WASHINGTON – Today is the second installment of a series of articles begun with Thursday’s “Journal of the Investment Plague Year, 2020.” I’m coming up with more novel investing ideas that (hopefully) will help at least some of us make the money back that we lost to the Year of the Novel Coronavirus, courtesy of Mr Market deciding to stage a waterfall decline when everything else looked peachy.
Before we begin, let’s quickly deal with Friday’s dismal Wall Street trading action.
First, from Fox Business: Today’s lousy box scores.
“The Dow Jones Industrial Average fell 361 points or 1.69 percent as unemployment surged to a level near the worst of the Trump era. The S&P 500 and Nasdaq Composite dropped about 1.5 percent each.
“For the week, stocks fell across the board as the number of confirmed COVID-19 cases crossed 1 million globally. The Dow fell 2.7 percent while the S&P lost 2.1 percent and the Nasdaq slid 1.7 percent.”
As usual, the entire media mob, including Fox, attributes the continuing crunch to the ongoing freakout over the W**an coronavirus. It’s more complicated than just that, but we’ll get to it.
“Orange Man Bad”
Next up, the deadly drumbeat of employment horror, courtesy of NBC satellite network CNBC, which offers generally excellent business coverage that’s soiled, however, by the mandatory negatives meant to convey the parent network’s relentless “Orange Man Bad” messaging.
“U.S. payrolls fell by 701,000 in March, marking the worst jobs report since 2009, while the unemployment rate jumped to 4.4%. However, the report failed to capture the full extent of the ongoing economic blow from the coronavirus outbreak. On Thursday, the Labor Department said jobless claims jumped by a record of 6.6 million for the week of March 27.
“‘Today’s nonfarm payrolls data confirms what we’ve already known: the U.S. economy was doing well before COVID-19’s impact was felt, and COVID-19’s impact has been severe,’ said Lauren Goodwin, multi-asset portfolio strategist at New York Life Investments. ‘Job losses will continue to surge as the national shutdown strengthens its hold on the U.S. economy.’
“American Express, UnitedHealth and IBM fell more than 3% each to lead the Dow lower. Some of those losses were offset by Walmart, which turned around to close 0.7% higher after a report said the company’s sales have jumped 20% in the past month. Utilities and financials led the S&P 500 lower, falling 3.6% and 2.3%, respectively.”
Drying up the money. Again?
Getting back to what was bugging today’s markets as much as the Chinese flu, those antic Tyler Durdens who pilot ZeroHedge offer a more technical and less well-covered reason for today’s market nosedive, which added insult to this week’s injuries.
“Having implicitly confirmed there is now a shortage of bonds as demonstrated by the recent repo ops that saw zero submissions as instead of using repo to park bonds with the Fed Dealers merely sell them back to the Fed, the NYFed has announced it will continue cutting back, or tapering, its ‘unlimited QE’ bond-buying next week.”
Ah, so that explains why what remains of my beloved collection of preferred stocks and “baby bonds” got sledgehammered today, forcing me to dispose a couple of them rather than continue to absorb endless losses. Oh, well….
All in all, today’s interest rate-sensitive stock and bond clobberation took all the fun out of a week that showed glimmers of progress.
Now for some more novel investing ideas in the Year of the Novel Coronavirus
Of course to keep those glimmers alive we need to keep looking for a few more stocks that promise to bring happy days back to our portfolios sometime before, oh… before 2050, let’s say. That will make sure we’re handsomely repaid for our hedgy prose, just like the high-paid TV
So what follows are a few more normal and abnormal recommendations. Or, if you will, more of our novel investing ideas in this, the Year of the Novel Coronavirus.
Thursday’s article offered my initial list of tentative winners once Mr Market extracts himself – and investors – from our current Slough of Despond. Today’s maybe-worth-gambling-on stocks are from random sectors.
Financial Sector heroes
We start today’s offering of novel investing ideas with the financial sector. These stocks unwittingly became numbered among the big losers in this Lightning Bear Market. Take JP Morgan Chase (trading symbol: JPM). This stock was tickling the $140.00 per share level earlier this year. It’s been up and down constantly since then, but mostly down. You could have had it for around $85.00 per share today, and it pays a swell dividend, although that could get cut if the economy turns worse than even the pundits think.
I’ve been accumulating JPM one share at a time, which you can now do with impunity if your brokerage has eliminated annoying commissions. And that’s the way to acquire this one as well as any other stock mentioned here. At least right now. This market is too treacherous to invest in without being extremely cautious right now. I’ve been picking up one share at a time, almost always on down days, which is the way to invest when you’re trapped in an always vice-like bear market like this one.
Why JPM? Simple. Many banks will be big winners when this horrendous down cycle reaches its end. They’ll survive because the government more or less has their collective backs. So why not get in at bargain basement prices, like around now.
Another potential suggestion: Bank of America (BAC). I was in and out for a modest profit a couple of weeks ago, and would like to get back in. Normally I don’t invest like this, but any positive trade you can get is helpful after all the money you and I lost, right? Besides, Uncle Warren Buffet is in this one, and he tends to have an aversion to losing big bucks.
Been shopping lately? Oh, you take delivery?
This is a not-so-coy allusion to a very big company that will survive and eventually prosper during the Year of the Novel Coronavirus crisis and later denouement. And that, of course, is Amazon.com (AMZN). The Amazing Amazon is a hugely volatile stock that sometimes makes money but occasionally takes an earnings header as it steals more market share from others.
This company is singlehandedly destroying America’s traditional mom-and-pop storefront economy. Whether this is moral or right is an open question. But what’s for sure is this: Amazon survives and often thrives because its service is convenient, prompt and (for the most part) amazingly consumer-friendly.
And during the coronavirus panic, they’ll sell you almost anything (except those coveted N95 masks as of Thursday) plus a few other things that hospitals should probably get first.
Meanwhile, you can order nearly anything else and usually at a good or great price. Which is terrific if your governor has ordered the local constabulary to get tough with you (at a 6-ft. distance) if you leave the house for anything but food, prescriptions or seed packets at Home Depot.
AMZN is expensive per share
The shares of AMZN are horridly expensive. (Costly shares are a version of corporate virtue signaling on Wall Street. Cheap share prices are for the Deplorables.) Amazon’s closed down today a bit below $1900.00 per share. Which means that plebes like you and me have to buy them one share at a time generally. I pick them up shares whenever traders decide to dump them on a big down day. Which is a good idea. Because when AMZN shares get killed, they get guillotined, up to -$40, -$50, -$60 bucks per share per trading session.
Of course, they sometimes go up like that, too. But that makes these shares suitable only for the strong of heart. (And the greedy, if they enjoy risk.) That’s why I still consider them one of our novel investing ideas, even though investing in Amazon is hardly novel these days, since Jeff Bezos owns everything.
But bottom line: AMZN is currently probably one of the better bets in the market at the moment. Just don’t expect to collect profits on this one for a while, as some of its coronavirus initiatives could cost it a calendar quarter.
Mister Softy continues to win Bigly
Finally, another tech giant offers value today. Plus a relative amount of stability. (Emphasis on relative.) We’re talking “Mister Softy,” here. Yes, Microsoft (MSFT), the old Evil Empire for longtime Mac users like moi. That said, Bill Gates once helped bail Steve Jobs and Apple (AAPL) out in their hour of need, so what the hell?
In point of fact, however, Microsoft is not just a Windows and Microsoft Office company anymore. They’ve made a BIG, impressive foray into the ubiquitous cloud, and it’s becoming the company’s major profit center. With all their corporate and database experience over the years, this is no surprise. And it’s stabilized their earnings rather impressively in recent years.
Plus, in this Year of the Coronavirus, everybody, particularly spring semester college students, computing and document sensitive industries and the like are literally inhabiting the cloud 24/7, given that most of America is now under coronavirus house arrest. This, in turn, will lead to a major rethinking of business models, academics and nearly everything else once the smoke clears. Which is why, after a roughly 40-point initial shellacking, MSFT shares have strongly stabilized in the area of $145.00-$160.00 per share area.
Wrapping things up
And that’s where I’ve been picking this one up, one share at a time. Microsoft is no flash in the pan these days. It’s more like the IBM of the 1950s: stable, strong, a constant winner of big business while not neglecting the needs of smaller corporations and individual users as well. It’s what Tim McPherson might call a “sock drawer” stock. One you put in your sock drawer and leave for years while it does its magic. I figure I could do a lot worse. And I already made money on Mr Softy once, before the current crash. So why not load up at cheap prices before the next bull market gets underway. After we conclude at least part of this Year of the Novel Coronavirus by putting at least some of our novel investing ideas into play.
Have a great weekend. And keep your distance!
– Headline image: Cartoon by Branco. Reproduced with permission and by arrangement with Legal Insurrection.