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What's really moving these markets
Wall Street Unplugged
Episode: 828December 7, 2021

The ‘Goldilocks’ economy is officially over

I have a serious message in today’s podcast: Prepare for a tough 2022 in the stock market.

In just the past week, we’ve seen wild swings in the markets over Omicron concerns, surging inflation, and Federal Reserve Chair Jerome Powell changing his tune on whether inflation is transitory. [0:40]

The bottom line is that the “Goldilocks” conditions for a bull market—record low interest rates and trillions in government stimulus—are over. We’re in unprecedented times… and the only choice the Fed has to fight inflation is going to result in a bumpy ride for stocks. [5:40]

We’re already seeing volatility around the expectation of rising interest rates. I highlight many stocks well off their highs…. and why you should expect more volatility going forward. [8:00]

Next, I explain why the Fed’s money-printing tactics were successful during the 2008-2009 financial crisis… and why that playbook won’t work this time. [12:10] 

It’s not all doom and gloom, though. I share some sectors and stocks that will continue to do well as we learn to live with the coronavirus and its variants. [15:35]

My advice is to be careful and look to protect yourself. And one of the best ways to do that is with our Moneyflow Trader newsletter, edited by Genia Turanova. Her recommended hedges can save a portfolio during a downturn. [18:18]

In addition to hedging, you want to own quality stocks… especially those in massive growth trends. Curzio Research Advisory members will learn all about an exciting new trend—and my favorite way to play it—in tomorrow’s issue. [23:00]

Turning to questions… 

After a terrible quarter, a listener wants to know if I think DocuSign (DOCU) is a buy… along with my take on gold stocks. [25:05]

Speaking of gold… Do investors have to choose between gold or cryptocurrencies? [29:00]

Inside this episode:
  • Why the “Goldilocks” economy is over [5:40]
  • Popular stocks well off their highs… and why we’ll see more volatility [8:00]
  • Why the Fed’s old playbook won’t work this time [12:10] 
  • Sectors and stocks that will thrive despite COVID and its variants [15:35]
  • Why Moneyflow Trader is the best newsletter for these times [18:18]
  • Curzio Research Advisory members are about to discover an exciting new growth trend [23:00]
  • Is DocuSign (DOCU) a buy? And the gold stocks Frank recommends [25:05]
  • Do investors have to choose between gold or cryptocurrencies? [29:00]
Transcript

Wall Street Unplugged | 828

The 'Goldilocks' economy is officially over

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 December 7th. 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. I like to have fun with these podcasts and make them entertaining as hell, while educating you on the way and giving you lots of ideas to make money on. But, today’s podcast is going to be a little serious. I need you to pay attention, because we are heading into 2022, where we will see a very difficult and volatile market. Really, really tough conditions. And we could look at the past few trading days alone, which have been nuts. DOW’s down 400 points as Omicron surfaced. People are worried, and they should be at the beginning, right? Holy cow, it’s spreading in different countries. And, the markets got hit a little bit. Worried about more lockdowns, and less international growth and stuff like that. I get it.

Frank Curzio: Then we rebound a little bit the next trading day, and what do we have? We have Powell go on TV and do a complete 180. Says, “We’re going to need to raise rates as inflation’s no longer transitory. It’s going to happen sooner, probably next year, mid-next year.” That was a big surprise. Not the inflation part. Everybody knew this inflation, except for the Fed. The smartest guys in don’t know, because I don’t know if they get their stuff served to them, they don’t have to pay for that shit. I have no idea how the smartest guys in the world that make a fortune, that do very, very well, and they’re in Fed. Control the money supply. These people had no idea that inflation was not going to be transitory. Right? We all knew that, right? This, my daughter knew that. They just didn’t know that.

Frank Curzio: But what was the surprise in the market is, yeah, we saw inflation rise, but we just didn’t… We all thought, “Hey, they’re going to say it’s transitory for another year or two. And then, maybe then start raising rates.” But he said, “Nope, it’s no longer transitory. It’s here.” And they use Omicron as an excuse, which is fine, but that spooked the markets and the markets fell sharply. Yesterday, the Dow surges 600 points, nice rebound. Another 400 points, as of right now, as I’m looking. 460 points to be exact on the Dow. This mostly of those fears about Omicron within five, six days are easing. So, it doesn’t seem to be a dangerous variant as of now. So everything’s fine. We’re okay. Again, that’s just the past eight trading days.

Frank Curzio: Now, if we look back over the past 10 years, what have we had? Why have we had one of the biggest bull markets in a generation? We had an economy which is known as Goldilocks. It’s not too hot, not too cold, but we had strong earning, but jobs are kind of weak. Average is, slow GDP growth. I mean, you look from 2010, 2019. GDP was only above 3% twice. And that was barely above 3%. 3.08% in 2015 and 3% exactly in 2018, but kind of slow. Wasn’t like four, five, 6%, “Holy cow, it’s heating up. The market’s heating up, inflation could,” no. It was just like hot and cold. Not too hot, not too cold. We had tariff issues with China, potential government shutdowns, which happen every fricking month because our politicians are assholes. We all know that. Earnings were pretty solid, but then you had interest rates, especially 10-year, remain relatively low historically, and kept pushing lower. Along with inflation, which the CPR was under 2% since 2012, mostly. Outside of a few years, when it rose slightly above 2%, but it always fell back below 2%.

Frank Curzio: And this is dating up to pre-COVID levels. Even when we look at 2018, earnings started to peak, but then what happened? We lowered corporate taxes, and earnings started to surge. That was more in 2017, going into 2018. Then in late 2019, what do we see? Earnings kind of peaking. GDP was slowing from 3% in Q2 and Q3, to 1.9% in Q4. This is the quarter right before COVID. And that’s okay, because the Fed was there to make sure conditions were super easy. Not too high, not too cold, but that’s what Goldilocks is. You know the Feds look at it. It’s going, “No worries.” Even though we see slow growth here and there, and it’ll pick out certain things, even though asset prices are continually hitting all-time highs almost every year since 2011, ’12, but just little piece of economic data. GDP is a pretty big deal. Jobs weren’t as strong. Just little things you could point to and plus listen, inflation was low. So, let’s keep interest rates low. There’s no reason to go crazy.

Frank Curzio: The Fed was there to help us out. No worries. Even on every pullback, it’s a buying opportunity because the Fed’s there to catch you. Goldilocks is no longer the case, and we’re heading into next year. It’s going to be different. And I’m always careful to say, it’s always going to be different, but it is going to be different, because inflation is surging. The Fed’s going to have to raise rates to control it. It’s going to have to taper at a faster rate than previously announced. And you’re going to have bulls out there. They’re going to say, “Well, stocks usually go up during the early stages of tightening.”

Frank Curzio: That’s bullshit, because we have to stop comparing the past to the present, and how it’s going to dictate the future, because we’re in unprecedented times. I mean, 0% interest rates, trillions, trillions, and trillions being thrown at every single problem. I mean, you throw out every investment book you have read. If you read investment books over the past five, six years, you’re losing money in the market. Buy low PE stocks, you shouldn’t buy… You’re getting crushed. You’re getting crushed, because none of this makes sense. And nobody could look at which books are, “Hey, this is my experience. This is what I learned. And here’s how you’re going to make money, buy everything I did, and the mistakes I made.” However, this is a market that’s never happened in history. In history.

Frank Curzio: I mean, it’s true for those people to say, “Hey, you know what? Stocks usually go up during the early stages of tightening. That’s a fact.” Yeah, but the S&P did not go up three straight years before those periods to the tune of 31% in 2018, 18% in 2020, and 22% in 2021. We didn’t have those conditions where we were up that much. So all of a sudden, you’re going to take one year that compares, “Hey, the last time,” we could have been down three, four years before that. And regardless of what the Fed did, whatever. Yes, it probably, market was probably heating up a little bit. And that’s why the Fed was raising rates or whatever. And again, raising brief in 2018, you probably don’t even remember the last time before that. I think it was 2008 or 2007, ’08, leading into credit card. They were raising rates while the market was crashing, which is insane. It just shows you the Fed is so behind the curve.

Frank Curzio: But, the comparisons are all bullshit now. But when the Fed raises rates, you need to understand it. Because what they’re doing is, they’re taking leverage out of the market. And we’re in the most leveraged market in history, by a mile. By a mile, by a mile, not even close. That’s why you’re seeing a lot of risky names get nailed, or names that are seeing that strong top line growth, but they don’t have it in their discounted cash out performance, going out to six, seven, eight years, the analysts, that these guys aren’t going to generate money for a long time. Those names are getting nailed.

Frank Curzio: I mean, why don’t I ID some of these names. I’m not going to just cherry pick, like whatever. I actually screen for these names. Okay? These aren’t bullshit companies. These are brand names of more than $10 billion market caps, that have gotten crushed down more than 40% in the past three months. DocuSign’s down 60%. Their market cap is 26 billion. They shed over $30 billion in the market. Just, I mean, most of that we know was just a week ago, when they reported the worst quarter you could probably ever see in a growth company. Peloton down 55%. That was a $30 billion company. Is 14 billion, right? So, that was wiped out. DraftKings down 50% plus. Still has an $11 billion market cap. Remember, you’re down 50% plus, you lost $11 billion, plus a market cap, just over the past three months. Robinhood down 50%. Still, has an $18 billion market cap. You can go Bumble, LivePerson, ESKY Telecom, Lemonade, Compass, CRISPR, Beyond Meat, Virgin Galactic, and Zillow, Snap.

Frank Curzio: Snap’s market cap is $75 billion. It fell 45%, and half of that wiped out in 30 days. Pinterest, $23 billion market cap, Zoom, $54 billion market cap. Those are the market caps today that are down 40% plus. 40% plus, just over the past three months. No surprise, these names are getting destroyed. They’re getting hit hard. The anticipation of leverage coming out of the market. They may think, “Well, you know what? We got China. China’s the wild card, right? They’re going to come to the rescue. It’s the growth engine of the world. Can’t afford to upset the world’s growth.” Not anymore. China has its own problems. Forget about climate change, they’re just doing for Beijing. And after that, forget it. I mean, they’re ramping up coal like crazy, producing cheap energy, making a fortune, monopolies on rare earth minerals, killing us, right?

Frank Curzio: Because we’re idiots about climate change, deciding to change and have our oil companies… We can be energy independent. We are energy independent. Stopped drilling oil. We’re going to replace it. We don’t have anything replace it with right now, but we’re going to have alternatives in the future, right? You wonder why you’re paying a shit load of money for natural gas. So, gasoline prices, heat your house, air conditioner energy. You wonder why? That’s why. Maybe you should have those alternatives in place before you have these oil companies, and you force them to stop drilling. Because, they’re publicly traded and you have the biggest companies in the world. You could do your research on it. They have trillions in capital, and the biggest positions are supporting this agenda right now.

Frank Curzio: But getting back to China, who doesn’t care about climate change. They do right now because Beijing Olympics are what, a month and half away? Can’t afford to upset the world’s growth. But China, look what happened after Evergrande. That was a very, very, very, very big story that kind of got swept under the carpet. Now, I’m not too sure if you saw the latest stats. I get them. That’s my job. If you look at a real estate, contract sales are down 38%, year over year. Much, much sharper than the 30% decline that was expected. The government’s trying to make borrowing easier. Not working. Those deadline developers are still in big, very, very big trouble. They have higher borrowing costs, and they have shut those developers out of offshore debt markets over the past few weeks. What does that mean? In layman’s terms? Default risks are increasing for all these real estate firms, which most real estate firms carry lots of debt on the balance sheet.

Frank Curzio: So, what do we have now? We have inflation. The whole world knows it. Fed tightening, constant uncertainty about future COVID variants. I mean, can’t be surprised, most firms are lowering GDP estimates. This includes Goldman Sachs who lowered their Q4 GDP from 4.2% to 3.8%, and also lowered their 2022 full year GDP to under 3% now, right? To about 3%, under 3% now. Now, you’re wondering why so of these names are getting hit. You’re going to see leverage come out of the market, and you have to be careful with the Fed, because the Fed, what have they done year after year, after year? If you’re looking at the credit crisis, the worst thing to happen to the Fed is they made a fortune. They made a fortune. Everything they bailed out.

Frank Curzio: If you look at the banks, you’re looking at the warrants, you’re looking at Fannie and Freddy who is still under conservatorship, which is illegal, by the way, they’re making billions every quarter. They took all the distressed assets that are worth probably 2X to 7X right now, and they made an absolute fortune. So, what do they do during COVID? Just spend even more money. Were probably going to make even more money. But this time it was different. They didn’t do it to shore up the banks and make sure people know their money is there, which a lot of those banks didn’t even lend some of that money out, or most of that money out. Instead, they handed checks directly to people, trillions, and trillions, and trillions of dollars. 10 and a half trillion in total for the US. 10 and a half trillion dollars. Put that in perspective, to save the world and the financial system, it was $480 billion. That’s what they did in 2009, 2010.

Frank Curzio: Now, it’s 10 and a half trillion, and we’re still going, right? Infrastructure, another 1.2 trillion. Let’s keep going, keep going, keep going. So, you have this massive leverage, but when you have troubling times, and even the Evergrande situation, or even the credit crisis, or COVID, or things go under, you could always throw money at it to cure it. And that’s fine, because we have an unlimited printing press that’s on, every second of every day. However, with inflation, it’s the opposite. The Fed cannot do nothing. The only thing that they could do, I shouldn’t say they can’t do nothing. The only thing they could do is provide tightening conditions, remove leverage from the market. It’s a lot different. So, you can’t rely on the Fed and that Goldilocks economy, that the Fed’s going to be there. So, it’s not going to be, always a buy the dip on every single stock. It’s not.

Frank Curzio: I’m not telling you, in 2022, every company’s going to see a massive correction, even though we saw most of them have a correction already. I don’t know if you’re looking at the underlying conditions of the market. And yes, if you’re looking at the major indices, there’s still 4%, 3% off their all-time highs, because Microsoft and Apple. If you look at Microsoft, Apple, Tesla, Facebook, Google, Netflix, Amazon, those stocks alone account for $12 trillion in market cap. Five trillion alone, just on Microsoft and Apple. 12 trillion of the 38 trillion in total market cap. And a lot of those stocks are at all-time highs, or pretty close to them. That’s where the money’s going. That’s the safe haven. So, that’s keeping the major indices up. I mean, it counts for a third of it. But if you look at the underlying stocks, look at all those stocks I mentioned. You look at ESG names, marijuana names, holy cow. And some of these things are down tremendously, tremendously over the past three months.

Frank Curzio: You’re looking at it going, “What happened? I don’t understand. The market seems like it’s doing good.” It’s really not. You’re looking at the new lows, to new highs. The new low list has been massive over the past two months, but yet, you’re seeing, “Hey, we’re closing in all-time highs. Closing in all-time highs,” because a lot of it is top weighted from those big technology stocks. Now, if you’re looking forward, I think look, 2022, the cyclical recovery is going to continue. Airlines, hotels, casinos, rental car companies should perform well as we’re going to get used to living with COVID and all the bullshit. We are getting sick of it. We’re not going to lock down and have overreactions, other than New York and California, which you know, you can’t stop those guys, that they’re in that mode. Man, just insane. Insane.

Frank Curzio: It’s so funny. I feel bad for them people in New York. Anyway, you got a new mayor who I’m very optimistic about. So, Eric Adams, hopefully that will change a little bit. We’ll see, hopefully, but you’re looking at that risk of COVID, new variants. They’re going to be around for a while. Just think, you’re not going to see these major overreactions. Plus, if you’re looking at airlines, hotels, I mean, they’re still trading 25% off their pre-COVID high, especially airlines. Airlines are trading at the same level they were, this time last year, other than bouncing this week. But how could that be possible? When the vaccine, everything was shut down, the vaccines were just getting rolled out now last year. How did that be possible? Did you see the last quarters? I mean, they’re like 22% off of their record revenue. That’s not bad, considering they’re not even, they don’t have international revenue coming in yet, but that’s going to change. Might not change next month, might not change three months, but it’s going to change, six months or a year.

Frank Curzio: These guys have pricing power. Everyone’s got to fly. You’re going to see earnings explode. These are great names to buy. Financials always do great in an inflationary environment. Be selective, because a lot of people say that and these things have run up. Oil is super cheap, despite these stocks running incredibly high off their decade lows. When you’re looking at Devon Energy go from $6 to 40, I missed it, but it was pretty much $40 three years ago, pre-COVID. And here’s the name that just got murdered. So now, it’s at those same lows. The fundamentals, financials are 10 times better. I also like biotech, heading into the JP Morgan Healthcare Conference, which is next month, right after the Consumer Electronics Show. Consumer Electronics Show, I’m going to be attending. I do lots of live events. So, be prepared, it’s going to be really, really cool.

Frank Curzio: But JP Morgan Healthcare Conference is right after that. That second week in January. So, right after the CSNs. And that’s been around 40 years, that’s like the Super Bowl of healthcare conferences. But, you look at biotech, the sector got hammered this year, especially over the past three months. But this is a conference where companies report data, and interim data within the phase one, the phase two studies, and I’ve seen names go up 50% plus. They didn’t crash before that. Now, we have a big crash in these biotechs. I think biotech is setting up. Look, is there risk? Yes. Are you going to try to catch a falling knife? A little bit, but they’re down so much that any good news, and a lot of these companies going to be reporting at this conference, I mean, these things could pop anywhere from 30% to 50 to 75% in a couple of days.

Frank Curzio: And think how wrecked oil companies are. We’re there with a lot of biotech companies. I’ve seen companies get FDA approval, and be down 60, 70% from their highs. And they’re about start generating a shit load of revenue because they just got approved for maybe one of their first drugs. I’ve seen it. We just recommended a stock like that in Curzio Venture Opportunities. How could this thing be down 60, 70% when they’re going to see explosion in sales going forward? That’s what you’re seeing. It’s just a rush. It’s money coming out. Algorithms. Doesn’t make sense. But my advice is to be careful, and definitely start buying puts. Protect yourself. We do this in our Moneyflow Trader newsletter. Genia does a great job of this. And if you’re looking at stocks in just the past month, or past few months, right? So, Chegg is down 66%. Lightspeed’s down 60%. Okay. I went over DocuSign, Peloton, DraftKings, Grow Generation, and Bumble, LivePerson. Just so many names have gotten crushed.

Frank Curzio: And, if you bought puts on any of those names, you’d be up 3X to 10X on a lot of them, depending on what names, and what put you bought. But this isn’t only how you protect yourself. Given all the risks coming at 2022, where you see raising rates, tapering inflation, growth peaking for many names, not to mention uncertainties of the next new variant that comes out. But what you’re doing is, she’s buying long data puts. And I’m going to be honest with you, this newsletter got its ass kicked because we’ve been in a bull market for the last three years, or been the last 10 years. But what you’re doing with something like this, and with this product, or what you’re doing with buying puts is its insurance.

Frank Curzio: So, you’re taking your portfolio and saying, “Okay, here’s my portfolio and a hundred percent of it is long,” which are most people out there. Take 3%, buy a long data put. You’re going to be out of the money right away. That’s okay. What you’re hoping for is a 15 to 20% pullback over the next six to nine months. If it happens early, it’d be better. You could take a little bit off the table. That’s what you’re looking for. And you can’t tell me next year, that’s not going to happen. Are you crazy, with all the leverage being removed from this market and all these risks into the market? And you don’t have the Fed there to just hold your hand and say, “Oh, it’s okay. We’re going to keep rates until they can’t anymore.” They can’t. Inflation’s out of control. They can’t. Powell just threw in the towel. You can’t tell me that a lot of names aren’t going to get nailed. There’s still super high expectations for some of these names, that are crazy. But take 3% of your portfolio. You know what? If it doesn’t work out, you lose 3%.

Frank Curzio: Chances are the rest of your portfolio’s going to do well. A lot those long positions do well. I mean, the S&P 500’s up what, 20% plus? You did well, big deal, 3%. However, if you’re seeing a marked collapse in your own puts, if you’re buying these puts, now you’re going to see exceptional gains. I mean, that 3% of your portfolio, if the market crashes enough and really comes down, that could be worth more than your entire portfolio together. That’s how you invest. And not only are you making money on a downturn, you have that money in your pocket, right? You’re profiting from it. Now, you could put more money into some of these stocks are down 30, 40% from their highs. That’s how you invest. It’s a 10-20 year plan. It’s not like, “Hey, let me trade in a day.” You want to do that? Do that. I know traders throughout my life. I’ve met thousands of them. Thousands of them over the past 30 years, I know two or three of them to make money trading. Most of them get their ass kicked. It’s just too hard, just too hard. It’s crazy.

Frank Curzio: But next year’s going to be rough. Valuation for some names, especially tech companies that aren’t generating profits, are still insane. I mean, Virgin Galactic, right? It’s SPC as a symbol is down from $60 a share to under $15 a share, but still has a $4 billion market cap, while generating less than $1 million in revenue over the past 12 months. Not sure when the next ship’s going to take off, it doesn’t matter. I mean, who cares? Chamath and Branson already unloaded $300 million plus in stock for themselves. Murdered the retail investor, and not a bad deal for Branson. He got paid $150 million to fly to space, but it’s still crazy. And even when we look at cryptos, Doge still has a $23 billion market cap. It was 82 billion. 82 billion. Is that a necessity, Doge, do we need that? What are some of the utility functions? I don’t know. Sheba, 20 billion. That was over 40 billion, 45 days ago.

Frank Curzio: And, a lot of bullshit, which we call shit coins, and these cryptos are insane valuations. And if you own millions of dollars in Doge and Sheba right now, right? Say, if you own millions of dollars, you bought it, or how are you cashing in right now? How are you cashing in right now? This isn’t Bitcoin. This isn’t, hold on for dear life. These are shit coins. How are you? These things could be worthless in two years from now. How are you selling the crap out of this and making a fortune? Are you nuts? There’s a lot of leverage out there. It needs to come out of the market. It’s going to be dangerous in 2022. Not a market to take on excess amount of risk. Doesn’t mean, don’t own small caps or don’t own cryptos, but own the great names in those spaces. The ones in the middle of major growth trends, whether it’s the Metaverse, DOW’s, security tokens, Defi, NFTs for crypto, or EVs, robotics, AI, ESG.

Frank Curzio: Also, one major tech trend that most of you have not been introduced to yet, but you will in the weeks ahead. And if you’re a Curzio Research Advisory member, you’ll know tomorrow about that trend. This is one of the biggest trends that in the world. Microsoft has put a ton of money into this, and it’s a problem that’s inevitable. And this technology’s been around 2015, ’16, and ’17. Now, it’s becoming cheaper, and you’re going to see all the major companies. You got Harvard, MIT, all leading scientists in technology, all finding a way to make this technology work. And finally, you’re seeing some strides. Just a little hint there. Again, Curzio Research Advisory members, tomorrow you’re going to get that issue. You’re going to know what I’m talking about, and I’m going to be talking about later on.

Frank Curzio: It’s a massive, massive, massive trend that’s finally here, that nobody’s really talking about. But when I mention it, you’re going to understand why it’s such a big deal, and why those trillion dollar companies, those companies with the trillion dollar market caps need to pour billions, and tens of billions of dollars into this trend as fast as possible. And they’re doing that right now, which is interesting. But stay with those trends. Stay with quality, be selective with growth. I’m not sure space stocks, marijuana, online gambling, these sectors that are not going to see profits for a long time. They’re likely to get hit next year, as leverage comes out of the market. Yeah, with the Fed tapering and planning to raise rates. But, you have to be selective. We’re not in a market where you can just close your eyes and buy whatever and say, “Wow, look, how much it’s up. Let me buy calls on whatever.” It’s not that type of market.

Frank Curzio: Stocks would do 10, 20, $30 billion valuations, generating a few billion in sales. Man, when leverage comes out, those are the names are going to get hit and it’s already started. It’s already started. I mean, you saw it. You’re seeing it right now. You’re seeing it with a lot of brand names that I just brought up. I can tell you another 50 names that have gotten hit. Those are the brand names, $10 billion plus market caps, but the Goldilocks days are over. And that’s what happens when you remove leverage from the market, which the Fed is going to start to do next year, 2022.

Frank Curzio: Okay guys, I want to get to just a couple questions here. First one is from Matt, my buddy in Switzerland. He says, “Hey, Frank, hope you and your family have had a happy December and enjoyable Xmas. Two questions. What is your take on DocuSign after they dropped. Good entry point? Gold and gold stocks, when will we see some Christmas lights in the sector? We are overdue for a nice gold rally, but not sure what can light up the sector. With all the best, Switzerland.”

Frank Curzio: I do think DocuSign’s a buy here. It was a horrible, horrible quarter. And more to the point, you have to understand when growth stops, this is what happens to these companies. Look at Peloton, look at Zoom, look at all those names that I mentioned. When you have growth and it continues, and continues, and continues. That’s fine. It’s why Tesla deserves that massive premium. You’re still seeing huge growth. They’re the only ones with EVs on the market, even though everyone’s talking like they’re going to happen tomorrow, Ford, GM. “We’re putting these things out tomorrow.” You’re going to see it in Consumer Electronics Show. I’ll show you pictures and stuff like that. When, they’re not really going to have any meaningful sales for that, probably for another five years. I mean, production isn’t going to be there, to produce these things and sell them.

Frank Curzio: I mean, it’s not going to be as big as you think. They’re talking it up, like it’s going to be. The reason why Ford spent $30 billion on new technology, right, for EVs is because they don’t have the current technology now. Nobody talks about that. They could have had it by buying Rivian instead of taking a stake in it. But hey, at least they took a stake in it, because Rivian’s now what, at a hundred billion dollar market cap. But they are a competitor, and they have a nicer, much, much nicer truck, the Rivian, then the Lightning that’s coming out, which is basically the Ford 150. So, they’re a competitor, and the Rivian’s much, much nicer. Much, much nicer. So, just do the research yourself and just look at it online. There’s YouTube videos everywhere. It’s awesome.

Frank Curzio: So, DocuSign, right? Got nailed… And I do, because DocuSign’s a great company, and I think it still has a lot more to go in terms of penetration. I mean, things that I do, I wish were in DocuSign still. And, real estate is now catching on, where mortgages and things like that. It’s just a pain in the ass to sign 500 papers, and it just makes sense. There are private placements that make sense. There’s still a lot of companies that I deal with, and signing contracts, and running this company, and having so many different partners and stuff, that they don’t use DocuSign. It’s a pain in the ass. So yeah, I think it’s a buy. I think it’s a very, very good company, but yeah, again, they put up a really crappy, shitty quarter and everybody ran. And then, the algos trigger and that thing got nailed. So, I do think it’s kind of a buy here, if you have a 12-… It’s 24-month horizon.

Frank Curzio: And, gold. Look, I think now that stocks are getting hit, now gold comes into play. Because when everything’s going up, nobody gives a shit about gold, no matter what the inflationary environment. But right now, remember money needs to rotate. If it doesn’t rotate or it stays in cash, these fund managers don’t make money, and it’s all about money. They need to make right. They need to. That’s what it’s all about. So, it has to rotate someplace. So, you look at uranium, a lot of it’s started rotating in uranium. Finally. Now, you’re looking at a lot of sectors getting hit, inflation coming, gold makes sense, because the gold producers are the cheapest they’ve ever been. I don’t know if I could say in history, but if you’re looking at these companies, the earnings to production, their costs are down significantly. They produced for under a thousand. What are we, 17, $1,800 an ounce in gold? They’re producing for eight, $900. I mean, these guys, they’re paying dividends now.

Frank Curzio: I mean, they were so leveraged, they almost went out of business in 2012 and ’13. They’re the strongest they’ve ever been in history right now, and their great, great buys. They’re generating huge earnings, get paying dividends, massive cash flow. They get to pick at a little rolly, shitty junior miners to say, “Okay, we’ll pay you for this.” Because the little junior miners are still not doing well, and they’ve never been in a better position. So yeah, I think 2022 is going to be the year, although I could have said that last year and the year before, with inflation coming up, but hey, it hasn’t happened. But gold, now that the market is coming down, you’ve seen certain sectors get hit. Now, it makes sense for some of that money to rotate into gold, when you could have rotated to anywhere and made a lot more money in any other sector because it’s a bull market.

Frank Curzio: Next question’s from Dan. It is the last one. He goes, “I love your new format with YouTube videos.” Guys, catch us on YouTube. It’s really cool. We’re going to be producing a lot more stuff, even live videos on YouTube and stuff. So, yeah. And you get to watch my beautiful face, which is cool, but I like YouTube, and it’s a great platform. He says, “I watch you, Daniel, Luke, and all your videos, and I’m subscriber to three of your newsletters: Dollar Stock Club, CRA, which is Curzio Research Advisory, and The Big Money Report. They’re all insightful, and coming for days like today, I recently watched a video from Raoul Paul, not RuPaul, but Raoul Paul discussing the Bitcoin to gold ratio.” So, Raoul Paul has videos and people. He’s got a really good service.

Frank Curzio: He goes, “I own several of your gold recommendations. It was crypto, but it seemed to poke fun at gold books on both. I own Bitcoin and gold. I’m bullish on both, adding to both when I can. What are your thoughts on gold, Bitcoin, and crypto these days? Is crypto losing momentum, at least verse gold, and maybe versus other assets? Are both still worth adding?” I’m glad that you own both, which is really cool, because it’s… A lot of times, it’s either or, and I can ever figure that out, why it’s either or. But when I look at which one is better, I don’t know, but I know that the Bitcoin to gold ratio is garbage. Throw it out, print it out, and then crumple it up and throw it in the garbage. It’s like the gold to silver ratio.

Frank Curzio: You’re talking about two unrelated things. Okay? It’s, I mean you could pick two asset classes and make a ratio out of it. But, and for instance, it’s not like money from Bitcoin is going to ever flow into gold. It’s not. The younger generation is in Bitcoin. They’ll never, ever buy gold. We’re in a digital economy. That’s what they grow up in. Buying gold is like you buying a VCR to them, okay? You’re going to buy a VCR? No, you’re not going to buy a VCR. I don’t know if you can buy a VCR anymore. You probably can someplace, maybe used. So, comparing those ratios, like money’s going to flow into one, and then flow into the other, and go back, and I mean, has that ratio even worked since 2009, since Bitcoin was created? 2008? I mean, you’re looking, especially over the past four or five years, where you saw Bitcoin go up, how much?

Frank Curzio: I mean, so to have a ratio there just doesn’t make sense, of like determining whether I should put more money to gold, more money to Bitcoin. Both of them work. Love Bitcoin long-term, love crypto long-term. I like this correction. It’s something that I was telling you about. I said, “Look, we want this market to come down with taking small positions, and then we could build them up over time.” That’s how we got 30X, 40X winners in our portfolio. A lot of those things are down 20, 30%. It’s volatile. There’s a lot of leverage in the market, but the most innovation is coming from crypto. It’s disrupting everything, it’s going to disrupt every single industry. The metaverse has to flow through crypto. It’s going to flow through crypto, take a look at the central land. They have the technology already. Facebook could actually learn a few things from these guys. Roblox as well.

Frank Curzio: But, you’re looking at DeFi, and DOW, and security token is starting to take off. I mean, this is disrupting Wall Street, which they’re middlemen that make a fortune. That’s never been disrupted before. Never in a digital economy. I mean, these guys still make a fortune bringing out these issues. They make whatever, three to 6%, they get shares. They put them in their funds. And then, Goldman’s going to go ahead and recommend them through their research division, and put a crazy price target on it with a buy rating, only because they were able to get shares of this stock and the whole road show. I mean, there’s probably like six conflict of interest, just in that statement I just said, but it’s okay. That’s what they do. They’re middlemen, they’re making fees.

Frank Curzio: They say, “Hey, you have a pretty cool company, I got a good idea. Good. I got a bunch of people that will buy that idea. And I’m going to take a percentage of that.” It’s a middleman, right? Middlemen get cut all over the place, except in finance. Now you’re looking at payment systems. Imagine not being charged processing. That’s what happens with Bitcoin. I mean, this is massively disruptive to where trillions, if not tens of trillions of dollars, in credit card processing fees, credit card transactions, and this is disruptive all around. So, I love crypto. Gold is an inflation hedge I really, really like right now. I’d stick with the producers and a couple of those smaller names should do well, but I think gold’s ready to surge. I thought that really last year, I thought, but when you see a market where every single asset class is going higher, people just are like, “Ah, I don’t really need to be in gold.”

Frank Curzio: Yeah. We’re seeing inflation. “Ah, all right. Maybe I’ll go into Bitcoin, or I’ll go into banks, because banks are taking off and I can make so much more money.” Now, you’re looking at gold. I would buy the producers rather than gold itself. Or, you have to be selective with junior miners, because I’ve been in that industry. I have great, great sources that allow me to have unbelievable contacts. 85 to 90% of that is garbage, and they’re trying to scam you in the industry. I’ve never seen an industry with that many scams. Be very, very careful. Make sure you listen to the right people like Jeff Phillips, Marin Katusa. I mean, really great guys in the industry who have helped me really get to the top of the industry, and just learn. And, I’ve had some very bad experiences getting wrecked.

Frank Curzio: So, just be careful with the juniors. Everybody has a great story. Next thing you know, that the biggest tell is when you buy that stock because of what the CEOs said, or whoever was pitching it who’s within the company, when you see them three, four months later, call you and say, “Hey, I got another idea.” Sell that stock. I don’t want you to have another idea. I want this to be a freaking idea that you pitched to me. That’s the idea. I’m in it because of you. Now, you’re talking about another stock? Are you kidding me? The biggest tell, right there. Get out of the stock. A lot of bullshit in this industry. Be very, very careful, but I’d stick to the majors. I think both of these asset classes do very, very well. I think Bitcoin is a buy on this pullback again. We said, don’t take a full position at 60 grand, 50 grand. Even if you go on it now, take a small position. It’s going to be extremely volatile.

Frank Curzio: But, what I do know, what I feel I know, three years, Bitcoin’s going to be a lot, lot higher. I mean at a three-year outlook, if you’re looking at it that way, it’s going to be a lot higher. I don’t care about a 20% correction here, a 10% correction here. It’s all over the place, and money coming out. Everything’s going to Bitcoin. You see more and more banks regulation, it has eased tremendously. And, you’re seeing the biggest banks get in it. You’re seeing the biggest institutions get in it. They have to get in it. They have no choice, because this is a $2 trillion plus market now, that you can see amazing returns in, and their clients are asking for it. So, when they’re asking for it, and they could generate fees off of it, that’s when the institutions come in.

Frank Curzio: Again, it’s about the money. They couldn’t do that in 2016, ’17, ’18. It wasn’t enough volatility. Now there’s a massive, massive market, that they’re all late to the party getting in, and that’s going to make weeks like this, where Bitcoin comes down 20%, huge, huge buying opportunities. As long as you have a two-, three-year horizon and longer, that’s the way I would play it.

Frank Curzio: Okay, guys, that’s it for me. Questions, comments, feel free to email me at frank@curzioresearch.com. Really 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 decisions 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:

Frank thinks a major market drop—if not several—is around the corner. Luckily, there’s Moneyflow Trader. It was designed to help you not only weather market storms… but collect big profits as stocks decline. 

With a rocky 2022 ahead, don’t wait to get some protection.

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