Is Disney about to get a full Nelson?
Oct 10, 2023Good morning! š
Finally, a headline that gets it right.
Source: Yahoo! Finance
Weāve talked about this so many times Iāve lost count, but ābetter late than never,ā as the old saying goes.
Rememberā¦ the real key to market movement is Treasury yields. Not the usual blather you hear in the media about inflation-sensitive stocks, shifting sentiment, etc.
The relationship is super simple.
Prices tend to rise when yields drop (because big, leveraged traders have to pay less vig for all the money they borrow), and prices tend to fall when yields rise (because the cost of all that money goes up).
At the risk of sounding like a broken record...
Market mechanics matter, which is why any investor who understands how they actually work has a huge advantage over those who donāt. Especially when it comes to picking stocks for the long run thatāll be there when it counts!
Hereās my playbook.
Pepsi beats and raises $PEP
Super-simple story here.
Pepsi beat Q3 estimates top and bottom lineā¦ then raised full-year guidance. (Read)
Itās a perfect example of what Iāve been talking about on TV and in One Bar AheadĀ® for weeks. And now that earnings season is upon us, weāll talk about it some more.
The best companies will continue to put up great numbers, which is, naturally, why you want to ābuy the best, ignore the rest.ā
LEAPS might be a great play here.
If I were Peltz $DIS
Reports are circulating that Disney is āsurprisedā that activist investor Nelson Peltz is back and that there may be a proxy war.
Iām not.
Disney has been its own worst enemy for years. Igerās on the right track, but I think heās probably nowhere near as aggressive as Peltz will be when it comes to returning the company to prowess.
The Financial Times did a great write-up saying that the company āmust make asset sales or suffer a full Nelson,ā a clever pun on a wrestling hold by the same name. I think theyāre absolutely on the right track. (Read)
If I were Peltz, Iād hold a garage sale, clear the balance sheet, and get back down to business providing great theme parks, great brands, and a great entertainment experience.
Disney was a favourite stock of mine for years, but I still have not repurchased shares and, sadly, am in no rush.
Selling Cash-Secured Puts could be a great way to get paid while waiting for the stock to find its footing. Thereās not a lot of premium, but thatās changing, so itās worth keeping an eye on, IMHO.
FTX Trial: Lawyers on speed dial
Disgraced crypto king Sam Bankman-Friedās ex-lover, Caroline Ellison, is widely expected to take the stand this week. (Read) Lawyers will attempt to determine whether FTXās unprecedented collapse was the result of simple bungling or fraud.
Iāve got to imagine that thereās a slew of VCs bracing for the worst.
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If itās bungling, then they are arguably off the hook when it comes to their own investments.
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If itās fraud, I think itās very likely that some really big names have their lawyers on speed dial because there will be serious questions about the level of pre-investment due diligence, who knew what and when.
What does that mean for crypto prices?
Probably not much, at least not immediately anyway.
Longer term, I think the story is very different because a fraud finding in the SBF trial could quickly snowball into a story about market manipulation, the scale of which will shock both unsuspecting investors and the cryptoratti alike.
If youāre trading crypto, I submit nowās the time to start checking short interest and exploring put options. Not for nothing, but chaos always creates opportunity!
GM: Make it stop!
Canadian autoworkers are now piling on with their American kin. According to various reports, the 18,000+ member Unifor union will strike, which impacts Chevy Silverado and Equinox production if I understand that correctly. (Read)
Tesla, meanwhile, has sent two production pool trucks along the notoriously challenging Baja 1,000 route and apparently, theyāre doing just fine. (Watch)
Pairs trade idea: Long Tesla and Short GM.
Teslaās manufacturing plants are 20 years ahead of the big three, which are being hamstrung at the worst possible moment.
Nearly 50% of Buffettās portfolio is invested in one stock
Diversification hasnāt worked like it used to for more than a decade. Worse, investors who were counting on it have been held back.
Concentration is the only way to go, and Iām not the only one who thinks so.
Unka Warrenās conglomerate, Berkshire Hathaway, has nearly 50% of its $340 billion portfolio tied up in just one stock, according to SEC filings.
Apple.
Should you buy right now?
Thereās a very simple answer, and itās one that we talk about frequently in One Bar AheadĀ®, my premium research journal. Upgrade to Paid
Iād love to have you on board if youāre interested.
Bottom Line
Investing is a journey.
First, you learn how to lose.
Second, you learn how to learn.
Third, you make money using what you learned.
As always, letās MAKE it a great dayāyou got this!
Keith š
