The Canary Just Died
Together With LMT
Investors,
Inflation is beginning to get out of control. Commodity prices are hitting all-time highs. Valuations are at nosebleed levels.
Everyone on Wall Street is getting rich while the middle and lower class experience higher prices for the first time since the 1980s.
Heating costs in Europe have quadrupled and are likely to go higher as Russia cuts off gas supplies to the free world. The canary in the global recession mine has just died.
As prices rise to historical levels, consumer spending will plummet as more after-tax take home pay is allocated toward essential needs such as food, heat and gasoline.
The velocity of money will increase as consumers realize it is more important to own essential goods before prices increase even further.
The cycle of higher inflation will begin to populate the minds of many, leading to a fear induced panic. If you hold fiat currency you will be ruined.
After World War One, everyone in Germany felt like they were getting rich from speculation in the public markets.
Valuations increased to wonky nosebleed levels. Anyone who professionally valued assets at that time had a hard time justifying these price increases.
From my many readings on the Weimar hyperinflationary era, there are a lot of similarities today.
Non-cash flowing assets such as cryptos and NFTs have attracted speculators and gamblers across the globe, who think they are investing intelligentially.
Tech valuations are still at insane earnings multiples despite the recent pullback. And now commodities are going out of control.
All of the cash I receive is going straight back into equities and hard assets. Inflation is likely over 10% now and increasing everyday.
If you are holding fiat currency you will lose.
We have entered a new dawn of the economic cycle. Be fully invested or lose.
A Message From LMNT
Repeat after me: "I need to stay healthy to trade healthy."
You don't invest 50% of your savings every month so you can retire early to the couch and your favorite Netflix show, do you?
You invest 50% of your savings every month so you can live a fully active life longer than the average American.
So while your investments work while you sleep, you can work on your health.
With LMNT, pronounced "ELEMENT" you can focus on your health while Mr. Market takes care of the rest.
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Everyday after the market closes I head to the gym to get a workout in. Because if I want to stay sharp during market hours, I need to stay sharp in the mind and body. LMNT has been a game changer, helping me push my physical fitness goals to the next level.
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Trending News
EOG, Devon hold thousands of untapped oil drilling permits (Bloomberg)
Putin signs decree to restrict imports and exports until year end (Interfax)
Kenney says Keystone XL could bring oil to the US by Q1 2023 (Seeking Alpha)
Oil price spike nearing demand destruction levels, ConocoPhillips says (BNN)
Goldman hikes grain price outlook in 'sharpest shock' since 1970s (BNN)
Solar stocks rip higher as clean energy names make comeback (Seeking Alpha)
Crude oil jumps as much as 7% on U.S. ban of Russian imports (CNBC)
Nickel’s price surge could threaten automakers’ electric-vehicle plans (CNBC)
Jeffrey Gundlach Says Oil Tops Out At $200, Stagflation Is Here (ValueWalk)
Top Ten Worst Performing Stocks Of The Day
Seagate Technology Holdings - down 9.51%
Cleveland Cliffs - down 9.13%
Conagra Brands - down 8.22%
Intuitive Surgical - down 7.98%
Campbell Soup - down 7.07%
Church and Dwight - down 6.28%
Mccormick and Co - down 6.26%
United States Steel - down 6.06%
Northrop Grumman - down 6.01%
Intercontinental Exchange - down 5.83%
For new readers, I love buying companies when no one else wants to own them. When there is blood on the street, get greedy.
Alpha Picks
Excellent article on a microcap oil and gas play in Canada that is unhedged trading at a low cash flow multiple.
Another great article on how Peabody Energy can deliver enough thermal coal to Europe while energy prices are high and cheap coal is in demand.
Alpha Letter Pro Updates
For all Alpha Letter Pro subscribers. We will be getting an earnings report on one of my largest stock holdings tomorrow at 9am eastern.
I originally wrote the stock up on December 5th, 2021 at $3.43 per share. The stock continued to drop in the $2.80 per share range where I continued to add to my position. Last week, the price almost hit $5.00 per share, but collapsed on Monday as fears over the consumer getting pinched blanked the market. As of this writing the price is at $4.18 per share.
I sold a small amount of the company to buy $RSX (terrible move) when the stock almost hit $5.00 per share. Other than that small sale, I have continued to hold and expect strong results for Q4 and beyond. At the current valuation, the stock is one of the cheapest in the retail industry I know.
This morning we will get to see how right or wrong I am.
In addition, after the market closes we will get a second earnings report from a small oil and gas company I recently have been building a position in.
Alpha Letter Pro subscribers were able to see my research on this company that I dropped this past Sunday.
I’m guessing we will get an update on the 2021/2022 drilling program and see how successful the second well was in the program. If the well was a success the stock will likely rally as oil prices are near all time highs and unhedged production hits the books.
Keep any eye out for earnings updates from both of these companies. And check the private stock chatroom (IOS users only now) for commentary on markets throughout the day.
- Anon
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Good morning. Had to laugh. I sold some of that retail stock to nibble on some Lukoy. Terrible move. At least so far it has not been delisted. It just stares at me every day at 72 cents per share screaming “you are such an idiot.” Got to take your amusement where you can find it these days.
If valuations are nosebleed why is all your cash going back into equities?