Luke Lango's take on cutting rates at all-time highs… is it 1992 or 1998?… quantum is soaring – how to play it… this Jonathan Rose winner we put on your radar still has room to run… VIEW IN BROWSER
Last week, the Federal Reserve cut interest rates with stocks sitting at elevated valuations – by some measures, at or near the highest valuations on record (the Buffett Indicator and the CAPE ratio to name two). Is this a recipe for trouble? After all, expensive valuations suggest that the market is already pricing in a huge amount of future growth, leaving little margin for error. If those expectations aren’t met, the risk of a painful correction increases. Our technology expert Luke Lango ran the historical numbers. Let’s go to his Daily Notes in Innovation Investor: We dug into what happens when the Fed cuts rates with stocks trading at elevated valuations (>20X P/E multiple). Turns out, it is very rare – a lot more rare than the Fed cutting at all-time highs. Luke reports that this has only happened three times: 1992, 1998, and our current 2024/25 rate-cut cycle. In 1992 and 1998, stocks soared for about two years following the cut, after which their paths diverged… In 1992, stocks kept roaring for five years, resulting in the Dot Com peak/crash. But in 1998, stocks went straight into that same crash. Back to Luke’s analysis: Based on these precedents, it looks like a lock that stocks will soar into late 2026 (this rate cut cycle started in late 2024). But then what happens? Do we follow the 1992 precedent? Or the 1998 precedent? Today looks closer to 1998. We’re late cycle with elevated valuations and strong growth and lots of investor euphoria… So… what’s the lesson? Stocks have clear runway into late 2026. After that, it’s murky. If you doubt that stocks can keep running from today’s valuations, remember John Maynard Keynes’ classic quote: The market can remain irrational longer than you can remain solvent. And let’s not forget this wisdom from the great Peter Lynch: Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in the corrections themselves. So, let’s stay with this market while bullish momentum rules, but be ready to move into defensive mode when appropriate. Here’s Luke’s overall market outlook, and what it means for today: Some underlying warning signs—like inflation not yet at 2%, unemployment grinding higher, weak consumer health, and depressed sentiment—are caution lights flashing in the distance. None of this derails the rally now. But it does remind us that this is a 12-month trade, not a forever trend. For now, though, it’s all green lights. Before we move on, a quick congratulations to Luke’s Innovation Investor subscribers. On Friday, they banked 70% profits – in just three weeks – on their Oklo (OKLO) trade. Oklo is a nuclear technology company that develops and commercializes small modular reactors (SMRs) and advanced nuclear fuel recycling technology. It’s a leading player in the nuclear/uranium megatrend that we’ve been urging investors to get exposure to here in the Digest. Here’s Luke: Oklo (OKLO) soared another 20% [Friday] alone, pushing its technical gauges into the stratosphere. The RSI now reads 85. That’s not just hot … It's overcooked. History teaches a simple truth: markets reward discipline, not greed. When a stock goes “vertical,” the prudent investor takes something off the table. Luke only recommended selling a portion of the trade because he remains bullish on the long-term nuclear growth story. But as he writes to subscribers, “wealth is built by banking wins when the market hands them to you.” Congrats again. For more on Luke’s roadmap for the market’s boom/bust – and his other nuclear/AI picks – click here to learn about joining him in Innovation Investor. But nuclear/uranium wasn’t the only cutting-edge tech that was posting huge returns last week… | Recommended Link | | | | That’s when Nvidia’s silent partner could shock the world… And make a lot of people wealthy in the process. Nvidia and this partner are developing a new tech that, according to the CTO of Cloudera… “Is set to overshadow AI as the next major technological revolution.” Click here to get the details. |  | | On Friday, MarketWatch featured the following headline… Big Tech, quantum computing, gives Nasdaq a boost That “boost” came from a handful of quantum stocks making big moves. Below were their gains just last Friday alone: - Rigetti Computing (RGTI): +15%
- Quantum Computing Inc. (QUBT): +27%
- Quantum Corp. (QMCO): +41%
But these returns are just a drop in the bucket compared to the 12-month returns for sector leaders. For example, at Friday’s close QUBT had climbed more than 3,200% while RGTI had climbed more than 3,300% (lowly QMCO has “only” made investors almost 1.5X their money). Why is this sector so hot? And is it too late to get in? Mark Twain once said, “The difference between the almost right word and the right word is really a large matter - 'tis the difference between the lightning bug and the lightning.” This comparison understates the difference between today’s fastest supercomputers and tomorrow’s quantum computer. It’s hard to wrap our minds around this differential, but for context, in 2023, researchers from Google announced a stunning breakthrough. Here’s Science Alert: The team used a complex, synthetic benchmark called random circuit sampling…taking readings from randomly generated quantum processes… They then estimated how long it would take existing supercomputers to run the same sums. The Frontier supercomputer, currently the most powerful computer in the world, would take a little over 47 years to crunch the same numbers… The Sycamore quantum computer managed it in mere seconds. From almost half a century to mere seconds to solve the most complex problems…that’s the level of advancement quantum computing can achieve. With quantum computing, drug discovery timelines will shrink from decades to weeks as bleeding-edge computers precisely simulate how proteins fold and interact. Global supply chains, snarled from, say, a hurricane or a strike, will heal in real time as quantum algorithms re-optimize every shipping lane, trucking route, and cargo load. And central bankers will sniff out hidden vulnerabilities in global marketplaces as quantum computers run risk models so complex that today’s supercomputers can’t even start the calculation. Now, let’s be clear: these advancements aren’t guaranteed. Quantum remains a gamble. But with the odds of success growing rapidly – and the potential economic payoff if/when it arrives being astronomical – you can make a case for the 10X-moves we’re seeing in quantum stocks. But still, these are early, speculative bets We’re in the “Wild, Wild West” phase of quantum computing – revenues are small, losses are large, and volatility is big. But history shows that in every world-changing technology, from the Internet to smartphones to artificial intelligence, the first great rally often proves to be only the opening act. So, if you haven’t gotten to quantum stocks yet, you’re not too late. If you can stomach the volatility, you’re still closer to the beginning than the end. Of course, that doesn’t mean you can blindly jump into any quantum stock and expect a 10X return this time next year. Even at this stage in the game, fundamentals matter. For more, let’s go to legendary investor Louis Navellier: But rather than snap up shares of any company that incorporates quantum computing into its business, you need to consider its fundamentals first. After all, if a company has weak fundamentals, it doesn’t matter how involved it is in quantum computing; its stock will eventually fall flat after the hype inevitably dies down. So, you need to make sure that a direct quantum play or quantum computing-related stock has strong fundamentals to support its long-term growth. I want to cover additional ground in today’s Digest, but for more on the opportunity in quantum stocks, Louis just put together a free report that you can check out right here. Bottom line: This is a monster growth story. If you’re looking for firepower for your portfolio, check this one out. Another Jonathan Rose winner we hope you’re in today – and why it still has legs if you’re not On Monday June 30, Jonathan sent out a trade alert after his scanner picked up MP Materials (MP) – the only fully integrated rare earth mineral producer in the United States. The week after Jonathan’s trade alert, the Pentagon announced a $400 million investment into MP Materials, instantly positioning the company as a strategic national security play, and sending the stock soaring 51% in a day. Over the next month, MP kept climbing. Come mid-July, Jonathan recommended his subscribers finally cash in. The official return on one of their tranches of their MP calls trade clocked in at 700%. But Jonathan recognized this wasn’t the only trade benefiting from the push for rare earths. On July 16th, he gave me permission to feature NioCorp Developments Ltd. (NB), another rare earth minerals company that Jonathan said was “sitting at the heart of something big.” From Jonathan: They’re advancing a critical minerals project in Nebraska — just like we've seen with MP and TMC, demand for them is spiking in defense, energy, and the AI boom. The U.S. wants to secure supply onshore, and that puts companies like NioCorp in the spotlight. The very next day, NB fell when news broke that NB was raising money. We reported the news in the Digest, noting that Jonathan said it was “very common and expected.” Well, NB has not only recovered from that drawdown, but it’s now up 46% since we featured it in the Digest. And if you happened to buy on July 17th when we reassured investors about the trade, you’re up 82%. I asked Jonathan if it’s too late to jump into NB today. Here’s his take: We jumped into NB around $3.50 — now it’s trading near $6. I’m taking profits on half while letting the rest ride. The sector is exploding, momentum is with us, and many in our Discord are on board celebrating. Enjoy the ride — NB still has room to run. Supporting Jonathan’s reference to “room to run,” modern military tech, advanced electronics, robotics, and clean energy all lean heavily on rare earth elements. And our dependence on China for REEs has become a national security risk. So, expect President Trump to keep pushing hard to secure domestic supply chains for rare earths. That suggests a massive, long-legs tailwind for NB and similar REE plays. These are the kinds of opportunities that Jonathan puts on investors’ radars in his daily Masters in Trading: Live episodes, each day the market is open at 11:00 a.m. Eastern. They’re full of ideas, specific stocks to consider, and best of all, they’re free! You can learn more right here. We’ll keep you updated on all these stories here in the Digest. Have a good evening, Jeff Remsburg | 
Post a Comment
Post a Comment