A stopped clock is right twice a day… I guess.
Our readers know we’re not the biggest fans of mainstream media and their “tape bombs.” But, this is a newsletter business after all, so I should know what the hot topics are.
So, as usual, I sit at my desk to begin the work today, checking what the top stories are, expecting more of the same tired stuff that gets clicks… but doesn’t really matter.
To my surprise, however, I was met with a few topics I felt were quite relevant, even if the media is still missing the point. They touch on metals, mining, Bitcoin — yes, I think it’s relevant this time — and trading the global recovery.
But they don’t seem to acknowledge how it’s all related to inflation. So even when the broken media clock gets it right… it’s still a little off base.
For the first time in a while, I find the crypto talk relevant. In fact, I covered it Tuesday in a piece for Venture Society where I actually bought the dip… I know, I know. The world’s gone insane.
But I didn’t just buy Bitcoin outright or recommend opening a crypto wallet. Instead, I prefer some ETF-style products that are leveraged to the crypto space.
As I noted Tuesday, the Reddit crowd is high on MicroStrategy Inc. (Nasdaq: MSTR), but I prefer the GrayScale Bitcoin Trust (OTC: GBTC), due to its closer price correlation with Bitcoin.
And if you look at one of the top stories in the photo above, as I wrote the piece, Ark Invest CEO Cathie Wood was reading my mind and bought 1,046,002 shares of GBTC in the Ark Next Generation Internet ETF (NYSEArca: ARKW).
As we all know, a lot of retail traders love to follow what Wood does, so people are still bullish on crypto… I wonder why that could be.
Maybe it’s because of the theme of 2021: inflation.
Which is the point that the media is missing. Inflation means commodities go up. And cryptos are commodities.
Which leads us to the next topic in question…
According to Morgan Stanley analyst Carlos de Alba, metal and mining stocks are going to enter a strong period after pushing through some volatility.
Again. I wonder why.
Could it be… that inflation is still pushing upward? Gasp.
My thoughts on that sector are brief. Of the metals, gold and silver look the most attractive to me at current levels.
But none of this is what really caught my eye, and I’m sure you’re asking what any of this has to do with trading the global recovery.
Well, most people know how to beat inflation: You go long on the things that are inflating. But what happens when those areas start getting overbought?
Because that’s what I’m seeing as the U.S. is — for the most part — completely reopened. As consumers go out and spend more money in brick-and-mortar establishments, those associated stocks heat up — causing a lot of them to reach price levels I don’t like.
So when trading the global recovery, we want to look north… and far across the ocean.
As restrictive as the United States has been from a lockdown perspective over the past year, Europe and Canada’s governments have been downright oppressive by comparison. And as a result, those economies aren’t anywhere near as open as ours.
But as their vaccination numbers go up and restrictions ease, they will see the same kind of ripping reopenings as the U.S.
So why should anyone be long overbought U.S. stocks at a point where they may slow down… when they could be long Canadian and European stocks at a time they start to heat up?
Over the next couple of months, Fortune Research is going to look for as many of those opportunities as possible — most likely in retail and consumer-oriented areas.
After all, to paraphrase “The Great One”…
You gotta skate to where the puck is going, eh?
All the best,
P.S. Recent volatility has some investors acting like gamblers with their retirement funds. Chasing lost money… panic selling and buying… It’s sad.
Casinos can be fun, but leave the gambling mentality at the door when trading.
If traders can keep their head on their shoulders… and work a solid plan, history shows that these markets are exactly where they can make their money.
And Joy of the Trade Head Trader Jeff Zananiri is hosting a live event on Thursday, June 24, at 1:00 p.m. EDT, talking about the strategy to do just that.