Money, Credit, and Markets: Before You Buy the Dip, Read This.

April 13, 2025 - Update

My Investment Philosophy, Simplified

At the heart of my investment approach is a simple truth: money supply and access to credit are the lifeblood of the economy. When they’re flowing, businesses thrive, earnings grow, and markets rise. When they dry up, the economy slows, companies falter, and stock prices fall.

That’s why the first thing I look at is M2—the money supply. If M2 is growing at a healthy pace, it signals liquidity is available to support lending, investment, and expansion. But if it stalls or contracts, that’s often the first domino to fall. Credit tightens, interest rates rise, businesses cut back, earnings decline—and the market follows.

So while traditional investors focus on valuations or earnings or charts alone, I start with liquidity. It's the foundation. Without it, even the best businesses might struggle. Access to credit determines whether companies can grow, hire, invest, or even survive during downturns.

This isn't theory—it's how the modern economy works. Central banks manage monetary cycles by expanding or contracting M2, trying to balance growth with inflation. And we, as investors, live through these cycles. They're predictable in structure, even if the timing is messy and often disrupted by external shocks—wars, pandemics, political risk.

Now, layering on top of that:

• Businesses are wealth creators. When they grow, so does their value.

• Profitable, expanding companies are the best vehicles for long-term wealth creation.

• But those companies can only thrive in an environment where capital is accessible and affordable.

That's why monitoring M2 and credit access isn't just a side metric—it's the canary in the coal mine. It tells me when it's safe to be in stocks and when risk is rising beneath the surface. Yes, valuations matter—especially when they’re extreme—but deteriorating credit conditions are usually what kicks off real trouble.

Current Market Outlook

Right now, I remain constructive. The U.S. economy continues to show solid fundamentals:

• GDP growth is tracking at 2.6% for Q2 2025.

• Inflation is cooling—currently at 2.4% and trending lower.

• M2 is growing again—slowly, but importantly, it’s expanding rather than contracting.

• Credit access remains healthy, with financial conditions still supportive.

On top of that, we’re living through a technological leap driven by AI and robotics—a long-term growth engine in its own right.

Recent market fears were sparked by talk of historically high tariffs from the U.S. administration, which understandably spooked investors. But those tensions appear to be easing. A 90-day pause on tariffs was announced, along with hints of deals and exemptions. If this continues, we could see a sharp market rebound, especially in tech.

Interestingly, bond markets may have been the tipping point. When the 10-year Treasury yield jumped from 3.9% to 4.45% in a day, it signaled major investor concern. That move might have pressured the administration to recalibrate its message.

In my view, the peak of uncertainty may be behind us. The tough talk will likely continue—part of the negotiation playbook—but if we start seeing concrete trade agreements, markets may have already bottomed.

Still, there’s a big if in play.

Indexes: Market Snapshot

Take a look at the weekly chart for the Nasdaq—it’s been a wild ride lately. We’re seeing significant, unusual price movements, with all major moving averages currently sloping downward, signaling bearish momentum.

The good news? The market found support right where it mattered—at the 2022 highs and the August 2024 bottom.

Even though it's tempting to jump in here, I’m sticking to my strategy. I won’t initiate new short-term positions until the 20-day simple moving average begins trending up again. Discipline over impulse.

PORTFOLIOS

As I mentioned above, I am not adding anything. Yet, is time to update my “10X Best of ARKK" Portfolio. Below you can access the original post where I describe the experiment and my methodology.

Today, I ran my proprietary screen across all ARKK Fund holdings using the following criteria:

• Projected revenue growth >15% over the next 2 years

• At least $100M in annual revenue

• Market cap of $75M or higher

• Positive and improving ROA (Return on Assets)

• Evidence of reinvestment and expansion (Asset Growth)

• Margin improvement

• Reasonable or undervalued price based on fundamentals

Portfolio Changes

Staying In:
✅ GENI, SE, TOST, HOOD

Removed:
❌ XYZ, ADSK, GRMN, AMZN, INCY, AIR

New Additions:
➕ TSM, MELI, COIN, DKNG, NU, AMD

I've fully deployed the remaining cash in the portfolio to increase exposure to these new names. As of today, the portfolio is up over 30% since inception—outperforming the ARKK fund by 44%, which was the primary benchmark for testing my stock-picking methodology. While it's still early in the experiment (just six months in), the results so far show a strong edge over the benchmark.

Regarding the new additions, here’s a brief summary of the analysis I conducted for each stock using my proprietary Custom ChatGPT model. It reviews the latest analyst articles and earnings call transcripts, evaluating each company through an 11-point framework to determine its overall strength and investability.

AI-Powered Insights: What My CustomGPT Had to Say

🔧 Taiwan Semiconductors (TSM) — Score: 94/100
The gold standard in semiconductors. Critical to AI and high-performance computing, with unmatched tech and scale. A core holding for the digital age.

📦 MercadoLibre (MELI) — Score: 92.5/100
Latin America’s e-commerce and fintech titan. Exceptional growth, logistics infrastructure, and fintech penetration. A true long-term compounder—though macro risk is something to watch.

💰 Coinbase (COIN) — Score: 91/100
Top-tier crypto platform with regulatory leadership and strong brand trust. Cyclical volatility exists, but long-term fundamentals remain solid.

🔥 DraftKings (DKNG) — Score: 90.5/100
Explosive revenue and earnings growth, strong branding, and digital innovation make DKNG a standout in the online gaming arena.

🏦 Nu Holdings (NU) — Score: 90/100
Fintech disruptor with a visionary team. Unmatched customer growth and expanding margins—reshaping digital finance in underbanked LATAM.

💻 AMD — Score: 89.5/100
Powerful presence in AI and data centers. Not leading in every vertical, but a formidable, innovative challenger to Nvidia with a clear path to scale.

That’s all for this week. If you enjoy my content, please like or share!

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Important: This is not investment advice. Please consult a licensed financial advisor before making any investment decisions.