☕ The big question: should you put new money to work?

Good morning! 👋 

I hope you’re off to a great start today as we are here in the PNW, albeit a super early one. 

The selloff looks to continue this hour (0330) as I take a peek at futures and see that all three indices – the Dow, the S&P, and the Nasdaq – are firmly in the red. But who knows... that could easily change by the time you read this if the computers decide they’ve had enough. 

The point I want you to think about is that this stuff comes – and goes – a lot more regularly than you’d think.

Which is why I also want to remind you that you tend to make your money on the bad days. It just doesn’t become apparent until they’re good days and in the rearview mirror. 😊 

Here’s my playbook. 

1 – Should you put new money to work? 

That's the question. 

MyPOV is that every serious investor needs to take a good hard look in the mirror and ask themselves what they’re trying to accomplish. Then, take a good hard look at this chart. 

Ten years from now it likely won’t matter if you bought Nvidia at $140 or $120. Apple at $240 or $200. The former has returned 26,451.54% over the past decade while the latter has returned 916.84%. 

This is your “Templeton Moment” - don’t blow it! 

If you consider yourself an investor and you’re not familiar with the late Sir John Templeton, you should be.  

Templeton pioneered the concept of “buying at points of maximum pessimism” - a point you hear me hammer on time and again. 

In 1939 on the eve of WWII and under conditions that are very similar to today’s headlines, Templeton famously purchased 100 shares of every company trading on the NYSE for less than $1, including 34 that were already bankrupt. Then, sold all but 4 for ginormous profits later. 

Templeton would go on to refine that approach to the point that every $10,000 invested with him at the time he created what is now the Templeton Growth Fund in 1954 would have grown to more than $2 million by the time he sold the fund to the Franklin Group in 1992. 

There’s no question in my mind that I’ll be putting new money to work. 

You? 

Btw, here’s a bit more thinking you may enjoy from a conversation earlier today on Mornings with Maria. (Watch) 

2 – I love my dividends when the schtuff hits the fan 

People think about dividends purely in terms of income. 

That’s great, but it’s not the whole picture. 

Dividend paying stocks tend to fall less, stabilize first and come roaring back fastest whenever the markets get in a foul mood. 

One of my faves and a long time OBA recommendation – a medical stock - has a 5.26% shareholder yield and rose 3.27% yesterday while the broader markets got carried out feet first. 

Not a coincidence. 

In fact, there were a handful of super-stable, low-beta dividend superstars that were in the green yesterday including names that OBAers will recognize. Be sure to pick up a few shares or add to positions if you can when you have a moment. 

And if you’ve got this covered, excellent. Be sure to snap up a few of your faves while you have the opportunity! 

3 – Impossible to keep Chinese auto makers out of the US 

It's official. 

I am no longer a lone wolf. 

Joseph McCabe of Autoforecast Solutions told CNBC that it is impossible to keep Chinese automakers out of the US because of their “quality and cost competitiveness” - something I’ve talked about for a long time. (Watch) 

Rivian CEO RJ Scaringe alluded to that recently noting that the real problem with EV adoption is a lack of options. (Read)  

I agree. 

That’s why it’s vitally important to own Tesla (and buy more), while also owning at least one Chinese car maker. I hope everyone reading along has placed their bets. 

The Dragon is coming to lunch. The only question you need to ask yourself is whether you want to be at the table or on the menu.  

**OBAers: You know what to buy and more importantly how to do it, so I encourage you to get to it while the gettin’s good and before everybody else wakes up. (Learn More)  

4 - IBM earnings beat 

I was happy to see the numbers. 

IBM reported revenue increased 2% from 15.48 billion a year ago. Net income was $1.83 billion or $1.96 per share, up from $1.58 billion against $1.72 cents per share a year earlier. Perhaps more importantly, IBM now expects 2024 free cash flow to come in at $12B. (Read) 

What catches my attention, though, is that CEO Arvind Krishna said that the company now has more than $2B booked for AI. As of this past April this number was $1B+. I am also interested to see that Red Hat revenues jumped 7%, Automation +15% and Security +2%.  

Incredibly, Data & AI revenue dropped 3% which doesn’t make sense given the big picture, so I’ll have to do some digging yet. 

Shares are +14% YTD, roughly in line with the S&P 500. 

5 - Southwest wakes up 

I’ve spent a lot of time in the air over the years and my motto when booking tickets was “anybody but Southwest.” Like many folks, I simply prefer an assigned seat, more legroom and not having to duke it out with fellow travelers as part of the boarding process. 

Now, Southwest is going to start ... ta da ... offering assigned seats and more legroom while doing away from the free-for-all that has characterized operations for more than 50 years. 

The company has seriously underperformed competitors and 80% of customers choosing a competitor did so because they – like me – wanted an assigned seat. 

Funny how that works. 

Profits fell 46% and now you have decided to make changes??!!! (Read) 

Might be worth a punt under $20, albeit a tiny one.  

I think airlines are a bad bet in general. Airline travel has broken records, profits not. 

Bottom Line 

Investing as much money as you can as soon as you can and as consistently as you can requires less effort than trying to time the markets and usually produces better results, too. 

You got this – I promise! 

As always, let’s MAKE it a great day. 

Keith 😊