My Warning to All Investors‼️
Summary
Jeremy describes the current stock market as "strange times" offering "unbelievable opportunities" but also existing as a "masked bear market." He notes that the perceived strength of the S&P 500 and Nasdaq is misleading, as the majority of individual stocks are struggling: approximately 65% are down double-digits from their highs, 50% are down over 20%, and 40% are down over 30%. He calls this an "incredibly weak" market, yet one that simultaneously presents numerous buying opportunities for carefully selected companies. He issues three critical warnings for investors:
Jeremy discusses **Meta Platforms (META)** in detail, describing it as a "broken stock" but not a "broken company." Its fundamentals are strong: revenue growth is exceptional, margins are solid, earnings per share are good, and its balance sheet has historically been clean. The valuation is also attractive, with a trailing 12-month P/E of 20 and a forward P/E of 16. The primary concern is extreme capital expenditures (CapEx), which could potentially soar from $28.1 billion in 2024 to $145 billion this year. This far exceeds the expected net income of $80-90 billion and could lead to cash depletion, increased debt, or shareholder dilution. Jeremy advises patience with Meta, as it may undergo a multi-year consolidation phase. Long-term, he sees potential for the stock to reach $1,200 to $1,500, but warns that a decline in revenue growth amidst high CapEx could cause the price to fall to $400, $350, or even lower. He considers Meta the best long-term deal among big tech stocks for the next five years.
He is actively seeking "Palantir-type opportunities" – stocks that are beaten down, unloved, and present "incredible opportunities" for the next several years. He mentions that shares of **Palantir (PLTR)** could be picked up at $16, which he sees as an uncomfortable but potentially profitable entry point, echoing his own earlier purchases of Palantir years ago.
Mentioned Stocks
Reasoning: Nike, a "great historic company" down 29% over the past year at $42, is viewed as being in turnaround mode. Jeremy suggests it could easily go from $42 to $62 or even $82 over the next 6-9 months, drawing parallels to Estee Lauder's successful turnaround, which rallied 116% in nine months.
Reasoning: Jeremy warns against buying Micron now, stating it's "way late to the game" as it's up 777% over the past year and that buying at this point is a "complete gamble." He highlights the cyclicality of memory chip companies, noting that down cycles are brutal and can lead to "dead money or down money for years," not just months.
Reasoning: Celsius is presented as a "great beaten down stock" (down 34% over the past year at $28) that investors might mistakenly delay buying. Jeremy points out its potential for rapid recovery, having surged from $30 to over $80 in one year (Jan 2023-Jan 2024), illustrating that investors don't have unlimited time to act.
Reasoning: Jeremy views Meta as a "broken stock" but not a "broken company." Its fundamentals, including rapid revenue growth, strong margins, and attractive valuation (TTM PE 20, Fwd PE 16), are solid. The main issue is extreme CapEx (potentially $145 billion this year, far exceeding net income), which could lead to balance sheet issues. He advises patience, expecting a multi-year consolidation before an "explosive move" to $1,200-$1,500. He cautions that if revenue growth falters amidst high CapEx, the stock could drop to $400, $350, or lower. Jeremy considers Meta the "best deal" among tech stocks for the next five years.
Reasoning: Elf Beauty, despite being down 45% over the past year at $63, is used as an example of a beaten-down stock that can gain momentum quickly. It recently moved up nearly 30% in a few weeks and historically soared from $20 to $200 in two years, emphasizing the need for timely action in such opportunities.
Reasoning: Nvidia is mentioned to illustrate market strangeness, as its price in October last year ($202) is virtually the same as today ($201), suggesting that even major, perceived-strong stocks can show flat performance despite overall market narratives.
Reasoning: AMD is mentioned as an example of a large market cap stock ($800B+) that experiences significant daily percentage moves (like 6% down today) without specific bad news, reflecting the strange and volatile nature of the current market. Jeremy later implies that big money is made by identifying such stocks early, not by chasing them now.
Reasoning: Salesforce is highlighted as a stock where buyers are absent, resulting in a 41% decline over the past year, similar to other 'safe' tech stocks struggling to find demand.
Reasoning: Jeremy owns Estee Lauder and uses it as a successful example of a turnaround play. It rallied 116% in a nine-month span after making tough business decisions, illustrating the potential for significant gains in historic brands undergoing a positive transformation.
Reasoning: Jeremy states he bought Palantir "years ago" and made "great profits," advocating for buying when it's uncomfortable. He highlights that those who bought recently are "down" but suggests that investors "can pick up shares of Palantir at 16." He uses Palantir as an example of a currently beaten-down stock (a "Palantir type opportunity") that presents an incredible long-term opportunity, despite having been a popular, overbought stock last year.
Reasoning: ServiceNow is mentioned as a stock where buyers cannot be found, leading to a 50% decline over the past year, illustrating the broader lack of demand for certain tech stocks.
Reasoning: Despite owning strong products like TurboTax and QuickBooks, Intuit's stock has no buyers and is down 66% over the past year, used as an example of a quality company struggling in the current market.
Reasoning: Jeremy warns against buying SpaceX, labeling it an "insanely dangerous stock" because it's currently unprofitable and not expected to achieve profitability until the late 2020s or 2030s. He anticipates a "messy messy mess" for the stock due to expiring lockups and a lack of interest from "big money" until it nears profitability.
Reasoning: Tesla is briefly mentioned as having "very strange valuations" in the context of popular but potentially overvalued stocks that investors should be cautious about, especially if chasing them at their peaks.
Reasoning: Jeremy notes that despite Netflix historically being seen as one of the safest stocks, buyers are hard to find, and the stock is down 41% over the past year, indicating a lack of current investor interest.
Reasoning: Samsung (trading as SSNLF here) is cited as a memory chip company with an unsustainably high market valuation (12th largest globally) compared to diversified giants like Berkshire Hathaway or Exxon Mobil. Jeremy suggests this indicates an "out of whack" and "not sustainable" market situation for cyclical commodity businesses.
Reasoning: Jeremy strongly advises against buying SanDisk now, calling it "way way late to the game" and a "complete gamble," especially since it's up 4000% over the past year. He emphasizes that investors often misunderstand the cyclical nature of memory chip companies, which can lead to prolonged periods of "dead money or down money for years."
Reasoning: SK Hynix (trading as SKHYY here) is mentioned as another memory chip company with an unsustainably high market valuation (14th largest globally), exceeding that of diversified giants. Jeremy believes this indicates an "out of whack" and "not sustainable" market situation for cyclical commodity businesses.