MSFT got hit. AAPL pulled some gains forward ahead of their report. META is an absolute monster. And the setup in TSLA looks as good as anything after a muted reaction.
This is all great. I own most of these names still, and I’m content with them. I’ve taken profits in some - like META & NVDA, and I’ve added to others - like TSLA & GOOGL, recently. I think they all keep drifting higher. But, they don’t excite me.
US mega tech is no longer a conviction long for me.
There are simply better opportunities elsewhere.
The Mag 7 index completed a trend reversal almost two years ago. These stocks have already spent a good deal of time as the cycle leaders. They were the only game in town when the bull market began. NVDA is up 10x off its bear market lows. These seven stocks are all worth over $1T now… and they are the only ones. Berkshire and Taiwan Semi are close, and that’s it. Nothing else compares. The valuation gap is at such an extreme.
The point I’m trying to make is that the easy money has already been made. If you are buying these names today, you are so late to the party. You are probably better off going to an entirely different party. Everyone is tired. They are on their 5th drink. “Closing time” is about to play.
Meanwhile, there are other mega cap growth stocks that have never been so cheap and are just now completing textbook trend reversals. Say hello to the Mag 7 of China. This party just started:
These are the only other tech stocks that can compete with US tech stocks. They are the only ones big enough to afford it.
If the US mega-caps don’t win the AI battle, these are the companies they are likely to lose to.
However, no one wants them. They are “uninvestable.”
I literally can’t emphasize the following point enough.
This is a generational buying opportunity for Chinese equities. Wall Street has left the entire space for dead. Emerging Market fund managers dumped them all to overweight India years ago. There is so much dry powder on the sidelines.
2025 will be all about China.
Sentiment is at a bearish extreme…
Valuations are at historic lows…
And the primary trend is reversing after a steep and prolonged bear market…
This kind of setup doesn’t come around very often. We wait years for fat pitches like this.
So, I’m all in.
Here’s one of my favorite vehicles.
I’m so long Tencent $TCEHY right now. This is the Facebook of China.
More importantly, though, this is a fresh trend reversal. The path of least resistance literally just shifted higher. We had a textbook retest and buyers showed up to defend the breakout level. We’re above the prior cycle and pivot high VWAPs. It is go-time for Tencent.
$52 is the level. If you are a primary trend trader like me, this is exactly where you want it.
I have built my China portfolio the same way I built my US portfolio when the market bottomed a few years back. I’m heavy in all the mega caps as anchor positions.
Tencent is the biggest of them all. It is the largest company in China and the 18th largest in the world. At roughly $470B, it is larger than Exxon and Costco.
However, it’s not even close to META… and during the last cycle it was basically the same size.
Both stocks peaked in 2021 at about a $1T valuation, and then bottomed in late 2022 at about $250B.
Today, META is about 4x the size in terms of market cap. That’s the opportunity I’m talking about.
I’m betting on Tencent closing that gap in a big way this year.
A new bull market for China has arrived. Forget what you thought you knew about these stocks.
