Friends In High Places

Better Than NVDA (Part 2)

It’s an S&P 500 company that profits from its proximity to political power. It’s also outperformed AI darling Nvidia during 2024.

In yesterday’s edition we spotlighted the year’s very best performer in the S&P — the electricity provider Vistra Corp., which is positioning itself as a leader in power generation for AI data centers. Year-to-date it’s up 320%.

VST’s performance has outdone the hottest AI-adjacent name: NVDA is up “only” 200% so far in 2024.

Also outperforming NVDA is Palantir Technologies (PLTR), up 270% year-to-date.

“The company's name is derived from The Lord of the Rings,” Wikipedia tells us — “where the magical palantiri were ‘seeing-stones,’ described as indestructible balls of crystal used for communication and to see events in other parts of the world.”

In business for over 20 years now, Palantir positions itself as a “big data” company — even as much of what it actually does is still a black box.

Its most famous co-founder is Peter Thiel — the man behind PayPal. When PayPal sold out to eBay in 2002, Thiel was looking for a “next act.”

Knowing that a post-9/11 U.S. government was obsessed with surveillance, Thiel and four others launched Palantir in 2003.

They took seed money from In-Q-Tel, the not-for-profit venture capital outfit that invests specifically to develop technology for the CIA and other “three-letter agencies.”

Even now, PLTR collects 44% of its revenue from the federal government.

The rest is state and local governments, along with two industries that have tight government connections — finance and health care.

Palantir’s principals have shrewdly (cynically?) spread their political risk — always an eye toward keeping friends in high places. Thiel, still the chairman, has long been linked with Donald Trump. Meanwhile, CEO Alex Karp was all-in for Kamala Harris this year.

Back in 2013, Karp said that given the nature of Palantir’s work, going public would make “running a company like ours very difficult.” Besides, the company’s cachet of mystery continued to attract funding from venture capital, private equity and hedge funds.

But during 2020, amid epic money-printing by the Federal Reserve and a flood of “stimmy checks” bringing first-time investors into the stock market… the allure of an IPO was too much to resist.

As you can see from the chart, PLTR enjoyed a nice run in its early months — as many “techy” names did going into early 2021. Then it fell out of bed during the tech swoon of late 2021 and 2022.

A recovery began in 2023… and then came a rally for the ages this year as the company played up its AI capabilities to investors willing to throw money at any company with a compelling AI story.

As mentioned yesterday, the top performing stocks of 2024 — PLTR included — have one thing in common. And it’s not the tailwind of AI.

Every one of them exhibited an unusual chart pattern before 2024 — a pattern that can pinpoint the exact moment a stock is about to explode higher.

We at Paradigm learned about this pattern from a fellow who once managed over $4 billion on Wall Street.

While 97% of money managers can’t beat the market over the long run, this gentleman tripled the performance of the S&P 500 between 2001–2011 — a stretch that included the dot-com bust and the global financial crisis.

You don’t achieve that kind of performance playing by Wall Street’s rules. Not for nothing was this guy known as “The Maverick.”

Coming up this Tuesday, Nov. 26 at 10:00 a.m. EST, you can join The Maverick for a live demo in which you’ll learn all about the chart pattern that preceded the run-ups in PLTR, NVDA and all the other top-performing names this year.

Better yet, you’ll learn how to get in on the best performers of 2025 now — before they start a run for the ages. Click here and we’ll reserve your spot for The Maverick’s event on Tuesday.

Bitcoin Poised to 3X by Year-end 2025

With Bitcoin approaching $99,000 this morning, Paradigm crypto evangelist James Altucher is revising and updating his Bitcoin forecast.

On Election Day, he said in this space that a Donald Trump win would set the stage for a rally to $95,000. “But markets have a funny way of gravitating toward round numbers,” he added. “In this case, that's $100,000.”

Now that we’re almost there, “I expect Bitcoin will reach $300K by the end of 2025, and even $1 million by the end of Trump’s time in office.

“The reason why is obvious to anyone who has been paying attention. Crypto has already captured the imagination of millions of everyday retail investors managing small portfolios.

“However, in order for crypto to get even bigger, it needs to win support from the Wall Street giants who collectively manage trillions of dollars. Those Wall Street giants have been waiting for the government’s stamp of approval before diving in headfirst.”

Yesterday, the notoriously anti-crypto chair of the Securities and Exchange Commission, Gary Gensler, said he would step down on Inauguration Day. Better that than waiting for Trump to follow through on a campaign promise to fire him.

“With the government's stamp of approval, we’re on the verge of an absolute feeding frenzy,” James continues.

“Crypto is already one of the most lucrative areas of business growth for institutional investors like BlackRock. Other Wall Street institutions have been sitting on the sidelines, green with envy. That all changes on Inauguration Day.

“With the Trump administration promising to make America a world leader in crypto, I expect the big banks will jump into the opportunity, the size of which is hard to fathom.

“Although the entire cryptocurrency market is now a bit over $3 trillion, that number could easily explode into the hundreds of trillions… or even quadrillions.

“As the oldest and most well-known cryptocurrency, Bitcoin has been getting the lion’s share of the attention. Although I expect that to continue, other cryptocurrencies will have the opportunity to grow even faster as the Wall Street feeding frenzy begins.

“For investors, this creates a once-in-a-lifetime opportunity. The next few months could be your last chance to get positioned before the institutional money floods in.”

Every new subscriber to James’ entry-level newsletter, Altucher’s Investment Network, gets a free copy of Paradigm’s Big Book of Crypto — a 253-page PDF packed with everything you need to know to start your crypto journey if you haven’t gotten around to it. Details here – no long video to watch.

The WWIII Rally

Gold and oil are both rallying on this Friday — a classic case of traders who don’t want to be short those assets going into a weekend when geopolitics could blow up in a big way.

“Permanent Washington decides nuclear war is preferable to Donald Trump,” was Tucker Carlson’s pithy take on the current state of affairs.

“Our just-commenced 60 days of nuclear chicken,” is how independent journalist Matt Taibbi speaks of the showdown over Ukraine — and Washington giving Kyiv the green light to fire ATACMS missiles onto Russian territory.

With the proverbial fog of war lifting a bit, it seems Moscow did not retaliate by lobbing an intercontinental ballistic missile at Ukraine yesterday. Instead, President Vladimir Putin says it was a new type of medium-range hypersonic missile. The Pentagon has confirmed as much.

Putin went to great pains to point out this missile would have been banned under the Intermediate-Range Nuclear Forces Treaty signed by Ronald Reagan and Mikhail Gorbachev in 1987. But Donald Trump unilaterally walked away from the treaty in 2019.

What might Joe Biden (or his handlers) do next?

“Humanity approached world war before,” Taibbi writes — “but never like this, without a clear idea of who the decision-makers are.

“This is the logical conclusion of an argument we first heard after Biden’s shaky debate performance on June 27: Yes, the White House matters, but the actual president is an afterthought.”

Whatever Washington does next, Moscow is already signaling it’s prepared to strike a U.S. missile base in Poland — because the missile launchers at that base are capable of fitting nuclear-capable Tomahawks with a range of 1,000 miles.

With these latest developments, gold has reclaimed the $2,700 level for the first time in two weeks.

Recall what Paradigm options specialist Alan Knuckman said here yesterday: $2,675 was the level to watch because it marked the halfway point between gold’s late-October highs and its mid-November lows. Now that $2,675 is in the rear-view, the path is clear for a rally to $3,000.

Crude, meanwhile, is up more than 1% to $70.86 — also the highest in two weeks.

As for stocks, the action looks like a rerun of yesterday — the Dow taking the lead, the other major indexes trailing.

The Big Board is up a half percent, back above 44,000 for the first time in nine trading days. But the S&P 500 is nearly flat and the Nasdaq is slightly in the red.

Mailbag: Costs of War

“Well, I thank you for responding to my challenge about the Temple Mount,” a reader writes after yesterday’s mailbag. “Nevertheless, I am thinking that you missed my point. I was in no way trying to drag you into a secular debate.

“I had simply intended to convey that all the combatants in the region share a common foundation in the Bible, and that in its current manifestation that dispute cannot be adequately understood as long as one’s assessment is divorced from the combatants’ passionately held biblical claims regarding divine claim to the land.

“To the extent that you appear to default to an a priori Western, non-secular perspective seems to me to be deficient, given the ancient Near East, secular foundations of the conflict.”

Dave responds: Sorry if we ended up talking past each other. I just want my government to stay the hell out of that conflict.

The Costs of War project at Brown University says U.S. support for Israel since the Oct. 7, 2023 attacks has cost American taxpayers at least $22.76 billion. A related estimate by the Israeli newspaper Calcalist finds that Washington is funding 70% of Tel Aviv’s military costs.

One day, there’s bound to be blowback.

OK, let’s aim to wind down the week on a lighter note…

Bananas, Inflation and Recession

From the Department of People Who Have More Money Than Sense…

“Maurizio Cattelan's provocative artwork of a banana duct-taped to a wall has fetched $6.2 million at Sotheby's in New York,” reports the BBC — “four times higher than pre-sale estimates.

“The auction house says Chinese cryptocurrency entrepreneur Justin Sun outbid six other rivals to get the Comedian installation of the Italian visual artist on Wednesday.”

Sun — the guy behind the Tron crypto — plans to eat the banana “as part of this unique artistic experience.”

The contempt on social media is palpable: “Duct-taped banana fetches $6.2 million at auction as cost-of-living crisis continues,” says one hot take.

Which brings to mind an episode from the Jimmy Carter presidency in the late 1970s.

Carter had an “inflation czar,” an economist from Cornell named Alfred Kahn. Kahn would often warn Congress that if they didn’t get spending under control, the country was at risk of a recession.

But congresscritters and the media blanched at any mention of the word “recession.” So did Jimmy Carter, as it happened.

Therefore, Kahn took to avoiding the word “recession” in his public comments — opting instead for the word “banana.”

For real. One day he said, “Between 1973–1975 we had the deepest banana that we had in 35 years, and yet inflation dipped only very briefly.”

Then the banana industry started to complain — so he opted to substitute the word “kumquat.” Eventually, a recession — or banana, or kumquat — came anyway in 1980 and Carter was a one-term president.

Kahn died in 2010 at the age of 93. Although he called himself a “good liberal Democrat,” his biggest accomplishment in Washington was a major act of deregulation — disbanding the Civil Aeronautics Board and clearing the way for air travel to become affordable for the masses.

Have a good weekend,

Dave Gonigam
Managing editor, Paradigm Pressroom's 5 Bullets