Warren Buffett is worth $100 Billion and recommends investing in the S&P 500. 25% of the S&P 500 is made up of only 5 stocks, let’s discuss each stock:

By Andrew Lokenauth

~25% of the S&P 500 is made up of only 5 stocks:

• 7% Apple $AAPL

• 6% Microsoft $MSFT

• 4% Google $GOOGL

• 3% Amazon $AMZN

• 3% Tesla $TSLA

The S&P 500 is America’s largest companies, and returned ~11% each year on average, over the last 96 years. The S&P 500 is also:

• 1% NVidia $NVDA

• 1% Meta $META

• 1% Disney $DIS

• 1% Costco $COST

• 1% Walmart $WMT

• 1% Mastercard $MA

Let’s discuss each stock and it’s bull case:

Apple $AAPL:

• Apple Pay is the #1 mobile payment system in US

• Apple iCar & augmented reality products in pipeline

• 1.5 billion+ active devices, with devices replaced every few years

Data shows great:

• Profitability

• Institutional Flow

• Upside Breakout

Microsoft $MSFT:

• Dominant in cloud computing space

• Azure growing faster than Amazon’s AWS

• Azure has a large & constantly growing market for the cloud computing market space

Data shows great:

• Profitability

• Institutional Flow

• Upside Breakout

Alphabet/ Google $GOOGL:

• MOAT on online ad market

• Leader in quantum computing

• Strong balance sheet & healthy cash flow

Data shows great:

• Institutional Flow

• Upside Breakout

Amazon $AMZN:

• Largest in cloud infrastructure space

• Health care spending accounts for ~20% of the economy & they have a growing health care services business

Data shows great:

• Dark pool activity

• Institutional Flow

• Upside Breakout

Tesla $TSLA:

• MOAT over other EV’s due to low battery costs, self-designed A.I. chips & data collected from billions of miles of real-world driving from its customers

Data shows great:

• Growth

• Profitability

• Options Sentiment

• Institutional Flow

• Upside Breakout

Nvidia $NVDA:

• Best graphics chips & exposure to many themes such as artificial intelligence, machine learning, metaverse, digital biology, robotics, autonomous vehicles, cloud computing, IoT & 6G

Data shows great:

• Options Sentiment

• Institutional Flow

• Upside Breakout

Meta $META:

~80% of the World uses its products (Facebook, Instagram, Messenger & WhatsApp share ~4 billion monthly active users)

Data shows great:

• Profitability

• Dark pool activity

• Institutional Flow

• Upside Breakout

Disney $DIS:

• Disney great content in their pipeline

• This may be the busiest season for Disney parks (due to pandemic ending, travel restrictions being lifted & holiday season)

Data shows great:

• Profitability

• Options Sentiment

• Institutional Flow

• Upside Breakout

Costco $COST:

• One of the strongest balance sheets

• Consistently beats earnings estimates

• One of the most loyal customer bases (90%+ membership renewal rate in North America)

Data shows great:

• Profitability

• Institutional Flow

• Upside Breakout

Walmart $WMT:

• 47-years of dividend hikes

• Only American retailer that can complete with Amazon

• Many retailers won’t survive this recession, and their losses will be Walmart’s gain

Data shows great:

• Profitability

• Institutional Flow

• Upside Breakout

Mastercard $MA:

Exponential growth in smartphones, e-commerce, mobile banking & mobile payments will benefit (80% of World’s transactions are still done with cash/check)

Data shows great:

• Profitability

• Options Sentiment

• Institutional Flow

• Upside Breakout

If you want to pick better stocks long-term, consider these 5 signals:

1) Profitability- How likely the company is to be profitable over the next few years

2) Growth- How likely a company is to get bigger in revenue and/or size

3) Market Similarity- how closely the stock will follow the movement of the S&P 500

4) Upside- Chance of sharp move upwards in price any time within the next 1–2 years

5) Downside- chance of sharp decline in price any time within the next 1–2 years

If you want to swing trade better stocks short-term, consider these 5 signals:

1) Institutional Flow- If institutions are buying up or selling off a stock or options

2) Options Sentiment- How long or short the market is on short duration options

3) Dark Pools- Amount a stock trades in Dark Pools relative to the total trading volume and number of shares

4) Shark Rating- Measure of the trustworthiness of the institutions that own a stock

5) Short Pressure- Market forces pushing the stock price down and the potential to move sharply up or down

*Data and images are from the http://Prospero.AI app. The app provides data that hedge funds use to make trading decisions.

**Refer to the app, as signals change!

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