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Mission 1.25 Target

Mission 1.25 Target

Welcome to the New Year, with the same Insightful Agent Report!

Nedrick
January 06, 2025

Macro Minute: The Power of Patience in a New Year

Welcome to the first full trading week of the year (with the exception of the market closure on January 9th to honor the passing of former President Jimmy Carter). As we emerge from the holiday season, the macroeconomic news flow is understandably light. While the calendar has flipped to a new year, it's important to remember that market dynamics don't change overnight.

This period of relative quiet presents a valuable opportunity to reflect on a crucial principle for successful investing: patience. This isn't just a platitude; it's a hard-won lesson learned through experience in the markets. Patience extends to several key areas:

Time in the market: Give your investments time to mature. Don't expect immediate results.
Position holding: Allow your positions time to play out, especially when based on longer-term macroeconomic themes.
Managing streaks: Whether you're on a winning or losing streak, taking a break allows you to clear your head, avoid emotional decisions, and objectively assess the market.

Personally, I've found that extending my average trade length has significantly improved my results. This past year, my average holding period was 17 trading days—a stark contrast to my earlier days of frequent, intraday trading. By dialing back the timeframe, I've allowed my larger, macro-driven plays to develop and reach their full potential. This shift has been instrumental in my success.

Market Snapshot (Week-to-Date):

Bitcoin: Up 5.14%
Crude Oil: Up ~6.5%
S&P 500: Down 1.6%
Nasdaq: Down 2.1%
Gold: Essentially flat (More and More Central Banks Holding Physical Gold Bullion Exposure)

This light week on the macro front provides a chance to focus on strategy and discipline. Remember, patience is not passive waiting; it’s about making informed decisions and allowing those decisions time to work. Although nothing much has already occurred we have the Consumer Electronics Show where $NVDA speaks at 9:30am EST there today. We also have FOMC Meeting Minutes coming out on the 8th. Tik Tok Supreme Court Hearing on the 10th (Could be a Catalyst for names like $META and $SNAP)with Non-Farm Payrolls. This week is FULL!

Debrief: Themes Carrying Momentum into 2025

This week’s Debrief revisits several key themes and associated investments highlighted in previous reports, examining their performance and assessing their potential for continued growth in 2025.

Globalstar ($GSAT): Satellite Connectivity Takes Off

We initiated coverage on Globalstar ($GSAT) when it was trading around $1.39, recognizing the significance of Apple's $1.1 billion satellite services deal to support a new Mobile Satellite Services (MSS) network. The practical application of this technology is evident – even everyday users experience its functionality when traditional cell service is unavailable, as demonstrated by iPhone notifications seeking satellite connections in areas with poor reception. Since our initial coverage, $GSAT has seen a remarkable 60% increase, currently trading at $2.21. This upward trajectory is further supported by recent SEC filings showing executive share purchases, reinforcing our belief in the company's continued appreciation. The need for constant connection is a theme that will only continue to grow.

The "Spend Narrative": Consumer Confidence and Market Highs

In Mission 47.24, we introduced the "Spend Narrative," a theme connected to the psychological impact of market highs on consumer behavior. When markets reach new peaks, individuals are often more inclined to spend. This trend has played out favorably for companies like Square ($SQ) and PayPal ($PYPL), which have seen gains of over 44% and 31%, respectively. We anticipate this momentum continuing as consumer confidence remains robust.

Target Acquisitions and Emerging Trends:

Mission 46.24 highlighted several “Target Acquisitions” based on promising themes:

Hims & Hers Health, Inc. ($HIMS): We identified the potential of GLP-1 treatments to drive revenue growth for $HIMS through its subscription model. This model allows for a valuation similar to a SaaS company, which we believe will ultimately be reflected in the stock price. The continued popularity of these treatments should provide a strong tailwind.
Cloudflare ($NET): When $NET was trading around $91, we emphasized the growing importance of DDoS attack prevention. Since then, the stock has risen by 25%, validating this thesis. This aligns with our previously discussed themes around cybersecurity and the importance of online security as highlighted in $TWLO, $CRWD, and $HACK, a trend we expect to persist into 2025.

Cryptocurrency: Maturing Asset Class

Cryptocurrencies, particularly Bitcoin, have been a significant theme. Bitcoin's surge past $100,000 and the increasing adoption of Bitcoin ETFs have solidified the asset class's legitimacy. Furthermore, the substantial growth of stablecoin usage, with $8.5 trillion in transaction volume during the first half of the year (double Visa's transaction volume for the same period), underscores the increasing integration of digital assets into the financial system. This leads us directly into our next section, "Novum Cognitio," where we'll explore the implications of these developments.

Novum Cognitio: The AI Infrastructure Domino Effect

This concluding section explores the cascading effects of the ongoing AI boom, focusing on the infrastructure required to support its continued growth. This isn’t just about the algorithms; it’s about the physical and digital foundations that make AI a reality. The major theme of 2025 will be the continuation of AI and its adjacent applications, along with the next layer of infrastructure needed to run these large models and their relationship with the Hyperscalers ($GOOGL, $META, $MSFT, $AMZN) looking to push this into profitability.

Graph of $MSFT Capex where a great portion is being used to fund AI

Here's a breakdown of the potential domino effect, presented as a flow map with explanations:

Domino 1: Insatiable AI Demand (Driven by Mag 7)

The "Mag 7" companies are driving the AI revolution, investing heavily in development and deployment.
Sam Altman's recent statement about OpenAI Pro subscriptions losing money due to higher-than-expected usage highlights the immense demand for AI services. This is a key catalyst.

Domino 2: Increased GPU Demand (Benefiting $NVDA)

The hyperscalers will likely respond to this surging demand by significantly increasing their GPU capacity.
This coincides with the anticipated release of $NVDA's Blackwell GPUs, which are reportedly already sold out for the next 12 months, creating a bottleneck and further driving demand. We may get some more information on this with this week’s CES Showcase

Domino 3: Data Center Expansion (Benefiting $EQIX, $PSTG, $DLR)

More GPUs mean more data processing, which requires more data centers for storage and computational power.
This will benefit data center REITs and providers like $EQIX, $PSTG, and $DLR. $EQIX, with its recurring revenue model, strategic expansions, strong balance sheet, and dividend payouts, appears particularly well-positioned.

Domino 4: Software Solutions (Benefiting $CRM, $PLTR, Potential for $MDB, $SNOW)

The vast amounts of data generated by AI models need to be managed, analyzed, and applied.
This creates opportunities for software companies like $CRM and $PLTR, which offer data management and analytics solutions. $MDB and $SNOW could also emerge as key players if they can capitalize on specific AI-related use cases.

Domino 5: Massive Energy Consumption (Potential for Nuclear Energy and $OKLO, $VST, $TLN, $CEG)

The energy demands of these massive data centers are staggering. Scale AI's CEO estimates a need for 20 gigawatts of power in the next 2-3 years – equivalent to the energy consumption of five Chicagos.
This has reignited interest in nuclear energy, particularly Small Modular Reactors (SMRs). $OKLO, which is reportedly working with OpenAI and Amazon on potential SMR deployments, stands to benefit. This positive sentiment could extend to other energy companies like $VST, $TLN, and $CEG.

Conclusion:

The AI boom is creating a chain reaction across various industries. The demand for AI services is driving demand for GPUs, which in turn drives demand for data centers, software, and ultimately, vast amounts of energy. While investments in emerging sectors like nuclear energy may require patience, the potential long-term returns are significant, especially if policy supports its development and widespread adoption. This interconnected web of demand creates a compelling investment narrative for 2025 and beyond.