And I do expect we will have a bumpy few months before markets return to health. Readers will be able to view our recommended stop levels in our model portfolio. And I will alert readers whenever we hit those levels. Also note that we are using tailing stops. These are stops based upon a percentage drawdown. I encourage everyone to track their stops individually… And to wait until the stops are hit before entering the sell order. Please do not enter a stop loss sell order into your brokerage account. This will make our stop loss public knowledge and market makers can pull down the stock momentarily to force investors out of a position. This happens all the time. It should be illegal, but its not. So please, don’t let this happen to you. Action to Take: Sell entire position of Meta Networks (META) and BorgWarner (BWA). And sell a 50% position in Infineon (IFNNY). | Regards, Jeff Brown
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