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I think META halves again

Oct 27, 2022

Good morning!

‍The Dow was up 10.8% earlier this month, a move that would make it the best October since 1896 when Charlie Dow created the index if that holds.

Wanna guess what the other two Octobers gaining more than 10% were?

1982 and 2002.

Both ended prior bear markets and set up massive bull runs higher.

Here’s my Playbook.

META: I think it halves again

I said avoid META like the plague at $350 because it would break $200. I called it a “bug in search of a windshield” all the way down during various network appearances. Then, I cautioned investors that it would go sub-$100, most recently during an appearance on Varney & Co (Watch). This morning Meta’s trading at $98.82.

I’m not telling you this to brag; that’s not my style. Honestly, I could just as easily have gotten things wrong. But I didn’t.

I think Meta halves again. Yes, that’s $50 a share, if you’re doing the math. The earnings report just stunk and investors are clearly no longer willing to “buy” El Zucko’s bull___. (Read)

Why. The tide has shifted. Wall Street which has heavily defended the stock for years now smells blood in the water. It won’t take much for them to shift to the downside after some short-term reflex buying this morning.

Oh, and El Zucko mentioned Apple three times during the call if I did my math right. Guess who’s under his skin?

Musk’s Twitter is the nail in Meta’s coffin

Incoming rabble-rouser and CEO Elon Musk entered Twitter HQ carrying a kitchen sink. If that’s not a message, I don’t know what is. He’s expected to address employees on Friday morning. (Read)

Musk’s co-investors are tossing in $7.1B. Two of the more prominent backers include Oracle co-founder Larry Ellison and Saudi Prince Alwaleed bin Talal. At the same time, Morgan Stanley, Bank of America and other institutions have committed $13 billion in debt financing.

This is a nail in Meta’s coffin. I said early on that Musk undoubtedly has a plan that goes way beyond the “free-speech” the mainstream media latched onto. The so-called “super app” he wants to build will be on par with China’s WeChat.

Wild Idea: Maybe I haven’t had enough coffee or entirely too much, but what if Musk swoops in to clean up the wreckage next year. I’ll bet there are elements he could cannibalize rather than having to reinvent the wheel at Twitter.

China to US: Can’t we all just get along?

What’s happening. China’s President Xi Jinping has reportedly said that China is willing to collaborate with the United States to find a way for both to get along and benefit. As usual, the West will misunderstand the message and, critically, the intent. (Read)

We’ve seen this playbook before. China’s interested in “getting along” only if doing so benefits China. The nation operates by strategic deception, and this is another in a long list of ‘em.

There are only two Chinese stocks worth owning. I’ve recommended both of ‘em in One Bar Ahead®. They’re both at bargain basement levels but, if you know your history, could come roaring back. Upgrade to Paid

Dividend investors beware: yes, it could all go wrong

Dividend investors have long believed that companies like Altria were immune from challenges, especially in down markets and especially where dividends are concerned. People smoke when times get tough, or so went the logic for decades.

Not so fast. The Marlboro maker just biffed earnings as revenue fell. I think Altria is one of those household names at risk that I keep telling you about. Dividend investors would be wise to pay attention!

Recession or Not?

What The Data Say. GDP increased at a 2.6% annualized rate last quarter ending the two prior quarters' negative run according to Commerce Department. (Read)

What I Say. It’s irrelevant. As I noted on Yahoo! Finance yesterday, I think the country’s been in a recession since Q1 based on what people feel in their wallets. The fact that the boffins need to reinvent the definition is proof positive we’re there.

Why this matters. We talk constantly about the need to prioritize “must-have” companies over companies making “nice to have” products and services. Especially if spending is at risk. And it is because consumer spending accounts for 2/3rds of all US economic activity.

Think Chevron versus Meta. The former has returned 63.07% over the past 12 months while the latter has lost -68.24% over the same time frame.

Guess which one I think is worth owning? Upgrade to paid