Election movers, both positive and negative; Stocks to continue to avoid; A decision that could end my marriage

1) The market had a big day yesterday as investors were pleased by the election of Donald Trump and Republicans seizing control of the Senate and, almost certainly, the House. The Dow Jones Industrial Average rose 3.6%, its biggest one-day gain in two years.

All sorts of stocks had big moves yesterday, both up and down...

On the plus side, the government-controlled housing finance agencies, Fannie Mae (FNMA) and Freddie Mac (FMCC), both jumped around 40% on hopes that the Trump administration might return them to the private markets. I've owned the stocks in the past and think they're interesting speculations – but I want to emphasize the word "speculation."

Bitcoin and Ethereum both rose around 10%, as Trump has made big promises to the crypto industry (see this CNBC article for details: Here's what Trump promised the crypto industry ahead of the election). I view these as even bigger speculations than Fannie and Freddie.

(To be clear, I'm not opposed to all speculative investments – for example, see my e-mail last month about electric-aircraft maker Joby Aviation (JOBY). But you need to pick smart ones and size them appropriately.)

Tesla (TSLA) jumped 15%, as CEO Elon Musk is one of Trump's biggest supporters, which bodes well for government contracts and regulation. But the stock remains too richly valued for me...

And the major banks – JPMorgan Chase (JPM), Citigroup (C), Wells Fargo (WFC), Bank of America (BAC), Morgan Stanley (MS), and Goldman Sachs (GS) – were up between 8% and 13% because investors perceive (likely correctly) that the Trump administration will have a lighter regulatory touch. All of these stocks are trading near their 52-week highs, so it feels late to be jumping in, especially when Warren Buffett has been dumping his BAC shares...

2) Meanwhile, on the negative side, companies that import a lot of products from China fell due to fears regarding increased tariffs – for example, home-improvement retailers Lowe's (LOW), Home Depot (HD), and Floor & Decor (FND) dropped 3%, 3%, and 7%, respectively, and discount retailer Five Below (FIVE) fell 10%. I wrote favorably about the latter on July 22 and July 23, and while it has had a substantial move, I continue to like the stock.

Other losers were stocks of green- and alternative-energy companies like Plug Power (PLUG), Ballard Power Systems (BLDP), and FuelCell Energy (FCEL), which tumbled 22%, 19%, and 5%, respectively. They're all part of my "Dirty Dozen" stocks to avoid that I first named and shamed as part of my "Short Squeeze Bubble Basket" at the peak of the meme-stock bubble on January 27, 2021. Since that day, they're down a staggering 97%, 96%, and 98%, respectively. I've long said and continue to think that they're all zeros.

The cannabis sector also sold off sharply yesterday – the AdvisorShares Pure U.S. Cannabis Fund (MSOS) was down 28% – due to Florida voters rejecting a marijuana-legalization ballot measure and investor concerns that a Trump administration and Republican-controlled Congress will oppose loosening restrictions on the industry. Here's what my friend Doug Kass of Seabreeze Partners published yesterday on the subject:

Cannabis Is Uninvestable Over the Next 3-6 Months

Last night's failure to pass Amendment 3 in Florida is a powerful blow to the near-term investment case for cannabis equities.

I am now left with very small company holdings (representing, in dollar terms, less than five percent of my original and large exposure to the sector).

I will likely sell out of the tag ends of my seven individual cannabis stock holdings today when the markets opens this morning.

The singular positive catalyst is now the delayed [Drug Enforcement Administration] hearing (rescheduling) – and there is not enough retail interest to support maintaining the current level of the share prices of cannabis equities.

Cannabis stocks have longer-term merit, but a vicious cycle of difficult and uncertain industry operating conditions, bankruptcies, the absence of a new class of (institutional) buyers and a general disenchantment surrounding the sector likely lies ahead.

The largest cannabis [exchange-traded fund], MSOS, is the "tail that wags the cannabis dog" – its large size relative to the illiquid trading of its cannabis constituents poses a current and imposing risk.

The worst-case is that an extended period of sizeable and steady redemptions of MSOS could overwhelm the prices of individual securities, which lack liquidity – a risk that is now nontrivial.

Thank you, Doug!

3) Meanwhile, some stocks had big moves yesterday on fundamentals, not the election. For example, Boeing (BA) shares fell 2.5% and hit a two-year low on this news: A key Boeing supplier has 'substantial doubt' it can stay in business. Excerpt:

A major Boeing supplier is worried it won't be able to continue as a business for much longer. Fuselage builder Spirit AeroSystems (SPR) worries it won't have enough cash to continue operations.

"Substantial doubt about the Company's ability to continue as a going concern exists," the company said in a release accompanying its third-quarter earnings report.

The numbers were bad – a $477 million loss on $1.5 billion in revenue – but they also point to the continuing complications of Boeing's difficult year that was kicked off by a major Spirit AeroSystems failure.

Spirit used to be a Boeing subsidiary before the plane-maker spun Spirit out in 2005.

And this follows a 2.6% decline on Tuesday after news of a labor deal for Boeing's machinists, the high cost of which will depress earnings for years to come: Boeing Union Votes to End Strike. Excerpt:

Boeing's machinists ratified a new labor deal, ending a paralyzing strike after nearly eight weeks and clearing the way for the plane maker to restart its factories.

Workers voted in favor of a contract that delivers a 38% wage increase over the life of the four-year deal for 33,000 machinists in the Pacific Northwest who build most of Boeing's jets.

The walkout has strained the finances of a critical American manufacturer that has been hobbled by quality problems and deep losses in its commercial and defense operations. Chief Executive Kelly Ortberg is cutting 17,000 jobs and raising more than $24 billion in equity to keep the company afloat.

As I've warned my readers many times, most recently on October 24, I think this stock is a value trap, so I would continue to avoid it.

4) Ditto for server maker Super Micro Computer (SMCI), about which I've also warned my readers many times, most recently last week on October 31. The stock crashed another 18% yesterday after the company gave a weak quarterly forecast and failed to specify when it would file its 2024 annual report following Ernst & Young's recent resignation as its auditor.

This is another stock to avoid...

5) Last but not least, iRobot (IRBT), maker of the Roomba robotic vacuum (and another member of my 25-stock "Short Squeeze Bubble Basket"), cratered 35% after reporting earnings that missed expectations and giving dismal guidance for the fourth quarter. The company expects revenue to be only between $175 million and $200 million, far below last year's $308 million, despite the fourth quarter normally having the strongest seasonal sales.

iRobot has been burning cash each year for the last four years, so unless I gained conviction that sales were going to turn around – perhaps due to the introduction of a hot new product – this isn't the kind of turnaround situation I'd bet on.

6) This afternoon, my wife Susan and I are taking one of the longest flights in the world – 17 hours and 40 minutes nonstop from JFK to Auckland, New Zealand – for a two-week holiday to celebrate our birthdays and 31st anniversary, so I'll be writing to you from the other side of the world.

We have one flat-bed business class seat and one in coach. When I proposed the trip to Susan months ago, I had found a deal for business class seats for 250,000 miles, which is a great use of miles, as I value them at roughly $1,500 per 100,000 miles. So essentially I'm paying $3,750 for a seat that sells for more than $8,000.

But when I went to book the two business-class seats, I discovered that I didn't quite have 500,000 miles, so I booked one seat using miles and paid $1,700 for an economy ticket, figuring that Susan and I could share, each of us getting eight hours.

Totally fair, right?

Not so fast...

Susan said she agreed to go on the trip based on my promise that she could fly business class (which is true), so she's threatening to make me sit in coach for both flights (35-plus hours!).

In response, I reminded her that I booked the business-class seat in my name and the coach seat in her name. So if she makes a fuss, I might tell the flight attendant, "I don't know this woman – please send her to the back."

This could, of course, end our marriage... But I'd get 35 hours in business class...

This is a dilemma... What to do? (Tongue firmly in cheek.)

I'm going to try some of my favorite tricks: First, get to the airport early and ask about paid upgrades. My general rule of thumb is I'll pay $100 per flight-hour for a flat-bed business-class seat on a long international flight like this, so I'm hoping they sell me one for $1,800 or less.

It doesn't look good, however, as I looked at the seat map when I checked in to get my boarding pass and there were no open seats in business class. But no harm in asking...

If not business class, I'll ask if they have a paid upgrade to some sort of premium economy.

Realistically, however, it looks like we'll have one coach seat, so then my goal is to get at least one empty middle seat next to me so I can fully extend my legs at an angle or, ideally, find a row of three to myself, so I can lie down to sleep curled up.

To maximize the chance of this, when I checked in, I saw that my assigned seat was on the aisle, but the two seats next to me were occupied (as were about 90% of the seats), so I instead moved my seat to an aisle in one of two empty rows I saw.

Then, my last trick is to be the final person to board the plane and, as I'm walking back, if I see any open rows of three (assuming my row has at least one other person), I'll grab it by sitting in the middle seat.

Wish me luck!

Best regards,

Whitney

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