Will the Fed raise rates this year? Who cares? The talking heads love to speculate and spook investors by instilling doom and gloom around the Federal Reserve hiking interest rates. The fact or the matter is that Fed policy is much like the Shipping Yard in Season 2 of The Wire (shout out to Omar), a mediocre side story that detracts from the overall plot. Don’t listen to this absolute nonsense. Rates are at all time lows. Any rate hike from Janet Yellen is an extremely bullish sign in the long-term health of the economy.
We have no idea why gold is still important but we think it’s going higher. The team often has spirited debate on whether gold will hold the same value this century as it did throughout history. Some of our cryptopheliac team members argue that Bitcoin will supplant it as the new store of value. Gold has little use beyond jewelry and coins (and goldschlager of course) compared to precious metals such as palladium and platinum which have wide industry applications such as catalytic converters for the automobile industry. Still, investors view gold as a store of value and that is a trend we believe will persist and become increasingly important in the foreseeable future. Both Europe and Japan currently have negative interest rates which basically means they are so screwed that they are charging you just to hold their debt. We have never seen this before. Let me repeat, we have NEVER seen this before. Beyond US stocks (cause ‘Murica), gold seems to be a likely spot for investors from these regions to park their cash. $GLD, $GDX, and $GDXJ are all good ways to gain exposure to Gold. To any of you that trade those 3X Levered ETF junk, we hate you.
Biotech continues to get smacked back down to the middle ages. Anticipation of the election of HilDog has sent drug companies into the penalty box on fears of regulation in the space. Hillary holds little influence in these dealings and we see a much larger possibility that these companies are encouraged to self-regulate as an industry. Amongst the savagery, Gilead Life Sciences ($GILD) is down ~40% off its high. The stock has become egregiously cheap and is trading below 7 times earnings on fears that their cash cow (having the cure for Hepatitis C) is in decline. Gilead is yet another horrible precedent set by the market that developing cures for the world’s most infectious diseases instead of treatments is ultimately a losing bet. We take a contrarian view and love the company’s future prospects as well as management’s patience not to succumb to shareholder pressure to provide a short-term boost to the share price. This is a favorite of the Waylz team and we play it often in our rosters.
The Fat Lady has Samsung and the Winner is Apple. Apple ($AAPL) has run up in the past weeks in anticipation of selling a gajillion iPhone 7’s. Let’s not forget about their new toothbrush headphones either. Recently, expectations have increased further for the upcoming holiday quarter due to the highly flammable Samsung Galaxy Note 7. Things have gotten so bad that even airlines make it a point that Note 7 owner’s phones should be fully shut down for the durations of flights. As they say, one man’s blazing smartphone is another man’s gain. Unfortunately, due to Asian market data costing an arm and a leg (consequently the same cost of owning a Galaxy Note 7), we are unable to add Samsung into Waylz yet. However, Apple still looks reasonably priced and its insane cash flow should allow it to remain a solid pick in rosters.
IMPORTANT NOTE: This is not investing advice. This is pontification about the markets that we thought you might enjoy. If you would like a hot take on an issue or stock, email firstname.lastname@example.org. Please invest responsibly and thank you for playing Waylz!