Tuttle Ventures Newsletter

Freedom Leveraged: Patent Velocity

Darin Tuttle — Mon, 05 Jan 2026 00:09:34 GMT

Welcome to +34 new followers over the last 90 days and +17 Substack authors who recommend the newsletter.

For newcomers, I focus on unique investment ideas supported by novel research.

Discover more in our subscriber archive with over +150 newsletters.

Legal Disclaimer: These are solely my own personal opinions, not investment guidance.

Top of Mind:

All.Space (https://www.all.space/) is a satellite communications company specializing in advanced multi-link, multi orbit terminals that connect simultaneously to satellites across GEO, MEO and LEO orbits for resilient jam-resistant communications.

It’s essentially a Wi‑Fi router for space, blending multiple satellite networks so the connection stays up even if one link is disrupted.

In April, the FCC moved to revisit the decades‑old satellite spectrum‑sharing rules and opened 600 MHz of spectrum for commercial use, marking a major modernization of U.S. space‑communications policy.

Photo of April 28 FCC Open Meeting, by Jericho Casper

All‑Space’s terminal unlocks 500 MHz of that spectrum and jumps between orbits in milliseconds, creating a connection that’s almost impossible to break.

Over the next five years, this kind of multi‑orbit resilience will be continue to be a strategic geopolitical advantage.

Space is becoming more competitive and the systems that can stay connected are the ones that will define the next era of infrastructure and defense.

This is one company to keep an eye on.

Freedom Leveraged Series

As a reminder from last week, we are going back to our big idea of 2026: Freedom Leveraged.

Freedom Leveraged is the belief that liberty powers prosperity and strengthens national resilience.

At the core of Freedom Leveraged is a four-part investment framework featuring:

Patent Velocity
New Business Formation
Capital Flows
Regulatory Friction

Patent Velocity

This week is Patent Velocity.

Patent Velocity is the idea that the pace and density of patent activity can reveal early investment signals long before revenues or market share show up.

The idea that patents can serve as an early-stage investment signal is not new.

O’Shaughnessy Ventures calls patents “breadcrumbs” that reveal where talent, capital, and long‑term competitive advantage are accumulating long before revenues show up.

Investors should pay attention.

To put this into practice, I rely on tools like:

The Lens (https://www.lens.org/)
A free global patent search and analytics platform for exploring filing trends and citation data.

Patentscope (https://www.wipo.int/en/web/patentscope)
Full‑text access and patent family data, useful for comparing filing density across jurisdictions.

Used well, they turn raw IP filings into actionable insight.

Ok Darin, this is all great … but can you give me a specific example?

A Concrete Example: Fusion Innovation

The Lens’ new Innovation Landscapes prototype transforms global R&D into dynamic maps.

One standout example is the Nuclear Fusion landscape.

You can check it out for yourself here:

(https://link.lens.org/0nh0TwEDIB)

The map makes one thing obvious: fusion innovation isn’t a single race. It’s a set of distinct scientific clusters: physics, biology, materials science each generating its own momentum and highly cited patents.

From this, you can quickly see which scientific approaches are gaining traction and which institutions are driving the breakthroughs.

Additional charts reveal who originates the most influential patents and where research funding is concentrated.

A few signals stand out:

Max Planck Society leads Europe in highly cited fusion patents, making it a key node for anyone exploring fusion‑related investments.
China’s National Natural Science Foundation and the U.S. Department of Energy dominate public R&D funding, with Europe and Japan close behind which is a pattern consistent with today’s multipolar innovation landscape.

For investors, even under multipolar uncertainty we can see that the U.S. continues to be the leader in Freedom Leveraged when it comes to nuclear fusion.

This is why the U.S. continues to be the primary place where investors feel comfortable investing.

Ok Darin this is cool, but why should I care?

Bottom Line: Patent Velocity turns innovation into something measurable. Tools like The Lens and Patentscope make it possible for someone who is new to a frontier investment theme to see who is building what, where momentum is forming, and which institutions are quietly shaping the frontier.

If you want to invest ahead of the curve, start exploring a Lens’ landscape that aligns with your thesis.

Freedom creates the space for innovation and Patent Velocity shows you where that innovation is taking root.

Best,

Darin Tuttle, CFA

This information is for educational purposes and is not intended to provide, and should not be relied upon for, accounting, legal, tax, insurance, or investment advice. This does not constitute an offer to provide any services, nor a solicitation to purchase securities. The contents are not intended to be advice tailored to any particular person or situation. We believe the information provided is accurate and reliable, but do not warrant it as to completeness or accuracy. This information may include opinions or forecasts, including investment strategies and economic and market conditions; however, there is no guarantee that such opinions or forecasts will prove to be correct, and they also may change without notice. We encourage you to speak with a qualified professional regarding your scenario and the then-current applicable laws and rules.

Freedom Leveraged: How Individual Liberties Enhance National Security

Darin Tuttle — Sat, 27 Dec 2025 05:00:55 GMT

Welcome back to version 2.0 of the Tuttle Ventures Newsletter!

I’m grateful to the 5,240+ followers who’ve stayed and the 17+ Substack authors who still recommend this newsletter despite the quiet stretch.

For newcomers, I focus on unique investment ideas supported by novel research.

From SpaceX to overlooked market niches, explore our subscriber archive with more than 150+ newsletters.

2025 has been a year of tremendous change for me personally.

(Closing Tuttle Ventures, starting a new job, getting divorced, and losing +45 pounds)

If you’re curious about that journey, you can read more here:

From “I quit” to “What’s next?” – The Power of Not Giving Up

In 2026, as I resume consistent writing, I plan to share well‑researched geopolitical and investment insights that matter to you as an investor.

Let’s talk about the big idea shaping my investment framework going into 2026 Freedom Leveraged.

***Legal Disclaimer***

These are solely my personal opinions, not investment guidance, and the newsletter will continue to be free for the foreseeable future.

Newsletter Rundown:

Freedom Leveraged Defined
Why Should We Care?
Freedom as a Growth Multiplier
Unit Economics of Individual Liberties
Final Word

Freedom Leveraged Defined

Freedom Leveraged is the concept that individual liberties are not a cost to national security but rather an exponential engine that powers growth.

That’s the most basic definition I can come up with.

When people are free to question, create, explore, and compete, the nation becomes stronger, not weaker.

Scholars like Michael Doyle and Bruce Russett have long argued that democracies possess structural advantages: legitimacy, cooperation, and more durable alliances but they have never framed individual freedoms as a form of leverage.

Source: Normative and Structural Causes of Democratic Peace, 1946-1986

A real-world example of the Freedom Leveraged concept is in physics.

Stay with me for a second…

Free‑range electrons generate energy through constant movement and collisions, creating self‑reinforcing cascades.

Free electrons create multiplicative effects, not linear ones.

Source: Motion of a Free Particle – Quantum Mechanics

When electrons are free to move, energy is limitless and each interaction increases the probability of more interactions.

On the other hand, controlled electrons stay stable but stagnant.

Since the electrons are valence bounded within a defined energy state, they are unable to trigger the chain reactions that lead to exponential outcomes.

Source: Electron energy plotted as a function of wave-vector k

If the physics metaphor feels off, just know that freedom boosts the rate of productive collisions, and those collisions can compound into innovation that closed systems cannot replicate.

Bottom line: Freedom isn’t just a value — it’s a multiplier, and multipliers are what make exponential growth possible.

As is the case with all leverage, this works in both directions.

Freedom magnifies volatility in the short term, yet it produces far greater stability and ingenuity over time than any controlled system can match.

Tapping into this freedom for exponential growth is the reason why the U.S. is still the best place to invest.

Why Should We Care?

For U.S. investors navigating an elevated‑valuation environment (like today’s S&P 500 index above a 22 Price to Earnings Ratio) this is especially relevant.

According to LPL financial, when the S&P 500’s trailing P/E ratio is elevated, subsequent 10‑year returns tend to be lower.

Source: Do Good Times Make Bad Times? P/E Ratios and Forward Returns

The correlation between 10-year returns and valuations is compelling, but it does not mean stocks are set up for lackluster performance every month, quarter, and year for the next decade.

Instead of treating U.S. valuations as a ceiling, think of it as a premium on a system with structurally higher innovation throughput.

That is why it is critical for investors to double down on the individual freedoms within the U.S. to grow earnings up to a sustainable level.

Freedom as a Growth Multiplier

Some would argue, ok, valuations are high, just invest internationally then.

When evaluating international opportunities, the question isn’t just valuation; it’s whether the underlying system allows enough freedom for compounding innovation to occur.

As I said before, in mathematical terms, controlled systems grow linearly—steady but limited—while free societies grow exponentially, because individual decisions increase the system’s overall rate of innovation.

Freedom raises the growth rate r, and over time, exponential curves always outperform linear ones.

For example, think of innovation capacity as a function N(t) over time.

In a controlled system (like an authoritarian model), growth behaves more like linear accumulation:

Where:

N0 represents the initial value where the state directs and allocates resources
k is the constant rate of growth where milestones of innovation are predefined and planned
t is time, which is capped by central decision‑maker’s timeline and constraints

In an open system, freedom acts as a multiplier, a form of leverage:

Where:

N0 represents the same initial value of resources
e^ = compounding effect of millions of independent decisions rather than a central decision maker
r is the growth rate of unplanned innovation
t is time uncapped across multiple timelines

Freedom increases r relative to k because:

More ideas enter the system
More experiments run in parallel
More failures occur early (volatility), which accelerates learning
More competition drives iteration

This is exactly how startups out‑innovate state‑run enterprises.

Unit Economics of Individual Liberties

In 2026, I’ll be tracking freedom‑driven growth indicators like new business formation, patent velocity, capital flows, and regulatory friction.

I’m still refining the framework, but I just wanted to kick things off here to share that I’ve been thinking about individual liberties the way venture investors think about unit economics.

I haven’t fully cracked the model yet, but the goal is to identify which liberties deliver the highest marginal return on innovation and long‑term growth.

Final Word

The more I study markets, the more convinced I am that individual liberties function like leverage: they amplify volatility in the short term but create far greater resilience, innovation, and long‑term returns.

As investors, our job is to allocate capital toward systems where compounding is structurally possible, not artificially constrained.

That’s why the U.S., despite its noise and imperfections, remains the most fertile ground for innovation‑driven growth.

In the months ahead, I’ll be digging deeper into how freedom shapes earnings power, sector leadership, and long‑run investment outcomes.

If you’ve made it this far, thank you and I’m excited to build this next chapter with you.

Best,

Darin Tuttle, CFA

Out of Missiles, Switching to Guns

Darin Tuttle — Mon, 16 Dec 2024 00:54:21 GMT

The transition to Tuttle Ventures Newsletter 2.0 is in full swing.

I’ll be taking myself far less seriously this time.

My goal is simply to write because I feel compelled to get ideas on paper and share what’s been on my mind.

The weekend began with some father-son golf, followed by catching up on the latest in volatility research.

Long Tail Alpha's has a new paper out: "Relationship Between Trend-Following and Options” by Vineer Bhansali.

The paper explores how systematic timing rules, like those used in trend-following, can enhance a purely options-based strategy.

I've admired Vineer's work for its practical approach—more like a cookbook than a textbook.

Vineer argues that incorporating trend-following techniques may improve the performance and risk management of options strategies, offering a systematic approach to navigating market volatility and directional uncertainty.

Intuitively it makes sense…

Emanuel Derman emphasizes that a volatility strategy is only as good as its ability to model the volatility surface across space and time accurately.

Matching the volatility surface with a precise trend-following strategy may be a powerful tool for options traders.

The Importance of Signal Timing Length

One of the key insights from the paper is that signal timing matters—and it matters a lot.

For trend-following strategies to mimic the behavior of options, their exposures must systematically adjust, increasing or decreasing based on the signals. The length of the signal—whether short, medium, or long-term—can drastically impact performance and what market behavior the strategy captures.

Shorter Signals and Zero Days-to-Expiry (0DTE) Options

To illustrate, consider zero days-to-expiry (0DTE) options. With these ultra-short-term options, traders have only a small runway to align implied volatility (expectations of future movement) with realized volatility (what actually happens).

Everything is compressed into a single trading day.

This reminds me of a scene from Top Gun.

In the heat of a dogfight, Maverick can’t lock onto the enemy because the target is too close. Instead of relying on long-range missiles, he switches to guns—a more precise tool for short-range combat.

The same principle applies to short-term trend-following strategies.
If you need to “zero in” on realized volatility in a tight timeframe, you switch to a more responsive tool—like short-dated options or shorter signal timing lengths.

As traders have turned to shorter-dated options to capitalize on realized volatility given the relative underperformance of implied volatility, it has opened systematic trends that show robust risk premia out of sample.

Market Models and Trend Signals

The paper explores three simple market models that can drive significant price movements:

Constant positive drift: A steady upward trend.
Positive autocorrelation: Recent returns tend to persist in the short term.
Time-varying drift: Trends that change over time.

Vineer examines three trend signals of varying lengths: a short-term 10-day moving average (MA), a medium-term 50-day MA, and a long-term 200-day MA.

The trend positions are binary, taking values of +1 or -1 depending on whether the closing price is above or below the moving average.

Here is the breakdown exhibit of the simulated portfolio performance from the paper.

The paper found that longer-term signals tend to profit from drift, while shorter-term signals capitalize on positive autocorrelation (middle column).

In simple terms, if an asset went up today, it’s more likely to go up tomorrow; if it went down today, it’s more likely to go down tomorrow.

This short-term persistence gives traders an opportunity to exploit trends quickly and systematically.

In today’s market, it seems like traders are focusing more on those quick moves, especially with options that expire in a day or less.

Short-term signals may feel like a sprint, but in today’s market, they’re proving to be one of the sharpest tools for navigating volatility and capitalizing on quick trends.

Read the full paper here.

Thank you for reading—your time and attention are greatly appreciated, and I look forward to sharing more insights with you soon.

Best,

Darin Tuttle, CFA

A New Chapter: Exciting Changes Ahead

Darin Tuttle — Sat, 16 Nov 2024 19:41:18 GMT

When I first started the Tuttle Ventures Newsletter, my vision was to share unique investment ideas backed by solid research, helping readers become more effective investors.

Now, I’m excited to share that I’ve joined Corient as an Associate Wealth Strategist.

This role provides the incredible opportunity to work with some of America’s wealthiest families, with the support of a world-class team.

This decision wasn’t easy, but was made to benefit existing clients with greater resources and expertise than we could offer alone at Tuttle Ventures.

To my readers: thank you for subscribing and being part of this journey.

Over the past three years, we’ve grown to over 4,000+ subscribers, reaching people in all 50 states and 98 countries.

I’ve had the amazing experience of connecting with many of you offline and in the replies. Your support and engagement have made this journey incredibly rewarding both personally and professionally.

A quote from President Thomas S. Monson seems fitting: "The future is as bright as your faith." This encourages me to look ahead with optimism as I embrace new opportunities, knowing that faith and commitment can lead to exciting possibilities.

Going forward, the newsletter in its current form isn’t compliance-approved due to conflicts of interest with my new role.

This means that under new guidelines, I may or may not be able to comment on individual securities, make TV appearances, discuss specific investment strategies, or offer paid subscriptions.

There may also be further restrictions that I am not aware of at this time.

This transition is a work in progress.

That being the case, I have decided to pause paid subscriptions for the time being while I gain more clarity on approved outside business activities.

My goal is to stay fully compliant while continuing to share my personal views on topics I find interesting here on Substack.

While the newsletter will evolve under new guidelines, I’m grateful for the community we’ve built together.

Thank you for being part of this experience, and here’s to new beginnings, continued learning, and an exciting future ahead.

Best,

Darin Tuttle, CFA

Economic Offense: The Vital Role of Tariffs in Protecting America's Interests

Darin Tuttle — Mon, 02 Sep 2024 01:44:36 GMT

As the U.S. elections loom on the horizon, the nation finds itself in the throes of deep political division.

It’s become increasingly difficult to identify issues that garner bipartisan support.

I was surprised to find one thing both sides actually agree on: tariffs.

In May 2024, the Biden administration raised tariffs on a range of products, including steel, aluminum, medical equipment, electric vehicles, lithium-ion batteries, and solar cells.

Understanding the role of tariffs is crucial for investors because tariffs can significantly impact market dynamics, corporate profitability, and global supply chains.

This move underscores a broader strategic realignment, reflecting an understanding that economic policy is inextricably linked to national security.

Tariffs as a Tool for National Security and Geopolitical Strategy

Robert Lighthizer, author of No Trade is Free and former U.S. Trade Representative, has significantly influenced the current policy stance on tariffs.

Despite criticism from mainstream economists and media, Lighthizer’s views are increasingly shaping economic policy.

The tariffs on Chinese goods represent a major step by the U.S. to protect its economic sovereignty and workforce from unfair trade practices.

This has come at the right time and appears to be effective.

According to the White House, the Section 301 tariffs have put pressure on China’s economy, reduced its share of U.S. imports from 21.6% in 2017 to 13.7% in 2023, and discouraged foreign direct investment in China aimed at exporting to the U.S. (Source).

Additionally, countries like Mexico and Vietnam have benefited from the shift in U.S. import patterns.

One former Chinese official estimated the impact to China’s economy could be as much as 0.5 percent of GDP, or $308 billion over five years.

In an era of heightened global instability, reducing economic dependency on adversarial nations such as China is not merely a matter of economic prudence but a national security imperative.

Corporate America’s Strategic Realignment

The maintenance and expansion of these tariffs by the Biden administration signal to both foreign and domestic actors that the U.S. economic relationship with China is changing and could apply to others as well.

Organizations like the IMF, WTO, and World Bank often prioritize global interests over those of the American people, as seen when the WTO ruled against U.S. tariffs on China (Source).

Ultimately we see this shift is not an isolated incident but rather a calculated move within a broader geopolitical strategy that seeks to reassert American leadership and ensure long-term economic resilience.

This policy shift has prompted a significant response from American corporations, many of which are now actively relocating their production facilities out of China.

This trend is not merely reactive but reflects a strategic recalibration of global supply chains.

Apple, for instance, has begun to diversify its manufacturing footprint by moving iPhone production to India and MacBook production to Vietnam. Similarly, Dell has announced plans to phase out the use of Chinese microchips, while Hewlett Packard is in the process of divesting its Chinese IT equipment enterprises.

These corporate maneuvers are emblematic of a broader trend: the decoupling of American economic interests from Chinese manufacturing.

By reducing their reliance on China, these companies are mitigating the risks associated with geopolitical tensions and ensuring greater supply chain resilience.

This realignment also reflects a growing awareness that the American business community must adapt to a new global reality where economic relations with China are increasingly fraught with strategic implications back at home.

The Economic Disadvantages Confronting U.S. Companies

Despite these efforts, there is still more work to be done.

While China makes up nearly half of the U.S. trade deficient, they are only part of the story.

U.S. companies continue to face significant competitive disadvantages, particularly when compared to their foreign counterparts who exploit loopholes in our global trade system.

A U.S. company exporting to Europe, for instance, is subjected to both U.S. corporate income taxes and the local Value-Added Tax (VAT) on its sales in Europe. This dual taxation places American products at a distinct disadvantage in the global marketplace.

Moreover, certain foreign entities have devised strategies to circumvent U.S. tariffs altogether. The Mexican company Baja Fulfillment, for instance, imports millions of dollars’ worth of Chinese goods, loads them into bonded trucks in Los Angeles, and transports them duty-free to Mexico. These products technically never enter the U.S. customs area and thus evade U.S. tariffs entirely. From their base in Mexico, these goods are then sold directly to U.S. consumers, again duty-free, undercutting American businesses that comply with U.S. tariff regulations.

Similarly, Chinese fast-fashion giant Shein has built its business model around exploiting the de minimis provision, which allows low-value shipments under $800 to enter the U.S. tariff-free. This loophole has enabled Shein to capture nearly 30 percent of the U.S. fast-fashion market, further illustrating the challenges faced by American companies trying to compete on an uneven playing field.

Conclusion

In an increasingly polarized political environment, the emerging bipartisan support for tariffs highlights their strategic importance in safeguarding U.S. national security and economic sovereignty. Tariffs are no longer viewed merely as protectionist measures but as critical tools in a broader geopolitical strategy aimed at reasserting American leadership on the global stage.

As U.S. companies realign their supply chains and diversify away from China, the role of tariffs in shaping this new economic landscape cannot be overstated. However, for these policies to be fully effective, it is imperative that the U.S. addresses the competitive disadvantages its companies face, particularly in the face of foreign entities exploiting loopholes to circumvent tariffs. Only through a comprehensive and strategic approach can the United States ensure that its economic and national security interests are protected in an increasingly complex global environment.

Final Word

Thank you for reading and I am grateful and humbled to be able to learn, grow, and invest alongside you at Tuttle Ventures.

Vision, courage, and patience leads to successful investing.

Don’t forget to follow Tuttle Ventures on Twitter, LinkedIn, or Instagram.

Check out the website or some other work here.

Important Disclosures Here

Best,

Darin Tuttle, CFA

This is not investment advice. Do your own due diligence. Past performance is no guarantee of future results. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. Investors are encouraged to perform due diligence, consider their risk tolerance, investment goals, and consult with financial advisors before making investment decisions. I make no representation, warranty or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information contained in this report. Any assumptions, opinions and estimates expressed in this report constitute my judgment as of the date thereof and is subject to change without notice. Any projections contained in the report are based on a number of assumptions as to market conditions. There is no guarantee that projected outcomes will be achieved.

Neither the publisher nor any of its affiliates accepts any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of the information contained herein.

Unless there is a signed Investment Management or Financial Planning Agreement by both parties, Tuttle Ventures is not acting as your financial advisor or in any fiduciary capacity.

Beyond a Shadow of Doubt

Darin Tuttle — Sat, 27 Jul 2024 19:30:49 GMT

Welcome to +13 new followers over the last 30 days and +17 Substack authors who recommend our newsletter.

For newcomers, we focus on unique investment ideas supported by novel research.

Discover more in our subscriber archive with over +150 newsletters.

Subscribe now

Sometimes, I get a call or email from a worried investor who's been online or glued to the news. They've seen a story that convinced them the market is about to crash for good.

As an advisor to other financial advisors, you would be surprised to learn this happens to the best of them, even other advisors.

It's a reminder of how powerful the media is in spreading fear, regardless of the actual probability of an event happening.

The truth is, Bear markets are as common as dirt.

On average, they happen about once every six years.

So, is now the time to sell out of the market and run for the hills?

We don’t think so. Here are two reasons why:

Strong Economic Indicators
Sufficient liquidity reserves

Strong Economic Indicators

Key indicators like employment rates, consumer spending, and corporate earnings are still robust.

The Fed's preferred measure of inflation (Core PCE) held steady at 2.6% in June which is right on target.

Frequent readers should know I also like using the Adjusted National Financial Conditions Index.

The Adjusted National Financial Conditions Index (ANFCI) is a comprehensive weekly update of 105 U.S. financial conditions across three categories of financial indicators (risk, credit, and leverage).

We prefer this measure due to adjustments for inflation.

The weekly data goes back to the 1970’s, includes “shadow banking” metrics, and is a key input in our investment outlook.

Positive values have historically been associated with tighter-than-average financial conditions. (Bad for risk assets)

Negative values have historically been associated with looser-than-average financial conditions. (Good for risk assets)

We are currently in a negative position, which is good for risk assets.

In fact, 99 of the 105 indicators are looser than the long term average.

Don’t believe the hype of restrictive monetary policy, we still are in a Goldilocks period.

Sufficient Liquidity Reserves

Since last year, we have seen a sustained and methodical release of funds from reverse repo, serving as an intraday relief valve for liquidity into the financial system.

We have looked at reverse repo levels to measure temporary general net liquidity conditions.

When you reduce RRP, you now have treasuries free and clear of the overnight sweep.

Banks get to extend duration by purchasing treasuries which are then used as collateral to take risk beyond one day.

The free treasuries are also leveraged into risk assets and held for longer terms in money market fund deposits.

It appears there has been a leveling off around in the range of $400B - $500B.

This leveling off was against the previous trend and has held steady since mid April.

We believe this could mean two things:

The Federal Reserve is confident in favorable financial conditions and is willing to maintain slightly tighter liquidity as a result. Powell understands the importance of reverse repo in daily market activity. We believe it's possible that Powell wants to preserve the final $400B - $500B to be held back to be prepared if/when an unexpected market event arises. This creates an instant safety net.
The Treasury General Account (TGA) has enough funds to support current government operations. If RRP remains stable, the TGA becomes the next release valve in measuring net intraday liquidity. This is the most logical reason, given the percent makeup of liabilities on the balance sheet.

In summary, despite the fear-driven narratives, strong economic indicators and sufficient liquidity reserves suggest the market is in a stable condition. It's crucial to look beyond the headlines and focus on the underlying data, which points to a favorable environment for risk assets.

Final Word

Thank you for reading and I am grateful and humbled to be able to learn, grow, and invest alongside you at Tuttle Ventures.

Vision, courage, and patience leads to successful investing.

Don’t forget to follow Tuttle Ventures on Twitter, LinkedIn, or Instagram.

Check out the website or some other work here.

Important Disclosures Here

Best,

Darin Tuttle, CFA

Unless there is a signed Investment Management or Financial Planning Agreement by both parties, Tuttle Ventures is not acting as your financial advisor or in any fiduciary capacity.

From Tax Tables to Startup Success

Darin Tuttle — Sun, 21 Apr 2024 00:17:24 GMT

Welcome to +70 new subscribers over the last 30 days and 17 Substack authors who recommend this newsletter.

We focus on unique investment ideas supported by interesting research.

Subscribe now

Today’s newsletter is sponsored by Notice.co

At Tuttle Ventures, we use Notice to monitor our private market portfolio, research new opportunities, and access liquidity through the premier private market network.

Create a free portfolio

Newsletter rundown:

U.S. Federal Tax Deadline
How You Can Use Retirement Funds to Buy a Business
How it Works
Final Word

U.S. Federal Tax Deadline

The federal tax code comprises 74,608 pages. If you can't find a page tailored to your needs, you're not utilizing it effectively.

This is why hiring a financial advisor is important for high earning professionals.

Any surprises on April 15th could end up costing you thousands of dollars.

Based on reader feedback, today’s newsletter will cover a real life case study to help you apply the tax code the right way and make informed investment decisions.

How You Can Use Retirement Funds to Buy a Business

Did you know your 401(k) can be used before retirement to invest in a start up—tax and penalty free?

Invest in yourself, not Wall Street.

This might appeal to investors who:

Have large retirement balances ($250,000+)
Interested in running a start up business
Interested in owning a franchise
Considering a career change

The ROBS (Rollover Business Start-Up) solution is an IRS approved structure that allows investors to use retirement funds to invest in a new business or franchise that they will personally be involved in. IRS Source

It is an alternative form of business financing that can be used without having to borrow the cash to start, acquire, or grow a business. It is one way that a retirement plan holder can have personal involvement in a business with their retirement funds without triggering the IRS prohibited transaction rules.

The second way is a Solo 401(k) non-recourse loan.

The Solo 401(k) loan allows an investor to borrow $50,000 or 50% of your account value, whichever is less.

Both options have specific rules behind the type of investment, the transaction itself, and the structure of the business.

Personally we find that ROBS maybe the best solution for retirement fund investors who want to:

Invest in themselves
Earn a salary and be involved in a start-up business
Diversify their investments
Save money by not taking early taxable distributions

This type of structure does not come without risks.

If done incorrectly, you may unknowingly create a taxable distribution that is subject to a 100% penalty and may disqualify your retirement account.

This is why its important to work with a professional who drafts a favorable determination letter as a way to assure their clients the IRS approves the ROBS arrangement.

How it Works

Establish a C-Corp
Roll Over Funds
Start Earning a Salary
Draft a Determination Letter

Establish a C-Corp

The ROBS Solution requires you to establish a C corporation in the state you plan to operate the business. “C corporation” is the business term for this type of entity. The C corporation will pay an annual tax and is given an exemption from the IRS retirement prohibited transaction rules.

Roll Over Funds

Next you’ll have to roll over your funds from an old IRA or 401(k) plan to purchase stock in your new 401(k) plan in the name of the start-up C corporation.

Typically a minimum of $50,000 or more is needed to rollover and fund your new business.

It is at this time that the IRS requires an independent valuation of the new company’s stock.

After the independent valuation, the C corporation can use the rollover proceeds from the sale of stock to purchase assets for your new business.

Start Earning a Salary

According to IRS rules, you must be an employee of your new business and provide a legitimate service.

You cannot earn compensation income before the company actively engages in a trade or business.

Your compensation must be derived from your business operations.

In addition, the compensation you earn from your business must be “reasonable.”

Draft a Determination Letter

In the past, the IRS has voiced concerns that the ROBS structure can be abused.

The best way to avoid any tax penalties is to get the green light by having a professional draft a determination letter.

After submitting your application for a determination letter, you will receive an acknowledgement notice, which means the IRS has received your application. After it has been assigned, an employee plans specialist will contact you and provide all the necessary information to ensure your investment is legitimate.

Final Word

Thank you for reading and I am grateful and humbled to be able to learn, grow, and invest alongside you at Tuttle Ventures.

Vision, courage, and patience leads to successful investing.

Don’t forget to follow Tuttle Ventures on Twitter, LinkedIn, or Instagram.

Check out the website or some other work here.

Important Disclosures Here

Best,

Darin Tuttle, CFA

Unless there is a signed Investment Management or Financial Planning Agreement by both parties, Tuttle Ventures is not acting as your financial advisor or in any fiduciary capacity.

Discover Your Financial Couple Type

Darin Tuttle — Fri, 12 Apr 2024 19:03:02 GMT

Are you being financially faithful?

While every couple is unique — who you choose to save and invest with matters.

A new survey finds that 64% of couples admit to being financially incompatible with their partners.

Research has also shown that if couples can successful bridge their money differences the marriage benefits as well.

That’s where a financial advisor comes in….

At Tuttle Ventures, we've identified three core financial couple types, each with their own unique dynamics.

Find out your financial couple type by completing the survey here:

Find out My Financial Couple Type

The Three Financial Couple Types

The 2 Spenders
The 2 Savers
The Balanced Couple – The Spender and Saver

Understanding the dynamics of each is crucial to navigate the personal behavioral aspects of financial planning, investments, and goal setting.

Let’s dive into each type…

1. The 2 Spenders

Traits: We have fun here. After all, what good is money if you don’t have the chance to enjoy it? Both partners in this coupling tend to spend money more liberally, with big dreams and aspirations. Some build empires, while others showcase what wealth can do for their life. Often they choose to spend and deal with the consequences later.

Their motto? “Work hard, play hard.”

Advisor’s Strategy:

I set the bar high and hold the couple accountable to their goals. Together we get a sustainable financial pace that fits their lifestyle and keeps things fun.
I show the long term tradeoffs in financial decisions, showing short and long term impact of impulsive decisions. We set up a way to enjoy working towards those short and long term goals that fall in place with the couples values.
We look to automate as much of daily cashflow as possible.
The timing of meetings is not well defined, but we do set strict terms on when a financial advisor needs to be “in the loop” to minimize the potential for long term regret such as large asset purchases, income changes and changes in tax domicile.

For a spenders couple, our financial flows model is geared to be flexible.

Separate spending account for each member of the couple are typically a larger % of overall income (e.g. 20-30%). We identify non-negotiables on commentary about the other members spending and bring everything back to the what they share in values.

As the financial advisor, I enjoy sharing the big wins with the spenders (and saving for the future along the way).

2. The 2 Savers

Traits: Both partners are cautious about spending and lean towards saving more. The beauty of this pair? There’s a world of potential to achieve all their financial dreams. The least common of couples (but the highest percentage of millionaires in the US). Feelings about money can be strong, reflecting past trauma or lack of education.

Advisor’s Strategy:

It’s essential to explain the concept of “enough” and tap into their natural discipline to frame stretch goals while keeping stability.
We encourage transparency to stop “stuffing under the mattress” and let their money go to work for them.
We look for balance by setting cash targets, investing based on well defined buckets, and “fun goals” so they don’t hold themselves back from their own growth and development by clinging to comfort.
We set date and dollar specific goals to avoid procrastination or feeling paralyzed with fear.
We set frequent discussions on finances typically 4 times a year to ensure alignment on mutual goals.

For a savers couple, the separate spending accounts in the budget outline are typically a small % of overall income (e.g. 10%) but solve many potential financial issues that could arise.

3. The Spender & Saver

Traits: Yin and Yang. This pair has one person who tends to spend without hesitation, while the other leans towards saving. The magic lies in their balance.

Advisor’s Strategy:

We have a no judgement zone. Everyone is on the same team and one type is not better than the other.
These are my favorite couples to work with because there is so much potential to reach ALL of their financial goals. We take the time in the early meetings to compliment the balance that each member brings to the couples finances. Just like with the savers, we explain the meaning of “enough” and tap into the couples natural discipline to create stretch goals.
Recognizing the strengths each partner brings to the table is vital.
Setting clear goals and the frequency of financial discussions ensures that both partners are on the same page.
It’s essential for the spender to identify specific, big-ticket goals, while the saver should be ready to compromise on a few, ensuring a harmonious financial journey.
As always, transparency and communication are the pillars to financial success.
Bucketing investment strategies often works for retirement distributions.

In the budget outline, we ask the spender to target a few big ticket goals over the next year that they have (Date and Dollar specific) we then seek for the saver to compromise on a few of those spends based on current or future planned resources.

Then we ask the saver to set a defined saving goal (date and dollar specific) we look for the spender to comprise and agree to save. After each goal, we add the phrase “so that…” so the goals are aligned on common values.

Over time, as the financial advisor we act as a guardrail for the couple to minimize long term regret. We focus on making the financial goals the primary tradeoff when conflicts arise.

The Separate Spending Account Philosophy:

Having separate spending accounts is an effective strategy I endorse for all these couple types. Why?

Autonomy: It gives each partner some financial freedom. They don’t have to explain or discuss every purchase with their other half.
Avoid Conflicts: Keeping discretionary spending separate minimizes potential money disputes.

By understanding and respecting each type, every couple can find a harmonious and efficient path to financial freedom. With the right guidance, any couple can navigate the financial waters smoothly, ensuring a secure and prosperous future.

Find out your financial couple type by completing the survey here:

Find out My Financial Couple Type

Final Word

Thank you for reading and I am grateful and humbled to be able to learn, grow, and invest alongside you at Tuttle Ventures.

Vision, courage, and patience leads to successful investing.

Don’t forget to follow Tuttle Ventures on Twitter, LinkedIn, or Instagram.

Check out the website or some other work here.

Important Disclosures Here

Best,

Darin Tuttle, CFA

Unless there is a signed Investment Management or Financial Planning Agreement by both parties, Tuttle Ventures is not acting as your financial advisor or in any fiduciary capacity.

🔔 Ringing the Nasdaq Opening Bell

Darin Tuttle — Tue, 09 Apr 2024 13:36:29 GMT

Exciting news!

IThis time tomorrow we will be ringing the opening bell for the Nasdaq stock exchange!

This is brought to you by the innovative National Security Index.

https://www.nationalsecurityindex.com/

Watch live with the link below:

Program Timing: 8:30AM – 9:45AM EST
Ceremony Livestream Link: https://www.nasdaq.com/marketsite/bell-ringing-ceremony

Final Word

Thank you for reading and I am grateful and humbled to be able to learn, grow, and invest alongside you at Tuttle Ventures.

Vision, courage, and patience leads to successful investing.

Don’t forget to follow Tuttle Ventures on Twitter, LinkedIn, or Instagram.

Check out the website or some other work here.

Important Disclosures Here

Best,

Darin Tuttle, CFA

Unless there is a signed Investment Management or Financial Planning Agreement by both parties, Tuttle Ventures is not acting as your financial advisor or in any fiduciary capacity.

Don’t Take No for an Answer Too Easily

Darin Tuttle — Sun, 07 Apr 2024 18:00:20 GMT

This newsletter is brought to you by Yoodli, which is a private real-time AI speaking coach — with stats to improve your performance.

Learn More

Newsletter Rundown:

A closer look at Teck Resources Ltd
What’s the probability of a copper resurgence?
What's the right value for TECK given favorable commodity conditions?
Is a single stock position better than diversified commodity exposure?
Final Word

A closer look at Teck Resources Ltd

Teck Resources Limited is a Canada-based mining company that operates in copper, zinc, steelmaking coal and energy segments.

We forecast the company as a strong investment over the next twelve months— due to increasing commodity prices, positive shareholder yield, and effective cash management.

We have a buy rating and a price target of $54.

Main risks include volatility of commodity prices, legal liabilities from asset sale, corporate governance concerns, and geopolitical uncertainties.

In Norman Keevil’s memoir, he referred to one of the key lessons in life: “Don’t take no for an answer too easily.”

Teck’s future — and the legacy of the Keevil family are turning a new chapter.

The company has announced an agreement to sell its entire interest in its steelmaking coal business, Elk Valley Resources (EVR), through a sale of a majority stake to Glencore for an implied enterprise value of $9B, and a sale of a minority stake to Nippon Steel Corporation.

Teck finally gave in to the Swiss environmental cartel.

The strategic decision did not come easy —it was ultimately made to optimize the company’s portfolio, reduce risk, and allocate capital to opportunities that better fit its long-term goals.

Rather than get into a debate about the merits of ESG investing— I’m much more focused how much shareholders could be rewarded with its upcoming payday.

Teck has a global presence, with customers in more than 70 countries, and a workforce that includes over 10,000 employees and contractors.

We find the resilience of the company has attractive potential for shareholder payouts ahead of earnings on April 25th, 2024.

What’s the probability of a copper resurgence?

Two leading indicators for increasing commodity prices are:

Demand-Supply Imbalance: When demand exceeds supply, it often leads to higher prices as suppliers struggle to meet consumer needs.

Economic Growth: Strong economic growth, particularly in developing countries, tends to increase demand for commodities, driving prices higher.

Teck’s asset sale places renewed attention to the future of copper prices.

Electrical uses of copper, including power transmission and generation, building wiring, telecommunication, and electronic products, account for about 75% of total copper use. Source

Due to its broad use, we like to use the price of copper as a signal of general economic conditions.

In a recent study published by The Journal of Commodity Markets, copper prices were reviewed across seven factors —inventory, supply, demand, the macroeconomy, finance, and geopolitics.

The results of the study showed that financial and geopolitical factors have played an important role in copper pricing in recent years. The long-run trend of copper prices is mainly determined by fundamental factors, while financial and geopolitical factors have a more direct impact on short-term fluctuations.

In 2023, global economic shifts, conflicts, and anti-globalization sentiments are poised to influence the global copper supply.

The Copper Development Association (CDA) released a new report to determine mineral criticality.

The analysis showed that copper now meets the USGS benchmark supply risk score of 0.40 and automatic inclusion on the U.S. Critical Minerals List.

Teck holds a competitive edge when it comes to supply of this critical resource.

Chile and Peru, together accounting for 35% of global supply, have been focal points for Teck's investments over the past four decades.

National Minerals Information Center

With the rise of the financialization of copper and other base metals, the copper price is no longer completely determined only by the fundamental supply–demand relationship.

Last month, copper cash price vs. LME 3-month price hit its most extreme level of contango in thirty years.

Contango refers to a situation in the futures market where the future price of a commodity is higher than the current spot price.

It implies an expectation of rising copper prices over time.

Past research suggests that copper spot and futures prices are highly correlated during strong contango. Source

Considering all these factors, we assume there is a high probability that copper prices will rise over the next twelve months and Teck will benefit.

What's the right value for TECK given favorable commodity conditions?

We start comparative valuations by examining both debt and equity.

Debt for the company trades in line with peers—recently rated investment grade bonds—5.4% 02/01/2043— trade with good volume at 6.1% YTW (yield to worst).

The Moody’s report mentions the excellent liquidity that allows the company to operate through commodity price fluctuations. They go on to mention the company’s cost competitive mines are capable of generating positive earnings and free cash flow at current and even lower copper prices.

At an interest coverage ratio of 67.8, we agree with Moody’s. The capacity to paydown interest debt 67x times over provides the company operational flexibility.

Regarding equity, we believe the asset sale will significantly alter the balance sheet in the next 12 months and gives an opportunity for management to payout shareholders.

Before the asset sale, TECK's metrics, including Total Debt/Total Assets, EV/Sales, EV/EBITD, and Revenue Per Share, are generally comparable to those of its peers.

Bottom Line: We anticipate management will wisely utilize the ~$9B in cash.

We expect the low shareholder and dividend yield to catch up to peer averages.

The Board has already initiated the process by authorizing a $500 million share buyback last quarter.

We believe it’s highly likely next earnings call will reveal a stock buyback in the 1-4% range of outstanding shares.

An alignment to industry average shareholder yield might include a special dividend or a rise in current dividend policy.

Long-term tests show that high shareholder yield stocks outperform the broader stock market and high dividend paying stocks. Source

Is a single stock position better than diversified commodity exposure?

Whether a single stock position or diversified commodity exposure is better depends on various factors such as investment goals, risk tolerance, market conditions, and personal preferences.

The answer to this question is— it depends.

A single stock position can offer the potential for higher returns if the chosen company performs well. However, it also carries higher risk since an investor's fortunes are tied to the performance of a single company.

On the other hand, diversified commodity exposure spreads risk across multiple commodities, potentially reducing the impact of poor performance in any single commodity. It’s possible are bullish thesis on copper never materializes. A diversified approach can provide stability to an investment portfolio but may limit the potential for outsized gains compared to investing in a single high-performing stock.

Ultimately, the decision between a single stock position and diversified commodity exposure should be based on individual circumstances and investment objectives. It may also be beneficial to consult with a financial advisor to determine the most suitable investment strategy.

Final Word

Thank you for reading and I am grateful and humbled to be able to learn, grow, and invest alongside you at Tuttle Ventures.

Vision, courage, and patience leads to successful investing.

Don’t forget to follow Tuttle Ventures on Twitter, LinkedIn, or Instagram.

Check out the website or some other work here.

Important Disclosures Here

Best,

Darin Tuttle, CFA

Unless there is a signed Investment Management or Financial Planning Agreement by both parties, Tuttle Ventures is not acting as your financial advisor or in any fiduciary capacity.

What We See: Financial Trends & Economic Indicators

Darin Tuttle — Thu, 04 Apr 2024 19:12:22 GMT

Newsletter Rundown:

Easy financial conditions
Reverse Repo stays level
Strong ECRI Weekly Leading Index
Final Word

It’s not about the money – it’s about the system. We continue to be optimistic for investors because the system is healthy.

We believe that easy financial conditions and positive net liquidity are both showing signs which are positive for risk assets.

Easy Financial Conditions

Frequent readers should know I like using the Adjusted National Financial Conditions Index.

The Adjusted National Financial Conditions Index (ANFCI) is a comprehensive weekly update on 105 U.S. financial conditions across three categories of financial indicators (risk, credit, and leverage).

We prefer this measure due to its adjustments for inflation.

The weekly data goes back to the 1970’s, includes “shadow banking” metrics, and is a key input in our investment outlook.

Positive values have historically been associated with tighter-than-average financial conditions. (Bad for risk assets)

Negative values have historically been associated with looser-than-average financial conditions. (Good for risk assets)

We are currently in a favorable loose condition which is positive for risk assets.

When you look closer into the biggest contributors , such as credit conditions, the majority are positive. For example, credit spreads are back to lows not since 2019.

Our research indicates that for risk assets to selloff, ANFCI will need to meaningfully tighten under scare liquidity. Source

Reverse Repo Stays Level

Since last year, we have seen a sustained and methodical release of funds from reverse repo, serving as an intraday relief valve for liquidity into the financial system.

When you reduce RRP, you now have treasuries free and clear of the overnight sweep.

Banks get to extend duration by purchasing treasuries which are able to be used as collateral to take risk beyond one day.

The free treasuries can be leveraged into risk assets and held for longer terms in money market fund deposits.

Since the introduction of the bank term funding program, we have looked at reverse repo to measure general net liquidity conditions.

This month, the drawdown pace slowed significantly compared to previous months.

See grey line in the chart above.

It appears there has been a leveling off around in the range of $430B - $500B.

This leveling off suggests that reverse repo will not be drawn down to zero by April as we previously assumed.

We believe this could mean two things:

The Federal Reserve is confident in favorable financial conditions and is willing to maintain slightly tighter liquidity as a result. Powell understands the importance of reverse repo in daily market activity. We believe its possible that Powell wants to preserve the final $500B to be held back to be prepared if/when an unexpected market event arises.
The Treasury General Account (TGA) is now in focus. The TGA becomes the next release valve in measuring net intraday liquidity. This is the most logical reason, given the percent makeup of liabilities on the balance sheet.

In a simple comparison, if you compare the Federal Reserve Balance Sheet from seven months ago to today, the most notable changes have been:

The drawdown in liabilities of Reverse Repo (26% to 12%)
The increase in liabilities of TGA (5% to 10%).

When you look at this balance sheet simplified, it helps put things into perspective and demonstrates the limited options the Federal Reserve has to decrease it balance sheet.

When you decrease assets, liabilities are generally decreased as well.

We expect the next significant move to be made in the TGA account and that is our focus for net liquidity if the reverse repo remains stable.

Based on our research, we may see a potential level of the TGA around 5-7% and reverse repo steady around 10% of total liabilities.

This would increase net liquidity by another $200B - $400B without the drawdown of reverse repo to zero.

This is positive for the market generally.

Strong ECRI Weekly Leading Index

The Economic Cycle Research Institute (ECRI) maintains a proprietary composite of leading economic indicators. It has an impressive record, going back decades, of signaling recessions and business cycle changes. Source

I like to use the Weekly Leading Index (WLI) as a high-frequency leading index of U.S. economic growth.

The latest ECRI Weekly Leading Index indicates a increase in growth, returning back up near an impressive peak of 9% in February.

Historically, this has been a good indicator of when recessionary pressures are in the rearview mirror.

The substantial rebound since mid-November and sustained rates above 7% indicate a strong upward trajectory, suggesting likely continued growth.

We consider this a positive sign for equity markets going forward.

Final Word

Thank you for reading and I am grateful and humbled to be able to learn, grow, and invest alongside you at Tuttle Ventures.

Vision, courage, and patience leads to successful investing.

Don’t forget to follow Tuttle Ventures on Twitter, LinkedIn, or Instagram.

Check out the website or some other work here.

Important Disclosures Here

Best,

Darin Tuttle, CFA

Unless there is a signed Investment Management or Financial Planning Agreement by both parties, Tuttle Ventures is not acting as your financial advisor or in any fiduciary capacity.

SpaceX Investor Update: 1Q 2024

Darin Tuttle — Thu, 28 Mar 2024 19:09:20 GMT

Welcome to +74 new followers over the last 30 days and +17 Substack authors who recommend my newsletter.

For newcomers, I focus on unique investment ideas supported by novel research.

Discover more in our subscriber archive with over +150 newsletters.

Subscribe now

SpaceX continues to price strongly near the $100 mark with a $168.6B valuation.

Here’s our take:

AI-Powered Forecasting Approach

Darin Tuttle — Tue, 26 Mar 2024 23:59:59 GMT

Welcome to +74 new followers over the last 30 days and +17 Substack authors who recommend my newsletter.

For newcomers, I focus on unique investment ideas supported by novel research.

Discover more in our subscriber archive with over +150 newsletters.

Subscribe now

Many of my friends wonder where I find investment ideas.

One of my preferred sources for investment ideas, as detailed in my post 'My go-to resource for investment ideas,' is the Good Judgement Open Website (GJ Open).

GJ Open is a crowd forecasting platform where users can refine their forecasting skills, stay informed about global events, and interact with fellow forecasters.

Participants can predict the likelihood of future events and evaluate their accuracy against the crowd's performance.

This week, I ranked in the top 10 (89th percentile) on the Forecasting Leaderboard by projecting the annualized rate of US Housing Starts for February 2024. (Lower Brier Scores are Better)

In December, I used ChatGPT to create an AI-assisted autoregressive integrated moving average (ARMIA) forecast.

ARMIA projection: 1,452 units

95% Confidence Interval: [1184, 1719]

Actual: 1,521 units

Many believe Chat GPT is limited to text tasks, but I'll show you step-by-step how I used AI to forecast this question and the prompts I utilized to make my projection.

Identify Data Used to Determine Forecast
Clean Data and Add Column Headings
Upload data to ChatGPT | Initiate first prompt
Seasonality and Trends
Model Specification
Specificity Tests
Forecast Results

For those that have the paid version of ChatGPT, you can access my prompts directly by accessing the link HERE.

Question: What will be the annualized rate of US housing starts for February 2024?

Step 1: Identify Data Used to Determine Forecast

Every GJ Open question has benchmark data to reference.

Luckily, the data for this question was pulled from the FRED website.

The New Privately-Owned Housing Units Started has a historical dataset that goes all the back all the way to the 1950’s so I knew I would have a large n sample size to work with.

Step 2: Clean Data and Add Column Headings

I downloaded the data from the FRED website as a csv file [New Privately-Owned Housing Units Started: Total Units (HOUST)] and cleaned the data by removing blank rows and added column headings.

Step 3: Upload data to ChatGPT | Initiate first prompt

I then uploaded my csv file to ChatGPT and initiated my first prompt:

This prompt checks data column names and assesses normal distribution. Understanding if we are working with a normal distribution is crucial for drawing accurate statistical inferences from the data.

The prompt's flexibility allows ChatGPT to test non-normal distributions, speeding up the process of obtaining relevant information.

ChatGPT had to work through the time series for the monthly change data, so technically the March forecast period would be our February target. This was a minor issue. The prompt generated a beautiful bell-shaped distribution and statistical properties of the normal distribution tests:

The analysis of the distribution of the Housing Starts and Monthly Change data yielded the following results:

Housing Starts

Skewness: 0.36, indicating a slight skew to the right.

Kurtosis: -0.53, suggesting a distribution that is less peaked than a normal distribution.

Normality Test P-Value: 0.094, which is not small enough to reject the hypothesis of normality at a typical alpha level (e.g., 0.05).

Monthly Change

Skewness: -0.16, showing a slight skew to the left.

Kurtosis: 0.29, indicating a slightly more peaked distribution than normal.

Normality Test P-Value: 0.49, which is much higher than 0.05, suggesting that we cannot reject the hypothesis of normality.

From these results, both Housing Starts and Monthly Change distributions do not show strong deviations from normality. The skewness and kurtosis values are relatively close to those of a normal distribution (skewness = 0, kurtosis = 0). Moreover, the normality test does not provide enough evidence to reject the hypothesis that these distributions are normal. However, it's important to note that these tests are only indicative and should be used in conjunction with other data analysis techniques for more accurate conclusions.

As you can see, this first prompt gave us a lot to work with.

Step 4: Seasonality and Trends

My second prompt aimed to identify seasonality and trends given the 3-month gap between my forecast period (February) and the available data (November).

This lag presents a challenge compared to forecasting the next period directly, as we would be forecasting 3 months ahead.

To assess seasonality or trends, I prompted:

I emphasized 'review the data' because ChatGPT tends to be lazy and stop looking for specific iterations in large datasets once it finds the first instance.

As anticipated, ChatGPT identified several instances of three consecutive positive months, but they were all limited to the same year, 1994.

So I had to reinitiate two more prompts to be comprehensive and ensure that I was getting the series going all the way back to 1950’s:

Now I had specific figures of directionality over the entire forecast period.

I implicitly had a bullish bias given our positive macro view in December. Based on the commonality of positive directionality I felt confident that there was enough occurrences to not rule out 3 consecutive positive months during positive economic times.

Step 5: Model Specification

After narrowing down the directionality for the forecast period, I prompted ChatGPT with:

ChatGPT listed several model and then recommended the following model: “Given the data and requirements, a statistical time series model like ARIMA or SARIMA might be the most straightforward choice.”

Then I prompted:

ChatGPT gave the Autocorrelation Function (ACF) and Partial Autocorrelation Function (PACF) plots to show the potential parameters for the ARIMA model:

Step 6: Specificity Tests

ChatGPT then conducted Ljung-Box and Jarque-Bera tests on the distribution.

“The Ljung-Box test (Prob(Q)) suggests that the residuals are independently distributed (p = 0.76), which is a good sign. The Jarque-Bera test indicates that the residuals are not normally distributed (Prob(JB) close to 0), which might be a concern.”

Step 7: Forecast Results

Given this model, we can now proceed to forecast the housing starts for the next four months, up to March 2023. However, it's important to note that the accuracy of these forecasts can be influenced by various factors not captured in the model, such as economic changes, policy decisions, etc. Let's generate the forecast.

The forecast for housing starts for the next four months, up to March 2023, using the ARIMA(1,1,1) model is as follows:

First Month Forecast: 1491.84 units
- Confidence Interval: [1285.57, 1698.10] units
Second Month Forecast: 1465.84 units
- Confidence Interval: [1226.29, 1705.40] units
Third Month Forecast: 1455.93 units
- Confidence Interval: [1200.16, 1711.70] units
Fourth Month Forecast (February 2024): 1452.15 units
- Confidence Interval: [1184.94, 1719.35] units

These values were the predicted housing starts, with confidence intervals indicating the range within which the actual values are likely to fall with 95%

And that's it we had our forecast to enter the GJ Open project.

The best part?

This entire process to forecast was completed in less time than it took to write this post.

We plan to utilize Chat GPT for future forecasting questions.

Final Word

Thank you for reading and I am grateful and humbled to be able to learn, grow, and invest alongside you at Tuttle Ventures.

Vision, courage, and patience leads to successful investing.

Don’t forget to follow Tuttle Ventures on Twitter, LinkedIn, or Instagram.

Check out the website or some other work here.

Important Disclosures Here

Best,

Darin Tuttle, CFA

Unless there is a signed Investment Management or Financial Planning Agreement by both parties, Tuttle Ventures is not acting as your financial advisor or in any fiduciary capacity.

Tuttle Ventures' Triumphs: Celebrating Referrals

Darin Tuttle — Tue, 19 Mar 2024 17:43:07 GMT

Today, I wanted to change things up and highlight publications who recommend the Tuttle Ventures newsletter.

Referrals are the lifeblood of our publication, and we owe a debt of gratitude to those who recognize and recommend the value we bring to the table.

Over the past three years, I've gained valuable insights and made new connections far exceeding my contributions.

I've learned that work is habitual, not emotional, especially in my writing. Even when I feel uninspired, the urge to write persists. Having supporters keeps me motivated.

So, without further ado, let's dive into those willing to sing Tuttle Ventures' praises:

Dennis Choe | Tax Director at PWC

Darin is an ultimate professional. He is passionate about his work and client needs. He is always listening and learning more about how to better position his clients for success. I have watched him grow as an investment professional for the last 8 years and have a high level of confidence in his abilities.

Andrew Beer | Managing Member of DBi

High praise for Darin Tuttle! He combines a sophisticated understanding of complex strategies with an appreciation for the role that diversifiers can play in client portfolios. He is thoughtful and innovative and a pleasure to work with.

Phil Bak | CEO at Armada ETFs

One of the top macro commentators out there, Darin provides thought provoking content on a regular basis. One of the best there is!

Essential Tax Handbook: My Top 3 Must-Reads for Savvy Business Owners

Darin Tuttle — Mon, 18 Mar 2024 16:07:20 GMT

As a financial advisor, I naturally get questions about taxes.

Since I'm not actively doing taxes, I'm not always the best person to ask.

That being said, I do have a great list of quality resources that I believe are *better than Googling*.

Let’s dive in with three of my favorites:

IRS Tax Audit Technique Guides

IRS Tax Audit Technique Guides- If you want to get the best info, go straight to the source: the IRS website.

I know what you're thinking, but hear me out…

Skip the fluff and go straight to the Audit Technique Guides.

The Audit Techniques Guides (ATGs) help IRS examiners during audits by providing insight into common self employed tax issues and accounting methods for your business.

Each guide is broken down by industry so you can really niche down into your particular business.

They even have a guide designed specifically for the Entertainment Industry, which includes: W2 vs. independent contractors, advertising and promotion deals, and giveaways and prizes.

https://www.irs.gov/businesses/small-businesses-self-employed/audit-techniques-guides-atgs

(This is a great guide for the rising social media influencers out there)

Each guide is kept up to date with the latest tax code and gives not only the individual rules, but also the rationale and interpretation of those rules in the real world.

This is major.

Every small business owner should check out their guide and see what applies to them.

Carry Money eBook

Carry Money eBook- Business Owners Guide to Paying Less in Taxes: A Complete Guide to the Biggest Tax Saving Strategies for US Business Owners, Freelancers, Creators and Self-Employed Individuals. by Ankur

https://carrymoney.com/resources

This eBook is a life saver for taxpayers that want to get a general idea of what could be available to them with a little tax planning.

At only 69 pages long (that’s short in tax world) its packed with 2-3 page explanations on 20 different topics.

Some of my favorites are: the power of having a solo 401k, R&D Credits, and Cash Balance Plans. Most guides have trouble getting to the point, this one gives you enough information to come prepared to your CPA meeting.

Quick Disclaimer: I am not sure if Ankur will come out with regular updates and editions, so for now I only recommend using this eBook for the current tax year.

The tax code is always changing due to our friends in Washington.

Tax Summary Guide by Eaton Vance

Tax Summary Guide: by Eaton Vance Rates, Schedules and Contribution Limits

https://www.eatonvance.com/tax-information.php

This 4 page guide is better than Google because it is all in one place (no clicks needed).

For those who like numbers, this guide is for you.

It consolidates all essential annual tax information into a single, accessible document, eliminating the need for multiple internet queries. This guide is regularly updated and properly sourced to ensure accuracy and relevance.

I have used this for years and print one out on my desk every year. (I’m still old school like that).

Due to its comprehensive nature, the guide not only covers current tax-related matters but also includes lesser-known limits and provisions, like the Corporate Tax Rate and Child Tax Credit, that *may* become relevant to your financial situation in the future.

The guide covers a spectrum of possibilities, ensuring you're well-prepared.

Check out the website or some other work here.

Important Disclosures Here

Best,

Darin Tuttle, CFA

Unless there is a signed Investment Management or Financial Planning Agreement by both parties, Tuttle Ventures is not acting as your financial advisor or in any fiduciary capacity.

Insights & Innovations: Navigating AI, Cybersecurity, and Geopolitical Risks

Darin Tuttle — Fri, 15 Mar 2024 22:55:49 GMT

Welcome to our +60 new subscribers over the last 30 days and +17 Substack authors who recommend my newsletter.

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You can checkout the full story here.

Newsletter rundown:

Humans Anonymous: Not so Anonymous Anymore
Yoodli: A Unique Use Case of AI
Chebyshev Polynomials in Cybersecurity
Final Word

Humans Anonymous: Not so Anonymous Anymore

https://x.com/NateTepper/status/1768431901407338581?s=20

Long-time readers are aware of my enthusiasm for beta testing new and intriguing projects. Companies like Jasper.ai, Podmatch, ListenNotes, and others began as slow beta versions, yet I was willing to try firsthand.

I'm always open to beta testing things for free and providing honest feedback to founders. (RIP my inbox). One such discovery was Humans Anonymous, which I found back in early 2022 while exploring new apps on Apple’s Test Flight. It's an anonymous live audio platform fostering safe spaces for communities with similar life experiences. I liked it because it was a blend between Twitter spaces and YikYak (the relaunch version). I would jump on and talk about the highs and lows of running a growing business, without the fear of judgement from others. It was a casual version of talk therapy for me.

In October 2022, I ran into Nate Tepper, one of the co-founders, at a Combinations networking event. I’ll never forget the look on his face when I told him I was using the app. He was so surprised to find a real life user of his app in the wild! He rushed to pull out his phone and record an on-the-spot testimonial of the product.

Build. Learn. Share. Grow.

Yoodli: A Unique Use Case of AI

I’m stoked about real life use cases of AI that actually provide real value.

Yoodli is one of those companies.

A couple weeks ago, I realized my presentation skills needed some work.

I have been focused on removing all the “you knows”, and “ums” when I speak on camera.

So I hired Michael Davis from Speaking CPR to coach me up on how to get better.

Not only has Michael help me turn a corner on filler words, he introduced me to Yoodli, which is a private, real-time, AI coach — with stats to improve your speaking performance.

I particularly enjoyed the ability to record and then analyze the statistics afterward, akin to reviewing game footage as a collegiate athlete.

And I could chat back and forth with my human coach Michael, along different timestamps in the video.

The company is led by Varun Puri, a personable guy who generously shared with me insights into what it takes to build practical AI tools.

Here's a TED talk with Varun’s story.

I’m excited about the future of the company.

Build. Learn. Share. Grow.

Chebyshev Polynomials in Cybersecurity

A key problem between the digital and physical world is how to best contextualize movements through space.

Give me a second and I’ll explain how this all relates back to cybersecurity…which starts with my obsession with geopolitics.

When you consider geopolitics, I’m in the camp of Jacob Shapiro and take to Kjellén’s fundamental definition:

Defined simply, geopolitics is the belief that geography exerts a significant influence on states’ behavior.

When you expand this idea to geopolitical risks in financial markets, you cannot hedge a risk which you cannot measure, let alone define.

You need a physical map of the territory. (Notice the emphasis on physical)

Most analysts use geopolitical risk as a buzzword for any spat with a foreign country. The Federal Reserve’s definition of geopolitical risk (which is the most popular) looks at sentiment readings— text extracted from news headlines.

I believe that’s a poor measure of fundamental geopolitical risk.

We would never recommend an investment strategy based on what you read in the news!

I believe its important to have geopolitical models which support the pattern of the physical world in which we live — this should be the basis of geopolitical risk measurement.

This is how we get to Chebyshev Polynomials.

You must have precise mathematical measurements across space to replicate any model systematically.

From what I have studied, Chebyshev Polynomials do a really good job of going from Point A to Point B, by focusing on the absolute magnitude of the differences between coordinates of a pair of objects.

This captures the reference points necessary to build your model.

Back in August 2023 I wondered, “What if a discrete Chebyshev distance could be applied to NYU V-Lab’s COVOL and GJR-GARCH volatility analysis?”

Perhaps a risk event could use geographical coordinates as an input and applied to other capital market nodes in a risk weighted model.

This could solve the geopolitical measurement problem and be replicated systematically within sound mathematical parameters based on a physical world.

Since Robert Engel has been helpful in the past, I decided to ask him about the idea back but its been been on the backburner as other projects have come up.

So long story short, this is why I have an open Google alert for Chebyshev Polynomials…isn’t math beautiful sometimes?

Ok, now for the latest work of Chebshev Polynomial’s which applies to Cybersecurity.

A new study found that privacy and security of the information exchanged between automobiles in 5G-enabled vehicular networks is at risk.

Many of the smartest people in the world are all working hard to solve this cybersecurity issue.

Chebyshev Polynomial-Based Fog Computing Scheme Supporting Pseudonym Revocation for 5G-Enabled Vehicular Networks. Electronics. 2023; 12(4):872. https://doi.org/10.3390/electronics12040872

Intruders can alter a vehicle’s transmitted message. This could wreak havoc for millions of future autonomous vehicles.

In order to solve these problems, various researchers have developed an authentication strategy for vehicular networks.

And this solutions have to apply math through space.

Academics have offered a solution to these problems in the form of an authentication technique that uses an elliptic curve or bilinear pair to sign messages and verify the signature through physical space.

But we know that there is a better way…

And this is where Chebyshev Polynomials come in.

The study found that greater performance and cost efficiency than would otherwise be possible when compared to an elliptic curve or bilinear pair had been employed.

The efficiency of their work in signing messages and verifying signatures is compared to other relevant systems in the figure compares the computational costs for the proposal with other schemes.

Chebyshev Polynomials are not only beautiful but also cost-effective to protect your 5G car from bad guys.

Could it do the same for measuring geopolitical risk?

Final Word

Thank you for reading and I am grateful and humbled to be able to learn, grow, and invest alongside you at Tuttle Ventures.

Vision, courage, and patience leads to successful investing.

Don’t forget to follow Tuttle Ventures on Twitter, LinkedIn, or Instagram.

Check out the website or some other work here.

Important Disclosures Here

Best,

Darin Tuttle, CFA

Unless there is a signed Investment Management or Financial Planning Agreement by both parties, Tuttle Ventures is not acting as your financial advisor or in any fiduciary capacity.

Schwab Network Live Experience: Darin Tuttle's Insights

Darin Tuttle — Wed, 13 Mar 2024 14:57:19 GMT

Morning Trade Live with Oliver Renick Show Notes

I got to appear on the Schwab Network for their live segment. It was booked two days ago and the show is unscripted, which means you have to prepare two hours for just five minutes of airtime. (You never know what questions could come your way). Here are my behind-the-scenes notes, including Petco which was not covered live.

Dollar Tree Inc
Williams-Sonoma
Petco

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Dollar Tree Inc

Est. EPS: $2.65

Actual EPS: $2.55 (Miss) Bar is set High, Highest since last two years

Est. Revenue: $8.67B

Actual Revenue: $8.63B

Bulls say: Strong Cash flows supporting stock buybacks (250M last quarter) with stable margins, solid consumer, new store expansion, multi-price offerings

Bears say: Money doesn’t grow on trees. Overspending and cash could be used better elsewhere increasing sales per square foot or increase margins. Would be first hit if consumer slows.

Closing 600 stores in 2024, another 370 leases to expire, 16,774 total (CVS closed 600 in 2021 over three years)
No new buybacks, still have $1.3B outstanding remaining
Remember this is 4^th quarter earnings where S&P 500 earnings were up 11% vs. 3% consensus – Everyone was beating 4^th quarter earnings
Reached full resolution with the DOJ supply chain issues- became “Good Distribution Practices” (“GDP”) certified
JP Morgan Overweight $165, Guggenheim buy $170, Wells Fargo Overweight $180
Cash is King 3.66 Cash Flow per share Qtr. Vs. Industry average less than one.
Big spend on Capital Expenditures $660M which is a 38% increase YoY
Margins look good and stable, reported 32% Gross not impacted by the Bullwhip affect others have experienced
P/E 28 vs. DG P/E 18, trading in top half, except to trade mid range to comps
Expanded multi-price Plus offering to 870 additional Dollar Tree stores
Sensitive Consumer “First line of Defense”

Williams-Sonoma

Est. EPS: $5.14

Actual EPS: $5.44 (Beat)

Est. Revenue: $2.23B – lower that past 2 years 4^th quarter

Actual Revenue: $2.28B (Beat)

Bulls say 26% dividend increase, steady dividend payer, Increasing EBITDA greater than Sales, strong operator inventory turnover is picking up, New $1B stock repurchase program

Bears say High End Consumer Growth is shrinking, increasing net debt ratios at a rapid pace, rising shipping and fuel costs for home furnishings retailers Gross margin of 42.6% is stretched how much better can they get?

CEO Laura Alber has done a great job and understands her consumer, but a concern is the fact she has sold roughly $22M over the past year (high % of her personal holdings but still less than 1% of the total float)
Wells Fargo Equal Weight $240, UBS sell $195, RBC $261
Over the last four quarters, the company has surpassed consensus EPS estimates 4xx
P/E 16 fairly valued among specialty retailers
NYSE order imbalance at close 159,170 shares on the buy side (typically positive for a stock with increasing demand) last minute shoppers.

Petco

Est. EPS: $0.02

Actual EPS: $-0.08 Missed, back to back negative quarters

Est. Revenue: $1.62B , healthy growth in line with expectations

Actual Revenue: $1.7B

Bulls say: Good intrinsic Book Value, Name brand recognition and goodwill, and high revenue per share

Bears say: You don't need Super Bowl square footage to sell puppy chow. Under short term pressure with Costs of Good sold increasing faster than revenues, not much confidence from leadership able to deliver

On the call, mgmt. literally said profitability of the company is “Unacceptable” (Wow!, not a good look)
Mobile Vet vehicle growth (why not storefront?)
Morgan Stanley $3.00, Jefferies Hold $3.11, Goldman Buy $5.00
Earnings are really the only time this company gets the spotlight because their initiatives haven’t been catching the public’s eye.

Final Word

Thank you for reading and I am grateful and humbled to be able to learn, grow, and invest alongside you at Tuttle Ventures.

Vision, courage, and patience leads to successful investing.

Don’t forget to follow Tuttle Ventures on Twitter, LinkedIn, or Instagram.

Check out the website or some other work here.

Important Disclosures Here

Best,

Darin Tuttle, CFA

Unless there is a signed Investment Management or Financial Planning Agreement by both parties, Tuttle Ventures is not acting as your financial advisor or in any fiduciary capacity.

Still Some Gas in the Tank

Darin Tuttle — Mon, 11 Mar 2024 04:23:47 GMT

Welcome to our +8 new subscribers and the +17 Substack newsletter authors endorsing our publication.

If you are looking for unique investment ideas backed by interesting research, you have come to the right place.

Explore over +130 newsletters in our subscriber archive.

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Newsletter Rundown:

Reverse Repo is Favorable
Financial Conditions are easy
ECRI Weekly Leading Index is Strong
Final Word

Still Some Gas in the Tank

As you can see in the chart, the inverse blue line (reverse repo), has been steady —a constant pull upward on the black line (SPY) over time.

The flow of funds from RRP into T-Bills is beneficial for risk assets for a few reasons: a longer time to maturity, greater capacity for margin, and the Fed acting in a predictable way.

The consistent and steady decline allows market participants to remove the guesswork from risk-taking. This does not hold true when we get into April.

As we mentioned back in November, based on our projections, the current pace of the reverse repo drawdown suggests the balance will go to zero by April 2024.

The trend line shows a strong negative correlation (R² = 0.97), demonstrating a high degree of linearity in the decrease of RRP over time.

This pattern suggests a sustained and methodical release of funds from the Federal Reserve's tightening policy, serving as an intraday relief valve for the financial system.

We believe the April tax deadline to be a pivotal time for policy makers.

Until that time, we believe the drawdown is a reliable tool the Fed has to fight inflation and combat a large market selloff.

This chart displays the rolling 3-month correlation between the S&P 500 and Overnight Reverse Repo. The bars fluctuate between positive and negative values, indicating how correlation is not constant.

Despite this, when the bars are above the horizontal axis, this suggests a positive correlation (or concurrent movement) between the two, typically corresponding to a period where risk assets perform poorly.

On the other hand, the negative correlation periods may reflect risk-on sentiment or a strategic preference by market participants as the drawdown period continues to boost returns.

With ~$450B still in play, we believe there is still gas in the tank to run stocks higher.

Financial Conditions are Easy

Frequent readers should know I like using the Adjusted National Financial Conditions index.

We like this measure because adjustments are made to remove the variation based on inflation.

The weekly data goes back to the 1970’s, includes “shadow banking” metrics, and is a key input in our investment outlook.

Positive values have historically been associated with tighter-than-average financial conditions. (Bad for risk asset)

Negative values have historically been associated with looser-than-average financial conditions. (Good for risk asset)

We are clearly in a loose condition which is positive for risk assets.

Our research suggests that you need both ANFCI tightening and decreasing net liquidity— for risk assets to selloff. Source

ECRI Weekly Leading Index

I like to use the Weekly Leading Index (WLI) as a high-frequency leading index of U.S. economic growth.

The latest ECRI Weekly Leading Index indicates a slight decline in growth, coming off an impressive peak of 9% in February.

We wanted to see the WLI gain back to positive territory to be pro risk assets.

We are now well above the zero level threshold.

Historically, this has been a good indicator of when recessionary pressures have subsided.

The significant rebound since mid-November and sustained rates above 7% indicate a strong trajectory that suggests continued growth is likely.

We consider this a positive sign for equity markets going forward.

Factors that might shift our optimistic (bullish) assumptions to pessimistic (bearish) include:

Larger than expected buildup in the Treasury General Account
Sharp drop in available treasury issuance
Forced deleveraging by a major market speculator
Restrictive shift in policy from the Bank of Japan to combat inflation

There's every reason to believe that the economic strength we've seen can indeed continue.

Final Word

Thank you for reading and I am grateful and humbled to be able to learn, grow, and invest alongside you at Tuttle Ventures.

Vision, courage, and patience leads to successful investing.

Don’t forget to follow Tuttle Ventures on Twitter, LinkedIn, or Instagram.

Check out the website or some other work here.

Important Disclosures Here

Best,

Darin Tuttle, CFA

Unless there is a signed Investment Management or Financial Planning Agreement by both parties, Tuttle Ventures is not acting as your financial advisor or in any fiduciary capacity.

Virtual Reality (VR) Cybersecurity - An Emerging Frontier

Darin Tuttle — Sun, 03 Mar 2024 22:52:38 GMT

Welcome to our +52 new subscribers and the +17 Substack newsletter authors endorsing our publication.

If you are looking for unique investment ideas backed by interesting research, you have come to the right place.

Explore over +130 newsletters in our subscriber archive.

Share Tuttle Ventures Newsletter

Newsletter Rundown:

Virtual Reality (VR) Cybersecurity
The Market Opportunity
Privacy Concerns
Final Word

This week, I'll reserve the broader market analysis for its own dedicated newsletter and instead delve into the world of virtual reality.

Despite VR's rapid advancement and potential for visual human connection, cybersecurity remains an underexplored area ripe for investment.

Virtual Reality (VR) Cybersecurity - An Emerging Frontier

Visuals created by Midjourney’s AI vs. Meta's Horizon Worlds VR app

The greatest challenge facing Virtual Reality (VR) is not a technology problem but a marketing problem.

People are visual —approximately 90% of the information transmitted to the brain is visual, and visuals are processed 60,000 times faster in the brain than text. Source.

The VR Superbowl legless launch can't compete with Midjourney's AI.

But therein lies the opportunity.

When you think of AI what do you see? What comes to mind?

Apple’s Siri

Take for example the budding holographic cloud of Siri.

Siri's frequent 'I didn’t quite catch that' raises my blood pressure slightly. The bubble cloud still struggles to perform simple tasks.

Long term, AI faces an issue as advertising money follows eyeballs.

Advertising revenue, which typically targets areas with high viewer engagement, may not align with AI's development and application areas.

I believe that the unique nature of Virtual Reality (VR) taps into a desire of visual human connection that AI alone cannot meet.

I’m betting on human nature.

The Market Opportunity in VR Cybersecurity

According to Grand View Research, the global VR market size was estimated at USD $59B in 2022, with projections for a compound annual growth rate (CAGR) of 27% from 2023 to 2030. Source.

As the technology continues to expand and as businesses capitalize on the monetary angle of VR, one aspect continues to be overlooked, cybersecurity.

I believe investing in cybersecurity is the lowest hanging fruit for the space.

Many of the security risks that threaten VR are similar to the security risks of Internet users—data hacking, malware attacks, privacy problems, and spam.

However, VR has created new security challenges that include virtual identities, digital currencies, and biometric data which are new economic targets for hackers.

Division of Electronics & Electrical Engineering, Dongguk University

Privacy Concerns

I suspect every consumer tech product in the U.S. includes a surveillance backdoor—call it my inner skeptic.

This is evidenced by the U.S. government’s history of pushing for encrypted data backdoors, as detailed by Jessie Guy-Ryan’s A Brief History of the U.S. Trying to Add Backdoors Into Encrypted Data Source.

The Snowden leak proved the lengths the NSA will go.

From backdoors in Lotus Notes to persistent allegations that Microsoft routinely includes backdoors in its software, the government just can’t get away from snooping on you and me.

So my attitude is—If you can’t beat them, join them.

Apple doesn’t give much freedom with their devkits but good rule of thumb is any device is hackable with someone skilled enough.

The search for Virtual Reality development is increasing, and new technologies and libraries have surfaced in response.

The Apple Vision Pro (AVP) matches the capabilities of MacBooks and iPhones, running on a unique OS that responds to gaze and gestures, primarily using C/C# in Unity environments.

Wall Street analysts project Apple Vision Pro sales to increase to approximately 1.4 million units by the end of 2025.

This will create new vulnerabilities for global users.

As VR technology advances, there will be an increasing need for services and programs that can audit, test, and certify the security of VR applications and platforms.

LSU researchers Ibrahim “Abe” Baggili and Andrew Webb received $600K from the Defense Advanced Research Projects Agency (DARPA), to study safety aspects of virtual and augmented reality applications for U.S. military missions and training. Source.

This opens up new avenues for cybersecurity firms specializing in VR.

Final Word

Thank you for reading and I am grateful and humbled to be able to learn, grow, and invest alongside you at Tuttle Ventures.

Vision, courage, and patience leads to successful investing.

Don’t forget to follow Tuttle Ventures on Twitter, LinkedIn, or Instagram.

Check out the website or some other work here.

Important Disclosures Here

Best,

Darin Tuttle, CFA

Unless there is a signed Investment Management or Financial Planning Agreement by both parties, Tuttle Ventures is not acting as your financial advisor or in any fiduciary capacity.

[Part 2] Is there anything that could slow down the Nvidia momentum?

Darin Tuttle — Thu, 22 Feb 2024 20:15:26 GMT

Welcome to the +70 new subscribers who signed up over the last 30 days.

If you are looking for unique investment ideas backed by interesting research, you have come to the right place.

All the focus has been on .

Last month, I was on Schwab network explaining why I believed the stock could go higher despite already high valuations.

You can rewatch the segment here:

I distinctly recall questioning my sanity amidst the segment, given the staggering price levels. The initial $600 price target has been nothing but a speedbump on the road to $778.

I mentioned inventory levels were the key figure to watch, since I believed Nvidia was deliberately keeping supply low and prices high due to high demand.

I was wrong.

According to the latest earnings report, inventory levels are not what is driving the stock higher.

So what’s really going on here?

There are two driving forces: geopolitical and fundamental.

Geopolitical

The national security interests of artificial intelligence are at a critical point.

Information asymmetry and social media require artificial intelligence to play in the forefront of innovation and progress.

Since Nvidia is clearly the leader of the GPU architecture, China has a vested interest to invest.

The problem is China can’t order the chips themselves, but they can bid up the stock.

As I wrote in Part 1:

It’s my opinion that CEO Jen-Hsun "Jensen" Huang is the best avenue for China investment into the US chips market.
The funding of the CHIPS act comes with geographical restrictions, prohibiting recipients from expanding semiconductor manufacturing in China or countries posing a threat to U.S. national security.

This unconventional approach highlights China's determination to circumvent exclusions, effectively 'buying the house' to gain entry.

Index providers initially provided an open door for this investment.

As I wrote in: A New Era in Global Investing: National Security, there is a conflict of interest inherent with global asset gathers.

For the last few months, as China’s stock market has faced issues, the temperature has been turned up.

Now it’s the only game in town.

China is “all-in”.

When investing in stocks, it's essential to be aware of the risks involved. (Market, Liquidity, Systemic, Company-Specific and various others).

Goldman's risk control team is likely in turmoil.

Taking a far and balanced approach by investing in this company is difficult given the unpredictable nature of the stock price.

At this point, I believe the market will not reprice Nvidia lower.

The greatest risk is regulatory.

The original strategy to limit China's access to chips is failing.

One option is if the U.S. Government considers new restrictions.

If the US government came out and said that China could no longer invest in Nvidia it would not only be illegal but financial market suicide.

I believe one option to consider is to take the same approach to the chips arms war as the soviet nuclear war of old and simply outspend our adversaries.

Manufacturing is so costly that Sam Altman of OpenAI estimates it would take $7 trillion dollars to build and maintain global manufacturing capabilities.

Initially, the $7 trillion figure seems absurd, but it appears Sam is deliberately trolling.

This amount matches exactly what the U.S. printed during the 2020 COVID-19 shutdown.

If the U.S. can allocate $7 trillion for vaccines and safety measures, why hesitate to invest equally in artificial intelligence?

According to the National Bureau of Economic Research, the COVID-19 induced economic shutdown was $7 trillion, or about $15,000 per household, per quarter. Source.

If the U.S. can allocate $7 trillion for vaccines and safety measures, why hesitate to invest equally in artificial intelligence?

The stakes are high, and with China's aggressive tactics and the potential for regulatory intervention, the U.S. faces a critical juncture.

Investing heavily, akin to the strategy during the Cold War, may well be the necessary course to outpace our adversaries and secure a technological edge.

Fundamental

As I outlined in Part 1, there is a fundamental winning business model in Nvidia.

Historically asset-light semiconductor companies, outperform asset-intensive ones.

Advanced semiconductor chips involve a series of highly sophisticated and precise steps, combining state-of-the-art technology, materials science, and engineering expertise.

Inferencing, in the context of artificial intelligence (AI) refers to the process of using a trained model to make predictions or decisions based on new, unseen data.

Inferencing used to be all CPUs/TPUs.

Now its big API-as-a Service on GPUs.

This is based on the Remote Direct Memory Access (RDMA) that can bypass kernel data structures. In modern AI systems, the “application” points to the GPU systems’ memory space, bypassing kernel memory. This creates a system with many GPU’s.

Microsoft has publicly stated that all Azure AI workloads are basically inference.

The key issue is whether the model and architecture can keep up with advancements in hardware and manufacturing.

This is something we will continue to monitor for our readers.

Important Disclosures Here

Best,

Darin Tuttle, CFA

This is not investment advice. Do your own due diligence. Investors are encouraged to perform due diligence, consider their risk tolerance, investment goals, and consult with financial advisors before making investment decisions. I make no representation, warranty or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information contained in this report. Any assumptions, opinions and estimates expressed in this report constitute my judgment as of the date thereof and is subject to change without notice. Any projections contained in the report are based on a number of assumptions as to market conditions. There is no guarantee that projected outcomes will be achieved.

Unless there is a signed Investment Management or Financial Planning Agreement by both parties, Tuttle Ventures is not acting as your financial advisor or in any fiduciary capacity.