Is the Stock Market "Weak"? or should you be "Right Here" (SWV Mix)

I get so weak in the knees I can hardly speak.

I lose all control and something takes over me.

In a daze and it's so amazing, it's not a phase.

I want you to stay with me, by my side.

I swallow my pride, your love is so sweet.

It knocks me right off of my feet.

I can't explain why your loving makes me weak.

    ~ Artist: SWV     Song: "Weak " 

I was jamming to some classics and decided I needed the help of SWV to describe how I and many others feel about the economy, stocks, and life right now. Yes, only the classic hits of SWV and that soulful rhythm and blues (R+B) sound of the 90s can really assist in what this market is doing and how it's making people feel. I won't spend much time on the backdrop but if you need a reminder I tried to signal what was to come back in March. Remember it didn't take a rocket scientist to figure out that the impacts of COVID-19 were going to be devastating. These simple facts were in front of us at the time:

- China and the Asia Pacific region had been shut down since early January and even Chinese New Year was canceled (something reported on each day from Beijing by Eunice Yoon and others)

- The market prior to COVID-19 was already near record levels. We hit those levels in my opinion around 2017 when I changed my investment style to ensure I wasn't holding stocks too long (which is contrary to what I believe in). While the market IMO wasn't overvalued, we were in the longest bull market ever recorded (if history serves me correct). Since then, the market continued to melt-up and made us weak in the knees that we could hardly speak. Truss 2019 was a great year, remember: Tesla, Okta, Sprint, Symantec Norton Lifelock, Audentes, Celgene. How good, I got rid of Tesla and Okta way to early. At the time, I was riding great gains, however; they continued to skyrocket further. I feel weak. To put things further into perspective Tesla and Okta aside...the remaining companies I named above ALL got bought out easily making 2019 one of my best years on record investment wise (and the worst personally as I lost my father).

- Finally, I was concerned about the US response to COVID-19. If you flip back to my March posts, I highlighted scenarios that are now playing out when there isn't much of a plan and poor tone at the top leadership --- I said you will get to a situation where US states would start to draw lines in the sand and say citizens from other states cannot cross state lines without strict conditions. Recently, the state of New York told people from 31 states you must quarantine for 14 days (IMO a statement basically saying don't bother coming). I was concerned about the US Lil Nas X culture of "Can't Nobody Tell Me Nothing" to an airborne respiratory disease... who knew that would seriously lead to daily fights about whether masks should be mandated.

So if the market is so SWV "Weak", why is the Nasdaq hitting highs everyday and my portfolio and your retirement plan feeling so good. Well that's where SWV "Right Here" comes in. The Federal Reserve and even Congress has been right here with STIMULUS. I don't have a running total but over $7 Trillion with a T has been pumped into the economy after it began tanking in March.  

Lately, there seems to be

Some insecurities

About the way I feel

Where I wanna be

Boy, you know it's with you

No one can do

The things you do to me

                                                                    ~ Artist: SWV     Song: "Right Here" 

haha The Federal Reserve came out swinging boy. Go back and look at the March lows and damn there were some insecurity about the way we felt. The things you do to us...well here is a list:

- Unemployment + $600

- Federal Moratorium on Foreclosures

- Stimulus Check

- Loans to Small Businesses (PPP)

- Economic Disaster Loans

- Purchasing Company Bonds

- $25 Billion Dollar Bailout to the Airlines

Was this response unexpected. Hell No, just look back to the Federal Reserve did back in the 2008 Financial Crisis. I wrote about it here and it even got its own name: the Tepper rally, for my dawg Billionaire David Tepper who laid out the investment thesis --- You DO NOT fight the Federal Reserve when they come in the big guns...they can print money longer than you can stay liquid (if you were betting the market would fall). And that's exactly what happened...they came in with helicopter money, making it rain.  Don't knock my hustle, read here how a strategy from a decade ago prepared us for what to expect:  Tepper - Don't Fight The Fed Reminder

I hope this wasn't complicated but I think you now get how to position yourself going into the end of year and 2021. As my friend said it best after reading my posts, the Federal Reserve and others won't let the machine fail (and this is capitalism👌).  Fast forward to today, the extra $600 unemployment boost IS NOT being renewed. A second stimulus check is coming but smaller and I believe going out to less people. The Federal Moratorium on foreclosures has been extended but what are you going to do if you are a renter...sign up for paying 1 year of back rent once you finally get a job?? This new stimulus package comes in at roughly $1Trillion which will put the government easily over $8 Trillion in newly printed debt...AND after this round I don't feel there is any appetite for more. With 2 new states recently surpassing New York in COVID cases (California, Florida) and states like Texas and Georgia never really shutting down and cases rising...I'm positioning myself for when the Federal Reserve stops pumping the economy full of steroids (whips I mean stimulus).  Delta and American have announced 25K + layoffs after their stimulus ends October 1st and I'm afraid many announcements like this will be coming if we cannot get the cases under control (basically a vaccine). I'll continue to ride the wave and not fight the Federal Reserve but I'll be sleeping with one eye open. Most of my retirement funds are in cash and I'm riding the wave from my personal investment account where I willing to take the risk. Don't get greedy.

My Free Trade Reveal: The stocks that haven't performed well in my portfolio. Notice the theme RETAIL:

COTY - Purchased @ $10  

AMC - Purchased @ $11

Foot Locker - Purchased @ $59

Kohls - Purchased @ 57

Tapestry (formerly Coach) - Purchased @ $30

Red Robin - Purchased @ $20

I was up at one time in all these positions except I believe Foot Locker and Kohls and decided to be aggressive. Lesson(s): manage risk, don't get greedy, and don't believe the hype. Restaurants and Retail are not doing well, bankruptcies are rising and I am working to get out of these positions.  Peace Out

Investing Like the Godfather of Harlem

Investing In Yourself – Using Pillars to Build Your Core	https://urbanomics.blogspot.com/2015/04/urbanomics-pillars-path-set-for.html
Setting Budgets + Saving for Black Swans	https://urbanomics.blogspot.com/2013/02/personal-finance-budget-101-free-credit.html
	https://urbanomics.blogspot.com/2019/11/hey-henry-high-earner-not-yet-rich.html
How to Open My First Brokerage Account	https://urbanomics.blogspot.com/2015/04/personal-finance-101-starting.html
Diversify your Life (Mind, Body, Soul, + Investments)	Search My Blog

If Regular People Did That Sh!t

Legal Tax Evasion – Just when I’d like to think sometimes I've hit rock-star status (blessed with a great family, job, friend) , I remember listening to Lil Wayne’s lyrics. Wait for it – “We are not the same, I am a Martian” 👽.  This subtle line he’s repeated in his songs is to remind many of us, we are NOT on the same planet as he is. Disregard the facial tattoos , the fact he signed Nicki Minaj + Drake to his label (Young Money), or the fact that he started rapping at 13 years of age, it’s pretty easy for me to realize I got some work to do before I hit legendary status and can simply be recognized by my nickname known worldwide (Lil Weezy).  Well my ‘If Regular People’ post is a quick reminder to most of us to stop and think, while your political vote may represent what you aspire (e.g., tax cuts, small government, less regulation, etc.) you are not a Martian like those super rich who truly benefit from those policies.  Read my last post, if you don’t have enough money and connections like Carlos Ghosn has to escape prison in another country (while on trial) using private jets and jumping into speaker boxes then…you might just be a human being…not a Martian 👽.

My next example is some sh!t truly only rich or wanna be rich people have time to think about and benefit from. So I was reading an article about conservation easements. To cut to the chase, this is a law that allows someone owning land to claim they are protecting land from being developed. You get to claim that you have saved the world by reducing pollution and maintaining its natural beauty (since it goes undeveloped) AND you depending on the value of the land…you get to deduct that sh!t from your taxes.  I’m trying to not fall out of my chair laughing😀! This tax loophole is getting abused (see the IRS Dirty Dozen tax loopholes) more than “instant replay” in professional sports at the moment – and that’s a lot. If this isn’t rich people abuse, why can’t I buy up all the land in the hoods across America, mark up the price even further, and sell tax credits (i.e., charitable donations) to my people in the hood who really need it? I could demolish all those bandos and get rich while doing the public a favor??  Who should be ashamed of themselves – the Rich people hammering this loophole, the government for letting this continue, or the disillusioned people who think they are voting for policies like these which are not really helping them out??

Well anyone using this loophole is also making it very clear to the rest of us -- that use a tax software (me) or ‘claim’ we have an accountant that used to work for the IRS -- YOU ARE NOT A MARTIAN.  For us regular people, remember invest in yourself, diversify your life, and let’s change the game.

Link: ProPublica - IRS Non-Crackdown

Investing Themes for 2020

Please remember, I primarily use a data driven approach to investing.  I like to review data and events that were successful in the past and use those patterns to see if they will be successful in the future. This helps me take the emotion out of my investing. To further reinforce this I tend to set up trade alerts and purchases when I am doing my research and analysis – these are set well in advance of buying a stock so I often don’t know: a. what date I will purchase a stock (if at all) + b. why I liked the stock so much (so I take notes or blog about its potential to serve as a reminder). I also try to see if a theme is emerging from my data (so I can hammer the trend further with even deeper analysis) and I corroborate my thesis by trying to see if my Billionaire buddies (Ray Dalio, Mario Gabelli, Warren Buffett, David Tepper, Carl Icahn, David Einhorn, etc.) have mentioned these themes whenever they speak on TV or at conferences.

·          Streaming Media + Sports + Gambling

o    Media - So you want to play the streaming craze. The trend starts with high flying stocks like Google (think YouTube), Netflix and Roku. Then add Disney if you like Hulu (yup, Disney owns a large portion of Hulu). But media is now king! Don’t believe me, please watch the amazing series – The Godfather of Harlem on Epix. This is a great example that content will likely win the war…so go out and buy the content media companies that Netflix is paying top dollars to be able to stream their shows. 

o    Sports - It’s no secret that for live TV, sports is the last game in town. Revenue deals with sports teams are through the roof as new social media companies fight regular cable companies to offer live sports. Don’t believe just check out Hulu ridiculous commercials stating “Hulu Has Live Sports”. Next, get paid for something you love doing – watching sports. Do me a great favor and compile a list of all of the sports companies that are public companies. Trust, it’s cool to say you’re an owner and it makes the season a lot more interesting when you invest in shares of a sports franchise. I keep a mental list of a few sports teams that I know are public: Manchester United, Atlanta Braves, New York Knicks

o    Gambling – If the economy is doing so well, why are states scrambling for your gambling dollars.  States all across America are rushing for the 21^st century gold mine – Gambling. Casinos are Sport Betting no longer taboo. With the likes of FanDuel, DraftKings, and your local casinos offering mobile and physical sportsbooks, respectively state are raking in dollars. Many more states will follow the trend and the industry is already noticing the trend of bets being placed on mobile phone within a 15 mile radius of state lines where gambling is not offered.  Again the data don’t lie, people are showing they are willing to cross a border just to place a bet on their phone in a state where sport gambling is offered and then they head home.  

·          Cyber + ME + Social Media

o    Cyber: Cybersecurity will continue to be a huge force. Stay tuned for a separate post on stocks in this space and read my previous posts on the names I’ve traded.

o    Social Media Stocks – I have resisted the temptations of being on Instagram, Twitter, and Snapchat – but we’ll see how long the holdout continues. The world is telling you they want the attention to be all about them and what better platforms to scream to the world. So invest in social media companies because people are addicted and until people and possibly the government change the trends I’m seeing it will continue to be consumed. (Don’t believe me: see Apple’s new slow-mo selfie commercials) smh

o    ME – If you notice the consistent theme of what my data analysis is telling me is that people are using more and more things that have addictive qualities: TV binging, Gambling, Sports Betting, Social Media, etc. So the next surprising trend is people buy more things that allow them to look glamorous on social media. There is nothing better than TEETH and makeup. Yup, I’m positive Align Technology and Smile Direct Club are showing up in my research because people want straighter and whiter teeth to FLOSS on social media (no pun intended). Invisalign and Smile Direct are straightening teeth all across America. I was watching something about interesting entrepreneurs and this trend fell right into my lap. The entrepreneur got into the teeth whitening space very early and he attributes much of the success of his very lucrative business to the rise of social media and influencers (funny I thought selling yourself to another person was illegal). Or my small investment in Coty, guess whose cosmetics line they a bought 51% stake in shortly after: Kylie Jenner’s Kylie Cosmetics for roughly $1.2 Billion. Next what’s says, I’m into me better than Pinterest. It is now the 3^rd largest social media platform and it’s nothing more than a visual post-it note telling myself to buy more things for ME. If my thesis is correct and the world is getting more addicted (mainly to itself) this is great for Pinterest and the decline will be seen in church congregations across the world. The final ME investment is being consumed similar to TV, Social Media, Gambling, and Sports Betting -- its Medicinal and Recreational Marijuana. It was a CRIME to lock people up for something that people are lining up and down the streets to participate in legally.  Weed stocks are very volatile but will continue and have made many people rich legally while it funded the criminal justice system coffers (by locking up the so called gangsters) for so many years.  Now states want in on the action, even though there is no universal Federal law allowing the consumption of recreational weed. While there are too many stocks to name, you’ll see a few listed here: Aurora Cannabis, Cronos, Tilray, Canopy Growth, GW Pharmaceuticals, Cresco Labs, Acreage Holdings all play in the marijuana space.

I’m not judging on any of the trends above and will invest where I truly believe the market is going. But while I do, I can personally decide what I will participate in and won’t. So for now I guess you can call me the un-social media, non-gambling, non-smoking, slightly TV binging guy (The Godfather of Harlem, Power, NFL, + NBA) – hey Lil Wayne…maybe I am a Martian too.