Wall Street Unplugged
Episode: 930August 9, 2022

The closest thing to a guaranteed windfall for investors

investing windfall

Today I look under the hood of this earnings season. The results have been solid overall—but the headlines can be misleading… 

Federal Reserve members continue to trigger market volatility with their speculative comments. While this drives me crazy, I give credit to the Fed for its plan to fight inflation.

Next, I break down why—despite mixed earnings, rising rates, and massive inflation—this environment is actually good for stocks…

I explain how to find quality companies that will shine regardless of a recession… and why the metaverse is practically guaranteed to create a windfall for early investors. (By the way, if you don’t have exposure to this remarkable growth trend yet, here’s how to snag a FREE plot of metaverse real estate.)

Inside this episode:
  • The Fed’s plan to lower inflation is working [4:25]
  • Why Q2 earnings aren’t as strong as they seem [7:55]
  • Proof this is a stock picker’s market [16:30]
  • How to find quality stocks for any economy [28:25]
  • The metaverse is practically a guaranteed windfall [34:35]
Transcript

Wall Street Unplugged | 928

The closest thing to a guaranteed windfall 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: How’s it going out there? It’s August 9th. 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, we’re just finishing up earnings season, and holy cow, one of the most confusing times, and probably better off just shutting off TV completely, all channels, especially financial media, which maybe I shouldn’t be saying since I was on Charles Payne’s Making Money yesterday. I missed Charles. I’m going to be on that show more often. But the craziness you’re seeing in the markets right now, it’s not usual. Usually, we got a bunch of people who bearish when the market is terrible, everybody’s bearish, bearish, bearish, or everyone’s bullish, bullish, bullish, like they were past few years. No matter what happens, buy the dip. But now, I mean, you can’t figure it out. It’s confusing people.

Frank Curzio: And you could say, well, let me look at the economy. Is it good? Is it bad? Are we in a recession? I mean, economists are arguing, right? The definition we all know, with definition, is just to watch TV, right? Two straight cars, mega GDP growth, which we saw, but that’s not really a definition. We’re not in a recession. No, that’s the definition of it. But unemployment is doing so much better. People are doing okay, wages are going up a little bit. It doesn’t mean we’re in a recession, but are we, or aren’t we? No one could even know. No one wants you to answer that question.

Frank Curzio: Some people feel like they are. You look at companies when they’re reporting. Some people say yes, some people say no, you see things getting better. Usually in a recession, you see everybody cutting back. Everything terrible. Not everything is horribly terrible, but there are things that are terrible, of course, which you’re seeing. You look at the market saying, which direction are they going to go? And I’m talking about right now, today, not eight weeks ago. And we’re pounding the table just because segment indicators had all-time lows, all-time lows, we’re talking dating back to 1993. That’s when the NIX was created. Look at indicators across the board saying, it’s not been this bearish ever. And we’re not talking about during COVID. It was worse than COVID, worse than the 2000 crush, worse than September 11th, which is crazy.

Frank Curzio: And we saw stocks bounce tremendously. After going down 11 out of 12 weeks, we were clearly, clearly, clearly oversold. Now the Fed got back on track, where they had no clue that we’re going to see the biggest recessionary environment since the eighties. They were saying transitory was two years, right? We all know the story. Then, all of a sudden they’re like, oh no, we’re on the wrong side. And I mean, 5%, 6%, 7%, 8%, 9% year-over-year. Are you kidding me? Now, the Fed’s on the right side of the trade year, raising interest rates aggressively, see inflation in front of them. If it gets worse or raise further… But I’m not talking about eight weeks ago where everything is up, some stocks are up 20%. Some are up over 40% from their lows. We’re still down, and the NASDAQ is selling down 20% from its highs.

Frank Curzio: We just overshot. But today, right now, think about what’s going on right now. It’s difficult to gauge the market direction. Bulls and bears are completely split. You look at CPI still very, very high, still going to inflation, while moderating. Again, it’s still high. Very high. Mentioned earlier, unemployment’s strong, which indicates, how can we be in a recession if unemployment is strong, right? If the unemployment rate, if people were getting hired, really, that number was incredible. Couldn’t even really pick, or I guess the lagging indicator sees more companies laying off and freeze hiring and things like that. But that number was definitely positive. How could that number be so great in a recession? You have certain Fed presidents come out, like Bullard, Loretta Mester, Barkin, Mary Daly, let’s say inflation is out of control, it’s going higher. I think the Fed funds rates should go to 4%, which is absolutely nuts.

Frank Curzio: If we go to 4%, expect another 20%, at least a 20% correction for where we are right now, giving up all those if we go to 4%, it’s insane. I mean, 75 basis point hike, guys, is extremely… 1994 is the last time we did that, we did it two times in a row. And then, we’re seeing a 50 basis point hike in September, at least. It’s going to bring us to 3%. We were at zero not long ago, 3%. And you’re seeing the effects of that. You see an inflation moderate. You see that work through the system; it’s hurting. It’s going to continue to weaken market conditions. When it comes to borrowing and rates going higher, you don’t have to fed there, pumping money, quantitative tightening, right? Fed’s shrinking its balance sheet, along buying bonds, supporting that low straight environment. But yeah, these Fed governors going, hey, watch out, inflation is still out of control. We got to raise aggressively.

Frank Curzio: Yet, what do we see? Energy, gasoline prices, corn, wheat, lumber, copper down sharply, sharply from their highs, 30 to 50% across the board. And look at housing clearly, clearly cooling off, which makes sense. And imagine you’re looking for a house over the past nine months, and interest rates went from 3%, and yes, they’re what they fell under 5% was high 6%, but still, you’re looking at what is it? 6, $700 payment increase in a month, simply by just interest rates going higher. I mean, you’re sitting there going, holy shit. And that comes right out of your pocket earnings, right out of it. So, you see people saying, I got to wait. I mean, now watch interest rates go all the way through 6%. Now they’re below 5%. I’m just going to sit sidelines and wait. You’re seeing that housing market both from buyers and sellers, we’re just going to wait to see what happens.

Frank Curzio: Which means what the Fed is doing is clearly working. But lot of those Fed governors are like 4%. We need to go higher and higher and higher. And then, you look at a 10-year, which is holding steady below 3% at 2.8, which goes as the Fed could be done raising rates soon after September. Let’s see what the data says. As of right now, I made the case. You need to stop. You stop right away. It’s just obviously working. You’re seeing moderation. You’re going to continue to see that going forward. If you overshoot, holy cow. Now you’re talking about bankruptcies, banking problems. Even though banks are really flush with cash because they’re not allowed to lend out a lot of that money, which is why they’re, again does that indicate a recessionary environment? Have you ever seen a recessionary environment, where the banks are buying back their stock? Right? Because the balance sheet are so strong, right? They’re buying back stock and what else they do? They’re raising the dividends. You don’t see banks raising dividends during recessions. That never ever happens.

Frank Curzio: Again, the confusion back and forth. Which is it? The average person at home you’re looking at going I don’t know. You’re better off shutting TV off. Because when it gets to earnings, gets even better. Just finished Q2 earnings. Basically 90% of the companies reported so far. I got a few more on deck.

Frank Curzio: Well it’s nuts. It’s 75% of these companies reported positive earnings surprises. And you look at that, say, wait a minute. I thought we were in the recession. 75%? That’s higher than the norm of like 72%. There’s a large percent of companies reporting positive earnings surprises since Q3 2019 before COVID. How could that be? How could that be in this environment? Seems odd at first, at first, considering that Q2 earnings grew 7% year-over-year and that’s above the norm. Yes, we’ve seen 10, 15%, even 20% earnings growth after COVID, pre-COVID. That was amazing number if you growing earnings 7%. In 2017, 18, 19, those great numbers. 7%. Holy cow. Again, looks great on the surface. When you take a look under the hood, earnings were not so great. You have the S&P 500. You take it as a whole, just like you take the CPI, take it as a whole.

Frank Curzio: And it go X food, X energy, because they’re volatile. You know, X this, X that. Love to do that. Let’s remove this, this, this, this, and this to make everything seem all rosy and better. Even though last I heard, we do pay for food and energy. Right? I think we do, but we’re going to remove that from the CPI just so we get a better reading. It doesn’t matter if that goes up like 5000%. You’re good. There’s no inflation, right? That’s what we’re used to, which is funny, which is great. But let’s take a look at the S&P 500 earnings. Because that 7% increase includes energy stocks. And energy stocks, I’m going to give you a second to guess this, maybe two or three seconds. How much do you think the earnings for energy stocks grew year-over-year from this quarter to last quarter? And yes, oil went through the roof. And someone would’ve told me to guess, I would’ve said 50%, 60%. It’s 299%.

Frank Curzio: That’s the number. Facts it. That’s how much earnings have grown been the S&P 500, those earnings for energy stocks with the S&P 500, 299% year-over-year. Holy shit. Kidding me? So, if we take out energy, which we’ve seen a lot of these energy stocks have come down sharply over the past two months, three months, earnings are down for S&P 500 to down 4% year-over-year. So what does that mean? How come it’s like? Well, it means that analysts first did a great job of significantly lower estimates into the quarter. If a companies projected to earn a $1.25 for the quarter and analysts lower those estimates to a dollar, which you don’t see as an individual investor, most people they don’t report when they’re lowering earnings a little bit. They report upgrades, downgrades, and they’ll show that number on the bottom of the screen. They beat earnings by this much. That earnings is consensus earnings. That consensus earnings has gone down considerably into the quarter.

Frank Curzio: So, the analysts will lower that number from say a $1.25 to a dollar for a company, right? And you report a dollar five in earnings. And what does it say? This company beat estimates. They beat them by 5 cents. That’s all you see. They beat estimates and the stock might go up a little bit. But at the end of the day, the numbers are the numbers. No matter what the analysts say, the numbers are the numbers of what you’re reporting. And you’re seeing earnings slow because you’re supposed to earn $1.25, but that’s a dollar five, right? That number, whatever the analysts believe is what they believe. That’s what we trade on.

Frank Curzio: I get it. I understand. That’s what I do for a living. I track this stuff. For me, my job is to show discrepancies with cell site analysts because if you could say if a company’s going to report a dollar and I see that they’re going to report a $1.50 to consensus, people think it’s going to be a dollar. So, I would recommend that stock saying, these guys are way too conservative or vice versa. Maybe I say, short this stock because these earnings estimate are way too high.

Frank Curzio: But at the end of the day, the number is the number. The earnings number is the earnings number. And you’re seeing earnings slow, which is not a great sign especially if your stock’s trading at a high multiple, even though we saw 75 cent company’s S&P 500 beat earnings to the upside, which is a great headline and people are mentioning and talking about, yeah, you’re celebrating it. It’s not necessarily great news considering most of that came from energy stocks and you don’t have a huge following of energy stocks in the S&P 500. It’s not this major component like technology is. It’s not. But if you remove that S&P earnings are down 4% year-over-year, right? So, let’s use the formulas. It’s so funny because you don’t hear X energy when it comes to earnings, but you hear X energy when it comes to the CPI. Why don’t we be more consistent?

Frank Curzio: Let’s be more consistent. Let’s be real with people so we know exactly what’s going on. So, I listen to my podcast. But you wouldn’t know that earnings fast S&P 500 Q2 year-over-year fell 4% by watching your favorite media channels. No way. All you hear is that 75% of companies beat. Things look rosy. Not a recession. Earnings are strong. No, they’re not strong. They’re down 4% year-over-year. They’re not strong. They’re looking at valuation for the entire S&P 500, we’re trading at 17 and a half times earnings, we’re down to like 14 times forward earnings. We’re down to 14, which is insane considering on average, the 10-year average is about where it is right now, 17 and a half. So now, we move back to the average sharply, and you’re noticing in portfolio, your stocks are up tremendously since July 1st. But should we be at that average market multiple of 17 and a half times right now, with earnings down 4% again, taking one of the smallest components the S&P 500 out of it, like we would do with the CPI?

Frank Curzio: Makes you think we could be due for a pullback and again, trade the same valuation when earnings were growing 10% plus annually for years, interest rates were zero. The Fed was aggressively buying bonds and our government injected 11 trillion dollars, which is insane. 11 trillion dollar stimulus into the economy and kept going in 2021 even though all last prices at all-time highs. And it’s even funnier that they’re still doing more and more spending, more spending. Where’s this thing called the inflation reduction?

Frank Curzio: I think we’re going to spend more money, and it’s the inflation reduction. It’s getting to the point where the politicians are like, hey, all the people would talk to a bunch of idiots. Okay. They don’t know they’re idiots, but they’re idiots. So, let’s just call it something, and we’ll spend more money, as much money as we can. Right.

Frank Curzio: Do we really need to spend more money? Do we really need to hire more IRS people? Do we really need this right now? Really? Do we need to push this through? And congratulations to Manchin, what did he get? Holy cow. Remember, he was to hold that on Democrats. That guy probably has like nine houses overseas someplace just to get that guy to reverse. Good job. That’s what you need to do as a politician. Say no, no, no, no, no. And then, they’re going to. Listen, we’ll give you anything you want. You just need to say yes. Okay. Yes. Right. It’s great, politics. It’s awesome. But 11 trillion in stimulus. Now we’re moving a lot of that. Should we be trading at the same multiple as a 10-year average right now? I would think it should be a little bit below that.

Frank Curzio: Probably why short interest, if you notice is starting to ramp up to the highest levels of months, really ramping up here. That’s why you saw Bed, Bath & Beyond yesterday, AMC, GameStop. Right? You’re looking at the short interest, looking for Bed, Bath & Beyond, short interest is 15% in May. It went up to 35%. It was 35% two days ago. And what happened? Ape said, it’s time for the short squeeze. Talk about Bed, Bath & Beyond’s surge, 30% plus. A lot of that is short covering. So, when you see this massive shorts piling in, again, in order to get out of that position, you have to buy. So, if that moves the wrong way, you’re forced to buy the stock at whatever price. The stock’s at 20, and you are short, and it goes to 25. You’re like, I’m out of here. In order to be out of here, you got to continue to buy, which means it’s going to go to 27, 28, and then the rest of the short’s going to be like, holy shit, I’m getting buried. I got to continue to buy.

Frank Curzio: And that’s where the short squeeze is. It goes higher and higher. Look at Bed, Bath & Beyond, AMC, GameStop yesterday. You only see those types of moves when you have big shorts because you’re forced to buy. Just like we saw in Bitcoin, just like we saw throughout the crypto industry in small caps, especially on biotech, was the opposite. When you’re forced to leverage, you’re selling stocks no matter what price they are because you need that money. You’re not looking at valuation and saying, oh, this stock went from 80 to 10, and I’m going to wait for it to come back. No, you need to sell it and get out of it. And it brings it down to eight to six to four. And that’s great for individual investors. That was a great time to buy eight weeks ago, nine weeks ago, but we’ve come up tremendously since then.

Frank Curzio: And then, when we look at individual names, even more individual names, it gets even more confusing. Novavax cut their guidance just a little bit. Definitely cut their guidance a little bit, cut up from 5 billion to 2 billion. What? I mean, it kind of makes sense because we know vaccines are shit, right? We know that and even the current party saying that as well and saying, well, these things really didn’t work as well as we thought. Again, if you didn’t get vaxxed, you’re the enemy of the state. Holy shit. I can’t wait to see books and stories of what we’re writing about this five years, 10 years from now. What a joke. That stock fell 25%. It’s trading at 42. Just to put that in perspective, Novavax was at $270 nine months ago. Holy cow. Imagine owning that stock all the way down. And you’re saying, okay, well, it’s down to 50, 55, and down from 270, you’re like, okay, you know the market’s coming back a little and then bang, they lower guidance like that. And you get hit for another 30% decline, 25% decline.

Frank Curzio: But yeah, obviously, people are getting fewer vaccines these days. That’s why companies like the Novavax, Moderna, Pfizer are trying to shove their vaccines down the throat of kids between six months and five years old. Even though they need three doses to get FC up to 80%. Three doses. Three doses. And if you’re looking at adults, when these vaccines came out, which I covered and it was amazing because I had great research on this and saying that before they came out, there was an analyst, I think it was from Jeffrey’s, that was amazing. And I said, look, I don’t know if this is true or not, but this guy has a lot of credibility, and he said that FC rates are going to be above 90% for these vaccines when they release. And even people like you’re crazy. And it did, it came in above 90% and that guy gets all the credit. Not me. I said have access to a lot of this research, but the FC rates for adults, these vaccines are 93%, 94%. I mean, are you kidding me? For kids?

Frank Curzio: It’s telling you that the Pfizer’s, Moderna’s, Novavax, they don’t give a shit about your kids, right? Since more kids die from the flu than COVID at this age, all the way up to 12, right? We know that. Those are the facts on the CDC website. In case you want to look, they’re on a CDC website. So don’t fight me on that. Just look on the website is what it says. Plus numerous, if not all studies, show that kids getting COVID early builds up their immune system incredibly, which by far is the best defense against COVID than any vaccine. Right? We all know that. But yet, we want to shove this down your throat. Not because it’s good for your kids, because our profits are getting destroyed, especially Pfizer. Pfizer’s like the shittiest company bribing the FDA, all this crap. You got to go back at Pfizer’s history, how terrible it was.

Frank Curzio: Merck, eating their lunch. All the other companies eat, just eat their lunch, killing them. And then everything worked out with the vaccine. Dr. Gotley on the board of Pfizer giving advice on TV is a person that everyone’s listening to. If that’s not the ultimate conflict of interest, I don’t know what is. It was pretty amazing when you look at it. You came back to the individual names. Sorry about that mini rant there. I had to go there. Imagine owning Netflix or Meta, Match Group. These are names have gotten annihilated. They were up a little bit off their in video, right? Another bad quarter. People like things going to be great. Gaming across the board has come down. Look at Intel’s numbers. Look at Snap, Mohawk Industries, Dish Network, and you own any of those going, holy shit, we’re in a recession. This is the worst economy ever based on our latest earnings results. But then you have defense companies, Locke, you have Hershey’s, Kellogg’s done well this year.

Frank Curzio: If you take the past six weeks, again, we have many beaten up names, especially in biotech down sharply the past month. But look at Cathie Wood’s portfolio. Got annihilated this year until July 1st. Coinbase up over a hundred percent, especially after they deal with BlackRock to provide trading custody service to the invest fund manager, which only has about 10 trillion assets in the management. That’s a huge endorsement for Coinbase, by the way. And I’m not a fan of Coinbase because I think everything that they trade on there, other than maybe I’ll give them five of those cryptos are going to be deemed securities sooner or later. They’re securities and when they do those guys got to run because they’re not going to show their financials, they’re not going to file. They’re going to run. And they’re all going to get fined and pay fines. That’s where you’ll see security tokens, a lot of stuff come back to this market with Coinbase.

Frank Curzio: So, I’m not the biggest fan of Coinbase, but the fact that they’re able to trade cryptos and you’re looking at the biggest asset manager in the world, choosing them or choosing that platform is a major endorsement, right? Especially with Celsius, Voyager, and other platforms went under who are lending at 15%, 20% rates was taking your coins and stuff like that. It’s a good endorsement, but talking about Cathie Wood, Coinbase, she was buying up over a hundred percent since July. Roblox, name that I really like. I can’t believe it’s down is the rest of the names. Some of these names, seeing revenue grow massive, massive fricking losses. And you’re looking at Roblox. Roblox is a real company. Tons of people on that platform. You’re seeing everybody rushing in through the metaverse. Launching metaverses through there and trying to build their meta with Nike, and how many companies. That’s a great platform. Up 50% since July 1st. I just didn’t think it should be down as every other technology company because they’re seeing pretty strong growth. The numbers are okay quarter-over-quarter because they were growing so freaking fast, but that’s a real good name.

Frank Curzio: Block is another one up 40% since July 1st. Unity’s up 35%. I think they just accepted a bid or a takeout offer. And that’s one, one of the key companies in the metaverse with unreal and unity being the two engines, two gaming engines that are powering the metaverse right now. Huge, huge growth. And the amount of money being spent, hundreds of billions of dollars now getting thrown into the metaverse. These are the platforms they’re using. Unity and unreal. Everyone. That’s where the money’s going. That’s up 35%. Robinhood’s up 30% since July 1st. So, you take everything as a whole, right? How confusing was everything I just said? And some of stocks are down 40, 50%, others up a hundred percent over the past eight weeks, six weeks. Confusion over the data. Every piece of data. I mean, you’re seeing productivity go down to levels not seen in the history of our market yet, we’re seeing inflation continue to go higher where output costs, right?

Frank Curzio: That was just released. Going higher due to inflation gave us a number that we’ve never seen before to history of that data with productivity. Again, the CPI is high, unemployment and that rate’s pretty good, but yet housing’s dropping off a cliff all over the place. And it’s nuts. We have clear positives and clear negatives where bulls and bears, both side of aisle have lots of data points to support their thesis. And you’re looking at going, holy shit, this is confusing. I don’t know what the hell’s going on here, but this is more confusing. I get it, but there is good news here. Well, my 30-year career, the best market environments usually happen when you have a healthy mix of both bullish and bearish indicators and investors. The problems happen when everyone leads to one side or leads to the other side.

Frank Curzio: That’s when you see the problems happen, because it always overshoots. It’s better to be in the middle. When you’re in the middle, it usually chugs along, and it’s pretty good, and you got a little volatility here and there. We’ll go and see volatility since the Fed’s raising rates, can continue to raise rates, through September. Let’s see what happens based on the data today, they better stop after a 50 basis point hike in September. If that changes over the next month, that’s different. We see a massive CPI number, see unemployment, that’s different. Maybe you go 75 basis points, and say we might continue. But if we continue to see these prices and housing, I mean, everything tail off the way at even worse. We’re seeing that right now. We’re seeing price come down in a lot of places. Retailer’s sitting on more inventory than they sat on in probably a decade, which they’re going to have to sell at cheaper prices. That’s deflation.

Frank Curzio: Data that track is supply chains. They’re saying that demand is slowing. You have crates sitting on their lots now for eight, nine days, but it’s going to charge these companies. You didn’t see that for a very, very, very long time since they started injecting money into the system. That’s easing supply chain concerns because you’re seeing demand fold. That’s what they’re reporting. This is the data has been trucked 25 years. We have access to, okay, it’s not biased or anything. These are just the facts.

Frank Curzio: But having this split environment guys is a very, very good thing. Even though it’s confusing and you’re like, I don’t know if we’re inflated. I don’t know if we’re not. It’s very difficult to forecast your business or how much you want to spend this companies removing their estimates right now going, I’m not too sure what to do. Let’s just wait. I don’t know what the Fed’s going to do. They’re going to raise rates. It’s going to result in more and more people that bills are going to go higher and higher expenses are going to go higher. They’re going to be able to borrow less. That could result in less demand, fewer customers. So, let’s just be careful with our guidance. I get it. But during those times, especially as we see with the Fed being on the right side of the trade now, remember uncertainty is the death of equities and stock.

Frank Curzio: We have uncertainty, you don’t know what’s going on. That’s what it went down 11 out of 12 weeks. The uncertainty of the Fed completely doing about face going, they didn’t know what was going on. Holy shit. We’re totally wrong. They’re not wrong now. They’re not wrong now, today. Again, we’re talking about today, forget about it. You want to talk about the Fed? How terrible they’ve been, fine. It’s useless basically. It’s not going to make you money telling you how terrible the Fed is. What’s going to make you money is seeing what the Fed’s going to do going forward. Going forward, they’re going to raise rates. I just think it’s going to be a lot less, but if they go even higher and they go to three and a half or higher, lookout. I think 3% is perfect. Let’s see in September. But at least the Fed’s on the right side.

Frank Curzio: That’s important. Where we all see inflation now, not the whole entire world and the Fed didn’t see inflation like it was right. If the Fed was the only person didn’t see inflation, I guess they don’t pay their bills. I had no idea. They didn’t see inflation coming. Now they do. And we all do. Now we have Bullard and a lot of these other Fed presidents going crazy 4%. That’s what you want to see. You want to see them nervous. Holy cow, nervous on that side, not the other side. There’s no inflation, we’re going to be fine. Right? That suggests bullish market conditions. And then when you do an about face, what happens in market crashes? Totally gets destroyed. We never seen that. 11 out of 12 weeks when we’re down, never saw that in the history of the markets. That’s how terrible it was.

Frank Curzio: Now they’re on the other side. Inflation, holy cow. We got to worry about it. That’s where you want them to be. That’s way they see it in a concern and they can do things about it. And they can also ease back, where the Fed had no choice but to say, we need to shrink our balance sheet right now and raise rates incredibly at an interest rate that we’ve seen in over 30 years, close to 40 years. We’re not there anymore. So, when you see this back and forth, the confusion, it’s almost like when we have a split government, we need the Democrats, Republicans hold power in all three branches. Those are usually the best mark conditions because you don’t have idiots on either side passing radical agendas, which we’re seeing right now. And we saw that with Republicans. So, they’re pushing everything group for November because it’s not going to be that way anymore. It’s going to be split. We all know that.

Frank Curzio: But the confusion is… I know it’s difficult to navigate, especially some of your stocks might have gotten now for 30%. Some of your stocks might have gone up 20, 30% in the past couple months, and you’re all over the place, but that confusion and the back and forth, and this flip between bulls and bears while confusing is usually a healthy sign of the markets.

Frank Curzio: I know you got CNBC on, and Fox business on or whatever you’re watching. And you watched 20 guests yesterday. 10 said they’re bullish and 10 said they’re bearish. You’re like, I don’t know. You know what? Just own good quality names, not going to see a nice, a little bit push higher, not as high as we went, right? Incredibly bullish. Remember, you got to look at conditions. You can’t say, Frank you were really bullish like eight weeks ago and the market fell the first two weeks, pretty sharply before rising. But we did have what? Inside buying the record highs back then, sentiment indicators at all-time lows back then. I mean, it made sense for you to we clearly overshot, but right now we’re kind of this market that the cream’s going to rise to the top. Not everything is going to go higher, which we’re seeing in the market. You’re seeing across the board. Some companies are getting nailed and some companies are doing very, very well.

Frank Curzio: So, we listen to guys like me to separate the BS from the real companies. I’m not saying I need everything right, but there’s going to be clear winners here. And you’re probably going to see the market chug along pretty good. Little volatile through September until the next Fed meeting. So, I’m not saying aggressively buy every single stock right now, right now. Said eight weeks ago. But right now, when you’re looking at today and going forward, we’re going to see separation of companies within industries that do well. We saw it during earning season. As companies have pricing power that said, we’re not seeing recession, we’re seeing demand for the roof. And other companies saying, wow, supply chain concerns are still hurting us. It’s getting global like micron. But at all chip companies are seeing that. You’re not seeing every single company in the industry go down, every single in the industry go up.

Frank Curzio: We’re seeing split. And that’s what you want to see. That makes a stock pickers market. We pick the good names. And how do you find the good names? Focus on the ones with solid management teams. Those have been honest on the last couple conference calls are not bullshitting you, which we’ve seen a ton of, especially with supply chain concerns. Those that have pricing power, which isn’t too hard to see, look at their margins. Those where insiders are buying today, which you’re not going to see as many. You see more cells than buys now because stocks have risen so much off their lows, but still you have insiders buying. Focus on those names. If the insiders, especially if the stock is up well, if it’s lows and insiders are buying, I’m not talking about 10% owners of funds. I’m talking about the CEOs, the CFOs, the CEOs.

Frank Curzio: If they’re buying, that’s a good sign. They know their company. I’m not talking about them buying 50,000 because they just got the job and they want to show support, which you see if they hire a new CFO, he buys a hundred thousand shares. No, not one of those. Guys that have been there for 10, 15 years, whatever five years or longer that are buying. That’s a good sign. They know the business and they see things in the future, contracts in the future, demand with their business. That’s a very, very good sign. Look for that. It’s not difficult to see that. You can find out many, many free sites. Finviz is one of them. Look at companies that are buying back their stock. This way you have that floor. If it does fall, these guys are there to buy back a lot of their stock, which means they have a decent balance sheet. And even companies that are raising their dividend. Clear sign. You don’t raise your dividends if you believe your business going to be good for the next six to nine months. You’re not going to raise your dividend.

Frank Curzio: Unless you have one of those dividend risk credits that have like its 50-year track record that they have to raise and raise by a penny or whatever. I’m not talking about that. The guys that raise their dividend, like 10%, 15%, 20% companies are not going to raise their dividends unless they see a healthy outlook over the next six to nine months, especially since a lot of them during COVID suspended that dividend. So, they’re not under pressure to get that dividend back up and say, here’s our dividend. They’re not under pressure. So, for those companies raising that dividend, that’s a very, very good sign. There’s plenty of names that fit this profile. Of course, if you’re looking at small caps, take out the dividend thing, because you don’t want small caps paying dividends all the time. I’d rather see growth at a small caps. Someone’s covered all my life. That’s what I talked about with Charles Payne’s on his show yesterday about small caps and breaking through and how they still relatively cheap, still incredibly cheap compared to large caps.

Frank Curzio: A lot of great names in there, but we’re finding plenty of companies that fit the profile. They’re recommending them in our newsletters, Curzio Research Advisory, Curzio Venture Opportunities right now. But if possible, which I know it’s impossible these days, especially if you have a phone in your hand, you have to look at something all the time, all the time. I can’t tell you how often where I’m at a restaurant or when I was in Dominican or someplace or whatever, just people are on their phones constantly, they need to be fed information constantly, constantly, constantly. And what I’ve realized in life, the more information you have, the worse it is. And that’s coming from a research analyst, which has to look at as much information as possible, but that’s my job. But when you’re looking at so much garbage all the time that’s being fed, and it’s being fed based on how they could control your brain the most, how you can click this headline the most, how we can make this as crazy as possible the most, that’s what you’re going to believe.

Frank Curzio: That’s why you’re seeing kids. I saw kids with families, they wear masks when they’re outside. They were kids and maybe, maybe a tiny bit of had underlying conditions. I’m not talking about 65 year old’s who have underlying conditions or they’re on flights. I’m talking about young kids, young kids like wearing masks still outside. I’m like, holy cow. Again, it all depends on who you’re listening to. So, even you listen to this podcast, but do your own research. You could challenge me, challenge anything, but this is you. This is your life. Be careful what you listen to. Be careful who you’re listening to, but you should always be doing your own homework, especially if you’re doing your homework and you’re saying things like what I was saying at COVID very early on because I was blessed with having great, great information and interviewing people locked down in January and February in Europe and in China and understanding how it was coming here.

Frank Curzio: And so many doctors have reached out to me and saying, don’t mention my name. I was just very fortunate. As I started reporting this stuff, people started attacking me going crazy. You got to see my ratings. Look at my ratings on from iTunes of this getting political and all this bullshit, everything. I mean, just ripped me apart. I have kids. I try to report to you because I have kids. Forget about the money for a second. It supersedes everything, doesn’t it? But when I was getting attacked by people, for me I knew I was right.

Frank Curzio: Because when you have a thesis on something, everyone’s like, yeah, yeah, yeah. Even now with the metaverse and people, I have a couple of clients saying, Frank, you’re in the metaverse. I don’t know if I want to be with you, not too much of stock. With three newsletters on stocks. We have Curzio One folks on private deals as well. You have access to everything. Of course, that’s our core business, but you’re challenging me on something that this is as close to a guarantee as I’ve seen. And one of the only opportunities I’ve seen in my career, where you could actually buy the next Microsoft’s, Apples.

Frank Curzio: I wouldn’t say Google since it came out at such a high valuation, but the Amazons that could absolutely make you and your family life-changing gains. This is where the world is going. This is why Meta, a trillion dollar company, changes business amount. This is why $120 billion is flow. This is why every, every major technology company is pushing into the metaverse right now, this is the future. There’s plenty of evidence. This isn’t guessing. You follow the money. You see how much money’s pouring into this industry. The contacts that we have, this is something you have to have exposure to because you’re going to be able to make an absolute fortune off of this, because it’s that early on. But the fact that so many people doubt me, makes me even more convinced and have more conviction. So my point is, when you have a thesis on something and you’re doing your own research and you’re telling your friends and they’re like, oh, and they’re like yelling at you and think you’re crazy, chances are, you’re right.

Frank Curzio: When everyone’s on the right side, everyone’s agreeing with you, that’s when you have to worry. That’s when you have to worry. But do your own homework, doing your own research because when you’re watching TV and the stuff that I’m watching right now, holy cow, man, is it confusing as hell. What you do know is it’s a good split team, bulls and bears. It’s not a bad thing. It’s usually good. It’s healthy for market conditions. Probably going to see the market chug a little bit higher. Yes, we’re all far lows. And maybe we’ll pull back a little bit, but there are clear winners and clear losers. It’s not that the whole market’s coming down like it did couple months ago, and through November or the whole market’s going up like it did for a certain period before COVID. This is different. It’s a stock picker’s market, there’s companies that are getting done and others that aren’t.

Frank Curzio: And I’ll be able to find, I’m going to try my best to find as many of those ones that are doing good and throw those in a newsletters this way we can all make money off of them. And also while focusing on the metaverse and crypto, which BlackRock, 10 trillion assets getting into, Fidelity, 4 trillion assets getting into, they’re pouring the money into because clients want to be in an alternative asset class, you should all have access to alternative asset classes. I’m not saying go all in. I’m not saying even go in 25%, but you should have 5% of your allocation into things like this. And I got to tell you one of the things that me off the most when people say, the pedal edge theory, you have to invest in things you understand. You have to invest in things you understand. People say it all the time.

Frank Curzio: If that’s the case, you would’ve never invested in cloud in 2012, you would’ve never invested in half of the technology trends where stocks are up thousands of percent, because a lot of this you didn’t understand. And I didn’t even understand. It took me a long time to understand, but you have to start learning about this. You have to start listening to people who are in these areas that say, hey, this is the area that’s going. And investing in Microsoft, it was a dying company until Della got there and said, look, we got to focus on cloud and turned it into two and a half trillion dollar valuation. You had harder than that. Bill Gates, the brilliant guy, but he missed mobile by a mile, which hurt that company tremendously. Let Apple and a lot of other companies surpassed that. And then they were even a little bit late to the party when it came to cloud behind Amazon.

Frank Curzio: They corrected that. Look at that. But how many people knew what cloud computing was back then or data analytics? Or what about in 1995, 96 when the today show is like, what’s this.com? What’s an @ symbol? What the hell is this? I don’t know what’s going on. Imagine, right? Imagine investing in technology companies back then and you still held them to today. Holy cow, you probably have three helicopters, four islands and 19 houses, but you really didn’t understand it. You just knew, wow, this trend is pretty good. And this guy’s telling me that this is a great trend. Put a little bit of money into it. Few thousand dollars. That’s what people are seeing when it comes to crypto and the metaverse and NFTs. That’s what people are seeing. They’re pulling a little bit of their money into it and say, hey, I want to be in this.

Frank Curzio: This is an alternative asset class, just in case because a lot of these other stocks, I can’t get it early anymore because they come out at multi-billion dollar valuations at 50 times sales by the time the average investor could buy them. That’s why they’re all down. 60, 70, 80% and specs are down. IPOs are down on average, still of 65, 70%, even though they moved off their highs because the valuations are insane. When it comes to this other areas of the market, whether it’s the metaverse or crypto, you can get in early. Getting back to the major theme of this podcast, guys, be careful what you’re watching on TV. It’s more confusing as hell. That confusion could turn out to be pretty good because when you have bulls and bears fighting each other, that’s what you want. You don’t want a hundred percent bulls, a hundred percent bears. That’s when you run into trouble when that pendulum swings all the way to one side. And we’ve seen that. We’ve seen that’s why the market crashed.

Frank Curzio: And we’ve seen it when eight weeks ago, when everyone’s more bearish than they’ve ever been in the history of these markets based on sentiment in the case, which is crazy. So, let’s end it there. Guys, questions, comments, I’m sure I’ll have a lot, frank@curzioresearch.com. It’s frank@curzioresearch.com. I really appreciate all support, and I’ll see you guys tomorrow. 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 11 million times.

Editor’s note:

The smartest and wealthiest people in the world are convinced the metaverse will outperform every tech trend before it… but what IS the metaverse?

Frank is making a documentary to find out.

Click here to claim your free ticket to opening night.

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