A reminder about Enrique's potential 10-bagger; What Do Used Car Prices Say About Biden's Agenda?; Meet the academic who has fired up moonshot investing; The importance of being in the office; South Korean couples are wooing each other with Tesla stocks; College graduation

1) As I've noted many times, my friend and colleague Enrique Abeyta has been on fire since he joined Empire Financial Research a year and a half ago, with 10 of his stock picks in Empire Elite Growth and Empire Investment Report up at least 90%.

In this special essay he penned for Empire Financial Daily recently, How I Found What Could Be the First 10-Bagger in Empire Financial Research History, he explains how he and his team look for stocks with multi-bagger, long-term upside potential and concludes with a link for more information about the potential 10-bagger he's found:

This is the biggest, most obvious investment opportunity I've uncovered in 25 years. It's a unique company that gives investors the chance to catch the upside of the exploding cryptocurrency market without buying a single crypto... And I believe it has the potential to skyrocket 1,000%.

This special offer for Empire Elite Growth expires tonight at midnight – and we may never offer it at this price again – so click here to learn more.

2) In Wednesday's e-mail, I wrote:

The macro factor I'm watching most closely these days is inflation. The sharp economic rebound (what I call "the mother of all economic booms"), unprecedented fiscal and monetary stimulus, and supply chain disruptions around the world are causing prices to soar in many sectors.

The key question is whether the inflation we're seeing proves to be temporary or lasting. In last week's e-mail, I included a number of articles making the case for the latter, so I wanted to also include the argument for the former. Here's Nobel Prize-winning economist and New York Times columnist Paul Krugman: What Do Used Car Prices Say About Biden's Agenda? Excerpt:

Sure enough, those April price numbers were driven to a large extent by peculiar factors obviously related to the economy's restart. When people talk about underlying inflation, they rarely have the price of used cars in mind; yet a 10% monthly rise in used car prices – partly because people are ready to travel again, partly because a shortage of computer chips is crimping new-car production – accounted for a third of April's inflation. There was also a 7.6% rise in the price of "lodging away from home," as Americans resumed going places amid a waning pandemic.

And then there were "base effects": A year ago many prices were depressed because much of the country was in lockdown, so that simply getting back to normal was bound to show up as a temporary rise in inflation. White House estimates that correct for these effects show considerably tamer inflation.

3) These are super-interesting findings from the Financial Times: Meet the academic who has fired up moonshot investing. Excerpt:

Four years ago Hendrik Bessembinder, a finance professor at Arizona State University, published a paper that showed that despite the equity market's gains over the past century, most stocks are actually duds. In fact, of the roughly 26,000 companies listed between 1926 and 2016, more than half lost money or did worse than simply holding one-month Treasurys. In contrast, about 1,000 stocks – or just 4% of the entire sample – in practice accounted for all the net wealth creation over the period, or almost $35 trillion...

Like every good movie franchise, the paper has had a sequel. In 2019, Bessembinder showed that the skewed nature of stock market returns was even more extreme internationally. About 61% of non-U.S. stocks underperformed Treasury bills in the 1990-2018 period, and less than 1% accounted for the entire $16 trillion of net wealth creation over the period.

Initially, many seized on this as further evidence of the superiority of passive investing. After all, if so few stocks account for all the market's overall gains, investors should surely just buy the entire haystack rather than scour for a few rare golden needles buried within.

More recently, however, some investors cite Bessembinder's work as evidence that aggressively investing in a narrow clutch of potential corporate superstars – almost whatever the price – is actually the way for active asset management to regain its mojo. After all, his data implies that finding just one of these nascent stock market titans can more than compensate for losses elsewhere.

Bessembinder's influence can be most obviously seen in Baillie Gifford, the money management group that has seized on his work as backing for its big bets on fast-growing, disruptive companies. Baillie Gifford has hired Bessembinder as a consultant, and bankrolled his 2019 global study.

But his subtle reach can also arguably be detected in the approach of Cathie Woods' Ark Invest and Chase Coleman's Tiger Global. The former has caused a stir in the traditional investment world by making outsized, wildly successful bets on hot technology stocks, while the latter's gung-ho investment spree in an array of promising start-ups is now ruffling feathers in Silicon Valley.

"I think I have provided some ammunition for the people who say it's their business to chase moonshots," Bessembinder said. "The skewness shows just how big the pay-offs can be if you're good at this."

My take: This research provides powerful evidence for index investing, because then you're sure to own the handful of moonshot stocks that drive total market returns – and if you want to beat the market, you need to identify (but, just as importantly, have the patience and discipline to hold) at least a few of these stocks. As I've confessed many times before, I've owned a number of them – Apple (AAPL) at $0.35, Amazon (AMZN) at $48, and Netflix (NFLX) at $7.78 – yet in every case sold them far too early...

4) A friend who knows a number of the fund managers who've blown up in the past year made an interesting comment to me recently...

He speculated that these blow-ups might not have happened had the portfolio manager and his team all been in the office together every day, as they were before the pandemic hit. Maybe someone would have identified the ballooning risks and stuck their head into the portfolio manager's office for a talk that could have averted disaster...

It's an interesting theory – and one that has broader implications for all sorts of businesses, especially professional services like investment banks, law firms, and even my own company. It has definitely been more of a challenge to manage and build the culture of Empire Financial Research when our team has only been together in person a handful of times over the past year. That's one reason we're all looking forward to a retreat next month!

5) I confidently predict this is coming here... South Korean couples are wooing each other with Tesla stocks – not flowers – while dating. Excerpt:

• Young Koreans are upping their dating game, exchanging stocks instead of chocolates and flowers.
• The vouchers are issued by Korean stock corporations and list blue-chip stocks from Tesla to Netflix.

• Insider spoke to several young Koreans who said they had already treated their significant others to stock. 

6) Greetings from Winston-Salem, North Carolina, where my middle daughter graduated from Wake Forest yesterday. She starts working at Swiss food and beverage giant Nestlé (NSRGY) outside Washington, D.C., in two weeks.

Best regards,

Whitney