☕ Be like Unka Warren, buy oil and get a check every monthFeb 07, 2024
Good morning! 👋
Stocks have hit fresh 2-year highs; the dollar is easing.
Unbelievably, the naysayers still won’t let up.
That's okay with me.
It means I can buy great stocks cheaper, longer.
Never forget...the world’s most successful investors focus on being profitable; wannabes, pundits and late-night clickbait artists focus on being right.
There's a big difference!
Growth is better, higher, and stronger than expected:
- 46% of S&P 500 companies have reported as of last Friday
- 72% of ‘em have reported EPS above estimates that are on average 2.6% greater than expectations
- Since January 19th, 75% of S&P 500 companies have reported earnings that have exceeded expectations by 7.3%
- 7 of 11 sectors are reporting YoY earnings growth
- The blended growth rate for Q4 is roughly 3.5% which, if it sticks, will be the 13th consecutive quarter of revenue growth for S&P 500 companies
- Analysts are making smaller cuts than average to EPS estimates for Q1
Could there be a correction?
In fact, I'd be surprised if there weren't.
Here’s my playbook.
1 – SNAP: the dog ate my homework
SNAP shares have fallen off a cliff after biffing earnings. CEO Evan Spiegel says Middle Eastern headwinds play into what’s happening. (Read)
Perhaps, but it seems to me this is “dog ate my homework time.”
Amazon, Google and META all reported 25%+ gains in advertising. SNAP’s management has much bigger internal problems than they’re letting on.
Putskies and run for the hills.
I will be surprised if SNAP is still here a year from now or if El Zucko doesn’t buy it for pennies on the dollar.
2 – How to beat the next real estate crisis
I’ve been talking about this since mid-2022.
Not all real estate is the same and commercial real estate, in particular, is due for a comeuppance.
Yellen says regulators are on top of it. (Read)
To a point I made on Mornings with Maria earlier today, these are the same regulators who missed the regional banking crisis in formation and a dozen other problems roiling our financial system.
There is a bright spot, though.
Investors who depend on REITs for income have a golden opportunity to shift their focus before the storm hits by reallocating funds away from commercial real estate oriented REITs to those focused on healthcare, tech and aging-related properties. (Watch)
My fav and the one I recommend to OBAers has returned about 25% over the past year and a half while having a substantially lower volatility profile, too. If you’ve got this covered, fabulous. If you’d like some help, you know where to find me.
3 – Uncle Warren just doubled down on oil – you should too
Tech has gotten all the focus lately but if you’re not buying oil, you're not paying attention.
- Ford is refocusing on piston-clankers and all but abandoning $12B
- Hertz is ditching its EV fleet to buy more gasoline powered vehicles
- EVs are too expensive
- Customers don’t want ‘em
No surprise and exactly as I suggested he would to capitalize on lower prices, Unka Warren doubled down on big oil. (Read)
You should think about doing so, too.
There’s a good case to be made that big oil could be the single most undervalued set of stocks on the planet at the moment. Certainly, least loved. That’s crazy considering record shareholder payouts, great dividends and rock solid management.
Can you spell m-u-s-t-h-a-v-e?
4 – NVDA will hit $1,000 or split
Nvidia has an 80% market share when it comes to AI chips.
Everybody from Microsoft to Amazon is buying ‘em.
Demand is so high that there’s a shortage which, if you remember ECON 101, means higher prices.
Every country in the world needs NVDA products.
You could've heard a pin drop when I first mentioned $700 a share and a potential stock split more than a year ago for Nvidia.
Yesterday NVDA was within a whisker of that.
Shares have given back a little bit but that doesn't change the fact that we're here and that means we could be there – at $1,000 or a stock split – much sooner than people realize.
Keith’s Investing Tip: If you’re scared to buy expensive stocks, don’t be. Change your tactics – buy smaller, more consistently, focus. There is always a way into the fight and a path to profits. (Watch this)
5 – Why Chinese stocks could pop
Xinhua is reporting that Beijing has benched Yi Huiman as Chairman of the China Securities Regulatory Commission (CSRC) and replaced him with Wu Quin, a veteran securities regulator who led the Shanghai Exchange. (Read)
The Western press doesn’t understand the significance of this roster change and has only passingly covered the story so far.
That's a mistake.
China doesn't do anything unless it's already prepared behind-the-scenes for whatever actions it's contemplating. Wu is known as the “broker butcher” for having ruthlessly led the crackdown on brokers in the mid-2000s.
My guess is that China's President Xi has had enough of the economic malaise, the double dealing, and all sorts of other things that lurk in China's kitchen, unseen by the patrons in the dining room.
Xi has an $8T market problem.
I expect Wu to order China’s sovereign wealth fund to buy more stocks which, in turn, means that there could be a 10%-15% run in big names like BABA, JD.com and Baidu among others.
Still, I’d rather invest because of China than in China, but that’s just me.
No word on whether or not Yi is on a long walk in the Gobi.
Steady investors make more than anxious investors.
Let that sink in.
Then and as always, MAKE it a great day.
You got this – I promise!
PS: I think there’s still a few seats left if you’d like to join me at the Las Vegas MoneyShow where I’ll be speaking on The Surprising Truth about Investing in Today’s Markets, the future of emerging tech, ETFs and more. It’s always a great time – hope to see you there!