Let’s start with a quick win after vacation

Good morning! 👋

Make no bones about it, returning from vacation can be challenging.

Especially when it comes to the financial markets.

Here’s my playbook.

Start with a quick win to get your head back in the game after vacation

I find starting with a quick win is an effective way to regain focus—meaning that I hunt for stocks I know, love, and own first to begin the catch-up process.

Like JPM, which just bought First Republic via the FDIC.

Shares are up 2.63% as I type.

I don’t think the banking crisis is over, but it’s probably winding down for reasons I discussed with the fabulous Stuart Varney this morning ahead of the opening bell. (Watch).

Charlie Munger worries about commercial real estate

Charlie Munger, the vice chairman of Berkshire Hathaway, has expressed concern about the state of commercial real estate. (Read)

Should he?

Yep.

As we have discussed many times, the pandemic accelerated the shift towards remote work, which has, in turn, led to a decline in demand for office space. Factor in the rise of e-commerce, virtual meeting technology, and rates, and I think there’s a real problem.

It’s not rocket science.

At the risk of sounding like a broken record, REIT investors who own commercially oriented funds may be in for a nasty surprise as write-downs accelerate and rent-rolls get clobbered.

And they will, mark my words.

The better and, dare I say it, higher probability profit play is to invest in super specialized REITs where these kinds of risks are mitigated by property selection, product type, and usage.

My favourite—and one OBAers know all about—has returned 20.60% over the past 12 months versus the S&P 500, which has generated “just” 1.04% over the same time frame. Upgrade to Paid

Oh, and yes… banks are packed with what could be even more toxic real estate loans.

Sigh.

Pentagon awards $7.8 billion contract to Lockheed Martin

The Pentagon awarded a $7.8 billion contract modification to Lockheed Martin for 126 F-35 multirole aircraft. (Read)

Anybody who does not own defense stocks at this point isn’t paying attention to the world around us. China, Russia, North Korea, terrorists…

The spending will continue for decades.

Why Astellas Pharma is buying Iveric Bio now

Astellas Pharma agreed to buy Iveric Bio for around $5.9 billion. (Read)

This deal is representative of a larger viewpoint and one we’ve talked about for a while now.

Many biotech investors have been caught offsides as shares have remained flat thanks to a variety of macro-related headlines. For example, over a rolling three-year period, shares of the iShares Biotechnology ETF (IBB) have returned 3.19%, while the S&P 500 has returned 44.85% according to Refinitiv Eikon.

Flip that around.

I make it a point of talking about the importance of buying the very best while ignoring the rest for a very specific reason.

Larger pharma players like Astellas can afford to go on the hunt because they’ve got the financial stability, balance sheet, and moxie to do it. Weaker players do not.

Investors who recognize the playbook will make out like bandits.

Case in point, pay attention, for example, to what Pfizer says about its pipeline when the company reports earnings later this week. The Seagen acquisition, in particular.

Chances are you’ll know what to do.

You’re invited – thrice this week!

On Thursday… I’m keynoting the MoneyShow’s virtual gathering and will be making my argument for Why the Case for Alternative Investments is Stronger than Ever. You can learn more and sign up here.

On Friday… I’ll be speaking exclusively with Ed D’Agostino as part of the Strategic Investment Conference being presented by Mauldin Economics. We’re planning to talk about current market conditions and why the best IS yet to come—at least for savvy investors anyway. It’s a surprising take on things you won’t find anywhere else. Click here to get your pass immediately.

Also on Friday… the May issue of One Bar Ahead®, my premium research journal. This month, I’ll be sharing what just may be the single most powerful “re-rec” I’ve ever issued. There’s also a major upgrade for dividend investors that I think you’ll find compelling if you’re as interested in getting paid to own the world’s best stocks like I am. Of course, there’s the latest MMI charts, portfolio reviews, and more, too! Upgrade to Paid

Bottom Line

Missing opportunity is always more expensive than trying to avoid risks you cannot control.

As always, MAKE it a great day!

Keith 😊