March Madness, Wynn and Travel Stocks on the Move

Podcast Transcript

Hey this is Jeffrey with another edition of Stock Smart, the March 15th 2021 edition. Hope you’re all doing well, gonna start with March Madness little bit here, brackets are out, full disclosure, I did not watch a lot of college basketball this year, but I’m going to start with a state pick from Chicago I’m going to take University of Illinois to win, we’re going to go over some data that’s kind of interesting about the tournament, 12-5 seed upset happens a great deal, 35% of the time the 12-seed will beat the 5-seed and in the last 35 years the 12-seed has won at least one first-round game.

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That means if you’re picking your bracket, if you haven’t done it yet, make sure to pick one 12-5 upset, 13-4 not as much so, about 20% of the time, the 13-seed will beat the 4-seed. Just some interesting data for you to start your week when you’re picking your brackets, the Empire State index, which is the Manufacturing Index, again, showing signs of increased inflation’s prices paid continue to rise and if you pay attention to your grocery costs, it’s an easy way to see it. Some things like milk and meat, great deal over the year. GameStop up again for no reason. Up to around 273 makes no sense. Don’t get involved. Let’s see what happens from here. It’s got to build support its way overvalued. Maybe it’s a $40 stock.

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Maybe it’s a $20-40 stock, it’s not a $273 stock, not with 5000 mall outlets and no entry into the online gaming platforms. That’s dominated by Microsoft and Playstation. So we’re going to have a huge announcement here in the coming weeks. It’s going to change a lot of the content lot of the things we do on this show, it’s going to bring in a whole lot of new things we talked about in terms of stocks as well, big announcement coming in the next few weeks, really excited about it.

So the S&P oscillator which measures overbought or oversold conditions, we’re overbought right now, so don’t be surprised at the market in the next week, tends to roll down a little bit or trade neutral which it’s doing today.

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So let it roll off a little bit, not a great time to probably buy many things until the oscillator gets back down in like a neutral level, so we’re a bit overbought right now, VIX is up slightly about two or three percent not huge but we’re in kind of a dead period now, not a lot of buybacks right now, but we’re going to get back in a bank earnings in about 3-4 weeks and that’s when we’ll start with the banks, which will be the financials that have moved so much this year and that’ll be the start, so 3-4 weeks, probably going to be a period where we’re going to see the VIX pretty fairly high at this level 20-25 for the next month or so. Again inflation creep, 10-year note, big factors. And why are value stocks so in favor right now?

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We got interest rates which are tied to growth companies. So the interest rate so as money gets more expensive to borrow you think about these companies that need money to grow. These are these growth companies, right? They don’t really have bottom line earnings. They don’t have a positive earnings. So they need money to continue to grow. They’re in less favor.

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So companies that are value stocks that have good pipelines of money and a lot of these are insurance companies, Prudential, look at all the insurance and we’ve gone over this a couple times, but that’s one of the reasons these value stocks are so much in favor right now, but money managers who in years past had to go further out on the risk curve than they wanted to try to get returns for clients can now go into these value stocks and so you have all these people who may have been on the fence may be going a little deeper into the growth stock or little more risk than they wanted to for the client portfolios, these money managers, now they’re able to go into these value stocks with pleasure, they’re more than happy to go into them and they’re safer.

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So they’re getting their clients in a safer position with dividends. These are all low beta stocks and we’ll talk more about beta in some other show. These are all betas that are under one, so they would all trade, you know around what the S&P 500 would do or slightly less when you get a higher beta stock, more volatility, could make you more money, but could also create more volatility and bigger losses.

STOCK WATCH

So, let’s do the marketing language on a stock we’re going to look at today. We are the holding company which engages in the design, development and operation of destination Casino Resorts. And yeah, that’s probably pretty popular right now. It operates through the following segments – blank Palace, blank Macau, Las Vegas operations and blank Boston Harbor. Who are we?

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We are Wynn. So Wynn Casinos Empire there of Steve Wynn who is no longer with the company up already 21% this year. Ao they have Wynn Palace, Wynn Macau, Las Vegas and Encore, Boston Harbor, up already 21% making a pretty strong move today, again the stock is up about two and a half percent to 140, stock is moving into territories it hasn’t seen, it is in a 52-week high because this stock got shattered it was below $100, you know, three or four months ago, this thing has made a massive move and Covid really took it down, right because Covid, no one was traveling no one was going to go to Vegas, the most social place where there’s lots of a community activity and sharing of things and hands on everything. That’s not a great place to be when you’re enduring Covid.

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The stock really got hammered many years back when Steve Wynn had the sexual misconduct issue, was removed from the board, and essentially not able to manage his company which he had done such a great job, he could no longer manage his company, I think if you look at the stock, probably another 10-15% to go here, probably not much higher, usually resides in a normal operating period, resides in the 150-160 range, so that’s about 10% more that the stock can probably go up so I would look for that. So you haven’t missed it, even though it’s up so high. It’s up about 22% this year. You can still get it, the stock could probably go up to 30-35% because it’s been down so much, very strong on the technical charts. And it’s breaking out. So it’s one to watch like a lot of these Vegas and casino stocks and travel stocks, these are very in vogue right now. So if you’re not a part of that you might want to grab something like that, you could grab something like Jets, it was an ETF with airlines in it, or one of the travel and entertainment ETFs

THE AVERAGE INVESTOR

So I got a question from Melissa. And this is a common thing, a lot of

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stock pickers, people who buy individual stocks instead of indexes, and this happens to people a lot a lot of times you’ll get in when it’s too high. If you’re a novice, you won’t look at things like overbought conditions. And you’ll get into a stock at its peak and this happens to a lot of people so Melissa want to know she said, I bought Costco at 375 and right now it’s trading in the 330 range. And what should she do next? Right? Honestly, you need to just be patient with the stock, hold it, patience is the key to successful investing, Costco’s a great company, probably a little bit overdone, you know, they had some issues with Covid with stocking, they’re adjusting to inflation and raising prices right now.

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They got caught in the middle of this, actually talked to a friend of mine who have companies that have supplies or have cost of goods and they haven’t started really raising their prices either. So we had a discussion about this. So Costco got caught a little bit with not raising prices when their costs were going up as well. So here’s what you should do. Don’t get emotional, give the stock some time. We do like Costco, we hold it in our portfolios. You need to discuss and validate, why did you buy  this stock? If you really like the company and believe in it, which Costco, yeah you go to it, we know what Costco is, that would be a stock most people would want to buy because they know what Costco does.

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They’re probably members of the club, and I think subscription rates probably are flat to down with Costco right now. I don’t know those numbers specifically, but the reason is because my subscription slipped too, because I wasn’t going to Costco. I haven’t gone to Costco in probably 16 months. So my subscription which I will renew, when we start going out and we go shopping at Costco. I will get the subscription back and their subscriptions haven’t growth, because there haven’t been as many people who have gone to the centers, so it’s a good stock. So what we should do, is just be patient, you know, think about wealth creation and appreciation overtime, and you should be good in that stock. So hey, thanks for the questions. You can send them all to Jeffrey@JeffreyKamys.com.

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And we’ll see you again on Stock Smart