thoughts as we finish out this 4th Week of September 2020
Insider Selling Fastest Pace Since 2012 - S&P 500 execs sold shares of their own firms at a rapid pace in the last month. The selling vs buying, tracked by Sundial Capital, showed the fastest exit since 2012. About $975 million of stock was dumped last week: below you can see 10 years of sentiment where mountains are buying and valleys are selling.
😲 Why does this matter to you? When a group of investors who know the MOST about their own companies are selling, there could be several reasons, but this also is often a flashing signal for “dip buyers” to beware. I watch many different indicators, and this is one…to help put cash to work, or NOT.
Last month I wrote that electric vehicles and trucks were going to change the landscape, creating winners, and losers. Check out this headline from Barrons: “The new EVgo fast-charging stations will offer 100-350 kilowatt capabilities to meet the needs of an increasingly powerful set of EVs coming to market. General Motors unveiled its Ultium Drive system as part of their push to become a serious player in the electric-vehicle market.” That is potentially good news for GM investors—but it might be bad news for existing suppliers of powertrain parts. EV makers need batteries, electric motors, and power inverters to power their vehicles. Internal-combustion vehicles, on the other hand, need a motor, transmission, gas tank, and exhaust system. General Motors sources its EV batteries from Korean company LG Chem and develops its battery-management systems and software in house. Ultium Drive brings GM one degree closer to being not only an EV maker, but an EV supplier as well. That could be “potentially disruptive” (aka BAD) for powertrain providers, American Axle; BorgWarner, Magna and Delphi. 😊Why does this matter to you? Early adopters are the winners we will be investing as these technologies contribute to the battle to reign in climate change. Trust we will be out front in every new technology.
The remote chatting we have been pushed into at lightning speed to attend classes or church services; join in committee or volunteer meetings and connect with our advisors…could become the new normal. However, not everybody likes talking through GoToMeeting or Zoom and the preferences fall along generational lines. 57% of investors said meetings with their advisors have changed in some way following the stay-at-home mandates and 62% said they would continue to use these new communication channels either entirely or partially after the pandemic ends. The survey found that Zoom meetings were the least favored by respondents over 65 and while 36% used video chat, only 9% preferred that method above all others. While many investors do not want a return to the past…many prefer time savings this new normal brings…only 20% of baby boomers were happy relying solely on electronic communication. ☹ 😊 Why does this matter to you? In the drive for efficiency and cost cutting, this is not the first-time consumers have been forced to adapt to “signs of the times”. While it is natural for there to be resistance when we feel we are losing old ways that are comfortable, we can focus on what is gained while acknowledging what has been lost. It is very important that you feel heard when you share your preferences, so please look for (and return!) a survey later this year to help me better connect during the time socially distance and shelter in place. Know that when it is safer to gather face-to-face, we will. I understand how critical it is that I am well, and, in my chair, as we navigate this difficult time. More importantly, however, is that I want you healthy, wealthy, and wise when we come out on the other side.
Tesla had an amazing run through August—and then it suddenly reversed. That might appear to be just a problem for shareholders, but is it signaling trouble for the stock market, too? Tesla was one of the big winners following the Covid-19 crash and it surged 474% after the March bottom due to a combination of low interest rates, company profits, a potential stock split, and the possibility of inclusion in the S&P 500 index. This created a speculative frenzy in the stock price but September has been a different story that hasn’t been kind to the TSLA: reality sank in as the split occurred, it wasn’t included in the S&P 500, and battery day, a widely anticipated update on new technology, was a big disappointment. Even the announcement that California would ban the use of fossil fuels for cars by 2035 couldn’t help the stock on Wednesday, as it dropped 10% on that day alone. 😊 Why does this matter to you? There are many “old saws” that have lasted over the years and one that has stood the test of time is “buy on the rumor and sell on the news.” By the time news outlets start hyping about a “big story” analysts have often been quietly buying up the stock. Our charts can help us separate the hype from real news and avoid chasing a stock. At the end of the day, though…having your asset allocation aligned with your risk tolerance is the biggest contributor to your having good results in growing your wealth. None of us expected to be in this “Covid place” into the 4th Quarter…but nevertheless we will persist.
Constancy noun con·stan·cy | \ ˈkän(t)-stən(t)-sē
Steadfastness of mind under duress: fortitude, fidelity, loyalty. A state of being constant or unchanging: steadfastness of mind under duress; dedication and devotion. In short supply. Synonym - Skye Advisors