NFT – Non Fungible Tokens, Rocket Companies (RKT), Palantir (PLTR), Most Oversold Stocks

Podcast Transcript

Hey this is Jeffrey with another edition of Stock Smart the March 4^th, 2021 edition. Hope you’re doing well and I want to talk about what we’re doing here. What I’m trying to do here is educate, especially those who are younger and I would like to get overall more people to invest. I’ve gotten my kids investing at a young age and they’ve brought along their friends who are now investing and listening to the show as well because this thing is about compounding it’s not about what you see going on in GameStop and these other trades that are having it, Reddit. It’s not about getting rich in a week. Though some people did very well. The market is about getting your 8-10% every year for a number of years compounding on that and building a life of wealth. And so the sooner you can get people invested, 16, 18, 19, 20 21, the longer horizon

[00:00:47]
They’re going to have to build their wealth. We’re going to do some promotions, some different things for those younger people. I think we’re going to have an age limitation on what we do, but we may have something that we’re going to have, a special thing that we’re going to do, a contest of sorts, for under 25 to try to incentivize them and get invested in the marketplace, so we’re a little bit oversold on the S&P 500 oscillator. So if you can stomach it, it’s a time to slightly add here on the dips, futures ended up positive in the morning when the market opened then we traded down about one and a half percent, bounced back up a bit we’re going to probably end up down today, it seems like another down day, but only slightly.

[00:01:26]
It seems like it’s going to correct a bit because we’re getting some key, you know moving averages where there’s support. 10-year note about 1.46 right now, the Fed chair Powell is going to speak today and we should know a little bit more about how they may choose to cool off the rated bonds, which are parabolic right now, bonds have gone up 50 basis points in two and a half months. So we’re going to see from them and see what they decide to do, VIX again slightly positive up about 2% to 27. That’s a high range number.

[00:01:59]
So, you know, there’s concern in the market overall, when we get to 30, you know, there’s a lot of concern but 27 definitely a concern at 27. Want to talk about non fungible tokens and the art movement. The digital art movement that’s going on. We are going to have a special, probably over two or three episodes where we talk about this because it is really interesting. And to be honest I’m doing some more research on it and I’m speaking to people who are in this field so that I can be really well versed in it when we talk about it, but it’s been brought to my attention. I’ve been seeing a lot of stories about it. There’s a bunch of YouTube clips about the non fungible tokens and how they’re being exchanged and this whole art form that’s going on.

[00:02:35]
This digital art that’s being purchased for millions of dollars, super interesting to me. I guess in concept, we’re going to have these TVs on our walls like paintings and the art can be displayed and changed all the time. I don’t know if I’m going to want that myself, I think I remember hearing like Microsoft like Bill Gates had this in his house a long time ago. But I don’t know if that interests me at all. I still like the feel of canvas, my father was a painter. I think it’s interesting and we’re going to talk about non fungible tokens again in the next show. Next couple weeks probably we’ll start bringing it out and bring some up so Rocket RKT, Rocket Companies got slammed hard yesterday, it’s predictable.

[00:03:13]
I mean the shorts in Rocket were only about 40%, so you have, and some of the sites that do shorts they’ll have a number and it’ll be days to cover, in that short, if you really knew your business you knew that was a day to cover, 40 short is not much, you can cover that pretty quickly and you can come in and you know, once the short is covered, you know, they bailed out as quick as they can because they’re not going to wait for the bottom to fall out. So then the selling starts and Rocket pretty much went to where it should be, I actually like Rocket at where it’s at right now, Rocket at like 26 27, that’s a place where you want to buy, the company is actually doing really well.

[00:03:49]
But you don’t want to be in it at 42 right now. I mean, a parabolic move of 70% in one day is, it can’t be withstood. So where it’s at right now, 27, that’s a good buy right now for Rocket. And I’ll tell you what have they done? What have the GameStop folks done? The Reddit folks done? They put Tanger Factory Outlets in play because that is the next largest short that’s in place right now. It’s about 38% short, company is doing well anyway, it had been moving a positive direction, technicals on Tanger again a store company that owns malls in locations where people are going to be shopping again soon when the vaccine is in full breath.

[00:04:26]
That thing’s been up 72% anyway this year so the company’s been moving in the right direction so the fact that there’s still so many shorts in it, there were 40% shorts, it was the largest short other than GameStop right now. And so SKT, Tanger Factory Outlets was in play up as much as 15-20% this morning in the pre-market, now it’s up about 7%, the technical read anyway, this might be one you invest in right now. So it’s not a terrible investment. It came to me because I was reading on Reddit about this Tanger and I knew it was short anyway, but then when I looked at the chart, I’m thinking this is a good investment anyway.

[00:05:02]
So, you know, people are going to go back to the stores, Tanger is a great manager, I mean this guy knows what he’s doing. So this is not going to be a place where you wouldn’t want to be any way so take a look at it might be something that interests you, ticker symbol SKT.

STOCK WATCH

So a stock we’re watching today is a stock we’ve talked about before and that’s DermTech, DMTK. Earnings today after the bell gotten sold off hard. This morning it was down almost $10. We like the stock. I love the technology. Again, it falls into one of those categories of stock that has a problem because it’s not covered by many analysts. I think three or four cover it, not to disparage anyone but the analysts that are covering it are not the most well-known analysts. DermTech, a bio play, company in La Jolla.

[00:05:49]
It’s a great technology and this was brought to me by a friend of mine who’s a plastic surgeon. Essentially they have a Band-Aid like sticker that you essentially if you have cancer or melanoma growth or something that you want to have tested, in the old days, you would go in to your doctor and say hey, I have this growth what’s going on? And you know, as you get up in age, we all get them that’s part of life. You get one and you’re like, I’m freaked out. I want to know what it is and he has to go in there with a biopsy and cut it up, take the sample send it to the lab and bring it back and it’s painful. Now DermTech has a non-invasive technology

[00:06:24]
That’s like a Band-Aid you throw it on top of the sore or the mole or whatever it is on your skin. Throw it in, send it in to the labs, DermTech’s labs go over it and they sent it back to your doctor. And you find out, and you can even do this with like a Teladoc, like a remote doctor service if your doctor’s watching he could do it with you, you can send it right to your house and you could send it in to the lab. Well it’s gotten killed in the earnings, really killed which is a good set up generally. Earnings are today, be watching closely, it’s  gotten killed in earnings, down a lot, hitting some, you know, good support levels. So it’ll be one if it gets sold off more in earnings.

[00:07:02]
It’s more one that I would add to you know, again when the markets doing this kind of trouble and everything is dropping and everyone’s moving in to value stocks versus the growth stocks, that’s a good time to carefully add to your positions. It’s not a time, if you believe in the companies, pick them and add to them, you know, we’re going to go over the list in a little bit about some of these oversold stocks. There’s a ton of really great companies that are just over sold for no reason except everyone’s running to the exits because of this idea that one and a half percent in the 10-year note is going to change everything in your portfolio.

[00:07:34]
It’s not, it’s not high enough, two and a half percent is a concern, that’s when you have to start, you know being concerned. The heat up of 50 basis-points in the 10-year over two months is a concern, but two and a half really is a time when there’ll be more and more dramatic shifts. So let’s talk about the RSP with the SPY. Again, this is really interesting to me. RSP is the equal weight ETF that covers the S&P 500 and the SPY. So year over year, or year to date I should say…

[00:08:04]
Right now you’re seeing that the equal weight is up about 8.6% where the regular SPY is up about 5.4% and so what’s going on is you’re getting again these non-favorite large stocks that these cap-weighted stocks that are the part of the SPY are not in favor right now, and the 10 biggest stocks that make up 28% of the index are companies like Apple Microsoft Amazon Google Facebook Tesla Berkshire Hathaway B-Fund, VISA and JP Morgan and these 10 stocks make up 30% or 28% I should say, of that index. So that’s not really a balanced index and what you’re seeing right now is you’re seeing a big move as far as the S&P if you look at the sectors that are doing really well and we’ve talked about this because we talked about the inflation in the energy prices.

[00:08:54]
And so obviously Exxon Mobil Chevron those types of companies are doing really well. I think they’re overdone. I think it’s time to leave those especially now that we get into the summer. I think, you know energy goes down again seasonally, but let’s look at the top performing sector so far in the

S&P 500. Energy up 30% year-to-date. So in three months, 10% a month that’s huge and we talked about you can see it right in the Consumer Price Index. Energy prices are going up. Financials, the banks are doing well. Banks are doing well on the spreads. The yield curve creates more opportunities for them to monetize the loans that they make, you know, other things that are up, materials, again inflation. You see the cost of basic things

[00:09:38]
We need to make other things going up, wheat copper and all these minerals and all these different things are going up in prices so you can see that’s what’s happening. So when you look at the RSP, which is the equal weight ETF that covers the S&P 500, it’s doing better because things like energy companies like it’s very small now in energy as far as oil, very small allocation to the S&P 500, but they’re equal weight. So it’s pushing up the RSP. So things like energy and financials are really helping the RSP outperform. Do I think it’s going to be a long-term trend? Probably not, just because these growth stocks are where it’s at, that’s where portfolio managers make their money. That’s where you can turn the biggest returns for your clients. These other stocks are great

[00:10:22]
For certain types of investors for certain fixed income portfolios for sure because they usually pay better dividends as energy stocks have good dividends both Chevron and Exxon have excellent dividends, but overall the growth stocks are going to be where it’s at and companies like Tesla Microsoft, you know Salesforce those are all going to outperform overtime. But right now we’re getting this little move where the RSP is a little bit more valuable and better than the SPY.

THE AVERAGE INVESTOR

So I got a question from Joseph and thanks, really appreciate the question. And you can send them to Jeffrey@JeffreyKamys.com and he wants to know because we’ve been talking about this a lot,  how oversold is oversold. You know, we talked about RSI, relative strength index, is a momentum indicator used in technical analysis. That’s what I do.

[00:11:03]
That’s what we do here, measures the magnitude or price changes to valuate, you know, if a stock is overbought or oversold, it’s displayed by like an oscillator, it’s a line graph that moves from zero to a hundred and if it’s 70 or above that’s usually when a stock is overbought, 30 or below indicates oversold or undervalued condition. And generally you don’t want to necessarily be a buyer when a stock is overbought, you want to let it cool down a bit or if you’re going to add when it’s overbought, add a little bit of your intended position and add as it falls, because they all fall when it’s oversold, you may want to add a little bit more and then watch and see what it does.

[00:11:37]
So in this recent sell-off I wanted to take a look today at some of the most, you know oversold stocks and it’s surprising because some of these are unbelievable companies that actually have profits that are not just growth companies, they’re just getting oversold for no reason and this is a time again for a smart investor, long-term investor to take a nibble on these stocks. So let’s look at some of these are tech stocks Altreyx, Tech stock, Bandwidth, tech stock. CarGurus, honestly, I like Carvana so much better. I have two cars from Carvana. They were so easy to deal with, perfect. Costco. Costco is oversold, really? What’s wrong with Costco? Nothing. Time to buy Costco. Salesforce. Salesforce is great. I mean they have the number one thing you need for one of these technology companies, they have entrenchment. They have a subscription model. They keep growing, they’re boring.

[00:12:23]
I don’t know why it’s such a boring stock. It doesn’t move the way some of these other tech stocks do, it’s not as exciting to other people. But Salesforce is a great stock. Dollar General, that is a strange one, Dollar General being oversold when people are going to start going to the store is more strange, Domino’s Pizza, I guess people are thinking we’re not going to order as much Domino’s. I don’t think that really changes Domino’s Pizza, Jfrog, Fastly, again content provider, big relationship with Tik Tok. Most of their income comes from Tik Tok. GrubHub, the delivery. I agree with that a little bit because I think there will be less delivery and I think that GrubHub probably moved a little too far too fast seeing we were in this circumstance so they really had a great opportunity to grow in a time period

[00:13:04]
When we were all at home and I think that’s going to change, Lululemon, that’s a great company. Everyone loves Lululemon. They have those casual pants that men wear now that look like suit pants and it’s kind of amazing.  Teladoc, that is the at home doctor service, I can see why that’s oversold, that makes sense again, people do want to go see their regular doctors again, but Teladoc is not going away. It’s super convenient and it’s cutting the cost down for hospitals that use the service, so that’s staying. So it is oversold. I’m not really in it and never been in it, but I can see why it’s going down, Walmart, makes no sense to be down. People are going to go there. We’re going to see the RVs that are parked outside the Walmarts again.

[00:13:44]
They’re going to be all over that place. So I don’t understand it. And Petco, Petco did get a boost because there were so many pet adoptions during Covid because people were lonely so you can see why that one would be oversold but these are times if you’d like these companies and you believe in what they’re doing, Costco, come on, Salesforce, Walmart. These are all oversold right now. So it’s a good time to take a little nibble. So hey, another great show, thank you for listening, sign up and subscribe to the podcast so you can stay informed about when we post new content, I appreciate you, and will see you again next time on Stock Smart.