Things We Have But Don't Want
I hope you all had a great holiday! This year, Santa brought me exactly what I didn’t want … COVID!
I’d gone asymptomatic up until now. COVID got its revenge. I basically slept all weekend and most of Christmas Day. Which honestly wouldn’t have been so bad except for the jumping from chills to sweats and back again, not what you’d call restful sleep at all.
My sinuses are still pretty clogged up, so I haven’t gotten rid of the virus just yet. But it got me thinking about other things that we might have that we may not actually want…
And since Pro Trader Today is an investment publication, I’m going to narrow the focus to stocks that we have but may not want…
In 2023, there were two widely owned stocks that investors decided they didn’t want anymore. Exxon-Mobil (NYSE: XOM) and Chevron (NYSE: CVX). These two oil majors lost nearly $90 billion in value as investors sold the stocks off. They both make the list of Biggest S&P 500 Losers for the year.
That’s one way of looking at it. You could also look at the chart, where you’ll see that Exxon-Mobil shares set a new all-time high in 2023, at $120.70. And it challenged that level three separate times – once in January, once in April and again in September.
Currently right at $100 a share, Exxon remains well above its pre-pandemic highs around $75.
There’s definitely some irony between the Exxon story and Exxon as a business. The story of Exxon and oil stocks is not particularly bullish. The idea that demand growth for oil is peaking now and over the next few years is compelling. I wrote in my 2024 Predictions that I don’t see a strong case for higher oil prices in 2024.
And in fact, analysts are not exactly bullish on Exxon’s earnings potential over the next year. Analysts expect Exxon to finish fiscal 2023 with $8.35 in per share earnings. And they see virtually zero growth for fiscal 2024: the consensus estimate is $8.43 per share.
But that doesn’t mean Exxon can’t execute well and remain a good investment…
Lithium Irony
Lithium stocks were all over financial media as the no-brainer investment for most of 2023. The biggest lithium miner in the world is North Carolina’s Albemarle (NYSE: ALB). Coming into 2023, investors bid the stock up to $293. Because, wIth electric vehicles (EV) adoption driving the demand destruction story for oil (especially in China), it made some sense that weakness for oil prices would be offset by strength for lithium prices…
Nope. Lithium prices fell 75% over the last year. And investors didn’t want all those shares of Albemarle either – the stock fell as low as $112.
There’s been a lot written about a slowdown for EV sales. US EV sales for 2023 will still be 40% higher than they were in 2022. But the rate of growth has moderated enough that some companies (Honda, LG) have delayed plans for battery factories. Lithium supply will grow next year, and the net result is that lithium based EV battery prices fell 14% in 2023.
It’s been said that the cure for high prices is high prices. It’s a genius quote. And if price really is the big stumbling block for EV sales, well, there’s definitely room for prices to comed down more…
Tesla sports net profit margins of 11%. Sure, those margins have been cut in half over the last ~2 years, but Tesla margins are still 3x better than Ford’s (NYSE: F) and 2x better than GM’s (NYSE: GM).
A pair trade on higher lithium prices/lower Tesla margins sounds like an interesting idea. Like, if lithium prices recover some in 2024, thereby raising EV battery prices, Tesla should have to cut prices again to keep volume sales going.
The thing is, I kind of wanna bet on Tesla here. The competition is looking a little inept and Tesla can take advantage.
Artificial Intelligence Trading Agent
“Brit: I’ve got an Artificial Intelligence trading algorithm for stocks, I think it could make people a lot of money. But I need someone with a lot of real-world experience to put this algo through its paces and see if it’s the real deal…interested?”
That was the gist of an email I got a few months ago from an old friend and colleague.
Now, I’ve traded stocks and options for 25 years. I’ve got a proven style that has made millions for myself and my readers. I’m also an AI skeptic – it’s pretty easy to tell when an article or research piece is created by AI. The programs are prone to mistakes because they can’t decipher what’s true or not on the internet. I’m certainly not gonna trust it with my money…
Still, I’ve learned that it’s never a good idea to dismiss something out of hand. And his email got me curious…so I took the job.
To make a long story short, this AI powered Trading Agent is the real deal. Once I learned how to vet the algorithm’s suggestions, it has done very well.
In the last two months, this AI Trading Agent triggered two different trades on Bank of America (NYSE: BAC) that led to 40% and 36% profits in less than 10 days…
An 89% profit on Micron Tech (NYSE: MU) in a week…
A 77% overnight gain with Zebra Tech (NASDAQ: ZBRA), and another 50% on Zebra that took about a week…
There was a 62% profit from General Electric (NYSE: GE) that took 6 days…
And 16% profit from Western Digital (NYSE: WDC) over a 7 span…
It wasn’t perfect, there was a 5.5% loss on Enphase (NASDAQ: ENPH) and a 32% loss on Loews (NYSE: L).
So – that’s a 78% win rate, and a 37% average gain, including the losers…that’s powerful.
On to the future,
Briton Ryle
Chief Investment Strategist
Pro Trader Today
brit.ryle@protradertoday.com
Facebook: https://www.facebook.com/ProTraderToday
X/Twitter: https://twitter.com/BritonRyle
