Hey this is Jeffrey with another edition of Stock Smart March 11th, 2021 edition, big news today is they Coupang, which is a South Korean version of Amazon, goes public, it’s the largest foreign IPO since Alibaba, the company generated nearly twelve billion in revenue in 2020. That’s a 90% year-over-year growth rate. So what you are going to buy is an ADR, American depository receipt of a rapidly growing Amazon-type company that’s in South Korea. Very interesting stock, not sure we’re dipping a toe but definitely looking at it watching see how it trades out this morning. So we’re talking about the RSP vs the SPY. RSP again is the equal weight ETF of the S&P 500, up 11.5% this year as opposed to the SPY which is only up 7.4%, again the RSP doing much better because there’s a lot of breath of the market right now.
Meaning a lot of stocks are doing well, not just those big stocks or the Fang stocks. You know, of the Fang stocks, the only one really outperforming is Google right now, all the other ones Facebook Amazon, you know Nvidia or Netflix doing okay, but not really performing all that well compared to like what’s going on at financials or the Russell 2000, which is up 21% this year. You have the equal weighted ETF because of financials and energy up about 12% and you have the SPY which is the market cap weighted S&P 500, up only about 7% so a big discrepancy. This doesn’t generally happen. It certainly hasn’t happened before in the last 12 years.
So right now the equal weighted ETF is outperforming the S&P 500 SPY. GameStop falling back a little bit today after it’s made it’s big move, which is predictable. GameStop again does not, as short as it has been, so falling back a little bit, Stock Smart contest coming next few weeks little more information about our very first contest, lots of interest in it and getting a lot of feedback. We may limit it to age. We may open up to the general public to start, we’re positive on the S&P 500 oscillator, which gauges the relative strength index, we’re going to be up about 2 at the end of the day. So we’re getting more into the danger zone. We’re not quite there.
Once it gets up to three or four or towards 5 that may be a time when you don’t necessarily have to sell but you may not want to add to your positions. 10 year is kind of flat today. So that means we’re not getting a lot of buying, we’re not getting a lot of selling, it was down early in the morning meaning, there were more buyers, went up a little bit meaning there were more net sellers and that’s pretty much how it moves, we’re going to keep an eye on that pretty much every day. VIX is down today, getting to safer levels, is currently around 22 getting closer to 20.
Let’s take a look at a stock, Oracle, I would consider this old technology got hammered down about 8% on earnings, earnings were not exciting and why should they be? Oracle does not have exciting products. They were late to the cloud, so Oracle was a dinosaur company that survived on their database software. They would be the company that would come and do a gigantic medical corporation like a Blue Cross and say, only Oracle could handle this much data in their database and they were right, at that time Oracle had the best database, proprietary, meaning it’s not open source. Other developers couldn’t work on it. It was very expensive to license, probably one of the most expensive software licenses available on the planet, but their database was massive, it can handle massive amounts of data.
It was the go-to database for the 80’s, 90’s and it built up and it was one of the mega companies in the world for a long time, but because they stayed so firm and probably because Ellison who was really, you know the leader of that company kind of got a little bit disinterested or wasn’t involved in the day-to-day operations. The company really hasn’t evolved much. They’re essentially an old technology. They were late adapters of the cloud, they do have their own cloud space, their database, it’s not favored by younger developers because it’s so expensive to get into and to build into, and the licensing configuration issues and what it runs on, it’s very out of favor with a lot of developers and it’s really like this old mainframe technology.
And so it’s not really grasping the interest of a lot of the newer generation when they build out platforms, when someone builds a new system, they’re not thinking I want to go into Oracle because I have to, they’re thinking, I want to go into MongoDB or I’ll go into a different database. But the last thing they’re thinking about is going into Oracle because they don’t want to deal with the licensing restrictions and the licensing cost and so Oracle isn’t I don’t see this as a growing company now, they got a bid last year with a stock and moved out of its torturous $50 range. So this thing has been in its $50 range for years. So if you look at the stock over like five years the stock sat pretty much in between 46 and 50 for a long time.
It’s got an okay dividend nothing special, 1.33. You can certainly get better dividends than that, it is a blue chip company, but it got a play at the beginning of, late last year because when Trump was really going after TikTok and they said we need, you know, we’re going to have to regulate this shutdown TikTok.
Well Oracle became the suitor, the US company that can maybe purchase it and make it more stable, so it got a little bit of a move, I honestly don’t know why it’s moved so much recently because once Trump was out of office that stock should have been sold by most people and it did get sold off right in from October to November, it did get sold off anticipating Trump losing the election, but then we saw a bump again up high and I’m not sure why anybody got excited about it again, but it went up another 10% and then got as high as about 70, which is way too high for this stock, lousy earnings.
They did announce that they’re going to be buying back shares, which you’ll get a little bit of a bump on that but this stock probably should be back in the range of 55 to 60 at best and so not a big fan of Oracle. Let’s take a look at other stock, went public yesterday, direct listing, we’re going to do the marketing language. Blank is an online gaming and entertainment platform for shared digital experience that brings people together through play, it enables anyone to image create and have fun with friends as they explore interactive 3D experiences, produced by developers using their desktop design tool. Well, if you are a mom you probably know what this is or a dad who’s really invested in spending time with their kids, it’s Roblox. It’s a video game kind of tool and I know that you can design your own character, went public by direct listing yesterday.
And what’s great about direct listing is that all the shares are out in the market, there isn’t this game that like a big brokerage house can play where they sell a lot of stuff inside, all the shares just come out at one price, shares came out around in the sixties yesterday, bounced up a little bit, bounced up a little bit today again. The reality is this is going to be a stock that gets purchased and I asked some friends of mine, different people who have children, and I said to them, did you know that Roblox went public? and some of our clients actually have called me because they wanted to be involved in it too.
And the deal is this is going to get bought by the regular average everyday investor because they like this and they know this company and they are a firm believer in it because they believe in the kids learning through playing with it, which is what it is. It’s not just a one-sided video game where you can’t do anything you actually interact and you build your own characters and build your own whole reality. So Roblox, interesting stock. Keep an eye on it. And it’s not going to face the same kind of challenges that other IPOs face, which means they’re not going to have this holding period where the stock and can then be sold and then it dumps itself six months into it where you don’t have the protective period
Where everyone can sell. It’s not going to have any of that, it’s going to have good price exploration because everyone can sell at the same time or they can buy at the same time. So it’s not going to go through the normal travails that a classic IPO would.
So I got a question from Steve. Steve said, you mentioned a bitcoin stock Canaan, on yesterday’s show. What other ways can get bitcoin exposure in the stock market? We did talk about Canaan yesterday and they’re making a really popular Bitcoin mining computer and as Bitcoin becomes more popular, you’re going to see more and more bitcoins or types of cryptocurrency I should say, and the computers that make it are made by this company called Canaan so that’s one way to play this bitcoin boom. Another way
You could play something like Nvidia, Nvidia who’s making a lot of chips that go in Bitcoin, a couple years back when the bigger first bitcoin boom hit when bitcoin stormed from like the low hundreds into the ten thousands, Nvidia’s stock nearly doubled in a short period of time. It was because their processors were the favored processors for these bitcoin mining machines, and there’s also some ETFs that you can get involved in, but I’m going to say take caution here. There’s one called Grayscale bitcoin. It holds bitcoin and essentially holds it like in a cold storage. The only problem with this ETF is it’s very expensive. It’s nearly 2% and they did this, they were very clever. They figured most people would not look at the price of it.
They would see Bitcoin they would get in but realize if you’re a normal return if it’s 10% they’re going to take 2% in management fees right off the top for you to be involved in it. So it’s not a cheap thing to enter and the reason they did that as they were first to market. There are going to be more that are approved but right now the SEC is really limiting the approval of these Bitcoin ETFs. So right now the market is underserved and what you’re going to get is you’re going to get somebody like this with this Grayscale company. I’m not saying there’s anything wrong with the product. I’m just saying it is very expensive for an ETF, ETFs should generally be anywhere from 30 to 50. The average ETF is 70 basis points. So a 200 basis point ETF is very expensive.
And the reason they can do that is they don’t have competition. So take a look at that. That’s one way, another way to gain exposure is actually, Coinbase is going to go public soon. So Coinbase essentially is an exchange where you can trade these cryptocurrencies, I’m on Coinbase, again I’m not getting any endorsement or anything to talk about Coinbase, it’s just the one that I used to gain my exposure to cryptocurrencies like the Graph and Bitcoin itself and Ethereum and Litecoin and Dogecoin. Actually don’t sell Dogecoin on Coinbase. But Coinbase is going public in the near future. What’s interesting about Coinbase is it is very expensive and it’s very expensive to trade.
So in a world where you don’t have to pay for trading in terms of equities anymore or very limited, Coinbase is very expensive to make trades. So that is going to be an interesting interesting interesting IPO because they do generate a lot of free cash flow. So that’s another way to play it. You can also take part in the blockchain ETFs, several. One that’s done really well lately is Riot. And it has really moved a lot with this last boom in Bitcoin. So when you see these, there are plenty of them and they all invest in different companies that have blockchain technology like IBM the dinosaur that IBM is, they do have a blockchain technology and there are a lot of companies that have them and so what these blockchain ETFs do is they investment in the companies that have blockchain software.
So hey, another great show. Thanks for all the questions, keep them coming to Jeffrey@JeffreyKamys.com Will see you again next time on Stock Smart.
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