August 18, 2026
What You Need to Know Today:
Now that’s circular: The profit boom at tech companies like Amazon and Alphabet comes from investments in AI companies
Tech giants like Amazon (AMZN) and Alphabet (GOOG) have powered the stock market to record highs. But in recent months, a big driver of those two companies’ profits came from an unusual source: The increasing value of their investment stakes in artificial intelligence companies, according to a really important piece (in my opinion) by Joe Rennison in the New York Times on August 14. “Over 70% of Alphabet’s net quarterly income came from investments in other companies, and in particular, in Elon Musk’s SpaceX, according to a recent regulatory filing and analysis from Satori Insights, a financial markets research firm. SpaceX went public in June in the biggest initial public offering ever. Investment gains also accounted for roughly 65% of Amazon’s net income, largely stemming from its stake in Anthropic, a leading A.I. start-up that is also planning to go public. Those gains underscore a growing vulnerability in the broader stock market: The companies that keep pushing the market higher are increasingly dependent on each other’s success.” “It’s circular,” Matt King, founder of Satori Insights, told the Times. “What’s funding A.I. is now increasingly more A.I.”
Saturday Night Quarterback (on a Monday) says, For the week ahead expect…
It’s retail earnings week. This week’s (and next week’s) earnings reports include: Tuesday, August 18: Home Depot (HD) Wednesday, August 19: Lowe’s (LOW), Target (TGT) Thursday, August 20: Walmart (WMT) Tuesday,Aug 25: Dick’s Sporting Goods (DKS), Macy’s (M)
Wednesday, August 26: Kohl’s (KSS) Thursday, August 27: Dollar General (DG) What am I looking for?
It’s not just U.S. Treasury yields–interest rates are up everywhere from the EU to Japan
Government borrowing costs in Paris, Berlin, Washington, Tokyo and London hit their highest level since the 2008 financial crisis on Monday as investors feared the Middle East crisis would keep inflation higher for longer. Oh, and toss in worries over big government deficits.Fears that central banks would continue to tighten monetary policy, to prevent inflation bursting out of control, pushed up bond yields as traders sought a higher rate of return for holding government debt. The money markets indicate there is almost an 85% chance that the European Central Bank will raise interest rates in September. The ongoing Middle East crisis pushed oil prices up by 6% last week, and Brent crude rose higher on Monday as the U.S. and Iran struggled to end the war and President Donald Trump threatened to bomb Oman if it “gets in the way” of his effort to end the war.
Buy Alibaba on its move up to #1 global AI model
Alibaba’s (BABA) open-weight models have accumulated more than 3 billion global downloads in the past six months, eclipsing Meta Platforms Inc., Alphabet Inc. and domestic peers to become the world’s No. 1 artificial-intelligence model. I think that AI is a truly revolutionary technology, but I’ve got string reservations about the high valuations and the potential future profitability of U.S. frontier closed model AI companies such as OpenAI and Anthropic. And I really don’t like the circular, debt-funded financial ecosystem that has turned the U.S. sector into something that looks, on some days, like a Ponzi scheme. I’m buying the U.S. -traded ADRs on Monday, August 17. A buy of Alibaba on my 12-18 month Jubak Picks and my long-term 50 Stocks portfolios is an attempt to invest in this technology while avoiding some of the risks. Morningstar calculates a $241 fair value price for the ADRs, which closed at $123.81 on Friday, August 14.
Now that’s circular: The profit boom at tech companies like Amazon and Alphabet comes from investments in AI companies
Tech giants like Amazon (AMZN) and Alphabet (GOOG) have powered the stock market to record highs. But in recent months, a big driver of those two companies’ profits came from an unusual source: The increasing value of their investment stakes in artificial intelligence companies, according to a really important piece (in my opinion) by Joe Rennison in the New York Times on August 14. “Over 70% of Alphabet’s net quarterly income came from investments in other companies, and in particular, in Elon Musk’s SpaceX, according to a recent regulatory filing and analysis from Satori Insights, a financial markets research firm. SpaceX went public in June in the biggest initial public offering ever. Investment gains also accounted for roughly 65% of Amazon’s net income, largely stemming from its stake in Anthropic, a leading A.I. start-up that is also planning to go public. Those gains underscore a growing vulnerability in the broader stock market: The companies that keep pushing the market higher are increasingly dependent on each other’s success.” “It’s circular,” Matt King, founder of Satori Insights, told the Times. “What’s funding A.I. is now increasingly more A.I.”
There are no home buyers (a slight exaggeration)
From Aaron Parnas on the Parnas Perspective:The number of active homebuyers hit its lowest level in at least 13 years in July, with Redfin estimating just 967,000 buyers in the market, down 2.5% from June, as mortgage rates climbed to nearly their highest level in a year.
This market is just too damn expensive given the risks–Special Report 10 picks to stay (mostly) invested while cutting your risks
Could stocks move higher from here even though they’re more expensive than a year ago? Of course.
Could they gain another 29.8% in a year? It’s possible. But it strikes me as unlikely.
That sums up the current market puzzle very neatly, I think. Stocks are expensive and don’t seem to be pricing in potential very real risks. But stocks have returned almost 30% in the last year. And it’s very hard to walk away from the possibility of that kind of gain. Even if it is unlikely. What I’d suggest right now is a stock market strategy that takes into account both a solid appreciation of the excessive valuations in this market (along with a failure to price in risk), and the realities of investor psychology.
It is too difficult to go cold turkey on stocks right now and move 100% out of the market. On the other hand, you should be moving to reduce your exposure to the riskiest parts of the market–high multiple stocks–and raising your exposure to counter-cyclical or non-cyclical stocks. In this post, I’m going to give you 10 stock picks to use in executing that kind of strategy–a way to stay in the market and yet to reduce your risks.
Special Report: The Next Big Things and how to invest in them–Part 1 Quantum Computing; Part 2 Nuclear Fusion
A suggested quantum computing portfolio. If you want a piece of this Next Big Thing, but with less risk and less upside than a pure-play quantum stock, I’d suggest Alphabet/Google (GOOG). Among pure plays I’d include D‑Wave Quantum (QBTS), up about 235% year‑to‑date as of late 2025; Rigetti Computing (RGTI), up34% YTD by late December; and IonQ (IONQ), up around 25% year-to-date by late December.
Special Report: 3 Stock Market Bubbles: When will they burst? What to do now? Part 1, the AI bubble, Part 2, the debt market bubble, and Part 3, the cheap money bubble
This is a very difficult stock market. Even as stocks climb to new record highs. On the one hand, even investors who are all in, maybe even overweight to the long side, worry that this rally isn’t sustainable for much longer. By most historical standards valuations are off the charts. I get a steady stream of stories and posts asking whether XYZ stock has climbed to faro fast. Volatility on somedays can be downright scary with relatively minor events leading to big market moves. It’s simply very hard to stay on board this rally. On the other hand, it’s very hard to get off the train. I see lots of Wall Street analysts cutting recommendations from “buy” to “hold” on valuation fears, but I see almost no one saying “sell.” FOMO–fear of missing out–is just too strong. Which is totally understandable. The Standard & Poor’s 500 index was up 25.02% in 2024 and was up another 18.11% in 2025 to date through October 27. Market leaders have racked up even bigger gains. AI chip icon Nvidia (NVDA) was up 171% in 2024 and has gained another 39% in 2025 through October 27. It’s insanely difficult to walk away from those kinds of gains. So what’d you do?
Special Report: How to invest in our 3 energy crises–First 8 picks JCI, BEPC, LNG, SMNEY, GNRC, CCJ, EQNR and GVE
You don’t need the Department of Energy or the Energy Information Administration to tell you we have an energy crisis. (Good thing since they’re shut down with the rest of the Federal government today.) All you need to do is look at your electricity bill. This summer monthly home electric bills jumped in Trenton, New Jersey, for a typical home by $26. In Philadelphia, it increased about $17. And in Columbus, Ohio, it spiked $27. And your monthly bill doesn’t capture the full damage. In California,residential electric rates are up 62% in five years. In Maryland residential rates are up 54% in five years. Most frustratingly–and most importantly for investors–those bills don’t explain the nature of the crisis.
Or more accurately “crises.” Because we’re the middle of three, overlapping and interlocking energy crises. That are playing out on different timeframes that range from NOW to the next 5 to 10 years. It’s that last point that’s critically important for investors. Because to make money–and let’s be clear: like in all crises there’s money to be made investing in these three crises–you’ve got to understand the nature of each crisis and buy into it at the right time. Not so early that you sell in disappointment because your profits haven’t arrived yet. Not so late that all themes tasty profits are gone. This Special Report is about untangling the 3 energy crises, giving you a timeline for investing in each, and then calling out 10 picks you cause to profit from theses crises. Ya, ready?
Special Report: “10 better dividend stocks for a dangerous market”–Part 1 with 6 sells, Part 2 first buy COLD
You remember what The Rolling Stones sing? “You can’t always get what you want”?
In this historically expensive market with a slowing economy, with a falling dollar and a climbing government deficit, where no one knows what the Trump tariffs regime we lookalike in 60 days, and where stagflation where inflation rises even as the economy’s growth rate slows I know what I want: some safe dividend stocks to take some of the risk out of my portfolio, with tasty 8% dividend yields, with solid financials and low debt, and with relatively low exposure to any downturn in the economic cycle. Is that too much to ask? Well, apparently, Yes. Because I can’t find any stocks that fit the bill. Stocks paying anywhere near that yield, for example, come with more rick than I want to take on in this market and this economy. Especially because the last thing I want to do is add high-risk, go-for-broke dividend stocks to the “safe” side of my portfolio. But the Stones go on to advise “but if you try sometimes, you’ll find/You get what you need.” And that’s what this Special Report “10 better dividend stocks for a dangerous market” is all about.
