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☕ Still the best defense stock, hands down

Sep 20, 2024

Good morning! 👋

The Dow just closed above 42,000 for the first time and could charge a lot higher.

More immediately, traders appear to have a good case of the ya-yas.

I sent this Tweet out last night and hope you’re ready for the shenanigans.

Here’s my playbook.

1 – Two ways to defend yourself (and profit) from short-term chicanery

Big traders are taking profits today because they’ve had a good week and have a lot of money on the table.

Simple as that.

They’re also “running the stops" because they know that a) many retail investors who have piled in en masse this week after JPow’s “recalibration” have been taught to use trailing stops and b) they can see ‘em.

This is like playing pin the tail on the donkey without a blindfold.

Easy money.

There are three ways to defend yourself and profit from the chicanery.

First, change your mindset.

The big money doesn't give a rip about this stock or that fund. They are playing you and your money while you are playing those stocks and funds. It's not personal; it’s their job.

They know that most individual investors lack the mental control to keep their emotions out of the equation, so they will deliberately “game that” by creating alternating cycles of fear and greed that run counter to the news.

This is why you often see short-term downside moves following “good earnings” for instance or massive upside runs after otherwise “troubling” reports. It's also why you will almost always see short-term corrections after a few winning days like we are today.

Second, buy the best ignore the rest.

We talk about the importance of buying great stocks frequently for the simple reason that Wall Street’s merry marauders have a harder time gaming ‘em. In other words, owning ‘em makes you and your money a harder target.

Third, use tactics that take away their advantage.

It wasn’t always like this but now it’s a different game thanks to the rise in computerization, high speed trading, dark pools, and passive investing.

You’ve got to game the gamers if that makes sense.

Learning to use LowBall Orders or even simple Limit Orders can make a huge difference in your results.

Don't know what those are?

LEARN!

There is NO excuse and nobody to blame but the person looking out at you in the mirror if you don’t.

As always, I will be here if you’d like some help.

Speaking of which, I want everybody in the OBA Family to keep an eye on your email. Master Class #5 goes live today and we’ll be taking a detailed look at the BBSI along with this week’s AMAs. 😊

2 – Still the best defense stock

Investment propositions don’t get any simpler.

The world is a complicated place at the moment and short of a kumbaya moment around the ol’ campfire, it’s only going to get more challenging.

Lockheed Martin (one of two I prefer) has returned 79.88% over the past 3 years versus the S&P 500 which has turned in a super healthy but far less 28.46% over the same time frame.

That’s a 21.55% CAGR (compound annual growth rate) versus just 8.67% from the S&P, and nearly a 3X performance advantage.

Should you buy it?

That depends on whether you’ve got your bases covered.

Or not.

MyPOV: War, terrorism and ugliness are a growth industry and sadly, one that will also usher in huge new jumps in technology for all the “wrong” reasons. Demand for next-gen defense tech, AI and more is at an all-time high... and growing.

3 – Time to look at Annaly Mortgage again?

There’s a line of thinking that a falling Fed rate will result in increased mortgage demand as the cost of money goes down.

I’m not sure that’s true but let’s put that aside for a moment.

Many income-starved investors are looking at Annaly Mortgage and drooling.

Annaly is a mortgage REIT and, as such, could do nicely as rates come down because short-term borrowing costs decline which, in turn, allows something called net interest margin to rise.

Income fans are often told that Annaly has an “ace in the hole” because it invests primary in agency securities meaning debt backed by the US government, so the default risk is low.

Maybe.

If Uncle Sam didn’t have trillions hanging over our heads, perhaps I’d feel differently but that’s just me.

Time to do some figurin’ as my grandfather would say as he broke out his pencil and the adding machine. And yes, he really did use one at his desk when analyzing his portfolio. 😊

4 – UK Labour Politicians may “pull a California”

Monaco, Italy, Dubai, Switzerland... are all reportedly getting huge numbers of inquiries from UK’s wealthy who are planning to exit if the Labour Party’s plans to kibosh the UK’s 200-year-old non-dom tax regime come to fruition. (Read)

In ‘Merican... they’re about to “pull a California.”

Estimates vary but the measure could cost the UK tax base £1 billion or more.

Politicians the world over consistently fail to understand two things:

Money is mobile; and,

Money, like water, will always flow to where it’s treated best.

Investors would be wise to pay attention.

It doesn’t matter how you feel about what’s happening or even whether we agree or not. Nor does it matter what country or jurisdiction is making decisions like this one.

Companies that make the kind of digital nomadism that inevitably results when money moves are going to do considerably better than those that are quite literally grounded in one place or another.

For example, you can carry an Apple device anywhere in the world and, odds are, it’ll work. You can wear Nike products anywhere in the world but they’re one and done.

Apple’s returned 324.69% over the past 5 years. Nike is down –2.86%.

Just sayin’

5 – Blue Label Umami

It's a running joke in my family that I navigate by my palate.

No maps needed.

Perhaps not surprisingly, this caught my attention earlier this morning.

It is, after all, Friday and it has been a good week.😊

Johnnie Walker Master Blender Emma Walker teamed up with Michelin-starred Chef Kei Kobayashi to create Blue Label Elusive Umami.

Tasting notes reflect a touch of blood oranges and red berries, sweet wood spice and a long fruit finish.

Chef Kobayashi suggests pairing with “a spoon of Oscietra Caviar, ensuring the caviar coats the palate. Once swallowed, take a small sip of the whisky, let that intermingle with the flavors of the caviar, take 10-15 seconds to reflect on the waves of flavor on the palate, and savor slowly.”

Uncrate will be happy to take your order, subject to all the proper legal conditions and age requirements of course.