Jobless Claims Rise; Tesla’s Surprise; Twitter Flies
Something Witty This Way Comes
Welcome to Reader Feedback day here at Great Stuff!
We’ll get to your questions and reply to your smart remarks in short order — seriously, some of you have potty mouths!
But first, there are earnings reports, a few provisos, a couple quid pro quos to address:
We all saw the headlines this morning. Well, I did. Claims rose more than expected last week, rising for the first time since March. I don’t buy the narrative that “stocks are down because jobless claims are up.”
We’re in a pandemic. States are locking down again. Wall Street should’ve already priced this in. If it didn’t, we’re in a lot more trouble than we think. It’s all the more reason to consider a Bear Market Portfolio like the one offered by my good friend Ted Bauman. Do it. Like, now. Pronto!
In the words of my father, “Lightning strikes the crap house again!” He’s a colorful man, to say the least. Tesla Inc. (Nasdaq: TSLA) reported its fourth consecutive profitable quarter, shocking analysts and meeting the requirements to join the big leagues on the S&P 500.
Is TSLA’s valuation still ridiculous? Yes. But inclusion in the 500 is sure to put additional pressure on short sellers — think of all the ETFs, mutual funds and indexes that will have to buy TSLA once it joins. The sky really is the limit at this point for TSLA.
From the desktop, to the Cloud. To all skee, skee, Microsoft Corp. (Nasdaq: MSFT). The tech sector OG just blew away Wall Street’s quarterly earnings and revenue expectations.
Within those blue skies, revenue at Microsoft’s Azure cloud business spiked 47%, passing $50 billion in annual revenue for the first time. The company even put first-quarter guidance above Wall Street’s expectations.
However, MSFT is down today. Why? Because gross margins slipped two points from the same quarter last year. Operating margin was down slightly. These short-term concerns were likely an excuse to take profits. In other words, if you’re chomping at the bit for some MSFT goodness, the closer the stock edges toward $200 per share, the better for you to buy in.
I know social media stocks are on the outs with many investors (and advertisers) right now. But you really need to take a closer look at Twitter Inc. (Nasdaq: TWTR). The company missed earnings and revenue expectations, but daily active users came in at 186 million during the quarter — 14 million more than expected.
So, while Snap battles TikTok for users and Facebook descends into the cesspool … Twitter is adding new faces in the millions. Once advertisers resolve their social media issues, that cash will flow right back into the market. And Twitter will be poised to better capitalize on the return than its peers.
With the daily market niceties out of the way, let’s get right to answering your emails! (If you haven’t written in yet, drop us a line at GreatStuffToday@banyanhill.com. We don’t bite, I promise.)
It’s about time we quit our yappin’ and turn it over to your rappin’.
Thanks in advance to all who wrote in! Today finds us talking about silver buying, proper diversifying and free streaming.
Remember, feel free to join in the conversation at GreatStuffToday@banyanhill.com.
Hi Ho, Silver
Hey Joe, where you going with that metal in your hand?
Silver is on a tear! How far do you see the bulls carrying my preciousss?
— Mike B.
Silver on back-to-back Thursdays? Last week, we answered Tom B.’s question on silver miners, stating: “Silver if you want to bet on recovery, gold for safe-haven.”
Yeah … about that. So, I keep forgetting the market is off its rocker and that retail investors are driving considerable demand. (You’re not alone, Mike and Tom, in digging the precious.)
Silver is the “other white meat” right now for safe-haven bets. Gold is up near $1,879 an ounce, while silver is down in the $20s. It’s clear which one is in the “stimulus check” investing budget. That lower price also breeds more speculation.
How high will it rally?
$21 was a resistance level from back in 2014. That just broke. $26 is the next area. After that, silver’s all-time high is $49 an ounce. We’re seeing all kinds of irrational exuberance in this market, so who knows exactly how high is too high?
It really depends on how fearful the market gets as we head into the end of the year. If you made me guess, I’d say probably $30 an ounce, but don’t hold me to that. Here’s your way in, if you’re not into buying silver bullion, that is…
Brevity-averse mutual funds — such as the Aberdeen Standard Silver Trust Physical Silver Shares ETF (NYSE: SIVR) or the Invesco DB Precious Metals Fund (NYSE: DBP) — are indirect ways to get silver exposure. But some of these are diluted with gold and mining companies (especially DBP).
For the most direct way to play silver without buying ounces on a street corner, there are ETFs like iShares Silver Trust (NYSE: SLV).
Hi ho, Silver! Away, indeed.
I, for One, Love Roman Numerals
I read Great Stuff daily and enjoy the humorous comments. You can talk about Roku stock, Netflix, Hulu or whatever streaming service you choose, but I for one prefer to use free streaming services to watch whatever I want when I want at no cost.
There are plenty of free streaming services available, so factory that into your future calculation.
— Dick K. 😎
Thanks for tuning in, Dick! Did you know that you can watch those free streaming services on your TV with a Roku device? Just saying…
Anyway, I, too, have wandered into the deep end of the streaming sphere in search of free entertainment. You’re not wrong: There are enough free streaming sites and services now that even Good Housekeeping is writing about it.
Some interfaces were usable, some less so. Some services felt secure, others much less so. Always remember that if you aren’t paying for the product, then you, your data or your buying preferences are the real product.
Anyway, there’s another way to play the whole streaming market from the ground up — not from the Netflixes and Hulus, but from the connective internet tissue that even lets us stream.
The Portfolio Goldilocks Zone
Love your column Mr. Great Stuff! It can get a little wacky at times, but that’s part of the charm for me. I’m of a certain age and I greatly enjoy the, sometimes esoteric, music references you come up with.
My question is pretty basic. I’ve been investing for several years, and currently have about 40 stocks in my portfolio, including several Great Stuff picks that are doing quite well. I’ve heard over and over that you should have at least 15-20 individual stocks in your portfolio.
But I’ve never heard anyone mention an upper limit to that number. Is it possible to own too many different stocks, to the point where your portfolio becomes bloated?
Is there a ballpark number of stocks a regular Joe (so to speak) should be aiming for? Thanks.
— Mike in Alaska
How’s Alaska, Mike? Does nobody know your face? Are there rats to race? Is a song still a song?
Back at the ranch … the 15-20 rule guideline isn’t there to limit the number of stocks you invest in or force you to buy more. It’s designed to diversify your portfolio. Diversity is crucial … so that all your investments don’t go down at the same time.
As far as an upper limit? There isn’t one, really … especially if you’re rolling in cash like Jeff Bezos. The 15-20 rule is typically sufficient for most average Joes.
If you’re better off than the average Joe (even slightly better) and have the funds to move beyond the 15-20 zone, the only limits to observe are:
- Does this stock fit my investment plan?
- Is too much capital committed to my investments? (I.e., Can I still pay my bills?)
- Is too much capital committed to one sector? (Again, diversify.)
In the end, these are the same general rules you should follow anyway. Just remember to review your portfolio occasionally to make sure you are still hitting your investment goals and to take profits. (Remember, don’t be greedy!) That should help keep your portfolio from becoming too unwieldy.
Thanks for the question!
I Just Called … to Say…
I don’t have a question at this time. I just wanted to say that I look forward to reading your newsletter. Your analysis, insight, easy-to-understand and humorous approach are a pleasure. I follow your advice religiously. Thanks!
— Tommy D.
Pssh, thank you Tommy! No gloating here or showboating here; I’m using your email as a jumping-off point to ask you and the wide Great Stuff fam a general question: What could make our stuff even greater?
More stock picks? More economics? More investing tips like for our pal Mike? More sector analysis? We are constantly working to make Great Stuff even greater. And since we are here to inform and entertain YOU, who better to ask?
Write in and let us know: GreatStuffToday@banyanhill.com.
Great Stuff: Goin’ to Alaska
Where I got some friends I know…
Thanks for joining us for another edition of Reader Feedback!
We hope you got some ideas to write in about in your email. And if writing to us isn’t your thing, we get it. The Great Stuff action doesn’t have to end here: Why not check out what experts call the “Great American Reset?”
Until next time, be Great!
Editor, Great Stuff