With politicians fighting over stimulus… and companies in a race to develop a COVID vaccine… as well as the markets at all-time highs… we’re at something of a crossroads right now.
John Petrides, portfolio manager with Tocqueville Asset Management, explains how the Federal Reserve is forcing everyone to take on more risk in the markets… and why some stocks are acting like bond substitutes. John also breaks down the pros and cons of low interest rates, and—of course—gives us some of his favorite ideas right now. [18:27]
Then… across the U.S., masks are mandated in most public locations. But they also present their own potential health issues. That said… this could be setting up an excellent trade opportunity. [54:50]
- Guest: John Petrides, portfolio manager with Tocqueville Asset Management [18:27]
- Educational: Mask mandates could be setting up a trading opportunity [54:50]
Wall Street Unplugged | 736
The next wave of stocks that will benefit from COVID
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 26th. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where I break down the headlines and tell you what’s really what’s moving these markets. What a crazy few days, more hectic than ever. My kids started school on Monday. You guys know I have two daughters, they’re nine and 12, and they both entered new schools this year. So they were nervous as hell. And it reminds you as a parent, you think back to those days, right? Not knowing where you’re going, the hallways, trying to find your classes, you’re meeting new kids, you have a new locker, you got to remember the combination, eating at a cafeteria with lots of people, I mean, almost everything is new. It’s a cool experience.
Frank Curzio: And the schools are great. We went a few days before, we just went over the guidelines, the rules, we met the teachers, and it was awesome. Everyone wearing masks, desks five feet apart. When I dropped them off, the schools had music playing outside, the teachers with pom poms, there’s a celebration. And it was cool. It was an important message, that was for my nine-year old, because the world is different. You don’t realize your kids are wearing masks.
Frank Curzio: One of my friends told me his daughter is five, going to a preschool thing or whatever it was. And I think it’s five or whatever it is. But that’s her first memory. I mean, at least our kids knew they were going to school before this happened. But that’s her first memory, is it supposed to be like that? You don’t even know the effect that’s going to have later on, which is crazy. But I love that the celebration part and happiness, and it was cool, and we just made the kids feel really comfortable. And dropping them off, you just saw how much they really need school. They need to be around other kids. I mean, it’s such a huge part of growing up, and I understand why the schools are closed. I get it.
Frank Curzio: As you know the data came out, I’ve been covering this subject thoroughly, talking to doctors, interviewing people on lockdown since January. When you look at statistics, I’ve been a huge fan of saying that you got to let the kids go back to school. I mean, it really is a joke, especially if you look at the past two months, right? That’s what I was really saying on Twitter, saying, come on, all this garbage where people are closing their schools, it’s terrible. Especially when they show that most kids who catch COVID the systems are not even as bad as the flu, they’re less than the flu. And the death rate is minimal.
Frank Curzio: For kids under 25, you look at the stats from today, guys, from today. You’re looking at the stats. If you’re under 25 years old, the rate of you dying, if you’re infected, that infection rate is 0.2%, if you’re under 25 years old. If you are under 14 years old, it’s 0.03%. The chance of you catching COVID as a kid and dying, 0.03%. And schools are closed everywhere, almost everywhere, still. And so if you want to put all this in perspective, I know depending on what channel you watch, I know Biden came out and said, “Hey, if the science says it, we’re going to close our whole entire economy.” Again, it is a big race out there, and it makes sense to close schools, it makes sense for the economy not to do, whatever side you’re on, again, I don’t care.
Frank Curzio: You have the Republican National Convention going on, they’re saying every day how great Trump is, and then we saw Democrats, how great Biden is, all this, whatever it is. But do your own homework because this is about you, it’s about your kids. When you do the research and put in perspective, okay? Look at the CDC. That’s a site pretty much everyone trusts, we’re supposed to trust, on both sides. As of today right now, and not even today, the last two months, 92% of the deaths from COVID, getting from today’s stats on the CDC, come from people who are 55 and older, 92%.
Frank Curzio: So open up the damn schools already. As far as the L.A. Teachers Union, who said, they’re not going to go back to work until we see defunding of the local police departments, I’d fucking fire all of them. They’re using our kids as a political weapon, especially teachers. I mean, these are teachers. They need to be fired. There are unions, whatever, have the government provide funding for teachers who actually want to teach kids. That’s your job to teach kids. You’re talking about defunding the police, are you kidding me? It’s a sick joke. Put politics aside just for a little while. Come on. This is our kids. They’re home for six months.
Frank Curzio: It doesn’t mean every parent should send their kids back to school. And I’m coming up to a big point here, it doesn’t mean that. It means that the parents should have the choice, not the politicians. For example, my youngest has Crohn’s. Yes, the diagnosis is Crohn’s. Again, a couple of weeks ago, it was ulcerative colitis. They flip back and forth. But we got the test back from our latest biopsy and it’s Crohn’s. So she’s taking Humira now. It’s why we had to get more tests because the other medicine wasn’t working as well. So she takes a very, very low doses, and Humira, it’s a great drug, most people use it, it’s fantastic, we’ve done a ton of research on it, but when you have Crohn’s, you’re either flared up and it hurts or you’re in remission. And that remission is usually most of the time. And my daughter, she has small flare ups.
Frank Curzio: So she’s in pain every other day. And we knew that the medicine wasn’t working. So we had to upgrade to Humira. So Humira lowers your immune system, so it increases the chance of her catching COVID. And again, if she catches it based on it, it’s likely going to be mild, we can take her off Humira. We asked, we can take her off. She’s only getting a very, very small dose right now, but we’ve opted to send her to school, my wife and I, we made that choice.
Frank Curzio: Am I nervous? Yeah, of course. I’m a little nervous. Of course, I am, but at least I made the choice and people who are nervous, if they’re kids are going back and you’re talking to your friends and you seeing, hey, it’s been going on for four weeks and everything seems pretty cool, then you’re going to have more confidence, but that’s how you build up the confidence. But let that be up to parents. It’s their choice, it’s their children, not politicians. I mean, it’s crazy.
Frank Curzio: We know that there’s something, politicians we know based on whatever side you’re on, it’s a benefit if they’re keeping schools closed, keeping stores closed, keeping businesses closed, which is insane because CDC just came out and said, “We no longer need two-week quarantines for anyone traveling to different states.” Yet, look at the East Coast, my hometown, New York, you look at New Jersey, Connecticut, Rhode Island, still keeping so many businesses closed. And they have yet to lift those restrictions because anyone entering New York or those states, and I think they have a list of them. It’s obviously Florida, it’s Texas, Arizona, they have North Carolina, South Carolina, Utah, Alabama, there’s like just 10 of them.
Frank Curzio: But anyone entering, right? They have checkpoints still even though CDC said we don’t need them. They said based on the states “We don’t need that anymore.” But they’re still deciding it. So what happened to following the science? I mean, isn’t everybody on both sides, we’re going to follow the science, we’re got to follow the science, that’s why we really closed everything because the scientists were so wrong at the beginning, which was fine. Everybody was wrong at the beginning. We didn’t know how crazy this was. But now we know, we know the risks, we know the people who are at risk, and we know that people who are not at risk, but I guess following the science doesn’t really matter. But the reason why this week has been so hectic for me is because of my beautiful wife, who timed this perfectly on Tuesday morning, timed it perfectly.
Frank Curzio: So we like animals, kind of understatement there. We have a snake, we have a big lizard, we have a gecko, two dogs, a cat, just a bunch of animals. We like animals around the house. Anyway, my cat, when we got him, his name is Phil. That was the name on there, not my name, I didn’t name my cat Phil. Anyway, it’s funny because when my mom came over, before she got sick, she used to watch him and she thought his name Freddy. It was an outdoor cat. She used to yell, “Fred where are you?” I was like, “His name’s Phil mom c’mon.” Yelling Fred, some guy Fred probably is going to come. Hopefully it’s an older guy, maybe she could hook up whatever it is, but yelling Fred, people thought she was crazy. But yes, my cat’s name is Phil.
Frank Curzio: He loves to go outside and also loves to get beat up by other cats. I don’t know why, and unfortunately doesn’t have claws, we adopted him and he didn’t have claws on the front paws. So we worry about that, but loves to fight. Even starts with my dogs all the time. Nice cat, just likes to fight. And sometimes when he fights with cats, outdoor cats and it’s not a lot of them, there’s a couple across the street, you could hear it from three, four blocks away.
Frank Curzio: So my wife heard it at 5:00 in the morning, and we have a two-story house and she comes running down the stairs and she totally twists her ankle, rolls it over really, really bad. She was yelling, she was in pain, this is 5:00 in the morning and as I’m walking down the stairs, my first reaction was like, “Oh my God, babe, are you okay? Is everything okay?” And 5% of me was like, “Really? Did you just twist your ankle the second day the kids started school after they were home for six months?” Only 5% of me was thinking that, I promise it was only 5%, but I was really nervous because she did get hurt, it was pretty bad. And this was Tuesday, and they just started school on Monday.
Frank Curzio: So I wake up at 5:00, she could barely walk, I put her on a couch, ice on her ankle, wrapped it, elevated it. I know everything about ankles because I played basketball for 30 years and believe me, I know if you could have ligament damage, I can get you on the court for the next 24 hours. I’ve done it before, I know how to tape it up, I’ve taken classes on it as well. But I was able to tape it up. And basically now, everything falls on my shoulders. So I have to take the kids to school, and they go to two different schools, and they start an hour apart.
Frank Curzio: So I wake up, feed them, get them dressed and this is Tuesday, and it really went well. I think my wife got a little pissed at that because in the mornings my kids love to fight. They just bicker, they love each other to death, but they bicker, bicker, bicker all the time. And my wife is yelling, and they’re yelling, and then it ends up me yelling and saying, “Everybody, could you just shut the…” I don’t curse. “Just shut up. Everybody calm down.” But it’s a normal occurrence for anyone that has kids that have to wake up at the same time, it’s pretty crazy, it’s hectic.
Frank Curzio: But they got ready very quickly, lunch is packed, got their head, everything was perfect because daddy’s taking them the school. They were happy, which was really cool. But then I had to pick both of them up on Tuesday at two different times. And in the middle of this, I’m taping my interview for this podcast, which you’re going to hear in a little while, fantastic interview coming up, and also taping my CVO Newsletter, which I do in video format, which all my subscribers should be ecstatic, especially those who just signed up because the stock we pitched in that letter is up about 90% in a month. Fantastic news. I’ll talk about that later in my educational segment. But just running back and forth.
Frank Curzio: And then each of my daughters, when I pick them up one at a time, “I’m starving, I’m starving.” When you have kids at that age, man, they’re hungry all the time. They just hungry all the time, they eat whenever, it’s so hard, there’s no way you can have a schedule. Okay, you eat breakfast. No, they were hungry, dad, hungry, hungry, hungry. All right, great. Pick up my youngest, go get a food, come back home. Then I go to pick up my older one. She’s like, “You know what? I’m hungry.” My wife calls, “You know what? I’m hungry too.” Got to pick up all of this in the middle of taping all this stuff. And it’s been really, really crazy.
Frank Curzio: And it’s funny because when I look at my wife, when we fight all the time, right? We fight about so many little things like all couples fight and stuff like that, but when we fight, she always says, “Yeah, what do you think I’m an idiot? You must think I’m an idiot. Sometimes you think I’m an idiot, don’t you?” And she always says that. And I tell her, I said, “You know what? We live in Florida. You could actually have 25 boyfriends based on the state law. I’m still going to have to pay you half. So you’re actually one of the smartest people I’ve ever met if we get divorced.” And of course she gets upset, but we have a little back and forth and stuff like that. But we bicker just like most married people bicker. I mean, it’s a form of communication, which is cool. But now that she twisted her ankle, one day after the school reopened.
Frank Curzio: Yeah, she didn’t twist it in March, April, May, June, July, and most of August when the kids were home, but one day as the schools open. And it was so hectic taking care of the kids and working that I posted on Twitter at 3:45 and I said, “Listen guys, you’ve got to pay close attention to Best Buy.” You guys know I’ve been covering Best Buy for a long time, recommended a long time ago on the podcast two years ago, then you should be doing great. But I said, it’s one of the best conference calls to listen to, they’re reporting after the close, it’s going to give you a good indication of dozens of segments within technology. I posted this on my Twitter account @FrankCurzio.
Frank Curzio: Best Buy reported in the a.m. I didn’t even know that. That’s how hectic it was. I got a couple of messages, and I left it up there because I always own my own mistakes because I made fun of them and said, “Yep, I’m listening to that call right now you reported.” But it was tough, it was really tough. And in all seriousness, my wife is doing better, her ankle is still pretty bad, but I took her to get an x-ray yesterday and there was no fractures, which was good. And if I had to guess, she’s probably going to be out of commission for at least a week or two, but still having trouble working. And she is doing a lot better. But more to the point here, I got a first-hand look of how hard she works. And sometimes you take that for granted.
Frank Curzio: I mean, taking care of the kids all day, just taking them to school back and forth, and even when they get home, it’s crazy because the kids just want to get off a leash because they behaved all day, you’re doing the homework, arranging play dates, volunteering at school, and she also does our finances, our personal finances, which is really, really cool, she’s amazing. Running the company, she just does so much, but you really don’t appreciate that work, and sometimes you only realize that when you’re forced to be in someone else’s shoes, and man, holy cow.
Frank Curzio: So this week’s going to be a little crazy. It’s nuts. Especially since our CEO token is about to launch in just a few weeks, which is really exciting. So we’re going to become the first security token, and it’s nickname is CEO, Curzio Equity Owners, in the world to go free trading on a global exchange. It’s available to mom and pop investors or retail investors. So that’s coming up pretty soon and I want to thank my wife for everything that she does and yeah, she is getting better. And man, that timing though was really good for her, you got to admit. That timing was very, very good for her. But everything’s going to be fine, no break there. And hopefully, she’ll be up and at it. For my sake, for her sake, for everyone’s sake, within seven to 14 days.
Frank Curzio: But despite being crazy, I’m always going to find time to host this podcast, do great interviews like the one you’re about to hear and actually see if you want, we did tape this on video, which is going to be available on Curzio Research YouTube page, and it’s with my buddy, my friend, really great analyst, portfolio manager John Petrides. If you get a chance, if you want to, you’re going to hear the audio in a second, but if you want to watch the video, go to Curzio Research’s YouTube page it’s really, really cool. He’s such a great guest. I love having him on since he’s one of the guests we can go anywhere with, right?
Frank Curzio: We talk economics, politics, fantasy football even, which we haven’t got a chance to talk about sports for a long time since there’s just change it up a tiny bit. We can talk about the markets, the Fed, and the best part, which I know what you love, right, everybody loves it, is new ideas. So John’s always out there giving free picks and I’m hoping that you’ll listen because over the past few months, say going back nine months, he’s done an incredible job with his recommendations, along with a lot of my guests.
Frank Curzio: You guys could follow that in Dollar Stock Club. If you’re a Dollar Stock Club member, it’s one of the most affordable newsletters, but it’s in our interviews and they’ll mention a whole bunch of stocks, but I’ll take one, have a one page report on it, talk about the analyst, and we’ll supply a buy up to price and a stop on it. And it’s pretty cool. So if you follow me, you can see over the past since January, I mean through the coronavirus, the picks that have been given from my guests, it’s awesome. And that’s what I want to do. I want to bring these guys on and find new ideas for you. That’s what this is about.
Frank Curzio: And it’s great because sometimes I’ve had guests I don’t have on anymore because of their track record, but this is a way to keep track. I believe in accountability. That’s why all of my newsletters you need to subscribe to. We have our archives, you can go back when I wrote my first newsletter and see what I had to say, look at my track record, it’s there. You guys want to see everything I recommended or mistakes are on there. Of course, we’re all going to make mistakes sometimes, and we own our mistakes. I’ll always, always, always tell you guys exactly what to do with every single position. Even if it’s down, I think that’s what where you want information the most. Hey, we’re going to get rid of this, we’re going to take a loss that’s on me, but just never leaving your subscribers hanging out there to dry.
Frank Curzio: But getting back to Johnny, he’s been one of our, the analyst and his performance has been absolutely fantastic. So great interview coming up. Definitely pay attention because his new pick, it’s a conservative one, but it provides a great thesis of why you need to buy it right now. That’s coming up in a second. And later on in my educational segment, I’m going to talk about a crazy tiny sector that I think is going to boom over the next 24 months, since it’s secretly becoming a huge COVID play.
Frank Curzio: So never in my 25-year career doing this, providing research, podcast, whatever it is. I never talked about stocks in this sector before, but now a few of them could be screaming buys. This thesis is simply based on something the doctor told me, it’s a small problem that I needed medicine for, but sometimes it’s that simple. One little conversation that can lead to a host of new ideas. I got to break this out in my education segment. Really, really good stuff coming up. But first let’s get to my interview with one of my favorite analyst in the world, John Petrides.
Frank Curzio: John Petrides, thanks for coming back on Wall Street Unplugged.
John Petrides: Thanks Frank. And it’s great to finally see you after four or five years of always doing phone calls. The only time I’ve been able see you is on social media or on the website or the app.
Frank Curzio: I know, well-
John Petrides: Good to finally see you.
Frank Curzio: I get to see your picture a lot because you’re in CNBC. I love watching your commentary and stuff, and I want to start off there John, because the picks that, and I always admire this because for me, this is about our investors and I know you care about that too.
John Petrides: Of course.
Frank Curzio: Everyone cares about their clients, about the mom and pop investors out there, and I take pride in getting the right people on here and making sure that their picks are good and putting the right people in front of them for those picks and your picks have been very outstanding. Watsco was one of them, WSO up over 50%, you recommended that in late 2019. So that’s even after coronavirus and everything. We had IPG and I remember you picking that stock, if you would talk about it and you said, “I know this sounds crazy.” And right when people are like, “Yeah.” It usually means that you’re going to be right, right? Than wrong, I think most of the times.
John Petrides: Right.
Frank Curzio: So I just want to thank you for those picks. And I know you always do it. You’re going to give us some picks later on, but I guess-
John Petrides: Well, the pressure’s on now Frank. I got tough comps I got to follow now.
Frank Curzio: Listen, you deserve the credit, you deserve shout out and I really appreciate-
John Petrides: Thanks man, I appreciate that.
Frank Curzio: My listeners appreciate it. So I definitely want to mention out front. Now let’s talk about the markets in general, right? It’s pretty crazy. COVID risk is still around, you’re looking at a market where main street is obviously not doing that well, but Wall Street’s doing very, very well. Most of that’s due to a lot of policies. How will you play in this market not from, we’ll get to the mom and pop investor part, I know a lot of them are struggling, but you’re a person that has to give investment advice. What are you telling them now where the market’s just hit an all-time high, which seems crazy, given all these risks, do you see it really risky heading into election season? Do you think that, yeah, you are finding ideas, or is maybe you’re taking profits on some of those winners?
John Petrides: Yeah. I really feel that we are at crossroads. Over time, when I’ve been a guest on your show, ’15, ’16 I said, stocks look really interesting here. And then ’17, ’18, ’19. I said, “Ah, with interest rates backed up, definitely a more balanced portfolio looks attractive is how you should…” The stocks have run, the bonds have sold off. So a balanced portfolio definitely sees the most appropriate. Today I really feel we’re at crossroads on so many levels. Politically, economically, the markets, socially, we’re at a really interesting time because what happened when we had to sell off in March, right? So COVID hits, we have to sell off. And what needed to be done and has been doing is build a bridge for you and I, and for all of us, and for the economy until a vaccine was approved and distributed to the masses.
John Petrides: The Fed has laid the first foundation of the bridge by basically printing money and buying anything, not nailed to the ground. Of course, I’m exaggerating a bit, but the Fed is out there making sure the wheels are greased in the economy, okay? And they’ve achieved that part. Then the government has come through with the CARES Act and wrote a huge check to put money in everybody’s pocket to help soften the blow because everyone’s cashflow basically got sucked dry because the amount of people that got laid off, the country was shut down, businesses shut down. So those two pillars are done.
John Petrides: What we’re waiting for right now is the second round of stimulus. And clearly to me, it does feel like politics is in play. Those that have an axe to grind with the president, have the ability to drag their feet. On the other hand, he goes back and forth. So you have issues there, but we still need to get to where the vaccine is approved and distributed. And what I’ve seen or what I’ve heard, at least from the CDC and from former companies, it looks like that should hopefully be the second to third quarter of 2021, right? Is when we at least get it out to the first responders, or wherever the pecking order is. And Frank, at the end of the day, all that does is hopefully make the entire country feel comfortable spending money again. Feel comfortable being in a social gathering.
John Petrides: I’m in the Northeast, I’m in New Jersey, you’re in Florida. Different pockets of the country are responding to this differently and are feeling different, and it’s not that one is right or wrong. It just is what it is. And the problem is we have to get the whole country on one page. So I really feel like we’re at crossroads right now, but the longer that it takes for the economy to get back on track, the more prone the market is to sell off.
Frank Curzio: Let’s talk about that because if the market stays off track, I mean, the elephant in the room is the Fed, right? I mean, they’re going to come out jacks and hole, they’re going to say, they’re preparing everybody about inflation, right? Forget about 2% target. And this is a lot different, as I know you know this as well, John, where in tap, it was $470 billion, and that was in excess reserves, giving it to the bank where they could control it.
Frank Curzio: This is seven trillion so far that has been directly injected to people’s pockets, through advance unemployment benefits, tax checks, you’ve seen PD, PDNet loans everywhere. So this is going to spur inflation. To me this talk tomorrow is going to be more just in case if it happens, let’s mention it, just we always like to get ahead of things, which we’re going to see inflation, but even if the economy doesn’t come back on that timescale, which I think is a great time schedule by the way, because there’s a lot of people working on vaccines I think that’s going to provide confidence in the markets for people to spend more. With the Fed there, right? I mean, it seems like they’re just going to continue to spend, does that give you the green light to keep-
John Petrides: That to me is the number one issue why the stock market is above all-time highs right now is because the Fed prevented a Lehman Brothers like situation by printing all of this money. And then of course, we can talk about the concentration in tech and the FAANG stocks, which we’ve all spoken about ad nauseum. And we know this is a five horse race, driving the S&P 500 and as your listeners know, the S&P 500 is a market cap weighted index, meaning the larger you are, your size of your company, the more weight you are. But if you look on the average stock, right? So an equally weighted index, the average stock is negative for the year, low single digits, but it is negative for the year.
John Petrides: And I think that’s more important rather than focusing on this S&P 500, which is dominated by one second. But clearly the Fed here by printing so much money has forced all of us to take on more risk. Frank look at the bond market. And in fact, I think long dated bonds are a bubble and it could be in a bubble. And what could be perceived as the safest part of a portfolio may actually be the one that’s at the most risk. When you have the 30-year US treasury with below a 3% yield, the 10-year US treasury at a 0.6% yield, 0.6% and you’re earning for the next 10 years on bonds. You can’t find yield anywhere. Those yields have come down so much because the Fed is printing so much more money, so much money. So it forces investors to say, “Well, I can’t find any yield in the bond market, I’m getting nothing for my cash, where do I go?” You go into stocks.
John Petrides: And I think part of the reason of why the big cap tech stocks have rallied so much is because they’re sitting on so much cash from their balance sheet. You don’t have to worry about Apple’s liquidity or Google’s liquidity, or Microsoft’s liquidity. You don’t have to worry about if they’re going to be able to pay out their dividend or reinvest in your business, because they’re sitting on hundreds of billions of dollars in cash. That is becoming, in my opinion, a bond substitute. Why not own an Apple stock where you’re getting, whatever, north of 1% yield where the company that has a balance sheet with $200 billion in cash. So what the Fed is trying to do is force us out the risk curve to spend money and invest to get the economy inflated again.
Frank Curzio: And I know that because when we send notes and I always get little topics that we want to mention everything and we pretty much, we do this all time, so we can just freestyle. So it’s just like little bullets, but you talked about the part with income, because even when you have the Microsofts and Apple, I think people lose sight of that, where yes, you’re buying a growth company that has amazing balance sheets, but they could handle liquidity of the bond market, where these are, man, I never thought I’d say, two trillion dollar companies, right?
John Petrides: I know.
Frank Curzio: Which is unbelievable, but it also, doesn’t it bring into play, say some of the stocks that have underperformed on the dividends like the Ciscos that report a bad number, Intel report a bad number. These are companies that have two and a half, 3% yields. I don’t know where they’re going to be next year, they could be down. But if I had to place a bet, I’d be pretty sure in five years from now that they’re going to be higher than where they’re trading right now and you could earn that 3% rate, which is, again, like you said, 0.6, almost at 0.7 here in a 10 year. Even the ones that aren’t performing well, that actually had bad quarters and have a little bit problems, it seems like if you really look at park money, these are pretty good places, if you’re looking at a three to five year outlook, right?
John Petrides: Yes. The pros and cons of low interest rates of what the Fed is doing by printing so much money. So if you’re a borrower, this is heaven, right? This is a great time for you. Look, if you’re buying a new house, you have the credit quality to take out a loan on a car, go for it, right? I mean, right now you’re getting, so such cheap rates on a 30-year mortgage and other terms of financing. Look what’s happening on the corporate side, Johnson & Johnson took out a 40-year bond the other day at 2.45%, 40 years. Apple did a 30-year bond, two and a half percent. Google, a 30-year bond at two and a half percent. Amazon, a 30-year bond at 2.75%. That’s free money. If you thought they were big before, how much optionality has that given them?
John Petrides: They’re printing all this cash, now they have extra fire power, they could buy back a ton of stock, they could pay out their dividend, they could do massive acquisitions. I focus on Amazon, Apple and Google, but there’s Johnson & Johnson. I mean, all the way down even the energy market companies big cap, energy companies are having the credit markets opened up to them. So for the borrower, this is manna from heaven. If you’re the saver, it’s the worst environment, and I’m of the belief that COVID will not go away, but we’ll have a vaccine. I don’t think this is the bubonic plague that wipes out half of humanity, I don’t think this is the Ebola. I do think that we will be able to contain it to some degree in the future. But the fact of the matter is more and more people, the world population is growing, more and more people are aging, they’re living longer and others are retiring earlier.
John Petrides: So I bring them into the equation because if you’re now a saver, you no longer have income coming into your portfolio. You have to live off the cash flow of your investments. The idea of the pension system Frank, that our parents and maybe grandparents had, that’s gone, right? Pensions are gone. Unless you’re a teacher or a cop or a first responder or something, you don’t have access to a pension by and large, right? So you’re relying on the money you’ve saved in your 401(k), your 403(b) or whatever retirement plan that you have, right? So when you retire, you have that nest egg that you now have to live off the cash flow of your portfolio. But as the baby boomers continue to retire, what are they living off of?
John Petrides: In theory, your retirement, you should have more of your portfolio in bonds in theory and less in stocks, because you’re now moving to the distribution phase rather than the accumulation phase of your income. But you can’t do that now because you can’t earn anything on your bonds. If you have all of your retirement, a bond portfolio, you’re going to eat through the principal because you’re just going to live off it. So you’re forced out of the risk curve. So that’s the problem with what the Fed is doing. So you have to go out and find equities that have dividends.
John Petrides: Now, here’s the interesting thing. We talk ad nauseum Frank, about growth outperforming value, right? Everyone knows that story. The last decade growth in tech, healthcare, biotech has crushed value. Think utilities, financials, energy. It’s been the widest gap in a generation of one style versus the other. But there are other factors of investing. It’s not just growth versus value. There’s dividend as a factor of investing, there’s momentum as a factor of investing. Companies that take leverage that pay down debt is another factor, share buy backs are a factor, right? These are all different types of styles that investors invest in.
John Petrides: The worst performing factor this year is value. The second worst performing is dividends. The third worst performing factor is companies that buy back stock and the fourth worst performing factor is companies that have leverage on their balance sheet. So if you’re using cash in any way, you’re being penalized. On the other hand, what’s working, it’s all momentum, really momentum, beta for your volatility and growth, those are the three factors that are working, which to me doesn’t make much sense because in an environment where interest rates are low and they’re going to be lower for longer, where are people getting income from? So I don’t foresee that that dividend factor being the worst performing factor 12 months from now, I would have figured at some point cooler heads prevail and people rush into, or start moving into, dividend paying stocks because they can’t get income anywhere else.
Frank Curzio: So you’re telling me that, you’re not going to explain how Tesla’s at 2000 based on fundamentals. Is that what you’re saying?
John Petrides: Unbelievable, man. Unbelievable.
Frank Curzio: Okay. Now it’s time to have fun, and excuse me when I use this word, because the election, right? And we’re talking about dividend paying stocks, talking about rates, we’re talking about inflation and things like that, which are short to long-term trends. But we do have an election coming up, and I’m going to use this word because I don’t think I can describe in better words. It’s like a shit show. You have to hate one side, I say. It’s black and white, it’s no compromise, it’s no nothing. I mean, you can see that from the conventions, it’s pretty crazy.
Frank Curzio: However, I try to say, you want to put politics when it comes to investing, you have to separate, you have to separate your emotions because depending on who wins, it’s going to have serious implications for your portfolio. I mean, even something like, let’s just take energy where alternative energy, if Biden wins, I would think that’s going to do very well. Fracking, probably not well. So it is going to matter. Are you structuring your portfolio in a way where you have a plan A, plan B type thing, or is it, hey, you know what? We’re just looking at the markets long-term. And if you look at the S&P 500, it’s the greatest secular chart in the world from the ’50s.
John Petrides: Right.
Frank Curzio: We’ve had presidential elections, but how are you playing this where, obviously I think it’s a pretty big deal from a training perspective, maybe from a long-term perspective.
John Petrides: When we manage for clients’ portfolios, we’re not thinking about who’s in the White House for how we’re going to position, we’re positioning their portfolios for their long-term objectives. And we diversify accordingly based on their time horizon, risk tolerance, income needs, all of that stuff. Yes, the outcome of the election could, or may or may not produce increased volatility. There are certain plays that we had already had in the portfolio or have in the portfolio currently that will benefit, I.E. as you mentioned, Biden election, alternative energy, that sort of thing. But we also have some energy and financials in the portfolio that if Trump gets reelected, that those should do well.
John Petrides: What I learned in October and November of 2016 is, I remember talking to a lot of clients that were actually very, very nervous if Trump got elected. This guy, he’s unproven, he says things, he’s going to build a wall, and I can’t… If Trump gets elected, I want to go to 30% cash. Those are the phone calls that I was dealing with. And we were able to-
Frank Curzio: That was the sentiment back then, right? John, I thought, like, gold would take off. I mean, gold turned out to be terrible at that time, right?
John Petrides: Frank, it did, but for about five hours. Gold and treasuries, I remember being up then. Gold and treasuries were rallying up until about 3:00 a.m. on the day after the election. And then basically the light bulb went on, and we’re like, Trump policy of low-end corporate tax rates is good for corporate America, which is good for the stock market. And you had a 12-month rally in stocks of 30 something percent, right? The market took off. So my point is, trying to predict the market reaction to an election is really hard. And understand that, four years after someone is elected, they may not be in office.
John Petrides: To me, this is more of a pivot of not necessarily the presidency from a market reaction. To me, I’m not focused necessarily on the presidency, I’m focusing more on the senate because if it’s a democratic suite, in my opinion, the market will not react positively because then corporate taxes are probably going up, Biden’s talking about where I’ve heard the elimination of the step up in cost basis. If you have a stock and taxable account that you’re inheriting. I’ve heard things like increases to taxes on dividends.
John Petrides: And by the way, I’m not making a political statement. I’m giving you and the audience my thought on how I think the market will react, and markets rarely do well when one party dominates. It does well when there’s a check and balance, where the legislature is split. So, it rarely goes in one direction. So for me, from a market standpoint, I think the market would react the best to a Biden presidency, a Republican senate, and then the House is going to stay the way it is. And the reason why I say that is, I think the market would interpret a Biden presidency socially to probably have less social unrest relative to what we’re seeing now. As a total judgment call, I have no idea.
John Petrides: The best situation from a market standpoint, I think, is probably going to be a Trump presidency, Republican senate, Democratic congress is probably how the market reacts the best. But I do think the market could go up under a Biden, Republican, Democrat scenario. That’s just how I’m seeing the election results on the end of August.
Frank Curzio: I think it’s funny how we’re always politically correct with these things, right?
John Petrides: We’re in a contentious environment, and again, from my standpoint, when I’m managing our client’s money, the last thing I could do is overlay my emotions to their portfolio and/or my political thought. My political opinion is personal to me and my family. It should have zero bearing on how I manage money for clients. So that’s why I have to distinguish the two. It’s not because we live in a politically correct society, it’s because I have to be as emotionally neutral as possible when managing clients’ money.
Frank Curzio: Don’t worry. I’m going to give your email address if anyone wants it. All right, let’s get to the fun part here because we really covered a lot of stuff, which is important guys. Some people think the economy and they feel like it’s boring. There’s a lot going on right now that’s going to impact your portfolio. I love how we bring it all together to say, okay, we talked about dividends as well. You love offering some of your picks, you recommend stocks, Tocqueville and portfolio management. What are some of the ideas right now? I mean, is there anything that you like specifically?
John Petrides: Yeah. Like I said, I’m playing on two themes. One is that we’re at crossroads, meaning that the bull and bear case right now can be argued convincingly in my opinion, with a high degree of probability. And that’s the tricky part right now of where we are and the idea of income that I think people will need income. The stock market reminds me of the REM song, “It’s The End Of The World As We Know It, And I Feel Fine.” You look around you in the economy’s… And really, your people are struggling, you have everything else going on, but yet the market’s at new highs, it’s strange.
John Petrides: Two plays, again, on the income. One is I know, Frank, that I don’t think I’ve ever pitched an ETF on your show before, but we own in our enhanced income strategy. I own it personally. I like SHYG. So it’s a Sam, Harry, Yellow, George, it’s the iShares short duration high yield ETF. Right now, you’re getting out a 5.3% dividend yield. The expense ratio is 0.3, so it’s three tenths of 1%. And so, what I like about this is the Fed is printing a ton of money, I do think inflation will be an issue at some point in time, I think long-dated bonds have rallied unbelievably because people are stretching for a yield. So the longer the maturity right now to me is the biggest risk because it’s not factoring any inflation.
John Petrides: So this ETF only owns bonds that mature less than five years. So it’s very short, right? So the question is, where do you think bonds will be? Where do you think interest rates will be over the next five years? Right? Going higher. But if your bond matures within five years, you have less downside risk, and you’re getting a 5.3% dividend yield on the portfolio. So you get your income play, and you’re lessening your risk. And you own a basket of bonds. So you don’t have to worry that as much, you get a basket of high-yield bonds. You don’t have to worry that much on the credit side if the bond was going to default because you’re diversified amongst the basket of bonds.
John Petrides: I normally don’t pitch bonds within your client’s portfolio for your investors, but here’s a way if you’re looking for some yield, if you’re looking for something non-stock, it’s ETF, it’s fairly low cost, it’s liquid, that’s a good play in my opinion.
Frank Curzio: I like this too because you see me where now that we do video, people could see I’m always doing this when you’re talking and different things, I’m looking up something. But I love looking at the five-year chart where, going back 2015, it’s been steady, right?
John Petrides: Right.
Frank Curzio: Offering a nice yield and then it fell from 46 to whatever 38, which is a big move for something like this in March. And now it’s slowly making its way back up. But if you could see the economy getting better, I think that’s what everybody wants, right? Not the dividend, but they wish-
John Petrides: Exactly.
Frank Curzio: …they could buy a stock to get the yield. You’re getting something like this. That’s kind of steady. That’s not going to be you wake up and it’s down 15%, then it’s up 15%.
John Petrides: And you have the Fed in your corner, right?
Frank Curzio: Yes.
John Petrides: If we have a step backward, where we have to… The Fed’s just going to continue go out there and buy more assets. So it is a moral hazard. You don’t want to buy something, but the Fed’s got your back. And if things deteriorate further with the Fed, who’s right now buying investment grade bonds through its balance sheet and treasuries and agency mortgage backed securities, they can go down the ring and buy high-yield bonds. So you have protection here, in my opinion from the Fed, all right? Yeah.
Frank Curzio: And about any other ideas that you…
John Petrides: Yeah, yeah. So from the stock side, again, I may be booed off the stage from your investors because there’s nothing sexy about the next name, but Coca-Cola. We added Coke to our, again, our enhanced income strategy. Again, do I think volatility is going to pick up in the market over the next two months, three months? Probably because of the election. So in the short-term, do I think Coca-Cola will weather a volatile market relative to other stocks? Yes. Coke is still 20% off of its recent high. So it has not recovered like the stock market has, you’re getting a 3.4% dividend yield.
John Petrides: The consumer staples sector has been on fire, why? Because our entire wallet share over the six month has basically been geared toward the supermarket. We’re not going out to restaurants, we’re going to the store and we’re buying everything at the supermarket and all those packaged good companies think of General Mills and Kellogg’s and all those guys, they don’t have to offer any coupons. They’re pricing their cereals at full price. And those stocks are trading at very high multiples. So here’s a consumer staples company in Coke that’s off its highs. You’re getting a 3.4% dividend, they grow the dividend every year from an income play, it’s historically less follow on the overall market and there are couple of other places as well.
John Petrides: Over the last couple of weeks, you’ve seen a weakening in the US dollar by and law, the last two months. The dollar has been very, very strong relative to other currencies around the world for the last three years and market strategies have been waiting for that to come down, to come to parity. Why is the dollar so strong? And it really is a bit of a conundrum when we have $25 trillion in debt on the balance sheet of the US, and our economy is sucking wind, and we’re still dealing with COVID, where other countries are starting to rebound faster than we are. And they don’t have the debt that we do on our balance sheet. So if the dollar does weaken under that scenario, and by the way the Fed is printing so much money, why should the dollar be trading at such a premium to other currencies?
John Petrides: If the dollar does weaken, Coke gets 60 to 70% of its sales outside of the US. So they will benefit actually from a weaker dollar. And then the final play here is, there’s actually a growth story with Coke. They have a new CEO, the former CEO, Kent, spent most of his time working on supply chain efficiencies within Coke in of itself to make it as lean as possible. New CEO comes in, he’s inherited that lean supply chain, and now he’s overlaying different types of beverage channels for Coke to get into. Coke is going to be distributing coffee, they’re getting big into energy drinks, they’re coming out with their own hard seltzer in the market because they realized, hey, we have this great bus, let’s start putting other passengers on it outside of syrupy soda drinks. And they’re putting different forms of beverages inside, which I think is going to lead to a whole nutrient growth trajectory for Coke.
John Petrides: And they are making their effort. Coke is not an ESG company, plastic bottles are not good for the environment, the company is well aware of this, so they’re trying to really work on and harness that where they’ll be reducing plastic bottles, or at least the net, net plastic bottle neutral company by 2030, which over time, maybe you get a catalyst from the ESG investor. So you have a lower ball play, you have a dividend of 3.4%, which is significantly higher on a high-quality, A+ rated company balance sheet. And then you have the longer term growth play where they’re moving into other forms of beverages to distribute. So again, it’s not overly sexy, but it does the trick I think in this environment.
Frank Curzio: I love the pick here because a year from now when we revisit this, I think you going to be very, very right on this. But it’s funny how just, even now, how we’re programmed, right? You see the Nicholas, you see the Teslas, you see these crazy stocks. The Microsofts. It seems like it’s easy to make a killing in some of these cult stocks that keep going higher and higher. So people dismiss Coca-Cola, and I just want to remind everybody too because I did the same thing when I started looking at cloud computing for my newsletter, and it’s a large-cap, mid-cap newsletter. And I went through every single cloud company and there was nothing to compare it to. I mean, Amazon just blew it out of the water, right? You could say Microsoft did well, and I missed Microsoft a little bit, but we winded up recommending Amazon at 900 and it went up tremendously.
Frank Curzio: It’s the same thing, the same pitch. I was like, “Guys, I know you’re not paying me, you can find this on your own.” But going through the research and like you just explained looking through this, this is a good investment. And I hope people listen because the dividend makes sense. I think you have very low risk here. Economies are opening up, restaurants are opening up, not just the Chipotles, the Domino’s that are doing good, but you’re seeing more of that, at least where I am in Florida. All the COVID stats are getting better, better, better, better, not great, but better, which means, you’re going to see more things open up as time goes by. And I just think it’s a good play and hopefully people listen because when the best play is something like Coca-Cola and you really like it sometimes, I guess, people are like, Coca-Cola, but it makes a lot of sense here, it really does.
John Petrides: And I own it personally. We own it in our enhanced income strategy. So this is something where I think right now, it just checks a lot of boxes. And I was surprised, not when I came across the name, but as I was looking through my screens and what works for what we’re looking for, that Coke was still 20% off. I mean, this is underperforming the consumer staples sector, which has rallied strongly. So, if you’re looking for value within that portion of a portfolio, that sector consumer staples, where you’re trying to find a good name. Again, I think Coke fits that box.
Frank Curzio: Two other things here, and I’ll let you go. The first is if someone wants to learn more about your habit could they do that? Because I know they’re like watching you on CNBC, but maybe they want direct contact with your company.
John Petrides: Appreciate that. I’m at Tocqueville Asset Management, tocqueville.com. You’ll find all of our good stuff. We have a very deep team, nine or 10 analysts. We have 13 or 14 portfolio managers managing various strategies. We have a mutual fund strategy, private wealth, I’m going to be posting a commentary in about a week or two, it’s free. Basically I did a case study Frank on J.C. Penny. So, you know, J.C. Penny went bankrupt, but J.C. Penny in 1997 issued a 100-year bond, 100 years, right? So the idea behind the commentary is, things change.
John Petrides: At the time in 1997, that may be a joke. Half of your listeners probably never even went into a J.C. Penny, but ’97, Amazon just went public, China wasn’t even part of the World Trade Organization. The Fed funds rate was five and a quarter percent, okay? Apple was on the verge of bankruptcy and it got bailed out by Microsoft and Bill Gates. So my point is, nothing lasts forever. So for someone to issue a hundred year bond back in 1997, people say, “Yeah, I’ll take a hundred year bond for seven and a half percent yield coupon at J.C Penny, what’s wrong with J.C Penny? It’s a blue chip retailer, nothing could happen to it.” 25 years of the hundred years, the company’s bankrupt.
John Petrides: What if Apple issued a hundred year bond, right? The line would be around the block right now for people to get it. But that means you could forecast what’s going to happen a hundred years from now. My point is, nothing lasts forever. So you have to be very careful. Anyway, that’s the point of the commentary. So check it out.
Frank Curzio: No, I love it.
John Petrides: Go to tocqueville.com in about a week or two or so, that that commentary will be up there.
Frank Curzio: All right. Now the most important thing here, much more important than anything we talked about. You and your son, I believe that you won Fantasy football last year because you let me know about 80 times, which is I would have let you know 80 times if I would have won, but I didn’t.
John Petrides: We are the raging pants.
Frank Curzio: But Fantasy football, are you into it this year? I’m having my first trip on Thursday, really hard because players are opting out and likely to sit out. But at least we’re having fun. We’re going to be hanging out a little bit, friends and just doing something other than talking about COVID and staying in your home.
John Petrides: Right.
Frank Curzio: So I’m looking forward to it.
John Petrides: I just started looking at research and podcasts. To be honest with you, I have been a disengaged. Part of it is because I don’t know who’s going to be healthy come draft time and that throws everything off. But starting to look at everything, what I find interesting this year, more so than others, there’s so much parity at every position like wide receiver is super deep, running backs are deeper than normal, you want your first guys up front, but even down the road, you can find the quarterbacks are crazy deep. The only position that really is the deepest tight end, you have Kelsey and that’s kind of it.
Frank Curzio: Yeah. You have like two or three of them, right? No, I hear you. Tight end is tough. You want to get one a little bit early, but other than that, I’m looking at it too. And I know we have a lot of Fantasy football fans out there, but it’s just nice to get away from everything. I’m looking forward to that. And I haven’t even really began studying that much either, so other than the first two rounds, but good luck this year with Fantasy.
John Petrides: Thanks Frank, you too.
Frank Curzio: Thanks so much for coming on. And always great, always a pleasure and-
John Petrides: Yeah. Congratulations on the success Frank, you’re everywhere, your format continues to evolve, the video streams and your stuff on social media is really coming across sharp, and I know I get a ton of value out of it, so…
Frank Curzio: I appreciate that. I really do. Thank you so much for that. Yes. So all right, listen, definitely enjoying this again soon. I’ll call you soon and I know I’m going to talk to you in between and again, good luck with Fantasy football buddy.
John Petrides: Thanks Frank, see you.
Frank Curzio: All right. Great stuff from John. I mean, he’s such a good analyst. Given the chance, watch him on CNBC, he’s on a lot, he’s on a lot of media, but just always prepared. Really makes sense with his thesis. I love Coca-Cola, although I’m sure a lot of you won’t buy it because it’s not exciting. People want exciting stocks and things that are fun. But yeah, I love the thesis that I mentioned with Amazon. I know a lot of people in my Curzio Research Advisory newsletter that didn’t buy Amazon at 900, but I hated recommending Amazon to you because it’s not really what you pay me for. I want to find like new ideas, even though it’s a large cap, mid-cap newsletter.
Frank Curzio: But that’s after doing extensive research on cloud companies. I mean, the only other one was Microsoft, and we chose Amazon. Amazon, the performance has been unbelievable. And Microsoft probably the same, maybe a little bit better, but out of all the other cloud companies, I was like, “Guys, this is the one…” Even in this class, other than Microsoft, and this is 2017 when I recommended it. I know a lot of people didn’t buy it because, “Amazon, I’m going to buy…” I get it. But Coca-Cola has a lot of other upsides. It’s going to make you sleep at night, it has a great dividend, you’re seeing growth channels right now. Sometimes, these things really explode.
Frank Curzio: You need to realize this guys, it’s very, very important because when it comes to stocks, it’s all about risk adjusted returns. So if you could generate a hundred percent on a stock, like Coca-Cola, that’s going to be paying you with 3% yield plus over 12 months, when you’re looking at the adjusted risk over say a 12-month period, it’s a much better buy than a small cap that actually went up 300% in the same timeframe. You say, wait, the returns are great, but you’re accounting for risk. So what would happen if the market crashed? You’d probably see Coca-Cola still provide very good returns to you, but that small cap could be down 20, 30%. And people take that in a heartbeat. If you could buy the Coca-Colas and the large cap companies and make a hundred percent of your investments in 24 months, you take that in a heartbeat.
Frank Curzio: Yeah. You want to take risks and stocks and go up 10x and we have Curzio Venture Opportunities, things like that. But that’s the name of the game. So don’t look at Coca-Cola and be like, whatever. I thought he provided a very good thesis. And again, he’s like, I know this is boring and he said the same thing about Interpublic Groups when he recommended that and said, “Listen, I know it sounds crazy with advertising.” I think it was April when he recommended that. And this was in the heart of the crisis where we just started rebounding. Everybody’s nervous, everyone’s cutting budgets, the economies are cold, the states are closing, it’s crazy and he was right and that stock took off.
Frank Curzio: Usually when you’re nervous and you’re a little worried about that conviction, that usually means that you’re right. It’s the ones that you had total conviction, this is definitely going up, that’s when you have to be careful, trust me on that one, so much for doing it for a long time. But I really appreciate John coming on, and more importantly he’s just such a great guy. I mean, I know that he’s a regular guest on this podcast, really cool to see success he’s having, and he’s going to get bigger and bigger. Hopefully not too big, this way continues to come in this podcast but he’s just a great analyst, a great person, and let me know what you thought of that interview, email@example.com.
Frank Curzio: And again guys, we’re going to a lot of video going forward, just looking at the audio podcast of course, it’s going to be on iTunes, but this can be found the video version, which is really, really cool because even our podcasts, our full podcasts are going to be going video. And we’re going to provide segments and different things in video, which is going to be cool. That could all be found on our Curzio Research YouTube page, if you’re interested.
Frank Curzio: Now, let’s move on and get to my educational segment. One of the biggest things I try to teach all of you is finding new ideas ahead of mainstream media. One of these stocks is Fluidigm. Fluidigm just received the emergency approval from the FDA for its COVID tests, which is by far the best test I’ve ever seen in the market. So the stock is surging today. I’m doing this Wednesday. So it’s surging today. Citron came out, someone I respect, after the news today, and said the stock’s going to 35, it’s around 11.50, 12, very volatile today, up about 25%. He said, “It’s going to 35.” If you’re a Curzio Venture Opportunities member and watched that video that I’ve been pitching telling you about small cap stocks and saying, this is the one company, they have an amazing test, the Curzio Venture. We had a lot of people subscribe, which I’m very, very happy about, in the past couple weeks, tons of people subscribed to the newsletter.
Frank Curzio: But this is the company that I mentioned that is likely to receive the emergency approval for this test. A few people heard of the company. And this test, they do a simple swap of the cheek, and then they have the technology, which is the hardware, to analyze each test to where you get the results back in a few hours, and they could test 6,000 at a time with these machines. I don’t know if you’re familiar with the test today. It requires pushing a swab all the way up your nose, it’s very, very uncomfortable. Then they have to send a sample off-site. And you’re lucky to get those results inside of three days. Very, very lucky.
Frank Curzio: I’ve talked to hundreds and hundreds and hundreds of people where the doctor said 24 hours. Good luck. A lot of those 24 hour tests have not been accurate. And they say, “Well, it’ll be two days.” But they all say, “Well, the seven day test is really good.” This is a game changer. I mean, it’s a much easier test, right? It’s not uncomfortable at all. Then they analyze the results onsite using their technology. And in a few hours, they’re saying three to four hours, you get these results. And the people I’ve talked to within the industry, looking at the stop, doing the research, this made a lot of sense. I mean, who wants to wait three days if you really believe you have COVID. I mean, come on, how stressful is that? You could know in a couple of hours and they don’t have to send this offsite, they have the technology right there.
Frank Curzio: I don’t have to tell you hundreds of millions, if not billions, of people are going to be taking tests going forward. The stock around 11, 11.50. I don’t know where it’s going to close today. Citron’s talking about stock on the 35, they tweeted this out this morning ,and I agree with his analysis. In fact, I think it’s going to go a lot higher. And you’re looking at hundreds of millions, this is the best test that I’ve seen in the market by far. And I’ve analyzed every one of them. Now, the only difference with Citron and us, if you’re a CVO member, we talked about this a month ago. Your cost basis should be around $6.70 and that’s from a month ago, this is our last month pick.
Frank Curzio: So now you’re up 80%, and the rest of the world is starting to talk about the stock. Which again, has a chance to go much, much higher, has hundreds of millions. I mean, pretty easy, you could say these tests are going to be taken over the next 12 months, regardless of whether we have a vaccine. I don’t know if you saw the latest polls where one third of the people said, they’re not going to take the vaccine because they’re nervous about side effects, and rightly so, since the quickest we’ve ever brought a vaccine to the market is four years, you’re going to do it in a year? You going to do it in less than a year? That’s what the evidence is predicting. By the end of this year, and we started in March, really.
Frank Curzio: I’m not going to take it. I’d like to see everybody else take it and say, well, let me see what happens if everything’s okay with you in a year, then maybe I’ll take it. Because I’m under 50, and I’m low risk. Even if I catch it, I’m pretty healthy, I work out almost every day… I’m pretty confident I’m going to be okay. But the point is, you’re up 80% on this name while Citron is just tweeting out about it now, and the rest of the world is talking about this stock. So for CVO members, really happier in this name. And today after the close, we’ll come out with our new issue, we’re going to have three brand new picks for you to buy, which all have lots of upside potential in the next 24 months. You’ll see the thesis, the reason why, but I don’t think I’ve recommended three stocks in one issue, and that’s how excited I am about small caps.
Frank Curzio: I told you guys about my thesis with small caps. I think it’s going to surge over the next couple of years, there’s a lot of catalysts out there, it’s significantly in the form of large caps. It’s a great market. And plus, a lot of these names are down considerably, still, off their highs due to COVID. And everywhere you look, all statistics getting better, better, and better. And as they do these companies, these three I recommended, all reported decent quarter showing growth again, right?
Frank Curzio: Growing month over month and from quarter over quarter and now they’re seeing much more capacity. Yet, these stocks are still down 25% and they haven’t participated. And I can tell you, they’ve been cutting costs drastically where those margins are going to skyrocket, these names have the chance to surge. I’ve covered small caps all my life, the best small caps, the best time, the best thing what management does when they’re cutting costs and then they’re in the right growth markets and starting to benefit, you get an explosion in the stock price because you’re not just spending a fortune to make money in that growth, which you got to do well. But when you cut those costs and those margins take off, those small companies become mid-cap companies, you get 5x plus winners. That’s how I feel a lot of small caps right now.
Frank Curzio: Some glade took advantage of it. Now the point of this, whole entire thing is, finding new ideas before everybody else. So I took my wife to the doctor, I told you in the opening, with her ankle. And I have a stye in my eye right now. And it’s my third in the past 45 days. I haven’t got a stye for about 15 years at least, I think. I can’t even remember. Maybe it’s a bit longer. But three of them I had in the past 45 days.
Frank Curzio: When I took my wife to the doctor. I know the doctor, I said, “Hey doc, look, I have this stye, could you give me something?” I said, “I never had them and now I just have a ton of them.” I said, “I don’t know why.” He goes, “Tons of patients are coming in, and they also have styes.” And you know what the cause is? Masks. Because bacteria is breathing up through the mask and then making it to your eye. But also when you’re taking off the mask, you’re pretty close to your eye. It’s very easy to touch your eye. When you take off, just the standard mask that you would buy in stores.
Frank Curzio: Now for me, and a lot of people out there, I’m wearing a mask for everybody else. I believe in wearing mask, even when I’m in a store, because a lot of stuff is open in Florida. If I see an older person walking, I’ll go around a different aisle because I care. I understand that they’re very nervous. For me, still the data that I’ve seen you haven’t really seen masks a hundred percent prevent… Again is one, two studies out say, yeah, we think so, but nothing crazy, but hey, let’s do it. If there’s a possibility, I’m for it. So for me, I don’t have a designer mask or anything. So I’m just using three or four of them and shuffling through them but most people I think are doing the same thing. Are you washing your mask all the time? No, because there’s a lot of bacteria and germs in there that make it to your eye. But again, I’m sure millions of people are in the same boat.
Frank Curzio: Now, the interesting thing is I’m not going to tell you, hey, how are you going to make money off a stye, but he did say something else that was very interesting. He goes, “It’s not just styes I’m seeing, but I have a lot of friends in the dental industry, and talking to them, they said, tons of people are coming in with cavities more than ever, because a lot of bacteria inside the mask you’re breathing back in, it goes back into your mouth.” Kind of makes sense when you think about it. Over a billion people are wearing masks on a daily basis. It’s going to be like this for at least another six months, likely 24 months and who knows, maybe five years. Hopefully not, of how crazy this is.
Frank Curzio: But for me, when I heard that, I want to know all the publicly traded companies in this field, in dental. There’s dental Sirona X-Ray, supplies a lot of products to dentists. Henry Schein is another, the same thing, provides services for dental practitioners, $9 billion market caps on these guys. You have SmileDirect, which might not be a direct play on this because it’s just ripping out everything and coming. But who knows? I mean, if you have to have cavities and you’re old enough and whatever, maybe that’s what you want to do. But for me, this business could boom, if this is true, right? So this is just one source. This is me just talking to someone. Now this is step one.
Frank Curzio: So if you go to your dentist for a checkup. Most people go every six months. So maybe you have one coming up in a month, two months, whatever. Hopefully you don’t have any cavities, but ask them about it. And email me, firstname.lastname@example.org. Maybe it’s true, maybe some are seeing, maybe not. To me, that makes a lot of sense. It really does. You just breathing in that bacteria is going back into your mouth. It does make sense. Even if you’re brushing your teeth twice a day, your body’s not used to that. But I want to hear what they say.
Frank Curzio: Plus, I have a lot of dentists that write in from time to time. Again, email@example.com. I want to see if this is true. Again, makes a lot of sense. But if this is true, you’re going to see the profits for some of these companies skyrocket. How many people wear masks, and how long are they going to be wearing them for? Now, I don’t know if this is a great, well, I know I’m starting to research companies, and again, it’s early steps, and I’m looking at it, but this is how you find new ideas. So you’re gathering data, it’s something nobody’s talking about yet and now I’m going to start researching stocks within this sector because if you’re right, these things will take off. If you’re not, they’re probably going to still do well. I mean, if you’ll go to dentist all the time, these are two big players, X-Ray and Henry Schein.
Frank Curzio: So on a risk-reward, it looks pretty positive. If you’re wrong, I don’t think you going to get killed. If you’re right, these guys are going to see an explosion in business. And more important, this is how you find new ideas. Try to program yourself to ask people questions. If you’re traveling, getting a car, taking a cab, an Uber driver, ask them. They know everything about the economy. They’re going to tell you how busy they are, they’re going to tell you about the building in a neighborhood, they’re going to tell you where’s the most traffic, they know everything. They see people all the time, they hear stories and they’re some of the smartest people out there give you information that you can’t find any place else in real-time information.
Frank Curzio: Store owners, talk to your friends because there’s so many implications, guys, that are going to occur in the future due to COVID that we don’t know yet, tons we’re not seeing right now. And this could be one of them, or maybe it’s nothing. I don’t know. But that’s the way you get names that skyrocket 5x, 10x, like the vaccine companies, the telehealth companies, the online furniture companies like Overstock, and you see all the companies within those sectors alone, you’re looking at 5x, 10x plus gains, but that’s how you should always program your mind, ask questions. What’s going to be the next big idea?
Frank Curzio: And it’s going to happen when you’re just having a regular conversation. You can’t be like, “Okay, I’m going to go out and try to find the next big idea.” Just talk and something like that would come up. I just say, “Hey, doc could you give me some medicine? This is a pain in the ass. I got three of them.” “Well it’s because you wearing masks.” “Really?” “And also I know a couple of dentists where they’re all saying people coming in like crazy because they’re getting more cavities because they’re breathing in that bacteria from their masks.” They’re breathing out to the mask and coming back. And a lot of people do wear the same masks without washing them. Some of them do, some don’t. To me, that makes a lot of sense.
Frank Curzio: And trust me, if you’re making fun of me right now and saying, “Frank, really? Dentist companies.” Whatever, I’m going to tell you there’s no better feeling in the world knowing my subscribers on Fluidigm right now and they own it under $7 and it’s trading close to 12. And then today you have a great analyst. Andrew Left, Citron come out when it’s 80% higher, 90% higher telling you that the stock could still go up 4x to 5x from here, it’s pretty cool.
Frank Curzio: The only way to put yourself in that position is by doing the homework, boots on the ground, asking a lot of questions. Trust me, I’ve been doing this for over 25 years and this process works. When you least expect it, you’re going to have a conversation with someone and you’re going to be like, “Wow. You know what? That makes a lot of sense. How come nobody is talking about?”
Frank Curzio: When I learned about the Fluidigm tests, I said, “Why is nobody talking about this?” I know five other companies that provide tests and they’re all terrible. A lot of them come back where they’re not accurate. It’s uncomfortable. This company solves every single problem. They got the emergency approval like I said, that’s going to happen. It’s likely going to happen. If it doesn’t, the stock will probably still be able to get out of it, maybe a small what’s most likely a gain. And now we’re up and you have that huge growth trend behind it and you’re actually seeing this company being mentioned in the media right now, yet you knew about it before anyone else. No better feeling, trust me, there’s no better feeling, and I love the fact that my subscribers are making money.
Frank Curzio: So guys, thank you so much for subscribing to Curzio Venture Opportunities and that newsletter, we’re marking the product pretty heavily at a 60% discounts. It’s one of our most expensive products. I was just discounting it because I see a huge opportunity in small caps. A lot of you took advantage. So you’re in it already. Fluidigm was one of them, but I just recommended three stocks coming out today, three new ones. I think that’s the most stocks I recommend in one issue. Maybe early on, I recommended a few more than that, but that’s how positive I am on small caps.
Frank Curzio: The ideas that I’m seeing, even the cyclical names, I can’t believe I’m saying that. So discussing the cyclical names when all the growth is doing great. But names that have been the most impacted by COVID, and I call them the shitty names. And I say shitty names not because they’re shitty companies, because I want to get your attention. To say, hey these stocks are going to go up as COVID gets better. You’re not going to read it and you’re not going to care. So sometimes, I’ll have a headline that just is out there a little bit. So you’re paying attention because I want you to make money.
Frank Curzio: And the stocks that I’m seeing, if you’re looking at that list, because they reported great, great numbers last quarter, much better than expected. Margins are down, they’re starting to hire people, and there’s three names, all three of them,, I’m pretty sure you heard of that are all doing better. And if you look at COVID and if you look at the stats, everything is getting much, much better every other week. It’s been happening over the last two, two and a half months, and it’s going to continue to get better. It’s not going to be great, but it’s going to continue to get a little bit better going forward because we know everything about this disease, happy to say the death rate of infected is now below 3% for the first time. It was at seven and a half, 8%, when New York went crazy. Now it’s lower than that because we know who’s at risk, we’re protecting, we’re practicing social distancing, and now a lot of businesses are opening up.
Frank Curzio: The CDC came out and said, “Hey, we don’t need a two week quarantine anymore.” Nobody does because we understand the risk, we’re wearing masks, we’re staying away from the people who are over 55, who are at risk of this, and it’s resulting in more people going out, a lot more companies doing well ,and you’re seeing it. So what I’m saying by that, like the travel companies, the cruise lines, the casinos, rental cars, these names are still down tremendously. And you have an incredible opportunity to buy so many of them, so many of them that I found three and it was actually a fight between 10 of them.
Frank Curzio: So you’re going to see even more recommendations, small cap newsletter. If you guys still interested again, we have that on our site, you go on our site, Curzio Research. If not, it’s perfectly fine, but the promise I’ll always make you is I’m never ever going to pitch a product unless I think you can make money on it. And proof of that is just this newsletter right here because everyone that came in, we really talked about Fluidigm. That was our last pick from last month, and we’re already up 80% on it. I’m very, very happy for my subscribers. It doesn’t always happen that way. It’s no guarantee it’s going to happen in the future. But when I have conviction of something, again, I’m always nervous when I do, but it was a good risk-reward situation and I think right now, small caps with the Fed low interest rates, yield curve control coming in, there’s just so many factors.
Frank Curzio: We have Russell 2000, it has significantly underperformed. It’s more oversold and it’s been compared to large caps in the past… Over 10 years. And it’s going to reverse as the economy gets better and as we see with most bull markets, small caps outperform large caps, that hasn’t happened yet, it’s going to happen. It’s a good opportunity to make some money for you guys. So again, if you want that offer, interested in it, send me the email, firstname.lastname@example.org, or you go to our website.
Frank Curzio: That’s it for me. Be sure to check out our Curzio Research YouTube page. Again, we have that live interview, which I did live, but when you watch it, it’s not going to be live on our Curzio Research YouTube page, lots more videos coming out, and we also post a lot of stuff on Twitter. So you can follow me @FrankCurzio, but guys really appreciate all the support, really starting to grow fast now, analysts are doing great, everyone’s working really hard over here, but I really appreciate all the support. It means a lot. And again, I love that you guys reached out to me all the time, email@example.com, and thanks so much for listening. I really appreciate all the support. I’ll see you guys in seven days, take care.
Announcer: The information presented on Wall Street Unplugged is the opinion of its hosts and guests. You should not base your investment decisions solely on this broadcast. Remember it’s your money and your responsibility. Wall Street Unplugged produced by the Choose Yourself Podcast Network, the leader in podcasts produced to help you choose yourself.
Editor’s note: Frank’s latest COVID-19 vaccine play in Curzio Venture Opportunities is up over 70 % in under a month.
And this isn’t the only small cap set to explode in the COVID economy… Later today, Frank’s releasing three new names that could easily return 100% over the next 12 months—especially as the Fed enacts a rare policy that could send this bull market much, much higher…