Despite being a classical commodity investor, The Golden Investor wants to elaborate on some short-selling opportunities for our bear comrades who are less lucky. In contrast to precious metals and other commodities many shares have been rising like never before in response to the capital market recovery. This creates some interesting short selling opportunities for remaining bearish investors.
Heineken is a global supplier of beer, it is one of the most famous brands of beers with a worldwide consumer base. Just like the financial crisis the current corona crisis is a global crisis. Consumer demand all across the globe will tank, especially on leisure goods like Heineken’s beers will drop significantly. Many people seem to forget that the social distancing society and measures will last for some times. Today China put some hefty lockdown measures back in place in the province of Jilin. Schools were closed, public transportation and some cities imposed new home quarantining measures in order to stop a second wave of a COVID-19 outbreak. This is a symptom of the new sick global economy where we have to get used to no large scale events and binge drinking club nights. This will also be felt at the headquarters of Heineken in Amsterdam and the results will show our short-selling case is legit.
The Walt Disney Company (DIS:NYSE)
Walt Disney’s highest profit margin’s is on their amusement parks and even though their streaming product Disney+ has seen a great rise in new subscribers during the global mass quarantining period, Disney stock hasn’t seen its very lows yet. We will have to get used to a social distancing society and believe The Golden Investor, the early positive preliminary results of Moderna’s vaccine are not going to change anything anytime soon. It is already known that the corona virus has great capabilities of mutating, and for a vaccine to work a vast majority of the people has to be injected. Even if there’s a chance that there is a vaccine in January, many people will stay reluctant to instantly inject a poorly and rushed tested vaccine. The effectivity of social distancing is lower, but until a majority of the people is injected with a working medicine will take some time and until then social distancing is the only working measure. In a social distancing society there is no place for big theme parks to be extremely profitable and Disney+ won’t make a difference.
Madison Square Garden Sports (MSGS:NYSE)
In a great way to mock investors Madison Square Garden recently spun-off its entertainment division into a separate company. In contrary to spinoffs of tech-companies this won’t result in a fruitful growth and innovation. It’s a trick by the management to avert liquidity issues and keep its equity stable. Yes, the sports branch of the company has a way better chance of survival than the entertainment trench. However again The Golden Investor wants to note that in a social distancing society, full stadiums are a no-go. Moreover the hard hit consumer confidence won’t be able to return anytime soon with these levels of unemployment. In a recessionary global economy sponsorship revenue will go down tremendously, ticket revenue will go down due to (forced) lower attendance and merchandise revenue adapt to recessionary levels. I guess no new R.J. Barret jersey for Christmas this year. Maybe investors think this spin-off will make them eligible to the small business loans like the LA Lakers.
Malibu Boats (NASDAQ: MBUU)
This medium to small cap company makes pleasure boats. This stock perfectly shows how the current market is pricing in a V-shaped recovery: it is less than ten percent down from it’s February high’s. In a long lasting struggling economy the last thing what people need is a new boat. Conspicuous consumption will be away for a while and therefore investors should stay away from stocks like these. Especially these smaller cap stocks are a rougher ride to short, but the increased risk of shorting makes it a potentially higher rewarding stock.
The Ferrari case is a little different, it is mainly driven by conspicuous buying, but its consumer base has deeper pockets than the average person. Moreover it rather seems that the capital holding elite is only benefiting from the current market situation. However again when taking into account the intensive hit the global economy got, the capital burning measures most certainly will have hit many entrepreneurs. People will think twice before buying a Ferrari, even though the point of buying a Ferrari is that you don’t have to think twice. But at the current share price level of less than six percent below the February highs there is a short selling opportunity.
Short The Economy, Buy Silver and Gold!
However the safest way to short the market is to buy precious metals. Physical, ETF’s or Miners, it are all opportunities for the real bears. Gold has seen a steady rise since the FED cut rates last year in May. More and more market signals point toward the possibility of negative rates in the US. Let’s not forget, it is the only tool left in toolbox of Mr. Powell, next to his unlimited QE-ammonition. Silver is the best investment of the two at the moment, the gold/silver-ration is at its highest levels ever due to the crushed industry demand for silver. However silver has some safe-haven characteristics too, but most of the times needs to do some catch-up to gold. Both commodities are great to hold, any consumer should hold part of its wealth in these commodities. An emerging commodity which has some safe-haven characteristics is Palladium. Due to its low availability and high demand it has turned into a popular trading material. It has survived the drop in global industry and tech demand, however its pre-corona bull run has ended. This creates a great way to step in for the long term investor, but short term sell-offs could affect this market so be careful.
Stay safe and protect your wealth against new possible downturns. The market has not to go up for you to grow your wealth. There are always ways for investors to protect their wealth, even in these market conditions.
Disclaimer: This is not investment advice or anything like that, always make your own investment decisions based upon your own financial situation