October Newsletter

Now We Are In the Home Stretch With A Concentrated Portfolio of MOSTLY Winners

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Dear Subscriber,

Happy Halloween! As yours truly bangs out the first of our 2-part October newsletter--I do point out for the newbies again that we do NOT publish our monthly newsletters on a set schedule. The reasons are many--but mostly it's 1) waiting for earnings season news 2) waiting to dissect our specific investment results or 3) we are waiting for actionable news and advice from our now 1000+ Transformity Research Alliance members who are our eyes and ears in the vertical secular growth markets we select to invest in (and ride the most powerful waves of 3-5 year secular growth) while adjust our "barbell" allocation of very high yield securities to take some of the volatility out of this late stage bull market and 11 year old business cycle expansion.

Tonight I am going to go "Macro + Strategy" and next week go tactical and add a few new 1/2 positions to ramp up what I expect to a rush to the end of the year with S&P 500 lagging hedge funds adding positions to our winners to try to keep what remaining money they under management (for the 450th time--with our >50% a year performance since 2013 vs. 5.1% return in hedge funds charging you 2% of assets under management and a performance fee they never earn--please Lord stay away from these weapons of mass net worth destruction).

Quick Recap--Where We Assume We Going into January 2020 Election Cycle

1) The Overall Market Has Gone Basically Nowhere Since Jan 2018 but MOVED >1500 points Up and Down

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2) Our Transformity MacroMarket Index > Has never dropped below 15.2 (<14.9 is a 4-6 month recession call) and forecasts 1.25% GDP Growth Q4 2019 . Our index has CORRECTLY Kept Us In Stocks, NOT PANICKING and STILL buying the Big Dips VERY profitably.

Latest Fed GDP NOW forecast: 1.5 percent — October 31, 2019

The initial GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2019 is 1.5 percent on October 31. The initial estimate of third-quarter real GDP growth released by the U.S. Bureau of Economic Analysis on October 30 was 1.9 percent, 0.2 percentage points above the final GDPNow model nowcast released on October 28. The New York Fed Q4 2019 Nowcast is around 1% GDP Growth 

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3) We Have Just Been Through our 3rd Manufacturing Recession Since 2012. This last one is bottoming with the Midwest Manufacturing pain exacerbated by Boeing's 737 MAX Fiasco that is OVER 1st Quarter 2020.
4) To Break Out of 3000 Ceiling We Need a DURABLE Trade War Conclusion and Not Just a Photo Opp Truce
5) With the Fed Out of the Way and the Overall Market at 19 Times earnings, Secular Growth Outperforms Risk-Off Utilities and REITS
6) Relative to the Rest of The World the USA Economy Is Terrific (and just think if we only could get this Goddamn Trade War Settled! OY!)
7) The Stock Market Is SCARED TO DEATH Liz Warren But She is TOO LEFT WING. Even IF She Got Elected She Would Never Get Her Wealth Tax & FREE EVERYTHING Agenda Passed
8) It is now time to add 5G chips and infrastructure to our portfolio--stay tuned
9) It is time to add the Apple 2020 Transformation and its ecosystem
10) We are finalizing on 4-5 additional secular growth sectors with stocks at growth at-a-reasonable prices

Our Current Long Growth Positions: 2.2 X Outperformance of S&P 500
We have updated buy under and target prices. NOTE: IF Bloom Energy (BE) can't rally on 2 million Californians without power in their biggest market and a decade of power outages to come, they are hopeless. Lets take the loss at $3 and perhaps buy a call option on a leveraged buyout offer. They need a whole new sales and marketing team to start selling Bloom Energy Servers to California businesses and high end homes that ALL have buried natural lines to their premises.

Will update Xilinx next week after investor day--they ARE getting hammered on their Huawei exposure--it now is a GREAT value IF some resolution with Huawei comes with the "first phase" trade agreement.
10-Month 2019 Transformity PRO Performance (Double Listing means 2X Weight)

Position YTD YTD Growth + Div Date Sold Buy Under Target
AMD 81.00% $35.00 $45.00
AMD 63.00% 30-May
Nvidia 52.50% $160.00 $225.00
Nvidia 23.50% 30-May
Chegg 11.79% SELL STOP $30 $40.00 $55.00
BE-Bloom Energy -70.00% SELL STOP $3 $12.00 $25.00
Xilinx (XLNX) 7.70% $90.00 $140.00
Cloudera $7.50 Call Options 129.50% $1.74 in/$4 sold
Cloudera $7.50 CLDR Equity 45.00% $6.00 $12.00
S&P 500 21.50%
TR Growth Stocks 43.00% 2.1X Outperformance

$10k A Month Club Investment Income Club
We are breaking out our $10k a Month Income Club Portfolio into its own new stand alone newsletter starting in November. Your Transformity Investing PRO subscription will include that newsletter until your renewal--then they will be separate subscriptions. The reason for breaking into two newsletters is simple--we are expanding the $10k Income Club into a full 18-24 position portfolio and a whole lot of other goodies. As I explained, this newsletter will be focused on what guys like ME and my twin brother Brian are most interested in:

  1. Preservation of Hard Earned Wealth

  2. $10K+ a month of cash money income per $800,000 of investable capital to keep affording our excessive lifestyles

  3. Hedging Portfolio Value with Interest Rate Volatility hedges

Transformity Investor PRO will continue to attempt to keep our >30% annual GROWTH returns and double the size of your risk GROWTH portfolio every 2.5 years. We will get the $10k a Month Club newsletter out to you mid-November.

Cheers from not-so-spooky Scottsdale!

Toby

Tobin Smith