JD Durkin: Let’s bring in a longtime friend of the show and a good friend of mine as well. He is the Editor-in-Chief of Investopedia, a man of many titles. Caleb Silver, thank you for being here, as always.
What has invigorated the AI narrative this week, especially just a few days after interest rates went higher?
Caleb Silver: Yeah, we saw that rotation out of financials today. Suddenly, that storyline about AI and semiconductors, they’ve been ripping here.
Little-known fact from Creative Planning: the market actually has done better after a rate hike than it has after a rate drop. So maybe there’s some of that, investors getting used to new levels.
All we want is some clarity, right? Clarity on where the 10-year is going to be, clarity on where oil is going to be. Tough to get both of those. But when you see those relaxing a little bit, you’re going to see the momentum sectors catching a bid, just like they did today.
JD Durkin: You mentioned the S&P 500, flat today, pretty much flat for the last six months. Basically since June, the market has gone nowhere.
The good news, according to our buddy Ryan Detrick, we haven’t seen a 1% or greater drop in the S&P 500 in like two months now.
Caleb Silver: And that tells you that even though there’s some volatility and noise, the indexes themselves are holding up despite some weakness and clearly some non-intuitive action.
JD Durkin: We have the CLARITY Act that did not pass the Senate. Here we’ve got Bitcoin ripping north of 86,000, kind of holding that level yesterday and today.
You brought us a few stocks. Let’s talk about three stocks making two-year lows. Why are you looking at that 24-month duration? Who are a few of those names that you brought us here today?
Caleb Silver: Yeah, I went for two years because there’s been so much beta with individual stocks rocking back and forth across the indexes. So two years is a good smoothing mechanism to see which businesses are actually holding up, which aren’t.
And the three stocks I brought you, affected by different things. One, GLP-1s. The impact on the beverage industry, massive. Look at TAP, Molson Coors, at a two-year low. GLP-1 related completely. Also, other beer makers, craft beer makers and anything else in a can but beer selling well right now.
And the two others, LendingTree and Yelp, both victims of AI. I don’t remember the last time I left a Yelp review or used a Yelp review. Heck of a company, heck of a service, just not as necessary. In the lending business, the matchmaking in the lending business, complete disintermediation right now.
JD Durkin: Yeah, we have to see the continuation of the so-called SaaS apocalypse storyline. Not necessarily software as a service, but we’re maybe starting to have a narrative shift on other parts of the sectors of the economy that could be disrupted as a result of generative AI.
How about a handful of stocks making two-year highs, including one that just today reached an all-time high?
Caleb Silver: Yeah, you mentioned Apple. All-time high. That’s just been churning higher for the last several weeks. Is it the John Ternus effect, or is it the safety stock effect?
I think it’s that people flock to Apple in times of uncertainty. So even during the rocky news over the past couple of weeks in the momentum sector, Apple has been trending higher, and people are anticipating decent sales with the 18, maybe some decent sales with the foldable, but also Siri, AI.
And the whole game in this is the platform. You could pick your AI client any which way you want. There are several to pick from, but you need to interact with a platform. That platform is in our pockets in this country. That is the iPhone.
JD Durkin: Amazing how the narrative shift on Apple has turned a lot more bullish. Remember how we were talking about Apple this time, after a lot of questions over their AI approach.
Before I let you go, anything big top of mind? Investopedia readers are coming to you to become more informed investors in this particular environment.
Caleb Silver: Yeah, let me quickly mention the other two making two-year highs. These are healthcare stocks, Biogen and Moderna. Moderna has just been crushing it since they got this good news on the mRNA cancer vaccine, and then Biogen with its Alzheimer’s drug having some decent results here.
What is top of mind for investors right now? They’re looking up things like yield curve control. What does that actually mean? What is the best way to invest when the Treasury is buying these long-dated bonds, trying to control the yield on the long term? They’re looking at that.
They’re also looking at rotation right now across sectors. Should they sector rotate? Can they tax-loss harvest like the billionaires do? I have a column out on our Substack today, Value Added, about the tricks that you and I could be using that billionaires are using to make our portfolios more efficient.
So as we get closer to the end of the year, a lot of people are looking into that tax-loss harvesting, ways to keep more money in their portfolio.
JD Durkin: Yeah, we’re talking a lot more about that as we get closer to the holiday season. Caleb Silver, EIC, Investopedia. My man, thank you for being here, as always. Nice to see you.
