QQQ: The Greatest Show
The Nasdaq Composite just broke out to fresh all-time highs.
Sound familiar to you? I typed those exact words about one month ago on June 4 … a Thursday.
Today is also a Thursday. And, just like Arthur Dent, I never could get the hang of Thursdays.
Why do Thursdays matter? Because it’s the day that weekly jobless claims data are released.
This week, the Labor Department said that weekly initial jobless claims arrived at 1.314 million. Economists expected 1.39 million new claims, and so we get headlines crowing “Jobless Claims Better-Than-Expected!”
While I’m happy that people are getting back to work, I have to say that our “expectations” must be exceedingly low right now. As in, our expectations are so low, they could limbo under a Turkish rug.
Initial jobless claims are still roughly double the peak of 2009’s Great Recession. Continuing claims — i.e., people still receiving unemployment benefits — sit at 18 million.
It’s important to remember that these are still disturbing levels of unemployment, no matter how much Wall Street attempts to normalize the situation. And you’re no Negative Nancy for keeping this in mind … in fact, you’re a more-aware investor than most on Wall Street.
So far, investors have overlooked the labor market as a stock market driver. Unlimited stimulus from the Federal Reserve helps … a lot. It’s hard to take record unemployment levels seriously when you’re hopped up on mountains of cash and credit market liquidity.
But we as investors need to prepare all the same.
Don’t believe me? Just look at all the big-name retailers filing for bankruptcy this year. We’ve got Pier 1 Imports, True Religion, Neiman Marcus, J. Crew, J. C. Penney, GNC and now Brooks Brothers. And that just hits the highlights. (Lowlights?)
With the coronavirus and unemployment sweeping the country, the retail and services sectors are getting pummeled — especially those companies without an online presence.
As a result, there’s a rush from small- to medium-sized businesses to move operations online. Heck, even your neighbor Pam from the local craft market is probably a bona fide Etsy Empress by now.
Online sales, working from home, streaming entertainment … these are the current market’s hallmarks. It’s where consumer money is flowing, it’s where jobs are growing and investors are increasingly picking up on this trend.
As I’ve said before, technology is the future. And the future is now, no matter how much my mind thinks we’re stuck in an eternal and quite sweaty March-April.
With virtually every company strapping on its tech boots … it’s no wonder the tech-heavy Nasdaq Composite continues to hit all-time highs. Even with that whole “high unemployment and a global pandemic” drag.
As I said back in June, if you want a way to participate in the Nasdaq’s record-setting rebound, check out the Invesco QQQ Trust (Nasdaq: QQQ). Until the world goes back to normal, the Qs are where it’s at.
ETFs? Don’t talk about ETFs! ETFs? Come on man!
OK, I get it. I get it. You’re a Great Stuff reader. Exchange-traded funds (ETFs) are too blasé for you. You have more refined tastes. Well, we’ve got you covered! If the “Cubes” don’t get your tech-loving heart beating…
Before we dive into today’s meaty matter of inbox pitter-patter, let me tie up some loose ends here:
- Dave J.: Thanks for the invite for bush flying and fishing in Anchorage. (You guys have flying bushes up there?!)
- Hugh T.: My liver and I appreciate your concern. Trust me, no worries here in the bourbon belt. #GreatStuffStaysGreat
- Christy L.: I’ve seen nary an email so profane in my life. Got any eye bleach?
- Sofia G.: My Portuguese is admittedly shoddy, and Google Translate wasn’t much help here. Good luck with the atualização exclusiva do projeto … I guess?
- All of you sending me virtual drink invites every. Single. Goshdang. Day: I have no idea what this “Fubar” thing is, and at this point, I’m too afraid to ask. (See? This is why Hugh worries.)
Anyway, let’s get into another round of Reader Feedback!
Real-Time Disappointment Feed
The reason I am so disconnected is that it does not make me healthier or wealthier … I find that I spend too much time as it is in front of a computer. As you get older, time is MUCH more valuable than money etc., so I would rather convert social media time to either exercise time, family time, recreation time, or sleep time.
I remember about 10 years ago watching an NBA basketball game and twittering real time with others about the game.
After the excitement of seeing my tweets and being responded to wore off, I realized that I was not giving the game focus and it was actually an irritating distraction using Twitter, so I stopped using it…
— Mike M.
Mike, the more you stare into the Twitter abyss, the more the abyss stares at you — and your shopping preferences. I know you aren’t the only one disconnecting online, made clear by the collapse of advertising revenue lately.
Thank you for the reminder that the real wealth we’re making is inside us … in the friends we’ve made along the investing way … or something sappy like that.
Well, there’s also the wealth from the sick gains made on Great Stuff Picks recently, but more on that in a sec.
If Tomorrow Comes Today
Joseph, you say that the future of the market and the economy depend on what the virus does, but I only partially agree.
As I see it, if the virus went away tomorrow — no more new cases at all — we would still have a huge hole in our economy that will take a long time to dig our way out of. And a lot of companies are simply not going to make it…
The only thing that has kept us afloat thus far is the Fed, which has printed some $3 trillion, with subsidies for everyone. But if continued, this will destroy the dollar. We may already be headed over the cliff, but just can’t see it yet.
I read opinions from all sides, and try to be prepared for both good and bad outcomes, but a lot of that preparation is watching which way things are moving and trying to remain flexible and fast on my feet…
— Gordon F.
Gordon, I completely agree with you! Agreeing with internet strangers? What?! Unheard of!
I think our takes on the whole shebang are closer than you’d think. When I say that things will be OK when the virus is gone, frankly, I mean for the stock market … not the rest of us just yet. This will take time to recover from … but recovering is what we do.
Great Stuff has shared the same Boy Scouts standby “Be Prepared” mantra … way back before COVID-19 left China. And your take is perfect: The best way to prepare is to stay flexible and jive with the market’s jukes.
Here’s Great Stuff’s Quick-and-Dirty Guide to Staying Flexible, i.e., what we’ve preached over the past few months:
- First, take a deep breath before it takes you! Relax. You’re a Great One, and you’ll be A-OK.
- Pandemic earnings will tell you which of your stocks can keep on swimming once the tide rushes out.
- We’re not in the right climate to get greedy with gains, and recent rallies are ending in more whimpers than bangs.
- Watch for diamond-quality stocks mispriced and misjudged during the market’s volatility. Snatch up those bad boys if you can!
- Keep a hedge with gold and possibly a position in the ProShares Short S&P 500 (NYSE: SH) … just in case everything turns sour.
And speaking of volatility throwing us a bone with a bargain…
Great Stuff Picks (and Almost Picks)
Good Afternoon. I just wanted to extend a thank you for your email, great job. I missed the bus on NIKOLA’s email, what an idiot. The stock rose. I will continue to read your emails.
— Nelson S.
Hey Nelson! My answer for you is the same as anyone looking at our latest pick from the outside looking in, wanting to make like N’Sync and buy, buy, buy.
If you didn’t get into Nikola Corp. (Nasdaq: NKLA) over the past couple of days, this electric bus sure didn’t stop a-rolling on. Your results will vary widely from ours if you get in now. Though, another pullback (sentiment-based or otherwise) could be your chance to get in on NKLA — and the electric vehicle trend.
Now, for those of you who did get in on the Nikola action, you’re already up over 35% and some change, at least before the market’s mid-morning nosedive. Hold on! There’s more hydrogen-powered juice in this one.
STONKS GO NIIIIIOOOOOOOM
So glad you talked about NIO today. I got in at 6.65. Looks like a winner.
— Tommy D.
Congrats on the gain, Tommy! I hope you kept holding on for the past few days, but who’d complain about doubling your money and getting out of Dodge — err, Nio, right?
In case you yourself were wondering, dear reader, while “Tesla of China” Nio Inc. (NYSE: NIO) isn’t an active Great Stuff pick, we’ve had it in our crosshairs … though we don’t recommend you get in after its recent stratospheric rally.
Like Tommy here, we’ll keep an eye on it!
Great Stuff: No Wrong, No Write
Whoa, don’t see your email here today? I don’t either … so did you forget to write to us?
We should remedy that right away. Why not share your take on pandemic earnings, distanced holiday celebrations, favorite to-the-moon stocks … anything, really! Rant and rave on.
GreatStuffToday@BanyanHill.com. It takes all kinds of emails to serve up one healthy dose of Reader Feedback, and we’d love to feature your email next week!
Until next time, be Great!
Editor, Great Stuff