Investors have had a lot to process in recent weeks. In fact, after dominating the headlines for weeks, the Greek Debt Crisis got knocked aside by a deal and then a “flash crash” in gold and an elevator shaft-like plunge in Chinesestocks.
And that’s not all. There’s oil, which has fallen back again after rallying a bit earlier in the year. There are worries about if and when the U.S. Federal Reserve will boost interest rates. Then there’s the U.S. bull market in stocks, which celebrated its sixth birthday back in early March – and a tech sector that has pundits whispering about “bubbles” and “dot-bomb” implosions.
So for today’s issue of Wall Street Insights & Indictments, I decided to do something a little different. I sat down with Money Map Press Executive Editor William Patalon III to analyze those challenges, to recommend the best spots for profit and to highlight the strategies we believe will help you make money – and keep what you make.
On July 16, I gave you the real story on why oil prices are falling – and a trade to make you some easy money.
Since then, West Texas Intermediate (WTI), the U.S. crude oil benchmark, is down 5%. As of midday yesterday, the October $15 puts on the United States Oil Fund LP ETF (NYSE ARCA: USO) that I recommended buying when they were trading at 50 cents each were up 40%, and trading at 70 cents each.
“This is a stock you have got to own,” Shah Gilani told Stuart Varney on his latest appearance on Fox Business.
After Apple Inc.’s (Nasdaq: AAPL) quarterly results came out slightly less than expected, Shah explained how analysts have entirely “unrealistic expectations” from the largest, most profitable company in the world.
Google Inc. (Nasdaq: GOOGL) made major headlines Friday when an upbeat “read” of the search giant’s earnings report ignited a 16% surge in the company’s stock price.
That single-session bump added a whopping $65 billion to Google’s market value. And this came just one day after shares of Netflix Inc. (Nasdaq: NFLX) – another tech darling – zoomed 18%.
These two rallies are emblematic of the relentless march we’ve seen in the tech sector during the past year. And that elicited a warning from former Reagan Administration Budget Director David Stockman, an author and columnist who’s as outspoken today as he was during his White House years.
Google’s $65 billion jump was troubling enough. Not only was it a record for one trading session, but the amount of market value Google gained in a single day was greater than the entire $50 billion worth of Caterpillar Inc. (NYSE: CAT) – which the global heavy machinery franchise took a full century to amass.
In a column titled “Take Cover – Wall Street Is Breaking out the Bubblies,” Stockman said that overvaluation is emblematic of the whole tech sector. On Friday, the market value of the “New Tech 16” was $1.3 trillion – while their net income over the last 12 months was only $21 billion.
“When you take GOOG’s middle-aged profits machine out of the mix, you get something altogether more frisky,” Stockman wrote. “Namely, a collective market cap of $840 billion for the other 15 names in the Morgan Stanley index and LTM [last twelve months] net income of exactly $6.0 billion. That’s a P/E multiple of 140. That’s February 2000 all over again.”
With those words, Stockman is raising the same question that a slew of other pundits are posing: Are we experiencing a ruinous tech bubble?
What I’m telling you here is that all those experts are asking the wrong question – are looking at the market the wrong way.
You see, this is clearly a “momentum” market. And that means you have to make money while you can – while the opportunity is there.
But you also have to be prepared for the day when the music stops.
I’ve been trading for very long time. While it’s not rocket science, sometimes it comes close.
Take oil, for example. I can use all kinds of mathematical trading models to trade oil, but I prefer, because it works, to keep my oil trading simple.
Oil is a commodity. That makes it a lot simpler to trade than the stocks of companies.
Commodities mostly trade on supply and demand. It doesn’t get much simpler than that.
We made money in my Short-Side Fortunes investment advisory service when I recommended shorting oil. To me that was an easy call. I saw overproduction in the U.S. shale oil sector adding to global supply, which I knew would result in lower prices.
Since then, oil, as measured by West Texas Intermediate (WTI), dropped from about $100 a barrel to $42 a barrel.
It then bounced off its those, got above $60 where people loaded up as if it was going right back to $100 and hit $63.
Then it started backing off again and is south of $52 today.
The bull market Grim Reaper is here. At least that is what Shah warns on his latest appearance on MakingMoneywith Charles Payne.
“We don’t have a reason to be optimistic, we don’t have a reason to celebrate – we need to make changes,” Shah warns.
Between the latest employment numbers, the situation in Europe and the ongoing fear of rising interest rates, Shah reveals the truth about the market and how we can saves ourselves when the floor drops out from beneath us.
Uber, the ride-sharing service valued at $50 billion, is at the forefront of disrupting the taxi industry.
The price of a New York taxi medallion – the license that allows you to drive a taxicab in the city – has been plummeting since 2013… the first time that’s ever happened.
A medallion would have cost you $1.3 million in April 2013, an all-time high. Now you can pick one up for about $840,000.
And the hospitality industry is taking seriously the threat presented by Airbnb, which puts temporary renters and guests together.
That makes the sharing economy – which Airbnb and Uber are at the forefront of – a major Disruptor. In the sharing economy, instead of buying goods from a corporation, consumers “borrow” – really, rent – assets from other individuals. And companies like Uber and Lyft are the “conduits” that put those individuals together… and take a slice of the profits.
And Uber isn’t disrupting just taxis.
Many members of generations Y and Z, especially ones who live in cities, are forgoing the once-ubiquitous ritual of buying a first car. Rather, they’re depending on ride-sharing outlets like Uber, Lyft and Zipcar.
And that’s making auto manufacturers nervous.
Today, I want to tell you about a carmaker that’s not battling the sharing economy, but joining in by making some major investments in a new kind of “assembly line.”