Nick Hodge,
Publisher
Oct. 27, 2021
You know people are stupid and the world is crazy.
And you can use both to your advantage to get ahead... to profit... and to harness things that are going on in the world that people don't understand to help increase your bottom line as it relates to investing in stocks in the market.
I was reading this morning that A&W, the fast-food chain, had to rebrand their one-third-pound burger because it could never compete with or beat McDonald's quarter-pound burger.
The reason?
In focus groups, repeatedly, people thought that a quarter-pound — ¼ — was bigger than one-third — ⅓ — because four is bigger than three. So they didn't understand that the A&W third-pound burger was actually bigger and, therefore, a better value than McDonald's smaller quarter-pound burger.
So A&W is rebranding their third-pound burger to the three-ninths burger — 3/9 — because, obviously, nine is bigger than four.
There's a lot of things people don't understand, right?
People didn't understand that stocks were going to go back to all-time highs when they were going down in September and having their worst month since the pandemic hit in March of 2020.
I was telling you that's exactly what was going to happen: stocks would go back to a record in October, stocks, the S&P back to record highs and Q4 driven by earnings growth.
The mainstream financial media was saying that earnings weren't going to be good and that we were approaching a stagflation environment.
Lo and behold, earnings are coming out now. And S&P earnings growth, if it keeps the pace it's on right now, would be the third-best earnings growth on record!
We continue to see things inflating across the board.
Commodity prices at record highs… copper prices at record highs... and growth absolutely ripping in tech stocks as household wealth in the US inflated to $142 trillion at last check.
Those dollars are wanting to buy goods and services, and that is driving up prices. Of course, there are shortages, but other things are going on as well.
For example, the UN is meeting this week in Europe to set climate goals at COP26. They're talking about decarbonizing the atmosphere, mobilizing $88 trillion in assets to increase sustainability and reduce the emissions associated with everything — transportation, electricity generation, you name it.
To do that, they're going to want to improve infrastructure, deploy renewables and nuclear, and that's driving up all the inputs for that as we've been saying here.
And we've been profiting from, copper, tin, nickel, lithium, rare earths across the board.
The other thing that's happened is cryptocurrencies have inflated, right? They've sort of, at least for the past year, taken the place of gold as the main inflation hedge.
That's something I wanted to touch on this week. Because you had a run recently to $68,000 Bitcoin and that sort of pulled back a bit now to below $60,000. Certainly another buying opportunity, like one that emerged when China said they were going to ban Bitcoin a month or six weeks ago.
The other thing you have is sort of wonky math, right? We know we've printed trillions of dollars. We know the Fed continues to buy billions of dollars of securities, equities, bonds. And the valuations of things are sort of getting nonsensical.
Here's just one example…. Tesla (NASDAQ: TSLA) went to a trillion-dollar market cap. There's only a couple trillion-dollar market cap companies. The biggest ones you can think of, Microsoft (NASDAQ: MSFT), for example, Saudi Aramco.
Tesla went to a trillion-dollar market cap this week because it announced that it's selling 100,000 electric vehicles to Hertz (NASDAQ: HTZZ). Hertz is the company that was almost bankrupt last year. It was a $4 billion dollar deal that was announced and that added over $100 million in market cap to those two companies.
So it's sort of nonsensical valuations going on. You've obviously heard of record baseball card sales, record art sales, NFT sales, et cetera.
That's the double whammy. That's inflating asset prices, the money printing coupled with people wanting to hedge against inflation and putting capital into commodities and alternative assets, coupled with real fundamental drivers for those commodity inputs that are needed for infrastructure and a green energy revolution.
So spot on in my call last month that stocks would go back to highs. The things that are working continue to work. Energy continues to inflate. You've got oil now at $80.. Housing continues to inflate with REITs doing well.
I've got specific recommendations out this month in my premium research to take advantage of it all.
The October issue of Foundational Profits has a small cap recommendation to take advantage of this growth that's absolutely ripping.
Look, the US economy is going to grow at 6% this year. That's twice what it was growing pre-pandemic and that growth is propelling new stock highs and that's not going to slow down, I don't think, for at least a couple of months.
You've got people out there making crash calls. You've got people out there saying Bitcoin is too high. Those people aren't making money. They’re certainly not beating the market like we are.
So get in there and buy the things that are working.
You can get started with the recommendations I put out this week that include guidance on all the things I mentioned in this video.
Call it like you see it,
Nick Hodge
Editor, Daily Profit Cycle