But first . . . a two-minute view from Canada.
And now . . .
I bought some puts last week (not nearly enough!) because Trump seems to be wrecking the economy . . . giving us stagflation that could prove very hard to work our way out from . . . and to have lost the confidence of the Free World and the good will of the Third World. This is great for Putin — his wildest dream come true — but not for a stock market that, in the main, was selling at a very rich multiple of earnings on Inauguration Day.
So what to do with your money?
I fear it’s not too late to buy more puts on the various market indices; but — don’t. Or at least think long and hard before you do. First, you could easily lose 100% of the bet even if you’re right that the market has a lot further to fall — because the market might rebound or fall or stay flat before your puts expired worthless, even if it plunged the following day. Second, even if you do “win,” your gain will be fully taxable. (I bought most of mine inside a tax-deferred retirement account, where taxes are not an issue; the rest in a taxable account as a hedge, rather than sell highly appreciated stocks on which there’d also have been a high tax bill.)
And don’t be tempted by stocks just because they’ve dropped a lot. I’m often a sucker for those — but by no means for all of them.
Most obviously a bad idea . . . TSLA. Though down to $224 from its $488 high 90 days ago, consider that as recently as June, it was $170. Why is it worth more than that now that perhaps 90% of those who worry about climate change — Tesla’s best market — kind of hate him? Why is the company worth more than 100 times its trailing 12-month earnings when next year’s earning could be much worse? To drop to 20 times its trailing 12-month earnings, it would have to drop a further 80%. (Ford, by way of context, pays a 7.5% dividend and sells around 7 times its trailing 12-month earnings. I don’t know enough about Ford’s prospects to know whether to buy it, but it seems less wildly overpriced than TSLA.)
A few I do like here, all of which I’ve written about here more than once (use the search box to see):
CHRB
UNIT
OPRT
SQNS
HYMC
ANIX
PRKR
CHRB is limited to the $25 upside it promises to pay next year, plus the very nice dividend you get in the meantime.
My UNIT guru thinks it will be $12 after their merger and that the merged company will then be bought out at an even higher price by one of the giants, like Verizon or AT&T.
The next three. I think. have pretty solid underpinnings (as speculations go) and could easily triple in the next year or two. (Or not!)
The last two are swing-for-the-fences speculations.
For better or worse, I have lots of all of them.
This article was originally published on March 11th, 2024, on andrewtobias.com, syndicated with permission.
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