June 3 Post
Hi Again,
Have you heard of “Sell in May and go away”? If others sell, it would create an opportunity for
us to buy. We saw that in some tech stocks over the past few weeks. Salesforce (CRM) dropped
from $270 to $212 ! I bought some and when it goes down further, I will buy more. However,
on 5/31/24, CRM was up by 7%. Dell dropped from $179 to $131. I bought some and when it
goes down further, I will buy more. Since January, Adobe (ADBE) has dropped from $634 to
$444. Nathan Rothschild, a 19th-century British financier and member of the Rothschild
banking family, is credited with saying that "the time to buy is when there's blood in the
streets." As for our newsletter portfolio, I replaced Delta Airlines, Southwest Airlines and
WYNN with Salesforce (CRM), Dell Computers (DELL) and Adobe (ADBE). These will
appear in the July 2024 scorecard. I seriously considered adding Pfizer (PFE) as it has a chance
of doubling over the next 5 years. On my personal accounts, I have been making money selling
covered call options on Pfizer (PFE).
Have you been noticing that it was with great difficulty that the Dow (DJIA) went above
40,000? It only managed to stay above 40,000 only for 3 trading days! On 5/31/24, call options
on DJIA (DIA) at 40,000, expiring 6/7/24 is going for 2 cents or $2 per one contract (or 100
shares of DIA). This implies that no one expects the DJIA to be above 40,000 on 6/7/24.
According to CNBC on 5/28/24, Office Real Estate loans maturing in 2024 is at $30 Billion!
These loans are getting refinanced at high rates. If landlords want to break even, they have to
raise rents by 42%. Banks will sell debt creating a once in a lifetime opportunity. Prices are at a
25 year low. Probably, this is a good time to short regional banks (KRE) again.
The rise of private credit over the past decade has been nothing short of monumental.
But JPMorgan Chase CEO Jamie Dimon warned this week that parts of the burgeoning sector
have some of the same problems that the mortgage market had prior to the Great Recession of
2008, including questionable credit ratings from ratings agencies. “I’ve seen a couple of these
deals that were rated by a ratings agency, and I have to confess it shocked me what they got
rated,” he said at a conference Wednesday, per Bloomberg. “It reminds me a little bit of
mortgages.” Right after these comments, Dimon said when it comes to private credit, there's
been a similar dynamic at play today. The private credit market, where non-bank financial
institutions like insurance companies and hedge funds lend to corporate borrowers, has had a
renaissance in recent years with banks reducing their lending due to regulatory scrutiny,
inflation, and higher interest rates. Assets and committed capital in the sector surged from
around $500 billion a decade ago to $2.1 trillion last year, according to IMF data. And private
credit assets under management are expected to hit $2.8 trillion by 2028, according to Preqin’s
2024 Global Report .on’t expect it to be systemic, but I do expect there to be problems,” Jamie
Dimon added. (Will Daniel, Yahoo Finance, 5/30/24)