The đŸ”„H.E.A.T.đŸ”„ Formula

AI Driven Insights to Spark Your Portfolio

March 07, 2025

The H.E.A.T. Formula is a radically different way to look at investing your portfolio.

‍H- Hedges, you should always have hedges and be agnostic as to being long or short. Bonds are not a hedge

‍E-Edges, you should always look for edges. Preferably these are edges with some sort of psychological underpinning, structural edges, or some sort of barrier to entry.

‍A-Asymmetric. Everything you do, be it trades or your overall portfolio, should be designed so that heads you win a lot, tails you lose a little.

‍T-Themes. You should always be invested in the top themes. Most everything else is just noise.

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Episode 3 will live stream today from 11:30AM to 12:30PM EST at the link below

Market Recap

Trump’s comments on the stock market yesterday were telling


"A lot of them are globalist countries and companies that won't be doing as well because we're taking back things that have been taken from us many years ago ... There will always be a little short-term interruption. I don't think it's going to be big. But the countries and companies that have been ripping us aren't particularly happy with what I'm doing. But the United States will be very happy."

Trump is trying to engineer a complete restructuring. Those expecting a Trump put will be sorely disappointed.

SPY ended up taking out Tuesday’s low intraday, but it closed above, it also tested the 200 day moving average, and held. So now we are in a real important spot, the 200 day is key support, if that breaks you do have some levels in the 560’s around the election, but that’s about it.

QQQs weren’t so lucky, they broke the 200 day
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This morning looks like another bounce attempt, but we have jobs numbers at 8:30 and Powell is speaking at 12:30.

The most interesting development yesterday was that Trump announced a tariff reprieve for Mexico and the market continued to sell off. You could look at that as a good thing, the market continuing to whip back on forth on whatever he says on tariffs is a pain in the ass. You could also take the under and argue that if good news on tariffs doesn’t cause a bounce that means something else is going on.

MRVLs downbeat guidance yesterday shows more skepticism on the AI trade, which appears to have topped out pre DeepSeek.

”Boy, sentiment is rough for AI semis right now,” Melius Research analyst Ben Reitzes wrote in a note to clients. “For the immediate-term, the negative reaction stems from what was only a slight revenue beat and raise,” he adding, saying that buy-side expectations were likely for at least a $100 million upside. Marvell only beat the consensus view by about $10 million with its guidance.

At the time we wondered how important it was, turns out very. Not from the standpoint that people actually believe it only cost $6 million, it sparked uncomfortable questions on capex and monetization. Perhaps AVGO earnings from last night can change that a bit. I think AVGO is a must own for longer term investors, I’m a swing trader at heart so I got out somewhere around the 50 day moving average break. Was eyeing it yesterday and would have bought on the undercut and rally at the 200 day, but buying ahead of earnings is just asking for something bad to happen to you
.

I may add some today, but as a dip buyer I may decide to wait.

Speaking of the AI trade and Broadcom, great perspective from Mike O’Rourke last night
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Broadcom provided some much needed relief to the AI space when it reported earnings after hours. In addition to exceeding estimates on its key metrics, Broadcom stated Hyperscalers continue to invest aggressively. Broadcom also stated it picked up four new large Hyperscalers as customers that has yet to ship to and are not in its guidance. While it will be understandable to see an oversold Nvidia bounce on such comments, it is also a reminder than Nvidia is no longer the only game in town when it comes to AI chips. Over the long term, the bigger story today may have been China's Big Tech continuing to produce competitive AI models at a fraction of the capex spend. While every major US Hyperscaler believes its aggressive spend is a competitive advantage, it does not appear that way. Lastly, for the second time in two weeks, there was a report about Microsoft partially backing away from data center capacity. Early last week, it was a TD Cowen report which the company loosely denied. Today, it was the Financial Times. For all we know, it could have been the same deals, but it is not a great sign. It is also well advertised that Microsoft's key AI partner, OpenAI, has pivoted towards Oracle and Softbank in Project Stargate. Simply stated, it is still way too early in the cycle to be seeing even potential signs of slowing.

Bottom Line

I think it’s highly unlikely the market has bottomed, and highly likely we will continue to see volatility for a bit. If you are a day trader this is a target rich environment, you just can’t go to the bathroom or you may miss a headline. If you are a swing trader you keep your long exposure light, keep some short exposure. You can also selectively add on dips and sell or short into strength. If you are a long term investor this is a great opportunity to find out who’s swimming naked. Warren Buffett had a famous quote, “when the tide goes out you find out who’s been swimming naked”. The idea is that it’s easy to make money when the market is going up, when it’s going down you find out if your investment strategy works or not. If it doesn’t then we should be talking.

The technology is being used to help combine and weight the various investment factors that guide stock picking, thereby steering the nuts and bolts of an allocation method where Asness previously used to issue the final call, he said in an interview on Bloomberg Television on Tuesday.

“AI’s coming for me now,” he said. “It turns out it’s annoyingly better than me.”

One of my traders flagged this for me, missed it first time around. As I have continued to say, AI will completely change how assets are managed. I would argue that with what AI can do today it has made traditional analysis and indexing obsolete. The future will belong to those who know how to use it best.

Yesterday Trump signed an executive order establishing a crypto reserve. Again, Bitcoin popped and then sank back as traders realized we aren’t going to be purchasing Bitcoin in the open market. I do think this is a major positive for Bitcoin however, and I asked GPT to opine


The executive order establishing a Bitcoin reserve without open-market purchases has limited immediate bullish effects but provides critical credibility for digital assets long-term.

Short-term speculative positions should be approached cautiously, given disappointment from immediate expectations.

For intermediate- and long-term strategies, this is unequivocally bullish for Bitcoin. Positioning now, following any short-term weakness, aligns strategically with a thesis of ongoing institutional and governmental adoption.

While no direct stock picks are mandatory at this juncture based solely on this order, any meaningful near-term dips represent attractive entry points in high-quality crypto-related equities (Coinbase, MicroStrategy) and Bitcoin mining stocks (MARA).

I saw the article above about possibly a similar move in China, I asked GPT to rate the chances


The scenario outlined by the article—China establishing a Bitcoin reserve—is speculative and moderately unlikely given current policy and geopolitical contexts. Yet, the likelihood of stimulus-driven speculative asset appreciation is high. Thus, Bitcoin and crypto-exposed stocks, particularly Coinbase and MicroStrategy, as well as chipmakers and crypto-payment enablers, are likely winners from Chinese liquidity injections.

From an investment standpoint, focusing on stimulus-driven price appreciation offers a more credible short-to-intermediate opportunity. A long-term bet on China explicitly establishing a Bitcoin reserve is risky due to regulatory uncertainty.

Therefore, a balanced strategy of short-term opportunistic trades on liquidity-driven price action (in Coinbase, MicroStrategy, and selected miners), coupled with vigilance toward long-term regulatory signals, is recommended.

Bitcoin continues to look like it’s in a mini uptrend here
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I have long thought that the need to power AI would need all of the above when it came to energy. That’s why I frequently talk about nuclear and natural gas in the newsletter, and will talk about coal at some point when the coal companies find a bottom. Geothermal is another area that has huge potential, so this article caught my eye. I currently own ORA, which I believe is the only public company that’s entirely in the industry, it’s actually rallied a bit lately
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I had GPT take a deep dive on geothermal
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Key Article Insights:

The article discusses Quaise Energy, a private geothermal startup deploying advanced gyrotron technology (millimeter-wave drilling) to:

  • Vaporize extremely hard rock formations rapidly using electromagnetic waves.

  • Potentially reach unprecedented depths (up to 7+ miles) to access hotter geothermal energy (1,000°F+).

  • Overcome geographical constraints, dramatically expanding geothermal viability beyond current limited areas.

Geothermal Market Context:

  • Geothermal currently constitutes <1% of U.S. energy, making its growth potential massive.

  • The increased power demands from AI-driven data centers and electric vehicle infrastructure are likely to boost geothermal investments significantly.

  • Geothermal energy aligns with Trump’s “energy dominance” agenda, suggesting favorable policy tailwinds.

Potential Implications and Beneficiaries:

Publicly Traded Companies that Could Benefit:

  • Ormat Technologies (ORA):Rating (Geothermal Exposure): 9/10Rationale: ORA is well-positioned with existing infrastructure, global footprint, and advanced technology. A substantial breakthrough like Quaise’s would significantly expand ORA's market potential.

    • Currently the leading publicly traded pure-play geothermal power provider.

    • Specializes in binary geothermal plants and technology.

    • Benefits directly from increasing attention and investment in geothermal energy.

    • Strong existing portfolio and experience would position ORA as a natural beneficiary, especially if Quaise technology expands viable geothermal locations.

  • Chevron (CVX), Devon Energy (DVN), BP (BP):

    • Mentioned explicitly as investors in geothermal startups, showing interest in expanding their renewables portfolios.

    • These companies would have the capital and expertise to scale projects quickly.

    • However, geothermal represents a small portion of their businesses—meaning impact on stock price would likely be limited compared to their core fossil-fuel business.

  • Schlumberger (SLB), Halliburton (HAL), Baker Hughes (BKR):

    • Major oil-service companies with drilling and infrastructure expertise would benefit if gyrotron technology is adopted industry-wide.

    • Would potentially supply equipment, engineering, or services if technology proves scalable.

Assessment of Your Current Holding (ORA):

  • Strengths:

    • Established leader and profitable pure-play geothermal business.

    • Likely to be an early beneficiary if Quaise technology proves viable.

    • Limited pure-play geothermal options make ORA the default choice for institutional investors seeking exposure to this niche sector.

  • Risks:

    • Could face new competition from oil majors diversifying into geothermal.

    • If Quaise's technology enables widespread geothermal generation, it may reduce barriers to entry, potentially introducing competitors.

  • Overall Outlook:

    • Short-Term: Limited immediate impact as Quaise’s technology still needs to be field-tested.

    • Intermediate-Term: Likely bullish, as increasing geothermal visibility attracts investor interest.

    • Long-Term: Very bullish, assuming Quaise (or similar technology) proves viable, significantly expanding the global geothermal market. ORA, as the industry leader, is well-positioned.

Overall Rating for ORA (Geothermal exposure): 8.5/10

Analysis of Quaise's Impact on Geothermal as an Industry:

  • Technological Potential: Very high. Quaise’s tech, if successful, would represent a disruptive breakthrough.

  • Implementation Risk: Also high. Field demonstrations needed, and technology may encounter unforeseen hurdles.

  • Economic Feasibility: Moderate. High upfront costs ($15-$25 billion for 5GW), but scalable and appealing if validated.

  • Policy Support: High, especially under the current Trump administration's pro-energy domestic agenda.

Conclusion & Recommendation:

  • Bullish Long-Term for ORA: Quaise’s success would directly amplify Ormat’s total addressable market (TAM), allowing geothermal plants almost anywhere, dramatically enhancing the attractiveness of ORA as an investment.

  • Current Recommendation for ORA:

    • Short-Term (next 1 year): Moderate bullishness (7/10) due to broader sector momentum.

    • Intermediate-Term (1-3 years): Strongly bullish (8.5/10) if geopolitical pressure and increasing U.S. emphasis on domestic energy production continues.

    • Long-Term (3-5 years): Extremely bullish (9/10) if Quaise (or similar) breakthroughs prove economically viable, creating massive market opportunities for Ormat.

Strategic Consideration:

  • This signals an excellent entry point or opportunity to increase exposure to the geothermal space via ORA.

  • Monitor Quaise closely. If the technology proves commercially viable, consider increasing positions in ORA, Schlumberger (SLB), Baker Hughes (BKR), and other companies that could benefit through equipment and services in expanded geothermal exploration and infrastructure.

Final Verdict:

  • Quaise’s technology: Intriguing and potentially disruptive, yet still speculative.

  • ORA: Well-positioned for upside from geothermal’s increasing visibility and market expansion. Excellent hold or buy-on-dips.

  • Oil Services Companies (SLB, HAL, BKR): Could also benefit indirectly from broader adoption of deep-drilling technology, albeit on a longer time frame and smaller scale compared to pure-play geothermal (ORA).

Investing Lesson of the Day: Low Volatility Funds Suck

This article caught my eye this morning
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First you see this
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The $24 billion iShares MSCI USA Min Vol Factor ETF USMV has fallen 1.6% this week, while the Invesco S&P 500 Low Volatility ETF SPLV was off 1.3% in the same period. Their returns have significantly outpaced the 3.6% week-to-date slide for the S&P 500 and the more than 4% decline for the growth-heavy Nasdaq Composite in the same period, according to FactSet data.

Sounds pretty good, but then you see this
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To be sure, most low- or minimum-volatility ETFs had significantly trailed the broader market over the past two years, when more volatile technology companies and the rising demand for artificial intelligence emerged as driving forces behind the U.S. stock rally in 2023 and 2024.

Will low volatility funds not be down as much in a market downturn? Probably, but they will also probably still be down. Will you give that outperformance back, and then some, in the most of the time the market is moving up? Probably. We advocate hedges in the H.E.A.T. Formula, hedges are supposed to go up when the market is down. Something that goes down, just not as much, is useless IMHO.

Before you go: Here are ways I can help

‍

  1. ETFs: We offer innovative ETFs that cover all aspects of The H.E.A.T. Formula, Hedges, Edges, and Themes.

  2. Consulting: I'm happy to jump on the phone with financial advisors at no charge. I've built a wealth management firm and helped other advisors grow their practices through the use of substantially differentiated investment strategies. If you want to talk just send me an email at [email protected]

  3. Monthly investing webinars

  4. Rebel Finance Podcast

  5. Wealth Management-Coming SoonThe views and opinions expressed herein are those of the Chief Executive Officer and Portfolio Manager for Tuttle Capital Management (TCM) and are subject to change without notice. The data and information provided is derived from sources deemed to be reliable but we cannot guarantee its accuracy. Investing in securities is subject to risk including the possible loss of principal. Trade notifications are for informational purposes only. TCM offers fully transparent ETFs and provides trade information for all actively managed ETFs. TCM's statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. Trade notification files are not provided until full trade execution at the end of a trading day. The time stamp of the email is the time of file upload and not necessarily the exact time of the trades.TCM is not a commodity trading advisor and content provided regarding commodity interests is for informational purposes only and should not be construed as a recommendation. Investment recommendations for any securities or product may be made only after a comprehensive suitability review of the investor’s financial situation.© 2025 Tuttle Capital Management, LLC (TCM). TCM is a SEC-Registered Investment Adviser. All rights reserved.