Space for Civilians + China-Fueled Market Update
On Saturday, four people safely returned to Earth from SpaceX’s first civilian crew space mission.
This was an incredible step forward … for America 2.0 and commercial space travel.
Now, SpaceX’s phones are ringing off the hook with people hoping to be on the next launch — sign me up!
I believe this successful mission is just the catalyst our space stocks need to soar.
I’ll tell you how you can get in, but first I also want to comment on the stock market and crypto moves as a reaction to what’s happening in China.
Get my full take on the markets and space here:
Hey everyone. This week I am going to focus on two things. First, I want to talk about what happened yesterday in the stock market and the crypto market. I want to provide a little commentary.
What I find is that if you count on the usual websites like MarketWatch, Yahoo! Finance, even the Wall Street Journal or New York Times, they all provide sensationalized views on everything that happens. I just want to describe what was put out there and what I believe was the reality.
What Happened During The Mini Crypto Panic?
Yesterday the news as breaking that a real estate company in China called Evergrande was having a liquidity crisis. In other words, their bankers were unwilling to give them additional amounts of money for them to continue funding themselves.
Of course the internet media started to go crazy. People started to put headlines like, “This Is China’s Lehman.” Of course there was a mini panic among stock market investors and crypto investors. Truthfully, the crypto selling started well ahead of the stock market because the crypto markets are open all the time.
You can start selling at any point in time from anywhere in the world. Then the stock markets followed. When you look at the actual situation, here’s the reality in my judgement. Evergrande, a very large Chinese real estate company, is definitely having a significant issue.
In truth, real estate in China has been a difficult area for some time. It looks like that opportunity, that area in China, is something that the Chinese government is trying to control so it doesn’t cause an even bigger problem for its country. The size of Evergrande’s debts are quite large.
The estimates I saw were $300 billion. Then people were making very large claims that this was going to be transmitted throughout the Chinese economy and it would lead itself into the U.S. economy. I think all of that is BS. I believe even for China $300 billion, while quite large, is not going to debilitate their economy.
I saw a post from someone I follow on Twitter who said $300 billion would be a significant amount for one of their smallest provinces. So for the size of China it’s fairly small. Then for the second thing, which was being hyped in a big way, is that this is going to be transmitted all over the world and it’s another Lehman Brothers.
It’s definitely being pushed by people who are short and probably started going short Friday and pushed this news out into the media. That’s complete nonsense. That’s my judgement. Chinese finance is quite separate from a lot of other parts of the world.
For sure there are investment banks and western banks that probably have lent money to them and they will definitely face some pain. However, even for them, post-2008 and the crisis then there are regulators from every country who are careful about allowing any bank to take on risk.
While there will be some pain, there is going to be no domino effect like what happened after Lehman Brothers was allowed to go bankrupt into the United States that caused a ripple effect around the world. Truthfully, one of the places it didn’t have an effect was actually China.
In this case, there’s definitely going to be a significant effect in China in the real estate market. However, my experience is that China is a fairly good manager of its economy. It’s not a capitalist economy, it’s not a completely socialist economy. It’s something that swings between the two.
It’s always somewhere in the middle. In my judgement, they will find a way to manage through this. They will probably get other property companies to absorb all the operation of this company. They will get the banks to take some amount of bad debt. They will try to make sure regular Chinese people are hurt as little as possible.
Unfortunately, in all likelihood the Western banks who chose to give money are not going to get that money back. That’s just the reality of it.
Nonetheless, from our perspective, is it going to change the outlook for our stocks, America 2.0 and Fourth Industrial Revolution stocks? No.
It doesn’t change anything at all. All that happened is yesterday prices got marked down anywhere between 5% and 10%. Clearly some number of large asset managers decided they wanted to cut their equity exposure and took them down by 1% or 2%.
So when that happens, essentially you just got a large block of stock of all kinds — small, medium, large and all sectors — being pushed to the market and you are willing to take any price. As I like to tell all of you in Profits Unlimited updates, if we see people taking foolish prices, why would we choose to join them?
That seems like a dumb thing to do. This volatility is par for the course. It’s going to be there regularly. I retweeted Charles Bilello who said this is the 40 or 50th 5% correction we have gone through. He’s measuring it using the S&P 500, which is pretty much irrelevant for us.
What happens with the S&P 500 does affect us on a temporary basis. This is par for the course. We’ll have another one. The final thing I’ll say is that there is always some piece of FUD — fear, uncertainty, doubt — the media is going to use to panic you.
The goal is to make you panic. The goal is to make you click and be afraid. In the end, it serves folks who sit on the other side of the trade. You sell to them and later on that stock will get marked up at higher and higher prices.
You will say, “I should have held on. I would have hundreds of percent of gains.” I am still BOP. We never sold anything yesterday. We generally are always going to be focused on the long term. As you know, our timeframes are a minimum of one to three years.
We are willing to endure through volatility. If you go through the Profits Unlimited portfolio or our other portfolios, we have stocks that are down 70% and we are still in them. Why? Because we still believe the upside is so great and they are still so small that we think we can make huge money.
That’s the bottom line to our philosophy. We’re in or the long term. We are willing to endure through the volatility. We want to make big money over time. Nothing that’s going on in China or happened in the markets yesterday changed anything. I am still BOP on our portfolios.
The Future Of Space
Quickly I want to go to the second thing I wanted to mention, which is the subject of my t-shirt. If you are a space aficionado like I am, you know that on Saturday four regular people dropped back into the ocean from space after SpaceX launched them four days earlier.
This is a historic mission. It’s the first time you have had an all civilian crew go into space. Into actual space. Not like the — I don’t want it to sound like a putdown, but the kind of joy rides that Richard Branson had with Virgin Galactic and Jeff Bezos had with Blue Origin.
This was an actual launch that took four civilians into space. If something went wrong, they were on the hook to pilot that craft back. This was a big deal. They also raised more than $200 million, including a $50 million contribution from Elon Musk. One of the astronauts contributed $100 million.
$200 million was raised for St. Jude’s Hospital, which is an incredible organization that helps with children and childhood cancer. It was for a good cause and a historic mission for civilians going into space. Now I believe it starts to give people a picture. They were called the Inspiration 4 because that was the name of the mission.
I read a report this morning that said that SpaceX’s email inbox is full and phones are ringing off the hook with people who want to go to space. If you look at this, what this mission really illustrates to people is this: The cost of the space shuttle was $100,000 in 1980 or so.
They pushed that curve down a little, but you can see with SpaceX coming with Falcon 1 and being there with Falcon 9 and Falcon Heavy, the cost is significantly cheaper. I wanted to confirm that these numbers are correct. I found this on the website where they asked what the current price was per pound.
It does seem to be somewhere in the $2,000 to $2,200 category, which is greater than almost every country. It is going to make a lot of people think of new projects they can now send into space and do in space. These four civilians took research up there and did scientific experiments up there.
They themselves obviously were experiments. All the information about their bodies and everything they did is now being collected. In the past, all that information was segregated because all the space programs are national and you can’t get access to information.
This was a historic mission in every way. Number one, four civilians in space being able to operate an actual ship in space. Second, research is now going to be available to anybody. It’s open source research. Now it’s’ an illustration for so many projects people have been thinking about and looking at.
They see it’s now in the realm of affordability and they don’t have to have astronauts that are trained for years and years. Instead, you can go through a number of months of training and go up and do it. The number of projects that are going to start to get going in space is going to be massive.
I believe it’s going to light a fire underneath space stocks. However, particular space stocks. Even with respect to space stocks there are space 1.0. These are companies called legacy space. They really are the ones that helped build the space shuttle and more expensive rockets.
Then there are all the more recent companies. SpaceX is the leader of it. There are others out there like Rocket Labs, Astra and others. I believe when you see that cost curve being bent, that’s usually a boom coming that you want to get in on now.
In other words, when it’s really clear to everyone else it’s real. We are starting to see mainstream adoption coming. This is when money gets interested and starts to push in and see that the sales, earnings are going to be huge one, three, five, years out. They start to come in and buy the stocks.
I would tell you this is the moment to buy into space. I have one very small stock in the Profits Unlimited portfolio. It went through a difficult time because it came SPAC. I’m not going to give it away because it would be unfair to our paid readers.
If you want to watch my amazing presentation on space, subscribe to Profits Unlimited. Then you will get access to a report that has our views on space. It gives you three stocks we believe are absolutely integral to space 2.0.
That’s my video for this week. A stock market update and space 2.0 now launched. I will have another video for you next week. Until then, this is Paul saying bye.
Space Stocks … to the MOON!
The Inspiration4 was a phenomenal step for space in America 2.0. It will act as a catalyst for new research and the acceleration of space tourism.
It could also send space stocks soaring — hopefully to the moon!
But not every space stock…
There are still space 1.0 companies out there. For potentially huge winners, you want space 2.0.
My team and I put together two detailed reports with names, tickers and predictions for all my favorite space 2.0 companies.
Editor, Profits Unlimited