The safest stock you can buy today

Good morning!

‍Futures seem determined to snap 3 weeks of losses, or at least that’s what the headlines suggest.

There’s another explanation.

The algos – as in computerized algorithms – have simply determined that prices are low enough that they’re on the gas.

Hopefully you’ve been buying into the chaos as I’ve repeatedly encouraged!

If so, chances are you’re going to have some juicy profits in the weeks ahead if the rally finds legs.

If not, consider the words of Laurance J. Peters … “Many an optimist has become rich simply by buying out a pessimist.”

Here’s my playbook.

Markets will bottom when this happens

CNBC’s Jim Cramer and I agree … the markets may reach an investable bottom when analysts cut estimates. (Read)

Why this matters: Many have been caught offsides this year. There’s no doubt in my mind that the firms they work for are keen not to make that mistake again.

It’s a problem because many analyst estimates – unbelievably – still reflect 8% growth this year and 11% next year. Both are numbers you’d expect to see in a “normal” year.

You and I both know that’s not going to happen.

I expect a raft of “pre-emptive” negative earnings adjustments in the weeks ahead as a result.

Use it to your advantage: Buy low, sell high every chance you get when it comes to the world’s “best” companies, especially if they’re capable of influencing consumer behaviour.

Reinvest dividends, which forces you to buy more while also keeping emotions out of the equation.

Take a few speculative potshots at companies you may have missed the first time around; you can always add shares later as the markets gain legs.

And for crying out loud, keep your hedges in place or get ‘em established in the first place as an added precaution against more selling! (Click here if you don’t know how)

Chevron Trade Idea

I make a big deal out of knowing how to trade around core positions for one simple reason … the markets move in both directions which means you can profit in both directions.

For instance, I am keeping my Chevron shares for the long haul because I believe the company is a great investment and every data point I have at my disposal supports that thesis.

But I am also keenly aware that shares are falling because the boffins are pricing in a recession and “lower demand” whatever that means.

Here’s a trade idea if you think shares of energy giant Chevron (CVX) could fall further.

Step 1) Sell short 100 shares of CVX at $144.29 (yesterday’s close)

Step 2) Sell one CVX 19AUG22 $142 Put for $11.00+

Consider $155 your line in the sand if it runs higher; that’s the breakeven point if CVX rallies.

Selling short the stock positions you to profit if shares drop. Selling the short put increases your net basis to $155.22 a share, not including commissions and fees. However, it also limits your profit to $1,021 or 7% which wouldn’t be bad for a single day’s work.

And if you’re worried about upside risk or lack discipline?

You can fix that. Simply buy a CVX call that expires on the same day as the put you’ve sold in order to limit potential losses. The cost of the premium you pay will be deducted from your net basis. But you’ll have your position covered.

Avoid this stock like the next plague

The chaos continues.

Netflix, as you have heard me say many times, is a wreck and something investors should avoid at all costs. The stock has lost a staggering 73.68% of value since last October as it’s fallen from 52-week highs.

People argue that “it’ll be back” but they’re deluding themselves for one simple reason … there’s no competitive moat. There are a dozen potential streaming companies out there to choose from.

The company has lost more than 200,000 subscribers but may lose 2 million more! Now they’re laying off another 300 people. (Read)

Another crypto heist, another $100 million vaporized

Hackers have stolen $100 million from Horizon, a so-called “bridge” between cryptocurrencies created by Harmony, a crypto startup. (Read)

If you’re not familiar with the term, bridges are designed to transfer crypto tokens from one blockchain to another.

Think about this: People invest in crypto because they think they’re gonna win the lottery.

The better approach is to invest in crypto as if you’re playing the lottery – meaning keep risks small and don’t bet the farm.

Digital currency is the future but it’s still way too early to go heavy.

The safest stock you can buy today

Recession or not, the clown is going to be around.

McDonald’s is revolutionizing fast food, is a household name, a global operator and one of the most sophisticated technology investments you can make.

Prices are down as it exits Russia but there’s support at $220, $230, and $240. Not surprisingly it pays a healthy dividend of 2.27%.

The company is revamping franchise selection and I think that’ll open up a new crop of locations, add to revenues etc … all of which are using some super sophisticated tech.

New tech never tasted so good!

Bottom line

Many people talk about stocks they coulda’ bought or will buy.

News flash.

The ONLY ones that matter are those you have in play now.

Let’s finish the week strong!

Keith