Wall Street Unplugged
Episode: 860February 24, 2022

One biotech’s 80% single-day plunge: A case study for investors

Biotech Kodiak Sciences (KOD) plunged 80% in one day after a major drug trial setback. 

In today’s episode, we focus on why this company captivated Wall Street… and what investors can learn from the selloff. [1:45]

I’ve been following Kodiak for a while… We once bought and sold it for a gain in Curzio Venture Opportunities. Even recently, the Baker Brothers—some of the best biotech investors—were buying heavily. [3:40]

But this week… the Phase 3 study for its most exciting drug missed expectations. [7:50]

The situation is a strong example of why investors must pay attention to expectations—both high and low… and be willing to adjust as facts change. [11:00]

When expectations are leaning either bullish or bearish, consider the contrarian trade… It’s how you make the biggest gains as an investor. [26:00]

Inside this episode:
  • Lessons from a major biotech selloff [1:45]
  • Kodiak’s disappointing Phase 3 drug trial [7:50]
  • Why it’s critical to pay attention to expectations [11:00]
  • Investor expectations and the 2020 post-selloff rally [20:00]
  • How to make the biggest gains as an investor [26:00]

Wall Street Unplugged | 860

One biotech’s 80% single-day plunge: A case study for investors

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: This is going out there. It’s February 23rd. 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. Thursdays usually reserved for interviews. Took a little bit of break today, running around, got some great interviews set up over the next couple weeks. Really great interviews. I’ll leave you in suspense for now. What are your favorites? Someone who’s on for the year who made one of the best calls ever to really go all-in on energy? Those of you listen to the podcast probably know who that person is, and is very popular on social media these days. Building a great following, and a guy I like a lot, but today’s podcast is going to be educational, and it may be one of the best lessons you could learn. So, I want you to pay attention, and I’m not going to bore you and say, “This is what you should do all the time or whatever.”

Frank Curzio: I just want to try to explain the markets to you. And what you’re going to see today is something that some of the most brilliant, smartest people in the world that I respect got wrong. Okay? So, this isn’t something that you should always do. And this works out, again, a lot of people like to pat themselves in the back, it’s not that. It’s not even that ripping these people apart because I’m not. Because I’ll have a lot of respect for them and are following some of these people have made me a lot of money. Right? But this one little different. So, I want to talk about a company, and if you are Curzio Venture Opportunities subscriber, you should be familiar with, Kodiak Sciences has a lead product candidate called KSI-301. I don’t want to get too technical with you, but it has very positive phase one, phase two results for its drug to treat wet age-related macular degeneration, right? That’s AMD.

Frank Curzio: So, AMD is a leading cause blindness of people over 60, around 11 million individuals suffer from some of this with about 10% having a severe form called as wet AMD, WAMD. So, the main AMD drugs available is Eylea and Lucentis and they bring over 11 billion in sales. So, we’re talking about a huge 11 billion in sales huge market, especially if you only have two drugs, right? But there’s problem with these two drugs. They’re a little bit flawed. Now, Kodiak came along, and their new drug phase two approval is about mid-2020. It was phase one and getting into phase two approval. The results showed that his drug was much better than alternatives, which actually includes eye injections every eight weeks. Those hurt a little bit and were very uncomfortable every eight weeks.

Frank Curzio: So Kodiak, their drug included much better results, showing patients only required three injections or just a few injections every six months. That’s a big difference, right? From two months to six. Not only that, safety efficacy data was incredibly positive. So, everybody was on board. This thing going, holy… These guys are going to take over this market control this market. They have an amazing drug, and all the analysts were extremely bullish on it. So, the trials was so good and better. This drug showed better and also every single, everything that you would look at, it was just much better than the alternatives. The hours forecast take 3 billion, 9 billion in peak sales around 2030, starting around 2026, 2027. So, I know all of this because we recommended this thing in Curzio Venture Opportunities. And this was in September 2020.

Frank Curzio: And I bought a half position in 2020 because it was on the heels of the Baker Brothers, who I did very well with. And if someone that I followed for the last 10 years, these guys, I would say that a Warren Buffett of biotech, but they’re probably, I wouldn’t be doing them justice by saying that, believe it or not, even though as much as legend, I mean, these guys are right. These guys are right, and they’re right all the time. They’re right. It’s kind of like Renaissance, right. Who had like three losing periods in the last 15 years. Right. I know that’s front running the market, and shit like that, nobody cares. But these guys are right all the time. And it’s true that a lot of people get it wrong because it’s a dangerous market. You don’t know how studies are going to go. And sometimes expectations go either way. But the Baker Brothers, I mean, they was it with 30 billion in assets on the management in biotech. Think how, how big that is. That’s how big they are. These guys are great. Right?

Frank Curzio: So, I recommended this stock. I really did a lot of research into it. A cost base was 53. The Baker Brothers started buying a lot higher, and it did pull back, and we wound up selling it in May, 2021 for a 56% gain, which is disappointing because that stock, we recommended it at 53. It was well over a 100. I think it had like 140, 150. And I think we sold it around 80 something, but I sold it because insiders started to sell a little bit, reduced their positions. They sold some of their positions that included the Baker Brothers sold a little bit of their position. Obviously, they added to their position though after that, which I’ll explain in a minute, but they sold it then. But also their key studied their phase restudy on that drug. They said that they were going to delay it for a little while.

Frank Curzio: And when you delay something, you provide uncertainty in a market and biotech, I’m like, this stock’s going to go really nowhere for a while. And it kind of did, right? So, we got out of it, and I watched it. I watched the stock really go from 80 to 70, 60 to 50. I was trading recently at a little bit of about $50, which is crazy because if you look at the high of the year, it was not even a year. If you go back to November, it was $125, in November. And just the other day, it was trading at 50. And that may sound surprising because of how much expectations were. But this is the reason why I was saying, I’ve seen so many amazing ideas and biotech because this is a stock that look really good that people of love that said, “We liked it at this price before I wasn’t going to re recommend it or anything. But I was just keeping an eye on it.”

Frank Curzio: But the reason why stock got crushed, because most biotechs got destroyed since November. It’s one of the most hardest hit sexer outside of specs and stuff like that. So, it just got murdered, but expectations were still incredibly high. You had Kodiak going through that phase retrial drug delivery take probably 60, 70% market share, maybe even more of an 11 billion market. That’s why they have forecasting peak sales of 9 billion and some conservative at 3 billion. But whatever let’s do to math, 80% plus to the market. So, you had 10 hours covering only one sell a Goldman Sachs, had a $70 target on it. And the stock was a little bit over 50 and they came out… They initiated with this, right? And they said, “Is a neutral rating, $70 target with the stock trading around 50, 55.” But they initiated on Kodiak from February 11th. Right?

Frank Curzio: So, we’re talking about not too long ago, a couple weeks ago, JP Morgan put out a recent note reiterating its $124 target on the stock. Jeffrey’s had $150 target. The average price from these analysts was $121, also in January this year, late January, Kodiak director, who’s the Baker Brothers advisors name is Felix Baker. 10% owner purchased 347,000 plus shares through different transactions for around a price of $53, where it’s trading right now. Right? So, that was three weeks ago. If you do the math on that’s an 18 million buy. That’s a massive buy by a director, a massive buy 18 million, right? So, Baker Brothers best in biotech who now accumulated a 31% stake in Kodiak, which in total, that stake increased by 8% since last quarter and BlackRock who’s pretty big joins and asses also increased its percentage by 9% last quarter on this stock, it started come down. Is that… Here’s a great opportunity today.

Frank Curzio: Yesterday, the company announced its phrase three trial results, and they absolutely bombed. They did not meet the primary endpoint. Most patients so higher inflammation, that’s a free and slip because I say inflation all the time, higher inflammation and 30% needed more dosing, frequent dosing. The stock, yesterday was down 80% to $10. Okay. The average target price again on this thing was $121 going into that. All right. So, the stock was 30th of November. This position turned out to be at peak around 2 billion plus for Baker Brothers around there. Soon, they had that 31%, which is I think, close to where it is, but 2 billion. And now, that stake is worth, what, 160 million.

Frank Curzio: The Baker Brothers, very big over 30 billion in asset management. This is their fourth largest position. And again, they don’t get much wrong. Almost never get it wrong. I followed them into three other positions, including this, when I did fantastic. And Kodiak, when we recommended it, it immediately went from 50 to like 125, and it was like a couple months. We only had a half position because we didn’t even get a chance to buy the other half position. One of those stocks that, hey, it just took off and I’m okay with that.

Frank Curzio: I’d rather that than not owning it and waiting. Right? So, you could wait and say, “Well, I want to wait for it to come in” or own a half. And the worst case scenario, it goes higher you own it. And if it does come down and comes in, you could buy the other half of lower your cost basis. Right? It’s kind of what we do in some of our newsletters. Just makes sense. You never know when the bottom’s going to be in, and you want to scale in some of these positions, stock just immediately took off for us. So now, it’s gotten absolutely crushed, and there’s an important lesson here that you need to learn that will make you a great investor, and it will help you not only make money, but prevent you from getting wrecked.

Frank Curzio: And I’m not here to rage against these analysts, and they’re all in wrong. So, I listened to data was great. The data was fantastic at phase one, phase two. It made sense compared to the other drugs, everything checked every single box and really it, this was almost as certain as a guarantee that I saw. That’s why I love the stock. And I recommend it last time. But just the phase three trial was pushed out. I’m like, we’re going to be sitting this thing. It’s going to trade so a while. And it did. And then, went higher and then came back in. But the lesson here is the expectations. So everyone, and I mean everyone, familiar with this drug analyst, doctors, insiders, hedge funds thought this drug would easily get face re-approval. Everyone.

Frank Curzio: Companies were modeling before they received phase three approval before they could sell the drug and get the full approval. They were modeling for 5 to 9 billion peak sales. Think one company had 3 billion, but around 5, 6 billion was the average in peak sales for this. And only one ounce had a sell rating, which they’re undisclosed, which means they probably a very small phone because I have access to Goldman and JP Morgan Jeffries, all these reports, they didn’t have a name on it. So, it’s probably a small boutique firm. But even with that sell rating, the guy had a $50 target. Some expectations were kind of high as well. Since that’s where the stock was trading just before the news hit, he should have neutral rating on.

Frank Curzio: Now I explained how expectations work on Tuesday, since there’s a ton of risks in the market. And I’m looking at the market too. And I love when I can, this is why when I look at things, and I don’t care what saw you on a political aisle or whatever, for me, if the data changes, I change immediately. And I was leaning bearish. I’m like, wow, just there’s so many risks in the marketplace. I saw amazing opportunities in small caps. I’ve said listen to one of the great buying opportunities, not in the Russell, not buying the Russell, but just there’s so many names that are down 40, 50, 60% from their highs that don’t deserve to be down that much. They have strong balance sheets that are just great right sectors that the earnings they reported, the last two quarters were great. They raised earnings expectations. Now, they’re cheaper than ever down 20, 25, 30%. And a lot of great buys here.

Frank Curzio: But if you’re looking at the macro point and you’re looking at, what’s going on in the markets, what do you have UK Russia, which is all over the place. Are they invading? Are they not? What’s the definition of invasion is it, who knows? Right. We just know that we’re being told to hate Putin and there a threat to the world while China is perfectly okay. And they’re not a threat to the world at all. They killed millions of people, right? With, with COVID and genocide and all this shit and how terrible they are in Seattle technology. We’ll always deal with them because we do business with China. We don’t do business with Russia. Right. So, that’s why we’re very nice at China. Even though China’s a much bigger threat than Russia, much bigger threat than Russia to us right into the world. That’s okay. But it’s all about money, right? Everything robs more money that’s okay.

Frank Curzio: So, you got UK Russia fight. You’ve got the Fed tightening, which who the hell knows how much I got to tighten because it was three rate hikes going predict in November, December was four. Then, they went up to six. Now, just a couple months later, you have JP Morgan saying there’s going to be nine, which we talked about Dale and I at yesterday’s nine rate high. So, no one knows what the hell is going on. No one knows how much they’re going to raise. We all know they’re behind the curve, but inflation hasn’t slowed. It doesn’t slow. It might be nine. It could be more. I mean, you need inflation to slow, and we’re not seeing that it doesn’t help with the Russia crisis in Ukraine because all prices going higher and we have a… Are all prices that results in almost every single company that impacts every company, every family and prices, what to make up the difference. You’re going to raise prices even higher, right? So, they look good.

Frank Curzio: Then, we talk about peak earnings. We just came back from COVID ton of money flood into the system. Now it’s going to be less. Leverage rates are going higher. It’s not as easy to borrow money. The 10-year higher mortgage rates are higher, still relatively low historically, but much higher. I mean, I just closed to my house, closed my house yesterday. I was lucky four months ago, it’s four or five months. This process took, which is a joke. It was a construction loan, but I closed at 3.25 and I think pretty they’re over 4%. Now it’s a big difference, especially with my house. I’m buying a 60 million house. I’m kidding. I wish need a couple more of you to buy some more subscriptions for that. But it’s a significant difference. No matter how much the price your house costs. Then you have inflation just out of control everywhere. Commodities everywhere.

Frank Curzio: Inflation continues to be out of control and again, higher energy prices on the horizon, which that may lead to even higher inflation and higher energy price on the horizon because massive cutbacks, not as much drilling and also because of the UK, Russia and they think turning off a pipeline is good news, right? They think they’re punishing Russia. Who’s the one of the largest, if not the largest right now, they’re the largest energy producer in the world just to pass us. It’s like 12 million barrels a day, whatever it is. So, higher energy prices is great for them. They have a surplus. That’s awesome. So, you get shut it off, which creates higher inflation for the rest of the war. That’s punishing Russia, not to mention Europe, Germany, who’s shutting that pipeline off. I mean, Europe receives 40% of the natural gas supplies from Russia, right?

Frank Curzio: So yeah, it’s just funny how all this works, but where is it going to go? Who knows? But look at all the risks in the marketplace. One of the positives, not a lot of positives, not crazy, but you know what? I read a piece, which is really good that made a lot of sense. And I brought it up to you guys. And I brought up to the, this was on Tuesday’s podcast where if you’re looking at CTA exposure across all sectors and CTA stands for commodity trading advisors. So, these are the biggest investors of funds that trade futures and options. And where they lean on each side is a pretty big deal. Again, we talk about expectations is the lesson I’m going to try to teach you guys. So, CTA exposure across asset classes, right? The start of the year, just equities. When I say all asset classes, equities, bonds, forks, gold oil, copper, everything, but equities in general, these funds were 40% long equity.

Frank Curzio: This is the start of the year. Only in February, today that’s negative. It’s negative around negative 8%. That means they have a short position and it’s big. The last time it was at this level was June, 2020. And what happened then the markets really took off, but you see, and when you look at the chart and if you want to follow along on crazy research YouTube page, I’ll show this again. And you’re looking at that almost every time this line has come down that it’s like negative 8 close to negative 10. We’ve seen the markets rebound tremendously. Why because everyone, all these funds are leading short to the point that their overall exposure, not just equity. So equity bonds for gold, oil and gold and copper is their long exposure just 28%.

Frank Curzio: Don’t want a lot of numbers at you, but hear me out at 28% net long exposure, that’s the lowest since 2010. And what happens since then? The markets had one of the biggest roars that we’ve ever seen, right? The biggest bull markets probably in 30 years, about 30 years. So, I provided this chart. I think it was to Curzio Venture Opportunities. I don’t know if I put this chart up for which is our one of our most expensive products, but I don’t know if I put this chart up on Tuesday. But I talked about a little bit, but now you saw it, and I put some notes on the bottom of it. Again, that’s on a crazy research YouTube page, but again, I know most of you listening to these iTunes, I’ll explain it to you. The point is that 20% net exposure lowest since 2010, and you’re looking at what happened, the market’s absolutely searched.

Frank Curzio: And when they search, what do these guys have to do? They all had to cover their positions, and you see the market absolutely take off. So, when you’re looking at all these risks now, even the smart money again is leaning really hard in one direction. And that’s shorting the market, betting for a bigger downturn. That’s what we are right now. And that’s usually a contrarian indicator. Because when we look at Kodiak, they were leaning the other way, positive, extremely positive. It explains why the stocks sound eat percent in a day to $10, even though they have around $13 in net cash on their balance sheet, as everyone is selling the stock at the same time. That doesn’t mean you should go buy because it has $13 a share in cash, and it’s $10 because that’s right now, and they’re going to continue to use up that cash. And maybe, they have further studies that cash could go down to eight, seven dollars in six months from that. But right now, it’s $13 in net cash.

Frank Curzio: Not the reason that you should just go in and buy because the number one drug target, the biggest market just received very bad results. And those results I’ve seen results come in and they question them and say, “Okay, well you know what? We need more.” This wasn’t we need more, this was like, this ain’t going to work. This was almost as negatives as you can get. And they have other applications for small markets, and maybe they do better and there, but it was just nothing like safety FC was off. It was just then it required more dosage. It just didn’t meet anything inflammation. And they didn’t expect any of that. None of that showed up in phase one, phase two.

Frank Curzio: But now what happened? Everyone caught on one side selling at the same time, and you see the stock crash eight… How often do you see a stock crash 80% in one day? That only happens if everyone’s leaning to one side. Now, let’s flip that because all we need to see is just a small positive where maybe inflation moderates or tensions in Russia, UK’s, what the Fed says, “Hey, without going to be is aggressive when we tighten,” or maybe all prices fall 20% from these levels, which results in inflation, moderating a bit. If that happens, every one of these fund managers are going to rush to cover their shorts. So, you’re not to see the market rebound like 2, 3%. You’re going to, you can see a pop 5, 7%, and it could happen in a week, week and a half. Because that’s how short they are.

Frank Curzio: This is unprecedented. Then wouldn’t say unprecedented, but this happens, rare. It’s not often when they’re this net short everyone to the point where BlackRock just came out yesterday and said, “Hey, we’re adding to our positions now. We do these incredible opportunities.” So, when we’re talking about all these risks, it usually means that they’re priced in and yes, there’s a lot of them, and yes, you can’t see too many positives other than there are companies that have pricing power, but there’s companies getting it done. Google, Apple got it done. AMD got it done. And that’s technology where a lot of technology stocks are getting nailed. Reopen trades. Look at those numbers that they posted. Look at the oil companies. They don’t have to do anything, and they’re getting it done. Just oil prices are going higher and higher. I mean, pioneers hit an all-time high. Not a 10-year high or 8-year high or last time oil prices were over a hundred.

Frank Curzio: So, there’s things that are working and a lot of names are down that shouldn’t, that don’t deserve to be down. But when I see something like this, expectations are such a big deal when it comes to stocks. And that’s why you saw during COVID, when COVID absolutely crashed, expectations were low. You could have bought almost anything in April, and you would’ve made 2, 3, 400% outside of maybe Boeing or a couple of companies as you went up a hundred percent, not a hundred percent from, it went down to 90 and then the 140, 150 or whatever it went. But a lot of these companies that got destroyed, that’s the opportunity. And you get that opportunity if you’re a smart investor and you’re hedging yourself. Which is why I was pushing that product, which is Moneyflow Trader with Genia, which a lot of people didn’t take us up on. Which is cool. That’s okay. I’m just telling you.

Frank Curzio: That’s how professionals invest. Because when the market crashes, most people get destroyed and instead of getting destroyed like you did in COVID and going, holy shit, maybe if I hold on and you did okay, a lot of people sold, but imagine if you made money and your portfolio would save $50,000 and you had puts, so your loan positions got wrecked, but those puts just took off and say, if your portfolio for 50,000 to like 55, 60,000 now you’re sitting at the bottom of a market, one of the best buying opportunities while everyone’s like selling run into the exits screaming fire, and you’re buying at the ultimate cheap price. That’s how you make a fortune. You want to be buying when nobody wants to buy. I recommended a coal company. I’m like, “Holy shit, man, these guys got to go into earnings.” Everything that I looked at said “They’re going to blow out the freaking earnings.” I’m like, watch not blow during, let me just take a half position. They blew out the numbers. But me being nervous. I like that because everyone’s nervous about cold companies.

Frank Curzio: I won’t give you the name, but you know what name that is? If, what is it? Curzio Research Advisory, CVO, one of those, I forget. It’s recommending stocks here and there, been busy. But if you’re subscribers to the newsletter, you know what name I’m talking about, but you have to pay attention to that because what happens is when things are the most exciting everybody’s talking about it. It’s awesome. That’s when you should be selling, because usually, everybody’s in it already, especially when you have cab drivers and your teenagers and your friends across the street and your neighbors. You’re not in this stock. You didn’t buy this.

Frank Curzio: Notice the negative stories coming out on Bitcoin right now. And Bitcoin rebounded a little bit, fell that back below 40, and rebounded a little. But notice the stories three or four on CBC, all negative. Some guy that owns a big brokerage firm in crypto says, “Well, last two bull markets came around having in the last two halves. That’s when…” It really… It’s that basic. That’s what you think. So, if every fund is like pouring money into Bitcoin, like that’s going to hold up. That’s your thesis. Yeah. There’s a person that knows Bitcoin. There’s another markets. How things trade. But you’re seeing all these negative stories. “This person thinks Bitcoin is done and it’s going to get…” That’s when you want to be buying things. I know it’s hard when you’re buying shit and you are nervous. And you’re like, “Man, I think this is going to be a mistake.” That’s when you know you nailed it.

Frank Curzio: Because when you are buying something and you are that confident and everything you read is positive you better worry. Just take a step back. You could be right. But just take a little bit of step back and be like, okay, what am I missing here? Because every single data point I see is positive. And you cannot tell me there’s not one stock where you should see every single thing. Management team’s great. They’re in the right industry. Sales starting to explode, earning, starting to explode. They just took over the right companies. Just hire the right people. No, not every company’s perfect. You got to be able to find those risks. That’s why for me, I love reading the other side all the time. That’s going to make you work harder to make sure your thesis is right. And a lot of people don’t want to hear, especially in today’s world, you can’t disagree with anyone without people getting off.

Frank Curzio: And I got so many emails on the Ukraine and man, they were structured. They were detail. Frank, I don’t think no one stand in Ukraine and Russian how, but there was structure. And I said, “You know what? Thanks a lot.” I said, “And here’s what I think though.” And even the piece of that I’m showing you guys that a good friend of mine, who’s good analyst sent to me. You know, for me, I’m like, “Man, there’s just, there’s so many risks in the marketplace. What’s the catalyst here.” That’s the catalyst. Everybody’s short. And when I say everybody say the big money is really short. So, they’re all lean to one side. How much short could they go? Could we fall further from here? Yes. But if we have one, just everything is so freaking negative. We have one little positive move here. This market’s going to absolutely take off because all these big multi-billion dollar hedge funds are going to have to cover their shorts at the same time. And that’s why you saw the market fall so fast. Because they went from 40% long exposure and equities to negative in two months.

Frank Curzio: And a lot of these guys follow each other. In the algorithms follow each other. If you, I mean, I can’t say you have any newsletters, we follow the smart money and you follow I, this must be, the Nigerian brothers and option activity and following option activity. And so, you see that a lot. And some people have different systems, and we have one that’s really, really great. But with the options point, everybody could see those options and where they’re going. But I can’t tell you how many newsletters on launch have many people have that strategy. Now, eventually, you’re all looking at the same thing, which means what, which means someone is going to manipulate that to make a ton of money off of it and make you think that, hey, you know what? I’m going to spend 50 million to make all these people write to hundreds of millions of people that think we’re bullish on this thing. And I’m going to be shortening the shit out of it someplace, where you can’t really come up. It’s not going to come up on any Bloomberg systems. Believe me, this happens.

Frank Curzio: These guys are smart, very smart, and have connections in the highest places. So, that’s why the Fed’s able to trifled governors and are able to trade positions as they’re making policy. Politicians were able to do the same thing. Lobbying, knowing what’s coming out, and being aggressive, I mean, come on that’s system. That’s what you’re going into. That’s what you’re up against as an investor. So, when you’re seeing the expectations, guys, when you see those expectations lean into one side, be careful. You always want to be on that side that nobody’s talking about that everyone’s like you’re full of shit. You have no idea what you’re talking about. Like, I am with COVID, with so many different things. And I, from me, I take pride in that.

Frank Curzio: I take pride being able to come back after visiting every shell area saying guys, this whole fracking shit is a fucking hoax. This doesn’t cause water contamination. I was saying, “You’re crazy,” this and that. I’m like, well, okay, what do me a favor? You go to every shell area. You go into 50 different counties within Texas. You go to North Dakota when it’s freezing, hop on these rigs, talk to these people and then come back to me. Don’t fucking tell me what you just read from some idiot who has a bias. Go and do the research yourself. Get your ass out there because that’s how you make a fortune. I can’t tell you how much money I made on oil stocks because everyone was betting against them, saying fracking’s going to disappear when it’s gone.

Frank Curzio: What are you talking? It causes earthquakes. Animals are dying. You turn your faucet on, you light it on fire. It’s crazy. It’s all bullshit. It’s such a bullshit. That’s how you make money. Not by being on the side that everybody’s talking about. That’s why I started researching Ukraine so much. Like, why does everybody hate Russia? That’s not one negative thing on Ukraine, why? When I started realizing they’re one of the most corrupt nations in the world. And why are we defending these people so much, why? They want to get into NATO? They’re not going to get into NATO, why? Yes. There is worry about them taking over. Ukraine again and whatever, but it’s pretty clear that Russia said, “Look, just don’t mess around with Crimea and don’t go near NATO and you’re good.” And they did the opposite. So, that’s their problem.

Frank Curzio: Is it our problem? Should we be policing the world? Should we be telling Germany? If it’s okay that Russia builds a pipeline directly into Germany? Should we be like, I mean, why is that our concern? Why do we need an approval for that? Who the hell do we think we are in the US? That’s something that’s going to be great. Well, you don’t have to worry about Ukraine or tensions or political it directly Germany, which is, I would say most powerful in Europe from Russia gives them good ties, gives them cheaper energy directly to them. That’s a good thing for both of those nations. I think why the hell are we policing that for who the hell do we think we are? I mean, we do hardly any business with Russia other than sell soda and cigarettes, that’s it. We do nothing with them. But yet, you look at China, everything’s okay with you. Don’t say anything bad.

Frank Curzio: If you say something bad about China, what happens? Remember when you said, if you went on social media nine months ago, and you said that COVID started in Wuhan as originated Wuhan lab, you got thrown off social media. You get thrown on social media for that, think about that. Think about the connections that China has to have to the biggest come companies that we have in the United States to actually get that done. That people are reporting facts. And our social media companies are throwing us offline. Off their platforms for telling the truth. And this is from sources from people and whistle blowers that were there, that were interviewed, that I’m no biased that lost their lives to be interviewed that tell you, “Hey, I worked there. This is what happened with that girl.” Doesn’t matter. Think about that shit for a minute.

Frank Curzio: When it comes to this stuff, guys, if you want to be a good analyst, if you really want to make money, if you want to make a fortune, it’s being a contrarian, don’t do what everyone else does, especially in this market. You could have did that technology for the last 10 years and say, “Okay, I’m buying it. What everybody likes and technology” and yes, it did well. It’s different now. The Fed’s raising rates, and they’re going to raise rates aggressively it’s going to be here. They’re going to be raising rates. They’re going to take a ton of leverage out this market, which is trillions that was subjected due to COVID. It was a up time. It’s all messed up. We’re seeing a lot of crazy stuff. We’re going to see the consequences of just injecting a massive amount of money into the market without even worrying and saying, “We’ve done this how many times now? Since 2008, and it worked out where stocks keep going higher. So, let’s just print more money.”

Frank Curzio: Now, you’re see it affects what happens. These are the consequences. Those two big to fail banks. Remember those two big to fail banks. This is when everything was created, right? For 2009, just how do we make these banks so they’re not too big to fail? Look where they are now. Those measures in place, think about that. Those measures in place were supposed to make the JP Mortgage, Wells Fargo, Bank of America smaller. And what it do get two X to four X bigger today. I definitely too big to fail today, but why would these measures put in place? There’s a lot of surrounding the markets. I think people are sick of it. They’re sick of the politics as sick of everything, but use that to your advantage. And we saw about Kodiak everyone lean into one side and look what happens. I mean, what was the upside of this thing of it trading at 125 what’s the upside of it? Because you’re assuming everything’s absolutely perfect. That this drugs going to get approved. And those sales going to be 9 billion or 8 billion of 7 billion in sales, peak sales for Kodiak drug.

Frank Curzio: On a flip side, look what happens. That’s when you see an 80% correction means everyone was leaning to one side. That’s when you see a market absolutely correct. Because they were very bullish, and now they sold everything at the same time. But now, they’re on the opposite end of the spectrum. So, we just need a little bit of positive news, and you’re going to see stocks at even those names that sold off that you saw had great earnings last two quarter and they’re down 20, 25% from their highs. Those things are going to hit new highs and they’re going to rock it higher. They’re going to surge from these levels. And those are some of the names that we’re putting in our portfolios right now.

Frank Curzio: You have questions and comments guys, hopefully that helped went a little bit longer than expected. I try to educate you as much as I can get from lessons that I’ve learned for me getting my kicked. That’s why I love this. I love what I do because it’s like golf, you can never perfect it. If you shoot a 59, you’re, pissed you didn’t shoot a 58 and you worry about the shot you missed. In this, whenever you get an ego and you think you’re great, it slaps you right in the face. And for me being as competitive as I am, I love that, because there’s always something to learn and you’re learning constantly different industries, the way the markets work. You’re building your contacts. You’re learning for more and more people. And then you start realizing holy shit, man, there’s a lot of smart people out there.

Frank Curzio: And the people I interview getting your thirties, you think you’re the smartest guy in the world when you hit 40, 45 and start really talking. I just talk to one of the founders, one of the biggest power companies in the world and see companies in the world. You realize that, wow, you’re not as smart as you think, man. There’s a lot of brilliant people out there. They really are. So, learn from them and don’t do what everyone else is doing. That’s usually a sign, indication that you’re going to see disaster. I mean, that’s the best lesson I can teach you. It’s the best advice I can give you. Because I’ve seen that in the past as well. Everyone’s on one side, everything looks good. It’s better be on the other side. And plus when you’re on the other side, especially for stock or industry, everybody hates, you’re getting in super cheap.

Frank Curzio: Oil was trading negative how long ago? How long ago, right? Nobody wanted it. Now it’s a hundred bucks. I’ll close it in a hundred bucks, right? And now, everybody wants to buy it a hundred bucks. What does that tell you? It probably tells you that it’s topping out. Maybe it goes a little higher. All the indications points out. You’re not going to find anyone. I don’t think you’ll find a soul. That’s bearish on energy right now. Just scared of out of you if you’re long. Maybe it goes higher for a little while. Maybe Russia or all these tensions. Yes. It could go like go 125. But what happens at 125? All these producers, man pedal to the metal flooding the market was as much oil as they can because they’re going to make a fortune. And that’s when things balance out. Because now, you’re going to see a massive amount of supply, oil is the most cyclical industry in the world. Up, down.

Frank Curzio: I’ve learned that from my buddy Cactus who buys it every single time the market crashes, why? Because he’s been doing this for 40 years, and he has seen all of his friends. Almost, he tells me almost every one of my friends go bankrupt. Every 10, 12 years bankrupt done. Sometimes, every five or six years done. He goes, “That’s when I save my money. And that’s when I invest the most when things are really, not when they’re great.” And that’s worked for him, why? Because he almost went bankrupt a couple of times. And he learned from that.

Frank Curzio: So, you’re looking at oil being one of the most secular industries, not going to go straight up, it’s not. But you’re going to see tons more supply come to the market. And when it does, that’s when you’re going to see price level off and more EVs hit the market and you’re going to see demand towel off as well. As we finally start developing more renewables, which we don’t have right now, I wish we had them when we decided to go zero carbon by whatever year, which is never going to happen. But you guys get the point. You don’t want to be in the side that if you’re looking around, everyone’s high fiving each other and everyone’s on the same side, worry. That’s the best advice I can give you.

Frank Curzio: Any questions for me? Comments? I’m here for you, frank@curzioresearch.com. That’s frank@curzioresearch.com. Say this all the time, and I mean it every time. I really appreciate all the support, guys, love you. Again, you need anything, give me a holler, give me a shout, my email. And I’ll see you guys, when I say you guys, my subscribers, paid subscribers. I’ll see you tomorrow on Frankly Speaking. I’ll see you then. Take care.

Announcer: Wall Street Unplugged is produced by Curzio Research, one of the most respected financial media companies in the industry. The information presented on Wall Street Unplugged is the opinion of its host and guests. You should not base your investment decision solely on this broadcast. Remember, it’s your money and your responsibility.

Frank Curzio
Frank Curzio, founder and CEO of Curzio Research, is one of America’s most respected stock experts. His research is regularly featured on media outlets like CNBC’s Kudlow Report, The Call, CNN Radio, ABC News, and Fox Business News. His Wall Street Unplugged podcast—ranked the No. 1 “most listened-to” financial podcast on iTunes—has been downloaded over 12 million times.

Editor’s note:

Curzio Venture Opportunities is an elite advisory that gives you access to small-cap stocks most investors have never heard of… the type Wall Street professionals make their fortunes on. 

Yesterday, Frank released his latest under-the-radar recommendation: A dirt-cheap but fantastic stock that could double or even triple your money as the supply chain crisis drags on.

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