On October 19 I made reference to preparing for “the typical seasonal rally into a new year.”
A massive rally kicked-off not long after, at the end of October, and we’re now in the euphoric “bad news is good!” phase in which dire economic data is actually great because it means central banks will affect the pretense of holding interest rates steady, or even lowering rates, which in turn stokes speculative fervor so buy, buy, buy!
Lemming “logic” is fun, but it’s not the basis for getting ahead.
Lemmings buy at the top then follow the manic herd rushing off the cliff to their financial detriment. Every time, and it won’t be different this time.
It has never been different and never will be.
As I’ve noted several times before, the real trouble for stocks occurs when rates drop. Rates drop in response to bad economic data, so lemmings best be careful what they wish for.
Until the inevitable reckoning, ahead of which I plan to restore short positions, it’s “party on”.
Meanwhile panic-buyers wish to pay far more for banks than a few weeks ago, so I’m happy to sell them some banks.
Financials in general are looking good, so I’m not abandoning the sector.
Triumph Financial (TFIN) - https://www.tfin.com/about - has a great technical setup with compelling fundamentals; worth looking into.
It closed today at $70.60 and, though I’ve not mentioned it before in this blog, I’ve been buying since October 20 after watching it and waiting for ideal timing for months. TFIN has tremendous long-term upside potential in my view.
My stated “one and done” for the financial sector has been BNKU.
Two positions were sold very profitably right at this summer’s peak.
BNKU plunged 50% since then, below my stated level to repurchase a 1/4 position at $11.50
BNKU closed at $15.80, and that added investment is already up 37% in only a month.
I’ll close the added portion, sticking to my original BNKU holding for the longer term while going back to the planned repurchase schedule:
+ 1/4 at $11.50
+ 1/4 at $9.25
+ 1/4 at $7.40
+1/4 at $5.93
If an actual bank panic occurs, gains on the other side of it will be absolutely fantastic - the kind of opportunity seen in this sector only once or twice in a lifetime - and I’m eager to add multiple more positions when the timing’s right.
Remember:
To buy low, one must first sell high.
- Ray Dalio
I doubled my LL Flooring on November 8 as planned, at $2.93, bringing my average down to $3.13 on an outsized 4x position.
I will no longer add to it, so my prior intent to buy more above $3.35 is no longer the plan.
LL closed at $3.16
You can find its recent report and guidance by clicking here:
Guns & Dividends (and Ammo) was posted on a Saturday.
When markets opened that Monday, one of the components of that position, VSTO - Vista Outdoor Inc., opened 20% lower, at $26.24, after investors reacted negatively to details of this planned acquisition: The Czechoslovak Group Enters into Definitive Agreement to Acquire Vista Outdoor’s Sporting Products Business for $1.91 Billion
Simply, the reason I bought it - the parts of its business related to guns and ammo, euphemistically called “sporting products” - will end up in a private company, and given the announced terms I’m out.
VSTO closed at $26.14, essentially break-even even for this position.
One And Done #9 will be comprised of 3 holdings, not 4, going forward:
POWW - Ammo Inc. https://ammoinc.com/about/
SWBI - Smith & Wesson Brands Inc. https://www.smith-wesson.com/ourstory
RGR - Sturm, Ruger & Co. Inc. https://www.ruger.com/index.html
Ruger took a hit after its Q report November 2nd.
Ammo Inc. also dropped after its report November 9th.
Smith & Wesson reports December 7th.
I’m not worried about Smith & Wesson selling-off after its upcoming report, and I’m not hoping it doesn’t.
Hope and worry aren’t winning strategies. I’ll let the market sort it out and, barring any material changes like the news above from Vista Outdoors, there won’t be a change to the guns, dividends and ammo basket any time soon.
Democrat Senator Elizabeth Warren and California Congressman Robert Garcia have recently introduced a bill called the Ammunition Modernization and Monitoring Oversight (AMMO) Act. If passed, the bill would restrict bulk sales of ammunition, would require businesses who sell ammunition to obtain the same federal license as gun dealers, and would require businesses to conduct a background check on buyers.
Additionally, it would also apply the same prohibition on straw purchases for ammunition that currently exists for firearms. It would make it illegal for individuals to purchasing ammunition and then give that ammo to others, and it would require data sharing on ammunition sales.