Making Money Short-term and Long-term

Email agenda:

Estimated read time: 5 minutes 21 seconds

1. Making Money Short-term and Long-term

2. The Next Nvidia? A Potential 300x Stock Name

Good morning and happy Monday - let's get smarter

Making Money Short-term and Long-term

One of the biggest things when it comes to making money in markets is your time horizon

Different investors allocate capital differently based on their desired outcome

People day-trade and get in and out of tickers in minutes

People trade 2-3 week options

People buy and hold forever

Nothing is wrong with any of them

If you are compounding your capital then nothing else matters

I wanted to share the way I look at allocating my capital not because I think it’s the best, but I think for most people who put money in the S&P 500 ETF and hold forever it provides a different perspective worth thinking about

A lot of my capital allocation is based on the forward looking macroeconomics on a quarterly basis (e.g., Will GDP and inflation accelerate or decelerate in Q2, and what about in Q3 and Q4)

I am looking at the rate of change of GDP growth and inflation from a forward looking perspective to help determine what assets I will allocate capital to as when you backtest data, certain asset classes (bonds, stocks, commodities, currencies) perform better based on this data

Backtesting is a term used in modeling to refer to testing a predictive model on historical data

An example:

If based on research I read I see projections that in Q2 GDP in the US and inflation will slow, I know that I don’t want a lot of equities (stohks) exposure, and I would be better off owning currencies like the US Dollar and bonds

Based on this, in my brokerage account I will start positioning myself for the next quarter

It’s a little more complex than this, I use an algorithm developed on a service called trading view to determine the exact time I actually starting buying these items

But from a broader perspective, when the macro indicators are changing to the next quarter, I know what asset classes I will be buying vs selling and use the algorithm to determine the exact timing of it

But things also change - sometimes the indicators flip or head fake and I don’t hold them for the quarter

Markets are complex systems and the data is always changing, so it’s not a static buy and hold for the entire quarter

If the markets look forward on better data and things change I adjust

It isn’t as easy sadly as here is what the macro says for Q2, and the day Q2 ends the markets will adjust for Q3 so I will change then

It’s an ever changing game and I try to skate where the puck is going

So my brokerage account changes quite often based on quarterly macroeconomic indicators

This strategy has worked for me and I have avoided big drawn downs and compounded my capital

The biggest killer to returns is draw downs

If you lose 20% of your capital, you have to make 25% back JUST TO BREAK EVEN

That’s why I focus so much in my brokerage/macro on avoiding massive drawn downs as 80% of my capital in my account is in my brokerage

Then I have my IRA account which I call my HODL account

HODL as a coin termed by the crypto crowd which stands for Hold on For Dear Life

In my HODL account, I have the buy and hold forever basket

Companies that I genuinely believe that if I hold on for 10-25 years, they will win over the long-term

These are names like Meta, Google, Amazon, and occasionally some up and coming companies than I think if I hold onto for a longer time horizon, could be a 20-50x

This accounts for about 20% of my capital but allows me to benefit off of both time horizons

I can play the quarterly focus in my brokerage to align with macro and am consistently trading in and out of asset classes to avoid draw downs

And I can also buy and hold longer term companies that I think will generate huge returns over a long period of time, even if there are ups and downs throughout

I recently came across a new name that I am adding to my HODL account and wanted to give you a preview of this company and why I am bullish on it

Enovix Corporation

Enovix Corporation ($ENVX)

Enovix corporation is the leader in advanced silicon-anode lithium-ion battery development and production. The company's proprietary 3D cell architecture increases energy density and maintains high cycle life

Enovix is currently being tested as physical batteries on the back of Apple products

There are rumors that Enovix’s batteries could be on the back of Apple products by 2024

Enovix batteries don’t have the fire risk of today’s batteries and have 30-100% more battery than the current traditional batteries

Enovix is also working on wearable batteries for the US army

Enovix had some manufacturing issues and management turnout in the beginning of 2023 which pushed the stock down to new lows

However - to the extent that Enovix ends up being used on all Apple iPhones I would be willing to bet they will then start winning contracts with the likes of Google, Samsung and many other tech companies using batteries

I like this in my HODL account because your guess is as good as mine as what will happen

It could obviously flop and be a dud

It will probably trade in a wide range over the next 6-18 months

But it’s one of those companies that if I am right, could be a 300x

Why 300x?

One of Enovix’s biggest competitors is Nvidia

Nvidia designs, develops, and markets graphics processors as well as related software and hardware products and has a market cap of $700 billion

Enovix could be the new up and coming competitor in the space and has a market cap of $2 billion

They are quite a long way from the dominant market share giant of Nvidia

But if they do end up being on all Apple products in 2024 I think this would be the beginning of a long rally for Enovix and it could end up being acquired by Nvidia or just compounding and growing over time

I am willing to allocate a small % of my capital on the chance of Enovix being the next Nvidia

- Dev

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.