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SNAP is why we own AAPL

Aug 31, 2022

Good morning!

‍I’ve been on the go for nearly 24 hours straight so I’m going to keep it super brief this morning … then go in search of a nap and more coffee!

Here’s my playbook.

Markets working normally

The selling has been brutal, but normal. People forget that you have to have buying and selling in both directions.

Computerization and leverage make volatility worse. The moves are getting sharper and more violent because 80+% of the markets are on autopilot thanks to massively leveraged traders, indexing and passive investing. The average investor isn’t suddenly bailing out.

Not a popular thought. If you own index funds or ETFs but hate the volatility, you’re part of the problem. You didn’t do anything wrong; that’s on Wall Street for creating ‘em in the first place and gaming the system.

Powell is as wrong about the jobs report as he was about transitory

What they’re expecting. 300,000 jobs in Friday’s report.

The number doesn’t matter. The only thing that does is how traders, especially the big leveraged ones I just referenced, perceive the Fed will react to it. Too hot means more rate hikes and less leverage … sell off. Too cool means stabilized rates, more leverage … rally.

Defend your portfolio. Stick with the best, avoid the rest.

Go shopping or go home. The money isn’t made selling stocks, it’s made when you buy low then sell high.

SNAP is why you want to own AAPL

What’s being reported. The Verge (a tech news site) just reported that Snap will be cutting 20% of their workforce starting today. (Read)

Between the lines. SNAP is a $2 company at best. The company is so weak that Netflix poached Gorman and Naylor. Digital advertising is under pressure and the platform is suffering terribly. Customers are increasingly leaving because they can’t stand the constant bombardment of popups, and paywalls.

No future. Management is cutting loose the very people it needs to generate revenue because the layoffs apparently start in the division that builds in-app games and stuff.

What to make of it. Not all tech is the same. There is a reason I constantly hammer on "buy the best, ignore the rest" and Snap is a perfect example of why you want to own Apple. (Watch)

Putin’s moves favour this US stock

What’s happening. Team Putin has "temporarily” paused the Nord Stream – which links Russian gas fields with Germany – for maintenance, shooting natural gas prices higher. This comes as Europe faces record high energy prices and small businesses are getting absolutely hammered to the point where many are being forced to shut down. (Read)

Counterintuitively, the US may become the world’s largest LNG exporter later this year. I don’t think they’re going to be bringing the Nord Stream back online for a while.

The best companies are actually well-prepared. My favorite oil stock, for example, already inked a deal in June of this year to export LNG to Europe. Shares have since tacked on 12%. If you’re part of One Bar Ahead™, you probably know what the stock is.

Speaking of which, the next issue comes out Friday, along with a new recommendation perfectly positioned in the EV space. (Get the stock)

Travel > pre-pandemic levels

Not everything is doom and gloom. According to various travel companies, US Labor Day travel may surpass pre-pandemic levels (Read)

Hopper predicts 22% higher air passenger volumes
Labor Day spending is up 19% compared with 2019 levels
Rental companies Airbnb and Vrbo report 16% more nights booked
International flight bookings are up 14% this weekend

Takeaway: People are still getting out and about which means there is still pent-up demand. Anecdotally, our town’s art festival finally seemed to be back to normal this year which matches up to what I’m hearing about other local events around the country.

Travel stocks are still dicey at best.