Note: Moving forward, Wednesday episodes of Wall Street Unplugged will feature Frank and Daniel covering top news stories. The regular interview segment will move to Thursdays. Tune in tomorrow to catch up with fan-favorite guest Andrew Horowitz of The Disciplined Investor podcast.
Daniel just returned from a trip to Arizona… and has some interesting observations about the labor shortage in airports. [0:35]
While on his trip, Daniel was able to speak with business owners involved in construction and real estate… He shares some insight on these sectors… and explains why inflation will get much worse before it gets better. [5:30]
Automakers continue to deal with semiconductor shortages and supply chain issues… but Tesla seems to be bucking this trend. Quite frankly, some of the bearish price targets on Tesla seem ridiculous.
Daniel and I discuss whether sell-side analysis is meaningless in today’s investing world… and Daniel divulges which automaker he’d buy right now, and why (hint: it involves politics). [16:32]
As bitcoin prices jumped over $50k, JPMorgan CEO and famous bitcoin skeptic Jamie Dimon took yet another dig at the asset’s “intrinsic value.”
Daniel and I examine the “intrinsic value” argument… and highlight why you don’t need to worry about the U.S. banning crypto anytime soon—and why you need exposure to bitcoin… [25:25]
And for an easy way to add crypto to your portfolio, make sure to check out my Crypto Intelligence advisory. We’ve got some massive winners in the portfolio—I’m talking in the triple and quadruple digits—with more room to run. [33:00]
- How the labor shortage is impacting travel [0:35]
- Why inflation will get worse before it gets better [5:30]
- Is sell-side analysis meaningless in today’s investing world? [16:32]
- Why you need exposure to bitcoin… [25:25]
- Check out Crypto Intelligence [33:00]
Wall Street Unplugged | 803
Forget intrinsic value… Here’s why you need to buy bitcoin
Announcer: Wall Street Unplugged looks beyond the regular headlines heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street, right to you on main street.
Frank Curzio: What’s going on out there? It’s October 6th. I’m Frank Curzio, this is the Wall Street Unplugged podcast, where I break down the headlines and tell you what’s really moving these markets. So, I’m bringing in Daniel, right off to start here. A lot going on. We’re seeing a lot of volatility in the markets. Daniel, senior analyst at Curzio Research. What’s going on, man? How you doing?
Daniel Creech: Great. Doing well, sir. It’s good to be back. I had a fun trip out west to Arizona. And yeah, markets are up and down every day. So, we’re up 400 one day. Now, we’re down 400. You know, just typical stock market stuff.
Frank Curzio: How was the trip? How was the flights? Was it crowded? What’d you see? Airports and stuff like that?
Daniel Creech: Yeah. A few observations, like Frank always talks about, to all you listeners, just pay attention to your surroundings. You can get a good pulse on different things. So, the planes themselves, the flights are full. Coming back, just to skip forward real quick, Frank, I was in… It’s a good thing I’m so dedicated to you in working and getting back on track to publish everything because-
Frank Curzio: Yeah, okay.
Daniel Creech: I was in Houston, coming home from Arizona, and I was standing next to the desk there where you check in and get into the flight. They were offering… They’d overbooked the flights. Okay? Typical. They were offering $1,500 in travel vouchers, no blackout dates supposedly. Of course, take that with a grain of salt. They were going to pay for your hotel that evening. This was Monday, and they were going to pay for all your food and guarantee you a seat on the next flight at either 5:00 or 6:00 AM, which would’ve been Tuesday, yesterday, to Jacksonville. I thought, “Wow, that’s a lot of free vouchers. That could be a lot of fun.” But I’m so dedicated to all you listeners and everything here that I just ignored that completely.
Frank Curzio: Yeah. Daniel is so dedicated that he went to Arizona, and then he came back. I don’t think he knew that his parents were coming this week to visit him here. So, they’re here for… And they’re like, “Well, we’re leaving in three days.” Oh, and his dad goes golfing. So, I’m like, “I guess we’re not going to see Daniel this week.” Of course, I came in here really early, much earlier than expected. Daniel was here. I’m like, “Ah, you’re making it up for it a little bit. Huh?”
Daniel Creech: Hey, when you got a flexible schedule, you got to get things done whenever. But yeah, so the flights are full, which is nice. American, fun stewardess. I ordered an adult beverage to calm my flying nerves. She made a point to say that they were going to initiate, and this is coach, people. I’m not Frank. So, I’m not up in the front of the plane. I’m in the back. But she said that they were originally planned to have alcohol back in June of this year, Frank, and now they extended it to January of next year. She thinks it’s going to get pushed further back. Why? Because she said customers are at acting too crazy. Now that was on American.
Daniel Creech: I brought United back. Didn’t even ask on them. At least they serve snacks and things. But the wild thing, Frank, is flights are full. You get to the airport. I was in Dallas, Phoenix, and then Houston for a short time; obviously, the airports are to themselves. You walk by different bars and restaurants and not everything is open. They’re having the same staffing issues. I stopped and talked to a few people there at the restaurants that were open. It’s just your typical same old story. Everybody’s hurting for labor and things.
Daniel Creech: Chick-fil-A. When you see a Chick-fil-A line, and an airport that isn’t extraordinarily long, you know the airports aren’t that busy. That’s the easiest tell there. So, that was odd. But man, just the nickel and dime, you’ve talked about how different hotels, travel cars, rental cars, and flights, man, they just nickel and dime you. For me, I was buying a coach seat. It was a last minute ticket. I mean, last minute, couple weeks in advance. So very, very last minute on that side. Then, you buy exit rows, and everything is just tacked on, tacked on. So, you don’t need as much capacity when you cut cost and you can raise prices. It fits your big narrative.
Frank Curzio: It was interesting because even when I flew through Dallas two weeks ago, three weeks ago, whatever, the airport was empty. The flight was packed, but the airport was really empty. I’ve never seen it that empty, which surprising. But we’re looking at not just supply chain issues, guys, but it’s very, very, very serious, much more serious than people are talking about, which is the labor shortage. You see it. I see it. But for some reason, the fed doesn’t see it. A lot of people that you’re watching on TV don’t see it. Now, we’re seeing tons of companies, which I get data from this all the time. Top CEOs, and this is over the past three weeks, have all been warning. Some of them said, “Hey, we were successful in raising our costs with high raw material costs.”
Frank Curzio: I don’t know if you saw. You talked about it earlier, natural gas prices, forget in Europe. Holy cow. Now, what are we seeing? We’re seeing oil prices, financials, outperform, or the markets shitty here. What does that mean? Right? You’ve seen technology companies really take a hit here. We said why they’re more prone to getting hit harder inflation because they’re influenced by CapEx spending, and they can’t cut their margin. They have incredibly high margins, where cyclical companies can cut their margins a lot easier.
Frank Curzio: That’s a telltale sign that this selloff is inflation. We’re seeing the 10-year rise and just the sectors like the financials are going to do well. Energy’s doing well right now. A lot of technology is selling off, but it’s an indication that, hey, you know what? Inflation is here. Not only is it not transitory, my favorite word, transitory, but it’s getting progressively worse, and it’s going to get a lot worse. Even if they pass the infrastructure build, it’s really going to get worse because right now everything’s totally bottleneck. So, it’s really crazy out there. It really is.
Daniel Creech: Yeah, absolutely. You talk about your great network and contacts. I have just wonderful people in relationships out in Arizona spread across a lot of different sectors from residential and commercial real estate to construction and landscaping. I got to catch up with a lot of these people. To your point, Frank, we’ve been on this theme for a while with companies that have pricing power.
Daniel Creech: I was talking to a gentleman with a construction company, and he was highlighting the fact that several months ago and leading up over the past several months, he had great buying power because of his company. He wasn’t bragging. He’s just… He’s a hard worker. He’s a very smart guy. He’s got a great business. He was talking about how he would just go buy raw materials and he would take other people’s orders, basically.
Daniel Creech: What you’ve talked about with the container ships, how some companies like Amazon and the big dogs, they can just afford to pay more. They’ll eat or take a loss or cut into their margins to a certain point, just to get their goods on a ship and get them over here and get them on time. You can take market share there. The interesting thing of what he said in this, on the construction side was I used to just have to pay up and buy. Well, now the suppliers are saying, “Hey, it doesn’t matter what you want to pay. We don’t have it yet. So, you can take delivery in 12 weeks or 16 weeks or not, but that’s up to you.”
Daniel Creech: So now, think of this river analogy. If you have an oil spill or anything like that at the top of the river, it takes some time to funnel through and get down to the bottom. So we’ll see that. We need to be looking for that over the next several months on supply chain issues. Like you said, Frank, they’re only going to get worse. But that’s just one of the things. Now these are private companies I’m talking to, but we can, as investors, you can look for these same situations in publicly traded companies.
Daniel Creech: A gentleman I talked to with pool and landscaping, they had to limit their sales teams to selling certain jobs. We’re talking about building up your backyard like you want it. So, people are spending a lot of money sometimes several hundred thousand dollars to do a pool, landscaping, get their backyard just so they can entertain. Well, think about this, Frank. When you have to limit your sales teams to stop selling so much, because you can’t promise six months, eight months down the line, you don’t know what the labor… They’re talking to…
Daniel Creech: He’s having concrete guys and mason guys and different things come to him and say, “Hey, our prices are increasing in another week.” These aren’t the first price increases. So, as investors, you have to pay attention. It’s going to get worse on the supply chain side and the inflation, a hell of a lot worse before it gets better. So, something we need to navigate in our portfolios as well, and you at home.
Frank Curzio: I want to break this down in simple terms, because you hear this. The supply chain issues and the chip issues and a lot of you shopping for cars and you hear… I need to break this down for you to understand of why this is a massive risk to the overall market. If you look at the past two, three weeks, GM, 3M, Nike, Sherman Williams, Eaton. All these companies have come out and said raw material prices are skyrocketing, massive labor shortages that… They basically all are saying that things are getting progressively worse. I don’t know if that’s priced in, but when you look at Ford come out and their sales are down 17% year over year. Again, that’s why they’re talking up their EV portfolio. We talked about that a lot.
Frank Curzio: They actually said, the CEO again, the CEO for Ford and CEO for GM were lying to you three, four months ago, which you pointed out because they were like, “Oh, it’s going to be a second quarter. We’ll be fine in the third quarter.” We’re in the third quarter. Numbers are getting worse. Fourth quarter, the numbers are going down further than the third quarter. So, we haven’t hit bottom yet. Right? So, when you hit bottom, that’s a time to be like, “Okay, things are getting better. We can scale back in.”
Frank Curzio: These stocks haven’t really gotten hit yet because everyone’s so, “The EV portfolio.” Even though it’s 2030, everyone’s excited about it. But big news came out of Coca-Cola. They said, I think it’s the first time in their history. So, they’re going to ship through dry bulk. They usually ship through containers. This was yesterday. To me, I thought this was amazing because the containers ships that they shipped through, the prices went from $2,000 per container up to $14,000. So, whatever, up 7X and they’re like, “Look, we’re going to do dry bulk shipping instead, which is used for raw materials.”
Frank Curzio: They said through three different ships or whatever. Even those price for dry bulk, and if you look at the dry bulk index, which you hear all about, that index went from $1000 to $5,000 over the past year. So, it’s cheaper, but you’re going to see the dry bulk index absolutely explode. Now, Coca-Cola is one of the biggest companies in the world and big supply chain, logistics. You know if they’re doing this, some other companies are doing this, right? All the big guys are going to do this.
Frank Curzio: AzkoNobel company, maybe never heard of, they are one of the largest paint manufacturers in the world. They do 10 billion in sales, and they’re located in the Netherlands. CEO said, “Buy paint right now. Get in your car and buy paint right now.” He goes, “Because we don’t know if we’ll basically have it.” Then you have Lennox Group. CEO says, “Raw material cost inflation at 20% and prices are going to rise about 9% year over year this quarter.” Hopefully, that’s going to offset cost, but this is what he said about steel. It’s very constraint, which we know. But he goes, “The flash steel cost is 4X what it was 18 months ago.” As major players are trying to keep supply down, which means they’re keeping price elevated. So, he says it’s tough to get steel.
Frank Curzio: He goes, “Then the suppliers, whether it’s motors, compressors, they’re trying to manage their cost. So, what happens is steel suppliers just won’t make deliveries because they find a spot buyer, and they’re willing to pay for what was supposed to be our delivery. That’s rippling through the supply chain.” So, right now, what does that mean? That means the largest players are willing to go out and lose money to lock in container ships, dry bulk and all this, pricing out companies like maybe Dollar Tree and the Dollar Store, where don’t have high margin products. But these guys are willing to lose money and steal some of these things legally, basically.
Frank Curzio: What does that say for Christmas, which is where the biggest quarter for so many companies where you have the most sales, Daniel? Right? So, if I were you, when it comes to the holiday season and Christmas, you make sure the expectations, you set them low for your kids. Tell them, “Hey, we’re going to go on a vacation or something” because you can get that done. Buy them a basketball or a soccer ball, because they’re always in stock. But forget about those toys because those hot toys, there’s going to be two or three kids in the United States that gets them. They’re not going to be able to get, even if you order now, gift cards or Roblox or Fortnite, stuff like that. But the hottest toys, forget about it.
Frank Curzio: Sony Playstation 5 came out last year. Last year. You still can’t get one. I mean, you can get if you paid 3X, 4X for it. But it’s still not in inventory any place. So, you’re looking at the holiday season coming up, these guys need to stock up. They don’t have inventory. I’m interested to see what Best Buy says, who raised their estimate to exporting goods. Nike said, “Hey, we’re in a lot of trouble.” Basically their stock got hit. So, a lot of manufacturers through Taiwan and Vietnam and stuff, their COVID restrictions are crazy.
Frank Curzio: Guys, pay attention to this because on the other end, Daniel, is what’s working? Companies that have pricing power and I could tell you who have pricing power and stocks that are doing well. This is a theme that we’ve had for a very long time, right, Daniel, where we said, “Buy the reopening trade.” If you’re looking at Delta, the numbers are getting better. Every single state, every state, right now is below 90% ICU occupancy, which is great. I don’t know if you guys saw Avis. That’s a company in our portfolio. Dan, where’d we buy that? It’s 130.
Daniel Creech: Yeah, about. That’s for the CPO.
Frank Curzio: We’re up about 500% on that name. Royal Caribbean, full fleets. They said full fleets are going to be operational running early next year. Caesars Entertainment said EBITDA record high in Q3. That is incredible, considering international restrictions are still in place at a lot of places. Mask mandates are still in place, which people hate wearing masks. So, when this stuff gets lifted, and it will, and it could take six months. It could take a year. I don’t know, but it will get lifted, a lot of this stuff. When it does, these guys have so much pricing power, it’s incredible.
Frank Curzio: Even Delta lowered their estimates last month and then revised them higher this month. That’s how quickly it changed. They said 2022 bookings are going to surpass 2019 levels, which are the best levels on record. The stock was over 60 then. It’s 43 now, and not a apples to apples comparison because they did take out more debt and stuff and put more shares outstanding. But you’re seeing these companies. It’s back and forth. Oh, Delta, they’re going to open. People are dying to get out their international travel. That’s a pretty big theme, but you have to be careful of the companies that don’t have pricing power, which are going to be a lot of restaurants. I would think Dollar Stores. That’s really the biggest theme. That’s the biggest takeaway of what’s going on with supply chain issues and what’s going on with inflation right now, to me.
Daniel Creech: Yeah, absolutely. They’re going to have to navigate the waters because last week, I was talking about Dollar Tree and Dollar General as a way to play the discrepancy and the income gap continuing to get wider between the rich and the poor and those. But like I said, Dollar Tree is even going to sell prices or goods for higher than a dollar. Pricing power is a big deal. The casinos are good. In fact, when I was on the way home on the airplane, a gentleman sitting next to me was coming back. Him and a group of friends were in Vegas for the weekend, having a ball.
Daniel Creech: So yeah, people are dying to get out. No question there. People are still flushed with cash. Even though some of the unemployment things have run out, you still have a lot of working power and money because a lot of the people that lost their jobs were in the service sector. Not that that’s not important, but everybody got checks, regardless if they lost money or lost their jobs or not. So yeah, that’s a big thing, and the ripple through is the economy. Where do you think… Interest rates are one, one and a half percent on the 10 year.
Frank Curzio: Yeah. One and half percent.
Daniel Creech: You think that’s-
Frank Curzio: That’s why the market is hurting. That’s why you’re seeing a lot of volatility. That’s why you’re seeing it come down. It is the 10 year. Keep an eye on 10 years. Interest rates go high. It’s going to impact a lot of different industry, special housing. I’m on the market for getting a loan right now. I’m trying to lock it in because they’ve gone up, and it’s going up to the point where it’s meaningful.
Frank Curzio: So, how much higher are they going to go? I don’t know, but that’s going to result in the housing market might get hit a little bit. Fewer loans being made. Again, higher interest rates. It’s more difficult to borrow. You’re taking money out of the system. You’re taking leverage out of the system, because money’s not really free.
Daniel Creech: Fun, teachable moment here. You doing a 30-year fixed, Frank?
Frank Curzio: I’m doing-
Daniel Creech: Is that what you’re trying to do?
Frank Curzio: Yeah. I’m going to do a 30-year fixed. Yes.
Daniel Creech: Are you going to ask for a 40 or a 50?
Frank Curzio: No, no, no.
Daniel Creech: Just going to have fun with it.
Frank Curzio: 40 or 50? I don’t even know if they have 40 or 50.
Daniel Creech: No, they don’t because it’d be too good. Think about that. If you locked in-
Frank Curzio: Isn’t there 50-year bonds? Didn’t they do Microsoft or something?
Daniel Creech: Probably, yeah.
Frank Curzio: I thought Microsoft did it. It’s crazy.
Daniel Creech: Well, we’re not going to get off on this tangent, but you could always print the trillion dollar, what, platinum or palladium coin they’re talking about, with the debt ceiling going on. But the 30-year fixed is fantastic because you lock in an interest rate today for 30 years, people. You’re going to pay that back with inflated dollars. So, your house that you can go in and get shelter from, you’re going to be paying that back. The amount of dollars in your mortgage every single month that you pay now is not going to buy you near the same amount of goods in 30 years from now. That’s why it’s a great deal to lock in a fixed rate at such a low rate. You should really think about that if you’re in the market, such as Frank is.
Frank Curzio: Yeah, and Microsoft did it. That was in 2015. 40-year bonds. They probably did it again. That’s crazy. But let’s change scenes here because we saw Tesla meet their estimates. We know the valuation’s insane. I was just… Listen, I’m not picking on this person who’s a JP Morgan analyst that covers this stock. He raises target price from $180 to $215. The stock is at whatever, $780, close to $800. The average sell side price ranges from $215, which is the low end for JP Morgan and another boutique firm at $1,591. $1,591. The stock is again, around $780 today.
Frank Curzio: I have to ask you, are the sell side reports, are they becoming meaningless? Because when you do see upgrades and downgrades, it does move the market. So, I’m not going to say it’s not trading opportunities, but when I see something like this, where that range is that big and you’re looking where fundamentals don’t matter anymore, if you’re looking at… How do you look at AMC? How do you look at GameStop? How do you look at these companies? I don’t know if JP Morgan, that analyst was using Jamie Dimon’s math on it, where he says there’s no intrinsic value on Bitcoin at zero. Maybe that’s it, where he’s getting it from. I have no idea.
Frank Curzio: But it’s hard because you’re looking at these estimates, which are going to go up tremendously by 2024. Even at their estimates, it’s going to be trading at 125, 130 times forward earnings. So yeah, I don’t know if these things even make sense anymore. I know there’s a lot between investment fees, which we talk about all the time, which is a big bias, especially small caps. You’re not going to cover a small cap unless they’re going to get investment fees. They’re not going to waste their time.
Frank Curzio: So, I’m curious. I’m going to ask you. Are these reports… And these guys are brilliant here, but when you see ranges like this and you’re seeing so many times that fundamentals don’t matter, what’s the value of these reports?
Daniel Creech: I think meaningless is a strong word, but you’re somewhere on track there. I just have a limited vocabulary. So, I can’t pinpoint it exactly. But you just… Listen, the guys on the cell side, like you said, they’re brilliant. They have access to great information and up to date information. However, they’re biased and human, too. It’s hard to admit you’re wrong. It’s hard.
Daniel Creech: In the investing world, Frank, when you’re wrong, you don’t say you’re wrong. You’re early. So, if you have a price target on something that’s 300, and it’s 700, it’s like, “Oh, well, just wait. I’m just a little early. My thesis will play out” or whatever. You just have to take these company by company and not just paint with such a broad brush.
Frank Curzio: You know what I don’t understand, though?
Daniel Creech: Because you got Tesla bulls. You got crazy Tesla bulls that whatever, pick a price target, $10,000.
Frank Curzio: Bulls and bears.
Daniel Creech: And bears.
Frank Curzio: Crazy bears. It’s fraud, batteries on fire. Everyone’s just… There’s so much emotions, especially on social media with this. But the JP Morgan, if I was you just again, you’re probably a lot smarter than me.
Daniel Creech: Wait a minute, are you talking to me or the audience?
Frank Curzio: I’m talking to the audience.
Daniel Creech: Okay.
Frank Curzio: You’re definitely smarter than me. I’m talking about… The analysts at JP Morgan here, you could make the same case by putting a 450 target price on it.
Daniel Creech: Right.
Frank Curzio: People are saying, “Wow, that’s really low.” Then 215, I’m looking like a complete idiot. Right? So, I think for job security, and it didn’t work for Goldman because they had an analyst on hand, which he threw out the door because he kept… And they’re like, “Tesla’s going to be borrowing money and borrowing money and borrowing money. That’s our investment fees.” They threw him out the door. And now, they hire a guy and he’s got one of the highest estimates on the stock. I think it’s maybe not the highest, but I think it’s 880 or like that, much higher than it is today.
Frank Curzio: So, you have to be careful, but it’s almost, even when you look at this, when they have say… What does Goldman call it? The Conviction Buy List. So, they have a certain amount of names on their Conviction Buy List, where once they remove it, they have to put one on it. Just like they have to have a certain percentage of sell rating. So, you’ll see in a sector that they’ll say they’ll downgrade to a sell, they’re going to upgrade another one to a buy or take it off from a sell to whatever. Which means right there, it tells you there’s a lot of bias behind it, right? You’re just doing it because that’s what’s required for a formula. It’s not required where we really think.
Frank Curzio: I’ve talked to analysts, and they’ve said that in sales. So, I say, “Look, we have to provide some sell on this when we cover a whole industry.” But when I see stuff like this, it’s crazy. But I don’t know. I don’t know. I look at these sell side reports. A lot of these guys are really smart. They do fantastic research. But when it comes to target prices and something, it’s so subjective. You could just change one number in your model and come up with whatever you like.
Frank Curzio: It’s like technical analysis. Just move the chart out another month, another three, four months, six months, nine months. You’re going to get what you want to see. You could say, “Hey, look at this chart. When it hit here, it hit here. It hit here and it goes higher.” Then, until it doesn’t go higher anymore, and they don’t report back with their performance or anything.
Daniel Creech: Right?
Frank Curzio: You don’t see a lot of guys like that have performances in… That have technical analysis. They don’t have track records and stuff like that. But anyway-
Daniel Creech: Well, real quick and in their defense, to come to Wall Street’s defense, you have to be… How do you say this? You have to be willing to change your mind. So, what are they up against that they weren’t up against recently? Now, if you’ve been wrong on Tesla, you’ve been wrong for a while. But now, you have this meme stock atmosphere. You have the retail investor getting a lot more involved. You have internet channels like Reddit and Twitter and everything else blowing up with everybody from Dave Portnoy, who has massive followings, to really smart guys in the investing world, getting huge followings to just crazy pump and dump guys.
Daniel Creech: But you have to pay attention to that as a Wall Street analyst. Maybe you don’t have to let it deter or really control your thinking. But I think a lot of that is they’re just ignoring it. They thought, “Ah, this will pass. This is just a season.” It still may be, but it’s going to be a hell of a lot longer season. It’s like the Game of Thrones; winter is coming. I haven’t seen all that, but you don’t need to listen to that very long to realize winter is not a three or four month season in that show. It could be forever.
Frank Curzio: Quick question.
Daniel Creech: Uh-oh.
Frank Curzio: Out of the three car makers that I’m going to give you.
Daniel Creech: Okay.
Frank Curzio: Tesla, GM, Ford. Which one do you like the most right now today? Considering Tesla had great numbers and there’s more chips that go into those cars than anything, which is very interesting to me, of why they’re able to produce. Again, they’re producing on a much, much smaller, small, small scale than these guys, which we have to take into consideration. But which one of those companies would you buy right now?
Daniel Creech: GM. You want to know why?
Frank Curzio: I want to know why. I’m curious.
Daniel Creech: Politically speaking, people, this is the easiest layup here, and I’ll go out on record. We can timestamp this, Frank. We can either make me look great or make me look silly. Engine No. 1 has taken a stake in GM. Why do I bring up Engine No. 1? Because Engine No. 1 is the small activist firm. I say small. I don’t know what their management is, but they’re small in the big players because they’re the ones that took over and got board seats at Exxon Mobil, one of the biggest and gas producers-
Frank Curzio: By convincing all-
Daniel Creech: By convincing how?
Frank Curzio: BlackRock.
Daniel Creech: Did they go hit the campaign trail and get the average individual investor to buy into their ideas? Absolutely not. They went to BlackRock, who is a multi-trillion… Are they nine? Eight to 10 trillion, let’s say, pretty comfortably.
Frank Curzio: A lot of them are all five trillion plus now, Fidelity Oil.
Daniel Creech: Yeah, and they, BlackRock, who is one of the biggest asset managers in the world, if not the biggest, have decided to be woke under, is it Larry Fink that runs that? I always get those guys confused between BlackRock and the other big ones. But anyway, now they’ve… And full disclosure here. I threw out Dollar Stock Club because of that and Dollar Stock Club, I recommended Exxon Mobil. What did it do? It immediately went down about 15%. So, thank goodness we have 25% stop losses on that one.
Daniel Creech: But now, it’s basically trading flat. I think we’re in around 61 is where I recommended it. It’s basically 60 today, but I’m doing that from a fun political standpoint because when you have those kind of asset managers become activist, that means, Frank, money is going to flow into those stocks, in my opinion.
Frank Curzio: It’s not just flowing into those stocks. Look how brilliant they are, because now what they’re doing-
Daniel Creech: Who’s brilliant?
Frank Curzio: Engine.
Daniel Creech: Oh.
Frank Curzio: They’re brilliant because you would think, oh man, they’re going to force. Even my first instinct. Like, well, with Exxon, they’re going to force an oil company to drill less, which is why? Less supply. Energy prices are taking off. Now, they’re on the board. They own shares. They’re buying shares and stuff like that. But you’re all in these energy companies, probably carbon credits are stacking up on those things. Forget it. I mean, that industry’s going to just go crazy. It’s starting to go crazy. There’s actually ETFs now, carbon credit ETFs. So, you’re going to see a lot more issues coming out, even security tokens coming out. But yeah, those guys are geniuses, they really are. They convinced everyone about something that whatever, whether you believe it or not, it’s huge.
Daniel Creech: They didn’t convince everyone. They convinced BlackRock to vote on their side.
Frank Curzio: And also a lot of the-
Daniel Creech: That’s correct.
Frank Curzio: Three or four of the largest players and those guys have to vote right now. Every company, every single. If you look at the polls, which is all any of these companies and politicians care about, they’re saying right now that the latest polls that 70, 80% care about this now. They’re going to only refer green companies and buy them. It’s a massive, massive topic. It’s resulting in every single company buying in, whether you like or not. We covered that in past.
Frank Curzio: Now, we have five minutes left that I want to talk about what Jamie Dimon has said, because what Jamie Dimon said about Bitcoin, again, he’s like, “It has no intrinsic value. Could go to zero.” He said this about four or five days ago. I think it’s such a… It increases the bullish case for Bitcoin because he doesn’t understand it. Again, intrinsic value is funny, being a fundamental guy. If you really focus on intrinsic value, you would’ve had, I wouldn’t say you would’ve never had a big winner, but you would’ve never had Microsoft. Any of the massive technology companies. Whatever.
Frank Curzio: You use this kind of cash analysis, present value, future cash flows. It’s trying to provide valuation using numbers. So, it’s a fundamental way to calculate the valuation of an asset. But if you’re looking at that definition of intrinsic value, so that means gold has no intrinsic value. That means art, collectibles. They don’t have intrinsic value. But they have incredible value. You’re looking at Bitcoin is the psychology behind it, where this is people don’t trust central governments and it’s getting worse.
Frank Curzio: The younger generation’s growing up to…. You’re looking at Millennials, you’re looking at Gen Z. You’re looking at all these groups are really, it’s getting worse and worse. We’re even seeing it on this scale, where, how did you go from a trillion to three and a half trillion? They’re just throwing trillions out there. Now, over 30 trillion worldwide has been spent, and yet, you’re still keeping interest rates low across the board. Even though we have GDP near record highs, we have earnings at record highs. We have home prices at record highs. We had stocks at record highs up to two weeks ago. Well, maybe three weeks ago, a little bit before summer. You’re still pedal to the metal, right?
Frank Curzio: So, for me, the fact that he doesn’t understand that, and that’s what he’s valuing it at, and he’s not valuing it as something that’s incredibly, incredibly valuable to so many people. I got an email from a very good source and he made a lot of sense. He said, “Why is China cracking down on Bitcoin?” They keep announcing the same thing. We’re really cracking down. We’re really cracking down. Next week, they’re going to announce that they’re banning Bitcoin, which is going to be the sixth time they’re banning it this year.
Frank Curzio: Why? Why? This is a good theory, not mine, his theory, but when you have the Evergrande situation, which is rippled through their entire real estate, which is rippled through a ton GDP, their economy, when the shit hits the fan, there’s a lot of people that are going to want to get that money out. If you close that market, there’s no way you can get money out. Because why is it? Just the timing of it, and it made sense to me. Whatever, you could think of whatever you want, but why do they keep announcing the same news?
Frank Curzio: Just to see the hits that Bitcoin’s taking, where it is today, guys, it’s at 54,000 now. Our Crypto Intelligence portfolio is absolutely amazing. I’m so glad for the people that subscribe to that. It’s doing very, very good. Lots of great names in it. But crypto is here to stay. Security, tokens, NFTs, not all NFTs. A lot of people think it’s because you see these stupid little digital things, but you know what? I’d want to buy a digital something that’s original digitally that’s from Tom Brady, Michael Jordan. That’s value. I think that’s incredibly valuable. So, there is a good market. That market is starting to explode.
Frank Curzio: DeFi start… Is already big, getting bigger and bigger and bigger, just improving on smart contracts. The technology behind everything that’s going on in crypto, there’s some amazing companies and I just feel like still Wall Street’s so behind the curve. When I see Jamie Dimon, who’s a bank guy, again, just about intrinsic value. One of those powerful people in banking, CEO of the largest bank in the world, the fact that he still doesn’t get this and 55% of the banks are now in it. US bank just said they’re going in. US Bank has seven, I think, trillion in assets. They’re the fifth largest in the world. So, they’re going to take custody now for Bitcoin clients. Their clients want it.
Frank Curzio: This is here. This is a trend you really need to get into. But the whole intrinsic value on it, instead of being like, “Wow, Jamie Dimon said this.” To me, it strengthened the bullish case because you really don’t understand why people are buying this. It’s much more important than intrinsic value. It’s incredibly valuable to move your money different places, to keep it safe and to avoid a lot of the stuff that… In fee out currencies, where you is going to continue, continue, continue to print money, which we see. If they’re still printing money now with everything at record highs and insurance, they’re going to… When is it going to stop? You’re not going to see it stop. That strengthens the case for Bitcoin.
Daniel Creech: Absolutely. I don’t understand the severe of it’s either worthless or-
Frank Curzio: Exactly.
Daniel Creech: Or it’s invaluable. It’s so great. I get the argument, same way with gold. Hey, I believe Warren Buffet made it very popular. Gold doesn’t pay you a dividend. It doesn’t do anything. It’s just a shiny metal that you dig a hole in and put in. That’s not false. It doesn’t pay a dividend. If you have gold in your backyard, that’s great. But to go as far as say that that’s worthless when you have, as long as humans have been around in financial records, which is about five, 6,000 years, it does hold value.
Daniel Creech: Now, you can argue what that value should be. You could say it’s overpriced. You could say it’s undervalued. But just to say that it has zero value is ridiculous because you’re just ignoring human nature and reality right in front of you. So, is Bitcoin overvalued at 54? I don’t think so, but if you think so, that’s okay, But it’s certainly not going to zero any time soon because you have so many people. Bitcoin is more of a vote against central banking and authoritarianism and just total control of everybody. It’s just a freedom cry on a financial. It’s people voting with their wallet to a certain extent. It’s also people taking risk-reward and saying, “Hey, this is speculative and I could make a ton of money.”
Daniel Creech: That’s all fine. It’s not a big deal. I have to say, Frank, I have to give a little credit where credit is due. We had J Pow out of the Fed Chair, chairman and Ginsler or whatever for the SEC, both at least came out and said that they weren’t going to ban crypto like China did.
Frank Curzio: That’s when you saw the take off.
Daniel Creech: That also helped momentum because that is a word. They can do that just like Ray Dalio, that billionaire hedge fund manager has warned, that that is a possibility. Remember: If they can shut down the entire freaking economy, they can do anything. So, don’t-
Frank Curzio: Yeah, it’s a risk.
Daniel Creech: Exactly, it is a risk.
Frank Curzio: You can’t sit here and say there’s no-
Daniel Creech: Absolutely.
Frank Curzio: But, it’s intertwined with so many different banks and everything that-
Daniel Creech: Just because it’s a percentage risk doesn’t mean it’s a high percentage. Yes, it’s a risk.
Frank Curzio: Yes.
Daniel Creech: But is it a risk to keep you on the sidelines or keep you from taking action or gaining exposure to this sector? I don’t believe so. So, keep that in mind. Yeah, so Bitcoin is just a vote of confidence and freedom, more than it is… And a lack of trust in central banks because of what you’re talking about, printing endlessly.
Frank Curzio: Yeah, and guys, you have a limited supply and you have almost a cult-like following that’s not going to sell, that wants to hold this. I’ve talked to some of these people and they are holding. They are holding. They don’t care if it goes down to 25,000, 17,000. If it goes to 80,000, they hold. Right? So, now you have that cult following that was in early. What do we have going on today? Is institutions are going all in. That’s where the big money comes in, where the billions of dollars gets invested in this. That’s why you see Silvergate, a major player. Now, you’re seeing Galaxy. These are stocks that you could buy. These guys, just look at their numbers and how they’re growing tremendously. Even the minors, if you’re looking at Riot, or you’re looking at Marathon.
Frank Curzio: Now that China’s basically shut down, the margins, the estimates that are being raised, they’re being… EBIDTA is being almost doubled from the previous estimates a couple months ago. That’s how much these guys are growing. Because not only are they just mining for Bitcoin, now they’re keeping the Bitcoin in the balance sheets, and Bitcoin is going higher. So, you look at there’s a lot of stock players. There’s more and more coming out. Again, the institutions are here. You’re going to see ETS pretty soon. I believe so, but it it’s still early in this trend.
Frank Curzio: Man, there’s so many great technologies, which a lot of you guys could find in Crypto Intelligence newsletter, which, you know what? I’ll try to discount that. Again, I didn’t have this. None of this is scripted or anything, just a couple topics to talk about. But when I believe that there’s money to be made in certain products, that’s when I like to sell them and pitch them the most. Just the ideas that we’re seeing right now are really fantastic. A lot of new, great ideas, especially in the security token industry, which is really opening up and all you guys saw our news, who listened to that, that we’re going to be trading on a TDR platform probably around December-ish, which is very, very exciting, provide more liquidity. All of you could buy our CEO token, Curzio Equity Owners token, which gives you an equity stake in the business.
Frank Curzio: But really, really cool stuff, and all that stuff’s opening up. So yeah, I’m in agreement with you, Daniel. A lot of topics, a lot of volatility in the market. Again, there’s money to be made, folks, on the companies with pricing power, right? That’s what you say, Daniel. There are ideas that I like a lot that are doing… Again, the travel-related stocks. You’ve seen those numbers start to explode. The economies are opening. Everything’s getting better from Delta. Those numbers are getting much, much better. I think you’re going to see the international markets begin to open up in limited capacity.
Frank Curzio: That’s going to result a lot of these companies that a lot of these travel companies do have pricing power that really are going to take off from here. We’re seeing it on the front end, like with Avis Rent A Car and stuff like that. But I think you’re going to see it a lot more even with just like the Expedias and just all the casino stock. So, that’s probably a great place to be in, at least over the next few, I would say, six or 12 months.
Daniel Creech: Yeah. Christmas might be canceled because of supply chain issues, but we’re still set up for a Santa Claus rally. So, be cautiously long.
Frank Curzio: Man, I’m afraid for the ones going into earning season. We’ll see if that happens.
Daniel Creech: Absolutely.
Frank Curzio: But yeah, there’s definitely a lot of trouble, a lot of labor shortages, and again, so a lot worse than I think people are talking about on TV. So you guys, just be careful. If you’re buying right now, last thing here, I’d like to keep this to 30 minutes. We’re running a little bit over. If you’re buying right here, buy small positions. Don’t take a full position because there’s a likelihood that your company’s going to warn and the growth multiple that are on some of these companies, if they warn and see slow growth, you could take a 20, 25% hit way. If you have a small position, that’s not a bad thing because you could add to it, improve your cost basis. That’s fine because you’re in for the long-term.
Frank Curzio: Just be careful going into this earning season. We’ve already had seven, eight, nine major companies warn and I’ve seen probably at least 50 CEOs of comments that I’ve seen that are like, “This is getting worse, not better,” which may lead to a lot of warnings going forward. So, just be careful. It’s a very dangerous market. A lot of this stuff is not priced in yet, but they’re all going to be clear winners and losers, and we’re surely be giving those to you through our portfolio. So, Daniel, thank you so much for coming on.
Daniel Creech: Absolutely. Cheers. See you next week.
Frank Curzio: So, many different things. That’s it for me. Again, really appreciate all your support. Questions and comments, firstname.lastname@example.org. Daniel, email?
Daniel Creech: Daniel@curzioresearch.com.
Frank Curzio: I love when you say it, even though I know it. Guys, that’s it for me. I have a great interview coming up tomorrow. Appreciate all the support, questions, comments. Again, email@example.com. We’re here for you, and I’ll see you guys tomorrow. Take care.
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