When To Buy - When Markets are Going Down (Mary J Blige Style)

 

PREMIUM SUBSCRIBER ALERTS:

This is a quick hitter post. I wanted to reiterate the "Loner" / "Cancel Culture" investment philosophy I sometimes use. In my previous post, you've seen I often come to the aid of companies that have flat out done or said some stupid things. We are human, make mistakes and should not automatically get canceled. But if you break the law, cause harm to another, or invade my or someone else's space --- I have a different frame of mind. Yes, I said it don't be a 'Karen', BLM hater, Asian hater...or just a hater in general. Life is short, can't we all just get along.

The following premium alerts were triggered yesterday and they represent companies I was following and waited until they got picked on. Every quarter companies release a "health check report" called a quarterly earnings report. These companies were flying high, released their quarterly health check and then got beat down. The beautiful thing I do is to set an alert and wait for it to ring. Similarly to my home buying lesson --- don't get emotionally attached or fall in love with an investment. haha I play hard to get...and it's served me well. Once these alerts trigger, I trade them and send them to my subscriber group. If you're at work on the clock, I can't expect you to search for these stocks, so I have your back and deliver them straight to your phone and inbox.

The market was down big yesterday at one point. It reminded me of Mary J Blige's song "I'm going down, when you're not around" and since I was around I bought these stocks on a down day. If you can guess these stocks correctly, I'll reveal these new purchases:

Stock 1: Hint: Zoom meetings have sent these stocks higher. Say cheese!

S******* Inc 

Health Care : Health Care | Small Cap 

Stock 2: Hint: A grumpy billionaire in my Mansa Musa network is buying this stock so we went huntin' in packs together.

B******* Inc 

Health Care : Pharmaceuticals | Large Cap 

Stock 3: Hint: What does scrolling, streaming, and banning have to do with this stock.

T*******

Communication Services : Interactive Media & Services | Large Cap 

Stock 4: Hint: It appears I beat Cathie Woods into stocks like Draftkings; however, I like this bet she making here and decided to follow Cathie here.

S******* Inc 

Communication Services : Entertainment | Mid Cap

As a cybersecurity expert, I've learned to take advantage of Machine Learning. So I use handpicked data points, enter them into a rules engine, and when my data points hits I get that information sent to me. It's the best way to have my $$ working for me while I'm sleeping. I wake up and then make investments after evaluating that data. If you can guess this stock correctly, I'll reveal the new purchase:

Stock 5: Hint, Indeed, I rolled the dice on this stock and think its a winner.

****** Inc NASDAQ: J*******

Industrials : Professional Services | | Based in China

#getthebag

The Government Makes It Rain --- Stimulus To the Rescue

Coronavirus Update – Shutdown Has Finally Started

Thanks to the great leadership exhibited from New York, California, and Chicago the nation is slowly shutting down city by city --- and state by state. While unbelievable, this is very necessary to starve the virus. There will be debates on how long and I remind people to look to China’s recovery and the timeline they used. For example, Wuhan the epicenter of this crisis will remove the lockdown on April 8th. SO the reality is the longer the better for the hotspots. Why I demanded leadership --- one voice, one plan. Providing risk consultation to large corporations puts you in a position to see some amazing dynamics. People will not do thing unless they know the order has come from the top…it appears countries are no different. The shutdown should be federal because if we all go into shelter at the same time, you hope we can plan to exit strategically around the same time. Let me give you an example, if you have a missing child, technology (like the Amber Alert) has allowed for us to receive notification all at the same time rather than piecemeal.  This speeds up the likelihood of finding the child much better than sending it to one police department at a time. If the coronavirus shutdown does not come from the top, when one state recovers my question is: “Does that state allow you to travel or accept visitors from states that did not shutdown at all or that shutdown much later than your state did. Essentially this recovery could drag on longer than needed if we cannot move in a cohesive manner as a country. There could be a lack of trust in the air which is why I believe countries like Italy, China, S. Korea and others when into lockdowns all at once. Make It Rain – Last Resort to Inflate the Economy I am hoping for better coordination so we can begin to recover quicker and get the economy going.  The importance of the pillars we work on so hard here is to help you during these exact moments. If you have savings, you have some cushion during these bad times. See these articles, ripped from the news headlines: “Many Americans Biggest Worry is April 1st Rent and Mortgage Payments”  -- Washington Post “Real Estate Billionaire Barrack says Commercial Mortgages on a brink of Collapse” – Bloomberg “Jobless Claims Soar Past 3 Million to Record High” -- CNBC  “Mortgage Rates Surge to Highest Level Since January” – Marketwatch “2 Trillion Dollar Stimulus Package” --- See below These are just a few of the necessary reasons why the Federal Reserve is making it rain. It’s basically a blank check to shore up the economy until we can get a handle on the COVID-19.  Like in 2008, the market has responded with a rally since a “handshake deal” was announced just a few days ago. This rally will likely continue into the actual signing of the bill. Use this an opportune time to trade in the relief rally that is not uncommon. But when the dust settles, I am still not risking my individual retirement account funds at the moment because we know there is more to come. Mortgages need to be paid, the rent is due, businesses are asking for a bailout and jobs are being shuttered. Hopefully all this is temporary but it is a big risk. I don’t see an all clear sign, just yet. Urb Lesson of the Day:  Account Diversification · Savings Accounts – Gets you through the rough patches in life · Investment Accounts – Allows you to take risks when others are NOT – like today · Individual Retirement Accounts – This is truly for your future, why NOT wait for a sign that the recovery is strong

Investing in a Coronavirus Epidemic ---- No Testing Time to Move to the Sidelines

So 10 days ago, I wrote the following article: https://urbanomics.blogspot.com/2020/03/the-virus-goes-viral-why-stocks-are-in.html

Viral + Misinformation
I needed you all to truly understand in the age of social media, 24x7 news media, and poor governance from some world leaders -- the virus has truly gone viral.  The virus is NOT a FINANCIAL ISSUE it is a biological disease. A viral pandemic will NOT be cured by pouring money back into our economy.  The fact that our leaders have NOT provided a clear message is evidenced in my conversations over text, e-mail, and chat with family, friends, and co-workers. For example, a question came into my local public radio station. The question was: What type of antibiotic can be proscribed to combat the coronvirus?

Answer - This is NOT bacterial, antibiotics is not a solution to protect us. The fact is I wrote here weeks back, that a few companies have JUST started research on this virus in search for a vaccine and companies like Gilead, Moderna, and others are possibly over a year away from finding a cure and mass producing a vaccine. 

Stop Worrying About Perception
Crisis is managed by LEADERSHIP, constant factual messaging, and preventative and detective measures. I used to work with a guy years ago that bragged, boasted and used dumb ass phrases like 'epic fail', to put down everything and everyone in an attempt for him to look great. Well, this becomes an issue when you do and say these things all time. When a real crisis finally comes, he looks like the epic failure because he cried foul so long no one could distinguish the real crisis from the minor issues he used to rant about. The reality is his leadership was an 'epic fail' and that reminds me of what I am seeing today.  I get paid to manage risk and everyone knows the two primary methods of risk management are Preventative measures and Detective measures.

         Our leaders have dropped the ball on Preventative and Detective Measures. 
My colleague used the word perception and I thank him for that. My favorite term is optics as many of my colleagues and clients know. People drastically underestimate the optics of a situation and I believe its made me a fairly strong businessperson.

Perception 1 - In the US, we cannot and should not restrict people from travel, social gatherings and events, and work. It's draconian, un-American, because we're too sophisticated to adjust our way of lives.

Preventative Solution - Okay, to start...don't use the word quarantine (it's like socialism here in America just won't fly). But you should restrict travel, social and work gatherings, etc. To prevent a contagious disease spread by touching and coughing, you have to limit travel and close interactions. We know you want to keep the economy booming and the stock market up BUT this is the right next step. Like the loser who uses 'epic fail' many have dissed China for their draconian measures but their infection numbers are dropping, work is resuming, and confidence will slowly come back when you restrict or quarantine the nation.  Imagine that --- So Italy and the National Basketball (NBA) should be applauded for the courage to put people before profits because they would have been creating an environment to spread the disease if they did not quarantine their country and stop games, respectively.  If we are waiting for a message from every school, employer, and city to determine their own shutdown we are creating an environment of panic. This should be a message from the highest level, shutdown, so we are all on the same page. We call this setting the tone from the top. Don't leave it up to my elementary school, National Hockey League, Baseball, Golf, cities, states, and companies to make this call alone.

#2 or 3 weeks of profit pain help this disease go away

Perception 2 -  The greatest country in the world cannot develop enough testing kits to address this issue.

Detective Solution - We don't know how bad the situation is --- WHY because we DON'T HAVE ENOUGH TESTING KITS?  That seems more like someone doesn't want the real number to come out.  We talked about preventative measures, let's move over to detective. To detect the virus you need a kit. If you restrict people's travel period, then you can calmly share with people what the symptoms are, identify sick people, and test or DETECT whether they truly have the virus. We all know if the real numbers come out people will panic, but people are already panicking because they don't trust the current numbers being posted today. 

We freak out when an NBA player, or a guy on a jet, or symptoms show up in our local school --- I guess I wonder why people begin buying $100 dollar bottles of Purrell.  Tell the truth, most people have been exposed just like we all are exposed to the flu every year. Get us testing kits and let people know they will survive it JUST like you survive from the flu each year. We are all at risk --- risk is everywhere everyday --- but the people at high risk are the elderly and people with compromised immune systems. They need to be protected.

Restrict Travel and Movement - 2 to 3 week of pain could mean we get a handle on this

Get More Testing Kits - Yes testing reveals the true number and will burst everyone's bubble that many people around us are infected. But guess what, we stay home, treat ourselves, and get better

Ramp Up Protection For Elderly and Sickly - These are our most vulnerable population. Its time to give hospitals, nursing homes, and high risk people all of the resources they need. This includes make-shift hospitals just for the virus. Why because the last place I want to send someone with symptoms IS to a hospital FULL of people with compromised immune symptions.

Step Up and Pay for Time off and Healthcare - People sick or not will continue to go to work, in FEAR of losing their job. Pay for time off and for the fact that many people DO NOT have healthcare. If you ensure that panic dies down.

Loans to Affected Cities/States - Put in place the items I shared above. Every company and city will need a loan soon if you don't limit the spread further. So I don't love this idea b/c Cruise ships, retail, food, sports companies all will be hit --- are you going to bail them out. Bail people out first and companies will be saved. You do that and maybe it lessens the impact to business

# 2 or 3 weeks of profit pain helps this disease go away

Bad Ideas:

Payroll Tax Cut - Stop the optics of politics. This is a also a way to NOT fund Medicare and Medicaid. Just send me a check and ensure I have a job and health until the crisis is over.

So unfortunately since 2008, I have not had to make a call like this but I truly believe we are at this point. Until I hear the governance of our leaders changing, I will be personally moving my retirement portfolio to cash and safe assets. I have lost faith in the message coming from our leaders, the data being presented, and the actions -- or lack of actions being taken.

No Testing means I don't trust the data. If we don't implement the steps above then unfortunately my indicators say we are headed for a recession. I plan to move my retirement vehicles to cash, but I will keep my personal portfolio in stocks, I have some protection from the VIX, Gold, etc but it's not helping that much.

Apple Proves Value Investors Like Tech

Many people know my personality is similar to my investing style...I tend to go against the grain.  As a techie, I don't love the Apple phones for a technical reason it's a closed source ecosystem. Unlike open source devices, Apple prefers that you use only their software and products. I have to remind people that Apple did not invent putting things in the cloud, sending files/messages should be something you should be able to do to any phone, and chargers are meant to be universal.

But in order to be a good investor your personal preferences should NOT interfere with buying stocks.  While I don't own the phone, I don't dismiss many people around me use the phone. Or the fact that iTunes gift cards are a normal gift around the holidays without even asking me if I am an iPhone owner.  But these aren't the reasons why I decided to stake a claim in the value play a few years ago.  Many forgot back in 2016, Apple was trading under $100 dollars and there was fear they wouldn't be able to break into China and growth had stalled.  But as Apple continued to reinvent itself, I saw value in a company starting to pay a dividend, expanding internationally, and growing a profitable services and payments business. So when there is fear in the water you stake a calculated claim on an old dog that still has a few tricks.  Being in Risk Management, I had fun analyzing this stock and pulling the trigger when everyone was saying I got in too late. At an average of roughly $93 dollars, I was betting on a growing dividend, growth in China (maybe India), apps being the future (including iTunes), and logical determination that Apple phones would become larger as I knew people would share my frugal sensation over phone/tablets or phablets if you prefer (why have one of each when supersized phone does the trick).  I am not placing a big bet on Payments yet because I tend to know a little bit about this space. While people love the technology...I think there needs to be one wallet that can travel with you as you change from an ApplePay, SamsungPay, GooglePay....and merchants are CHEAP so it will be a very long time until every store and gas station pay for upgrade technology that supports these new types of payments.

Many say value is dead but I argue, you have to look in the right places. I just read an article about how Warren Buffet and Berkshire are enjoying the amazing gains of Apple. I laughed because I'm wondering if the pupil is finally learning from the teacher...looking back I bought Apple prior to when Berkshire made their purchase:

Post Mentioning Apple:
https://urbanomics.blogspot.com/2016/10/how-to-invest-in-clinton-trump-election.html 

Wall Street Journal: Buffet Bet Big on Apple


This has also happened with Teva Pharmaceuticals recently so I hope to keep the streak alive and maybe may a few future recommendations...one Oracle to another. :)

Seasonal Selling or A Top In the Stock Market

If you follow most of the commentary right now about the stock market you will see that a common theme is whether you should "SELL IN MAY".  This is a common seasonal trend in the stock market when trading in stocks becomes thin as more traders head off for vacation.  I guess this is somewhat true as I have to head to London here shortly, but its not exactly for vacation. But soon after that I'll find myself in Las Vegas for a little R&R, so I guess this trader will be off eventually for a few days.  There are a few people that are speaking a little louder and signaling that it may be more than seasonal.  I tend to listen to these voices if I find some of the points that they are highlighting credible.  I also tend to tune into these point of views more as friends and family begin to want to talk "shop" with me.  If my friends are asking me about the stock market and telling me how well its been moving and that they have to get back in because they've missed the move up, I start to think.."Uh-Oh the trend may be the markets will start moving down".  When the average Joe is jumping in its usually to late, the smart money has already pounced.  So I am a pretty average guy, so how does this effect me!  Well when I start to get scared about the markets, I try to do the opposite of my impulse and buy.  When things are getting really rosy, I try to sell even though I don't want to.  When I started getting more people talking shop, I sold a few positions, but to be fair, I added a few more of my PREMIUM ALERT picks. The one caveat is I am adding picks that might survive a tough downturn.

Here is a snippet from a BLOOMBERG article of an investor who's painting a picture that's less rosy. Attached is the link to the full article: 

John Burbank, founder of $3.8 billion hedge fund Passport Capital LLC, said he expects a U.S. economic recession this year or in early 2013, according to a letter to investors.