- The H.E.A.T. Formula
- Posts
- The š„H.E.A.T.š„ Formula
The š„H.E.A.T.š„ Formula
AI Driven Insights to Spark Your Portfolio
I will be on The Schwab Network today at 8:20AM EST
The H.E.A.T. Formula is a radically different way to look at investing your portfolio.
āH- Hedges, you should always have hedges and be agnostic as to being long or short. Bonds are not a hedge
āE-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.
āA-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.
āT-Themes. You should always be invested in the top themes. Most everything else is just noise.
Preview of Coming Attractions
I think AI is going to make traditional indexing and active management obsolete. I am putting my money where my mouth isā¦
The investment firm is introducing eight new AI-focused funds, including offerings targeting UFO disclosure and DeepSeek's emerging AI technology.
Our Next Webinar
Uncovering Hidden Themes with AI: How DeepSeek Is Rewriting the Investment Playbook
Thu, Feb 27, 2025 2:00 PM - 3:00 PM EST
1. Bullets From DeepSeek to Disruptors: Explore how one AI breakthrough (DeepSeek) reveals cost-effective strategies and under-the-radar opportunities beyond mainstream tech giants.
2. Finding Alpha in the Noise: Learn how AI-driven data-mining cuts through market hype and identifies genuine growth catalystsāeven in emerging or overlooked sectors.
3. Comparing & Contrasting Strategies: Discover how to harness AI to evaluate different investment approaches.
YouTube Videos
We will be hosting The Watchlist every Tuesday and Thursday. Jeremy Vreeland (Bullish Bears) and I will be discussing stocks we are currently watching, buying, or shorting. We will also be discussing how to structure trades for asymmetrical returns and we will take your questions.
Click below to register for the Thursday:
Tuesdays are live streamed on YouTube here:
Market Recap
Interesting note from Jefferies this morning on the current state of the stock and bond markets:
One of the feedbacks from clients interactions over the past month has been a lack of strong convictions. Market uncertainty has been high and clients are unwillingly to deploy capital behind any theme. In rates, there is a range of views over the Fed, but there is no strong catalyst to break the recent range convincingly either higher or lower. In equities, while most clients agree that equity markets should remain supported, tariff uncertainty and rotation from the recent tech developments has prevented strong convictions. In credit, investors are long not because spreads are compelling, but because there is no reason to be short
Powellās testimony today and tomorrow has the potential to be market moving, though it probably wonāt be. We also have the inflation numbers coming up.
This morning things look weaker on EU tariff news.
This is one area I have been remiss in talking about. Probably because China is so hard to trust from an investment standpoint. I went into BABA, BIDU, and GDS off the DeepSeek news, I also filed for a kind of emerging market (mostly China) ETF off this. I do think there is something here, but again, every time you think you have something in China they pull the rug out.
BABA is extended hereā¦..
If you are a breakout trader GDS just broke outā¦.
BIDU has been weaker, this from Jefferies explains whyā¦
CHINA PLAYS: Among Chinese internet companies, Bytedance, Tencent and Alibaba look best positioned, while Baidu is behind as their commitment to R&D is not as strong. BABA +c8% yesterday (+40% from Jan lows).
It just did an undercut and rally at the 200 day.
GPT thinks Boyd (BYDDY) is a must own alsoā¦..
BYD shares hit record high after EV maker rolls out driver assistance tech with DeepSeekās AI help-CNBC
If you donāt follow Stock Talk, you should. He also has a paid discord if you are a trader. Heās been on the SMID aerospace and defense names all year. I have owned AVAV and KTOS for a while and just bought ACHR yesterday. MRCY is another name GPT flagged, not my favorite looking chart but will keep an eye on itā¦.
Investors once worried that Apple was behind the pack in AI because it wasnāt spending as much as its rivals. But now Appleās strategy might have more shine, at least according to one analyst.
As I have said before I think AAPL is a must own for the long term. They have the potential (still have to execute) to be one of the biggest winners from AI. Not extended here and you could use the 200 day moving average as a stop if you were trading itā¦
.GPTs takeā¦.
Conclusion
Appleās AI approach stands out: minimal HPC data-center investment, focusing on local AI inference, curated partnerships, and continued massive free cash flow for buybacks. This can keep shareholders happy, especially if HPC meltdown mania eventually hammers margins at big cloud shops.
Other Publicly Traded Winners:
TSMC (TSM) continues building Appleās advanced AI chips.
Potential HPC cloud partners (Azure, AWS, Google Cloud) might see usage if Apple offloads AI training.
Apple remains a strong AI play thanks to massive ecosystem and chip design prowessāeven if itās not building the biggest HPC data centers.
I own QBTS, and all the other quantum stocks. They have all calmed down quite a bit, and QBTS looks like it is setting up for a big move (up or down). I still think you need to be in quantum for the long term (just filed for 2 quantum ETFs), would like to see it move back above the 50 day, but after going from 1 to 11 in no time, you would expect some consolidationā¦.
GPT rates QBTS the best with an 8 out of 10. IONQ gets a 7 and RGTI gets a 6ā¦..
Final Opinion: D-Wave & Overall Quantum Strategy
D-Wave stands out in quantumās near-term commercial potential due to its annealing approach and specialized solutions for industrial optimization.
The entire quantum sector is extremely volatile, with HPC meltdown mania overshadowing near-term usage, but certain specialized tasks (like optimization) can be monetized now.
If youāre heavily invested in quantum stocks (including D-Wave), understand the multi-year timeline and volatility. D-Waveās CEO sees earlier profitability than IonQ, but itās still a risky emerging tech bet.
Potential side beneficiaries are HPC cloud providers or GPU makers (Nvidia), but for pure quantum exposure, D-Waveās near-term specialized approach could yield the best commercial traction.
Franceās $100+ billion AI push is another signal HPC meltdown mania is overshadowed by unstoppable HPC expansions. Nvidia, Broadcom, Marvell, AMD remain top HPC-laden public stocks set to benefit from large European HPC data center builds. Optical/Power infrastructure names like Coherent, Lumentum, Vertiv, Eaton also gain. The big U.S. hyperscalers see indirect benefits if they partner or supply cloud solutions in Europe. Overall, HPC meltdown mania seems overshadowed again by big spendingāEuropeās latest announcement only cements that HPC usage will keep growing.
I think āphysical AIā is going to be one of the next major areas. I had GPT analyze this article and pick some winnersā¦.
Robotics & AI for infrastructure inspection is boomingācompanies offering advanced automation, sensors, or data analytics can tap into the multi-billion-dollar market for fixing roads, bridges, refineries, etc. While Gecko Robotics & Percepto are private, U.S. investors can look to ABB (Indian), Honeywell, Emerson, Rockwell, and specialized solutions from Teledyne or AeroVironment. Indirect software plays like Palantir and Trimble also stand to benefit if local governments adopt more data-driven solutions.
Before you go: Here are ways I can help
ā
ETFs: We offer innovative ETFs that cover all aspects of The H.E.A.T. Formula, Hedges, Edges, and Themes.
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]
Monthly investing webinars
Weekly trading strategy podcast
Weekly investing podcast-Coming Soon
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 investorās financial situation.Ā© 2025 Tuttle Capital Management, LLC (TCM). TCM is a SEC-Registered Investment Adviser. All rights reserved.