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Buy Energy Stocks Before Winter Hits

Posted September 7, 2022

Welcome back from the long Labor Day weekend.

While you were busy getting sand in your hair and soaking in the last days of summer, the stock market craziness continued.

Sadly there was tragic news out of Bed Bath & Beyond (NASDAQ: BBBY) this weekend.

The company’s CFO, Gustavo Arnal, fell to his death Friday from a New York City high-rise.

It’s now officially been ruled a suicide.

This comes after shareholders filed a billion-dollar lawsuit against the company accusing Arnal and recent 10% owner Ryan Cohen of a pump-and-dump scheme.

The stock’s been on a turbulent ride since Cohen, the infamous activist investor and Chewy founder, bought 10% of the company’s stock and then sold it for a $58 million profit just three days later.

After Cohen announced he was selling his entire stake and the stock went into a free fall, retail investors reportedly lost $1.2 billion.

According to the complaint, investors say Arnal and Cohen purposefully inflated the stock price in order to sell shares at a higher price.

The lawsuit is damning for the two executives...

At all times Gustavo… controlled day-to-day affairs of BBBY, while Cohen, the largest BBBY shareholder who appointed three directors to BBBY’s board, a controlling person pursuant to Section 20(a) of the Exchange Act, has extensive involvement in management and decision-making process through his ownership stake in BBBY and his appointed directors.

The SEC is also investigating the company for insider trading.

As a reminder, according to the SEC, a conviction for insider trading comes with a penalty of up to $5 million and a maximum of 20 years behind bars.

Now, these are just accusations, but the market’s saying these two are guilty.

Bed Bath & Beyond short interest now sits at more than 50%, and the stock’s dropped 70% from its August high of $28.

But that high represented a 500% increase from its previous lows, so investors really should have seen this reversal coming.

Alas, irrationality is the name of the game in the markets, so we shouldn’t be too surprised people bought at the top, lost money, and then got angry enough to sue the failing company.

After all the hype from the r/Wallstreetbets crowd, Bed Bath & Beyond announced that it’s closing 150 stores and laying off 20% of its employees.

If you follow me at all, you know I run a trading service that tracks insider trading.

Now, Bed Bath & Beyond was on my watch list, and at first I regretted not issuing a “Buy” alert.

But now I’m glad we didn’t make a move.

Sometimes you want to avoid the market drama and not have any guilt on your plate.

For those who want access to my current insider trading portfolio, you can check it out here.

One of my picks just hit a new high as of this writing, but there’s still time to get in...

And as the markets extend their losses this week, here’s what you need to keep an eye on...

 

The Jobs Market Suffers

It’s hard to believe that we’re more than halfway through the year.

To finish out the year, investors need to focus on jobs and energy.

In a bit of reverse logic, economists have been saying that poor jobs numbers are good for the economy because if the labor market is too hot, the Fed will have to raise rates more aggressively.

But this perverse market connection to the Fed is counterproductive.

It’s time investors cut ties with the Fed.

A singular organization shouldn’t have this much power over stock prices.

And the Fed is going to raise rates regardless because of President Biden’s inflationary domestic and foreign policy initiatives.

It’s a lose-lose situation.

And the numbers indicate that, yes, we are still in a recession.

Here are the latest jobs numbers that came in Friday:

  • The U.S. added 315,000 jobs, slightly lower than expected.
  • The unemployment rate rose to 3.7% from 3.5% (but this isn’t so bad, as many people voluntarily left their jobs to search for better ones).
  • Average hourly earnings grew 5.2%, lower than July’s average.

The media are calling this the “goldilocks” job report because they say it’s neither too hot nor too cold.

But I say these are terrible numbers and show why recessions hurt everyone except the super wealthy — ahem, the political elite — who cause recession and inflation in the first place.

So while Jerome Powell is on track to raise rates again to “get inflation under control,” the average American will keep feeling the sting at the grocery store and the gas pump.

Speaking of oil, the energy crisis we’ve been pounding the table about is coming fast.

Winter is right around the corner...

Your Last Chance to Invest in Energy

Look, we all know that until the U.S. becomes energy independent, gas prices will continue rising.

Add to that the fact that the European markets are importing U.S. oil at a record pace as Russia shuts off its taps.

And OPEC is restraining supply to keep prices elevated.

It sounds cliché, but the best time to invest in energy stocks was yesterday.

If you want to get in, now’s your last chance before the winter causes oil and natural gas prices to skyrocket not only in Europe but around the world.

The great part about investing in energy is that many companies pay sky-high dividends, allowing you to beat inflation during one of the worst bear markets in history.

So while nearly every sector of the economy, including the FANG stocks, is in the red, the S&P 500 Energy Index is up 40% year to date.

Here's how you can keep yourself safe from the bear market.

Stay free,

Alexander Boulden
Editor, Wealth Daily

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After Alexander’s passion for economics and investing drew him to one of the largest financial publishers in the world, where he rubbed elbows with former Chicago Board Options Exchange floor traders, Wall Street hedge fund managers, and International Monetary Fund analysts, he decided to take up the pen and guide others through this new age of investing.

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