“It’s the Economy, Stupid.”
Welcome to Reader Feedback day here at Great Stuff!
We’ll get to your emails in a moment — You, you you … always about you isn’t it? — but first, let’s address that big-lettered quote up there, shall we?
As some of you may remember, that quote comes from former U.S. political strategist (and avid Cryptkeeper cosplayer) James Carville. It was uttered live on TV back in 1992, when Carville was a strategist for President Bill Clinton’s first campaign for the White House.
Why do I dredge up Carville and Clinton today? Why not let them rest in peace? Wait … they’re both still alive? Huh…
Anyway, I brought up this quote because the market tanked today … and it’s because of the economy, stupid.
No, no, you’re not stupid. You read Great Stuff! You’ve clearly passed your own cognitive test with flying colors.
No, dear reader, the market is stupid. What am I talking about? (What am I talking about…) I’m talking about today’s Commerce Department report that U.S. second-quarter gross domestic product (GDP) fell 32.9%.
Economists have warned about the pandemic’s economic effect for literally months now. We’ve seen weekly initial jobless claims hit record levels. We’ve seen a record number of Americans out of work. Businesses closed and went bankrupt.
Economists even warned that U.S. second-quarter GDP would fall about 35%. Wall Street knew this would come. Heck, investors bid up gold and silver prices massively in the past month to prepare for just such an occasion.
And yet, both the Dow and the S&P 500 threaten to move back below key support and resistance levels. Which is a real shame, since both were poised for another melt-up rally in short order.
Now you know why I’ve ranted about “volatility this” and “volatility that” since summer started. This was a known event with a better-than-expected outcome … and Wall Street is still selling!
You know what that tells us?
Wall Street still hasn’t taken off its rose-colored glasses when it comes to COVID-19. It tells us that, when the market is confronted with reality, it shoves its head in the ground like one of those cartoon ostriches.
It tells us that Great Stuff’s advice to keep the majority of your investments in cash, currency indexes, gold and Treasurys is the smart thing to do. Keep your powder dry … and a close eye on your chances to take profits on runaway gains.
Now, I know that traders are gonna trade. Investors are gonna invest. You don’t have all your money tucked away in your mattress, that’s not your style. But you do have to consider your options. It’s volatility, stu— never mind.
Instead of worrying about the constant back and forth between sweet serenity and surprise devastation … why not play both sides of the pendulum’s swing?
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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 time once again to dive into the murky depths of our inboxes, sifting through the rants and raves to pick out our faves — or at least the emails that make us question this bizarro world even more than we already do.
I’ll quit yapping and let you do the talking. It’s Reader Feedback time!
Electric Elephant in the Room
After NKLA dropped from the 50s share price down to the low 40s in one day you recommended [a] ‘second chance’ to pick up cheap shares … so I did. Now the share price is in the 20s. Because of your advice I’m in the house of pain … where do you see this stock going?
— Rick L.
Rick, it’s a little past suppertime. I’m still out on the porch step sitting on my behind, waiting for Nikola to rally. But then, you’re probably not a Faster Pussycat fan. So, let’s get to the point.
Right now, Nikola Corp. (Nasdaq: NKLA) is grossly undervalued, trading at nearly half the consensus’ average price target of $59.67.
It dropped because the holding period on NKLA warrants ended, and more shares came into the market quickly. We knew about this and expected it. That said, the market’s reaction has been sharper than anticipated … as it has been with nearly every other bit of stock news.
Volatility is a #$@*%. A wet blanket. The sock sliding down further in your shoe. And this market is full of it.
But NKLA will come back. This was not a short-term, get-rich-quick play. Nikola is not having a Kodak moment.
If that were the case, we’d have taken profits the day after we recommended it. But that doesn’t do your portfolio any long-term growth favors. With its hydrogen fuel cells, Nikola is building possibly the best competitor to Tesla Inc. (Nasdaq: TSLA) and the electric battery right now. The next Ford versus Chevy, if you will.
I know it’s painful if you got in, but I promise it will be worth it down the road. Electric vehicle dominance don’t come easy … it’s a game of give and take. And Great Stuff is ready to wait and give it time.
1 Man’s Trash
My portfolio is garbage. Lol. Waste Management, Waste Connections, Republic. I got them all back in 2018/2019 or so. It’s been steady and slow, but I haven’t lost much on them, which is good honest work to me. What do you think about trash stocks? Thanks for reading my ramble if you use this email. Peace!
— Craig
Craig, I dig it. Waste management businesses are an underrated chunk of the flight-to-safety stocks during market uncertainty. The sector’s three giants that you named are all giants for a reason, snatching up the local can-collecting competition.
On the investment side, while these are far from glamorous … there’s a certain allure around “boring” stocks these days.
So, what’s “safe” about them? Safe is relative, especially these days, but the idea is that you want to own businesses that won’t be hurt as much as others when the, well, waste hits the fan.
Even in the most dire times, the garbage man commeth. That’s one bill that hardly ever gets cut in the budgeting shuffle. Electricity? Pshaw, bring it; I was molded by the boggy Kentucky summer heat. But go days with trash piling up, and you have neighbors hollering in no time.
The only part of that that falls apart here are the shuttered businesses that no longer need trash picked up. No matter how much useless Amazon stuff we buy (and the excessive packaging that comes with it), business waste collection is a huge part of the revenue stream.
That said … if the big-name waste profits are too slow for your liking, check out the sector’s small fry, such as Clean Harbors Inc. (NYSE: CLH), which handles hazardous disposals, or Sharps Compliance Corp. (Nasdaq: SMED), which takes care of medical waste.
Neither are Great Stuff Picks — sorry, we have to mention that to not cause confusion — but you know that we’re all about highlighting the lesser-known ways to play a trend! SMED alone is up over 68% since March, with CLH nearing 100%!
Of course, after a certain point, you don’t want to expose yourself too much to any one sector — even more pandemic-proof ones like waste collections. That completely negates your original point of diversifying, while also limiting the amount of dry powder you can throw to the wind in other directions.
Anyway, thank you for reading my ramble. Peace!
Rated PG
I’m bummed out by Procter/Gamble earnings. I invested in it for the first time back in March then again in April when people were bonkers over Bounty. What happened to the hoarding? Sales only went up like 5%? What gives?
— Mitch
Wait … this was the big-ticket draw for you this earnings season? No judgment here — you and Craig up there have the “safe and boring” bounties locked down.
The only reason why anyone bought Procter & Gamble Co. (NYSE: PG) back in March was the great toilet paper hoarding stampede. Charmin was nearly its own virtual currency. Depending on which days you got in, you’re up between 4% and 34% … I’m hoping more on the 34% side for your sake.
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Tech Sells
Send me your tech symbol
— Susan
Why, you gotta buy me a drink first, Susan!
Can’t say I know what tech symbol you’re talking about. I need to reach out to the Tech Whisperer for this one: Paul . If you’re not aware, the dude lives and breathes the tech you seek, like the Obi-Wan Kenobi of next-generation tech stocks … or something.
Here’s what Paul is saying about the tech sector right now.
Huzzah! Paul is my true tech symbol. Thank you for your email, Susan.
CROX
Hey. Crox.
— Lem
Crox? Oh … Crocs Inc. (Nasdaq: CROX)!
Now there’s a name I haven’t heard in a … wait … what the CROX?!
First, Crocs reported earnings today that surpassed estimates by 741%. Also, CROX is up nearly 250% since society collapsed in March.
Second, Crocs collaborated with everyone from Vera Bradley to KFC. Yes, KFC. Kentucky Fried Crocs. Ew.
The topper to the bizarro trilogy: Crocs are in because the “…consumer is moving away from the conventional idea of beauty…”
Conventional ideas of beauty, my @#$. I’ve been moving away from that since eighth grade, Crocs. It’s time for you to ketchup, mustard…
If you had the “Crocs will be the true pandemic play” square on your Armageddon bingo card … go ahead and scratch it off. How long have I been inside my house? What strange new world did I wake up in?
Never mind. I’m going back to bed. Thanks for writing in, Lem. And, later, gator.
A Great, Big Croc of Great Stuff
Thanks to all of you who wrote in! Like I said, it takes all kinds of emails to make one shiny duct-taped edition of Reader Feedback.
And if you have any questions for me, feel free to write in! GreatStuffToday@banyanhill.com is the source for everything from electric Badgers to Crocs.
I hope to see your email in next week’s issue!
But we can’t do that if you don’t write in. (Hint, hint: GreatStuffToday@banyanhill.com. You know you want to.)
We’ll be here tomorrow, same place, same (ish) time. And you can always check us out on Facebook, Instagram and Twitter.
Until next time, be Great!
Joseph Hargett
Editor, Great Stuff