The 🔥H.E.A.T.🔥 Formula

AI Driven Insights to Spark Your Portfolio

March 05, 2025

3 New Launches Yesterday:

2X Long ARM (ARMU)

2x Long DJT (DJTU)

2x Long RBLX (RBLU)

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.

Our Next Webinar

The AI Investing Playbook For Toppy Markets: How to Find Hidden Opportunities and Hedge Risks in 2025

Thu, March 20, 2025 2:00 PM - 3:00 PM EST

Rebel Finance Podcast-Episode 2 is Out

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

Market Recap

Yesterday was a strange one but we could have made a low. Typically, you reach a point where sellers are just done, the market flushes out, stops at a spot and then rallies from there. Kind of what happened yesterday, but we went from red to green, then back to red. Nevertheless, watch $572.25 on SPY……

If that holds, it could be the low, at least for now. If it doesn’t, then next stop is the 200 day. Why it’s so hard to know is the tariffs. The market rallied after the close when Lutnick started talking about compromises…..

"... both the Mexicans and the Canadians were on the phone with me all day today trying to show that they will do better. And the President's listening, because you know he's very, very fair and very reasonable. So I think he's going to work something out with them. It's not going to be a pause, not that pause stuff, but I think he's going to figure out, you do more and I will meet you in the middle some way. And we're going to probably be announcing that tomorrow. So somewhere in the middle will likely be the outcome, the President moving with the Canadians and Mexicans, but not all the way."

One key point is that this first round is supposed to be about fentanyl and the border. The April 2 tariffs are the reciprocal ones and I can’t imagine a compromise there, unless other countries drop theirs.

Bessent said on Fox News what I was talking about yesterday with Main Street vs. Wall Street….

"Look I think over the medium term, which is what we're focused on, it's a focus on Main Street. Wall Street's done great, Wall Street can continue to do fine, but we have a focus on small business and the consumers. So, we are going to rebalance the economy, we're going to bring manufacturing jobs home. We are going to continue the surge in small business confidence that was at a record level when President Trump came in."

Like I also said yesterday, no more Trump put…

Hopes for deregulation, tax cuts, and other fiscal stimulus from President Donald Trump have been replaced by fears that his tariffs on Canada, Mexico, and China will ignite a full-blown trade war. That outcome would most certainly hurt consumers and corporate profits—and revive the economic threat of inflation.

But Trump doesn’t care…

“We should all buckle up a bit,” Carlyle Group Inc. Chief Executive Officer Harvey Schwartz said Tuesday at the Bloomberg Invest conference in New York.

I took some hedges off yesterday, will probably put them back on today. I will probably add some longs as well, as like I said above we could have hit a bottom near term (I will believe it when I see it). TLT is red pre market, I will probably add to my position.

A survey of JPMorgan clients published Tuesday showed wagers on further gains — so-called net bullish positions — are at their highest level in 15 years. Large block trades betting on the benchmark 10-year yield falling below 4% are proliferating, while demand for options to hedge against further price increases is on the rise.

Be cognizant of this though…..

I did add to Bitcoin yesterday on the undercut and rally at the 200 day….

I added to VST on the undercut and rally at the 200 day….

Nuclear stocks were strong in a sea of red yesterday. SMR had an undercut and rally at it’s 200 day….

I added to BWXT instead, much lower risk and reward way to play nuclear. I will look at the higher vol names today. If we really did make a low, those guys could move.

Speaking of nuclear….

Here’s what GPT had to say…

Addressing the nuclear waste challenge is not only an imperative but also a significant investment opportunity. Jacobs Engineering (J) is a clear, strategic choice to capitalize on nuclear's resurgence in powering AI infrastructure, making it a highly attractive investment.

Not a great looking chart at the moment, but something for the watchlist….

I watch the State of the Union with an eye towards potential investment opportunities. This seems like a possible candidate. I had GPT take a look….

🎯 Bottom Line Conclusion:

Trump’s executive order will structurally boost U.S. shipbuilding and maritime infrastructure, marking a significant investment opportunity. Defense shipbuilders (GD, HII) and U.S.-flagged marine operators (MATX, KEX) offer particularly compelling opportunities to capitalize on this policy shift, providing targeted exposure to both near-term catalysts and longer-term strategic advantages.

The HII chart is interesting, it could look to fill a couple of gaps….

Huntington Ingalls Industries (HII)

  • Largest military shipbuilder in the U.S., produces nuclear-powered aircraft carriers and submarines.

  • Direct exposure to nuclear shipyard investment and wage incentives.

  • Rating: 9.5/10 (Strategically central to U.S. shipbuilding revival)

Stocks are dropping on the back of President Donald Trump’s tariffs. Certain industrial companies could benefit, however, making industrial stocks look appealing.

I do like the industrial stocks focused on robotics and data centers, so this article caught my eye. I asked GPT if these names could meaningfully benefit from tariffs……

đź“Š Meaningfulness of Impact to Stock Prices:

  • Moderate to High:

    • Rockwell Automation and Carrier have clear, tangible paths to incremental revenue driven directly by onshoring CapEx cycles.

    • Historically, major shifts in trade policy and industrial investment trends have materially impacted valuations, resulting in sustained multi-quarter expansions for these names.

    • Fastenal would benefit moderately, driven by volume growth; the stock’s already premium valuation could limit the relative upside.

    • Eli Lilly and similar companies indirectly stimulate demand for industrial products; this effect will be limited at company-specific levels, though it bolsters sector growth overall.

🎯 Strategic Conclusion:

  • High Conviction: Consider building or increasing a position in Rockwell Automation (ROK) as it offers significant exposure to secular growth in automation, augmented by this tariff-related tailwind.

  • Secondary Opportunities: Carrier (CARR) and Trane Technologies (TT) are strong second-tier bets with HVAC benefiting from CapEx and domestic reshoring.

  • Supplemental Opportunities: Industrial distributors like Fastenal (FAST) will benefit from incremental growth, but less dramatically.

Given your focus on identifying asymmetric and sustainable trends, Rockwell Automation and Carrier represent the clearest direct winners, with Rockwell Automation particularly standing out due to its automation-focused positioning in a high CapEx environment.

I like ROK, sold it in the selloff but it’s on the watchlist and it’s in an interesting spot here. Could call it an undercut and rally at the February lows, but would prefer it above the 200 day.

I’ve owned CARR in the past, it looks pretty ugly…

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

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