Nick Hodge,
Publisher
March 15, 2021
Another round of stimulus is on the way. An infrastructure bill will follow that.
Trillions and trillions have been spent. It will never be paid back.
One of the main financial arguments of our day is whether or not that matters.
Do debts and deficits matter? Or can governments borrow infinitely without worry?
The ferocity with which the stock market recovered from its Covid infection made many think the latter.
It has been a rocket ship higher since the March 2020 selloff we’ll never forget. A Virgin Galactic SPACeship, if you will.
But, alas, even financially engineered rocket ships can’t propel indefinitely higher.
When Virgin Galactic (NYSE: SPCE) went public in 2019 via one of Chamath Palihapitiya’s SPACs, the company was forecasting $31 million in revenue for 2020 and $210 million for 2021.
Shares of Virgin Galactic have ripped from a low of $6.90 in 2019 when it went public to $62.80 this year. That’s over 800% in about 18 months. At its peak this year it had a market cap approaching $15 billion. Pretty good for a company that doesn’t generate revenues, let alone profits.
But Virgin Galactic did “not generate significant revenue” at all in 2020 executives admitted last month as shares proceeded to lose more than 60% of their value.
Is Mr. Palihapitiya hurting? Hardly.
He jumped off the SPACeship on the way down, unloading his entire personal stake — 6.2 million shares — for $213 million, at around $34 per share.
The dream of going to space is only a dream if you don’t sell.
And if you bought the line that some company was going to start offering space rides this year, well, you probably believe other silly stories as well… like the government doesn’t have to pay its debts or that there is no inflation.
Be like Chamath. Sell stock to the story believers.
Readers of my Foundational Profits have been doing just that. I issued several sell recommendations over the past month.
This is no coincidence as the S&P 500 has now put in its first lower high of this bull cycle.
We took the opportunity lock in 185% and 280% gains on MP Materials and Ivanhoe Mines (TSX: IVN)(OTC: IVPAF), respectively.
It’s prudent to prune certain positions here like I did with the blackberries this past weekend.
I also advised buying or adding to a few positions. That info is for premium members only.
Call it like you see it,
Nick Hodge
Editor, Daily Profit Cycle
Nick Hodge is the co-owner and publisher of Daily Profit Cycle and Resource Stock Digest. He's also the founder of Hodge Family Office, the umbrella organization for his three premium services: Hodge Family Office, Family Office Advantage, and Foundational Profits. He specializes in private placements and speculations in early stage ventures, and has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world.
*Follow Nick on Twitter.
[leadgenform slug="dpc_dpc-story_top-sectors-2021"]