Many of you are likely familiar with Luke Downey, cofounder of MAPsignals and frequent guest contributor here at Curzio Research.
Today, Luke explains why he expects a short-term pullback in January… and why this will present a great buying opportunity for smart investors. Luke also breaks down his methodology behind following Big Money market action to identify outlier stocks.
Plus, a big announcement that will benefit all Curzio Research members. [21:34]
Then, Daniel returns for a discussion about the Georgia Senate election results. As the Democrats prepare to control all branches of the government, here’s how to invest for a socialist America. [49:18]
Wall Street Unplugged | 755
How to make a fortune from a socialist America
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 January 6th, 2021. I’m Frank Curzio, host of the Wall Street Unplugged Podcast, where I break down the headlines and tell you what’s really moving these markets. So, I hope all of you had a wonderful time over the holidays. I did spend time with family, eating a lot. I was on a big diet in December, so I gained probably about eight pounds. I lost four pounds so far in this week, but trying to get back in shape. But I did have a good time with the family. Hopefully, you guys are too.
Frank Curzio: And welcome to the new year 2021, which starts off with a bang, as the Georgia results are in. And welcome to the blue wave, where Democrats will control all the branches. As of now, it’s like stepping out one of the races, but it’s pretty much over. And I have to tell you: The market is not factoring this in. People look at the S&P 500 say, “Wow, it’s up. It’s not that bad. It’s not going to…” There’s massive implications, good and bad. It’s not so much where the market is going to crash or it’s going to go higher. It’s different sectors are going to be…
Frank Curzio: You want proof of that, look at the markets today. And marijuana stocks are up 15% to 17% each, like Canopy, Tilray, Aurora. Look at infrastructure stocks. We talk about that later with Daniel, how an infrastructure bill is likely, it’s going to probably be pushed early, maybe in with this new stimulus that’s going to be passed through quick. It’s probably two trillion and $2,000. I mean, this is going to be a lot quicker, a lot faster.
Frank Curzio: Look at cyclicals and material stocks. I mean, a lot of cyclicals and materials stocks, these names you’ll find in Russell 2000. And Russell 2000 today is up almost 3%. 3%, the Russell. It’s like 3X what the S&P 500 is up right now. So, you can’t say, “Wow, it’s great. And everything’s okay.” It’s going to be implications for your portfolio, significant implications.
Frank Curzio: And we’re going to cover a whole range of sectors later. Things you’re going to do. Things you need to do to adjust your portfolios, because this was a surprise. It isn’t 30% chance of this happening after the November elections. If you look at runoffs, they almost never win the Democrats, because less people are voting to the point where you might see more turnout of the Republican. Republicans usually win runoffs. Whatever, there’s science behind it. You go look at the Math and Georgia. I think the last time it happened was 10, 15, 20 years, whatever it was. And then yesterday, those odds were only 40% and it happened. And I was surprised when almost every sell side firm published reports on what to do. They publish reports today.
Frank Curzio: As you know, we do video now, as well if you listen to iTunes. A lot of people like to watch on YouTube, where we tape this. But I’m bringing up reports from, this is from Bank of America. You’re looking at Evercore, all these reports. Wells Fargo, it talks about Georgia. Just the implications. These reports weren’t published until yesterday because it came as a surprise. And how did… You look at the Jeffrey’s, Goldman. I mean, these reports are everywhere. And they’re all coming out today. I mean, they weren’t published before three days ago and said, “When did they?” No, they said, “It’s a slight chance that this happened now.” It’s happened now, you see the adjustments. And some of these adjustments are pretty massive when you look at them. So, when I look at this and how to structure your portfolio, we’re going to go through all of that today, which is important.
Frank Curzio: But when I went through, read these reports this morning, they were kind all over the place, ranged from the 10 year going to 2% next year, the Fed raising rates in 2022, which I don’t think is going to happen. And they’re saying that in 2022, say 2023, because everything’s getting pushed forward. It’s more stimulus right away, maybe infrastructure and less stimulus maybe throughout 2021 and… I think that’s bullshit, to be honest with you.
Frank Curzio: But lots of forecasts. Inflation forecast, inflation going up tremendously. So, they are right, serious implications where you have to adjust your portfolios. Now, one sell-side report from Bank of America… And this is interesting. This was published yesterday, talking about Georgia and Biden’s proposals. So, they’re saying basically, and this is just the… If Georgia wins, and Biden’s tax raises, not tax cuts. I can’t believe the president actually ran on saying he’s going to raise taxes and won the election, which is amazing. You don’t usually see that. But I have this up now. They’re saying it’s going to take 7% cut in S&P 500 earnings. And most of it is due to taxes. High corporate taxes, high taxes all around. And some say, “Well, that might’ve happened in 2022.” But they say a 7% hit to the S&P 500 earnings.
Frank Curzio: And you might not think that’s significant, but if you look at how much earnings grew after the tax cuts through Trump, it’s significant. It’s even more significant because I did a lot of research on this and went back to 2002, all years annually. And you’re looking at the average annual growth and earnings, S&P 500 is around seven and a half percent. They’re predicting now that’s going to get cut by 7%, so much solar growth. Why is that a big deal? Why is that a big deal?
Frank Curzio: And I’m going to give you a great resource here. If you go to Google and just put in FactSet earnings, they cover a report every two to three weeks, 30 page report, absolutely for free. It’s amazing. For earnings junkies like me, they have tons of stats compared to everything. And when I see this and looking at what they’re saying right now, it’s kind of amazing. Because you’re looking at a market right now, that’s trading… And I’ll bring it up here for you guys to see it, at a forward PE of 22. And this is above the 10 year average of 50, way above. The five-year average is 17.
Frank Curzio: So, you have the PE ratio here at 22 times forward earnings, which is one of the most expensive valuations we’ve seen outside of a couple of periods in the past decade, maybe in 2008, where earnings were crazy. And people were cutting earnings, cutting dividends, and also dot com. But one of the most expensive valuations that we’ve had in decades, in many decades. So, 22 times forward earnings. And now we’re seeing earnings growth going too slow.
Frank Curzio: And if we look historically, that’s usually unsustainable to the point where stocks pull back. I mean, when we see expensive valuations coupled with unexpected slow growth, which we’re going to see in corporate earnings, usually we see steep pullbacks in equities… Usually, usually. It’s different time now. Do you want a good example? Think of a growth stock that you’ve owned that was growing 40% plus annually and it’s up a hundred percent, two hundred, three hundred percent, and continues to grow tremendously. And all sudden, one quarter, they come out and say, “Well, growth is going to slow a ton. It’s going to 5% annually.” I mean, the stock falls 30% in a day immediately. Immediately, you lose that growth premium. You see it happen all the time. And you guys see that happen all the time. I mean, there’s so many different examples.
Frank Curzio: If Tesla says they did deliveries, which are close to 500,000, but they’re growing at 30%, 35% annually. I mean, but if they say it’s going to go from 500,000 to next year to 550,000, the stocks are going to fall like 30%. And you’re talking about a company’s growth, 3%, 4% growth it’s now single digit growth. I look at that. The reason why they have this insane premium is because they’re growing as the battery company, I know. But not that for to comparison, even though they get into electric cars, but just to show you the difference in what’s going on with the market, which is insane.
Frank Curzio: Tesla sold 500 cars last year as a market capital over $700 billion. Ford sold 545,000 cars last quarter, three months as a $34 billion market cap. And they’re getting into electric vehicles. I get not the most Apples, Apples comparison. We know Tesla technology of batteries can be used in so many different things. I get it. But the valuation discrepancy is crazy. And Tesla has that premium because they’re growing so fast. So, I’ve used that as an example.
Frank Curzio: So, what does this mean for the markets? In order to sustain these crazy valuations, because now you’re seeing a slower growth. The Fed is going to have to keep rates at zero forever, forever. I don’t care what people say, “Well, 2023, their price will start raising rates.” If inflation gets wildly out of control, 3%, 4%, maybe. But they’re not going to have a 2% inflation target. They’ve going to change that. They’re going to say, “Yeah, it’s 3%, 4%.” They can’t raise the rate; we have too much debt.
Frank Curzio: You see when they control short-term rates, long-term, they’ll issue yield curve control. And I talked a lot about that. And one of the promotions that we did, that if long-term rates start going high, they’re going to implement it. They have to. They have to. How can they afford to pay the debt? It’s insane. You’re looking at the numbers. I’m going to break them down later of how much we’re spending. On a fiscal side, we’re going to spend more money in the US than the rest of the countries in the world combined in fiscal. Think about that.
Frank Curzio: And then, we have a Fed that not only keeping rates, it’s more stimulus coming out. I mean, we have a Fed in our government that believes 20% correction it’s not allowed to happen anymore. We cannot see that. We cannot say, if it does, we immediately need to do whatever we need to do. Let’s back up the banks or whatever. We can’t see that. Even though it’s a normal course of action, usually, we extend on one end, and we pull back and back and forth. And you adjust as winners or losers. That’s how the market works, not today. You could buy now, and then buying in the day of the news, and you’re still going to make money because everything is going high. That’s a bull market.
Frank Curzio: Some of you, you think you’ve been in a bull market the last ten years, not like in the last… Pretty much five, six months where everything goes higher. You’re seeing things going 300% higher like nothing. That’s like dot com era crap. But welcome to that bull market. But it’s not a bull market in everything. And we’re seeing that. I don’t know why technology is down. It’s kind of weird. You think Biden and blue wave is bad for technology? I don’t get it. But if you’re looking at some of the things I do get, it’s low rates for long time, more stimulus.
Frank Curzio: And the two biggest beneficiaries are going to be Bitcoin and gold. Bitcoin started at 35,000. 35,000, right when you kind of knew that Democrats are going to win. So, you’re looking at 9:00 PM, 10:00 PM around there. And then one county said, “Hey, we’re tired, we’re going to go home.” I love that. You got one fricking job: To count vote. “I’ve got to go home. We’re going to count 8:30 tomorrow when we wake up.” I mean, that’s your job. That’s your job. Imagine you said that when you went to work, “I’m tired. I’m not going to do my job. To hell with all those deliveries have got to go out. I’m just going to do it tomorrow.” It’s awesome. So awesome.
Frank Curzio: Anyway, I mean, the expectations is going to be busy. And they did a pretty good job counting it right away. I mean, you knew the results last night. And then come in this morning. And one of the races was called for a Democrat, but the other one is going to be called for Democrat. But you’re looking at interest rates low for very long time, more stimulus, Bitcoin and gold. And spread score is down a little bit today, but it did run up into this. And you have your solars, your winds, great sectors to own for a blue wave government, along with infrastructure, healthcare. They’re going to really push healthcare, and more money going into so many different stock materials, industrials.
Frank Curzio: Well, energy is up right now mostly, not because of a Biden win, but you have to be a little careful there too with energy where they’re really against fracking. So, how long could that be sustained? But we had cuts around OPEC and Russia and things like that. And so, it’s pushing oil price to $50. I think it’s a function of the blue wave or anything. I think energy is going to get hit. I’d be taking some profits in it. I mean, it’s up a ton.
Frank Curzio: And again, not show why so many market forecasters believe a blue wave is bad news for large cap technology. I mean, these are the ones that funded the Democrats. This is factual. He had Google, Twitter suppressed tons of sites. Conservative sites, which again, is fact. It’s clear agenda there, which is factual. You can look at all the statistics, all the search results, go vote. It’s just the things that they put in front of you. But I don’t know why they think that’s bad for big tech. I mean, you think they’re going to split up. They split them up buy them. They’re going to be 10 times bigger. They might not have monopolies and social media and things like that. And Google, who know, but if they break them up, you’re going to get pieces of all those companies. And you’ve seen throughout history when that happens.
Frank Curzio: You could prevent monopolies and Rockefeller and things like that and railroads, but those companies and those people that become, they increased their wealth dramatically when that happens. Because now they own pieces of all these companies, which is, but anyways that going to happen, I don’t know. I think tech might be a buy in this pullback, and we’ll cover a lot more of this later, but you need to do one thing for me. One thing, which is nearly impossible, but I’m going to ask you to do this. I’m going to ask this. You need to separate your personal feelings about politics, from the feelings you have for taking care of your family and providing for them.
Frank Curzio: It’s two totally different things because you invest emotionally, which we all do, even professionals do. I’m not just talking about emotionally losing money, but you could invest in Tesla. If you had options on Tesla and Tesla takes off and you sold it too early, there’s emotions involved. Oh my God, I’m going to be $5,000. I could have been up $100,000. If I kept it. I’m such an… It’s hard to… I don’t care if you’re a trader. If you look at charts, it’s hard. You always going to look and have those feelings, what if, what if I did this? Could I make more money? What if I did this? I would have say, you’re going invest emotion, people do. But you want to try to keep that in check because you’re going to miss out on making a small fortune. Because it’s not too difficult to see what sectors are going to benefit from a blue wave and what industries, what stocks? It’s not difficult.
Frank Curzio: You’re talking about, if you invest emotionally again, which you all do sometimes you can miss out on making big profits and instead investing the right way. Just look at it and say, “Okay, this happened. How am I going to make money off of it?” What are the stocks and sectors that are going to benefit? You could do that or waste your time on social media shouting about how Trump is a bomb. He’s a crook. He’s a racist. He’s an ass. You hate him. Well, if you’re conservative shouting about how Biden can’t complete a sentence even with a prompter. Have fun, go on social media, do that. That’s what you want to do in your spare time. Me, my job… You are listening to me to create generational wealth. To make more money than you’ve ever made for your family so your kids have a better life.
Frank Curzio: That’s why you’re listening to this. That’s what you should be listening to this. That’s how you have to look at this. There’s emotions that are very, very high. I get it. I got caught up a little bit a couple of months ago. It’s very frustrating, but you got to put your emotions and invest in the right things accordingly. You can be pissed at the fed. It’s like cheating. Hey, we have low interest rates. We have slower growth is going to happen because of higher taxes. And we have a super expensive market. That’s a recipe for a market to fall 25% at least, but it’s not going to because our Fed is providing stimulus and said basically, we’re going to keep low rates forever. And this stimulus the next way now the Democrats, it’s going to be huge. It’s going to be huge. Two trillion, maybe over two trillion, $2,000 checks. And maybe you throw an infrastructure. Maybe it’s three trillion. They’re going to try and get that passed. You might be able to get that passed.
Frank Curzio: We’ve seen a lot of these stocks take off. And when we look back at 2020, we did a really good job staying ahead of the markets. They’re selling out before the crash in March, getting back in May and April, not at the bottom. I’m still nervous. I had no idea that Fed would say here’s six and a half trillion dollars. Get 12 exercise of tarp to save the world. And then, hey, we benefit tremendously. It pounded the table on Bitcoin, on gold, small caps in August, September. I told you, listen, small-caps are usually out before large caps when you have an economic recovery and then are down significantly. And we did fantastic in our portfolios, recommended a lot of those stocks, especially cyclicals. Recommended Goldman three months ago when everyone thought, hey, what are you, an idiot? Banks ran up it, now.
Frank Curzio: The whole world loves banks. Banks are the greatest thing in the world. I think Citigroup is of 5%, but it’s nice to see Goldman getting upgraded by sell-side firms when we were already up, what, 25% plus on it. Because we’re getting ahead of things. That’s what we want to do. We want to get ahead of the street and stay ahead. We did a good job in 2020. I think we’re going to do a fantastic job in 2021, if you keep your emotions in check, which is hard to do. So, by doing that, and if you’re able to do it, you’ll make money in 2021. Again, it’s not going to be that difficult. Just finding out what works, I’m going to give you tons of ideas. I promise you, but it’s not that easy when you have social media dictating what you read, what you see, what you don’t see.
Frank Curzio: And then whatever media channel you watch, I don’t care what side you’re on. They’re all biased. They’re not reporting the news scene. The report… It’s an agenda. They all have an agenda. We’ve seen that. They don’t even hide it anymore, but you have to come back. What’s the most important thing to you? To me, it’s my family. It’s my kids. I might not be that for you. I don’t know if it’s not, if you’d like to shout it from the top of the roof, you want to be famous, write books, whatever you want to do about politics. That’s fine. For me, that’s the most important thing: generational wealth. So when my family has a better life than I had… At the end of the day, it’s about your kids, that generational wealth.
Frank Curzio: And then when you’re rich and you make a fortune, you can retire, donate money to any political organization you feel fit, and then go on social media all the time. You got plenty of time when you’re retired, but get rich first. Otherwise, you’re just going to be sheep. While the wolves are politicians, social media companies control your every move. If you want that, that’s up to you. Take it, your decision now. What do you want to just leave emotion behind and make money on something? Listen, we know the sectors are going to go with the stocks are going to go up. We know what’s going to happen. They said their agenda, Democrats. They have their agenda. We know what it is. They could do almost anything they want right now. Again, we’re going to cover that after our interview, which by the way, have a great guest today. If read our content at Curzio Research, this is a name you’ve got to be familiar with.
Frank Curzio: And that’s Luke Downey, who is a 10-year plus veteran of the markets. Worked at numerous institutions like Canter and Jeffery’s, co-founder of MAPsignals, which is a proprietary system used to track inflows and outflows of the smart money. And Luke’s been making money off this system for over a decade. And you could see that if you’re reading his articles on our site, which is awesome, and the value that he provided is incredible. And he’s also one of the best growth analysts I know because he used that system to find the best growth stocks. And today, he’s going to share and talk about his methodology for finding tomorrow’s big growth stocks. Tomorrow’s Pelotons, Netflix, Zooms, Teslas. And Tesla and Netflix are two companies that he had years ago. He has the track record to prove that. He will show you how he does it.
Frank Curzio: He also can tell you his favorite growth stock to buy right now, which is very controversial, has some short reports written on it, but it is hitting new highs, which he likes. And most importantly, we have some pretty cool news to share news, news that’s going to benefit all of you immensely. No, I’m not hyping it up. You will get to see in a minute. Great, great stuff. And just one note before we get to that interview is, the last time I interviewed… Luke has been on the podcast several times now. He’s at his house and he’s got young kids and they’re running around and screaming going crazy. So usually, we like having all this on video, now we do. But for the video portion, we’re only doing audio for the interview. But everything else… you’ll see what I’m talking about right now.
Frank Curzio: And even in the charts that I’m bringing up, you can see everything on Curzio Research YouTube page, be sure to subscribe. Again, you get all this information. It’s really cool. You see the sites that we’re looking at, we’re bringing up, showing you things that you’re not going to see any place else and trying to educate you. It’s a lot easier because we do our newsletters like that as well. But for Luke, he’s like, you know what, my kids going to run by, it’s going to get crazy. And yeah, he said, let’s just do audio. And I said, audio is fine. But then, we’re going to come back with Dan and do a video, if you’re watching this on YouTube. But if you’re not, you have nothing to worry about, if you’re on iTunes because you just listened to it, which is really, really cool. So, I just want to give you the heads up on that quick note. And let’s get to my interview with Luke right now. Luke Downey, thanks so much for coming back on Wall Street Unplugged.
Luke Downey: Good to hear from you, Frank. Glad to be here.
Frank Curzio: So, we have lots to talk about, including really good news for Curzio Research and you, we’ll get to in a minute. And also I want to get to your whole MAPsignals, high select stocks. But before that, let’s talk about the markets. We just ended 2020, pretty crazy year, the S&P 500 just surged 16%. The NASDAQ did a lot better than that. And now, you’ve been writing for us for a long time, and you’re saying that, that little worried because it’s showing extreme overbought levels. And I guess my question to you, haven’t we been overbought for a while? I mean, a lot of things that I’m looking at, seems like we’ve been overbought for a little while. But what are your thoughts on the market now, coming out of 2020 and going into 2021?
Luke Downey: Yeah. Great, great question. Great setup. I think if we could rewind a little bit, we look at 2020… Something pretty amazing happened in 2020. I did a study, and we actually published this on your website on one of my contributions, but nearly 50% of 2020 spent overbought. And that was pretty amazing because that hadn’t happened in over 25 years. Obviously, we know we had a pandemic, so things are a little bit strange, and everything’s acting a little bit out of the ordinary, but for half of the year practically, markets were overbought. And I think everybody’s 401Ks, brokerage accounts, everything basically was at all-time highs. And then I think we kind of came into this election setting for November. We did a really cool study that said, and this was before the election, that typically on average, going back to 1990, big money moves out of stocks prior to the election.
Luke Downey: And then big money moves into stocks in a very big way after the election. So basically, it’s like, there’s this uncertainty that happens, maybe these big fund managers, they de-risk a little bit, or at least flatten out. Then once they know who the victor is or who they think the victor is going to be, then they can go and place their chips. And that’s exactly what happened, not only from a historical standpoint, but also happened in 2020. And so, it didn’t take long for us to get overbought again. And so now, to your question, is we are extremely overbought. And the way I look at that, it’s basically what is the big money doing? And we have this really cool indicator, it’s called the Big Money Index. I think you know, I live and die by this thing.
Luke Downey: And it basically just tracks how many stocks are going up with this big money activity? How many are going down with this big money activity? And whenever we hit these lengthy periods, four weeks, six weeks, eight weeks, whatever it is, it tends to be unsustainable if we’re overbought because markets have to correct. And I find corrections are really good for buying great stocks on a discount. Maybe there were some names that we may have missed out on in this big rally. And so what we’re thinking about right now is, we’re very extended, very overbought. The data historically says that there’s a chance, there’s a good chance, that we could see a modest pullback maybe at the end of January.
Frank Curzio: That’s interesting. I mean, only because I would think, if you’re looking at the market to look at fundamentals, and you look at institutional money coming in, which we’re going talk about through MAPsignals and stuff, which has been fantastic, guys. Luke writes for our site, Curzio Research. And it’s fine, it could be there. We have so many testimonials about you, and positive things that you’ve helped people, and your stock picks, your market… Everything has been, like, dead on so far. And you’ve been writing for us for a long time. But when I look at this market, looking at it trading at 22 times forward earnings, which is 60% higher than the 10-year average, and you’re looking at earnings that… Where you’re not seeing the massive growth, you’ve seen a rebound in earnings, of course, because they came down so far, but it doesn’t even seem like we’ve got the earnings growth there.
Frank Curzio: And it just adds to how important the stimulus is and how important Fed policy is because that’s really driving stocks. And I don’t know if that’s going to change it up, but maybe that’s what I got wrong? Because I thought we were kind of overbought, saying, “Hey guys, don’t come out of the markets.” For me, I’ve learned my lessons, never sell things that are going higher and higher and higher. You could take some off the table, but don’t sell your full positions. But even now, it just feels like with that thesis, I’ve been wrong. I’ve been long, but just took some off the table, but it has that feeling like, is that the right strategy?
Frank Curzio: What’s different this time? And I don’t know if you feel that way because there’s an underlying current under this market that doesn’t make sense from a fundamental, or maybe even a technical, view, where we’re relying on stimulus, and the Fed, and these guys think a recession, or not a recession, but just your normal pullback or a correction is very, very bad, when this is a normal course of action for the markets going back hundreds of years over a hundred years.
Luke Downey: Mm-hmm. Yeah. No, I think the only thing that I could really compare 2020 to was what we saw in 2008, and I had a front row seat and watching this that complete collapse and watching my customers, a number of them, just went under. And then once the Fed got involved, it basically was like a reset button, as far as I was concerned. That was kind of whenever Jesus took the wheel, and everything basically rallied for the next decade. I think a little bit of that happened in 2020, and that’s kind of the way that we’ve been positioned, and the way I’ve been thinking about things, as you know, the Fed had to step in. And we discussed this in March. It’s a great time to be on your podcast. And there wasn’t any announcement yet of what they were going to do and how far the stimulus was going to go.
Luke Downey: But there was a sense, and there was this urgency, that they were going to do something, and I thought they were going to do something in a big way. I think whenever they do that, Wall Street knows, at least historically, that’s going to be good for stocks. That’s going to be the balance that we need that is going to help us bridge the gap of that earnings drought. And so, you look here, and if we just fast forward past January, even if we get a small pullback, I still think it’s going to be a great time to be adding to stocks because I think that the cops that are going to be coming in Q2 and Q3, I think it’s going to be easy to beat. And I think that’s what Wall Street… I think that’s what their models are really looking at is, are we going to have stacked growth for the next couple of years? And it seems like that is the case. And if we all agree, or if we think Wall Street agrees to that, then we’re going up, up, up over the long-term.
Frank Curzio: I want to get into how you make these forecasts. Because we have been interviewing analysts for over 13 years now, 14 years, on this podcast, and everybody has their own opinion. But you actually have a certain system, which you write about on our website, Curzio Research, and it’s your MAPsignals, where you’re following the Big Money. And I guess my question is, when you’re following the Big Money… I’ve always prided myself on being a contrarian. But if you follow the Big Money… But you can still be a contrarian. Because sometimes, you’ll see Big Money flow into ideas, and you’re not really seeing them talked about a lot.
Frank Curzio: And then me… Does that factor in? And let’s go into MAPsignals and how you come up with these forecasts because if… Guys, seriously, it’s for free, go to Curzio Research, if you read what Luke’s been writing, since you’ve been writing for us for a while now, you can see how accurate he is. And it’s based on this MAPsignal system, which on your website, at least at 1.2 million pieces of data that you’re analyzing on more than 5,000 stocks, except for penny stocks. But there’s a lot of effort that goes into you just coming on this podcast and saying, “Hey, we think we could see a pullback in January,” isn’t it?
Luke Downey: Yeah, totally. I mean, just this past weekend, I spent hours and hours… My wife was like, what are you doing? And Frank, you know me, I love this stuff. This is outside of my family. This is what I think about all the time and what we’re able to do… And, to make these forecasts, we’re basically are just measuring all of these thousands of stocks and to see if there’s a trend. It’s that underlying trend that money appears to be going into these stocks, or is it coming out of these stocks? And it doesn’t matter if there’s a rotation happening because we can still look by sector, we can still look by ETFs, and all of that. And so, we use that as our framework. And now that we’ve been in business for going on seven years, there’s a little bit of muscle memory that kind of comes with this. Meaning like, have we seen this before?
Luke Downey: And so, whenever we start to see these thematic plays start to unfold, we’re able to circle back to a prior time in history, whether we were in business at that time, and then make a forecast from there. And a couple of years ago, we filled in our data all the way back to 1990. So, we did a pretty extensive… Took a long time to do this back test. And what we’re able to do is kind of look back and say, “What is similar now that happened in certain periods?” And then we can kind of formulate an action plan. And even though that’s just the data framework, we also have to use our noggin on top of that. We have to sit here and say, “Okay, well, what was happening the last time that we saw any type of stimulus that was similar to this?”
Luke Downey: And then also, we have the advent of ETFs. Those kind of got started really in a big way in 2005. And that’s really kind of been a driving force for us to look at Big Money. So Big Money may be hedge funds, maybe pension funds, it could be ETFs. It doesn’t matter. It’s just, where is the flow of money coming in? Most recently, probably, the Robinhood traders have taken over Wall Street. And so, that’s what really is helping us to make these forecasts. It’s all based on data. It’s not based on guts, it’s not based on fields, or anything like that. And we don’t get it right all the time, but definitely, it’s a very extensive thought process of which way you want to lean with your portfolio.
Frank Curzio: Now, when I look at this methodology, it seems like it’s focusing on growth stocks. Is that just where the institutional money is going right now? Because we are seeing kind of a slow down a little bit, but you saw the airlines bounce back over the past couple of months, a lot of travel-related value plans, they’ve gotten crushed quite a bit, even energy quite a bit. Those aren’t grossed up, but it seems like you focus on a lot of growth names. Is that because of the system, or is that just something that you do where this has been the way the market’s in 10 years and it doesn’t seem like it’s changing, with growth is outpacing and much more favorable than the value.
Luke Downey: That’s a great question. So, the main reason is whenever we look at everything just from a data framework, every stock is looked at individually on its own. Now what we do, and what we learned to do whenever we were trading on institutional trading desk, is that there were higher quality names than other names. And so we came up with this really cool ranking process where we would actually score the stock based on not only the big money activity, but also the fundamental health of the company. So, are they growing their sales? Are they growing their revenues? Is there a narrative? Is there better guidance? Et cetera. And then also, just ranking the technicals of how the stock is actually trading.
Luke Downey: So I, myself, personally, have always loved growth stocks. I really wasn’t interested in finding a stock that’s going to perform in line with the S&P 500. I’ve always been looking for the next Netflix. And I was lucky enough to get that one. The next Tesla, I was lucky enough to get that one as well. And that’s where I think that I’m trying to be. As I’m trying to not only just beat the market, but find these outlier stocks that history has shown, about 1% of all the stocks make up most of the gains for the stock market, going back to nearly 1920.
Frank Curzio: That’s a good point. I mean, an interesting stat that I saw yesterday, which you may know, I didn’t know, but you’re looking at the market, where it did so well, it’s up 16% the S&P 500, if you’re looking at the individual names, 40% of them showed negative returns last year. I thought that was extremely high. I know energy, financials are in there. I get it. But I was like, wow, I didn’t. You think that all you had to do is throw a dart and everything came back since March, but not necessarily the case when you’re looking at individual names.
Luke Downey: If you’re not in the best of the best, you’re not seeing the gains that… What we’re basically seeing on some of the other outlets that you see. And that’s kind of been the whole crux of trying to score and to actually rank names is, if you’re going to get into the investment game and you’re going to pick single stocks and specific stocks, shouldn’t you be glued to the ones that are changing lives and making new all-time highs consistently? And they’re basically having a moat around their business and changing the way we live our lives. I mean, that’s the type of stuff that we’re looking for. And I’ve always… Even as I’ve gotten a little bit older, I still just… I’m looking for that high octane, but high-quality, stock.
Frank Curzio: So now for the big news, talking about your methodology so much and hopefully, I love talking about that learning. So hopefully, that comes across to investors. Sometimes, it’s just like, look, just give us a pick, and we’ll go over that later on and see what you like or what you’re seeing based on your system. But you talk about growth stocks. I felt like that was a huge need for Curzio Research. I always have people write for our sites first and, look, it’s writing, and to me, it’s more of a character thing to see: How serious you take it, how much data you’re providing, and how you’re educating my investors? And some people say, “Well, I’m going to get it right a couple of weeks. This isn’t worth it.” You’ve done it for a very long time to the point where we look at this and when we get positive response, we want to do what our customers want us to do.
Frank Curzio: As much as we can we’re not going to start like some crazy newsletter that only has… In an industry it’s not going to work. We’re not going to make money off of that. But we always want to follow what our customers want. And they’re looking for growth stocks. They’re looking for a way to play this. And we decided to partner with you to start a newsletter. It’s going to focus on growth stocks, very exciting, it’s in the early stages. If you are a Curzio One member, you’re going to get beta version starting at the end of January. But I just wanted to introduce that because I’m really excited to work with you.
Frank Curzio: And that’s the first of a newsletter. It’s going to be a front-end at a very low price, so people could see your work. But then, we’ll get to come out with something more sophisticated, but not too sophisticated, but that’s a back-end product, where you’re actually going to be focused on options and things like that. Why don’t you talk about how you approach the market using MAPsignals, that methodology, and say, “Hey, you know what, Tesla came up on your list a long time ago.” But also, when you really see something that’s exciting, you have options strategies around, is that correct?
Luke Downey: Yeah, definitely. And thanks for bringing that up. I’m really excited about the partnership and talking about stocks. This is just what I love to do. This is what you love to do. And if this feel… Fits a void that Curzio Research can utilize, I’m all for it. So, I’m really excited. I think it’s going to be really great and to talk about what we’ll hopefully be working towards is, number one is isolating just a lot of these growth names that might be on people’s radar, may also not be on people’s radar, try to find these companies that are early in their cycle, that are growing in a healthy way. They dominate their space. And in terms of how long we might hold that, it really just depends on how much we make an in terms of return.
Luke Downey: I’m more of a longer term minded investor. So, I kind of have a two-pronged approach. One is, you want to have your outlier stocks, you want to have your great stocks, that’s kind of your core. And then there will be these periods, through data, that we can make a change. If we want to lighten up a little bit, that would be based on Big Money’s coming out of stocks. Maybe you do an options trade during their… Whenever markets get oversold, that’s a great opportunity where you can limit your downside by using options, same type of stocks, same type of profile. And really, just as markets are extreme and crazy, I think it’ll be a balanced approach of not only using data, but all the things that I’ve learned over a decade plus of being an investor.
Frank Curzio: Yeah. And your institutional background… And what I love about you, which is rare, Luke, is that even through your writing on our site is you explain things to average investors, which is important. It gets lost in our business so much, especially I came from the sell-side as well. But it’s important because most people out there are looking to… They have their full-time jobs to do, what they do… They look at for us for ideas and to learn about the markets. And you have people talking about EBITDA, enterprise value, moving averages, like, we talked about institutional inflows, outflows… You explain everything in detail of, what that means, why it’s different this time than other times.
Frank Curzio: And, I mean, the importance of that, I can’t overstate. It’s just incredible because that gets lost in a lot of people when they’re writing, and they come to me and say, “Hey, can I mark?” I say, “You got to make it simple.” Because if people don’t understand what you’re writing, they’re not going to subscribe to your work. So, it’s amazing how you put everything in perspective for the average investor to understand exactly why you’re buying the stock. Everything that you write about, you explain, which is really cool. And I’m really excited to launch our first newsletter with you. And there’s a lot of probably get launched… I would say around March, and the backend will come out maybe a month later or so.
Frank Curzio: But we are going to provide beta issues to Curzio One, who… Those members give us feedback and say, “Hey, we like this. We don’t like this.” And we try to tailor it because we care about our customers here, like every business should. So, we want to basically tailor it to your needs. And now, they’re going to get access to a lot of growth stocks that they might not have heard, too. And hopefully, some of the ones that get invested early that become the biggest names, where we’ve seen, man… Tesla, we’ve seen people look at it fundamentally and can’t understand it, but Tesla, Zooms, just the Pelotons, and stuff like that, it’s pretty crazy. And having access to that, knowing how to invest in it, is going to be really cool. I think people can get excited.
Luke Downey: Yeah. I mean, it is boom time right now. And I’ve been holding a lot of names over years that I’ve collected. And just to see the power of some of these outlier stocks, I mean, just look at Tesla. I think I bought that one back and think it was 2000, it was either 2010, 2014, I’m not even exactly sure. But the thrust that, that stock has had… And I mean, there was half of Wall Street was shorting it. The other half was saying that it was bullish. I was just looking at, what’s the Big Money say about that one? And obviously, that one turned out to be one of my biggest gainers of all time.
Luke Downey: But that’s what we’re trying to do is, if you can spread your risk out a little bit, get some of these… I mean, that’s kind of like my cryptocurrency play. I just put a little bit of money in Tesla, and it turned out to be a pretty nice position. I’m not a cryptocurrency guy, but to me, it was the same type of asymmetric risk profile. So, yeah.
Frank Curzio: It definitely makes sense. So, okay, let’s get to the last question here, the most important, which everybody wants to know. So, based on your system, what you’re seeing, you said you’re expecting a pullback in January. Are you seeing anything where… More institutional money is flowing into? I know it’s…EV, you’re seeing social responsible stocks, I mean, you see this bid among different sectors, and even energy’s catching a bid now, and financials. But you’re seeing large cap technology pull back a little bit, I mean, pretty much underperform the market over the past couple of months, especially the Amazons and stuff. What do you see right now, where they’re loading up on it, or they’re actually easing back? Is there anything you could talk about, any ideas you can share?
Luke Downey: Sure. Well, there’s definitely been a big bid into industrial and material stocks. And so, that could be, you know, until we get to a re-open phase, they’re going to have to turn the machines back on. And so I think that’s what’s happening with a lot of these industrial names. We’re starting to see also banks coming back from the dead. A lot of those plays have been just beaten down to the ground, I think for most of 2020. They’re actually coming back. Inside of that, you talk about big-cap tech, there’s a lot of names that have really kind of been stuck in neutral.
Luke Downey: But there are some of these smaller caps that I think a lot of people have been talking about. The small-cap rotation that’s happened, post the election, once the vaccine news was announced, there is a lot of names that are just exploding higher, and these are some of these sub-10 billion market cap weighted companies. And that’s some of the stuff that we’ve been looking at. And there’s some definite interesting plays that are in technology, smaller names, not necessarily these big tech names. But that’s what we’ve been seeing as magnets for Big Money recently.
Frank Curzio: Now, I won’t ask you, unless you want to share individual names, but I know you’re going to share individual names in your beta versions of the newsletter. I don’t know if you have any individual names. If not, that’s okay. I know you’re going to share them with subscribers going forward. But yeah, I wanted to see if there’s anything that really caught your attention that, again, not that you need to tell them to buy or right now, but something that… Hey, you know what, it is interesting, it’s not just materials, but specifically, these companies and materials and banks that are seeing inflows.
Luke Downey: Yeah. I think an interesting one that I’ve been looking at is a small-cap name. This is definitely going to have a higher volatility than some of your other names, and that’s Grow Generation. And this one kind of came up on our radar… I want to say maybe a couple of months ago, the ticker is G-R-W-G. It’s not for the faint of heart. They basically are based out of Colorado. They deal with soil, nutrients, any type of… If you’re in horticulture or anything like that. But I think what’s really interesting about this company is, not only are they in a really cool space and a growing space, if you look at some of their earnings and their guidance, they have just been beating and raising consistently.
Luke Downey: And the sheriffs have been rewarded. And again, I think it’s about a $40 stock, and it’s gone up tremendously over the past year. But that’s one I think that you could keep on your radar.
Frank Curzio: Yeah. It’s amazing. Because when you say faint of heart and volatility and risky, everybody wants to buy it. Had you said, it’s safe, it’s not too bad, a safe haven, people are like, “All right.”
Luke Downey: Yeah. I know. I mean, listen, it’s some of these names that you got to be careful. If God forbid you short something like that, I mean, you see some of these stocks… I mean, they are just going moon bound once people get ahold of them. So, it’s interesting. It’s not really discussed that much. I hadn’t really heard this name that often, but it’s got really strong fundamentals. It’s got great technicals, and it’s starting to see that Big Money activity. And so whenever you have that power three, it’s something definitely to keep on your radar, for sure.
Frank Curzio: That’s great stuff. Well, I’m looking forward to working with you, and a lot of people are going to appreciate that newsletter. You’re going to see stocks being bought after they’ve made nice moves, but they all have earnings growth, sales growth. We have some of these in our portfolio, but just having a newsletter dedicated to this, and showing people how to make money on these things because… Sometimes, you focus on PE ratios and things like that. And if you did, you’d never have an Amazon, you’d never have a Microsoft breaking out here, you’d never have the Apples.
Frank Curzio: You’d never have the Netflix’s because you have to really look at that growth profile, and as long as these companies continue to grow, it gets rewarded through their stock price. You don’t fight it or whatever. But having a newsletter dedicated to that, I know my investors, my followers, are going be very, very excited. So, I’m looking forward to working with you over the long-term, not just short-term, but launching a couple of newsletters with you. So ,I’m very, very excited, man.
Luke Downey: Yeah. I am super excited too. I think it’s going to be great. And we’ll be able to spit back and forth on the airwaves and really just try to make people money. I mean, that’s what it’s all about, and I really enjoy this. I know you enjoy this. So, I think it’s going to be a great partnership.
Frank Curzio: Now, that sounds great. Listen, I hopefully you and your family have a wonderful New Year in, 2021 and saying goodbye to 2020, which was difficult for so many people. But yeah, look forwarding to that. Hopefully, you enjoy the year, looking forward to working with you, buddy.
Luke Downey: Same to you. Happy New Year.
Frank Curzio: Happy New Year. You guys, great stuff from Luke, so glad to have him be part of the Curzio family. If you’re a Curzio One member, you’re going to start seeing beta issues of this newsletter, which we haven’t even named yet. We’ve got a couple of cool names. That’s going to be later this month, focusing on growth stocks, mid-cap, large cap, a couple of small ones in there. And then, this newsletter is going to be available for everyone at a really, really affordable price, really affordable price. And it’s going to be around March. So, that’s a front-end newsletter. So, we do that this way, people who could come in and they see what Luke’s all about. And then when we launch a back-end newsletter, it’s usually more detailed, more research, more, you know, just options strategies and stuff like that, which he’s going to have and be a little more aggressive.
Frank Curzio: But I’m just, really happy with his work. He’s just been fantastic. He shows good character. Again, we don’t sound like we pay a lot. Nobody really pays a lot if you’re writing for a site. But to just see him and the work he puts in, to me, it’s a character thing. I mean, we have someone here, Veronica, who’s a publisher. She came in as a part-time employee. She killed it. She wasn’t making a lot of money at the beginning because she was a consultant. And then, she just killed it. She did fantastic to the point where I wanted her to be publisher, which is the top position, other than CEO, obviously. But the publisher, when it comes to a publishing company, is a big deal.
Frank Curzio: But to me, it’s about character. A lot of people coming just like expect everything, and I’m great, and I’m awesome. I mean, you got to play the game a little bit and show some respect. And, just seeing how… Not one of his articles on Curzio Research… It was never half-assed. And I could see that from a mile away. And I hate that. It’s like, oh, I’m just going to publish something to make a few hundred dollars. No, he really cared. He broke things down. And not only that, a lot of the advice that he gave, it was spot on during one of the most difficult times in the market, because he was writing for us even before the crash. So, I’m really happy to have him part of the team.
Frank Curzio: But again, I want to hear from you about that. Questions, comments, feel free to email me, email@example.com. That’s firstname.lastname@example.org. Now, I’m going to bring in my buddy, Daniel, senior research analyst. Daniel Creech, what’s going on, man?
Daniel Creech: Frank Curzio, what’s happening? Happy, happy, Wednesday. Happy New Year.
Frank Curzio: Happy New Year.
Daniel Creech: Happy new world order-
Frank Curzio: New world order. It’s funny because-
Daniel Creech: I can tell you’re fired up today.
Frank Curzio: Oh, I am fired up. You’re going to hear it today. I’m going to be fired up. But it doesn’t matter if you’re a Democrat, Republican, whatever, I don’t care. I don’t care. I’m sick of people getting sensitive. I’m sick of sensitive people. Everyone’s sensitive. Everyone gets offended. I’m sick of it. I mean, I don’t know when the whole world turned into a bunch of… And I won’t use the P word, but I don’t know why that happened or when it happened, but it’s just amazing. I mean, everyone’s offended by anything, and I’m sick… I’m just going to speak my mind, tell the truth. And if you like it, you like it. If not, there’s a million other podcasts.
Daniel Creech: How is that any different than…? No, I’m kidding.
Frank Curzio: No, I mean, it is. Usually, I’m a little conscious and not like, hey, you know? I get it.
Daniel Creech: Hey, I’m always having fun. I think people want to talk more about politics and just understand what they disagree on. But hey, you know, it’s exciting because we got a lot to go over with portfolios and, man, the sectors are going crazy.
Frank Curzio: This was a shock. This was not expected because as I said earlier, every sell-side firm came out, and they were saying how they just came out with reports, there’s a 30% chance after the election in November, and now 40% chance beforehand. But they all came out with reports today saying, okay, adjusting, and this is going to happen, and it’s a lot different from what they was saying, like, just a week ago. But for all in the published reports today, this was a surprise.
Daniel Creech: Yeah. I mean, what a difference let’s see, we’re taping this a couple hours into the market. Futures were down a little bit. Nasdaq was down close to 2%, the big FAANG stocks, the big tech stocks were selling off. They were all down 2%, which I think is a gift because now I think is the Nasdaq higher right now? It’s as we’re going in here. All the markets are higher.
Frank Curzio: Yeah. Nasdaq is higher.
Daniel Creech: Life was good. The big question going forward will… You’ve talked about this extensively, the market is obviously forward-looking. We try to price in the future, et cetera, et cetera. How far we’re looking, will the market continue to be… Because this rally, I mean, you have to take what the market’s giving you. It’s bullish on a lot of things, and Briefing, the site we use just for news and updates and things like that on markets.
Daniel Creech: They had a really interesting chart today on tax cuts, everything from healthcare and all that kind of stuff. And the tax cuts, the repealing of the tax cuts and increase in capital gains, is only needed 51 Senate votes, which looks like they’re going to have, with the tiebreaker and vice president Harris. A lot of the other stimulus or reforms are going to take 60 votes, according to this. Now, if that’s true, and a lot of that is, you can’t just do a simple majority. They can always change the rules and different things. But I think that’s why you see a lot of the certain sectors, like infrastructure and healthcare, going higher, as well as finances. And I think that’s going to be a good roadmap. Just listen to what they’re telling you, and keep it simple.
Frank Curzio: I keep it simple from an investment perspective, we’ve got a couple of other sections of stocks. But I have to be honest with you, after this and what happened… I’m scared. I mean, I’m not kidding you. Not that I fear, oh man, it’s going… I just… Like, people don’t understand the changes that are going to happen. If you live in New York and California, you’re seeing them. But now, they just got accelerated. If you think it’s just 60% taxes, you’re out of your mind. If you make more than $400,000 in those states, you’re gone, unless you hate money. Because you’re going to be taxable in 70% now.
Frank Curzio: It’s 60% now, but it’s going to be more than 70. Where are they going to get the money from? Because you’re basically telling… It’s almost like the people who were successful and work their ass off are like an enemy. And they have been very clear in those two states. They’ve said… They don’t hide it. You saw the De Blasio go on TV and said, “Nope, this is clearly about the distribution of wealth.” And that’s what we’re going to do, which has never worked in any country anywhere in the fricking world in hundreds and hundreds of years.
Frank Curzio: That’s what it is right now. The distribution of wealth. So, it’s taking… So it used to be, work hard, you can succeed, you could be great, and you can make it in this world. You can be very successful in terms of how much money you make and whatever. Now, it’s, hey, you could work hard, but as soon as you start making money, we’re taking that shit away from you. It’s like, what is going on? Like, I just feel like… And I get it. I mean, it used to be more moderate Republicans, moderate Democrats… But I mean, Trump, the hatred for Trump is so bad, to see how you needed the left…
Frank Curzio: The far left, the craziness to really beat Trump, and now to dial it back and say, “Well, we’re not going to be that crazy.” You’re nuts because these people are going to come after you. You see how they are. I mean, this… We’re talking about not just climate change or things like that. I was talking about the Green Deal. I mean, basically done by… It’s so funny. A thirty seven-year old bartender, who was a bartender, that became a congresswoman, which shows America capitalism, how that works. And now you’re against that. Where… I mean… Emissions, no boats, no planes. If you live in Hawaii, good luck. You’re stuck, bye. Wait, I’ve got to get off the island, no boats, no planes. I mean, that’s how far left it was, and it’s not going to happen. But just to push it even a certain amount, where… Are we going to restructure all the buildings and major cities to be environmentally friendly? Now?
Frank Curzio: Are we going to really kill fracking, which made us energy independent? Which, like, I can’t under overstate the importance of that being energy independent. I mean, it led to how many wars to the Middle East? Because they’re controlling something that we need, which means they have control over… We don’t need that anymore. But now, you’re going to go back to the way it was, and look at all the wars that happened. So, some of the changes and some of the things… Then also, are you going to really add people to the Supreme Court? Because that’s what we heard, and they didn’t deny it. Are you going to make Puerto Rico and Washington DC states? So you could run the Senate forever. Are you going to really… You’re changing the fundamental values of what America was built on. I mean, to defund the police is still out there. How many people are cutting their budgets, where crime rates are going through the roof? I mean, are these things… There’s a reason why gun companies… You talked about that. What gun companies are up today?
Daniel Creech: Sturm Ruger and Smith and Wesson were both up about 8% at the start. So, I would assume that they’re going to hold their gains. And yeah Sturm Ruger and companies are up about 9%. And this is going to be a fear play. If everything holds and they have all the votes to do something, the market’s going to… Whether it happens or not, the market will, in my opinion. And they obviously are anticipating either further restrictions or outlaws of some sort. A lot of that demand should be pulled forward, given the risk there, and the headline risk. And these are still well off their highs. Strum Ruger was at 85 before mid-summer. So, there’s going to be a lot of room to run on that. The defense and the kind of back and forth between the political headlines is going to be crazy. Yes, Frank, I know you’re fired up about this. So, how soon do you think some major legislation will pass?
Frank Curzio: When you look at the stimulus, it’s going to pass right away. And I think they might throw the infrastructure in there. That’s why you’re seeing infrastructure staff so crazy right now. And material stocks like Marietta, you saw Vulcan and one of the ones we have in the portfolio summit, I mean, these stocks are running out well ahead of this curve, getting into cyclicals early months ago. You guys should be doing very, very well in all of our portfolios, especially crypto, holy cow. I mean, you saw the Bitcoin surge to 35,000. It’s still up there. So like, 34 and change, but-
Daniel Creech: Yeah, it’s incredible.
Frank Curzio: Again, you’re seeing this because you wouldn’t see these major moves. Unless there’s a prize where I’m hearing, oh, well the markets are up. You see everything’s okay. It’s not the end of the world, but you have to adjust your portfolio into the right sectors. I mean, marijuana, you see marijuana stocks where they are?
Daniel Creech: Yeah. It’s going through the roof.
Frank Curzio: It’s just… Canopy, they’re up like 15 to 17% each. Yes. There’s a lot of sectors and stocks. You were talking about a lot of that stuff, but you are seeing these massive booms, and again, maybe they just accelerated and just overreactions. But to get back to your question is, we’ll go into probably see two trillion stimulus right away. And that led to Goldman Sachs coming out, Jeffrey’s coming out, even Evercore coming out. And can I read these reports to get to just to see what they’re saying. It’s not that I agree with them, but I like hearing all opinions. It just makes you a better analyst. And they believe they wanted to… That the Fed could raise rates earlier than expected. You’ve seen the 10 years, so you jumped on the 10-year today?
Daniel Creech: Yeah.
Frank Curzio: So you jump 10-year today? Like 10%, was at 1.047.
Daniel Creech: It wasn’t from the Fed that said a 3% inflation would be okay. It wouldn’t be okay-
Frank Curzio: And that’s a 10% inflation, Chicago. I talked about that earlier. As soon as we get there, we’re going to get to 2% inflation right away. This is money that’s getting directly filtered to people. This isn’t… People were surprised, but we understand why we didn’t see the inflation on the CPI level, guys. I know we’re all paying high bills, but the only thing that matters is what the Fed looks at. That’s how they dictate and determine policy, is they look at, especially, interest rates. What are they going to do? They look at the CPI. And based on that, they came up with a target of 2%. But they’ve got to change that, just… They changed everything. So, they’re going to say, “Oh, 2% is okay, 3%.” But this isn’t back in 2008, when the money was filtered to the banks to stabilize the system.
Frank Curzio: And then, they decided what to do with it. This is going directly to consumers. These are checks that are bypassing you working to get it, going directly to you. And it’s supposed to be 600, but it’s probably going to be 2000. I think it’s going to be over two trillion altogether. But yeah, it’s going to be interesting to see, because I think that’s going to happen right away. But when it comes to taxes and tax increases, it’s probably going to happen in early 2022, but the market’s forward-looking. It’s going to be interesting how companies adjust because that’s going to result in slower earnings growth. And it’s going to take a premium away from a lot of these companies that are trading at the highest valuations that you’ve ever traded in history.
Daniel Creech: I think you’re right on the first legislation, and they’ll front run that. I mean, they were saying, “Hey, elect us. We’ll give you another stimulus,” which is popular. I completely understand that. The interesting thing to me is that on Monday, the market sells off, and what anticipation to be, maybe a blue wave, which is completely reversed today. But gold popped, and now gold is a gift too, because it’s down two and a half percent today. So, maybe all that money is allocated towards Bitcoin and cryptocurrencies. If that’s the case and you’ve had your eye on any gold stocks that are pulling back on today’s news, I would look at that because gold and Bitcoin can both go higher.
Daniel Creech: Yes, Bitcoin is well-ahead or leading the race on a percentage turn and everything else, but take what the market gives you, and gold coming down like this when the market is rallying and anticipation of more money is just… That’s where markets don’t meet reality. And you can take advantage of those.
Frank Curzio: Yeah, it is amazing to see because eventually, like so many people would think, that money is going to come out a gold. J. P. Morgan said that, I think it was Jeffrey that said they published a report and said the money that’s going to go into gold is a lot of that’s going to be into Bitcoin, but at what price? Bitcoin is up tremendously. Just put it in perspective, when J. P. Morgan comes out and says, “It was 140,000 plus target price on Bitcoin now.” That’s… I mentioned Jamie, Jamie Dimon said, it was a fraud. So it’s a fraud, if anyone trades it, I’ve got to fire them, a hundred points on that. It just makes me laugh, some of this shit. But it’s just so much drama. And I like Jamie Dimon, but I just thought that was funny.
Frank Curzio: Just a clear overreaction to something you don’t understand. He’s one of the greatest bankers and smartest people that you’ll know. But when you don’t know about something, you don’t know about something. So, I love when people talk about being smart, you’re smart in certain areas, but not smart in other areas. And obviously, he wasn’t smart there. But having that target, when you look at stocks, these guys don’t have targets like that, that are 3X, 4X, 5X higher. They don’t say the stocks that go from 10. And when I talk at 75, 80, they say it’s 10. Our talk is 16. When it’s going 18-
Daniel Creech: That’s Tesla. That’s the only time we do that, Tesla.
Frank Curzio: Tesla. I mean, they’ve been behind the curve every single time.
Daniel Creech: I’m kidding. You raised it from 500 to like 800 today, finally.
Frank Curzio: Yes. And that’s the highest. The highest target is 10% higher than the stock price. Again, it’s ran up tremendously, but what you-
Daniel Creech: To your point, I’m sorry. You’re right. I mean, people don’t just say that on the…
Frank Curzio: And so, you would think that J. P. Morgan is going… For their clients. If they really believe that target price over the term, and you’re hearing all the hundred thousand plus target prices, maybe it is a buy here. But at 40,000, 50,000, maybe at 35,000, I mean, when do you say, okay, gold’s not even 2,000, and there’s a fundamental reason to be buying gold. So, I mean, that’s just infrastructure-related like copper, it looks fantastic right now. And silver has industrial uses as well. But when you look at gold on the production, because these guys are so leveraged in 2011, 12, 13, 14, these guys almost went out of business with big companies.
Frank Curzio: Now that they need gold, they didn’t invest in a lot of these projects. And here, you’re looking at their margins, they’re like software company margins, where they are producing for $900 an ounce, where $2,000 an ounce, these guys are printing money. And they also produce hundreds to the majors, hundreds of millions pounds of copper, which is up tremendously over the past few months. And a ton went up well over a dollar. That’s a lot of money. That’s 100 million, 200 billion, 300 million right to the bottom line. So, when I see these stocks and pulling back, I just think these guys have to purchase.
Frank Curzio: They have to continue to produce gold in order to do that. They have to find these big projects and that puts juniors into place. I love gold here. You could own them both, I know. Just amazing, right, Daniel, how people hate, they hate each other. Bitcoin. And I’m in the middle of that because I’m from Wall Street background.
Frank Curzio: And now, we have a security token, and just talking about sides is very difficult because you need both of them in order for this to scale and go create. That’s why Bitcoin is so huge right now. It’s not huge because everyone’s finding out about it. It’s not a huge even because PayPal is square. Now, it’s huge because institutions are investing in it, Wall Street.
Daniel Creech: Yeah. Absolutely.
Frank Curzio: That’s where the billions and trillions of dollars are. So, you need to get along with these people, they need to accomplish a solution where all this works, and that happens to security tokens. But I see this whole market and just the forecast on this thing, it’s going to be interesting to see what price did people say, “Okay, I’m not buying Bitcoin at 40,000 when it was 12,000 three months ago.” And then maybe that goes into gold. I don’t know. What do you think?
Daniel Creech: Yeah, I mean, like I said, I think they can both go higher. Bitcoin is obviously well ahead of the game, and it’s got momentum now. But yeah, for what you just said about gold in the economic use and everything, I mean, those things trade like new tech stocks on margins and things, and it’s still kind of flying under the radar. So I would take advantage… If I can switch gears real quick with the green new deal and everything. And then also, how oil is rallying. I mean, that’s got to surprise some people.
Frank Curzio: But I don’t know if that’s because of what’s going on today, with Georgia, more than… And it just started rallying yesterday, too-
Daniel Creech: Yeah. Absolutely-
Frank Curzio: Something like that.
Daniel Creech: But still leading up to, you know, you got at least two out of the three, until yesterday’s election being democratic tilted. But yeah, I mean, Saudi cut production. So, I understand what OPEC Plus and them guys are doing, but you still have economic lockdown. So, the UK is going down under lockdown again, they currently are. Cruises are still not going. So it’s just, hey, the market’s forward-looking. And the rally in oil stocks, we’ve talked about this the past couple of weeks. They are still well off, not even their highs. So, I mean, we’re definitely going to have to be digging into that more in the coming weeks, but it’s crazy as it sounds, because it’s no shock to our listeners, I’m as conservative as it gets for the most part-
Frank Curzio: No.
Daniel Creech: I can’t tell you that I’m bullish on damn everything-
Frank Curzio: No.
Daniel Creech: Right now for the short-term. And so take caution on that.
Frank Curzio: You guys had emails coming in for Daniel, that’s so funny. Can I get that guy off the podcast? He’s taking it down as is… Some people, you know, it’s just so funny. But it’s… Listen, if you don’t have everyone hating you, that means you’re probably fake. So, you should have people like-
Daniel Creech: Oh, there you go.
Frank Curzio: I know it’s true. It’s definitely true. If everyone likes you, that means you’re basically pretending to be someone that you’re not. Because yeah, again, personalities can be bold or shy or whatever. You’re not going to get along with everybody, but it’s not the worst thing.
Daniel Creech: Yeah. But when it comes to making money, you’ve got to put that aside and say, hey, here’s the… Like, we always joke. Here’s the environment. Here’s the rules. Let’s play by them. Let’s find the roadmap. I love Chuck Schumer, who summed it up best on his Twitter. He just tweeted, “Buckle up,” a couple hours ago. So, you can choose to ignore, or you can look at, hey, what do these guys want to do? And let’s put the odds in our favor, and let’s make some money. And like I said, let’s push the chips over and see where they fall.
Frank Curzio: Yeah. And I’m going to read something too, which I thought was interesting, just to put the numbers in perspective, guys. And Goldman Sachs does a good job of this. I mean, I know that the enemy has said all the time…
Frank Curzio: They hate Goldman Sachs, but everybody wants to work for them. Because I mean, I know, but a lot of people want to work… Because you’ve going to make a lot of money if you work for them. But anyway, they talk about… Just to underscore the point, yet, the US just passed a $900 billion fiscal package. And they said, to put these numbers into context, that alone is equivalent to 4.1% of US GDP. If you pile on an additional 600 billion, which is expected right away, that’s another 2.7% of US GDP. So in English, what you’re looking at here is an additional fiscal boost equivalent to nearly 7% of US GDP, on top of the two and a half trillion that came earlier in 2020.
Frank Curzio: So, when you really put these in perspective like that, if fundamentals don’t matter, it doesn’t matter what you do as a business. There is free money coming into the system. It’s not going to stop. How do you benefit? The cyclicals have been crushed, that economy is going to come back. It’s not just the Moderna vaccine. Again, we’re hearing so much crap about the vaccines. I feel like there’s an agenda for everyone to just trash the vaccines. I mean, for the majority, they have 40,000 people. Again, I’m not telling you how to take it. But if you’re 70… My mom doesn’t want to take it, but I told her, maybe you should take it because if you get COVID, it’s not going to be good, having that many underlying conditions. And she was sick a lot.
Frank Curzio: But you have to remember change is coming out. AstraZeneca is coming out with different ways. It’s not protein based. And mRNA… I study this a ton, but these are going to be a different way of attacking the virus. Those are going to come at now. You have all of these vaccines at same time, say six months, nine months, whatever that takes them by the year end. At IC Travel, I think casinos… I mean, these things are going to go through people are dying to get out.
Daniel Creech: Oh yeah, absolutely. That’ll be the big turning point once. I don’t know when that is, exactly. But different research reports are talking about mid this year, when a lot of vaccines are going to be out there, to where people are starting to say, hey, I either know somebody that got it personally, I’m in line, or I know a handful of people. That’ll be interesting to me because once that happens, then it’s show-me time. Because you can still look forward and say, okay, well, there’s still going to be plenty of stimulus. There’s still going to be a lot of easy banking regulations, et cetera, et cetera, but you’ll know a lot more about people’s mindsets when more and more people get this thing.
Daniel Creech: What’s the data coming in? And you want to look at investor sentiment, and you want to look at travel for sure. Because until then, like I said, I’m nervous to say that… Not that it’s easy sailing, but I don’t know how the melt up doesn’t continue until you get some sort of fundamental change, when you’re trying to price that in forward-looking. So mid-summer, that’s when you can really start… I mean, it’ll obviously kick in before that, as far as sediment goes. But that’s the big turning point for me personally, what I’m looking at, how are they going to react to that, once that news is kind of in the mix? I wouldn’t say it’s priced in yet, but it will be shortly.
Frank Curzio: No, I agree. I agree. Yeah. It’s… But there is going to be that inflationary, reopen trade, the cyclicals. I mean, just… I’m pulling this up right now. We’re doing this in the mid-afternoon. Again, we publish all this and get it out today, and a couple… A few hours after the close. So, just to put things in perspective, the NASDAQ’s up 0.4%. You have the Russell up right now, three and a half percent.
Daniel Creech: Nice-
Frank Curzio: Holy cow-
Daniel Creech: CPI, there you go.
Frank Curzio: And you’re looking at the data, the S&P up by 1.2. But the Russell, three and a half percent oil is now flat under 50. Gold down 1%. So… But now, 1% of the 10-year bond up 10%, which is over 1% again. So, you’re looking at Bitcoin at pretty close to 35,000, held those gains, surged pretty much last night. I was watching, it went from like 30 to 35. And it’s funny because I had my script written already saying that the Democrats are going to win because that’s how I felt. I just felt like they’re definitely going to win, and saying that Bitcoin was one of the best things that you should own.
Frank Curzio: And this was before the 3,000 move. I mean, we’ve been in it for a very long time, but you just seeing it adding to that. But the fact that gold… Gold is interesting. I mean, the fact that it’s coming down a little bit, that’s fine. But almost every report, and everyone, due to the amount of money that we’re going to spend, Daniel, and maybe we’ll end on this thing, is we spent, I said it earlier, that we’re going to spend more money fiscally than every other country combined. So, the whole world is shorting the dollar.
Frank Curzio: I think the dollar is going to go off. The dollar goes lower. Gold’s going to surge. And that’s been a trend for a very long time. I think it’s going to continue. You can take time periods where it didn’t work, but for the most part, if you really want to see a surge in gold, you’re going to have to see a weak dollar. That’s usually what happens. And yeah, that’s projected to happen. It’s going to result even in investing in internationally, in certain countries. I think they’ve got to provide much better value than the US, and add upside potential. But it’s kind of amazing just to see all of this restructuring off of something that happened a few hours ago. And again, this wasn’t priced in. You could say, well, the market’s up, but I’d say it has nothing to do with the full S&P. You can see the Nasdaq, how certain technology companies… Which by the way, Daniel, what is this hurting technology companies for?
Daniel Creech: I will be-
Frank Curzio: Blue wave.
Daniel Creech: I’m the ignorant guy in the room. I have no idea why. I won’t get into it too much, but CNBC did some really good articles at the beginning of November of this year. And this is how simple I’ll keep it. Look at the FAANG stocks. I don’t know how you would go into fearing them going down when you look at their political contributions by company-
Frank Curzio: Which is public.
Daniel Creech: Exactly. And I don’t care who you donate to. But my point is that when you have an overwhelmingly majority, and you could argue… Did Twitter, Apple, Facebook, if you want to argue censorship, who do they sensor more, one or the other? It’s not a secret: It’s a political party versus another. So to think that now, the party that they donated to and are okay with, are fans of, he’s in power. I think that’s a gift. So, we’ll track those to have fun. Maybe it’ll be another Amazon where we sneak it in CRA and be like, we know nobody’s going to buy this. And now it’s a huge winner, so…
Frank Curzio: It’s just amazing because Trump was saying how, kind of saying, these need to be broken up, and they have too much power and all this. But yet, everyone said that these companies have the benefit of, if Trump gets re-elected, just like, wait a minute. To me, that makes no sense. And it still makes no sense.
Daniel Creech: And hats off to him. I mean, valuations are high, but they’re amazing businesses. I mean, the money they generate, the products that they serve… I mean, you could argue Apple’s politics, but most people have an iPhone. So not maybe most, but I mean, I do. It’s not like, the hell with you, I’m going to go to Google or somebody else’s phone. I mean, and if people vote with their feet and their money, more power to them. But yeah, they’re great companies. So, as crazy as everything’s going, I just find… I have a good piece about keeping things simple. And I think there’s going to be a lot of upside in some wild sectors, but I’m going to have to break down and buy solar, Frank. So be prepared for that in the coming weeks.
Frank Curzio: Yeah. I know how much you like alternative energy and wind and solar, but a lot of these stocks have run up tremendously. But you saw some downgrades, which were interesting at first. Solar was… Goldman downgraded them, but these companies are up tremendously. And I just love when people downgraded due to valuation in this market because valuations don’t matter. You’re hearing that from a fundamental analyst who grew up in a household that was all fundamental analysis. Right, and I worked for Cramer and learned with growth. And there’s so many different styles you’ll see me use in my videos of how we choose and pick stocks. And we have a… Again, we’re doing a pretty good job of staying ahead of the markets the past few years. But, it just…
Daniel Creech: Yeah. And to investors, don’t panic. I mean, I know a lot of people were upset. I know, but don’t panic. The world has changed, literally. I mean, this will be interesting going forward. But you… It’s usually never a good idea to do the easy thing, and panic is always the easy thing, so…
Frank Curzio: It is. And one of the things that I said, like, I mentioned California and New York, just coming from New York, it hurts to see the state of New York and what it is right now. I mean, how dangerous it is, how a lot of my friends have moved out, how it’s just… It’s the greatest place on Earth. I was jealous. And I used to complain about Florida and say the things are different here. It’s a culture shock, coming from New York, the fast pace, to Florida. I used to joke around a lot about it, but when you’re looking at the mayor going on, saying that, not hiding it, this is about distribution of wealth, we’re going to take money from people who make money and give it to people who probably don’t work as hard as you. That’s never worked, ever.
Frank Curzio: You’re looking at taxes right now before you even saw Georgia. And we’re talking about 60% across the board, over 60%… But think about that being up 60% taxes, like, imagine giving away over 60% of the money that you earned. I mean, how crazy is that? And that’s Georgia, and I mean, not Georgia, that’s New York, California. So what’s happening is, there’s a mass exodus that you’re seeing. You could see, I think in California, it’s the first year… I don’t want to say ever, but in a very, very, very long time, where you’re seeing that population go lower.
Frank Curzio: There’s so many people leaving right now. And where they’re going… I would buy real estate in Texas and Florida. I mean, they’re all flocking here. It’s seriously… I mean, that the price of my house… It’s probably up about 60% in two years, and rightly so. They’re building them like crazy, and we live in, like… Kind of like… Amelia Island’s not necessarily like an island, but it’s by itself.
Frank Curzio: But, it was limited supply. But now, they’re trying to build every way they possibly can. And it makes sense, based on the tax structure. And I get it, but I just don’t understand, like, the New York roots, and even California and the things that are happening there, it’s sad. I mean, these are two of the greatest places on Earth, where we used to be. And now, you’re looking at crime rates through the roof, you’re looking at higher taxes. You’re punishing people for working harder and giving money to people, that to me, don’t deserve it. They don’t deserve it. Some people do, maybe if you’re handicapped, you can’t work, it’s different. But just to gradually take money from someone else and give it to another person…
Frank Curzio: I mean, that’s never, ever… Just disagree, email@example.com, send me an example, because it’s never worked. Don’t even bother looking because it’s never worked. It’s never worked. I’ll save you time. It’s never worked. In the history of Earth, that has never worked. That has never worked. And yet, this is what they’re doing. And just sitting by and allowing this, and I talked about this earlier, and this is why I was fired up, where I’m seeing people in big institutions and schools teaching our kids how capitalism, if you believe in capitalism, then you’re a racist. That’s an effing joke to me. Because you’re telling me, don’t work hard because it doesn’t matter. And it does matter.
Frank Curzio: And from someone who believes in capitalism, believes and wants to help the younger generation, you’ll work hard and achieve your goals. I’m starting an online class, which we’re going to do this year, the first quarter, where we’ll select about 15, 20 younger investors and help them out for free. You have to tell them, hey, you know what? You’re a racist. If you believe in capitalism, come on, man. What the hell is going on? I mean, when did we become like a third world country? I mean, this is crazy. I mean, this… It’s not even being hidden, though. That’s just funny. It’s not even like, all right, these guys have an agenda. And… No. How do you come out and say the distribution of wealth… It’s kind of, I don’t know… I mean… You’re smiling. You’re laughing over there.
Daniel Creech: I know, man. It shouldn’t be that big of a shock. They’ve told you who they are for a long time. I know your perspective is different because it’s your hometown in New York and all that. But hey, I will take your advice. If you don’t kick me off due to email demand, then I’ll look to buy a house here. I’ll take your advice. I’ll buy a house down here.
Frank Curzio: Yeah. You should buy quick, man. You guys see… Prices exploded, and they’ll explode higher. I mean, there’s just so many people that are going to move just for a simple tax structure and make this like their hub. I mean, you talk about people who are very wealthy, where they have like three, four, five different houses. Well, they had their primary residence, but they’re going to have a primary residence in Florida and Texas. And yeah, that you’re seeing that right now. You’re seeing very wealthy people move there, and you’re to just-
Daniel Creech: We need the whole South to go state income tax free. That way, we have choices.
Frank Curzio: Yeah. Absolutely.
Daniel Creech: No way I’ll get Frank and the crew to go to Arizona.
Frank Curzio: So yeah. And the last thing here, too, we talked a little bit about, with gun stocks going up, kind of… I guess it’s not really a surprise. I mean, hopefully, we don’t have it defund the police. I mean, yeah, it’s a few bad Apples. I have so many friends at the police. They can’t even do their job. They’re afraid to arrest somebody now because if you resist arrest, it’s the best thing to do. You get rewarded for resisting arrest right now. You get rewarded. If you try to take a top cop’s gun, you get rewarded for that. You get rewarded. If you try to take the cops, shoot you, you’re a millionaire. It’s like, where are we living? Where are we living? And you’ve seen those crime rates. It’s crazy, man. It really is crazy. But to see gun stocks go up as a clear indication, I think people are worried. Right?
Daniel Creech: Yeah, absolutely. Like I said, you’ll have some headline risks depending on votes coming forward, but yeah. There’s going to be a lot of momentum still in the market with all the fiscal stimulus and everything else. So yeah, like I said, buckle up. That’s the best way to sum it up. It’ll be fun.
Frank Curzio: Yeah. All right, Dan. Well, thanks so much for joining us. Good stuff. And guys, remember, I mean, have a great New Year. I promise I’m going to be here for you, to help as much as I can, to make smart investment decisions. Also, I’m bringing lots of cool ideas and staying ahead of the market again. We talked about things that were emotional a little bit, but at the end of the day, you want to be investing in the right sectors, the right stocks. And it’s not that difficult to see if you check your emotions at the door. So, you’re going to hear us talk about this theme a lot, not just on the podcast, and a lot of you guys’ podcasts, but we have a big percentage too that are subscribers to our products. And you can see the performance for yourself, of how we’d been doing pretty good.
Frank Curzio: We could always do better. But to stay ahead, keep your emotions in check, even things that you agree with or disagree with or whatever, and just invest in quarterly. Because these are sectors that are going to absolutely take off because of the blue wave. And there’s certain sectors that aren’t going to do as good because of the blue wave. And just position yourself smartly. Don’t look at it as the S&P 500 as a whole, just look… I mean, you see the difference in sectors. We just went across a whole range of sectors, Daniel and I. You’re seeing that like the Russell would be up over 3% while the Nasdaq’s up 0.5%. You’ve seen massive shifts.
Frank Curzio: This was a surprise. And how do we adjust? And when do all these things and their agenda take place? And if you get in ahead of that, you’re going to make money in the market. I promise that we’ll try to do that for you going forward. So, thanks so much for listening. As always, I’ll see you guys in seven days. Take care.
Announcer: The information presented on Wall Street Unplugged is the opinion of its hosts and guests. You should not base your investment decisions solely on this broadcast. Remember it’s your money and your responsibility. Wall Street Unplugged produced by the Choose Yourself Podcast Network. The leader in podcasts produced to help you choose yourself.
- Guest: Luke Downey, cofounder of MAPsignals [21:34]
- How to invest for a socialist America [49:18]
If the Democrats take the Senate, Biden’s tax plan could be passed. If that happens, Frank predicts more big moves for bitcoin… and the digital assets he calls the “New Stock Market.” He’s urging all investors to take advantage of this financial revolution today… before the rest of the market catches on.