So, what is going on?<\/p>\n
A few things, I think.\u00a0First, the market is not the economy.\u00a0It does go up and down roughly with economic activity, but this isn\u2019t a one-to-one relationship.<\/p>\n
The market is full of largest companies in the economy.\u00a0The shutdown, the second wave, the half-full malls and stay-at-home workers \u2013 these are all disproportionately impacting small business.<\/p>\n
But Ma and Pa\u2019s restaurant or uncle Joe\u2019s barber shop aren\u2019t trading on the big board.\u00a0These businesses are being decimated, but they are not part of what we trade.<\/p>\n
Second, many of the companies that we do trade are actually benefiting.<\/p>\n
We have been picking these sorts of names up for InvestingWhisperer subscribers.\u00a0These are businesses that are outperforming because they are part of the stay-at-home, work-from-home, medical supplier, and biotech sectors \u2013 ie. parts of the economy that are booming.<\/p>\n
Third and most important \u2013 liquidity.\u00a0There is an old saying that stock markets perform best when you have a lot of liquidity and no where else in the real economy for it to go.<\/p>\n
No surprise that the outcome is topsy-turvy \u2013 this is a market where it has been better to be speculative.<\/p>\n
You do not want to be tied to the underlying bricks and mortar economy.\u00a0That economy is not doing well.\u00a0Eventually you will have to report numbers that are going to be ugly.<\/p>\n
Far better to have a business that is far removed from real measurement of performance \u2013 or where performance in terms of revenue and earnings is secondary to the story.<\/p>\n
It is all about the story.<\/p>\n
You want a stock that has a good story as story stocks are the rage.\u00a0Take for example electric vehicles \u2013 great\u00a0story<\/em>.\u00a0I love it.\u00a0Some day this business is going to be amazing.<\/p>\n Just not yet.\u00a0Electric vehicles remain an (albeit growing) niche.\u00a0We are in the nascent stage of their deployment and it still is not clear how fast their ramp will be.<\/p>\n But ironically that makes for the perfect story in this kind of market.\u00a0If quarterly sales numbers disappoint \u2013 no problem.\u00a0It is not about current demand anyway \u2013 write-off the disappointment as a one-time (pandemic induced) hiccup and the story remains intact.<\/p>\n This week the iShares Biotechnology index broke out to new highs after 4 years of consolidation.<\/p>\n This is not surprising.\u00a0Let me ask you what group of stocks are<\/p>\n You guessed it: development stage biotechs.<\/p>\n Yes, I realize that clinical trials are being delayed and that is a negative.\u00a0But this is a minor complaint.\u00a0The business of these names is so far out \u2013 usually 3+ years \u2013 that what they do next quarter is largely irrelevant.\u00a0Whether approval occurs the first half or the second half of 2023 does not matter \u2013 all that matters is that their drug gets approved.<\/p>\n You want another example you only need look so far as the gold juniors.\u00a0I\u2019m not talking producers \u2013 I\u2019m talking companies with a project or a property.<\/p>\n These stocks are screaming.\u00a0We have made a killing of these names.\u00a0Yes, that is because gold is hot right now.\u00a0But it is also because these are great, speculative vehicles whose outcomes have no relationship to the economy, to the pandemic or anything else.<\/p>\n This may all end badly.\u00a0In fact, I would bet it does at some point.\u00a0But that could be a long way off.\u00a0The Fed and other central banks only started pumping the money a few months ago.\u00a0If history is any guide, we have years of printing ahead of us.\u00a0Given the scale of economic destruction, this cycle will likely be bigger than ever.<\/p>\n I may not like it, but it is not my place to moralize.\u00a0My place is to detect and understand.\u00a0And it seems to me that there is so much liquidity out there that people will want to buy stocks for some time coming.<\/p>\n Weirdly enough, you may not just want to buy stocks, you may want to buy those stocks that are furthest away from what you would normally buy \u2013 those that don\u2019t have real earnings, aren\u2019t tied to the economy and cannot be hurt by the economy.<\/p>\n It sounds like a wacky formula, but it is one that is working in this topsy-turvy world.<\/p>\n EDITORS NOTE<\/strong><\/span>\u2013Here\u2019s one story stock that\u2019s turning into reality\u2013and fast. Armed with a disruptive technology that is fast gaining market share vs. competitors, and a CEO with an amazing track record in larger companies, this business is taking off THIS QUARTER. Trading at just 10 cents, it\u2019s the best ground floor opportunity I see in this market\u2013get ready to profit by clicking HERE.<\/a><\/p>\n![\"\"](\"https:\/\/investingwhisperer.com\/wp-content\/uploads\/1-42.jpg\")
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