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The Coronavirus’ Effect on the Stock Market

The Coronavirus’ Effect on the Stock Market

As this bull market marches higher, it’s normal for some people to take profits.

After all, taking profits here and there to enjoy life is one of my “rules of the investing game.”

But please, please don’t let the bad news media push you into “panic selling.”

That’s what I’m seeing happening with the coronavirus.

Now is the time for Strong Hands! Thanks to precision medicine, the coronavirus will not have the impact previous scares such as SARS and the Ebola virus have had.

Watch this week’s Market Talk to find out everything I have learned about the coronavirus in my research, as well as how the market effects will play out.

Market Talk January 27, 2020

We have to acknowledge the passing of a legend, an icon, an inspiration and a warrior.

Under pressure, Kobe was the Mamba he said he was. After he retired he started an investment company and was pursued it with excellence and the same determination and spirit he had on the basketball court. I want to you to read this because it applies to investing.

Those of you who stood with us through 2018, that ugly period when stocks went down in a straight line, you will know that some of what I said is here.

Kobe quote about self doubt

Rest in peace, Kobe Bryant.

Housing is Heating Up

Even though it’s winter, the U.S. housing market is bringing the heat. Sales of previously owned homes rose higher in December to quickest annualized rate since early 2018. The positive economic statistics we note here often at Bold Profits are contributing factors to the number’s rise.

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Low mortgage rates and wage growth have left inventory at its lowest on record back to 1999 and pushed asking prices up to the most since early 2016 per Bloomberg. Where upcoming economic releases are concerned, it will be an extremely busy week with nine major releases.

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On Tuesday, January 28, December’s preliminary durable goods orders will post at 8:30 a.m. and the Conference Board Consumer Confidence number for January will post at 10 a.m. On Wednesday, preliminary wholesale inventories month-over-month for December will post at 8:40 a.m. and the Fed’s rate decision will be released at 2 p.m.

On Friday, December’s personal income and personal spending will be released at 8:30 a.m., M&I Chicago PMI will post at 9:45 a.m. and the University of Michigan sentiment final print for January will post at 10 am.

Capstone Companies

Now for my innovation story of the week, a Florida company called Capstone Companies is a designer, manufacturer and marketer of consumer-inspired products that bridge technological innovations with today’s lifestyle.

This company created a smart mirror that allows users to access Google Voice Assistance, check weather and traffic, listen to music, stream entertainment, respond to emails, set calendar reminders, add task lists, read the news and social media feeds, turn off the lights in your home, adjust thermostats and even check how a stock is trading.

The Capstone Connected Smart Mirror performs and functions just like a tablet with both touchscreen and voice interphases. The smart mirror has internet access and is enabled with Android’s operating system. This allows users to download apps and use Google Voice Assistant for a variety of hands-free tasks. I think it’s pretty cool and innovative.

America 2.0 Update

First, according to HousingWire, economists at Capital Economics predict single-family housing starts will average around 1 million annualized this year.

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These homes will be lower priced, are in short supply and are right in line with the gen Z and millennial buying markets.

Next, Tesla has been in the news a lot, especially with its skyrocketing stock price. Guess what, there’s more.

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There’s more positive strategic moves by Tesla that will help it trounce the competition. According to Teslarati, Tesla’s extreme focus on battery development is paving the way and paying off in spades.

Over the years, Tesla has acquired multiple companies that have enabled the company in some way to either accelerate or prove its products’ batteries. At this point, Tesla’s batteries have become the gold standard of electric vehicles. The company appears to be well on its way toward releasing vehicles that have a range of 400 miles or more.

The Plaid Model S and X will likely be the first of these, as well as the next gen Roadster, which will have 620 miles of range. Even the reasonably priced Cybertruck tops out over 500 miles of range per charge. Massive battery developments are needed to achieve these. Tesla seems to have done it or at least it’s well on its way.

Lastly, per Bloomberg, the under-the-radar economic indicator for manufacturing and shipping activity showed it’s on an upswing.

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The catalyst of its rebound should put a spring in the step of equity bulls going forward. I’m speaking of the 18-wheeler truck tonnage for December, which swung back to a year-over-year growth of 2.6%.

Housing was a key driver of last month’s truck movement. That looks to set continued growth with low interest rates driving mortgage applications to buy new homes. This is a great economic we are seeing coming from the trucking industry.

Coronavirus Causes Market Panic

I’m not sure whether or not the coronavirus will turn into the same epidemic as Ebola. But it bears watching for a similar fallout.Once again there is panic and fear in the market and this time it is being blamed on the Coronavirus. In preparation of today’s Market Talk I looked into this virus and discovered there’s some great research being done by our friends at ARK invest.

I recommend you follow them because they do fantastic work.

Thus far the Coronavirus has killed 56 people, or about 3% of the roughly 2,000 people who have been infected.

This is similar to some of our recent scares.

For example, in 2002 and 2003 there was the SARS virus, in 2015 we had Ebola. We’ve been through Zika and Bird Flu and everything in between.

In terms of the Coronavirus, China acknowledged it within a day. They got to working on the sequencing of the DNA of the virus. There’s already contracts out there for a counter measure.

The idea that markets need to sell off by 15%, 20% or 30% or for there to be a crash, a crisis or a problem, is just going to be wrong.

In other words, if you own our stocks, please keep your positions.

We’ve had a huge run. It’s been a three or four month run and a lot of people are going to be looking for excuses to take a few profits off the top. And this news is that perfect excuse.

However, in reality, I believe China is in good shape and I believe we’re in good shape.

If you are in our America 2.0 stocks, please hold on. All markets have ups and downs. We have ridden through ups, we have ridden through downs. Please stay in our stocks. I believe that this scare will pass.

Those of you who are worried about it, follow the Rules of the Game. Having said that, if you want to invest in precision medicine, which is going to be the answer to the Coronavirus and anything that comes in the future, you want to invest in Profits Unlimited.

This is our flagship service that has exposure to all of our megatrends, including precision medicine, which is going to be part of the answer to the Coronavirus.


Paul Mampilly

Editor, Profits Unlimited

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