I feel like blabbering a little today. Get some stuff off my mind. 🤔

Are we seeing a pump and dump scheme with Gamestop, AMC, and the likes? Not exactly by definition but enough similar attributes to put this one in the P&D scheme category for me!

Before I talk about my opinion on the matter, I have to admit that the guy who discovered this opportunity is genius. I’m amazed that this was able to be pulled off.

The pump fueled by social media and online forum communities forced shorts to cover resulting in massive spike in share price. The argument for the target was more elaborate based on better research and sound reasoning I admit. Some argue that it is not a P&D scheme because it is not based on false or misleading information.

However, when stocks are manipulated upwards regardless of how it was done, causing it to stretch far from its relative valuations, the risks for less experienced investors to lose money become greater. Many unexperienced retail investors piled on in droves and many will likely be left holding the bag as the buy side dries up and things drop back down to earth.

The “Dump” side which is inevitable in scenarios like this is what makes me view these events similar to P&D schemes. When more and more people began to tout the squeeze can send GME upwards of $1000 per share, I could not help but wonder how many out there would believe this and join the fray. It was all over the internet. It became somewhat of a movement which made it easier to lure in many amateur investors. A movement in which succeeded in what it wished to accomplish to a certain degree but in consequence likely to end with many being left holding a lighter bag than they likely hoped for.

I must admit, I was VERY tempted to short these stocks but decided to grab my popcorn instead… But I know for a fact many like myself would pile onto the short side. But I could not find myself to do this knowing a few friends and family were participating in the event and their reasoning on why they were participating. It felt wrong.

As of writing, GME/AMC seem to be unwinding and if you are reading this my friends and family, I hope you guys come out of this profitable!

A quote comes to mind.

“In the short run, the market is a voting machine, but in the long run, the market is a weighing machine.” By Benjamin Graham.

In the short-term markets may behave like a popularity contest but stepping back and observing the 10 to 20 year charts, the short-term movements based off psychological factors become barely noticeable as the real value of the company based on earnings, growth, margins, debts, and cash flows become more prevalent.

For those who truly believe in the underlying companies future prospects, the short term price actions should be ignored.

In my opinion, good will come of this as many will cry foul and regulators come under pressure to do something. I believe the likely regulations to come of this will be good for all investors going forward.

With low interest rates and massive stimulus being pumped into the economy, money continues to flow into equities driving up prices and luring more retail investors to join the party.

I can’t help but be reminded of the similarities post 08’ when everyone believed home prices only had one direction, up. The difference today is with stocks. Easy money and stimulus are likely contributing factors for the froth in the marketplace. What can go wrong right?! With FED expectations on rates to remain low for quite a while (at least till 2023), with potentially an additional trillion plus of stimulus to be pumped into the economy, many investors are taking this as green light to ride stocks higher. Don’t fight the FED right?

Dangle cheap money in front of the people and again as history shows, the early signs of the animal spirits once again come to life. I guess you can’t deny the fact that it is in our nature to want more.

Could this eventually lead to the next bubble forming somewhere in the economy? Perhaps we already do in asset prices such as real estate and equities? Could we really keep inflation under control under such environment for much longer? How long will this pandemic be the weight that keeps inflation suppressed? What happens if inflation spikes higher too quickly forcing FED to raise rates much quicker than anyone had anticipated? How severe could an interest rate spike induced correction be and which industries are likely to be most impacted first? Will investors pile into small/mid cap growth stocks due to inflation expectations? S&P SmallCap 600 is projected to grow EPS by 107% in 2021 compared to sub 30% for the S&P500, says Sam Stovall from CFRA.

The FED’s are in the driver seat and let us hope they do not veer us off a cliff. Many signs are telling us we are likely headed towards a more inflationary environment towards the second half of this year.

The more the consensus become bullish in one view the more contrarian views I crave for balance. Perhaps it is time to consider some downside protection. I smell exuberance in the marketplace. Been a while I felt this way. 🤔

Anyhow, enough blabbering and let us check up on those divies shall we! 🚀🚀🚀

 

News That Matter

Boeing Company (Ticker: BA)

• Boeing settles 737 Max fraud charge with $2.5B fine.

Bristol Myers (Ticker: BMY)

• Company authorized a $2B incremental buyback of its shares bringing the total outstanding share repurchase to $6.4B.

Qualcomm (Ticker: QCOM)

• CEO Steve Mollenkopf will step down as new CEO Cristiano Amon to take reign.
• Company to acquire NUVIA a 2 year start up ran by former Apple chip executive Gerard Williams for $1.4B. Founders will be joining Qualcomm as part of the transaction. Technologies are expected to improve step function in CPU performance, improve power efficiency to meet the demands of 5G computing, and will integrate across a wide portfolio of products including flagship products.

Walmart (Ticker: WMT)

• Company launch start up with Ribbit Capital to deliver tech driven financial services designed to be more modern, affordable and innovative financial solutions.

 

Buy Orders

 

Sell Orders

There have been no sales for this month.

 

Pass Go and Collect Dividends!

 

Dividend Increases & Cuts

 

Portfolio Snapshot

• YOY Monthly dividend is down -9.5%.
• YOY Projected annual dividend is up 19.8%.
• YTD Dividend income: $268.49

• I hope to be reversing that January dividend trend this year. It’s due to shifting some dividends from SPHD towards AT&T. 🙄

Well, that’s a wrap for this months update! Till next month! 🚀🚀🚀

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