The Market Always Sucks in a Few More Rubes
*Updated 5/29/2020 to clarify/rectify comments on Bill Ackman and Pershing Square as requested by PSC Director of Communications
Over the past few weeks, I’ve been imploring you not to get caught up in the unfounded optimism driving stocks up nearly 30% from their late-March lows.
I’ve explained the data coming in. I’ve shared insights from my talks with Fortune 500 companies. I’ve even given you a few ideas of stocks that missed the rally, but have incredible value backing them.
I sure hope you’ve been listening. I hope you’ve used this strength to rebalance your portfolios. I hope you’ve sold off some weaker investments into the strength. I hope you’ve been building up a bigger pile of cash to make some strategic buys once the real bottom comes in.
And I hope that after this week, you come to realize that the “experts” gracing your television screen are nothing more than multi-millionaires being pimped out by their billionaire bosses to make them richer at your expense.
What About Bob Bill?
I’ve often made the point that the majority of the financial news personalities are really out to make themselves and their bosses richer. Recently, I talked with you about good old Bill Ackman.
Ackman’s the founder of a hedge fund called Pershing Square Capital Management. And, in case you forgot, he was on CNBC days before the March lows, literally crying about how bad things were and how much worse they were going to get. He'll tell you it was just a hypothetical situation he was describing, but he spent 27 minutes and 30 seconds lamenting where we were and where we were heading.
Now, of course, Billy-boy's Director of Communications made sure he covered his bases so they could defend themselves against folks like me who see them for exactly what they are - slimey characters pretending to be clean. So, he spent a good 30 seconds of the 28 minute interview mentioning that he was a long-term buyer, so he couldn't be found guilty of market manipulation - even though that was his obvious goal.
But he neglected to point out that his fund had made a multimillion-dollar bet that the market would crash. He also neglected to mention that bet had already made him $1.3 billion by the time of the interview. And he forgot to mention that he was on TV trying to push the market down a little more before he closed out the other half of his short position.
Ackman made billions off that position — the one he used an appearance on CNBC to make even more profitable. And he then reinvested said profits in the same stocks he was saying were destined to fall much further.
But he was just the first “legendary investor” to use his fame and public position to benefit himself at the detriment of retail investors.
This week, several other former bulls changed their tune. And we watched markets fall across the board…
It’s Not News When It’s Old
Throughout the course of this week, a handful of multi-billionaire investors have come out citing the same information I’ve been sharing with you for weeks. But all of a sudden, the market listened.
Hedge fund managers Stanley Druckenmiller and David Tepper both came out bashing U.S. equities this week. Tepper says they’re the most overvalued he’s ever seen (except for in 1999). Druckenmiller called the hope for a V-shaped rally "fantasy."
But you’ve got to remember that Tepper said in late March he was a buyer and the rally had legs. We still have about the same amount of clarity on the coronavirus as we had then – not much. And we’ve still got the same projections for massive drops in GDP and massive spikes in unemployment.
And Tepper was silent last week while the market was rallying. Druckenmiller was, too. But their reasons for being bearish aren’t anything new. It’s actually all quite old.
So, where were Tepper and Druckenmiller last week? Why did they wait until this week to talk about their books? Could it be that they were selling out of long positions and setting up short ones in preparation for their comments this week?
I can’t prove anything yet, but I’d bet my sailboat against your dinghy that’s exactly what they were doing. And it's just more proof that you need to ignore pretty much everything you hear from those shills on CNBC.
These guys are telling you to buy while they’re busy closing out positions and shorting the same stocks they’ve gotten you to drive up. They’re telling you to sell while they take the opposite side and buy up your stocks at an extreme discount.
I don’t agree with the president all the time. But he’s absolutely right when he tweets that these “so-called ‘rich guys’… get you both ways.”
As he said, they’re “betting big against it, and make a lot of money if it goes down… Then they go positive, get big publicity, and make it going up. They get you both ways.”
He’s absolutely right. And it’s completely disgusting.
A few years ago, I undertook an experiment. It wasn’t anywhere near scientific or anything, just a change in the way I responded. I called it “absolute honesty.”
You know how people always say they want the truth? Well, that’s not really true. People want a version of the truth that makes them feel good.
Do you really think your wife wants the truth when she asks if those jeans make her butt look big? Do you think the guy next to you at work really wants the truth when he asks how you like his new rainbow mohawk haircut?
Especially when the truth is it’s not the jeans that make the butt “look” big, and that new haircut makes your coworker look like a rooster that fell into a Skittles factory?
But everyone always says they want the unadulterated truth. So that’s what my “absolute honesty” campaign was all about.
If your haircut looked dumb, that’s what you were going to hear from me. Not surprisingly, people stopped asking me about their outfits and haircuts pretty quickly.
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I’m a little more sympathetic as far as casual observations like hair and outfit go now. But the absolute part stuck with everything else.
And that’s why I’ve been so upfront with you about what trades I’m making and where I see the market. I’m not going to lie to you so I can make a little short-term money. Because you’re going to remember that lie and you’re never going to trust me again.
And that’s why I’ll always have a place in finance. There just isn’t enough honesty in the profession, especially on television and in the financial “news.”
You need honest analysts and forecasters if you’re going to make the right moves. That’s why it’s essential that you pay attention to me and my colleagues here at Wealth Daily and our sister site Energy and Capital.
Right now, you need the kind of absolute honesty you’ll only find here more than ever before.
Some Good to Break Up the Bad
I know it isn’t fun to read about a coming reckoning every week. It’s no fun to write about, either. But I’m not going to micturate on your leg and tell you it’s raining. I’m going to keep being honest with you and letting you know where I see this market heading.
But that doesn’t mean there aren’t some great opportunities still out there for investors. In fact, there are a bunch of incredibly valuable companies out there that have been sitting out this sucker’s rally.
I mean, really, only a few stocks are performing well since late March. Less than two handfuls of stocks were driving the rally this whole time.
But the ones that don’t get the constant news coverage of Amazon, Netflix, and Google are just as valuable in a post-coronavirus world.
Connectivity is now an essential resource for all Americans. If we’re going to maintain the ability to shift our jobs online, we’re all going to need more internet. Some places in the country are still relying on dial-up internet services.
That’s going to drive the spread of 5G like a wildfire across a dead forest.
And one small, little-known company has a near monopoly on the “backbone” that network will rest on. It’s got more of this crucial asset than the next 10 competitors combined.
And it’s already got deals with all of the major wireless carriers and many of the internet service providers in the U.S. as well.
But its shares are still trading for less than $10. Even though a simple analysis puts its current value closer to $15 or $16, that means once we get a few more eyes on the stock, it’s poised for an immediate 50% gain or more.
And as the 5G network continues to develop and grow, so will the profits and the share price of this little company that’s got near-complete control of the infrastructure needed for 5G.
I’ve put together a presentation with my colleague, Briton Ryle, which details the opportunity and explains how you can get invested today.
After an announcement last week, shares jumped about 25%. But there’s still a TON of runway left. In fact, this stock could be worth as much as $60 a share as early as next year.
Click here and check it out now before the shares head up even more and your profits get cut even shorter.
If you’d prefer to read a written report, I’ve got one of those for you, too. Just click here and you’ll get all the same information that’s in the presentation.
Just make sure you do it today because the next 25% jump is just around the corner.
To your wealth,
After graduating Cum Laude in finance and economics, Jason analyzed complex projects and budgets for the U.S. Army. Then, at Morgan Stanley, he led the assistants' team for the North American repo sales desk, responsible for hundreds of multibillion-dollar trades every day. Jason is the founder of Main Street Ventures and an editor for The Wealth Advisory income stock newsletter. He also contributes regularly to Wealth Daily. To learn more about Jason, click here.
P.S. A few weeks back, I wrote to you about a small company that’s nailed its response to coronavirus and is stealing market share from its bigger, less flexible competitors. The company was The Alkaline Water Company (NASDAQ: WTER). Thanks to its streamlined operations, it was able to do a whole quarter’s worth of sales in the month of March — all while competitors were seeing their revenues slashed. And since that article was released, the stock is up about 11%.
Next week, I’ll have the opportunity to question the head of Alkaline’s board of directors. I’ve been assured that my questions will get top priority. And I want to ask any that you’ve got on your mind. I’ve already gotten a few good ones from Wealth Daily members, but I’m looking for more. So, if you’ve ever wanted to grill an executive, now’s your chance. Reply to this email with your questions and I’ll make sure they get a response.
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