This Week in Barrons – 6-3-2018:
“When my mom played soccer, only the winner got a trophy.” … P. Byrnes
DYI (“Do-It-Yourself”) vs YDI (“You-Do-It”)
Per SF: Remember those days – when you kept score, and ONLY the winning team got a trophy? This week was Jobs Report week, and it was revealed that our unemployment rate fell to its lowest level since 2000. The report also showed that we created 223,000 new jobs, and that there was minimal wage growth. In my view it was a terrible report because not only was there no wage growth, but 95% of the created jobs were fake (birth/death model) jobs. The graph below of U.S. Businesses created, clearly shows our nation’s declining DIY (“Do-It-Yourself”) attitude, and when placed alongside our ever-declining labor participation rate tells me that we have a problem. I doubt that anyone really understood the continued collateral damage that the ‘participation trophy’ mentality would have on our economy. Currently, social entrepreneurship is the fastest growing entrepreneurial sector. It’s the ONLY area of entrepreneurship completely void of measurements other than getting the next grant. Social entrepreneurs aren’t measured by sales, profits, or even employment. It’s just another way of saying: “I’m with the government and I’m here to help.”
The Jobs Report also pointed to flaws within our educational system. This time it’s not our process, but rather our curriculum. Employers are telling us that we’re not teaching enough of the right stuff. Maybe that’s why the fastest growing employment sector starts with: “Do you want fries with that?” It seems employers have realized for a decade that DIY’ers are in rare supply, and now can’t find enough YDI’ers (worker-bees). It seems that even immigration authorities are close to issuing temporary immigration status so that California and Arizona can find enough workers for their fields. At one point employers took a long-term view to employees, but today they’re just chattel. Employees need to come to the table with a skill set that the employer wants NOW, or not come to the table at all. Banks are beginning to re-think student loans – linking a loans interest rate to the student’s major. For example, the interest rate on a student loan for a computer science major would be low (2%), but the interest rate for a drama student’s loan would be closer to 18%.
Educational institutions have no one to blame but themselves. Universities have completely over-built on the physical side, and have dramatically under-invested on the professional side. Last week, I personally attended a crypto-currency / blockchain webinar given by the #1 ranked computer science school in the world – and heard 50 minutes on the “History of Money”. There was no mention of block-chain, nothing about decentralized ledger technology, and nothing about the 2008 banking crisis that lead to the birthing of Bitcoin. It continued to reinforce the fact that the university is more interested in attracting new (shiny object) students than it is in re-furbishing professors and existing infrastructure. We have entered a world where: Ai, Autonomous driving, Blockchain, and ’70 is the new 30’ are almost reality. A world where technology (and Moore’s Law) are moving faster than our teaching abilities. Combine that, with a university professor being able to make 5 TIMES more money in the private sector – and I’m scared that we’re re-entering the perfect storm where: “Those that can’t DO … teach.”
But I’m not blaming the teacher for choosing a better path for themselves. It’s the University who (in this case) chose to build yet another monument / business school – rather than plowing those resources back into teacher’s salaries and their surrounding infrastructure. Who would have thought that education had to move at the pace of Moore's Law (doubling every 18 months)? Given technology is in every aspect of our lives from driving a car to ringing a doorbell – the way we are doing things (including education) will need to double its effectiveness every 18 months just to keep pace. That will cause our mannerisms and behavior to change every 3.5 years. Look around, because 42 months from now your processes will be different, and the only people that can prepare us for those changes are our teachers. This rate of change is 3 to 5 TIMES faster than previous generations had to endure, and our TEACHERS are the ones that will feel the brunt of the responsibility – especially at higher levels.
We disillusioned our DIY’ers by giving them all participation trophies, and now we’re shocked that without the trophy – they no longer want to participate in the work force (hence our historically low labor force participation rate). We’re putting YDI’ers to work faster than we can find them – as long as they’re willing to work at wages below the poverty level. We’ve succeeded in putting ‘Riverdale’ before reading, ‘texting’ before writing, and ‘athletics’ before arithmetic – and we’re surprised that we’re below Poland on the global educational rankings.
Courtesy of MJP: here’s a sobering thought. The Enterprise Corporation was created in 1983 by a successful entrepreneur who joined private foundation funds with 2 nearby universities. It lasted over a decade until his passing. It was replaced by a government entity that was ripe with scandal and embezzlement to a point that it was forced to change its name to: Innovation Works. Current government entities (Redevelopment Authorities) are taking over most efforts of business and entrepreneurial development, but checking results:
- Landlords love it because the government (when building out all of its incubators and accelerators) pays for a building’s complete rehab.
- Teachers love it because Entrepreneurial Thinking has been reduced to a check box – simply signifying classroom attendance.
- And that 1983 recipe for creating successful entrepreneurs (upper 2.5% = in yellow) will forever remain a mystery due to the lack of understanding.
Currently, it’s all about whether you’re a DIY’er or a YDI’er. A successful DIY’er is compensated for their knowledge and insight far beyond their time. A successful YDI’er is a gopher and relies on their time to make ends meet. The good news is – you have the ability to change at any time.
The Market:
The U.S. trade imbalance with the EU, and with China.
The DOW ended the week 0.5% lower, while the S&P and NASDAQ rose 0.5% and 1.6% respectively.
Info-Bits:
- Roseanneat the end of her ‘tweet’ claimed to be on Ambien. Ambien’s response: "Racism is not a known side effect of any medication."
- Tradinghas no age limits. Unlike trading:
o Over 25: you really shouldn’t start rapping, skateboarding, rallying after a day of drinking, or going out on Halloween.
o Over 30: you shouldn’t wear Crocs, own a scooter, play hacky sack, or have an AOL email address.
o Over 40: you really can’t say things like "adorbs", "amazeballs", "let’s do some shots", "don’t leave me hanging" and "irregardless."
o Over 50: no parkour, no Jello shots, no band t-shirts, no roommates, no beer can collections, and no flip phones.
o Over 70: everything is back on the table including rapping, skateboarding, and t-shirts. But trading never gets old, and it keeps your brain young.
- Make War not Love: On Tuesday, the White House announced that the U.S. would impose tariffs on $50B worth of Chinese goods and restrict Chinese investment in the United States. On Thursday the U.S. imposed aluminum and steel tariffs on imports from Canada, Mexico, and the European Union. They (in turn) wasted no time responding to the new U.S. metals tariffs with punitive measures of their own.
- Starbucks:closed 8,000 U.S. stores for one day for anti-bias training.
Crypto-Bytes:
- Bitcoin for the long-term: As the chart below shows, for the first time in 4 years, Bitcoin’s long-term price indicator has turned bearish. Bitcoin’s price fell by 19% in May, and is now attempting to push its 5-month moving average below its 10-month moving average for the first time since June 2014. The drop could be a validation that the long-term bull market in BTC has ended and investors should be cautious.
- Why all the long faces?Although blockchain and crypto may be touted as the greatest discoveries since sliced bread, people forget that money is power, and timing is everything. Investors need to appreciate the time it takes for major elements to develop, especially when an opportunity to make triple digit returns is on the table. As an old ‘car guy’ once told me: 9 guys can’t make a baby in 1 month.
- $9B: Is the approximate capital that has been raised since January 2018 – surpassing 2017’s pace.
- 179%: Is the avg. return from ICO price to opening market price for a 16-day holding period, which suggests significant ICO underpricing.
- -100%: Is the avg. return of ICOs that fail to list their token within 60 days.
- 48%: Is the avg. buy-and-hold return for the first 30 days post-ICO.
- $4B: Is the amount of money blockchain startup Block.one raised on the promise of their product to be ‘eos.ios’. I’m not against vaporware, but $4B? That sounds like dumb money. If that’s where global capital is going, then who’s going to keep buying equities?
Swallow your coffeebefore reading any further. Per the Daily Bit: on June 25th, John McAfee will be releasing his own fiat currency which he states is: “serialized, linked to the blockchain, redeemable, convertible, and collectible”. There are 7 different bills – each displaying the likeness of familiar crypto-faces: Jihan Wu ($10), Brock Pierce ($20), Roger Ver ($50), J. McAfee ($1, $5 and $100), and J. McAfee and his wife ($500).
Finish your coffee. Redemption will be done via a face-to-face meeting with the man himself, John McAfee. The terms are even written on the back of the bill: “Present your certificate. The redemption center will verify its authenticity and provide you with a date, time and location in the US where Mr. McAfee will meet you for the allotted time.” 1 McAfee Redemption Unit (MRU) = 1 minute with John McAfee.
In terms of the equity markets, is this the big run up that everyone’s been waiting for? It could be. After all, we’ve been trading sideways for months. Twice they've tried to break out of this slop. Back on May 14th the S&P bounced to 2742 and then faded off. A week later on May 22 it ran smack into that exact level, 2742 and once again faded back – hitting a low on May 29 at 2676.
We ended Friday at 2734 – just 8 points shy of that upper resistance level at 2742. If we get through that and it holds, I have to believe we run to 2800 and potentially beyond. But if it fails again, that would be the third failure, and that could put an end to all of this.
I think that this is Wall Street’s best shot at reclaiming 2800. They're going to use the dolled up jobs report as an excuse to make it happen, despite the fact that 215,000 of those jobs were fake, and the labor force participation rate fell again. Doesn't anyone find it odd that we're supposedly doing so well, yet 100 million people of working age, do NOT have jobs? That's 1/3 of our population.
In advance of the run, I added some: QQQs, FB, and CSCO. I’m up in those names and if we break out, I will probably add to the pot. If we get repelled again at 2742, I’ll take my profits and consider going short.
Top Equity Recommendations:
3 Top Biotech Picks – based upon technical analysis:
- Intercept Pharmaceuticals (ICPT) $74.30 and up 27% YTD, almost had a break out in early April but failed. There is significant resistance at $76.40, but breaking that should allow ICPT to move to $86.50.
- Spark Therapeutics (ONCE) $80.53 and up 56% YTD, is still about 11% shy of its one-year high of $91.75. The technical pattern shows resistance at $83.20, but clearing this should allow it to climb to $91 – over 12.5% from its current price.
- Seattle Genetics (SGEN) $61.62 and up 15% YTD has been trading sideways since August 2017 - between $48 and $60. The stock appears to have broken out of the range and should move up to its next resistance level of $69.50 – a 13.25% jump from its current price.
Weed stocks that soared last week:
- May 29, 2018, will be remembered as the day when MedMen Enterprises (the largest cannabis company in the U.S.) began trading on the Canadian Securities Exchange (CSE). The CSE is teasingly referred to as the “Cannabis Stock Exchange” because over 20% of the stocks on the exchange are cannabis companies. Since U.S. cannabis companies are prohibited from listing on U.S. stock exchanges and are denied financial services, many more are expected to follow MedMen: “To Canada – and beyond.”
- CV Sciences Inc. (OTC: CVSI) soared 15.03% last week to $1.76 after announcing the appointment of a new CEO.
- Cronos Group Inc. (CRON) popped 7.87% to $3.98 after reporting its fourth-quarter and fiscal year ending financials.
- Beleave Inc. (OTC: BLEVF) climbed 6.76% to $1.28 after announcing another location was added to its Medical Cannabis Clinic network.
- 22nd Century Group Inc. (XXII) jumped 5.19% to $2.23 after presenting its first-quarter earnings report.
- Marapharm Ventures Inc. (OTC: MRPHF) rose 4.46% to $0.403 after disclosing that propagation at its Las Vegas, Nevada facility had begun.
Marijuana stocks (HODL):
- Canntrust Holdings (CNTTF)
Others:
- QQQ = long stock,
- FB = long stock, and
- CSCO = long stock
To follow me on StockTwits.com to get my daily thoughts and trades – my handle is: taylorpamm.
Please be safe out there!
Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, R.F. Culbertson, contributing sources and those he interviews. You can learn more and get your subscription by visiting:
Please write to Mr. Culbertson at: <rfc@culbertsons.com> to inform him of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference <http://rfcfinancialnews.blogspot.com/>.
If you'd like to view R.F.'s actual stock trades - and see more of his thoughts - please feel free to sign up as a StockTwits follower - "taylorpamm" is the handle.
If you'd like to see R.F. in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing:
Creativity =https://youtu.be/n2QiPSe_dKk
Investing = https://youtu.be/zIIlk6DlSOM
Marketing = https://youtu.be/p0wWGdOfYXI
Sales = https://youtu.be/blKw0zb6SZk
To unsubscribe please refer to the bottom of the email.
Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Please make sure to review important disclosures at the end of each article.
Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.
All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.
Remember the Blog: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.
R.F. Culbertson
