Update on my Dirty Dozen; Tweets on inflation; Buying From Mark Cuban's Pharmacy Could Save Medicare Billions, Study Says; ABBA Voyage concert and the metaverse
1) It's just past midyear, so it's time for a check-in on my "Dirty Dozen" – the 12 stocks I said to avoid in my January 4 e-mail. These are the stocks that would have been the core of my short book if I were still running a hedge fund.
I'm pleased to report that not only are all 12 of these turds down, but every single one is down more than the 20% decline of the S&P 500, with an average return nearly twice as bad as the index, as you can see in this table:
Generally when shorts work out so well, I'm inclined to cover, say, half of the position... But as I look at this motley collection, there's not one I would cover.
That said, I wouldn't be adding to them either because, as I've discussed in numerous recent e-mails, I think there's a good chance we could see a rally in the markets – especially among the most beaten-down stocks.
That's what happened from March 14 to March 23, which I covered in my March 24 e-mail. At that point, the Dirty Dozen had rallied so much that they were actually down a bit less than the S&P 500 year to date, as this table showed:
My advice at the time was clear:
While I think this growth stock rally might have legs, what's happening with the Dirty Dozen is a classic "dead-cat bounce"... so avoid these stocks at all costs, especially the three worst: DWAC, AMC, and GME.
Sure enough, they've imploded since then:
I suppose some folks might look at this pattern and conclude that I should try to trade around my short book, banking profits when the stocks sell off and then adding to the positions after they rally, but I'll pass. Long experience has taught me that I'm not a good trader...
2) My analyst Kevin DeCamp found me a couple more interesting tweets yesterday that relate to inflation. Here's the first:
And here's the second, with Nassim Nicholas Taleb's comment on how many investors are botching inflation trades:
3) Good for Mark Cuban – let's hope Medicare is paying attention! Buying From Mark Cuban's Pharmacy Could Save Medicare Billions, Study Says. Excerpt:
Medicare's prescription drug program could save billions of dollars annually if it purchased generic acid reflux, cancer and other drugs from a new pharmacy backed by investor Mark Cuban, according to Harvard Medical School researchers.
Mr. Cuban, the billionaire internet entrepreneur and owner of the NBA's Dallas Mavericks, launched his pharmacy in January with an eye toward disrupting the $365 billion U.S. prescription drug market by sidestepping health insurers and selling commonly used generic medicines directly to consumers with a transparent, fixed-rate markup pricing model.
A group of Harvard Medical School researchers say that Mr. Cuban's "cost plus" business model could also benefit health insurers, including Medicare, which spent an estimated $115.6 billion on prescription drugs last year, or nearly a third of total U.S. drug spending.
The taxpayer-funded health insurance program for seniors could have saved as much as $3.6 billion over one year if it had used Mr. Cuban's pharmacy to directly purchase generic medicines rather than the vast network of private insurance plans and retail pharmacies that operate the program, according to the paper published in the Annals of Internal Medicine on Monday.
4) I felt like I saw the future on Saturday night when my buddy Rupert and I went to the ABBA Voyage concert in London.
I took 10 short video clips, which I posted in one video here, and here are some pictures:
It looks like a regular concert, right? But if you look closely at the performers on stage, they look like this:
But wait a second! Wasn't ABBA a band from the 1970s and aren't its four members all in their 70s?
Don't worry – your memory isn't failing you. The performers at this concert are avatars of the ABBA members circa 1977!
If I hadn't known, I never would have guessed that I (and 3,500 other people) were singing and dancing to computer-generated figures on stage. They were 100% lifelike – playing the piano, dancing, putting their arms around each other, etc.
The technology blew my mind! It was just like going to a real concert – so much so that when they finished what appeared to be their last song, the crowd went nuts for an encore. I joked to Rupert, "Maybe if we make enough noise, they'll hear us and come back out!" Of course, they did...
It was like the metaverse came to life... 3,500 humans responding to avatars exactly as if they were real.
The potential applications for this technology are limitless. Museums could have rooms where visitors could experience Martin Luther King, Jr. giving his "I have a dream" speech, or Abraham Lincoln giving the Gettysburg Address. Or, even easier, people could experience this simply by donning a pair of virtual reality goggles.
I'd love to hear your thoughts on this.
Best regards,
Whitney
P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.