Money Morning Monday 03/28/2022 Transcript

|March 29, 2022

Good morning, everybody. Shah Gilani here. Hope you all had a good weekend. Hope it’s going to be a good week. It’s going to be an interesting one because every week, so far, this year has been interesting. And certainly, I expect the volatility in the market will continue. So today I just want to touch base with you guys on a bunch of your questions. I’ve got a few of them that certainly are great questions. Most of them are really good questions. And there’s a lot of questions you guys have about particular stocks. I’m going to save my, I want to call a sort of a lightning round towards the end. It’s going to be 20 minutes, half an hour, call here, and I’m going to go over all of the stocks that I have, or most of the stocks that you guys have submitted.

So, there’s a bunch of them. And I know if you go into your Q and A box here in Zoom, you can post questions and I’ll try and get to those. Also, if you have some stock questions there, again, I’ll try and get to those towards the end of this call.

So, with that, let’s get started. Here are some of the questions that were submitted and I’m going to touch base on the market. And some of these in these questions, as I address them, I will talk generally about probably the things everyone’s most interested in as far as where the market is now, where it’s likely to go and why it might do what I think it’s going to do.

So first off, Jack asked me: “I’m out of the market,” he says, “because I think we’re headed for a recession. Is that right or wrong?

Well, I don’t of a crystal ball. I wish I did Jack, but I don’t know that we’re heading into a recession. I don’t think we’re heading into a recession.

Even if we were heading into a recession, you still want to be in the market. That’s the bottom line answer to your question. You don’t want to be out of the market every time we have some expectation of either a downward cycle in the market, or we’re heading into a recession in terms of the economy. That doesn’t mean you get out of the market.

If you’re out of the market, it’s very hard to time getting back in. So, I don’t advocate getting out of the market. I advocate paring back positions. And by that, I mean, put stops in there. If you’re positions, especially if you have profitable positions and you trail your stops higher. If we do get a recession, if the market has a nasty tumble, yes, you can get taken out of those with profits.

And then the hard part is getting back in, deciding timing-wise when to get back in. So that’s a question for another day, but I don’t think we’re heading into a recession. The economy could probably will slow down. That’s what raising interest rates is supposed to do. It’s supposed to dampen demand. The problem is if the fed raises rates too quickly and shocks markets and destroys demand, then yes, we could fall into our session. But that’s the purpose of raising rates yet? It is to dampen demand and slow price appreciation in terms of inflation. So I don’t think we’re get to, I think the economy is too strong. I think consumers are in good shape. And I think we’re going to see a growth stagflation. So we’re going to see growth. It’s not going to be stellar because the Fed’s going to tamp that down, but we’re going to continue to grow.

And I think we’re going to continue to see inflationary pressures and certainly consumers’ expectations of higher inflation down the road. So that’s going to be a problem for all of us, but it’s not a reason to be out of the market. There are plenty of companies that do well that have pricing power that can increase prices and increase their profit margins, doing inflationary bouts and spikes, and even long run inflationary periods. So you don’t want to be outta the market a matter of stock selection, really, but I wouldn’t get out now. Certainly, wouldn’t get out probably at.

And if you are a long term buy and hold type investor, and you have absolutely wonderful quality stocks, then you stay in the market. Even if it’s going to have a, a swoon, even if you think we’re heading into a recession, stay at the course people because if your long-term investors are always going to make out that that’s pretty much, I think, general advice for everyone. And I think probably the soundest advice I could give.

Second up. Steven asks: “You may have already covered this, but I’ve heard that this may be a good time to get into gold. What are your thoughts about the gold market in particular investing direct in billion and also other precious metals?

I’m not a huge advocate of gold. I’m certainly not a gold bug. I don’t think that gold is even has a place in one’s portfolio. If you have maybe two, three, five percent of your portfolio in gold, if you really like gold, that’s fine.

But to me, it’s the wasting asset. When we have times of trouble, gold certainly gets a pop. When it’s had a pop here, where’s it going to go? Ultimately, we’re never going to go back to a gold standard and no currency is going to be ever tied to gold, no matter what you hear or what you think or what expectations are as far as analysts talking about, well, this might be a way for this to happen or that to happen.

There’s not enough gold period. So, no economy can grow if your monetary supply is tied to gold, which you can’t mine fast enough. And there isn’t enough of so it’s not going to happen. So as far as gold goes, I don’t own any gold. If I, if you want to own some, I wouldn’t own the bullion. It’s too difficult as far as storage and getting to, and if you want to sell it, you have problems there. You can buy an ETF like GD that holds gold and that be a way to play, but I would trade gold. I wouldn’t invest in it long term. The bottom line with what I’m going to say about a lot of stocks that you guys are asking me about and something like gold is when, if there’s not a great opportunity in a position like gold, then don’t buy because there are plenty of other places where you can put your money to make it work. Gold’s not going to be a home run for you. So that’s the bottom.

As far as precious metals, yes. In an inflationary environment, we’re going to see precious metals. We’re going to see the miners and minerals are going to go higher. Commodities are going higher, but I like the miners in here. Rio Tinto, the great dividends, great companies, and certainly want to be there. That’s where you want to be. As far as particular metals. Yes. You can go into a metal. You can go into an ETF that, and, and follow a metal or a single commodity. But I think you’re better off buying the miners in here because you’ll do you’ll do well. You, you want to have a broad-based approach to inflation, to all commodities, to all I think minerals and metals, and that’s the way to do it for me.

Next up CJ asks: “In light of the Russo-Ukrainian wars interruptions of supply chains, and with supply chains aggravated by unprecedented sanctions, why isn’t a stock like PLG going gang busters?

Well, PLG again, there’s a, there’s a play that you might said, okay, if this is happening, then this kind of precious metal platinum group metal’s limited. This particular stock should, should, should do something, but it’s not doing anything because frankly at, even at 2018 cents, I wouldn’t touch this with a 10-foot pole. First of all, the, the stock chart just tells you everything you need to know. It’s just a downward spiral. And there’s no reason for it to pick up. And the reason is just because you see platinum in the name and it’s a miner of platinum and some other metals it’s not making any money. It’s, it may have some rights to mine, but it’s not producing anything worthwhile. The there’s nothing to this company. You don’t want to waste your money on it. This is I think, a long-term loser. So kick that one to the curve.

And again, as far as single metals or precious metals or single commodities, you can play those, but trade them as far as investing, trying, you know, go into something that’s more diversified. As I said, like the miners: Vale’s (VALE) my favorite right now, Rio Tinto’s (RIO) right up there. Those two, you can’t go wrong with those two. The prices have come down a little bit. So there are good opportunities for you right there.

I see a question up on the box.

ZIM has dropped a lot lately. You still think it’ll have large gains?

ZIM dropped because it, it declared a $17 a share dividend. So yes, when the dividends taken out of the stock, then the price will drop commensurately with that, with that dividend payment.

So that’s ZIM’s going back up. It’s a, it’s a great, it’s a well-run company on, on I support it as far as supply chain, as far as ship shipping companies certainly want to be in both logistics and in shipping supply chain issues, aren’t going away anytime soon. And these kinds of companies are going to do extremely well. ZIM is one of my favorites. We own it in one of my services. I know that’s why you’re probably asking about it. It’s a go-to I think you, down here, you want to buy this on any dips. ZIM is just going to continue to pay dividends. Their revenues are up 150% in the fourth quarter, which they just reported. So it it’s just hitting it out of the park. Margins are phenomenal and you want to own ZIM on any dips. So for those of you who don’t follow don’t know, zoom, it’s a stock and the is the symbol Z I M the stock is ZIM integrated shipping services limited. That’s definitely a buy down here for those of you that don’t own it.

And we have it in my, one of my services. And we’re obviously very happy with it because we’ll be collecting that big fat dividend and going to continue to watch the stock. Appreciate

Next question up. I got, Richard’s asking my question is about ZIM. Okay. So I addressed that for you. “I thought your evaluation was excellent” – Thank you – “I bought it and want to buy more while the price is down.

I think you getting that opportunity right here. ZIM closed on Friday $68.40 and was down 4.81%. A good opportunity there’s support and at 61. So, if you are taking a position here and you like to have tide stops, which I don’t always recommend, but in a market, that’s as volatile as this. If you’re getting, if you’re starting in new positions and you have a limited capital and you don’t want to take big hits, then yes.

When you’re putting on new positions in this kind of an environment doesn’t hurt, put a, a 15, 20% stop. For those of you who have, who like really tight stops, 10% is tight, but given volatility in the market, given the volatility, even in ZIM, simply because of the dividend payment and the way it’s been trading, you might get taken out a little too quickly. I prefer a 15, 20% stop on those, but that’s to you guys, if you want to be, if you’re a little less risk, I I’m, I’m a huge risk taker. I, and I’ve always have been, but I take managed risks, understand where I’m going to go. And I don’t mind the volatility. So for me, if a stock swings 10-15% and I’m buying it because I know what the company does and I expect it to do really well over time. I’m not worried about swings like that, but that being said, ZIM is a buy down here if you don’t own it. And, and I certainly wouldn’t be too worried about a little bit of volatility that this particular stock may experience over the next couple of weeks. So certainly, a buy.

FPE asks: “How can the government get out of massive debt without running our country and taking us down with them? How can an investors survive such an event?

The country has been running the deficits forever, and it’s not going to destroy the market. It’s not going to crowd out investors. And far as the, the public debt and the interest we’re going to have to pay in that. Even with interest rates rising of like, you don’t want to be out of the market and worried about what could happen. The US government is unlikely to default.

It doesn’t mean that can’t be a downgrade by rating agencies. If the debt situation gets markedly worse, but it’s bad already. And we haven’t had downgrade and it’s unlikely we’ll get one because we certainly, the country has the, as long as the economy is growing robustly, we have plenty of ability to raise taxes, hate to say that, but there’s always a way to raise money to pay off the debt. That’s never going to happen. So don’t worry about it. I mean, as far as paying off the debt, \

We just live with deficits. It’s natural and it’s in a sense there’s leverage economy and that’s not the worst thing. So certainly, I wouldn’t worry about it. I wouldn’t think twice about it. I go about my investing and trading with not a care in mind about the deficit. And I don’t think anybody should worry about it. It’s, it’s a macroeconomic question, but really irrelevant as far as investing goes, in my opinion. Someday, that will be wrong, maybe, but let’s not waste time thinking when that day might come, because it may not.

Next up Ram asks: “There’s been a lot of talk about big gains, potentials about all these cryptocurrencies or stocks, but my famous and largest of brokerage firms, Vanguard doesn’t deal with any crypto. So where can I go to buy or sell cryptos?

I don’t trade cryptos. I think the crypto business is great. If you want to trade them, some people have traded them early on. And those trades that maybe happened years ago have turned into fabulous investments. I’m all for it. I don’t trade cryptos. I don’t feel that at the most of them have a real purpose that makes sense to me. I do think they’re fabulous trading instruments. It’s just I don’t trade them. So as far as where to go to trade them, I don’t have a place where I can recommend. There’s plenty of places that you can. And as far as some of the crypto exchanges, you probably where you want to go to a crypto exchange, the caveat with crypto is they’re volatile. As far as cryptos go, probably you want to make sure that you understand where you’re going to get in and where you’re going to get out and how, and when, because they are incredibly volatile, he can make a lot of money with him, but also lose a lot. So I don’t have a place for you to, I don’t have a brokerage to recommend, but I will recommend when you find one and there are plenty of them. Mind your p’s and q’s as far as trading them.

So as far as stocks go, generally speaking, the market is in a difficult place.

We’ve come out of correction. We’ve come out of correction in the S&P and the NASDAQ but they all look a little weak to me. In other words, I think this bounce that we’ve seen off of these lows that we’ve recently experienced is a dead cat bounce. I think we can go a little bit higher, maybe a good bit higher, but I think those are selling opportunities. So if you’re looking to exit positions, if you think the market’s going to come down, then just make sure you have your stops in place. And if it does come back down, you can get out.

But I think a lot of investors are institutions in particular and a lot of hedge funds are looking to sell into these rallies. They’re rallies have been accompanied by tremendous amounts of short covering. So a lot of shorts as the market were getting weak. As we are hitting correction territory in the major benchmarks, there was a lot of shorting going on. As far as the shorting goes, then when the market turns around, goes up, those shorts have to cover. And given the volatility we’re seeing and the kind of moves we’re seeing both to the upside and the downside shorts, aren’t sticking around too long cover positions. And a lot of them are helping lift the markets. And then investors say, ah, we are firming up in here. It’s time to get back in. So we get a little bit of retail then feeding off of that institutions, then come back if they don’t want to get left behind, if this turns into a longer move.

And I think we have interest rate hikes ahead of us. And certainly, I don’t see any near term resolution to the war in Ukraine. And those are problematic for investors and of how high the market can go. So, it’s a stock pickers’ market, and you have to be cautious. You got to play the big themes, the narratives on the inflation stocks, the inflation hedges.

Like I said, the miners are, are a great place to go. There’re companies that have pricing power that can increase their prices and their profit margins. As far as earnings go. I think that earnings are going to end up being better than people expected. And it’s just starting to lift their estimates for earnings in the first quarter already. We’ll start to see how that pans out in a couple of weeks, but the markets in general are in an sort of no man’s land right here. And it’s worthwhile to be cautious in here. Bitcoin is going through the roof. I’m looking at it. It’s up 2.3% today. Bitcoin is certainly had a tremendous move off of its lows. The markets, so much.

So VIX has come down, which is a good sign. And if you guys follow me, you know, I said, when the VIX got to 36, it was a near term buying opportunity as far as trading and getting into positions. And that was pretty much modern spot, but the VIX is back down to 21 and change right now. I think that’ll maybe ease the path for investors to get back in, in terms of diminished volatility is better for funds, especially the, the funds that, that plow money into certain asset classes when volatility subsides. So as volatility and equities subsidize more money in these risk parity funds will go back into equities.

A lot of them, a lot of that money coming back in because the volatility has subsided is money that came out because volatility was skyrocketing. And a lot of those risk parity funds sold equities and bought other asset classes, including a lot of commodities. So that’s pretty much where we are now. Again, we, we’re not out of the woods as far as I can see. So you just got to be careful out there.

And so I don’t see too many other questions. I’ve got a few other questions here, but I want to hit these stocks for you guys, because there are a lot of questions on stocks. And if I would love to do this every Monday, if you all like, let me know, let us snow. And we can do this every Monday for the open. 8:30 – 9:00 might be a good time to talk about stocks and everything else.

I got a question from Connie: “Because of the war, should we sell everything only keep the inflation hedge stocks?

No, I wouldn’t sell everything.

Put stops in on your positions because you don’t know that the war could end, and there could be a resolution. And I think we would have a very quick and severe jump in stocks. And could we get back up to levels where we would be out of the woods? Yes, we, we could, but then we still have the overhang and rising interest rates and how that’s going to impact the market. But no, we don’t, you don’t want to get out with the war. Continuing again. You should have stops in the positions that you’re uncomfortable with. If you’re a long term buying whole type person and you’re in quality companies, then don’t worry about it. Yes. You may see some paper losses as some stocks come down, but if you’re in great companies and apple would be a perfect example, I wouldn’t worry about it.

For those of you who do like to get out and time the market and position yourself and put, use stops, then you’re perfectly situated. So I use stops. I want to get out of certain things that’s and I’m very happy to after I’ve had a profit, I have huge profits in a couple of my positions and I put stops in last week. I just raised them, I should say. And if I get taken out, I’ve got huge gains in them. I’m fine if they come down lower, I’ll probably get back into some of them. So don’t want to miss the market.

All right. On these stocks, this is going to kind of be a lightning round here, and then I’m going to hit a couple more questions before we call it today. Now these you guys are sent in a lot of these, and this is going to go lightning fast.

Paypal Holdings Inc (PYPL)

PayPal down here is a buy. It, it it’s again. You want use, you’re getting into a position and a stock that’s come down as markedly as PayPal has. You definitely want to use a stop. It’s a trade for now. It becomes an investment, if continues to go higher. And then even then you should raise your stops as far as trailing them higher. But PayPal, you know, it’s worth a shot down here. But it’s got the margins. It’s got it. It hasn’t had the earnings growth that everybody would like to see. And it may not cover earnings growth anytime soon. But I think down here at close, at 113, you can put a 15% stop on that and it’s worth a shot. There’s a gap to fill on PayPal. It could go higher. So, yeah, it’s a good stock to put some money into right now, as far as a trade. And if it works out, it’ll turn into an investment and you could ride this thing quite a bit higher

Teledoc (TDOC)

I don’t get it. I never did it. Doesn’t make money, been around long enough. Yes. It’s all fancy because it’s how we’re going to get our healthcare and what we’re going to do. But you know, not everybody’s doing it. In fact, not even enough people are doing it. The company is a loser. If you look at the stock graph, it’s an absolute loser. I wouldn’t own this. I wouldn’t even speculate in this. I don’t see how much of a balance this is going to have. I know it’s in the ARK funds and I know it’s a favorite of some folks Frankly. I don’t get it. Don’t get a company that loses money in a business that they should be making money. So TDOC is just not, I think a worthwhile stock. If you want to trade it again, very tight, stop on this one for looking for a pop, but it’s not, I don’t think you’re going to see much of a pop.

DocuSign (DOCU)

Another one. As far as DocuSign goes, this is another sort of, to me, it’s baffling. This is it’s been around a long time. This is a 19.82 billion market cap company that loses money, negative profit margins. If you want to speculate in it, because yes, any stock can have a good move. Speculate. Don’t invest in it because it’s not making money. It hasn’t made money all these years. You would think it, it would, it would make money. Oh yes. It had the COVID pop. Great. What’s it done? Come right back down. You want to trade it? There’s a huge gap to fill. If you want to trade it again, you can, they close at 100 and change. Maybe, you know, make a play on it, but use pretty tight stop on this one. I would say again, 10, 15% of this is trade. If it turns out that it can gain some momentum and you can fill the gap, and this stock gets back up to say 222-228, you’ll have a heck of a run, but good luck with that. It’s a trading stock. It’s not an investment long term hold.

CrowdStrike (CRWD)

Again, everybody’s talking cyber security. I’m talking about cybersecurity. It’s the top of mind for everybody as it should be. CrowdStrike… There are much better, much better cyber security stocks than CrowdStrike. It’s been around a long time and the worst part is it’s a technology stock. So, you expect it to make money. It’s a $50 billion market cap company with a negative 16.17% profit margin. Really people if you want to buy it, trade it. Don’t own it. It’s not worth owning. These are stocks you want to speculate in, but frankly, I wouldn’t. I don’t waste my money on speculating in stocks like this. There’s plenty of other places to put your money where you can make a lot of money. This isn’t a spot for me there.

Advanced Micro Devices Inc (AMD)

AMD is another one. I like AMD down here. It’s worth it down here. For the chip stocks, I go look at the balance sheet of the company. I look at the earnings potential. I look at margins. I look at all of that stuff. And when the chip makers that are always going to be profitable come down, there’s usually a reason in terms of the chip makers right now, their earnings growth has fallen fairly dramatically. So, they’re still growing, but their earnings growth has slowed markedly. And some of them, their earnings growth has gone the wrong way. But doesn’t mean they’re not worthwhile owning it at some point because the chip makers are always going to do well. Advanced Micro: 185 billion company, got almost 20% profit margins. So, the stock has come down. I think this is well, certainly an opportunity to try and pick some up in here AMD.

Looking at the chart and yeah, I think it’s a worthwhile opportunity going to get, you’ve got support around 100 right now, closed at 119. So, there’s your 20%. If you buy in here, put a 20% stop on it, you are going to kind of be mad if it gets down to that support at a 100 and then bounces back up. But for those of you that like it long term, I would pick up a piece of it here. I wouldn’t apply my full capital allocation to it in here because I think the market is going to move around a little bit. Long term, I like Advanced Micro.

Let’s see. Yeah. I think you guys are going to get, we’re going to get transcript of this. Keep doing this every Monday? I would be happy to do that. I enjoy it. And it’s fun for me and especially addressing your stocks and I know that’s important. So yeah. Keep the, keep your questions coming. Keep sending me your stocks. I love to talk about them and let’s see if we can’t do this every Monday. Thanks everybody for being with me. Hope you all have a great week.

Be careful out there. Cheers.

Shah Gilani
Shah Gilani

Shah Gilani is the Chief Investment Strategist of Manward Press. Shah is a sought-after market commentator… a former hedge fund manager… and a veteran of the Chicago Board of Options Exchange. He ran the futures and options division at the largest retail bank in Britain… and called the implosion of U.S. financial markets (AND the mega bull run that followed). Now at the helm of Manward, Shah is focused tightly on one goal: To do his part to make subscribers wealthier, happier and more free.