by Robert Holman | The Defensive Advisor | www.defensiveadvisor.com
INSIDE THIS EDITION (a 2-3 minute read): My current market rating, Free Offer, why I purchased GOOGL, note on S&P 500 companies reporting their earnings, and Bitcoin.
MARKET … The market remains bullish, but overbought and overvalued. My rating opinion remains 8.0 (0 - 4 is bearish, 5 is neutral, 6 - 10 is bullish). The Market will most likely continue moving sideways-up, with volatility.
ECONOMY AND MARKETS … This is a big week for earnings, as more than 1/3 of the S&P 500 report results this week. The primary worries remain inflation and interest rates. No significant economic numbers are due to be released until late this week. The future looks encouraging for the both the economy and stock prices. Keep in mind, certain sectors will benefit more than others.
WHY I PURCHASED GOOGL (short version): I purchased GOOGL in March 2020, because a) I had available cash from prior sales near the market peak, b) it was an outstanding profit opportunity at less than $1200, near the bottom of the last downturn, c) this fit Buffett’s view of buying cheap, leaving a significant margin of error and d) of all the FAANG stocks, its revenues and growth rate are the most stable in ordinary times and hence the least risk in my view.
For those who prefer a little finance data and finance-speak: it has the lowest beta of the 5 (1.0 for 24-60 months) although it has bested the last 12 month S&P 500 performance by a good measure.
P.S. - It’s my view that the breakup value of the company is probably 10-30% greater than the stock price, so congressional anti-trust action may not be unprofitable to us. And, I think the company has more upside, as vacation and travel and return-to-normalcy picks back up. They are also a participant in the EV market.
BITCOIN – Rallied $3K on Monday to recover to the low $50K mark. I was asked recently if Bitcoin is “for real”, and my answer and opinion was “Yes, it is for real”. Bitcoin is functioning as a store of value, like gold, but many prefer investing in Bitcoin over gold. It appears unlikely to be used as a medium of exchange.
It’s unclear which crypto will function as a medium of exchange (i.e., used in commerce). The one that is used as a medium of exchange (the early candidates are Ether, Litecoin and others) – they will have the greatest impact on society.
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Opinions voiced in this post are for general information only and are not intended to provide specific advice or recommendations for any individual, without complete knowledge of that individual’s total financial profile. No strategy assures success or protection against loss. Past performance does not guarantee future results.