Looking to diversify your portfolio as inflation becomes the new normal?
Contemporary art has a history of strong appreciation during high inflation periods—like right now.
Masterworks’ innovative platform makes starting a fine art collection attainable for anyone.
For over 10 years, my family and I have been attending a local fair here in northeast Florida. Usually it’s packed—but not this year. I highlight the terrible experience… and what it says about the economy.
Speaking of the economy, I explain what Fed Chair Jerome Powell got wrong about inflation… and why we must prepare for a recession.
We’ll see earnings growth from two sectors… but it will mean even more pain for the economy (and consumers).
But don’t let the negative news scare you out of the markets—the volatility will create amazing risk/reward opportunities going forward. I share a few assets you should have exposure to right now.
Don’t miss tomorrow’s WSU Premium. Daniel and I will discuss the opportunity in small-cap stocks… and share our latest pick.
Wall Street Unplugged | 1085
Prep for a recession with these assets
This transcript was automatically generated.
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: How’s it going out there? It’s October 25th.
I’m Frank Curzio. This is the Wall Street Unplugged podcast where I break down the headlines and tell you what’s really moving these markets.
So every year I go to this fair, my house held annually in Callahan, Florida.
It used to be called the Callahan Fair.
That just changes called the Northeast Florida Fair.
Those fairs where it’s in a really big field, they have all the rides, bunch of games, not like the typical one that you might see.
Like a bizarre side, like, like much, much bigger than that, right? You got animals all over the place, all kinds of food, sausage of peppers, hamburgers, hot dogs, pizza, barbecue.
Of course you have the funnel cakes and the fried Oreos, which are amazing.
If I had to bet each one you eat probably takes a week off of your life.
Most people say it’s worth it.
So I’ve been going to this thing for a while.
Been in Florida for about 13 years now, 14 years.
So I’d say at least 10 years.
You take the kids, you buy these bands so they can go on all the rides and there’s usually, you know, there’s a lot of rides there.
The place was always, always, always crowded.
I used to take videos of him being like, I guess no one’s worried about the economy.
And that’s a, this year it was a very different story.
Not only were there hardly any people there, just the quality of everything and the prices they were charging, it was insane.
I mean, it got to the point where you were like, no effing way.
So the games that you play, the DARS to basketball, I remember there used to be $2, there used to be $3, there used to be five.
I remember there used to be 50 cents, the minimum was $10.
And for basketball you have to get two in this hoop where you know the hoops longer than 10 feet.
And there’s wind and you have these rims that are really small or they usually bent so you can’t get ’em in.
Like nobody hit one shot.
You had to hit two.
And then you’d get, I think five balls for 20 bucks.
But the minimum was $10.
$10 to play a game.
One game that’s gonna be over in a second that you’re not gonna win.
Anyone’s walking around with these big things.
Sometimes you’ll see a few people, but I mean rare.
Now the rides, each ticket for the ride used to be 50 cents.
It was $2 per ticket.
And you need at least three.
The best rides require four tickets.
So you’re looking at $6 to $8 for each ride.
Or you could buy a band which is $30 for unlimited rides.
And then when we got up there, ’cause we took kids with us and, and you know, I always pay for the kids, whoever’s with us and their friends and stuff like that, you use your credit card and to buy these bands, they would charge you a $5 fee if you use your credit card, $5 fee.
They also charge you a $3 fee if you use your credit card to purchase foods.
We had cash on us and we, we avoided that.
But $5 fee, I don’t even know if that’s legal or not.
Even if you bought a drink, just a drink for whatever, you know, the costs are extremely high.
Some places in the fair you can get it for a little bit cheaper.
They would charge you $3 if you use your credit card on top of that for the fee.
Even speaking, a drinks a cup of, so a cup of soda, a cup, literally a cup of soda was $5.
You can get a souvenir plastic cup and that’s for $10.
And when you get that, you get to refill it because you’re special.
You get to refill it for $5, refill for soda, which cost them what? 30 cents? you calculate this and you’ll a family of five, I mean you’re looking at two, $250 just for the food and to go on some rides.
Didn’t include any games, didn’t even include dessert, didn’t include anything.
No funnel cakes.
They were like $11, $10 each.
But it’s the first time I’ve seen this first time where the event was not crowded.
It was probably ’cause how expensive it was.
More importantly the quality.
The quality of everything has gone down.
It’s gone down significantly.
And there were rides that weren’t properly working.
The electricity went out in 25% of the park.
They had a hand like push a ride all the way down and it was out for like a half an hour.
So some of these things had to be shut down.
You had these little like haunted houses that you go in, went in, the lights weren’t even on, nothing was working.
Another one where that round thing that you get in, that you step in and you could hold the sides.
So that wasn’t working like when you first go in that round thing that you have to like, you know, balance yourself with your feet and everything.
A lot of stuff wasn’t working.
The people working there, I think the qualifications include that you have to have a tattoo on your neck.
And it’s always been sketchy people at, at these events.
But it was much worse.
Now, and I’m not, you know, I’m not being a, you don’t want to say this, but just, I don’t care how you look, I really don’t.
But when you wearing your jeans down, your underwear showing, and I’m bringing my daughters there and there’s kid’s there, and you just, you know, you could tell like, ah, I’m taking a break.
And they’ll come back with, I mean, it, it’s just the quality.
I dunno where they got these guys.
I dunno if they waited outside of jail or someone, you know, as soon as someone’s released certain time, they’re like, Hey, you want a job? I mean, probably a a a good strategy, right? They’re gonna be looking for jobs and everybody hires them, ex-convicts or whatever.
But it, it, it looked like that.
It, it, it was bad.
Like the people yelling for the game saying, you know, they always try to get you to play the games.
It was scary.
These people that were yelling at my daughters and, Hey, you wanna play? I mean, it was, it was like, whoa.
It was like, you know, but the quality just went down tremendously and the prices went up enormously.
The food wasn’t really that good, you know, it was charged close to $50 for two sausage and pepper sandwiches, a slice of pizza and three drinks, 50 bucks.
But the vibe, the vibe felt different again.
The quality tower price were insane.
And not a lot of people at this thing, this is one fair that I’m talking about, right? So it could be a one off.
’cause we’ve, but I visited, and this is the past week, a Home Depot recently a Lowe’s.
Some of the restaurants that we go to, the Home Depot and Lowe’s were, were completely empty.
There was nobody online at all.
Nobody online at all.
I went there about seven, but I I I’ve never seen them that empty before.
Restaurants not as busy.
Some on Friday and Saturday, but others not as busy.
And all the places, the prices are still being raised.
And also what are you seeing? You’re seeing a few workers around.
I mean yesterday it was my wife’s birthday and she’s like, yeah, let’s just go to Olive Garden.
We’ll hang out there with the kids and stuff like that.
And we went there and it was a little crowded, get middle of the week and it was one girl working five tables.
So we finished eating and if you ever eat at Olive Garden, they give you such big portions, you take a lot of it home.
We said, can we get some boxes? My dau, it was my wife’s birthday.
We’re like, you know, okay, they’re gonna come out with a dessert and sing Happy birthday.
We waited about twenty, twenty five minutes sitting there after we ate.
Now keep in mind, my kids have school, they have homework and we’re gonna go home and have a cake with my wife.
But you know, they, my kids like singing the happy birthday in a restaurant and stuff like that.
It took 20, 25 minutes to get boxes in the check.
And I felt bad for this girl.
And then all of a sudden they came out where they were like, oh, we’re gonna sing our birthday.
My wife’s like, forget it.
We, we gotta go.
And I felt terrible.
And it wasn’t the girls, there was nobody there working.
I mean it’s not like you’re waiting at 15 minutes and, and maybe you get your drinks and then they take your order and stuff like that.
Imagine finishing and you’re like, where to get out there? And 2025, you’re just waiting there.
And I’m like, whoa, we were looking to get out.
I almost just threw money on the table and walked out and look, we’ve been talking, everyone talks about Andrew Hard’s gonna get back at this podcast.
We always say this all the time.
Talk about a pullback in consumer spending.
Possible recession for years.
For years and years and years, right? Back in 2011, GP fell below 1%, stayed under 2% for three straight quarters.
Recessions coming, consumers gonna slow down.
Never happened 2016, three straight quarters of below 2% GDP growth.
See the slowdown out didn’t happen 2019, I really believe this.
In the end of 2019, earnings were not growing year over year.
China was, was starting to die pre COVID.
I think we would’ve hit a recession without COVID.
We thought that was gonna happen then.
You know, we didn’t get a recession there, but we did get a recession from COVID, which is like a black swan event.
And it was quick, but we’ve been talking about this with so many consumers gonna stop spending.
And then we realize the consumer never ever stop spending ever, ever, ever.
This never happens, right? This consumer spending slowdown just doesn’t happen.
Retail sales were pretty good last month.
It’s not happening.
Continue to raise rates.
But this is how we’ve been conditioned in this new market for what, for 15 years.
Low interest rates, government spending.
But is that about to change? Because if you look back at past recessions, they occur around every six years on a historical basis.
Again, I’m not including COVID because it’s a black swan event.
It’s not like, you know, happened and it was a month and a half and then all the spending came in and again, lockdowns and stuff like that.
But a real recession, right? Caused by just, you know, it happens with businesses, things go great.
You start putting more money into growth.
Some of the things don’t work out.
And then you contract, right? It happens.
It’s throughout every, we’ve seen it happen sector after sector, every single sector.
That’s what cyclicals is supposed to be about.
That’s what a cyclical company is, right? Does well, when the economy does well, what has a cyclical company? They, they do well forever and ever.
They become secular companies.
’cause the economy’s doing well all the time.
Now we really haven’t seen a real recession in, in what, since 2008, 2009.
But if you look back, they’re caused by the same factors.
Rising interest rates used the combat inflation.
This was 19 80, 19 82.
We all know the story.
The Fed doesn’t wanna make that mistake again.
Stop raising rates and then lowering them.
Oh my god, inflation came back, right? We’re not gonna make that mistake again.
Higher energy prices.
That was a case in 1990.
That was when Iraq was invasion of Kuwait.
Also had high rates then, which led to the savings and loan crisis a year earlier.
And the other thing is a massive expansion of credit or leverage, which led to the.com crash.
Also 2008, 2009, financial crisis at a much, much worse.
Expe just, I mean put it on steroids, the amount of leverage in 2008, 2000 nine.com.
You had that leverage.
But you had these valuations going through the roof and, and super expensive stocks.
Arguably the most expensive that we’ve ever been just before the.com crash.
But massive expansion of credit.
So these are the factors that cause recession.
No surprise there.
We all know them.
Every economist talks about them, monitors them.
But I feel like a lot of economists are asleep at the wheel here and I don’t really blame them.
And why is that? Because they’ve been conditioned differently since the credit credit crisis, which was a long time ago, 15 years ago, almost 15 years ago.
’cause during this period, which never really happens, we added an ex actually two x factors, right? I mean that’s excessive government spending along with super low interest rates, right? Favorable Fed policy.
We never really had that for this long of a stretch.
’cause usually when you have those conditions, it usually leads to inflation a lot quicker.
And both of these, these major factors in terms of the major drivers of economic growth since may result in our economy just doing fantastic and going, growing, growing, growing, consumer spending, growing, growing, growing all the time.
And then what happened? We had the credit crisis, we lowered rates to zero.
The government also bailed out certain entities, backstop, major banks, home lenders like Fannie and Freddie.
Insurers like AIG.
They never did that before.
Taking stakes directly in companies.
But that money went to the companies and they decided, especially the banks, they decided who they’re lending to, you didn’t really see inflation.
So now you have a Fed that’s saying, Hey man, we can keep, yeah, let’s keep rates low.
They, if you listen to the commentary in 2010, much higher over the next couple years.
But since we didn’t have inflation, they didn’t need to.
This money filter into the economy, filter into the economy, filtered into the economy.
They kept it going.
And they were supposed to raise rates once the economy found the bottom, which it did what? 2010 and 2000 2011.
But instead, they kept those rates at zero for almost 15 years.
Then look at post COVID.
Our government started to inject money directly into our pockets.
Not just talking tax incentives, which they use for these industries to grow EVs, alternative energy infrastructure, things like that.
But by handing checks directly to consumers, directly to businesses, bypassing the economy.
And they really believed this wasn’t gonna cause recession.
They’re like, we haven’t seen recession in 15 years.
How is this gonna cause recession? There’s no way this is gonna cause recession or there’s no way it’s gonna cause a inflation.
Right? Or a recession a a and the inflation started to take off it just massive, massive, massive inflation.
And now what are you gonna do? Because when you look at this conditioning and how we’ve been conditioned and it’s a very big deal.
I mean conditioning is a big deal.
And think about if you were around September 11th when that happened the next couple of weeks and they, they grounded all the flights.
I remember looking up if there was a plane that it was going to crash into something because we just saw something that we’ve never seen in history.
And as crazy as that sounds now that’s the emotions.
That’s how you feel.
So you get used to certain and then okay, you, you, you ease up and okay, it’s safe now.
Well your condition a certain way like this, this isn’t gonna happen.
It results in you changing and you stop looking at things historically and you’re just like, wow, okay, this is the way it’s going to be.
If you look at Powell, who’s a very, very smart guy, I don’t care if you hate him, of course you know people destroy him and you’re gonna get credit.
Everybody destroys this fricking guy, right? Someone’s gotta be at the hel the Fed.
And that guy’s gonna get destroyed by everyone.
’cause everyone’s supposedly smarter than that guy.
They know so much more than that guy.
But 18 months ago, this is a guy that looked, looked right in the eye and he told you inflation was gonna be transitory and he meant it.
He wasn’t BSing you.
Meaning that inflation can’t be sustained because higher prices usually leads to slower demand.
So inflation almost cures itself, right? It has a way of correcting itself.
And he said it’s gonna be transitory, it’s gonna be transitory.
We haven’t seen inflation in a while, but it’s gonna be transitory.
And then what did he do? And when you are wrong on something, you’re wrong on something, that’s fine.
You could be a little wrong.
You couldn’t have been more wrong than Powell saying it’s gonna be transitory to raising rates by the fastest pace in the Fed ever.
You can’t be more wrong than that.
You literally can’t be more wrong than that.
That’s like nothing’s gonna happen and the world ends.
That’s how far off he was.
So what did he do? Immediately Started raising rates aggressively to the point where he still wants to raise rates today.
Even though if you look at the metrics, we’re seeing a meaningful slowdown in the economy.
And you say, okay, I, we know the story now.
Transitory and everything, rate hikes, power’s a loser, doesn’t know anything.
Where are we today? Well he wants to raise rates, continue to still see strength in the markets.
Well let’s take a look at today and let’s look at the economy because when I told you the factors that caused recession, there was one here, one there.
But every factor that caused a past recession dating back to the 18 hundreds, every single one of them exists.
Right now we have high inflation, we have a Fed that’s raised rates significantly, right? Fast paced in the Fed era and is still looking to raise.
We have rising energy prices.
Again, these are the factors that cause past recessions.
One, some two.
We have every one of those factors.
And when we look under the hood, I mean it, it’s almost like a bunch of gang members moving into your neighborhood and every one of ’em has a history of killing people.
And you looking at them going Hey, we’re gonna be fine.
We’re gonna be okay.
It’s cool, nothing’s gonna happen.
And then you’re like, we don’t need police in this neighborhood.
That’s what it’s like in the economy.
’cause when I look under the hood, the warning signs are clearly there.
Bank credit is contracting.
It’s only the second time.
This number has been negative year over year dating back to 1971.
The only other time was during the credit crisis.
We have an inverted yield curve which preceded every major recession dating back to World War II.
Delinquency rates on credit cards are the highest they’ve been dating back to We’re not all loan delinquencies hit their highest level nearly 30 years.
I don’t even know what’s going on with mortgage demand.
It’s a little slow going at the slowest pace since 1995.
That’s a long time.
Housing is a massive driver of the economy and it’s at a standstill with mortgage rates near 8%.
More than double where they were just 18 months ago where we’re trying to explain why the home builders is such a great buy right now.
The supply issues.
So you know, but, but you looking at the housing market and these conditions that exist today, if you would’ve told anyone who’s just a little bit smart that knows what they’re doing, that we would have dig go a year ago where we were and the market was coming down, if you would’ve told me we were gonna go up and the Nasdaq was gonna see its biggest gain, its seen practically its history over the first five months of the year based on massive increase in interest rates based on mortgage rates.
Almost a shut down of the housing market with demand.
So slow delinquency rates through the roof, credit tightening, you would’ve said, okay, the market’s gonna be down a lot but it’s not.
And why is that’s because of that government spending those X factors.
But the conditioning here, it still exists where Powell and company wanna continue to raise rates because they see an economy that that’s healthy right now.
And what is this based on? Unemployment still historically low factory production is still solid.
Retail spending was strong last month.
All this stuff’s gonna reverse.
That’s what happens when you raise rates a little.
And that’s not what we did here.
We raised rates by over 6000% from its lows.
You’re gonna see unemployment sharply higher from here.
Why? Companies are about to see their fourth straight quarter of earnings declines, which was not on the table, it was two quarters in three quarters, now it’s four quarters.
And notice this earnings season, we’re supposed to see huge growth in the fourth quarter and then massive growth in 2024 just like three quarters ago and two quarters ago.
We were gonna see this growth now, but it keeps getting pushing further out.
Third quarter Fed s.
Feds gonna lower lower rates, get nothing to worry about, earnings are gonna start surging.
It’s a reason to go buy stocks.
Remember that was a bullish thesis.
But now companies are gonna see the fourth straight quarter of earnings declines and next quarter they’re supposed to go up 6% on average.
That’s gonna come down and worse, that’s six percent’s gonna come from two sectors, which is banking and oil.
What are the two worst sectors you wanna see growing if you’re a consumer and if you wanna buy stocks, why? Because it’s high interest rates that are driving the net interest margin higher.
It’s why the banks reported $105 billion in revenue and $30 billion plus in profits.
The four largest banks, I’m not kidding that’s what they generated.
But they’re worried JJ Diamond’s really worried.
What hell are you worried about? You’re generating rec record profits.
Things are great for you so long as rates stay high, they’re gonna be great for you.
And then oil, if oil companies generate more profits, mean oil prices are going higher.
So higher interest rates and higher oil prices, things that cause recessions.
Those are the reasons why we’re gonna see earnings.
We’re pretty sure that’s where the most growth is gonna come from.
Again, that unemployment rate, it’s going to move sharply higher.
Retail spending was strong.
But how long can that continue with credit card rates above 20% And now again, which amounts to $400 a month on average for 40 million Americans.
So we do now up to 65% of people say we live paycheck to paycheck in the United States or families.
Also, when you look at the sales, it’s not because they’re buying more stuff, which is unit sales.
They’re paying higher prices, which is driving up prices, which is driving.
That’s why you’re saying, well if I bought the same amount of goods that I bought last year, retail spending’s gonna be up, it’s gonna be up their inflation rate, which is 4% and it was seven or 8%.
So retail sales are strong, they’re growing strong.
Are they really? Or just were forced to pay higher prices.
So when I see Powell go on TV right now and talk about things of a soft landing, which is gonna be impossible to achieve, we’re not gonna have a soft landing.
You’re not gonna immediately get rid of, you know, high rates and just be like, okay, they’re gone.
You see how long it takes 18 months to filter through the system and we’re still not seeing the slow down he thought we would see to get us down to 2% CPI.
So reverse that.
When they start cutting and when they start cutting, ’cause we haven’t really seen the pause yet.
They’re still saying they’re gonna raise most likely.
But when they start cutting, there’s a reason why When you cut rates during these hiking cycles, hiking cycles, usually you’re raising rates.
’cause the economy’s strong stocks usually perform well when you’re cutting.
That’s when stocks come down a ton.
They come down tremendously.
’cause they’re only gonna cut if the economy is seeing a significant slowdown.
So it, it can’t be a soft landing.
So Powell right now to say, Hey you know what? We need to continue to raise rates because we have data like unemployment wage growth still high.
It’s insane to me.
Higher rates is going to result in higher employment, a result in wages coming down.
It can result much, much, much slower growth, which we’re seeing in housing.
We’re starting to see in travel, we’re starting to see at parks like Disney and Universal, which we thought were untouchable.
They’re always gonna see high demand.
That’s what I thought that was a catalyst for Disney.
Now you’re seen the slowdown in parks.
That’s why they’re trying to raise prices again.
Let’s see if they’re able to do that and pass that through without hurting demand.
But the slowdown is real.
It’s not going away.
Like we saw in the past, consumers are closing their wallets and the growth cows we’ve seen over the past Massive, massive, massive government spending.
They can’t do this anymore.
How are they going to do this? They can’t.
You see what’s going on with the house and and and the Republicans or whatever and regardless of, you know how I feel about politics, they’re all idiots.
They don’t give a s**t about us.
We all know that on both sides.
But I could tell you if Republicans do win, they’re gonna focus on cutting spending.
’cause everybody’s worried about the massive government spending.
And if they do that, what do you think is gonna happen to the economy? Now you don’t have this free money constantly hitting the system and we had it for the first six months of the year.
Do we have any government programs, inflation reduction, act, all this stuff cares, act all this right? All hitting just another trillion dollars into the markets.
Why deficit’s going higher and higher.
We decide to put more money into the market.
What’s gonna happen? Inflation’s gonna surge again like we’re so the eighties.
So they can’t, they can’t, they don’t have that catalyst that’s driven the markets for over a decade or low rates.
And what has been the growth engine of the world for most of this time for the past couple decades.
China, which is in terrible terrible shape right now.
Japan’s on fire.
So what does this mean? Well first lemme get a word from our sponsor.
We have a sponsor on our podcast, right? Who’s masterworks.
So you’re wondering how to diversify your portfolio in today’s extremely volatile market.
You can do so through masterworks, which also is temporary art that’s demonstrated strong appreciation for decades compared to stocks, real estate, almost any asset class.
I know what you’re thinking comes a fine art used to be only open to the rich and elite.
But through masterworks, anyone can now own a piece or buy a stake in some of the world’s finest art through tokenization.
Should be familiar with that term.
You could trade this art on their platform similar to how you trade a stock where investors own a percentage.
So like if you own a percentage, when you own a share of Microsoft or Apple, you get immediate access to personally invest in some of the greatest artists and their work by gonna ww.
There’s a great educational experience for those looking to purchase art for the very first time.
Again ww masterworks.com.
So what does all of this mean? All the negatives that I just told you before you run out and sell everything and go, oh my god, it’s we’re dead.
The market’s dead.
It just means portfolio positioning is critical.
It means that growth stocks, we used to buy growth stocks that matter about the fundamentals that worked over a decade.
Probably not gonna go, I mean I won’t say it won’t work at all, but you’re gonna have to have those fundamentals to back it.
You’ve seen SPACs get annihilated where their fundamentals are pretty strong right now.
Some of them ’cause they raise a lot of cash.
Bitcoin is an option which we’ve been pushing for a very, very long time now.
Everybody likes Bitcoin ’cause it’s up.
Was it 34, 30 5,000? It makes sense as an alternative.
Gold has been very painful, I know, but catching a bit of a bid, especially as inflation does come down and it will come down as long as the government doesn’t continue to throw trillions into the market.
But you have to be very, very careful in your stock selection.
You need, you need to follow people that know what they’re doing that been through this environment, that understand this.
Because all those books that you read on finance, I’m not talking about trading, which is this.
5 million books on trading.
Everyone’s an expert trading in the world.
Buy here, sell here.
It’s very easy.
I’m not talking about those.
I’m talking about the fundamental books.
Earnings drive, stock prices really ’cause we’re down, we’re gonna be down four straight quarters year over year in earnings and the market is up what, 12, 13% this year.
I mean you could say, well it’s led by seven to 10 technology stocks or whatever.
You’re driving a NASDAQ and that’s including like the past two months, two and a half months where stocks have really been selling off, especially the rest of 2000.
But overall, remember earnings? No it’s not earnings, it’s the government and that’s not there anymore.
So you really have to throw out all the textbooks of the reasons of why you should buy stocks because you got punished buying Coca-Cola instead of Microsoft very early on when those valuations are really inflated for the Amazons, for software companies, for cloud companies.
So they’re too expensive, don’t buy them, they don’t have great balance sheets.
Those things went up hundreds and hundreds and hundreds of percent over the 10 years.
That’s what happens when you have zero interest rates and money’s for free.
It’s a different environment.
This isn’t something that’s gonna go away anytime soon, guys.
I wish it would.
I’m gonna sell more newsletters if it does.
But it’s not.
It’s a different environment.
We’ve been conditioned that, oh my God, we shut down COVID.
It was what, five weeks? The market fell 30% and bounced right back.
Everything perfectly fine.
Thank you Mr. Government injecting money, low rates, we don’t have those catalysts.
Now that makes it a very, very dangerous market.
And where I’m seeing the most value is in small caps.
I know it sounds crazy Sector where the Russell, I think has sold off 16% over the past three months and 7% in the past 30 days.
But I’m not talking about buying the the Russell 2000, it’s a lot of crap in it.
I’m talk about buying individual names that have been down 25% plus from their highs.
Companies that already restructured their debt, have tons of liquidity, are seeing some growth in their businesses, have great management teams and they’re trading at stupidly cheap valuations.
It’s no surprise that these companies that fit that profile, this is where their insiders are buying hands over fist insiders.
Now I’m talking about 10% owners that are getting into a stock.
I’m talking about the CEOs, the CFOs, the executives of the company that already have big positions in these stocks.
Those are the names that are in our portfolio and Curzio Venture Opportunities right now.
A lot of ’em fit that exact profile.
They’re cheap, restructured debt, plenty of liquidity.
That’s the stock that we just added to today’s issue.
That’s why it’s largest shareholder is buying shares hand over fist because the stock is off 40% and every reason why the stock is off 40% ’cause it didn’t have liquidity.
Business wasn’t doing that good.
They no longer exist.
All those reasons why this stock has sold off tremendously.
It’s a good name.
$4 billion plus market cap.
It’s a good name.
The name you probably heard of.
It’s a symbol you’ll never figure out though.
Doesn’t make sense for the company that I actually, it’s so weird.
It’s so weird.
It’s like a curer research.
If I had a symbol it would be xp, LN.
Like you’re like what? Like you never figure out for yourself.
This is a a, a company that’s been around for a while and now their largest shareholder own it’s why one of the most prestigious hedge fund activists just took a stake in this company and this legend that runs his hedge fund been around since 2001, He’s invested in many companies within this industry and as an incredible track record too recently that he was able to sell to bigger companies within this industry.
I can tell you the industry, otherwise you’d probably be able to figure out the person I’m talking about.
And also the stock.
I don’t wanna give that away ’cause people pay a lot of money for Curzio Venture Opportunities.
But these are the stocks I’m seeing.
These individual ideas, the ones that have disconnects where you only have these disconnects when you have a crazy market like this where retail sales are up, the market looks fine, everything looks great, and yet you’re seeing everything.
Almost all these measures that say we’re gonna be in a recession are in happening right now.
All the warning signals are there.
Are we oversold? Yes.
Can we say a little bit of a pop? Yes.
We’re not talking about trading here.
Looking at a market that’s extremely, extremely dangerous.
But when you have dangerous markets, sometimes you have forced selling people to leveraged.
They get margin calls, they’re getting out of stocks and you’re seeing these disconnects, the largest disconnects that I’ve seen in at least 10 past 10 years.
So the names that I’m looking at, we’re not looking for a hundred percent returns on.
And these are names that can move the needle for you.
I mean three x five x 10 x gains.
You know me for a long time and I do not throw out those figures lightly.
I’m very real with you.
But some of these names are down 60, 70%.
And the reason why they’re down, they were preparing for this recession was supposed to have for 18 months that restructured their debt.
They have liquidity and they’re trading at valuations that are insane right now.
They’re extremely cheap.
And you have the smartest people in the company that know everything about the company.
Okay? There’s millions of reasons to sell.
SLI is to sell.
There’s one reason for them to buy.
And it’s even stronger if that insider is A-C-E-O-C-F-O that’s already a large shareholder.
These are the names that we’re seeing.
Not only that some of these names are actually buying back their stock because they have strong balance sheets.
That’s the market you wanna be in.
You have to be able to switch strategies.
You can be like growth, growth, growth, growth.
We’re not in a growth market right now.
I know it’s fun when you’re in a growth market, you could buy whatever the hell you want, doesn’t matter.
You don’t have to look at one number or one financial, you don’t have to know what the company’s doing.
Growth, growth, growth.
That’s all you wanna see.
But it’s a different market.
Be prepared ’cause it’s very, very dangerous.
And again, the gains that you can get by focusing on companies that disconnects that you’re seeing right now don’t happen often, but they’re happening in small caps.
Dan, I gonna talk more about small caps and share some individual ideas with you on our Wall Street Premium podcast.
Also gonna be recommending a new recommendation, which we do every single week.
To learn more about our premium podcast, go to www.curzioresearch.com.
Made it very affordable for everyone sharing ideas, have a whole portfolio there.
Really cool stuff.
This is where we’ll break it down further and share some of the names that we are seeing.
That’s just, just big, big disconnects.
Again, I’m not telling you to buy all Russell, I’m not telling you buy every stock.
I’ve even seen some of these in large cap stocks.
Most of the market is dangerous.
But right now it this is where you find the best deals.
Like, holy cow, I can’t believe where this stock is trading deals.
They’re hard to find.
They’re not easy.
Anyone could recommend any stock.
People have one year of experience.
You need to understand these types of market conditions.
Guys, it’s dangerous.
High interest rates are here.
They’re here to stay.
You’re gonna seed in your portfolio.
It’s not gonna be pretty, I’m not telling you the stocks we’re gonna recommend are gonna go straight up.
They’re gonna be volatile.
So we’re using, we’re scaling into these positions, buying half positions and then waiting through earnings season and stuff like that to scale in because we want to be in these names.
And if you have a time horizon past 12 months, again, the gains that you could see from some of these names, we’re now looking for a hundred percent gains.
It’s a lot, lot more.
And it’s just setting up really, really well.
The same thing I told you, when our crypto portfolio is getting its ass kicked, okay? Just like everybody else, and I said we have the best names in crypto in our portfolio, the average position was up over 600%.
I know that’s insane.
I’ve never seen gains like that in my life.
I’m glad a lot of you have.
But a lot of those names are recommended.
And I said, this is the time.
I know it’s insane.
But the ETFs are coming, which is gonna result in trillions of more dollars pushing into the system.
People will get tens of millions of people.
Americans are gonna be able to own Bitcoin for the first time, but have access to it and very, very easily.
They don’t have to worry about a wallet and all this education and Coinbase and stuff like that.
They’re gonna be able to buy it just very, very easily through their 401K now.
And then you have the Bitcoin haling, which happens every four years.
And if you look the six months before and the six months after Bitcoin takes off, that’s why we’ve been pounding the table, which is not easy to do, right? When you have losers in your portfolio, which everyone has, that was crypto, you’re starting to see it move.
You’re gonna see the same thing over the next six, 12 months, maybe earlier.
For a lot of these names that are already discounting recession, they’re pricing it in.
I see a little bit of risk, but massive, massive upside.
That risk reward is fantastic right now.
Scott said for me again, see you in the premium podcast tomorrow.
I’ll talk to you today.
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 decisions solely on this broadcast. Remember, it’s your money, and your responsibility.