☕ Dividend investors beware, this stocks on borrowed time

Howdy! 👋 

All three indices have opened green this morning following a strong day yesterday. 

The question at hand is whether the updraft has legs. 

I think it’s too early to tell, but I’ll take it. 😀 

Your job as an investor or trader isn't to figure out where the markets go next.  It's to recognize that they're in motion, then act on the signals created when that happens. 

Here’s my playbook. 

1 – Private sector hiring better than expected, what to buy 

Private jobs growth topped 62,000 in March according to ADP. 

Great. 

What catches my attention is the composition. 

Health care and education made up 58,000 of the 62,000 jobs while at the same time businesses with fewer than 50 employees dominated hiring. 

A coupla things come to mind. 

First, healthcare is a no-brainer, particularly when you combine that data point with the fact that we are all getting older. Specialized medical REITs are at the top of the list but data like this also suggest that medical equipment providers should increasingly be too. In fact, I’ll be sharing one new choice with the One Bar Ahead® Family this Friday so keep an eye on your email if you’re an OBAer 🤗 

Second, many economists will tell you that small business catch up hiring is a danger sign but I don’t see it that way. My experience is that small business owners are some of the most brilliant, engaged and clever folks in the world. I see this as a sign that there’s a new playbook at hand… faster pivots on B2B services, niche trucking and domestic suppliers. And, of course, an opportunity for the data services and infrastructure that serves ‘em. 

Hmmm. 🤔 

2 - OpenAI just raised $122 Billion 

OpenAI just raised $122 billion at an $852 billion valuation. (Read)  

Most people are going to be gob-fobbed by the valuation but I think it’s par for the course. 

I also think it’s telling who’s leaning in. 

Basically, all the big hitters… SoftBank, Microsoft, Nvidia, Amazon… because they can’t afford not to. 

Many people along with scores of pundits and clickbait artists are going to worry about the concentration but that, my friends, is what happens when there’s a new ecosystem forming. 

We’ve seen the same thing five prior times in human history. 

Now, we’re on the cusp of what I call the Sixth Wave. 

I’ve long believed that there will be more profits created in the next 10 years than the last 50 combined and so far we’re right on track. 

Keith’s Investing Tip: The path to profits isn’t complicated even though a lot of people want to make it that way. Your job as an investor is to recognize big sweeping changes and the companies making that happen… then get your money there first. And, assuming you’ve picked correctly, leave it alone for as long as you can. 

3 – Nike didn’t “do it” – but everybody else apparently did 

Shares are down on a weak outlook and an expected 20% sales decline in China. (Read) 

Like that’s a surprise. 

I’ve long warned folks to steer clear because 1) you can only sell so many shoes and sports gear to so many people and 2) the brand simply isn’t all that anymore. 

Shares are down ~65% over the past 5 years and ~72.7% from a post-Covid peak in early 2022 of ~$166.39. And down -14.36% today alone as I type. 

I expect ‘em to fall further. 

Here’s the real challenge. 

Nike has long been a favorite for dividend and value investors, including quite a few ETFs in that space like the Vanguard Dividend Appreciation ETF (VIG), the Invesco Dow Jones Industrial Average Dividend ETF (DJD) and the Vanguard High Dividend Yield ETF (VYM). 

I expect Nike to cut its dividend within the next 12 months which means that not only is the stock itself at risk but every one of the ETFs I’ve just mentioned is too. 

Trade Idea: Putskies – a bet that the stock declines further. Otherwise, just avoid the dang thing.  

Keith’s Investing Tip: Sometimes what you don’t buy is more important than what you do. 

4 – Buy UPS? 

UPS has been in trouble for a long time and shares are down ~25.15% over the past 2 years. 

Now I think it might be an interesting turnaround choice. 

Team Brown has cut, cut, and cut dang near everything for the past few years… buildings, locations, logistics with the intention of overhauling its aging business model. 

I loved the fact that it reduced exposure to Amazon along the way, too. That’s counterintuitive because you and I both know what a behemoth Amazon is when it comes to deliveries. But Amazon is low margin, so it makes sense. 

Now, I’m seeing UPS making more money on every package it delivers. 

If my read on the numbers is correct, that means 2026 could be the year it all finally turns around.  

Still, I’m not keen to put a whole ton of moola into shares at $98.38 despite the fact that the yield is a drool-worthy 6.67% as I type.  

Trade Idea: LEAPs calls to track any potential rise in share prices but at a fraction of the money required. The tradeoff, of course, is that LEAPs owners give up the dividend but selling shorter term monthly calls against that could help offset that – a strategy often referred to as the “Poor Man’s Covered Call.” 

Keith’s Investing Tip: It’s better to focus on making money over time than to worry about making money just in time. LEAPs can help you do that in a situation like this (which is why we’ll be talking about ‘em at the upcoming OBA Options Boot Camp which is just around the corner – looking forward to seeing you there if you’re coming!) 💯 

5 – The most important question you’ll answer today has nothing to do with the President’s speech tonight 

US President Donald Trump will deliver a prime-time Address to the Nation tonight. 

However you feel about the President, his policies, and everything in between – set it aside. The markets don't care how you feel, but your money very definitely will. 

Remember… 

Your job as an investor is to focus on what you can control and let go of what you cannot. You cannot control what he says tonight. You cannot control how the markets react. 

But… 

You absolutely CAN control what you own and how you own it – and that's where your mental energy belongs today. 

We may agree or we may not – but that, too, is moot. 

The one question I want you to ask yourself before he speaks is this: do you want to own every company that’s presently in your portfolio 5 years from now? 

• If yes – fantastic. Stay the course; you're good and, odds are, have made great choices. 
• If not – this is your moment. A little pruning now beats a lot of pain later. 

There will be no middle ground tonight. 

If the President provides an off-ramp, the markets will take off like a rocket – and yesterday's rally along with today’s continuation is going to smoke everyone who thought they were being smart by heading to the sidelines. 

If not, they'll head right back to the basement.  

Either way… 

Investors who come out ahead won't be the ones who predicted the outcome correctly – although that might help short-term. 

The real winners will be those folks who use today wisely to review, to refine and to stay the course whatever that looks like and no matter how you define that. Being true to yourself is critical because, frankly, not a lot else matters. 

Building wealth is an ongoing journey filled with twists and turns. 

Whatever happens tonight certainly qualifies. 

Keith's Investing Tip: Many people are obsessed with being right, but the world's most successful investors are obsessed with being profitable… even if they're wrong. Think about that for a second because there's a world of difference between the two. 

Bottom Line 

Reflecting on the past can give us almost superhero-like powers in the future.   

Success becomes information we build upon.   

Mistakes become tuition.  

You got this – I promise! 

Now and as always, let’s MAKE it a great day. 

Keith 😀