Greetings from Kenya!; I'm buying Tesla today; I'm not calling a top in bitcoin – or stocks; Lifetime Partnership; Hertz; Care package
1) Greetings from Kenya, where my family will be spending the next three weeks with my parents and sister, who live here.
After getting negative COVID-19 tests on Thursday, we took the nonstop on Kenya Airways from JFK to Nairobi yesterday and landed this morning.
We're spending the first week at my parents' home outside Nairobi – here's a picture of it:
Then we're going on safari for four days and spending the rest of our vacation at my parents' beach house on the island of Lamu.
2) Given my well-known skepticism of Tesla's (TSLA) valuation, you might be surprised to hear that I'm buying Tesla today!
Well, not directly... Rather, I now own it indirectly due to my position in the S&P 500 Index via the SPDR S&P 500 ETF (SPY), which is adding Tesla today, as this New York Times article notes: Tesla, Profitable at Last, Bulls Its Way Into the S&P 500. Excerpt:
The stock market has never seen anything quite like Tesla.
Led by the mercurial celebrity billionaire Elon Musk, the electric-car maker's shares have soared roughly 14,000% since it went public a decade ago. Even amid an economy-roiling pandemic it's up roughly 700% this year.
And now, a company that has provoked years of equally intense fandom and criticism among money managers and tech bros the world over is being added to the S&P 500 – traditionally a marker of corporate maturity.
In this, too, the stock market has never seen anything like Tesla: On Monday, the company will be the largest ever added to the index, and, with a market capitalization of $650 billion, the sudden weight it will throw into the market could have strange consequences.
"This is by far the biggest index inclusion that they've ever attempted," said Steve Sosnick, chief strategist at Interactive Brokers in Greenwich, Conn. "The stock will immediately be a top 10 name in the S&P, which is nuts."
Here's a Wall Street Journal article about it as well: Tesla Joins the S&P 500: Five Things to Watch.
I've been critical of the company and its CEO in the past, but it's an extraordinary achievement for them.
As for the stock, more than a year ago, I said it was a bad short (phew, as it's up more than 1,000% since then!). My view on it today is the same as when I wrote this earlier in the month:
I am not advocating shorting the stock – I've seen too many of my friends get run over – but those who've had a wonderful ride on this rocket ship might want to bank some profits, especially if it's in a tax-free account...
3) Following up on Friday's e-mail about my skepticism around bitcoin and other cryptocurrencies...
I tend to think that bitcoin these days is simply a barometer on the level of "animal spirits" in the markets, so the fact that its price has recently been hitting all-time highs tells me that such spirits are very substantial right now.
That's definitely a warning sign for stocks in general... but as I've discussed in previous e-mails, I'm not calling a top in stocks either. The combination of unprecedented fiscal and monetary stimulus, widespread vaccinations finally defeating the coronavirus, and super-easy year-over-year comps in 2021 for nearly every company is the perfect set-up for a continued "melt up" in the market.
But investors need to be aware that they're playing a very dangerous game, planning to get out as close to the top as possible before the inevitable downturn. It goes without saying that not everyone can get out at the same time, so it could get ugly... Remember those three weeks in March?
My colleagues Enrique Abeyta, Berna Barshay, and I all managed money – and protected our investors' assets – as the Internet and housing bubbles inflated and then crashed. We're closely following this market as well, and we'll be telling our subscribers when we think it's time to get out.
The best way to get all of our latest advice is to become a Lifetime Partner, which entitles you to all five of Empire Financial Research's current paid publications – plus everything we ever publish in the future – for life! To learn more about our special year-end offer, which expires on December 31, click here.
4) Another good measure of the level of animal spirits in the market is the stock of bankrupt rental-car company Hertz (HTZGQ). It's 99% certain that there will be no recovery for the equity (meaning the stock is worth zero), so the fact that it still trades more than 9 million shares on the average day – closing Friday at $1.65, giving the company a $258 million market cap – is nothing more than a speculative absurdity.
5) You may remember that at the beginning of the pandemic it was difficult to find toilet paper, wipes, paper towels, etc. Well, with COVID-19 on the rise again, it seems like some of the same shortages are unfortunately back – plus lots of people want to limit their shopping time in stores.
My friend, Fred Singer, who runs one of the largest restaurant supply companies in the country, is bringing back his care packages that I wrote about in April – supplies he normally sells only to business customers, but is happy to sell directly to you during these times. Prices are even lower than before, as he was able to build up strong inventory over the summer. Here's a picture of his most popular package:
You can get details and order by clicking here.
Even better, Fred will donate 5% of money spent to KIPP charter schools in New York City to help the thousands of KIPPsters climbing the mountain to college. Just make sure to use the customized link above and enter the code WHITNEY when you check out. The donation code will also apply to any purchases of PPE supplies, kitchen supplies, or sale items.
It's a win-win-win: help yourself by getting products you might not be able to find easily elsewhere (and save yourself a trip to the store), help Fred keep his warehouse workers busy during restaurant shutdowns, and help KIPP!
Thank you!
Please feel free to share this offer widely! Again, here is the link, and don't forget to use the code WHITNEY.
Fred and I were officemates at the Boston Consulting Group from 1990 to 1992, and he's been my best friend ever since. He was the best man in my wedding in 1993:
And here's a picture from 2011 of us with our families...
Warren Buffett once told me how important it was to pick your friends wisely... and I sure did with Fred. I know of no one who is kinder, more decent, honest, fun-loving, and big-hearted.
Best regards,
Whitney