The artificial intelligence sector is showing critical warning signs that suggest a significant correction may be approaching. Recent market analysis reveals that AI stocks, particularly the “Magnificent Seven,” have been making lower highs since December 2024, diverging from broader market performance – a pattern that historically precedes major corrections.The I/O Fund, for example, has been 100% hedged since December 27th. Bridgewater Associates quietly rotated out of tech. With AI unicorn valuations rea ...

Market Volatility and Options Pricing - Options market volumes have surged in recent years, but the VIX (CBOE Volatility Index) has returned to around 16, suggesting relatively cheap options given existing risks [2][3] - Suppressed correlations between stocks, as indicated by the SIBO correlation index in the teens (historically 40s-50s, crisis periods 90s), are contributing to lower volatility [3][4] - The current divergence between headline risk and options market pricing presents opportunities for investors and traders [5] Options Strategies and Risk Management - The options market is suitable for risk management, particularly through option income strategies (e g, covered calls, cash-secured puts) to reduce risk and generate monthly income [7] - Hedging strategies, such as buying protection (e g, purchasing insurance), can reduce risk independently of future correlations [8] - For option income strategies (selling options), shorter-dated expirations are preferred to capitalize on time decay [9] - For hedging strategies, longer-dated puts can be used to protect against market drawdowns [10] Speculative Activity - Increased volume in the options market is partly driven by speculative activity, such as lottery ticket buying through calls on meme stocks [6]

Core Viewpoint - Kinder Morgan reported strong second quarter results for fiscal 2025, with significant revenue growth and a notable increase in net income, reflecting operational strength in its core pipeline and storage businesses [1][5]. Financial Performance - Revenue reached $4.04 billion, exceeding analyst estimates by $213 million, and showing a year-over-year increase of 13.2% from $3.57 billion [2][5]. - Adjusted earnings per share (Non-GAAP) were $0.28, matching consensus estimates and representing a 12% increase from $0.25 in Q2 2024 [2]. - Net income rose to $715 million, a 24.3% increase from $575 million in the prior-year quarter [2]. - Adjusted EBITDA was $1.97 billion, a 6% increase from $1.86 billion in Q2 2024, marking a company record [2][5]. - Free cash flow declined to $1.00 billion, down 9.4% from $1.11 billion in the previous year [2]. Operational Highlights - The Natural Gas Pipelines segment saw a 10% increase in adjusted segment earnings, with transport volumes up 3% due to higher LNG and power generation deliveries [6]. - The Products Pipelines segment experienced a 3% decline in earnings despite a 2% increase in volumes, attributed to weaker commodity prices [6]. - The Terminals segment's adjusted earnings increased by 7%, supported by high capacity utilization in liquid storage at 94.4% [6]. - The CO2 and Energy Transition Ventures segment reported a 10% decrease in earnings, impacted by lower prices for CO2 and regulatory credits [6]. Project Backlog and Investments - Kinder Morgan's project backlog grew by $1.3 billion to $9.3 billion, with 93% dedicated to natural gas projects [7]. - Significant investments include the Trident, Mississippi Crossing, and South System Expansion 4 projects, aimed at meeting rising natural gas demand [7]. - The company placed $750 million worth of projects in service during the quarter [7]. Environmental and Safety Initiatives - The quarter showed progress in environmental and safety initiatives, with no major incidents reported [8]. - Renewable natural gas (RNG) production capacity increased to 6.9 billion cubic feet per year [8]. - Hedging strategies were implemented to protect commodity prices in renewables and CO2 through 2028 [8]. Dividend and Shareholder Returns - The board declared a quarterly dividend of $0.2925 per share, reflecting a 2% year-over-year increase, supported by fee-based cash flows [9][13]. Business Model and Strategic Focus - Kinder Morgan's business model relies on long-term, take-or-pay contracts, providing stable cash flows and insulation from market volatility [10]. - The company focuses on expanding natural gas capacity, growing its project backlog, and securing new contracts to meet demand growth, particularly for LNG exports [4][11]. Future Guidance - Management reaffirmed its fiscal 2025 outlook, projecting net income of $2.8 billion (up 8%), adjusted earnings per share of $1.27 (up 10%), and adjusted EBITDA of $8.3 billion (up 4%) [12]. - The guidance assumes a West Texas Intermediate oil price of $68 per barrel and a Henry Hub natural gas price of $3.00 per million British thermal units [12].

Group 1 - Major stock indexes are nearing all-time highs, prompting some investors to consider protecting their gains against potential market downturns [1] - For investors lacking the time or expertise to manage their own hedging strategies, certain ETFs are available to assist [1] - Fred Piard, a quantitative analyst with over 30 years of experience, runs an investing group focused on quality dividend stocks and tech innovation [1] Group 2 - The investing group also provides market risk indicators, real estate strategies, bond strategies, and income strategies through closed-end funds [1] - Fred Piard has been investing in data-driven systematic strategies since 2010 and is the author of three books [1]

Group 1 - Gold is highlighted as the only precious metal that should be included in investment portfolios due to its historical performance in protecting value during market downturns and generating alpha since the 1970s [1] - The analyst, known as The Barnacle, emphasizes a quantitative approach to investing, valuing mathematical analysis over sell-side analysis, which is often deemed inadequate [1] - The investment strategy includes a focus on value stocks with growth potential across various market capitalizations, including large caps, midcaps, small caps, international stocks, gold miners, and REITs [1] Group 2 - The analyst has a beneficial long position in AEM shares, indicating a personal investment interest in the company [2] - The article expresses the analyst's own opinions without external compensation, suggesting an independent viewpoint on the investment landscape [2]

Group 1 - Major stock indexes are nearing all-time highs, prompting some investors to consider protecting their gains against potential market downturns [1] - For investors lacking the time or expertise to manage their own hedging strategies, certain ETFs are available to assist [1] - Fred Piard, a quantitative analyst with over 30 years of experience, runs an investing group focused on quality dividend stocks and tech innovation [1] Group 2 - The investing group also provides market risk indicators, real estate strategies, bond strategies, and income strategies through closed-end funds [1] - Fred Piard has been investing in data-driven systematic strategies since 2010 and is the author of three books [1]