Don’t Give in to “Gains Panic”
- There’s a new breakthrough that’s gearing up to enhance the way we drive and can increase car mileage by 30%.
- Tesla’s new Cybertruck has caught the attention of Dubai officials in a big way.
- How you can get Paul’s No. 1 stock pick for 2020.
With the market hitting new highs, there’s a fear settling over investors.
It’s not a recession, a slowdown or a crash.
It’s “gains panic.”
This is a fear that the market will see a downfall because so many stocks are reaching new highs. But I’m telling you, please no gains panic!
This is the time to celebrate your strong hands.
I believe we’re entering a new era where innovation is meeting our mega trends. And this is going to set us up for potentially even bigger wins in 2020.
Market Talk Megacharts
I have three megacharts to share with you this week. The first chart shows we had a healthy expansion in U.S. GDP in the third quarter. Per the Bureau of Economic Analysis, third quarter U.S. economic growth numbers released last week were revised higher to an annual rate of 2.1% from 1.9%.
This revision reflected revised gains in private manufacturers’ inventory investment, as well as shipments and orders. We also saw that non-residential fixed investment in commercial and healthcare structures ticked up, as well as an increase in consumer spending on cars and car parts. In particular, new light trucks.
This second chart shows you that these positive revisions in third quarter GDP were released at the same time initial jobless claims for the week of November 23 — also known as weekly filings for unemployment benefits — fell by the most since May.
This third chart shows a great snapback in U.S. capital goods orders. Survey analysts were projecting declines in this number, but the latest release shows demand in U.S. business equipment unexpectedly jumped higher in October, the most since January. Bookings for commercial equipment, excluding aircraft, increased 1.2% while shipments raised 0.8%.
Where this week’s economic releases are concerned, there will be six major releases over a two-day period. As you can see in this table, on Thursday, October’s trade balance will post at 8:30 a.m. October’s factory orders and October’s final durable goods orders will post at 10 a.m.
On Friday, November’s jobs report will be released at 8:30 a.m. Wholesale inventories month-over-month final print for October will post at 10 a.m. followed by the University of Michigan’s sentiment preliminary December reading at 10 a.m.
Amber on Big Innovation
For my innovation story of the week, we focus a lot of our research on companies like Tesla, but there is a modern-day technological breakthrough in development that could have an impact not just on EVs like Tesla but on both hybrid and internal combustion engine (ICE) cars. I’m focusing on it because with EVs and ICE, they all need this item to function.
I’m referring to car tires. Right now there are companies that are aiming to revolutionize the tire industry by enhancing the performance of our car tires by using graphene. Graphene is known as the wonder material that is the thinnest material known to humankind at just one atom thick.
It’s strong. About 200 times stronger than steel according to graphene information. A set of international companies are working together to create car tires that include graphene enhancements. So far, studies have shown these graphene-enhanced car tires show a 30% increase in wear resistance over current rubber tires.
Drivers could possibly get more than 30% more mileage on their tires before they need to get them replaced. Graphene-enhanced tires can improve braking in poor weather conditions by 40%. With these graphene stats we may be poised to see a turn in the traditional tire industry.
Good News Roundup
Story number one: Tesla’s Cybertruck is set to join Dubai’s police force, according to Engadget. This is pretty cool.
Story number two: Also per Engadget, nearly 40% of online Black Friday purchases were made with smartphones. I know because I did it. People spent $2.9 billion using their phones versus $2.1 billion last year.
Story number three: Tomorrow, December 3, is giving Tuesday. Giving Tuesday is a day that encourages people to do good. It’s a worldwide movement that inspires hundreds of millions of people to give, collaborate and celebrate generosity. To participate, we can give our time, voice, dollars, goods, talents and most of all kindness.
Since its inception in 2012, Giving Tuesday has collectively raised more than $1 billion and is projected to break the $500 million mark tomorrow. To learn more about this tremendous day, visit GivingTuesday.org.
More Market Talk
I’m looking at three things this week.
First, I saw late last week that Fidelity got approval from New York State for cryptocurrency trading, which is a big potential on ramp for crypto because Fidelity manages a ton of retail money. That’s an interesting development.
Second, this week we are looking at the Saudi Aramco IPO that should trade in Saudi Arabia. Most of the equity being raised is going to be coming likely from regional investors and a small number of international investors who are able to access the Saudi market. That’s going to be a big one and something interesting to look at.
Eventually, I think they will come to the western markets but this first experimentation with privatization is going to be with their local market.
Finally, the big news I saw this weekend is the New York Stock Exchange (NYSE) submitted a proposal to the SEC that will allow issuers to raise new capital alongside direct listings. This is sort of a hybrid approach coming to the public market.
It sounds a lot like a traditional IPO, just without the lockup. What will this mean? I think it will mean there will be more stock coming to the market upon listing as opposed to six months later when the lockup expires and the big venture capital investors and founders can sell.
I also think it means that more institutional investors will be participating in these companies earlier. We’ve maintained that institutional investors mostly wait for the new earnings reports. At least a couple earnings reports to gain confidence and for the large blocks of stocks they need to accumulate a significant position.
I think now they are going to accelerate their diligence, do a lot more work upfront earlier and be willing to make a bet on these untested management teams earlier if they can get enough stock at a lower valuation to compensate for that risk. I think that’s a big development we will see playing out in 2020. I’m curious what ends up happening with the SEC ruling on that. It’s definitely something to watch out for.
Paul on New Stock Market Highs
The stock market is making new highs. GDP. Recession is missing. All through 2018 and 2019 this was the drumbeat: There’s going to be a recession, there’s going to be a crisis, there’s going to be a crash. And nothing. We never even got close.
We have told you in every Market Talk that we never saw signs of a recession. For sure there was a slowdown. We may have talked ourselves into that just by all the things that were being put out because of a choice by financial media to focus on the most negative elements of what is going on.
However, we’ve been telling you throughout 2019 to stay invested. Now that stock markets are making new highs, please do not have “gains panic”. Many people seeing the stock market or their stocks at new highs are going to feel like they need to do something.
It’s the same feeling people get when stocks are declining rapidly. You feel this physical urge to do something. What you need to do is follow the Rules of the Game we tell our readers about. If you have money set aside, you are equal weighted, you have never gone all in on any single stock and you’ve bought in over time, maybe you’ve taken a little profit here or there to build your cash reserve, but there’s nothing you need to do.
You have done the hard work by being the strong hands. This is the benefit you have gained by enduring through that volatility. All the folks who sold last year out of panic are now in a panic to get in. This is why stocks are being bid higher every day, day after day. Of course the financial media is now telling you they have gone too far too fast, it’s overvalued and all these other things.
We would tell you that new highs are a good sign. They are a sign of confidence in our markets, confidence in our economy and a sign that people who are bidding these higher and holding it also see better times coming. Higher sales and better earnings. Please remember, no gains panic. Stay in our stocks. Be strong hands through a much easier scenario, which is seeing your stocks bid up.
At Bold Profits we favor innovation-based stocks around our big megatrends: Internet of Things, artificial intelligence, block chain, precision medicine, new energy, the rise of the millennial generation. A lollapalooza of all this coming together is just beginning.
We’ve been hinting about it in Market Talks. It’s America 2.0. All these megatrends coming together with this demographic shift. It starts to come together to build a new America, which somebody looking at us even 20 years ago will not recognize. I mean that in a good way.
Technology begins to transform the way we live, how we do things and all the elements of innovation that matter. It makes things better in so many different ways. If you are interested in these kinds of stocks, this week my publisher is going to be sending out emails for you to get in on my True Momentum service.
We are going to put in my number one pick for 2020 in this service. If you want to get in on that, check out True Momentum is our best-performing service. It focuses on what is referred to as mid-cap stocks. Stocks that have a market capitalization of $3 billion and higher. It’s been annualizing at something in the range of 45% or so.
That’s because these companies are in that perfect moment where they are coming to the market for the first time with a service, product or solution that has wide appeal. The growth rate is the strongest so people come to bid it up in a big way. I’m going to put in an incredible stock that I believe has a capability to at least do what the other stocks have done.
Our minimum target for all stocks that go into True Momentum is 300%. If you’re interested in that, click here. It will send you to the webpage that will get you the details to get in.
We focus on the good news. We tell you everything that’s going on, rather than the bad news media. Tell us, what did you do in 2018? Even the first half of 2019? Were you the strong hands? Did you hold on? Are you making more money? Comment below and let us know if you were the strong hands. Let us know what you did.
Editor, Profits Unlimited