Replay of yesterday's big event with Jeff Brown and me; My former colleague Herb Greenberg on a 'SPAC Attack'; Conflicting macroeconomic data; I'm still pounding the table on Alphabet's stock; Amazing video of real-time speech translation in Google Meet

1) If you didn't catch the big event yesterday, you're in luck...

In a special briefing, I joined my friend Jeff Brown – the founder and chief investment analyst of our corporate affiliate Brownstone Research. And we both shared the same warning for June 2, which could be the catalyst to at least double your money on five different investments and reshape the U.S. on a scale unseen since 1999.

This could be the artificial-intelligence ("AI") investment opportunity of the decade – and it's all centered on a tiny California company.

Don't miss out... You can still catch up on all the details in the briefing with Jeff and me right here.

2) Following up on my warning in yesterday's e-mail about special purpose acquisition companies ("SPACs"), my friend and former colleague Herb Greenberg expressed similar sentiments in this column yesterday: Beware of This SPAC Attack. Excerpt:

For proof of just how risky they are, look at the numbers, which show that only 8% of all de-SPACs since 2021 are in the green, with a median negative return of 87%. Of the 73 that de-SPAC'ed last year, only 6% are above their IPO price, with a negative return of 88%.

Take a look at this chart he shared with a year-by-year view...

And as Herb continued in his column:

What's more, of those in the green this year – as of yesterday – only two were positive. One is WeBull (BULL), an online trading platform officially headquartered in Florida, but whose strong China ties raise questions about whether it's really a Chinese company. After popping higher by more than 500% immediately after its April de-SPAC, it's now up around 20% from its IPO price.

After reading Herb's column, I took a quick look at WeBull. And in less than a minute, I could tell it's a stock to run far away from...

It has a $5.8 billion market cap... it trades at about 14.5 times trailing revenue... and the company's CEO, chief operating officer, and chief financial officer all have Chinese names – lending credence to Herb's conclusion that it's really a Chinese company.

And if you know anything about the history of Chinese companies listing on U.S. exchanges through nontraditional avenues (in the past, via "reverse mergers"), then you know what a huge warning flag this is.

For example, here's a 2020 report about it from three professors at Texas A&M University: Shell Games: Chinese Reverse Merger Fraud. It features this terrifying statistic: "Between 2007 and 2010, Chinese companies used reverse mergers to defraud investors of $34 billion."

3) One of the reasons I don't like to invest based on macroeconomic predictions is that you can always find data to support whatever narrative you want.

Here's a good example from two recent posts on social platform X by Charles Schwab Chief Investment Strategist Liz Ann Sonders...

The first shows that leading economic indicators are the worst they've been since the global financial crisis more than 15 years ago:

And the second shows that corporate earnings revisions have turned positive over the past two weeks after 20 consecutive weeks of declines:

My advice, as always, is to ignore the short-term noise and remember that stocks have historically been – and will continue to be – the best place to invest in the long run.

Take a look at the incredible chart below on this (courtesy of author and financial advisor Peter Mallouk from a recent post on X):

4) The prior chart shows the return of the S&P 500 Index, which any investor can own quickly, easily, and cheaply.

If you want to try to do better than the market with a portion of your portfolio, the best way, in my opinion, is to buy the stocks of high-quality companies when they're out of favor and hence cheap (or at least not overvalued).

A great example today is Google's parent company, Alphabet (GOOGL), which I most recently wrote about on April 25 (Looking into earnings reports from Alphabet and Intel) and May 8 (Alphabet remains my favorite Magnificent Seven stock).

This Wall Street Journal "Heard on the Street" article from yesterday captures investors' concerns: Google Still Needs to Convince Investors It Has Got the Hang of AI. Excerpt:

Google's breadth still hasn't stopped at least some search users from gravitating toward AI chatbots like ChatGPT and Perplexity. Meanwhile, the federal government is pressing two antitrust cases seeking to break the company up, threatening some of its vital distribution channels.

The twin threats of AI displacement and a forced breakup amount to a new existential risk for the company. The stock of Google's parent, Alphabet, fell Tuesday after its I/O conference keynote and is now down 13% this year.

As a result, Alphabet "is the only megacap tech company to have lost market value over the past 12 months." And as this chart from the article shows, Alphabet is the cheapest among the other mega-caps based on forward earnings estimates – even trading at a substantial discount to the S&P 500 (which is truly crazy!):

The WSJ article notes (and I agree) that Google is successfully incorporating AI into its dominant search business:

And Google might not actually be running that far behind its new generative-AI competitors. A survey by Morgan Stanley of Americans 16 and up found that 40% of respondents reported in March that they used Google's Gemini at least once a month, which was only 1 percentage point lower than the number saying they used ChatGPT that much.

It also highlights that the stock hasn't been this cheap since early 2023:

It helps that Google has been here before. The stock was previously at this valuation level in early 2023, after the public launch of ChatGPT and the partnership between OpenAI and Microsoft created the impression that Google was now playing catch-up in AI. Google responded by aggressively launching its own AI features while keeping its core business humming. The company's annual advertising revenue has risen 20% to about $270 billion since ChatGPT's launch, a sign that it remains strong in searches with commercial intent. Google's corporate cloud business – another distribution point for AI services – has grown by 45% during that time.

As you can see in this three-year chart, anyone who bought GOOGL shares in early 2023 doubled their money in only 15 months:

I suspect history will repeat itself... which is why I continue to pound the table on Alphabet's stock.

5) While Google Meet is only a tiny part of Alphabet's business, I think this amazing video from a post on X showing an English and Spanish speaker conversing using real-time translation built into the software underscores Google's innovation:

Best regards,

Whitney

P.S. I welcome your feedback – send me an e-mail by clicking here.