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Wil the last one in the Crypto room please turn out the lights?

The last time I wrote about Crypto was in August when I had this to say, “I think Bitcoin is about to make another downward move on its inevitable course lower. I remain a firm avoider of crypto. And, I could always be wrong.” So far, I’ve been spot on.

Hopefully no one reading this newsletter is getting crushed in Crypto. As FTX collapsing tens of billions overnight shows, there’s nothing there! The “value” simply doesn’t exist and the emperor truly has no clothes.

Now, an astute reader (okay, even a casual observer) might point out that a lot of micro-caps are down just as much as these digital coins. This is true. But, there’s a big difference; there is a proven path towards monetization of technologies through the stock market. If a company executes on its business plan, investors will be rewarded. Meanwhile, Crypto is still struggling to find a valid business case. Avoid buying the dip. I believe it gets a lot worse.

Showing that plunging Crypto doesn’t hold much meaning for stocks, the market had a big rally last week. Inflation coming in lower than expected sparked the rally and it was quite impressive. Bear market rallies can be that way; almost breathtaking in their ascent.

With many funds positioned for a continued downward move in the market, it’s quite possible that this rally has more legs. Yet, at the end of the day, liquidity matters and it is continuing to leave the system. My guess is the next big move is lower. I remain quite cautious in my outlook.

While I generally stick to micro-caps, I have been unable to avoid recommending investors skip the Crypto hype as it was an obvious situation of ridiculous hype driving crazy valuations that were doomed to come back to earth eventually. I’ve seen this act before and it never ends well.

Along those lines, I also said that investors should avoid Tesla for the same reasons. More so as Elon Musk was destined to sell a ton of stock. Little did I know that on top of his tax sales, he needed to fund Twitter. This is an ongoing calamity.

In May, I said this, “I continue to believe that Tesla has more risk to the downside and would much rather be short than long this stock.” I’m reiterating this stance. The bloom is off the rose and the valuation has a lot more downside left in it.

On the other end of the spectrum, most of my stocks have little to no expectations priced into them. Over the last year and a half, valuations have cratered to the point where the upside potential dwarfs the current market caps.

What can reverse this tide? Catalysts that add tangible value. Reporting more pre-clinical data isn’t going to cut it. Companies need to hit meaningful milestones in order to see their shares appreciate and have a chance of holding the gains.

Are there any on the horizon? I believe that several are out there that can be achieved over the next couple quarters. Here are the biggest events that I hope to see. If these transpire, they are going to permanently change the valuations of the companies:

1. Anixa ($ANIX) demonstrates success on at least 3 ovarian cancer patients. Their CAR-T treatment is potentially the first successful one in solid tumors. It’s also quite different from other programs and, therefore, not getting any respect in the market. If they can show the same degree of success they’ve seen on the first patient across two more, the stock will likely go ballistic.
2. Atomera ($ATOM) inks a license deal providing visibility into commercialization. I continue to believe this event is inevitable but also impossible to predict (I gave that game up). It will happen someday and best to be there when it does. I have no idea when that day will be, but based on comments on the last conference call it seems closer than ever.
3. INmune ($INMB) gets FDA approval to start their phase 2 trial. Normally I would suggest you need more than an FDA thumbs up on commencement of a trial to be a meaningful event, but I believe this is an exception. The industry is increasingly pointing towards inflammation as the biggest issue in CNS and INmune has the best solution. I think moving into phase 2 is sufficient to attract significant investor attention and re-rate the shares.
4. Movano ($MOVE) successfully monitors glucose levels in their ongoing trial. The holy grail in wearables, we are potentially a few weeks away from hearing this program has achieved this milestone.
5. ParkerVision ($PRKR) wins their lawsuit against Intel. The February court date is rapidly approaching. With the recent addition to their board of a very senior attorney, one might think the stars are aligning here. With the history of disappointments, it’s tough to bet too big here. But, sticking one’s toes in the water could see a nice payout soon.
6. TFF Pharma ($TFFP) inks a major partnership. Similar to Atomera, it’s been tough for management to predict the timing much less yours truly. But, we all know, when it happens it’s going to be very meaningful for investors.