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☕ Disney gets serious

Feb 08, 2024

Good morning! 👋  

I've been closely involved with global markets for 43+ years now and I cannot ever recall seeing the S&P 500 on the cusp of taking out my annual target just a month and change into the new year. 

Still and not to be a spoilsport, JPow and his band of monetary marauders have been very quiet the past few days.  

Powell isn’t one to waste a good bull market. 

I have no doubt that he and his bunch will miraculously find a microphone within the next 24-48 hours and start jawboning about rates, the need to be cautious etc. Prices will, of course, drop. 

Get your buy list ready - I smell opportunity! 

Here’s my playbook. 

1 – It’s earnings, stupid 

Political strategist James Carville coined the phrase, “it’s the economy, stupid” when it came to explaining core messages to be used as a part of Bill Clinton’s successful 1992 presidential run. 

Now... 

It’s earnings. 

More than half of the S&P 500 has reported Q4 results as of Tuesday with earnings up 8.1% from a year ago while sales are up 3.2%. 

It's no wonder the S&P 500 is on the cusp of another record.  

This time 5,000+. 

I hope you’re on board! 

Keith’s Investing Tip: Many people hear stuff like this and think to themselves that they’ve missed it or stocks are too expensive. Not even! The biggest obstacle facing you today isn’t the markets. It's the person looking back at you in the mirror every morning. Get him or her under control, and the game changes. I promise! 

2 – The House of Mouse gets scrappy 

I love this. 

Disney posted some very aggressive and welcome numbers after the bell yesterday, beating estimates while unveiling a dividend increase and additional share buybacks. (Read) 

It could finally be time to revisit shares: 

  1. Disney is taking a $1.5 billion stake in Epic games which means it’s now got a dog in the hunt against Microsoft and Activision, not to mention Nintendo (a name I haven’t heard in forever). 
  2. CEO Bob Iger is apparently a Swifty, or at least Disney is. He announced that the company is going to host Taylor Swift’s Eras Tour movie on Disney+ and begin streaming it as of March 15. Talk about a bling machine.  
  3. And finally, ESPN is launching a sports-centric streaming platform with Fox and Warner Brothers Discovery. The sports leagues were apparently blindsided, which means there is undoubtedly more to the story. 

This is a great development. 

I think Iger is tired of being Peltz’d so I see this move as the strongest sign yet that Disney wants to fight back against the activist investor. 

That said, why Swift? 

Taylor Swift is undeniably the “it” girl of the year. Hosting her tour movie will bring hundreds of thousands perhaps even millions of “swifties” - her fan base – within Disney’s orbit. I do wonder about the crossover into the rest of Disney’s brand portfolio but have to imagine that’s very much the goal here in Iger’s mind. 

3 – First there was IP Man, now there is ACK Man 

Chances are you know the name Ip Man if you’re a martial artist. 

He was Bruce Lee’s teacher. 

Now there’s Ack Man. 

Hedge fund billionaire Bill Ackman plans to launch an investment vehicle for the people centered on one to two dozen large cap "durable growth "companies in the US according to regulatory filings. (Read) 

Sounds familiar. 

Diversification hasn’t worked the way Wall Street intended for more than a decade. Yet, they continue to peddle it anyway for reasons we’ll get into another time. 

Buy the best, ignore the rest. 

My research shows that 15-20 stocks centered on world class companies is the way to go if you want to win. If you’re playing not to lose, diversify away to your heart’s content – I'm sure Wall Street will be happy to take your money (again). 

Meanwhile and to make my point, one trust I’m aware of that’s being run using my research has experienced 9 stocks that have at least doubled, two triples and a quad within the past 15 months. It’s returned 39.21% versus a still fabulous 34.30% from the S&P 500 according to First Trust portfolios. 

Btw, welcome to the party, Bill! 

My POV: The fact that Ackman is centered on a concentrated portfolio of large cap names and has an axe to grind with Wall Street is important validation that we're on the right track.  

4 –Palantir in one chart 

They say a picture is worth 1,000 words. 

Yep. 

Tip o’the hat to my friend and ace-Palantir analyst, Arny Trezzi 

5 – Google’s still playing catch-up 

Alphabet/Google, is rebranding its chat bot Bard as Gemini and rolling out a paid subscription based on the assumption that customers will pay for better reasoning capacity. (Read) 

Perhaps a few will. 

Many won’t. 

Generative AI is a fancy play toy that has changed the world but it’s not ready for prime time yet. Moreover, Google’s version – Bard, Gemini, whatever you want to call it – just isn’t a needle mover. 

The real threat – and opportunity - is Apple. 

MyPOV: I make it a point of buying the best and ignoring the rest. Situations like this reinforce my thinking and research bears me out. History shows that first movers, particularly if they’re Zero to 1 innovators will leave 2nd and 3rd tier competitors using n+1 models in the dirt until a newer entrant changes the rules as will be the case here when Apple busts a move. 

If you haven’t read Peter Thiel’s book, Zero to One, you should; it’ll change the way you think about investing forever. 

Bottom Line  

The next generation of millionaires is being created right now.  

Do NOT miss the boat.  

Find the right companies, learn the needed tactics, hone your craft. 

You got this! 

Now and as always, MAKE it a great day. 

Keith 😊 

 

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