Editor’s Note: Each day, Keith cuts to the core of Wall Street’s most important stories. While other talking heads are telling you what happened, Keith tells with you what’s really driving trading, how to think about the news and how to profit.
1. With the Dow Jones hitting its 12th straight all-time closing record, there’s been a lot of chatter that the index is poised for a sudden crash. The Dow is now within striking distance of 21,000. The bears are roaring that a 1987-style crash is imminent any day now…
Keith’s take: They’ve said the same thing since March 2009 when the market bottomed, so you’ve got to take what they say with a grain of salt – and a really big one at that!
There’s no law that says the markets have to fall just cause they’re climbing to new heights. In fact, some of the best buys are made when prices are at all-time highs.
If you know what to look for – Unstoppable Trends backed by trillions of dollars and the companies making “must have” products selling into them.
In the meantime, keep your stops nice and tight “just in case.”
2. Goldman Sachs Group Inc. (NYSE: GS) is out with a report that should investors sell Tesla Inc. (Nasdaq: TSLA). Not surprisingly, shares fell more than 4.3% Monday after Goldman analyst David Tamberrino cut his price target from $190.00 per share to $185.00, citing concerns about the company’s need to raise capital ahead of its Model 3 launch later this year. Investors are now concerned that the company could experience delays in its manufacturing process.
Keith’s take: Perspective matters in situations like this.
Goldman has a long history of trading against its clients, and I’d be very leery that there’s another side of the house taking the exact opposite position in private.
3. Harley-Davidson (NYSE: HOG) was the subject of a very negative Barron’s article over the weekend. The publication said that the iconic motorcycle maker is in trouble due to weak demand from millennials, among other things.
Keith’s take: It’s got far bigger problems, not the least of which is complacent executives who think that $30,000 motorcycles are normal and who think the brand is unassailable.
The situation reminds me of Sears Holding Corp. (Nasdaq: SHLD), which was another iconic brand marginalized by consumers.
I don’t think it’s too far down the road to turnaround, but it will need several years of concerted effort to do so. Steer clear.
4. Snap Inc. (NYSE: SNAP), the parent company of social media giant Snapchat, is poised to initiate its IPO this week. Millions of investors are waiting with baited breath to buy shares. The company has lowered its expectations for capital raising in the last week. And investors want to know if they should buy into what will likely be the largest technology IPO in years.
Keith’s take: Good luck buying this stock at a reasonable price. Instead, you should just take your money to Las Vegas and pick a number on the roulette wheel at random. Though the company is set to be valued at more than $20 billion, there is a distinct possibility that the firm will NEVER BE PROFITABLE.
They call stocks like this a unicorn for a reason. It’s a mythical beast with no bearing in reality.
My advice is that you should wait nine months to see how the market values it. Should the firm prove that it can be profitable – and that’s a big IF – then proceed and buy it for the long run.
5. Finally, let’s talk about health insurers and their fate from President Trump’s designs for Obamacare.
Keith’s take: Obviously, it’s big news President Donald Trump just met with leading healthcare executives. It appears that the industry is going to get realigned. However, it’s not entirely clear what this is going to look like in the years ahead.
Whereas the Obamacare mandate was very clear, this isn’t, and that calls profit margins into question.
Check back tomorrow for more of Keith’s insight into the major stories driving the market.