By Ross Silver
I seems like every day technology gets faster and expectations are higher and results expected sooner. My Dad would always tell be to, “be quick but not in a hurry”, which is a famous John Wooden quote that I never truly understood until yesterday. The world of Wall Street is generalized and publicly branded as pure unadulterated frenzy based on media accounts. Stocks go up, they go down, companies have good news and then bad news; fortunes are made and lost every day. Many seem to think this world is a casino open 24/7 filled with degenerate gamblers all looking for a quick fix. “Many” are not wrong but “many” are also not right and more than a surface level analysis is required.
Wall Street is often perceived as a collection of brilliant, fast talking, masters of industry, who exist in an isolated world. They cannot be seen or touched. Wall Street is portrayed as an elite club, where the members have unlimited access to money and power, and speak in a foreign language. “Ross, you still selling calls on Santa Claus or did you get margined out, lol?” The media loves to glorify Wall Street with photos of high end suits, wads of cash and a wild party scene. While that depiction may be accurate for some, the vast majority of Wall Street professionals live a very different reality.
The real Wall Street is a world full of professionals immersed in the daily ritual of self-doubt, anxiety, fear, and occasionally jubilation. There is no shortcut to wealth; wealth comes from waiting and hopefully being invested in the right company at the right time. The financial professionals I know are all risk takers but take risk in a measured way so as not to destroy themselves or their clients. In this business there are no second chances, one blemish and the fat lady is singing.
So what the heck is my point? My point is, when it comes to investing, be quick but not in a hurry. Take the time to do your diligence so that you get into an investment at a good price at the right time. Don’t blindly follow the pack or chase the returns because you are in a hurry to get rich and you assume the pack knows where it is going. It rarely does. The pack almost always gets lost and loses; there is no quick fix in this game (unless you joined the pack and owned FANG stocks for the past 5 years, which I have been dead wrong about for the record). J
To put it another way, never be afraid to miss out on a good investment. There will be others. After all, Warren Buffett passed on an opportunity to invest in Microsoft early on, and I’m pretty sure he ended up ok. So take your time, do your homework, and stay patient.
Devaluing the Yuan
A number of people have asked me my thoughts on the tariffs President Trump has imposed on China and how they will impact the stock market. First and foremost, take a look at aluminum and steel stocks, both of which have performed well in the past year. The tariff has helped companies in steel and aluminum realize increases in their share price but China is likely adding coal to their list of tariffs which will effectively halt U.S. coal exports and may negatively impact steel and aluminum. The tariffs as a whole in my opinion are not going to have the impact I think people will expect, they may be worse. While I realize this is a bit of an extreme view, I think China will continue devaluing their currency and while devaluing is the opposite of what China has been preaching, that is what I am guessing they will continue to do because it may work. By devaluing their currency China will play the same currency game almost all other major nations have played over the past 9 years which is make money as cheap as possible relative to other currencies. Yes I realize this is currency manipulation 101 and yes the Chinese will play right into President Trump’s rhetoric that they are currency manipulators but, the tactic may work. I understand that China devalued the yuan in 2015 and it set off a global firestorm but the backdrop then is very different now given large tariffs HAVE been levied. I realize yuan devaluation seems like an extreme in Western journalism, but China is not concerned with anyone not named China, especially in an “America First” environment. China’s debt will grow larger if they devalue their currency, but China’s $4.3 trillion (USD) debt, which represents approximately 41% of the country’s GDP, has hardly had any effect on corporate growth in China. Just ask anyone who’s tried to short Chinese stocks. I am very concerned about yuan devaluation and the chart of USD/yuan so far this year makes me very nervous because if China goes into a tailspin, we will too. Maybe it is a good time to get short China?
Cannabis In Canada
Recently the Canadian Senate approved the Cannabis Act, which was the final legislative hurdle to fully legalizing Cannabis in the country. Canada is the very first “wealthy” nation to fully legalize Cannabis which means the rest of the world will be watching very closely to see how things develop. Because the legislation was widely expected to pass, Canadian-based cannabis companies like Aurora and Canopy had tremendous run-ups in their valuations. In our view, those stocks are very fairly priced, so we went looking for an undiscovered gem, that the market hasn’t noticed…yet.
We found a gem. Actually, an emerald to be more exact. Emerald Health Therapeutics (EMHTF) has a very interesting story. The company has nearly 4 million square feet of greenhouse grow facility at its disposal, which – if utilized – would make them the largest cannabis greenhouse producer in the world. The company also had plenty of cash on their balance sheet as of their last filing (roughly $74 million CAD as of May), and management resumes are stellar. In other words, investors can buy a very attractive cannabis company at a fraction of the price of its competitors. It’s worth a look for those of our readers looking to gain exposure to the Canadian cannabis market.
The Pure Genius Behind Selling Clothes & Dance Moves…In A Video Game
I was speaking with a friend who runs a fund yesterday and he told me that the game Fortnite generated over $300M in revenue in May. When I read stories about people using real money to purchase dance moves and clothes for a video game character, I wonder if we are part of the same species. Hopefully I evolve.