Polestar could do to Tesla what Indian did to Harley
Sep 27, 2021Good morning!
The “value” thing is apparently back. Tech companies are getting hit premarket as I type with the 10-year treasury topping 1.49% on inflationary fears in the early going. That’s up from 1.30% at the end of August and the highest since June.
As usual, this is NOT the real story!
Here’s my playbook.
1 – What’s really happening and why another selloff
The boffins are telling you inflationary fears are driving the selloff because big tech and others tied to growth are more sensitive to higher rates. That’s not right nor true.
In fact, the selloff is because the use of “margin” is highest in those stocks. That’s why they get dumped quickly when the leveraged traders holding them unwind because the cost of paying back their margin loans gets higher as the yield – aka cost – of money rises.
Imagine what would happen if your mortgage company suddenly required 5% … you’d have a massive number of property owners dump their homes. Same thing, but with stocks.
Tech stocks, by the way, are what you want to buy to beat inflation starting with Apple (AAPL). While you’re at it, the same thing is true with certain energy stocks, especially the one I’ve recommended in One Bar Ahead™ recently because it’s investing in breakthrough technology.
2 – How to play Congress before Congress plays you
Very simple equation. We roll back into earnings season again, there’s a data dump all week long with home prices, durable and capital goods, the Fed speaks, and more. I’m particularly interested in Micron because it will reveal chip shortage impacts and the impact of yet another Evergrande debt payment due on Wed.
As for what to do, that’s pretty simple.
- Buy inverse shares (again) and plan to hold through Friday as a hedge against shenanigans. Or, consider using SP500 put options as an alternative if you’ve got the skills.
- And, of course, get ready to do some shopping for companies you may have missed on the last run. Selling cash-secured puts and LowBall Orders will work great if there’s a general sell-off.
3 – Polestar could do to Tesla what Indian did to Harley
The press is buzzing that Swedish electric car market Polestar goes public via a SPAC valued at $20 billion including debt. The deal also reportedly includes a PIPE or private investment in public equity of $250 million from institutional investors. It will trade under PSNY on the Nasdaq.
Only it’s not Swedish at all.
Polestar is owned by Volvo, and Volvo is a Chinese subsidiary owned by Zhejiang Geely Holdings Group, a Chinese company. Not only that, but Geely recently upped its ownership of Polestar to 49.5%.
At the risk of sounding like a broken record, you have one decision to make when it comes to China. The dragon is coming to dinner and you can be at the table or on the menu.
I’ll probably wind up owning both over time.
4 – A new gene therapy player ready to bolt higher?
I’ve owned AbbVie (ABBV) over the years and am intrigued by a new relationship with Regenxbio (RGNX) intended to commercialize RGX-314, a new gene therapy candidate to help treat those with chronic eye disorders.
If there’s a pullback, these two are definitely worth a look.
5 – Nukes and Bitcoin miners??!!
Not sure there’s an immediate investment here but this is an interesting development if for no other reason that these are strange bedfellows in a deal that somehow makes plenty of sense.
Talen Energy Corp has formed a JV with TeraWulf for a development immediately adjacent to the Pennsylvania nuclear plant that’s the size of four football fields. Energy Harbor Corp will provide juice to Standard Power, a bitcoin miner, in Ohio.
Bottom Line
People tell me frequently that there’s nothing to buy or that stocks are expensive.
I couldn’t disagree more strongly. We are living through a global reset and there has never been as much opportunity in front of us as there is today.
The next generation of millionaires is being created right now.
Do NOT miss the boat.
Find the right companies, learn the needed tactics, hone your craft.
You got this – I promise!
Now, as always, let’s start the day strong!
Keith
