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 Gainers📈 & Losers📉

Our Biggest Gainers & Losers of the Day in the $100,000 Build Portfolio

For the 12th November 2024:

• Profit from Trump’s Trade War🥊

• AI’s Creative Sidekick🎨

Profit from Trump’s Trade War🥊 

He’s barely been elected & Chinese stocks have taken a beating.

Threats of 60% tariffs have been enough to send Chinese stocks spiraling.

Of those, JD.com was my biggest loser today. If it keeps losing ground, I’m going to aggressively scale up my position size.

Here’s why.

Trump’s Tariff Talk

I could do a whole segment about tariffs but so we’re all working off the same definition, here; Tariffs are the government's way of saying, “We’re gonna charge extra if you want to bring your stuff into our club”. Why would they want to do that?

It's a tax that makes foreign goods pricier so local stuff gets the spotlight & keeps the money in your economy.

(If you want to do your own research on tariffs & how they can effect the economy, Ray Dalio does a great job of tying it all together in his book here)

So Trump’s threatening to make goods coming from China 60% more expensive. Not ideal if you’re an ecommerce brand that runs on volume & thin margins.

But here’s the thing.

JD’s not exactly exporting boatloads of goods stateside. Almost 100% of JD’s revenue comes from China. That’s right. Practically all of it.

“What does their US exposure look like?”, you ask?

Well, they help Chinese companies with logistics for getting into the American market. But that slice is small. Small enough to not justify a plummeting stock price from a 60% tariff.

Compare JD to the other big kids on the block for context.

- PDD Holdings: About 60% of their sales are U.S.-bound.

- Alibaba: Roughly 19% of revenue tied up in international sales.

JD’s revenue is practically tariff-proof compared to its competition which makes them one of the best picks. That’s if you want exposure to Chinese stocks in the first place.

The Numbers Don’t Lie 💸

What makes them even more appealing when they have these huge 7%+ drops in a day is they were already a good value buy. Now it’s shockingly low.

A solid earnings beat last quarter & a PE ratio well below the industry average shows undervalued fundamentals.

Will tariffs tarnish those fundamentals? I doubt it. I think it’ll be inconvenient at worst & most likely, barely noticeable.

My current position in JD.com is quite small & already up 34%. I’d say it’s reasonable to expect them to reclaim recent highs in the future which still leaves over a 30% gain up for grabs.

I’ll keep buying the dip on this one. The bigger the dip, the bigger my basket. 🛍️ 

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AI’s Creative Sidekick🎨

I did a deep dive here on these guy’s a couple of weeks ago.

Adobe is up 8% since then. Today they dropped some more news the market liked & gained 4% for it.

So what is the news? 🤔 

Well, we know the adobe suite is having a love affair with AI tools. They’ve now cranked up the AI dial on their stock photo segment, too.

Just so we’re all on the same page, a stock photo is a pre-made, ready-to-use image that anyone can license. They’re perfect when businesses need a quick visual without hiring a photographer.

Anyway, Adobe just released some fancy new AI tools that let’s you take a stock photo & tweak it with a little AI magic ✨.

You start with a basic image, tell the AI what to do, & BAM💥 

You’ve got something custom-made without lifting a finger. I think this is actually a super helpful tool for this space. If you’ve ever used stock images before, you’ll know you can usually get pretty close to what you want but it’s never perfect, like when you can’t quite scratch that itch in the middle of your back. This’ll be the back-scratcher.

Ok great. Another useful tool but…

What’s the Big Deal?

1/ Creators Get Their Cut 💸: Even if the image gets an AI makeover, the original artist gets paid as if it’s untouched. This is is super important because adobe are working with creatives rather than trying to replace them. I think companies that use AI to replace rather than enhance will get bitten in the long run.

2/ AI Isn’t Taking Over; It’s Leveling Up: The Adobe execs feel exactly the same way. Adobe exec Matthew Smith said AI isn’t here to replace photographers or artists. It’s here to make the blank canvas less… blank. Generative AI gives creators a superpower to be more efficient, not make them unemployed.

Analysts have been all over on Adobe’s AI moves since their Max event last month. It looks like the market is behind Adobes strategy of building a win-win for creators and the company’s bottom line & I’d have to agree. I think it’d be a mistake to use AI to run as lean as possible in a space that really does need a human touch.

They currently make up around 0.5% of the portfolio & with Adobe keeping it fresh, bringing more value to its platform & giving creators more ways to get paid I’ll keep buying in for now.

Target price just above $600 gives about a 16% gain from where we are now.

That’s all! See you same time tomorrow 👋 

P.S Hit reply & let me know what you thought of today’s newsletter. All feedback is welcomed ❤️