Reap the Spoils of War

Andy Snyder|May 7, 2020

Here’s a fact we bet you haven’t heard.

It’s insane.

In all of World War II, the United States spent $4.7 trillion (in 2019 dollars). It used the money to build some incredible things… tanks, airplanes, monstrous ships and devious bombs.

The money went a long way. The innovations it led to are all around us.

But $4.7 trillion is a lot of money.

To give that amount of cash some context, if we spend $1 million per hour, all day, every day… it would take 576 years to spend what we did to win that war.

But check out this stat from The Washington Post…

All told, the U.S. government has committed more than $6 trillion to arrest the economic downturn from the pandemic.

In less than two months’ time, the U.S. government has spent more to fight the nasty effects of the coronavirus shutdown than it spent in all of World War II. Congress signed off on nearly $3 trillion in direct aid (and is eyeing another $800 billion), while the Federal Reserve has made moves that are likely to total more than $4 trillion.

As anybody with a calculator – or common sense – will tell you… all this spending and the addictions that come with it are not going to end well.

But in the meantime, we see only one path for regular Americans.

Buy Like Hell

We absolutely must not sit back and wait for things to blow over. Cash is a dangerous option these days. With the Fed pulling trillions out of thin air, the merits of a stockpile are eroding quickly.

It’s no secret who got rich during WWII.

The companies that got their hands under that spending spigot are still reaping the rewards today. Lockheed Martin, Boeing, Northrop, DuPont, Ford and General Motors are all companies that set their financial fate during the war.

Today’s winners look a whole lot different, but we’re already seeing the spoils of the war against the coronavirus.

Shares of Zoom Video Communications (ZM) have nearly doubled this year. Amazon (AMZN) was hot before all this, but it has now solidified its entry into the too-big-to-fail record book. Netflix (NFLX) is certainly not a typical wartime stock, but its army of investors sure isn’t ready to retreat.

Or how about a more front-line play… a tiny company like Co-Diagnostics (CODX). It started the year with shares trading for just $0.91. These days, they’re close to $14 each.

Again, as this war continues and Washington rushes to spend (and print) maddening amounts of money, the only rational option to protect yourself is to own tangible assets and shares of companies that make in-demand products.

There are a slew of them out there.

But how do you find them?

Follow the Money

If you’ve paid attention, you already know. We’ve written about it a lot of late.

Finding fast-moving stocks before they climb out of reach is made much simpler if we ditch the traditional models that focus on price… and instead focus on volume.

It’s the oldest truism in capitalism – follow the money.

Look for companies with large slugs of volume.

It doesn’t matter which way the stock is moving when the volume hits. After all, for every seller, there’s a willing buyer.

That means…

Look for companies with fresh institutional buying. Pension funds don’t do a lot of guessing.

Corporate insiders are worth tracking too. They know when it’s time to get greedy. And they have to report all their buying in a public database.

And don’t be afraid to buy companies when they’re making headlines and getting attention. In this sort of market, high prices can get a whole lot higher… especially when everybody is piling in.

Try this…

If you want to find a better way to invest, take 10 minutes to look at a few stock charts today.

But don’t focus on the pricing action. Look at the volume. Study the effects of low volume. Watch what a slug of trading activity does. And pinpoint the patterns that would have led to the best gains.

You’ll see the opportunity quickly.

Washington is on a heck of a spending spree. By most accounts, we’ve never spent more.

That’s a bad thing.

But if you don’t take action to protect yourself, you could be this war’s next victim.

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