TR Investor PRO April Newsletter: The Ride of the Know Nothing Market Vigilantes Is Essentially Over: They Lost & We Won
Hey Subscriber,
Well, it finally happened--the Know-Nothing Investor fever has broken.
Ok, maybe not in Bitcoin, but with the Federal Reserve "printing" $5.1 trillion in monetary reserves and injecting them into the money supply with a keystroke (i.e., buying US Treasuries with new dollars they create from US banks and the US Treasury to fund fiscal stimulus), maybe the use case for Bitcoin as a fixed number of digital gold "coins" NOW makes sense vs. paying ransoms and money laundering LOL.
How do we know the fevered YOLO mania has run its course? Robinhood reported yesterday they have 60% less traffic and trades in the last 4 weeks vs. Jan/Feb 2021 and other online brokers reported a 60% lower number of online trades of penny/MEME/FOMO/YOLO stocks in general. SimilarWeb, a website traffic monitor that does not capture traffic via apps, saw a 35% reduction in brokerage and financial website traffic in the last three weeks of March.
The good news? Zoomer and Millennial boredom/fever no longer ridiculously distort stock prices and public company valuations! The YOLO distortion field of social media organized short attacks and value/price-insensitive YOLO Redditors has been tuned down to a mild roar. More important, the YOLO sector bear market beat downs of 25-50%+ destruction of the ballistic moves in no earnings stocks appears to not be done yet.
So yes, Virginia, the stock market did what it is SUPPOSED to do: prove once again draw and quarter the new most recent new marginal but speculative buyer of stocks and stock options and prove once again that investing your hard-earned money for long term growth and life-changing wealth building is not a game. It's not a substitute for sports betting or a new form of entertainment. And perhaps most importantly, if you proudly know nothing about how stocks are valued in the public marketplaces and the relationship of stock valuations vs. alternative investments and risk-free bonds, the manic YOLO insanity finally cratered as the laws of financial gravity returned with a vengeance (hence to the term "The Pain Trade.").
Action to Take: It's safe again to rebuild our Unstoppable 2025 Ultra Growth Super Secular Growth portfolio
We are with Jamie Morgan and JP Morgan when their economic forecasting unit says (based on their huge corporate and personal banking data) that our V-shaped economic recovery post-herd immunity and fed by a dovish Federal Reserve who is on the record saying "until we get the NUMBER of jobs in America back to Nov-Dec 2019 levels, we will keep our foot on the monetary stimulus gas inflation be damned!") has ushered in a 'Goldilocks' economic boom (i.e., "there is no inflation that is too hot") 2021-2024.
The $Trillion Transformational Waves of Change We Will Be Riding in 2021-2022 and Beyond
Let's count the most important dozen or so $trillion macroeconomic cyclical growth catalysts that have been/will be pumped into the $21.5 trillion US economy over the next 9 months (not to mention $trillions more by the EU/UK and other central banks in the EU):
1) About 25% of 330 million Americans have been infected with Covid-19 but no symptoms (68 million-ish)/ 35 million-ish Americans infected and recovered, 40% are now vaccinated with at least one shot, and the US is averaging 3 million vaccinations a day and growing
2) California, the 5th largest GDP in the world, reopens June 15 with more than 65% of citizens with at least one dose
3) THUS, the United States is on track for reaching 70% "herd immunity" with just another 60-70 million arms (in the next 30 days since vaccinations are running 7 days a week) and hitting the "all clear sign" by mid-summer which is when the
4) US vaccine jobs and travel boom REALLY takes off
5) At the same time, $5 trillion+ of fiscal stimulus + infrastructure spend has given the US a 25% BOOST to our pre-covid $21.5 trillion 2019 US economy (and again whether you agree or disagree with the policy and/or the politics, all my contacts on the Hill say it will be a fight BUT with reconciliation rules, Build Back Better will get passed by June with just 50 Dem senators and VP making simple majority at 51 like the Cares Act.)
6) Our Federal Reserve is committed to maintaining .25% Fed Funds cost of funds rates and buying $120 billion of federal debt every month until 2023 and a "we don't care about no stinkin' 2%+ inflation attitude (Jerome told us they expect transitory inflation--it's all part of "the plan"--what could go wrong??)
7) Record numbers of flyers, hotel bookings, and car rentals created in the last week according to Bloomberg (e.g., we just booked a much needed long New Orleans weekend in October--not much available)
8) Record service and manufacturing survey index surges US services sector activity picked up dramatically last month, ISM said Monday. The headline print on the services gauge came in at 63.7. That's a record in data back to 1997 and was easily better than the 59 consensuses expected
9) 10% gain in household earnings and cash liquidity from latest "stimulus" $cash money handouts and unemployment insurance
10) Stock buybacks and financial company dividends restored by June 1
11) And let's not forget a BIG part of the $2 trillion Build Back Better infrastructure has a real sense of urgency now that China and the United States are in the race to win 2030. Will the United States and the Western world remain the economic top dog hegemony or will China by 2030 become the top dog in the most important industries of 2030-2050?
12) And PS: China just announced this week they are creating a real digital currency controlled by its central bank. Wanna bet by 2030 which nation will control the world's digital monetary system? Ever BEEN to China? NO ONE uses cash to buy anything already--92% of consumer transactions are Alipay or WeChat Pay pay. Only the round eyes pay for things in cash so frankly, it now looks like China will own the global digital currency race without much of a fight.
The Good News: All of the above points means the US economy is going to run hotter than it has in the last 35 years and . . .
. . . it is now impossible to NOT to conclude that the V-shaped American economic recovery is on like Donkey Kong and the US economy has now been optimized and energized for the continuation of a bull market for stocks for YEARS.
And then add in the new YOLO data that tells us the wild excesses on the manic fringes of the stock market have not infected the core of the stock market!
In fact, you could even say that because of the global Covid-19 fiscal and monetary responses, we are now clearly in a world where fiscal and monetary POLICY trumps market valuation factors and metrics.
Now of course the US market is now going to need to price in the inevitable higher corporate, capital gains, and dividend taxes. At the margins, high corporate tax-paying companies will report slightly lower EPS--but these are mostly mature 20th-century companies for the most part--not our bag, baby.
So what's the plan, Stan?
That's great news for cyclical and secular growth stocks (with 21st-century asset-light business models and moat-like IP) which means our macro cyclical bull market has legs until 2025 at least (with every six months or so a 6-10% ish price correction when stock prices have run too far too fast.)
How do we best play this reaffirmed '20s bull market? In addition to the positions we still hold (SONO, EOSE, FSLY, HTOOW, CNHI) in our Ultra Growth portfolio (and continue to hold ALL our existing Ultra Income plays--and CONGRATS to you who stepped into USAC last week at $14.30 ish price--you are up a $1 today!) we are going to add new positions in all our favorite secular growth sectors.
But first, let's start with our lowest risk/market-beating mega-cap "core" secular + cyclical growth stocks.
1) "Game Over" Digital Dominators(GODD) with Secular + Cyclical Growth + Network Effects+ Digital Flywheel Effect + Competitive Moat Dynamics at GARP valuations
Action to Take: The simplest play is to just buy the 2X Leveraged ProShares Ultra Technology ROM (preferably on DOWN days, OK? 1/3, 1/3, /13.) This leveraged ETF is loaded with what we have come to identify as the leading "Game Over" Global Digital Platform Dominators (GODPDs) with
1) secular + cyclical tailwind 20%ish CAGR growth 2021-2015 +
2) profoundly powerful network effects (i.e., the more people connected to the platform, the more valuable the platform becomes+
3) The digital flywheel effect. The “Flywheel Effect” was introduced by Jim Collins in his seminal book Good To Great. His theory was that companies don't become exceptional as a result of a single intervention or initiative, but rather from the accumulation of little wins and innovations that stack up over years of hard work into new products and services. The amazing financial outcome of the flywheel effect is that revenue/earnings growth becomes self-perpetuating as ALL additional new services are 100% incremental gross profits aka zero new customer acquisition cost.
4) Competitive Moat Dynamics at GARP valuations simply means the literal size and breadth of all the above makes significant competition impossible or uneconomic at reasonable premiums to overall S&P 500 valuations.
Action to Take: Buy our 2021 "Game Over" Global Digital Platform Dominators (GODPDs) with 2021-2022 catalysts INDIVIDUALLY in 1/3, 1/3, and 1/3 portions on DOWN days (and if you are more of a trader, join our All-Access program and we will sell put and call options and buy call options opportunistically.
Our 2021 Global Digital Platform Dominators with 2021-2022 catalysts are:
Facebook (FB): global catalysts include advertising from SMB products and services reopening, travel and leisure, virtual reality technology rollout continuing, adding e-commerce to FB and Instagram, and in 2022, the introduction of Facebook cryptocurrency with 2 billion + users under David Marcus ex-Goldman crypto leader
Alphabet (GOOG) global catalysts include advertising from SMB services reopening, travel and leisure search, YouTube advertising and subscriptions, Google Cloud ramping, Waymo autonomous driving tech
Amazon (AMZN) global catalysts include AWS growth, 3rd party logistics, one-day delivery to 48 states and SAME DAY delivery in 90 urban/suburban regions, new advertising revenues from SMB products, travel and leisure search and booking fees, Twitch advertising and subscriptions, and in 2022 national introduction of Amazon Care a digital-based primary healthcare network offered in 48 states, and then in 2023 a digital-based Medicare Advantage plan at 20% lower premiums than the major Medicare Advantage plans + Amazon Pharmacy + Amazon Remote Patient Monitoring/Chronic Care Monitoring
Apple (AAPL) catalysts include #3 mobile phone/tablet player LG leaving the mobile 5G phone business, iPhone 13 roll-out starting September with advanced Lidar technology, 18% subscription service income growth 2021-202 including advanced healthcare monitoring on iWatch, and the iCar introduction ramp starting in 2022 and self-driving technology 2023.
Microsoft (MSFT) catalysts include global Microsoft Cloud growth, additional conversion to software-as-a-service subscriptions, Xbox update cycle, 25% Game Pass subscription growth, Touch screen laptops, $22 billion Hololens contract with Army, AI-as-a-Service, and acquisitions
Taiwan Semiconductor (TSM) $100 billion invested in new US/Taiwan/Korean/European semiconductor fabs over the next 4 years with 80% of production capacity pre-booked.
Next, we WILL add to our existing:
2) Dominant GARP Super-Cyclical companies (cyclical or secular growth at a reasonable multiple of earnings) in powerfully transformed/transforming sectors and individual companies
3) 5X upside emerging small and micro-cap 2025 secular growth sector leaders
4) New Ultra Income 12% Yield+ 12% Capital Appreciation Portfolio Plays on the Reflation/Reopening of North American economies.
Introducing Our New Transformity Research All-Access Plan
Friends--we are always trying to re-invent our investment advisory experience. And I can tell you this: The value and subscriber experience within our SuperSPAC Pro Trader All-Access program with our Discord Trading Room membership has been so fantastic- that we are opening up our Transformity Discord Trading room privileges to ALL our current TR PRO All-Access plan members.
If you are already a TR All-Access member (who is not also a SuperSPAC All Access member), you will get an email tomorrow with an All-Access link to our Discord trading room.
Key point: IF you are active in the market at least 2 or more times a week, our ALL-ACCESS Discord trading room is for you!
What we have found that just like our TR Alliance membership (subject matter experts in everything from genetic medicine to semiconductor engineering), the MORE active our All-Access members are in the TR Trading room, the more value WE ALL GET.
For one thing, the world and the markets are just moving WAY to fast to these days. A good example was the USAC hit job from Seeking Alpha. For the All-Access members in our TR All-Access trading room, I was able to post our response in REAL TIME--and that meant amazing entry points for those All-Access members.
In addition, I am posting short-term calls and put option trades in there that are just not possible to get out via email and hit the buy under prices. For example, and GM $62.50 call option we bought at $.75 yesterday we just closed out at $1.75 today.
With our new improved TR PRO All-Access Subscription, you now get BOTH our #1 rated Transformity Investor PRO + $10,000-a-Month ULTRA Income Investor Club + exclusive DAILY access to Tobin and TR staff via our new private Discord Room plus you Gain Daily E-mail/Text/Discord Room Access to Tobin Smith to ask ANY question + Conference Calls +Unpublished Covered Call and Put Option Trades to add 50% MORE INCOME per Year to Your Ultra Income Monthly Dividends!
All you do is download the Discord App (and remember Microsoft is in talks to buy Discord as you read this) and whether you are on a PC, Laptop, iPad, or cell phone, you are right in the middle of our merry tribe of active investors and traders.
And this I know: the MORE serious investors and traders we have on our TR All-Access Trading Room, the BETTER YOUR RESULTS will be.
And of course, we give you a 100% money-back guarantee: Join the TR All-Access Trading room for 30 days--and if you don't find enough value, we will refund 100% of the membership fee.
Action to take: click here and you are in TR All-Access!