DeepSeek Sparks Sell Off

I arise this morning to a sea of red with the primary culprit being “Deep Seek” a China led start-up that apparently was developed in a fraction of the time of other large language models with a fraction of the cost. The app launched over the weekend and shot to #1 on the downloads. The competition has technology stocks in the AI space careening lower as speculative investors seem to believe the China knock-off will immediately put all of these companies out of business. Some rapid thoughts as you start your day.

?

• Defense – It is this type of rapid move down that is precisely why we have been raising cash over the last several months, specifically reducing exposure to technology. We now have a decent amount of capital parked in treasuries prepared to deploy. We won’t hesitate to do so if the route continues.

?

• Reality – Stocks had once again gotten a bit frothy and the reality that all stocks don’t go up all the time, is not a bad thing. In my opinion those who are late to the game, chasing names with nascent fundamentals will be punished on this move. It’s never fun to see stocks in the red but it is part of the process.

?

• Not Bearish Yet – At this point, a shake on news like this does not alter my general long-term outlook. In fact, if we shake hard and see a sharp decline that weeds out shorter term traders, this is very similar to what we saw on the Japanese Yen news in August of last year. I would expect it to be recovered fairly quickly. That said, we are heading into earnings season and it will be very important for us to watch what companies are saying about real fundamentals. While my desire is to put our treasury money to work back in equities, should fundamentals actually be turning we would not be so quick.

?

As always, we have our eyes on this from the very beginning and know that we will be on high alert watching and reporting as we see developments.

?

Until next time,

?

~ Quint

?

Did you know??Joule works with clients all throughout the United States. With our process of utilizing technology and online planning portal, there is no geographic limitation to whom we can help. If you need a second opinion or want to explore what an advisory relationship with Joule would look like, review more info on our?site?and we’d be happy to discuss your current situation.

?

Disclosures

Joule Financial, LLC is registered as an investment adviser with the SEC. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser does not constitute an endorsement of the firm by securities regulators nor does it indicate that the adviser has attained a particular level of skill or ability. A copy of Joule’s current written disclosure brochure filed with the SEC which discusses among other things, Joule’s business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov

?

This does not constitute an offer or solicitation. This information should not be considered investment advice. Opinions expressed reflect the judgment of the author and are current opinions as of the date appearing in this material only. While every effort has been made to verify the information contained herein, we make no representations as to its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Past performance does not predict future results. Content should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation. All investing involves risk, including the loss of some or all of your investment.

Certain information contained herein constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events, results or actual performance may differ materially from those reflected or contemplated in such forward-looking statements. Nothing contained herein may be relied upon as a guarantee, promise, assurance or a representation as to the future.

Hyperlinks in this letter are provided as a convenience, and we disclaim any responsibility for information, services or products found on websites linked hereto.

Specific investments described herein do not represent all investment decisions made by Joule. The reader should not assume that investment decisions identified and discussed were or will be profitable.?Specific investment advice references provided herein are for illustrative purposes only and are not necessarily representative of investments that will be made in the future.

All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions or withdrawals, and economic conditions may materially alter the performance of your portfolio. There are no assurances that an investor’s portfolio will match or outperform any particular benchmark. Asset allocation and diversification do not ensure or guarantee better performance and cannot eliminate the risk of investment losses.