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The best stock to buy today on yet another misguided dip

Nov 09, 2021

Good morning!

The markets are down a bit in the early going which is entirely normal after 8 straight days higher. Owning the “best” is key because ignoring the rest is exactly what you’ll want to do.

Here’s my playbook.

1 – GE Neutron Jack Welch would explode

“Neutron” Jack Welch took over GE as CEO in 1981 and transformed GE into one of the world’s most dynamic companies by “growing fast in a slow-growth economy.” When he retired in 2001, he’d done it and received the largest retirement severance in history, some $417 million.

Today GE is being broken up into three separate companies because it can’t compete as one. Shares have been in the toilet for 20 years. They’re up today, but I think the better buy is after the split when it becomes clear which divisions get which assets, which managers and who inherits the company’s crushing debt load. (Read)

2 – Scared money rarely makes money

Palantir just rocked earnings and management sees a super strong finish to the year. Shares have sold off boosting premiums and shaking out the scared money. We’ve seen this playbook so many times it’s comical. Palantir is still THE best play on big data if you’ve got the chutzpah and the discipline. (Read)

3 – Here’s how to make PayPal pay

The company reported mixed results yesterday. Predictably, shares got hammered in the after hours following an underwhelming reaction to news of an Amazon/Venmo tie up and lacklustre guidance.

I took a quick speculative pot-shot yesterday by purchasing a call spread and that position is a loser as of this morning doggonit. So, I’ll be flipping things around to play offense.

Selling cash-secured puts to capitalize on the ensuing chaos could make all sorts of sense if I’m right. (Read)

4 – Bond yields are lower than you’d think & why you should care

People think that bonds are about income but that’s not right. Most bond investors don’t care about the return on their money as much as they care about the return of their money but none more so than huge institutions, endowments, pensions, and trusts. That’s why they rarely sell even in the face of rising rates even though that’s what most individual investors think they’ll do.

Bond prices suggest investors expect 2.56% inflation for the next decade but real inflation is running waaaaaayyyyy higher than that which means the real yield on a 10-year Treasury is negative 1.1%.

Hang with me … here’s the coup ’de grace.

As that becomes more positive – the negative real yield moves closer to 0% - it will pull PE multiples down and gives stocks room to run even higher!

Which, to a point I make at the risk of sounding like a broken record, means companies like Apple, Microsoft and, yes, even Tesla are dirt cheap. (Read)

5 – AMD to Intel: Meta this!

AMD announced that it’s made a deal with Meta, formerly Facebook, to power the metaverse. I had hoped that Intel would step up but AMD’s CEO Lisa Su is making it clear that she’s taking no prisoners.

Intel is still dead money or one helluva turnaround play. There is no middle ground. Shares were up yesterday on AMD’s news; perhaps I’m not the only one who thinks so!