Three things you need to know today…

1) In the latest issue of Altucher’s Investment Network Australia,James talks about investment ‘cheating’.

The idea is to look at the big investors and see what they’re buying.

You can do this in both the US and on the ASX because of the regulatory notices that fund managers put out to the market.

This way you can consider piggybacking on people with more resources and knowledge than you (and I) have.

You can also invert the idea. That means looking at what the big guys are selling.

Case in point is Warren Buffett and Apple shares. Buffett began buying Apple in 2016.

Buffett operates with massive numbers. In total, he put US$41 billion into Apple.

By around early 2024, this stake had climbed to approximately US$180 billion. It was one of his greatest investments ever.

However, Buffett is selling his stake in Apple down. It’s now down to a third of what it was. Why might that be?

Apple recently announced that it plans to invest $500 billion in America over the next four years.

Porter and Co are investment analysts in the US. They say this plan will send Apple’s annual capital expenditure up 10x. It will also wipe out most of Apple’s free cash flow.

That would likely also cut off Apple’s buyback, which is what’s been driving the stock in recent years.

They conclude:

‘We can’t help but wonder if investors will be willing to pay 35x earnings for a company with little to no earnings growth.’

Clearly, Buffett is thinking along similar lines.

In the latest issue of Altucher’s Investment Network Australia, we have multiple ways to play the US tech market. But Apple isn’t one of them.

James Altucher is a genuine tech insider. He called both Facebook and bitcoin years before they became mainstream ideas.

You can find out his best ideas on this by going here.

2) Watch out oil…

Get set for a wild ride in the coming weeks.

On Friday we had a big bout of selling. We had a big UP day yesterday.

Now the futures market is suggesting a big down day for Tuesday.

The likely culprit is Donald Trump’s aggressive tariff position. It’s unlikely to be good for world growth.

The first victim might be the oil market. The other week my colleague Murray Dawes put the US$69 price down as a key level.

The American oil benchmark fell below this in their Monday trading.

There’s no way I’d go long oil here.

One analyst I respect says that world oil use could be cut by 2 million barrels a day by the end of the year if Trump does not ease off the tariffs.

Oil would be vulnerable to a big price collapse in this scenario.

Now…this scenario may or may not play out. However, it’s very hard for me to see significant upside for oil, absent a war or disruption to supply.

We’re better off looking elsewhere.

3) Check out this blast from the past!

This morning the Australian Financial Review reports…

‘David Henn, the founder of Germany’s biggest medicinal cannabis importer, says he cannot get enough Australian-grown marijuana.

‘With relaxed cannabis laws tripling demand for medicinal marijuana in the past 10 months, Henn flew into Queensland last month desperate to secure more supply from local partner Australian Natural Therapeutics Group.

‘“They just grow the best weed in the world,” Henn said.’

I’m calling this a blast from the past because I was around in 2017-18 when the marijuana stocks exploded on the ASX. Some of the price gains were staggering.

The story had everything you want in an industry. New markets. Massive, worldwide demand. Low costs and high margins.

The early promise had massive expectations. Canada, Germany and the majority of US states were legalising, either for medicinal purposes, recreation or both.

However…

In the years since the marijuana sector on the ASX turned into a useless bunch of shitcos.

They barely trade anymore. The lofty valuations of those earlier years are long gone. None of them turned a profit, at least as far as I know.

Basically, the investment banks pushed a bunch of early-stage developers into a nascent industry surrounded by hype and let the public ride them down.

I remember looking into the sector around its peak. The reality didn’t square with the hype.

My conclusion at the time was that most of the shares were trading on ridiculous valuations. The odds of making a buck off them were terrible.

However, I also assumed the sector would come back. The case of medicinal marijuana seemed compelling…but what was needed was more clinical evidence.

Never for a moment did I think that seven years later most of the marijuana companies would have achieved diddly squat and still be of little interest to investors…at least here, anyway.

Just goes to show that investing for the long term doesn’t always work for some.

Best wishes,

Callum Newman,
Editor, Small-Cap Systems and Australian Small-Cap Investigator

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Murray’s Chart of the Day

By Murray Dawes, Tuesday, 04 March 2025

Over the last few weeks, I have been giving you an overview of the key markets and my view on their direction.

I told you that I expected to see the US dollar and US bond interest rates falling. I also pointed out that oil prices are at risk of a major fall.

All the above is starting to happen rapidly. The final shoe to drop, that could turn a slight correction into a sharp fall, is if a falling USDJPY ignites carry trade unwinds as we saw last August.

The Nasdaq is seeing stiff selling pressure and the USDJPY (The US dollar vs the Japanese Yen) is also starting to fall towards the major high reached in 1989 at 148.00.

The Nasdaq looks like it could fall 7% rapidly from here as I pointed out in last week’s Closing Bell.

The scene is set for Magnificent 7 stocks to accelerate to the downside if we are on the edge of round two for carry trade unwinds.

Carry trade unwinds are where investors who have borrowed in Japanese Yen and invested in the US (including into Magnificent 7 stocks) sell out of their positions and convert the proceeds into Japanese Yen to pay back loans.

Regards,

Murray Dawes,
Editor, Retirement Trader and Fat Tail Microcaps