- Trading both sides of the market
- Zach Scheidt’s winning trade in one week (32.35%)
- Greg Guenthner pours one out for “Robinhoodies”
- The NFIB buries the lede (small-business optimism)
- A Canadian gold miner is ready to mingle… “Not the PJs”… “Not serious people”… And more!
“One of the things I loved about the hedge fund was the flexibility I had to trade both sides of the market,” says Paradigm’s income-generating ace and former hedge fund manager Zach Scheidt (aka “The Banker,” per Jim Rickards).
“I could make investment plays on stocks I expected to trade higher, but in a turbulent market, I could also make plays on stocks I expected to trade lower.
“This was especially helpful during bear markets and in situations where the market was choppy, as it is today.”
How’s this for a bear market?: “Last year, investors faced… many popular stocks losing 50%, 70% and even 90% of their value,” he says.
“During that same time…
“My real-money model portfolio saw positive returns to the tune of 190%!” says Zach. “I’m telling you this to let you know that you don’t have to accept what the stock market throws at you.”
Namely, Zach took the wraps off his model portfolio last week — designed to crank out income from bullish and bearish opportunities that today’s chaotic market presents.
“I’ve put $100,000 of my own family’s money into this account,” he says, “and I’ll be placing trades alongside the recommendations I send to my Income Alliance members.”
And in short order…
“Just one week after launching The Income Alliance, one of our very first trades is making big news,” says Zach, and locking in a 32.35% profit.
“Shares of Atlassian Corp. (TEAM) are dropping after the company’s earnings report last [week] — and that’s great news for our bearish play!
“While the company technically beat expectations for the quarter, traders are worried about TEAM’s ability to grow profits steadily in the future.
“Chalk this up as a win for our Income Alliance members!” he says. Here’s a quick peek at how Zach’s own “Income Matrix” indicators line up for TEAM…
- Economic: “Recession concerns will cause customers to pull back on spending. And higher interest rates make it tough for investors to justify high stock prices for growth stocks
- Fundamental: “TEAM still trades near 85 times expected profits for this year,” says Zach. “The stock price is way too high compared with the value of TEAM’s profits
- Technical: “The stock is gapping lower following a disappointing earnings announcement,” he says. “This ignites a third indicator, giving us a chance to profit again from a further TEAM decline.
“Now that TEAM is trading lower,” says Zach, “we’ve got a great opportunity to lock in profits and set up a new bearish position.”
[To learn all the particulars about TEAM and other short-term trades — which capitalize on today’s turbulent market — we’re re-opening Zach’s Income Alliance to new members.
In response to hundreds of inquiries, in fact, Paradigm’s director of customer care is reopening Zach’s service for 48 hours.
“I hope you’ll join me in this new community,” Zach says. “I’ve got $100,000 of my own money committed to this venture. I’m just as excited as you are to be tracking down profits in this dynamic market environment.”
So effective for just 48 hours, you can view Paradigm’s brief messagebeforemidnight on Wednesday, May 10.]
“The COVID Bubble buying frenzy is now dead and buried,” says Paradigm’s market analyst Greg Guenthner.
According to a recent Goldman Sachs research note: “We estimate retail investors have now sold more than twice what they acquired during the pandemic.”
Greg snarks: “Pour one out for the last WallStreetBets bucketeer as he sells his AMC shares and remaining Dogecoin for a loss and closes his Robinhood trading account. Not only are they selling their meme stocks — these poor souls are also ditching other ‘stable’ investments, even ETFs.”
(RIP to the “Robinhoodies” who produced a 2020 phenomenon which, at the very least, provided a much needed pandemic distraction… Not that we didn’t forecast the “stocks only go up” mania would end disastrously.)
“The psychology is simple,” Greg notes, “Persistent downside action has soured sentiment throughout even the more stable areas of the market.
“Capitulation is a rare and powerful force,” he adds. “There’s an old market adage that says ‘If the market doesn’t scare you out, it will wear you out.’ Stocks are grinding away, wearing down the resolve of anyone who managed to survive last year’s dismal drop.”
Greg notes, however: “If Goldman’s calculations are true and the last retail speculator has flicked off the lights and slammed the door shut, we could begin to enjoy more favorable market conditions, especially if sold-out bulls begin to chase any emerging rallies.”
The market continues to “grind away” today, as all three of the major U.S. indexes struggle in the red. The Nasdaq’s getting hit hardest, down 0.50% to 12,195, while the S&P 500 has lost 0.35% to 4,120. The staid Dow? Down 0.10% to 33,570.
As for the commodities complex, the price of crude is up 0.85% to $72.53 for a barrel of WTI. Precious metals, too, are in the green: Gold is up 0.35% to $2,040.40 per ounce and silver is up 0.15% to $25.87.
Finally, crypto’s hanging in there, at the time of writing. Bitcoin’s up almost 1% to $27,675 and Ethereum’s up 0.65% to $1,850.
The latest write-up per the NFIB’s Small Business Optimism Index completely buries the lede… It’s the weakest reading in a decade.
The monthly survey, going back to 1986, measures how small-business owners perceive current and future business conditions based on 10 key components.
And after 16 consecutive months of subpar readings, including April’s, NFIB chief Bill Dunkelberg says: “Optimism is not improving on Main Street as more owners struggle with finding qualified workers for their open positions. Inflation remains a top concern for small businesses but is showing signs of easing.”
Indeed, quality of labor and inflation remain the two top-of-mind concerns among small-business owners.
The CEO of Canadian-based Barrick Gold is signaling that he’s in the market for takeover targets.
“Because of our broad footprint of exploration across all prospective tier-one gold and copper jurisdictions, we have our geologists on the front lines,” says CEO Mark Bristow. “We have a much better understanding of the M&A activity than most of our peers.”
By his estimation, Mr. Bristow includes Barrick’s U.S. rival Newmont, which recently bid $19.5 billion to acquire Australia’s Newcrest Mining. “Newcrest granted Newmont, the industry leader, an exclusivity period to conduct due diligence that ends next Thursday,” says a Financial Times article.
“Even so, Bristow has ruled out at this stage bidding for the base metals business of Canadian miner Teck Resources, which could be spun out.”
Despite global ESG agendas, with a near-term switch to EVs, wind farms and solar — all of which require enormous amounts of copper — the price of the red metal has floundered 10% since January when China’s “reopening” fell flat.
“However, mining executives and traders warn that historically low levels of inventory raise the risk of prices spiking later in the year,” FT says.
“In the case of gold, the sector is considered ripe for consolidation because it is relatively fragmented and companies have fallen out of favor in the past over investment decisions.”
Bristow emphasizes the strength of Barrick’s management and exploration track record, concluding that his company has the “luxury of picking and choosing M&A opportunities.”
Stay tuned for more takeover news later this week…
A new study from the Institute for Policy Studies finds private jets comprise about one-sixth of FAA traffic… but only contribute 2% of the tax revenue funding the FAA.
“Instead, the majority (roughly 70%) of the tax revenue that makes up the aviation trust fund is financed by passengers purchasing commercial air travel,” the study claims. “Passengers pay a 7.5% tax on the prices of their tickets plus a passenger facility charge of no more than $4.50.
“Passenger taxes are increasing as flight prices increase. Meanwhile, private jet fliers only pay fuel surcharge taxes — roughly $0.22 per gallon of jet fuel.”
Which reminds your editor today of a scene from the HBO show Succession, when hostile shareholders want to fold in a clause for the show’s Rupert Murdoch-esque family, prohibiting a certain privilege…
Courtesy: Twitter
“Not the PJs,” says one nitwit son. “No! First they came for the PJs and I said nothing.”
“The median net worth of a full and fractional private jet owner is $190 million and $140 million respectively. They represent 0.0008% of the global population,” the study concludes.
“The jet-owning oligarchy is overwhelmingly male, over the age of 50 and concentrated in the industries of banking, finance and real estate.” Considering how those industries are faring lately? “Not the PJs” might become a common refrain.
Now to the mailbag, where a few readers respond to yesterday’s episode of The 5, featuring an all-electric U.S. military fleet…
“As a retired engineer from one of the largest military contractors in the world, I am sure my former colleagues are most eager to collect the billions that will be doled out to ‘develop’ the technology to make this possible.
“During my employment, as an eyewitness and participant in these types of projects, I can assure you the only ‘product’ will be pocket lining.”
Another reader notes a deadly unintended consequence: “One of the things not yet mentioned is what happens when a bullet, of just about any size, penetrates a military electric vehicle battery? Think it would be pretty catastrophic.
“Reminds me of the time in WWII when our tanks were powered by gasoline engines. It was not pretty. We lost a lot of soldiers. Wonder if that is why we went to diesel (sarcastic).”
“Come on, guys: ‘deeply unserious’? Is this the new politically correct way to say ‘deeply delusional’?” another reader questions. “Perhaps you’re worried you might get censored by our regime (I mean government) by calling it what it is?”
No censorship worries here. Yesterday’s email subject line, in fact, spelled it out: Team Biden’s Electric Delusions. But in another Succession callback…
Heh, which is a perfect segue to our final contributor…
“You have talked a lot in the past about the World Economic Forum (WEF),” he says.
“Has anyone noticed the eerie parallel between the WEF and the SPECTRE criminal organization from the old James Bond movies of the ’60s and ’70s?
“Beyond the parallels in ideology and goals, just hand Klaus Schwab a white cat and he would be a pretty good stand-in for an older, flabbier Ernst Stavro Blofeld!”
The resemblance, yes, is obviously meme-worthy.
We’ll be back with a new issue tomorrow… Take care!
Best regards,
Emily Clancy
The 5 Min. Forecast
