My Top 5 Blue Chip Picks For The Face Ripping Rally To Come

In the last few weeks, I’ve really focused on what GNG members need to know most. 10 Reasons To "Shut Up And Buy something Smart...You'll Thank Me In A Year"😉 On March 23rd, I published this special report explaining why the market bottom was historically and fundamentally likely to come within 1 to 3 weeks. And then on March 25th, I explained the detailed (yet elegantly simple) plan for Ultra ZEUS (the hovercraft version of ZEUS) and how to take advantage of the face-ripping rally to come. What Happens After The Correction Ends? Ultra ZEUS Plan C (My Family's Portfolio For The Next Year) This is the “face-ripping” rally that I was talking about before the 2-week cease-fire was announced on Tuesday, April 7th. In the March 25th report, I explained that March 23rd looked like the likely bottom. Connor later confirmed our latest super Algo estimates 92.8% probability that March 23rd was the bottom. I also explained how the negative convexity hedges (the ones that short the market directly) would get slaughtered in a 40% historical rally that follows the 15% normal mid-term year correction. And given CTA’s 53% oil exposure, the need for Plan C was significant, because the theoretical short-term worst-case losses from the 56% hedging of the portfolio might, in a worst-case scenario, generate $1.15 million in losses. And that’s why I spent the week following that Mike Zaccardi table working on Plan C. In the March 25th report, I explained why Ultra ZEUS was expected to earn $508,000 over the coming year (about 10%) while Plan C had a base-case (based on 200,000 Monte Carlo simulations) of 31% (with a 63% fundamentally justified upside potential). 5% probability of that full 63% upside potential. Plan C Triggered On Wednesday, April 9th Tuesday night, I saw the headlines and immediately jumped into action. I had the rebalancing spreadsheet ready and placed all the trades for the market open, AND then double-checked with the AGIOS council to make absolutely sure that it was appropriate to manually rebalance instead of waiting for the trip wire signal that the correction bottom was in. TAIL ETF hitting $10.36 = breaking through 10 levels of support = 5.9% decline vs 19% historical smallest decline in the face of correction rallies. I spent 5 hours making absolutely sure that all systems were green across the board, and it was time to launch plan C on Wednesday morning. Wednesday morning, TAIL hit $10.34 and would have initiated Plan C anyway. I woke up, confirmed that all trades were executed correctly, and updated all our risk-tracking systems. And now it’s time to explain why Plan C is my top 5 blue-chip recommendations for the coming face-ripping rally. After I geek out with some valuation math…because you know, math is fun😉 First: What Should We Actually Expect From This “Face Ripping” Rally In The Coming Year? The 40% median rally I discussed on March 23rd and March 25th was based on the historical 15.6% median peak decline. Morningstar uses discounted cash flow models in which every analyst covering a company builds a model estimating future growth, and then they estimate a discount rate that they think the stock market will assign to the company’s future cash flow. And then they weight ETFs by those estimates to get bottom-up valuation estimates for the broader market and indexes. For companies not covered by an analyst, they use algos to estimate fair value This is a useful but limited way to estimate broader market valuation (since you are using a single analyst’s model and then assuming a discount rate that is an educated guess). BUT the market, which bottomed at a 13% discount per Morningstar on Monday, March 23rd (-8.9% peak intra-day decline), has recovered a bit and is now 8% undervalued based on discounted cash flow (factoring in growth). So let’s take a look at what the PEGY analysis says. PEGY Analysis: How I Think About Broader Market Valuations