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This stock is up 201.71 percent off 52-week lows and I hope you own it

Oct 18, 2023

Good morning! 👋

The major indices are all firmly in the red, despite strong earnings early in the game from the likes of JPM, GS, MS, PEP, and more.

Here’s my playbook.

The problem with analyst headlines

We talk a lot about the need to do what Wall Street does, not what it says.

Here’s yet another great example as to why.

CNBC is reporting that a “Top Apple analyst says that MacBook demand has fallen ‘significantly.’”

Millions of investors will read that headline and think it’s a reason to sell.

Riiiiiiight…

What they’re not reporting is far more important to any investor who understands the game is being played at their expense.

Apple now has more than 2 billion installed devices around the world, that the company counts 1 billion paying subscribers, and that its services division now produces more revenue than many countries.

You get the idea.

Apple makes $12,174 a second.

Apple's annual revenue for the 12 months ending June 30, 2023 was $383.93B, according to macrotrends.net.
Daily Revenue: $383.933 billion / 365 days = $1,051,871,232 per day.
Revenue per Second: $1,051,871,232 / 86,400 seconds (number of seconds in a day) = $12,174 per second.

I’ve got news for you.

Wall Street does not take sell-side analysts’ opinions into account when making decisions what to buy or sell. You shouldn’t either.

If you remember nothing else today, remember this… Wall Street sells hard to satisfy the get-rich-quick mentality, and if you get caught up in it, you will pay a terrible price over time.

Big traders are looking at the same headline and licking their lips like a Viking at an all-you-can-eat buffet.

Like us, they know full well that it’s an opening and an opportunity to go shopping—using the right tactics, of course.

Ergo… Always do what Wall Street does, not what it says.

United Airlines in firm command of the obvious

United warns of a slimmer Q4 2023, due to higher fuel costs and the halting of its flights from and to Tel Aviv. (Read) Shares were down 5% in pre-market trading and are now down -7.38% as I type in the early going.

I warned you to steer clear of airline stocks a while back, and that still stands.

Putskies!

I’m thinking it breaks sub-$30.

From the Dept. of Be Careful What You Wish For

I believe that everybody has a right to make as much money as they can doing anything they want, as long as it’s legal, ethical, and morally correct. But in the same breath, I have often cautioned against the merits of legislating higher minimum wages, striking, etc.

Here’s why.

Mandating higher wages will force companies to speed up automation and the pace at which they adopt robotics. The labor shortage they’re dealing with will get solved one way or the other.

MCD has already made significant progress with kiosks and automation. Other service businesses including Starbucks, Campbell’s, and PepsiCo are not far behind. UAW is on the picket lines but trying to thread the same needle.

Now comes PaintJet, which is deploying robotics in the construction and maintenance industry. (Read)

According to CEO Nick Hegeman, the company has already painted more than 1.5 million square feet of building exteriors using a fleet of remotely controlled robots. The company has just 20 employees.

The company also reports that the robotic scanners it uses are so precise that customers can expect to use 25% less paint, which, of course, holds down costs and boosts profit margins.

The company is private, so there’s no way to invest just yet, but I think that opportunity won’t be far away if my read on the situation is correct. Meanwhile, there could be an alternative through the bigger homebuilders or commercial construction companies.

I could also see paint makers taking a hit longer term, so there is that.

Hmmm.

A hidden lifeline for two chip makers

A report circulating on Reuters suggests that two chip makers are being tossed a lifeline of sorts, even though the US wants to choke Chinese tech. (Read)

As usual, the devil is in the details.

The administration (rightly, in my opinion) wants to limit China’s thinly disguised desire to build massive supercomputers, AI, and more that can then, in turn, be used to threaten the US and other nations around the world.

Thomas Krueger, a former US National Security Council export control official said that the principle for “all these rules is to keep them focused on those capabilities that can enable Chinese military systems. They’re not interested in going after broad consumer applications. They’re really trying to thread that needle.”

Wanna bet?!

Consumer applications are actually very high on China’s shopping list—for the simple reason that China’s military doctrine is focused on unrestricted economic warfare. They have lots of bombs and bullets, but they don’t need ‘em, or at least haven’t for the past 40 years while they’ve played the West like a $2 fiddle.

Unrestricted Economic Warfare is based on three pillars:

Hybrid Economic Tactics: China employs a combination of traditional economic strategies and non-traditional tools, such as cyber espionage, intellectual property theft, and strategic investments, to gain economic advantage and disrupt competitors.
Dual-Use Investments: China strategically invests in critical sectors globally, leveraging economic investments for geopolitical influence. These investments serve dual purposes: securing resources and technologies while expanding their economic and political influence.
Information Warfare and Propaganda: China employs a comprehensive information warfare and propaganda campaign to shape global narratives, control public opinion, and advance its economic interests. This includes using state-controlled media, social media manipulation, and disinformation campaigns.

The path forward is super clear for any investor paying attention.

Big Tech is as “must have” as it gets, if for no other reason than that chip tech is now a defense priority. One of my faves has tacked on 200%+ off 52-week lows and, I believe, could easily power higher over the next six months. Upgrade to Paid

Here’s how Walmart could beat Amazon at its own game

Several years ago, I caught wind of something so incredible, I almost couldn’t believe it. Walmart execs wanted to beef up online sales.

Critics thought it was just another bricks-and-mortar store going online, but my view was that Team Bentonville had a much larger, longer-term play in mind… beating Amazon at its own game.

Fast forward.

The global ecommerce market is expected to total $6.3 trillion in 2023, according to Shopify, which also projects that that “21.2% of total retail sales will happen online by 2024.”

I think that figure is an order of magnitude low.

Walmart has the upper hand (Read) and could actually beat Amazon at its own game.

Amazon is increasingly viewed as the bad guy by angry consumers, small-business owners, and regulators alike. AWS or not, that’s going to impact share prices.

Long WMT, short/avoid AMZN.