Wall Street Unplugged
Episode: 820November 16, 2021

The easiest way to lose $1 million in the stock market

AMC is currently trading over $40 per share… Yet, one analyst note I recently read is calling for a target price of $1 on the stock.

The company may have seemed left for dead following the COVID lockdowns… but it’s made some impressive strides over the past year. 

Today, I explain why this analyst’s way of thinking is the easiest way to lose millions in the stock market. [0:40]

Is the supply chain crisis “fake news”? One listener says he’s not seeing any shortages on the shelves… [23:25]

After a slow start to 2021 for security tokens, the market is picking up as we approach the end of the year. A listener wants my take on the industry’s progress and what to expect in the coming months.

I highlight several exciting updates in the space… including a coming Securities & Exchange Commission (SEC) regulation that will be a major tailwind for security tokens. [30:55]

Finally, Luke Downey’s Big Money Trader launches this week. Here’s what it can do for your portfolio… [34:30]

This week’s episode of Wall Street Unplugged is sponsored by Masterworks.io, which gives individual investors access to elite blue-chip art.

Artwork is a proven hedge against high inflation… returning 23% on average during inflationary times vs. the S&P 500’s 3.8% and gold’s 0.2%.

Get in on what The Wall Street Journal calls one of “the hottest markets on Earth.”

Go here.

Inside this episode:
  • One analyst’s AMC bet is the easiest way to lose millions [0:40]
  • Is the supply chain crisis “fake news”? [23:25]
  • A coming regulation will be a major tailwind for security tokens [30:55]
  • Luke Downey’s Big Money Trader launches this week [34:30]
Transcript

Wall Street Unplugged | 820

The easiest way to lose $1 million in the stock market

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 November 16th. 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. It’s a great podcast for you today, which being sponsored by Masterworks, who is democratizing the $1.7 trillion art industry.

Frank Curzio: I read a note yesterday from an analyst, he’s been around for a while, on a particular stock. A stock that’s very, very popular among millennials. And, the note itself is actually pretty terrible. So, I wanted to bring it up to you today, because there’s a lot of lessons that we could learn from this. And this is something I see investors, or this mistake investors make a lot. And I’m not just talking about amateur investors, but even the best of analysts. And this is a mistake, listen to me here, that can cost you millions of dollars. Millions. I’m not joking, because even as a first-time investor, say you’re putting your 401k, you’re putting thousands of dollars into it. Over time, this nest egg grows. It could easily grow into the millions over a 20-year period, if you’re adding money to it every month from your paycheck and compounding those returns.

Frank Curzio: You may be thinking, “20 years, man. That’s a long time.” Believe me, I’m 49. It’s not that long. It’s not that far away. I wish I was doing it younger. But, this is a big mistake I see. And here’s the note. It came out yesterday from MKM Partners. I’m not going to name the analyst, right? That’s the firm. I’m not going to name the analyst on it, right? But he put out a note on AMC, the theater company, reiterating its sell rating and $1 target price. So, it is a dollar target price on this stock. So now, you’re familiar with AMC entertainment, meme stock, it’s trading over $40 right now, $40. And when you’re looking at this analyst and that dollar target, you may be saying, “Wow, holy cow, that’s crazy. I thought.” This is his target price. He lowered this target to a dollar in May 2020. Think about that timeframe, right? That was in the heart of COVID. Everything was closed. Every theater was closing, and it would stay closed for a while.

Frank Curzio: You had a company that was facing bankruptcy and still trading around $14 a share. Again, this is May 2020, when he lowered that target to a dollar. We all know what happened. The Reddit crowd took over, started buying the stock like crazy, sent it to over $60 a share. But again, now it’s around 40. But back then, a $1 target may have been justified. And if you have a $14 share, a stock, you could put a target of $3, $4, $5 on it. But a dollar is a clear sign that you think this company’s going bankrupt. And, when you look at May 2020, you might have got away with that. That’s fine, right? I mean, you’re talking about AMC, which had loads of debt, their revenue stream completely 100% cutoff due to COVID, and would remain cutoff for several quarters. That dollar target basically implying that AMC’s going bankrupt.

Frank Curzio: So, let’s fast forward to today. Like I said, again, I’ll say this again, AMC’s over $40 a share. And this analyst came out, and reiterated his sell rating, a $1 target. So when I look at AMC today, there’s no question it’s a much different company. And so are the market conditions. And you look at box office receipts, they’re starting to surge. More people are heading back to the movies now that COVID, that second wave, has eased. We’re benefiting this because we have a great recommendation that we recommended off of this, not AMC. I was surprised to see these trends, and I’m willing to adapt and change. And we recommended a stock that’s probably up 35% right now in a month and a half, two months, because people going back to the movies. Just go back to the movies, you’ll see. People are starting to go back. They feel comfortable.

Frank Curzio: So, that changed. But what it does, it gives AMC a growth component, which we know the market loves. The market loves a growth component. Doesn’t matter about revenue. Doesn’t matter about sales. Doesn’t matter about anything, even earnings. It doesn’t matter. Rivian’s a clear sign of that, it’s generating one million in sales. And we’re looking at what, $130 billion valuation, which is probably 30, 40% higher than Ford now, and GM. One million in sales, they’re doing. They love that, that’s what the market loves. Give the market what it loves. That’s what AMC has now. It has a growth component. Operating cash flow will be positive, starting next quarter, compared to massive losses it saw for most of 2020. Also, AMC, their management team did a great job raising a lot of money. As the stock went high, it was pushed higher by the Reddit crowd, and the WallStreetBets.

Frank Curzio: Very, very smart. That’s what Peloton just announced today that they’re raising one billion, and this is after their stock just crashed. And also, after the manager said, “It doesn’t need money. We’re fine.” He said that six months ago. Now, you’re raising one billion after your stock crashed. Pretty crazy. That’s not what AMC did. AMC waited for the stock to go higher, and it raised a lot of money. But after these capital raises, AMC’s now sitting on 1.8 billion in liquidity. So there’s 1.6 billion in cash, and also a revolving line of credit it can tap for over $200 million. So, over 1.8 billion in liquidity. So, based on the liquidity, based on the positive operating cashflow, bankruptcy is clearly off the table for AMC. They’re not going bankrupt anytime soon. But again, you’re reiterating your dollar stock price. This is you’re suggesting, this is what you believe. You’re implying to the markets, when you put out that note yesterday.

Frank Curzio: Now, to be clear, I’m not saying run out and buy AMC, or it’s not insanely overvalued. It’s trading at 40 times EV to EBITDA. If you don’t know what that means, EV to EBITDA is what analysts, sell side analysts put on a stock when they can’t value it by a PE, because they’re not going to generate money for a long time. Right? That’s what that means. So, if you’re a sell-side analyst, you can’t say, “Hey, I love Peloton’s bike. It’s amazing. The stock’s going higher.” No, you have to have a whole discounted cash flow model. How much revenue they’re going to earn, it doesn’t even matter. You got to make up shit like they did with Tesla. I mean, Tesla right now is supposed to have every rent-a-car with self-driving from Tesla. Remember that? That was now. Morgan Stanley came out with a note three years ago saying that’s what it was going to be. Right?

Frank Curzio: They have to put all this shit in there to justify, because they have to put numbers, figure it all out, and then come out with a target price and spit it out. Right? That’s what they do. That’s to get paid for, whatever. So, AMC traded 40 times EV to EBITDA. Okay. Again, not 40 times forward earnings, but EV to EBITDA. To put in perspective, the industry’s peak all time, the industry at its highest point traded nine times EV to EBITDA. This is trading at 40 times EV to EBITDA. So, I’m not telling you that it’s not insanely overvalued. I’m also not saying you should buy the stock here at $40. I’m bringing this up to you because what this analyst is doing is a mistake I see often, and it’s not just from amateur investors, but as you can see, really great analysts, so called season professionals.

Frank Curzio: So, what am I talking about here? I’m talking about stubbornness, and failure to adapt to ever changing market conditions. You think that stubbornness, it’s not a big deal. How could that be a big deal? When it comes to investing, it is a big deal. It’s huge. It’s one of the biggest mistakes you can make. And, it’s almost impossible to correct because it deals with psychology and changing your mind, and changing the person you are. And people, they fucking hate to change, especially older men. We get really stubborn, as our wives know very, very well, and we don’t want to change. This is the way we did it. We used to write notes on paper, and they got stickies from a pad all over the place, and we used typewriters. You got to adapt. You have to adapt. But if you go back and look at all the people telling you the market’s going to crash since 2010, you know the list, you should know the list by now, just go back and Google. It’s hilarious.

Frank Curzio: And, you look at how many people continue to make that call almost every single year since then. And over that time, what happened? We experienced one of the biggest bull markets in any generation. Well, how about the people telling you how the dollar’s going to lose its reserve currency status? Again, for 40 plus years, people have been saying that. For 40 plus years, the dollar’s going to lose its reserve currency status. Got to prepare. Own gold. Gold’s going to 50,000, 25,000. I mean, we heard all these targets. Own as much as you can. You guys know exactly who I’m talking about.

Frank Curzio: I’m not going to throw out names here, but these are people that get on the rooftops and they’re preachers. They preach the word of what they believe, or truly believe, where it’s like a religion. And this becomes a cult where people buy into this message, and believe every word of what this person is preaching and predicting forever. The only thing is, we’re not talking about religion here. We’re talking about investing. We’re talking about accumulating enough wealth over time so that you’re financially secure. So, your families are financially secure. It’s a way you can live great lives when you retire. This is about you. Not them, not me, not anybody. It’s about you.

Frank Curzio: And, in today’s time where we have social media, and you could see this with the Rittenhouse case. And there’s things in the Rittenhouse case, I had no idea. They just threw out the gun charge. I had no idea that he was allowed to carry that. They just threw out the gun charge. You know how long, for over a year, they’ve been telling us that. I’m not, I don’t want to get political here. I just had, they throw that out. I’m like, “They threw out the gun charge?” Well, apparently, yeah. He’s allowed to carry a gun in Wisconsin. So, they had to throw it out. I didn’t know that. I mean, I was told by every media outlet that, “Holy cow, this guy just grabbed the gun, running through the streets, going crazy shit.” You don’t know. You get caught up in this story of who’s telling you.

Frank Curzio: And then it becomes a mindset. You’re just conditioned to believe it. And it’s almost like trying to, whoever, if you listen to this as a Democrat or a Republican, it’s the other side try to convince you, their side is better. It’s never going to happen, right? It’s never going to happen. That’s politics and religion. No one’s going to be able to tell you what God you should believe in. You’re going to believe in what you want to believe, but this is investing. It’s not a religion. You need to change. You need to adapt, or you’re going to get wrecked. You are going to get wrecked.

Frank Curzio: And a few lessons here. Just try not to get caught up in the story, because once your feelings get involved, you’re going to keep reading shit over and over again, on how the government sucks. The Fed sucks, the dollar’s going to shit. And you just start believing this stuff, regardless of the facts. And this forces you to do what? It forces you to stay in the sidelines, while over the past 10-year period, we’ve gone through one of the biggest bull market cycles in decades. I’d think about that. Think about what they’re saying about the dollar. It loses reserve currency status. Really? Every single time, 100% of the time when the market crashes, if it goes down more than 15%,goes down 20%, what happens? The whole entire world jumps into the dollar. It’s the safe haven of the world. Every country flocks to it, every single time there’s a crash, because many of these countries, their own currency is not as safe.

Frank Curzio: It’s a safe haven of the world. Yet for 40 years, the dollar’s going to lose reserve currency status. If that happens, you got more problems than just listening to some crazy guy or worrying about stocks. Your house is probably going to get mobbed, and everything’s going to get stolen from you. I mean, you’re talking about a crazy, crazy world. Or, like believing the market’s going to crash, regardless of the conditions. And in 2010, I wasn’t optimistic on the market. I was like, “Holy cow, man.” It’s we came back kind of quickly. But as the facts changed, things changed. Even you’re looking at COVID in the past year after this happened. People are like, “Oh, that’s it. Retail sales are not coming back.” You’re saying the market’s going to crash, and we have terrible conditions, regardless of the $12 trillion injected into the US economy in fiscal and monetary stimulus in one year. In one year.

Frank Curzio: In one year, the government handed free money directly to people in businesses and said, “You know what?” You never have to pay me back. Never would I have thought this in history that would happen. That’s a game changing event, that you need to change your sentiment on, thinking the market’s going to crash regardless of the Fed, the most important body in the world, keeping rates near zero and continuing to keep rates near zero. Even, though every asset class is at its all-time highs. Do I agree with it? No. Do I think they’re idiots? Yes, but it means every asset class is going to continue to go higher, and higher, and higher, because interest rates are low. Yes, we’re seeing inflation, and we’re going to see inflation be out of control, now that the infrastructure bill passed. But for now, you’re going to see asset prices continue to inflate, deduced by the Fed. So change your mindset, because you know what? These people aren’t going to change their mindset. There’s no way. It’s a religion to them. That’s what they believe. But don’t be stubborn in your ways.

Frank Curzio: You can maybe talk about seasoned experts that have made this mistake. And, one of them who I like, I’m a fan of, but Nelson Peltz. And he’s the guy that bought GE in 2015. I’m bringing it up because I’m comparing it, because that was a mistake that I made, which I bring up a lot. And I’ll talk about my bad trades more than my winning trades, because that’s how you’re going to learn. And that’s being real with people, because every single ounce in this, but you’re going to make mistakes. You’re going to have bad trades. There’s nothing wrong with it.

Frank Curzio: In our industry, like this guy, he won’t admit that he is wrong. MKM Partners, it’s a dollar target. Just say, you’re wrong. Just say, “Hey man, I was wrong on this.” Just like Cintron came out and said, “Hey, we’re not shorting stocks no more.” David Einhorn said, “Yeah, it’s a different landscape. We got to change.” These guys are adapting. These are some of the best short sellers in the world, that aren’t shorting stocks anymore. At least not as much, because on a dime, you could see a GameStop or AMC wipe out your entire fund.

Frank Curzio: But Nelson Peltz runs the Trian Fund. He’s a billionaire. Bought GE in 2015 and he held it to today, despite all the shit this company went through, all the mistakes, the massive downfall in the stock price, several management changes. Tons of write downs. Again, this is a mistake I bet on as well, lost money, a lot of money on it personally, because I invested in what I give you guys. But here’s the difference in handling the situation. We stopped out of GE, and what do we do after? We went into a lot of other stocks. I mean, so many amazing opportunities, unbelievable gains. The performance has been absolutely fantastic across many of the newsletters. So, Peltz could have the same, investing in almost any stock, generates significant returns. Even by just holding the S&P 500. That’s called, the opportunity cost of holding something.

Frank Curzio: And that value lost by holding GE, and GE on a split adjusted basement, he bought at $215 a share. Again, split adjusted basis. So even though that stock, GE has doubled from its July lows recently, it’s still trading 50% below these levels. So, if you’re looking at say, 2017 until today, at the S&P 500, it’s up 115% while GE’s down 50%, imagine if we still, if I still owned that, I’d be out of business. Nobody would want to buy my newsletter. But how do you convince people to buy something when you’re wrong is, make it a religion. Get on the roof tops and keep shouting about it. No matter what the facts are, no matter what changes, just keep shouting about it, because everybody’s going to believe it. And a lot of people will.

Frank Curzio: I look at Trian’s Fund. It was 13 billion in 2015. It’s eight billion now, during one of the biggest bull markets, where this is a big position in his portfolio. And he’s not one that has a lot of stocks in his portfolio. He doesn’t have dozens of picks. He only has a few names in his portfolio. GE has been the staple in his portfolio. Glad it’s coming back a little bit for him, but what about that opportunity cost? It’s saying, “Hey, let me get out of this thing. Learn my losses here,” and then go into something else. And just following your stocks, because you’re going to be wrong and really fricking wrong sometimes. That’s the business, but that’s the easiest way to lower your risk. But keeping a dollar target in a stock where the outlook has clearly changed, it doesn’t make sense.

Frank Curzio: And this analysis is not based on fundamentals or research. It’s based on an analyst that’s being stubborn. He’s refusing to adapt to changes in the stock and the marketplace. And if you’re someone that’s listening to him or listening to some of these people, that puts you in danger. That puts you in danger. Doesn’t put him in danger. He’s an analyst, is still going to get paid by his firm. He’s probably, I’m almost 100% sure of this, not allowed to short this stock. If he wasn’t really allowed to short AMC since May 2020 at 14, and it’s 40 right now, I mean, this guy would be living on a park bench. He’s not, he’s still at his firm. He’s still doing great, but everyone listens to him, right? Does he care about that? I don’t know, but it’s crazy. But you, the investor, who’s listening to him loses a ton of money. Listen to a guy who doesn’t have stake in the game and doesn’t even care, and this is his position. This is how I feel.

Frank Curzio: But, don’t blindly follow someone because you love the story. Because chances are, that person who’s telling the story how, “You need to buy gold,” for the past 25 years or, “Get out of the market, it’s going to crash.” You got wrecked listening to this person. But trust me, these people are still making a ton of money off of you. A lot of them don’t have stake in the game. They’re charging you stupid fees for under-performance in their funds, or writing tons of books about the same subject and keep revising them, that you’re going to buy, regardless of this person’s been wrong for decades, because it’s a mindset and you just believe it. You totally don’t look at the facts.

Frank Curzio: I can’t tell you how many emails I got from COVID and then they’re like, “Well Frank, let me see your,” and I showed you. Here’s the sites. Here’s the data. Here’s what I’m looking at. I don’t have stake in this. I have stake in making sure that you’re healthy, that you’re doing great investments, that my family’s healthy, doing the right thing with COVID. That’s where I got the stats from. Why’d I dig in so deep? Because I saw all the shit that was being reported. And a lot of it was shit and bullshit.

Frank Curzio: So, in short, these people, their net wealth is going higher and higher where you’re getting smoked. And on Wall Street, it’s one of the few industries where you can do that, where you can lose other people’s money, but somehow maintain credibility to get more people to invest. I can’t say how many people I know that destroyed their fund. Destroyed their fund. They just had a bad trade or whatever. And they went all in, because it’s other people’s money that you’re managing. And then this guy, like a year later would just start a fund. And he’s like, “Hey, this,” raising half a billion to a billion dollars. I mean, Wall Street’s awesome. That is fantastic. The guy just wrecked you and right away, everyone’s like, “All right, cool. Yeah, yeah. Let’s go. Let’s invest in him.” And that’s Wall Street for you, but guys, don’t make it a religion.

Frank Curzio: Don’t make it a religion. Don’t get caught up so much in this story where when the facts change, I know it’s hard to do. It’s hard. It’s difficult. It’s like you have a habit that you’re trying to break. If it’s drinking soda, or if it’s eating, if it’s smoking, whatever it is, it’s so hard to do. But when the facts change in investing, we’re talking about investing. You need to change, you need to adapt. Because that’s one of the biggest mistakes I make. And just seeing this report. I mean, it’s a disgusting report to me. It’s implying that AMC’s going to be bankrupt. It’s going bankrupt, and it’s clearly not the case. The fundamentals have changed dramatically. Yes. It’s wildly overvalued. Yes. It can go down 70%. And if it went down 70%, it would still be whatever. You do the math, how many hundreds percent above its target price, but it’s not going bankrupt. It’s not.

Frank Curzio: It’s sad that this analyst is allowed to print this, generate lots of money, fees from his investment bank, whatever, his firm, but yet he’s not investing in this. You’re investing it, you’re getting killed, and you need to smarten up. That’s what the segment’s about. Don’t be stubborn. Don’t get caught up in the story, and be able to adapt and change on a dime. You need it in today’s marketplace, especially in a growth market where fundamentals really don’t matter. And it’s really crazy out there. You need to adapt.

Frank Curzio: So, I know a lot of you signed up to Masterworks, and that was after I interviewed Scott Lynn a few weeks ago. So, Masterworks is democratizing the $1.7 trillion art market, through what? Through tokenization, a word I know you’re familiar with, since that’s what we did with Curzio Research. Tokenized or selling off a piece of our company to people, to you, who want to invest and own an equity stake in our business. And that is through our Curzio Equity Owners token, which by the way, is going to be trading on tZERO two weeks from now. Masterworks is tokenizing the fine art industry, so that anyone could buy into a piece of some of the finest artwork in the world. That wasn’t available to most people ever. Now it is. So, Masterworks has a lot of artwork lists on its site, masterworks.io. It’s now being valued, the company at $1 billion. It’s a real company. It’s not some idea that some guy thought of, did building their site tremendously. I know a lot of you have already signed up to it.

Frank Curzio: But Masterworks, a major player in the tokenization world. They love our platform, because we’re basically tokenizing is as well. So much so that Scott’s been running a special offer for just you Wall Street Unplugged listeners. I know some of you took us up on this already, to where you can bypass the request invitation part. It’s a little bit of a pain in the ass, and immediately get accepted to the platform. So to do this, use the link, www.masterworks.io/wsu. And once you’re in, you’re going to see the pricing of all the paintings listed on Masterworks. You could purchase a piece, also trade on secondary market, but art’s one of the fastest growing asset classes. It outperformed the S&P 500 for the past 20 years, really exciting stuff. And again, to get that special offer just for you Wall Street Unplugged listeners, thanks to Masterworks, go to www.masterworks.io/wsu, and that’ll give you immediate access where you can personally invest in some the greatest artists and network for the first time ever.

Frank Curzio: Now, let’s get to a couple of your questions, which I do like to take in these segments. So, let’s get for a question, let’s go over here, got a bunch of them this week, and this one is from Bill. So he goes, “Hey Frank, I visited our local Costco today.” He says, “I know everyone’s talking about supply chain shortages, but I did not observe it here. We’re in suburban Philadelphia. Here are a few observations. We want to secure a turkey, as we heard there was a shortage. Costco was fully stocked, both organic and regular turkeys. Their regular Butterball turkeys cost 99 cents per pound. I paid $20 for our turkey, which will feed six of us and give us another day of leftovers.” Think about that, 20 bucks.

Frank Curzio: I ordered DoorDash the other day for my daughters, because we went out, ordered DoorDash, and it was like $40 for two orders of Chick-fil-A. DoorDash. I don’t know how that company’s losing their money. They generate, their revenues are going higher. They’re losing more and more money. I don’t know any DoorDash driver. I mean, I’ll be honest with you. I don’t know if this is bad saying this, but if I was a DoorDash driver and there’s like McDonald fries next to me and that bag is open, I’m definitely taking one. I mean it’s McDonald’s French Fries, right? You got to take one. Who do doesn’t take McDonald’s French Fries? I don’t know. Just crazy, but they do well.

Frank Curzio: But $20 again for a turkey, feed six, that’s pretty good. And you can have leftovers, because, “There are plenty of Christmas supplies and toys, as well as clothes for kids. There were ample supplies of toilet paper, et cetera. 60 minutes did a spot on the back of shipping containers, and how high the container prices climbed. Here is food for thought, and no pun intended. Is the supply shortage equally spread throughout the country? Is it a fake crisis? What I mean is that, maybe there was too much inventory already in the US. It is truly a supply issue leading to inflation, or are people taking advantage of pricing power? I find it interesting to hear people across the country talk about prices rising. Some of our local places have secured reasonably priced, local produce and goods, which has held prices in check. We do not live in a rural area. Our area is a typical upper middle-class suburb, called,” and I won’t give it out, but it’s in Pennsylvania.

Frank Curzio: And he said that, it’s Republican and his US rep is Brian Fitzpatrick, a Republican who’s one of the 13 people who voted for the infrastructure plan. The rest, Bill just gives me an idea of his area. Bill, I think the supply chain issues are company specific. If Ford and GM is struggling while Tesla is not, Costco’s able to stock its shelves, but many retails are having trouble. If you look at Nvidia and AMD, when it to chips, right? They’re killing it when Intel seems to be struggling. Why is that? I don’t know. So, it’s not the supply chain is impacting every… It impacted the auto significantly, and I explained the reason why. Autos have a different supply chain where it’s more real time. And when you have the iPhone coming out again, you have really two companies, it’s Samsung and Taiwan Semi, that manufacture almost all the chips for everyone out there. There’s other companies that do a little bit, but they have all the fabs and everything, and they have a certain amount of capacity.

Frank Curzio: And, a lot of the technology companies saw what was coming with COVID, and they called these guys and said, “Listen, we need more capacity. We need more capacity, we need more capacity.” And the autos saw it late. And when the autos called these guys and said, “Hey, we need capacity.” They’re like, “We have none, sorry. We got to build more fab plants, which takes four to five years to build.” So that’s why you’re seeing the struggle with autos where if you, I think Jim Kramer went on and said he tried to buy a car, and it’s not going to get delivered until March. And he ordered it in March, right? So that’s a year, and I’m hearing around nine months. So, it’s different for companies and also some industries, but Tesla’s not really seeing this problem. That big problem is for GM.

Frank Curzio: My biggest concern with this whole thing, and by the way, I research this material all the time, with supply chain. The last two weeks, finally, it has kind of bottomed and starting to get better. Finally, we were told this is going to happen like six months ago by Ford and GM. So, it’s finally bottoming to the point, it’s getting a little bit better, not great. But my biggest concern is the delivery component. So we could build more containers, which is Trinity, use more robots, AI to produce goods, which is AMRAN, Rockwell, companies that do this. And, we’ll figure out the shipping problem. I believe that. What I’m most worried about is the trucking problem. So, that last mile delivery, what these ships unload. And I think that’s why you’re seeing, even with the ships where, “Hey, we’re here, but we have no one to really take these goods.” And yeah, you’re loading these stock yards and stuff like that.

Frank Curzio: But when it comes to trucking, we currently have a shortage of more than 80,000 truck drivers right now. We’re going to need to hire, and this is based on industry statistics, one million new drivers over the next 10 years. So, a hundred thousand a year. I mean, Time’s reporting that, “Hey, it’s not a trucker shortage, or they get treated bad or,” listen. You can make a hundred thousand dollars and get full benefits right now in trucking. And they’re dying for workers, they’re dying for workers and they need them. And prices are going up. They’re able to pass those costs on, raise prices to their customers. So, they’re able to pay you more money because they need this stuff shipped. They need it shipped. They all do cost analysis, and it makes sense to pay truck drivers more than a hundred thousand dollars right now. Still, can’t get them.

Frank Curzio: So large retailers, where you have Costco, which you mentioned, Walmart, Target, Best Buy. They’re going to overpay to lock-in drivers. So, they’re going to have less inventory concerns. These guys have a lot, a lot of money. But what this does is, it creates an almost impossible situation for the smaller players because they’re seeing their costs skyrocket, raw materials, everything skyrocket, yet, they can’t get inventory on the shelves because all this capacity is being eat up. And this is from industry people that I’ve talked to, who are very deep in this industry, where they’re overbidding. Where smaller companies think they have freight. They think they have trucking. And next thing you know, they’re like, “No, no, no, we didn’t secure it.” Why? Because it’s a Walmart or one of the big guys came over and offered them double, which they could afford. And long term it’s better for them, if they’re eliminating a competition. That’s what happens.

Frank Curzio: That’s why during Christmas season, a holiday season, you’re going to see deals that Walmart and Costco can provide, and Best Buy that no one else can. No one else could touch them because they could afford to take a loss on certain products, because they know, that person’s going to come in and buy numerous products over the next three months, six months, nine months. So, they’re willing to lose money. So, that return on ad spend is 70%. They’re happy. Doesn’t have to be over a hundred percent on day one, because they know once they lock in that customer, or whatever, at a Best Buy and they’re going to go through Geek Squad and all this stuff, they have all this data available, all this data spending money on, and that’s going to hurt the small players.

Frank Curzio: It’s not a good scenario, but you look at through the holiday season. I’m going to tell you this guys, this is going to be winners and losers. It’s not that, “Hey, retail sales had a great number.” Last month just came out today. Everybody’s going to benefit, Macy’s, Kohl’s. You see more money pour into those companies from hedge funds and their 13Fs, and Kohl’s, and Macy’s. I’m going to talk about that tomorrow with Daniel, but you’re going to see not every company benefit from this and there’s going to be big losers. You’re going to see this trend play over the next two months. The holiday season. Just be careful what retailer you own, going into the holiday season, because some of them, as you see with this market through earning season, there was companies that went up 15, 20% on good earnings and companies that fell 20, 30% that on bad earnings, like a Peloton.

Frank Curzio: I can name 30 of them that crashed, that are well-named companies that people, that had growth trends intact, and all of a sudden it just disappears. So be careful, we’re an expensive market. And when companies miss, you get wrecked. And not everyone’s going to benefit, not everyone could get their goods to the stores for the holiday season. There’s not enough capacity out there. We all know that. It’s going to be interesting to see how this trend plays out. Going to look for hedge. You might see some recommendations or some shorts come out in my newsletters going forward, but something to think about if you’re holding retails into the quarter. Thanks so much for that question. Let’s get into one more. We have a little bit more time here.

Frank Curzio: And, this one is from Jim. He goes, “Hey Frank, happy Curzio One member here. Very satisfied with the results so far. Wondering what your outlook is for the future timeline for the security token market. I currently have accounts open with MERJ and tZERO, and have holdings in the CEO token. tZERO as well, the Aspen token, and Exodus, all those trade on tZERO. This market still seems very slow and inactive with few listings. I was interested in hearing about your opinion on prospective time line for development of this market. Curzio, being a first mover in this space, I see enormous potential. It all seems to be moving a little slow at this time. Luckily the Fed is doing everything possible to support this impending crackup boom, and I’m quite busy with stock and option trades. Thanks, just keep up the great work.”

Frank Curzio: So Jim, this market has opened up tremendously. I mean, you think it’s slow now, it was really slow nine months ago, just coming out of COVID. Now everything’s opened up. So, you’re seeing more of these alternative trading platforms, exchanges listed for security tokens. You’re seeing more money being raised through security tokens, more listings. This is like 2017, I’d say 2016 in crypto, right? Where people are starting to say, “Hey, Bitcoin’s okay. And Ethereum,” and this and that. And now, you’re seeing all these platforms open up and more and more volume. tZERO, we’re going to be next to list there with our CEO token, a couple weeks, just go into all the process now. MERJ, an international exchange, great people, but we are a US-based company and we want to be trading on a US-based exchange.

Frank Curzio: And to be honest with you, tZERO, it’s a lot easier for anyone to just open up an account there and trade our token, compared to wiring money overseas, which is not a problem for people. Maybe credit investors will have businesses that wire money, but most people wiring money overseas, it is scary, right? So, tZERO is starting to list tons and tons of people on their site. That’s why I chose them. It’s growing rapidly right now. The volume’s still going to be small, but it’s going to get bigger. And we want the trend to get bigger, and bigger, and bigger. And that’s what we’re seeing in this market. There’s new, great issues coming out. Huge wildcard there where the SEC could come out and deem a lot of these utility tokens, securities. They are securities. They’re late to the party, when it comes to the SEC. They’re going to deem them securities sooner or later. When they do, these guys have to show their financials, show everything.

Frank Curzio: And then when that happens, they’re going to run to the exits. They’re going to run off a Coinbase. They’re going to run off a Gemini, even Kraken. They’re going to go to Binance and international exchanges, because they can’t show their financials. Because all these kids took so much money and believe me, they’re don’t want to show their financials, or the insider holdings, or anything. They don’t want to report anything. And they are going to have to report, if they’re deemed securities. If that happens, that’s going to create a massive, massive boom in security tokens. It’s going to happen much quicker. But right now, it’s happening. It’s good. Is it slow? It’s much, much faster than it was. But exciting times, because we’re one of the first in here, which means a lot of these companies who are raising millions, and tens of millions of dollars to launch their tokens are coming to us, like Masterworks, which is our sponsor, right?

Frank Curzio: So, the fact that they’re tokenizing, we have something in common, but that gives us an in, where I’m able to get a CEO like that on here. And he’s like, “Hey, I’m going to be your sponsor, and people are signing up, and they’re able to invest in these artworks for the first time.” I’m getting a lot of looks at great ideas. Even in the carbon space and alternative energy space that are tokenizing. In real estate. And a lot of these people are coming to us, because we’ve been through this system and we’ve done this already. And that’s really, really cool because that’s going to open the door to new ideas, especially in our newsletter, as you’re a Curzio One member, which means you got CCI, which is our Crypto Intelligence newsletter. And, that’s where you see a lot of these new deals come up, where you might be able to invest in a discount, and you don’t need to be in a credit investor, due to new regulations.

Frank Curzio: And also, since you’re a Curzio One member, it means that you are going to get access, Jim, to Luke’s Big Money Trader. You get free access to that, which you have free access already. It’s in beta version. So we have… I think he made two trades in there. His next trade’s going to be made on Monday, but this is the first product, a new product, and premium product that we launched in over a year. So, really, really exciting as we continue to expand our products and services for you, we continue to grow. I want to put products and the right people in front of you to help you make money. This is an awesome, awesome product. You guys are familiar with Luke. He’s been writing for us for free. You can go to Curzio Research, look at all his free work, and you could see how right he’s been. Calling market trends on different stocks by following the big money, tracking it to where, not that you’re investing so much after it, but you can invest alongside it.

Frank Curzio: And, Luke has an incredible track record for over a decade, using this system. It’s led him some of his fastest growing stocks in the world. Like the Netflixs, the Teslas, the Facebooks early on. Many of those huge growth names you know today, and also those are up thousands and thousands of a percent over the past years. So, when I look at this product and why I love it, and why I launched this, because I don’t just want to launch a product, to launch a product for Curzio Research, right? It doesn’t make sense if people going to buy it and be like, “Ah, this sucks.” We’re in a massive growth market that’s going to continue. We’re going to see ups and downs. I think 2021, we’re almost guaranteed to see a 20% correction. Our corrections usually happen in two weeks, and then we rebound, right?

Frank Curzio: But there’s a lot of stuff going on, inflation and things. And there’s a lot of risk going into 2021. And, the underlying conditions are still the Fed keeping rates low, more money being injected into the system. Growth is going to trump value. And these are names that so many investors, including myself, have avoided because they have high PEs or they’ve already had big moves. I mean, you look at Amazon, we recommended our news, I think 2017, 2018. And it was approaching 900. So, we got it in below 900. You might say, “It’s $900. Look how expensive. It’s crazy.” It’s 3,400 today. So, a lot of people feel like, “I missed that move.” But yet over that time, look at what Amazon has done. Not just retail and yes, it benefited from COVID, but still, still huge in cloud. Massive, biggest company in cloud. Yes, Microsoft is caught up and now it’s kind of two of them, but they are massive when it comes to AWS. And that is one of the highest margin businesses in the world.

Frank Curzio: And this company has continued to make money, make money. So, it’s not just buying these things. It’s seeing the growth behind them. And that’s what this newsletter tracks. And a lot of these funds have the investing in some of these stocks early on, and Luke’s able to track them through a system and follow. So, happy to launch this product. He’s got a Big Money Trader guide of how to capitalize on mispriced stocks. He’s going to have educational videos. He’s great on videos. So we’re launching it tomorrow. You’re probably going to see a video on it. It’s a short video, we’re not doing long videos. If you’re interested, definitely sign up to that offer, because it’s a special price just for you, just to Wall Street Unplugged listeners. But again, very excited to launch that.

Frank Curzio: And I know last question was from Jim, and he talked about, yeah, you trading stock and options. This is going to have options in it. This is going to have an option newsletter. Options are on fire right now. And if you look at his current newsletter, which is The Big Money Report, think about those stocks and placing option trades. I don’t know if you’re a subscriber to that newsletter. And that’s pretty exciting, because when you see his performance, you’re going to know why it’s exciting. So, he’s going to teach you how to trade these options. You can do them through your E-Trade accounts. So, really exciting stuff. His next trade is going to be on Monday. Okay, everybody has two in a newsletter that you’ll see if you subscribe, but that next trade’s coming Monday, which is pretty quick and excited to launch this product. So, that comes out tomorrow, and questions, comments you guys have on that, please feel free to email frank@curzioresearch.com.

Frank Curzio: But really happy for Luke, launching this product and my team, and yeah, really exciting times right now, that we’ll continue to expand new products and build this company for our customers. So guys, questions, comments, feel free to email frankcurzioresearch.com. Appreciate all the support. 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, 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 weekly Wall Street Unplugged podcast—ranked the No. 1 “most listened-to” financial podcast on iTunes—has been downloaded over 9 million times.

Editor’s note:

Sign up here to receive your discount as soon as Big Money Trader launches… and get a FREE training series on how Luke uses this strategy to lock in quick triple- and even quadruple-digit gains.

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