☕ The real problem with CrowdStrike’s screwup and what to do about it

Good morning! 👋 

Nvidia is going to lead the tech rebound today, or at least that’s what I think. Other names we talk about frequently will very likely be along for the ride shortly. 

I hope you’re on board. 

Big dips, as scary as they are, are the financial version of an engraved invitation, particularly if you’re buying the best and ignoring the rest. 

Here’s my playbook. 

1 – Markets like a clear deck, not candidates 

The fabulous Stuart Varney asked me what I was doing (and what I did) when I heard that President Biden dropped out of the race. My answer surprised him.  

Painting the deck. 

I thought to myself when I heard the news, interesting... and loaded up my next roller. (Watch) 

Keith’s Investing Tip: It’s very hard for people to understand because they get so wrapped up in politics and their personal opinions on the matter, but to a point I make many, many times, get your emotions out of the equation. The markets don’t care long term. Election cycles are 18 months of carrot and stick, then they settle down which is why you want to look beyond that if you’re a serious investor who wants to be a successful investor. If you’re a trader, knock yourself out. 

2 – Not all tech earnings are the same 

Alphabet, Tesla, and more than 100 S&P companies report this week. There will be a sharp divide and millions of investors will get caught offsides. 

Take Verizon which biffed it this morning, for example. 

People are holding on to existing smartphones longer because a) they don’t want to fork over their hard-earned money for older tech when b) they know AI-equipped new tech like Apple’s next gen phones is on the horizon. (Read) 

Bluntly, Apple is a “must have” (because there’s only one of ‘em) but companies like Verizon are “nice to have” (because there are dozens of wireless carriers). 

Invest accordingly. 

And, btw, if you want to know what’s what and which companies fit my criterion, I’ll be here and would love to welcome you to the OBA Family if that’s of interest. It’s a short list. 

3 – The real problem (and opportunity) with CrowdStrike’s screwup 

Most investors are still focused on what happened, who’s to blame... the usual. 

Shares are getting pounded, of course. 

I see two takeaways. 

1. The world’s CEOs just learned – many of them the hard way – that resiliency is a must-have expense they need to pay rather than a cost of doing business they choose not to pay. Delta is a great example. 
2. Every bad actor in the world now knows how simple it could be to take down the entire dang planet if they want to.  

I think cyber security sees a massive expansion in sales and earnings as a result.  

Btw... you’ll notice that China was virtually unaffected by what happened. That's NOT an accident because Beijing doesn’t allow Chinese companies to use CrowdStrike products which are largely designed to counter threats coming from Beijing. 

I’ll have a new recommendation in the August issue to capitalize on the chaos and the opportunity being created even as I type if that’s of interest. 

Meanwhile, I bought more CrowdStrike Friday. (Watch) 

4 – Korean Air’s got guts 

My bride and I shook our heads when we read the news this morning ... Korean Air buying 40 Boeing Jets?!?! (Read) 

I think this is an exceptionally gutsy move given Boeing’s problems but that’s not the half of it. 

I continue to suspect that Boeing may carve off civilian aviation from its military business and deals like this would go a long way towards supporting that possibility. Boeing Commercial Airplanes CEO Stephanie Pope is certainly walking the talk in that regard. (Read) 

At the same time, investing in airlines? 

I get asked about that a lot. 

No thanks. 

The travel boom is failing and the industry is struggling. (Read) 

5 – REIT investors beware of this ‘n 

Rexford is a super popular REIT focused on industrial properties. I like the fact that it’s got a great yield of 3.39%, sports a gross margin of nearly 50% or so and has one of the lowest vacancy rates in the US, especially in the supply constrained markets it serves. 

That said, I am also leery as all heck. 

The company is very concentrated in SoCal – aka Southern California – where expenses are out of control, social discontent is on the rise, and companies have increasingly had it with being there. 

That kind of geographic risk can be a strength when things are good but an albatross around your neck or at least your portfolio if times get tougher. 

Shares have returned –8.37% over the past 12 months. 

MyPOV: All investments have risk but not all risks are worth the investment. 

Bottom Line 

Many aspiring market mavericks fail because they start with all the reasons not to do something or why they shouldn't. Successful investors and traders start from a position of "let's make this happen" Then do it.  

Mindset matters! 

As always, you got this and let’s MAKE it a fabulous week. 

You got this. 

Keith 😊