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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Rebel Finance Podcast

Episode 1

Market Recap

Was worried that was going to happen. A green morning after a big down day usually isn’t a good thing. QQQ is now below it’s 50 day and looks like a short…..

Same with SPY…..

Then of course there is Bitcoin this morning, which doesn’t bode well for risk assets.

As of this writing it has already broken the low of the year and the 200 day moving average is at 81 and change.

At some point Magnificent 7, AI, etc has to sell off. This may or may not be it. Either way, caution is warranted. I’m a dip buyer but will probably offset everything I’m doing with some sort of hedge until this settles down.

Remember, NVDA earnings are tomorrow, that could change everything, positive or negative.

At the moment, the only thing that looks good from a long standpoint is TLT (long term Treasuries), I mentioned that yesterday. Hard to imagine the Fed hiking rates anytime soon, so that $85 level looks like a pretty good bottom.

Treasuries Rally as Traders Boost Bets on Fed Interest-Rate Cuts-Bloomberg

Investing Lesson of the Day

Monday morning Morgan Stanley raised BABA to an overweight and raised their price target from $100 to $180…

BABA has almost doubled this year and now they tell you to buy it. Of course it also went down 10% yesterday. If you are thinking following Wall Street research is going to add alpha, think again.

ETF Spotlight

https://www.tglretf.com/

Given the recent pullbacks across the AI spectrum, I asked GPT about old economy stocks that are, or could, implement AI to enhance revenue…..

The recent AI-driven market selloff has triggered a critical rotation opportunity:➡️ High-multiple AI infrastructure & software stocks have pulled back.➡️ Meanwhile, "Old Economy" companies are quietly integrating AI to enhance margins, cut costs, and drive efficiency.➡️ These companies are not just "AI beneficiaries"—they are actively using AI to transform operations.

💡 The real money in AI will not just be in NVIDIA chips—it will be in companies that successfully deploy AI to increase profits in industries like manufacturing, energy, logistics, and healthcare.

👉 The market is mispricing this opportunity.

🔥 Why This Trade Works Now

1️⃣ Market Mispricing AI Adoption in Old Economy Stocks

• Investors still associate AI with tech stocks—they are ignoring industrial AI applications.

• AI can boost EPS in legacy sectors faster than in pure AI R&D companies.

2️⃣ Lower Valuations, Lower Risk

• These stocks trade at reasonable multiples—unlike AI infrastructure stocks, which were priced for perfection.

• More resilient in a rising rate environment due to stronger free cash flow.

3️⃣ AI Adoption Is Accelerating Across Industries

• Autonomous vehicles, industrial automation, predictive maintenance, and logistics AI are happening NOW.

Speaking of old economy stocks implementing AI….

The Rise of Artificial Intelligence at JPMorgan-WSJ

Wouldn’t be buying it here, looks like it has a date with the 50 day….

Hedges

The H.E.A.T. Formula always recommends having hedges for times like these. there are a ton of different ways to hedge, one is using charts on crap actively managed ETFs. Meet the ARK Innovation ETF (ARKK). Since inception it has woefully underperformed both the S&P 500 and the NASDAQ. So while I identified both of those indices above as looking like shorts, if I am bearish I’d much rather short ARKK. I like shorting based on daily charts looking for breakdowns of key support levels. I started buying ARKK puts last week when it broke below the 10 day moving average and I bought more yesterday when it broke the 50….

You can see some support in the 55ish area and then you have the 200 day. Remember, if the market comes roaring back this thing could soar, which is one reason I like options vs. outright shorting. When you buy a put your risk is limited to the premium paid. You could use the 50 day, the 20 day, and/or the 10 day as a stop.

Strategy: Cash Secured Puts

When markets get like this and I still want to add equity exposure I tend to do more cash secured puts (not on extremely speculative stocks that have a possibility of going to zero). I typically like buying calls on stocks I like, but if they don’t really go anywhere then the time decay eats them up. I can place a cash secured put under important support areas on stocks I like and if they don’t go anywhere or go down but hold support, then I win. Worst case scenario I get put the stock at a lower price. FYI, we are close to launching some cash secured put ETFs. More advanced strategy, so not for everyone, but had GPT do a tutorial….

📊 Cash-Secured Puts vs. Buying Calls vs. Buying Stock Outright

🚀 The Best Strategy for Uncertain Markets

When markets are volatile or moving sideways, many investors hesitate to buy stocks outright. So what’s the best way to gain equity exposure while managing risk?

🔹 Buying stock outright gives you full ownership but exposes you to immediate downside risk.🔹 Buying calls provides upside leverage but suffers from time decay and requires a significant price move to profit.🔹 Selling cash-secured puts allows you to earn income while waiting for a better entry price—a more conservative way to gain exposure.

📚 Tutorial: What Is a Cash-Secured Put?

✅ A cash-secured put involves selling a put option on a stock while holding enough cash to buy the stock if assigned.✅ If the stock stays above the strike price, you keep the premium.✅ If the stock falls below the strike, you buy it at the strike price (but at a discount thanks to the premium received).

💡 This strategy is best when you’re willing to own the stock at a lower price.

📌 Key Takeaways:✅ Buying stock is the simplest strategy but comes with full downside risk.✅ Buying calls offers leverage, but time decay works against you.✅ Selling cash-secured puts is a great alternative if you want to own stock at a lower price while earning income.

🚨 Important Warnings About Selling Puts

🔹 If the stock drops significantly, you must buy it at the strike price. Be sure you actually want to own it.🔹 This is NOT a risk-free strategy—if the stock crashes, you take a loss just like a stockholder would.🔹 Requires enough capital to buy the stock if assigned. If you don’t have enough cash, avoid this strategy.

🔥 Final Verdict: Best Strategy for Today’s Market

1️⃣ If you believe markets will rally aggressively: Buy calls (higher risk, higher reward).2️⃣ If you want to own stocks but fear a pullback: Sell cash-secured puts (earn income while waiting).3️⃣ If you’re long-term bullish and don’t care about short-term moves: Buy stock outright.

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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