Where I'm Putting Capital in a Nervous Market
I've taken a defensive posture, with 45% in cash now, but am looking at two names in particular.
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Investors are nervous on Wednesday morning as they await the Federal Reserve interest rate policy decision and four major earnings reports after the close. New highs in oil prices are also an issue, as many market players wonder why they are not causing more pressure.
President Trump is indicating that the blockade of Iran could last months, which would cause long-term increases in gas prices, but the market is acting as if that is unlikely. It would be surprising if Trump had a high level of patience with Iran, yet oil is hitting new highs, and the market isn't reacting much.
Powell's Inflation Tone Is the Real Tell
The Fed decision is unlikely to have much market impact as no one expects any change in policy at this point. One thing to watch for is Jerome Powell's comments on rising inflationary pressures from oil and energy costs.
Goldman Sachs raised its December 2026 YoY Headline PCE Inflation Forecast by 0.3pp to 3.4% and its Core PCE Inflation Forecast by 0.1pp to 2.6%. At some point that is going to cause some severe problems if this pressure continues.
Beat-and-Raise May Not Be Enough This Time
Earnings tonight from Alphabet (GOOGL) , Amazon (AMZN) , Microsoft (MSFT) , and Meta Platforms (META) have the potential of changing the trajectory of the overall market. The AI sector has been the primary driving force since the March 30 low. Investors have positioned themselves primarily in the AI sector as the place to be when the Iran situation is resolved. The stocks are showing some signs of stalling now as we await the reports.
The billion-dollar question is whether beat-and-raise reports will be good enough to bring in more buyers. In addition, there will be intense scrutiny of CapEx and ROI. Those issues killed the stocks earlier this year when fourth-quarter results were released.
Where I'm Putting Capital
As I discussed on Tuesday, I have raised my cash levels substantially and am around 45% cash right now. I am going to wait for the earnings news tonight before I do much new, but I'm looking for some strategic opportunities.
One name I added was BridgeBio Pharma (BBIO) , which had a huge reversal on Tuesday due to the resolution of some patent litigation. There were some folks who were unhappy with the terms of the deal, but this removes what has been a substantial obstacle for the stock and I believe it will see good support from here. I've added a little and will be building this position.
Another stock I'm looking at after a selloff on earnings is SoFi Technologies (SOFI) . While the company's report and guidance were in line, the big issue is the very poor performance of the Technology Platform, which saw revenue fall 27% YoY to roughly $75.1 million.
This SoFi technology segment is viewed as the "AWS of FinTech" and commands a higher valuation multiple than the lending business. A decline here hurts the growth narrative more than a lending beat helps it.
SoFi management said this drop was due to the loss of a high volume of low-margin legacy clients, but investors are obviously concerned. Another client, Robinhood Markets (HOOD) , also indicated some weakness. I'll keep an eye on this name, but it may take some time for it to sort out this issue.
Right now it looks like I should have raised more cash than I did, but I feel pretty comfortable with my defensive positioning.
Related: Corning Slips After a Big Run — And That May Be Exactly What Bulls Wanted
At the time of publication, Rev Shark was long GOOGL and BBIO.
