The 'Sell in May' Crowd Is Missing Out on This Trend

Prices are rising more slowly than expected...

The consumer price index ("CPI") for June was published last week, and it came in slightly below Wall Street expectations. That got many investors into a celebratory mood because it showed the pace of price growth seen by folks at the store is slowing more than anticipated.

Then the producer price index ("PPI") report, published the following day, appeared to tell the same story. It registered growth of 0.1% in June... half of what economists were thinking.

This set of economic data reflects wholesale prices paid by businesses... whether they're rising or falling, and by how much. It's thought of as a leading indicator of inflation trends, since the prices producers pay can take time to be passed through to consumers.

So prices are calming down... both those paid by people and by businesses that make and sell things. (They're always rising somewhat thanks to a fiat-currency system, but the pace is what investors are interested in today.)

Put that together, and you get what we saw in response: Nearly every major asset – stocks, bonds, gold, bitcoin – went up, except the U.S. dollar.

It feels like the opposite of 2021 and early 2022...

That's when CPI and PPI numbers kept climbing by more than Wall Street was expecting. Seeing this, investors believed that the Federal Reserve would eventually raise interest rates and slow the pace of higher prices – which it did.

If the official inflation numbers keep falling by more than expected now, it could mark a growing belief that rate hikes are near their end. Whether that is actually the case is another discussion. Today, I'm telling you what we see.

We're always going to take "official" government data with a heaping dose of skepticism. Nevertheless, enough people (with enough money in the markets) care about the new data that the markets are up. Party on.

One thing is for sure...

The "sell in May and go away" crowd is missing out.

"Sell in May and go away" has roots in the idea that pre-Internet Wall Streeters might have wanted to sell positions at the start of the summer, so they wouldn't have to worry about ruinous losses while they were away from their desks on vacation.

If that's conventional wisdom, it was no good this year. The S&P 500 Index is up about 9% since May 1, and the tech-heavy Nasdaq Composite Index is around 15% higher.

You can trade from virtually anywhere with an Internet connection now. And more common than selling for the summer is using artificial-intelligence ("AI") programs to make trades. Whether a human trader is around or not, these AI traders know how to respond to price movements, a report like the CPI or PPI, or even the words of an important speech.

Speaking of that...

We've mentioned the recent buzz about AI a few times this year...

In the Digest, we've warned against getting swept up in euphoria around this trend. But we've also noted that the technology will likely transform the way many businesses operate, how people work, and what skills are valued in the years ahead.

This isn't a new discussion... People have been talking about the potential of AI for years. But advancing tools – like the new version of ChatGPT earlier this year – have reignited the story and created more bullishness around AI.

I first wrote about GPT-3 technology back in a September 2020 Digest titled "A Robot Wrote This"...

Developed by San Francisco-based company OpenAI, GPT-3 has been "trained" on billions of bytes of data... including e-books, news articles, and Wikipedia. As directed, it takes a prompt... and attempts to complete it.

We then shared a story of a college computer-science student who directed the technology to write a series of essays with some degree of success. (Fortunately, they required editing like the human version, so we weren't worried about it putting us out of a job.)

And in 2020, we also noted the growth opportunities for AI...

We shared the story about a "robot writing an article" not to scare anyone, but to simply point out that "AI has arrived," saying...

You can be optimistic or pessimistic about these technologies changing the way a lot of people do business and perceive the overall job market... But no matter your stance, it wouldn't be wise to ignore these trends completely.

Some of the biggest companies in the world – and highest-returning stocks – are investing heavily in this space... And our editors have been tracking the developments for years.

In that September 2020 essay, we mentioned Stansberry Venture Technology editor Dave Lashmet calling AI "artificial brains"... and how he'd first recommended owning shares of Nvidia (NVDA) – now an AI poster child – back in May 2016, when it traded for roughly $45 per share. That recommendation – since closed with a weighted gain of more than 600% – now appears in our Stansberry Research Hall of Fame.

Back when Dave initially recommended Nvidia, the chipmaker was known mainly for making graphics cards for video-game systems. But by 2020, it was already making technology with "lots of deep learning capabilities too," Dave told us. As we wrote that year...

A lot of folks don't realize that "deep learning" technology, a kind of machine learning, goes hand-in-hand with microchips...

For instance, Nvidia's RTX 3080 chip uses algorithms to predict where light rays should be on a gamer's screen... and it does it at twice the speed of the chips used in Sony's new PlayStation 5 and Microsoft's Xbox Series X gaming consoles.

As Dave told us of this new Nvidia chip, "It's both a video game story and an AI story." This new chip allows 4K gaming at very fast refresh rates – 90 times per second, which is faster than the human eye can see.

And the very same idea of "deep learning" has a wide variety of applications, which makes its potential market massive. Dave says these technologies could be used for content creation, as the "robot article" shows, as well as for something yet unimagined or totally unrelated – like driverless cars...

We also talked about how a longtime favorite company of our Dr. David "Doc" Eifrig – Microsoft (MSFT) – had just lost out on securing the underlying code to social media platform TikTok... but may have made out better with a recent exclusive license deal with OpenAI for GPT.

That said, the primary feedback I received three years ago about AI was along the lines of "move on to something else." My, has that tone changed. Everyone wants to talk about GPT and AI now. And so we are again, too...

The AI debate you'll want to hear now...

We've received countless questions about the AI craze. And earlier this week, we aired a special event to give you our full and unbiased answers.

In it, Doc sat down with 50-year Wall Street veteran Marc Chaikin, the founder of our corporate affiliate Chaikin Analytics, to debate the latest buzz around AI and what to make of it.

Is this just the latest tech bubble? Or will AI really change the world and the economy for decades to come? And, importantly, what does AI mean for you and your money?

Doc and Marc covered all of these topics. Their perspectives might surprise you. As Doc says...

Marc and I have very different investing philosophies. But I asked Marc to join me because he's spent decades on the leading edge of applying new technological breakthroughs to the field of finance.

Not to mention, Marc has a higher-level understanding of systems and neural networks than anyone else we know of.

As Doc's alluding to here, Marc has created several different technologies and indicators that are used by some of Wall Street's biggest firms today. He also happened to use them to predict the COVID-19 crash... the market bottom in March 2020... and a "bullish personality shift" in stocks late last year.

In other words, expect to get some useful market analysis with the AI talk as well. If you missed the discussion, check it out right here.

Good investing,

Corey McLaughlin

Editor's note: AI technology is suddenly advancing so quickly, investors who wait too long may never catch up. If you've given any thought to investing in the AI sector – or if you simply want to be better informed, so you can discern what's really happening as this trend evolves – our recent event will explain the details... including one step you should consider taking right now. Watch the video before it goes offline.