OTW #65: Govt data makes no sense; Top companies will fall; Stocks drop, metals rise, & more.
Important financial events and data to check out over the weekend
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1. The government’s data makes zero sense.
The release of unemployment data causes hundreds of billions of dollars to shift to different areas of the financial system. The Federal Reserve even relies on this info as it considers what to do with interest rates.
But are these market-moving decisions based on bogus info?
James Bianco’s research suggests this may be the reality:
Below is the number of initial filings for unemployment insurance.
How is this statistically possible?
Five of the last six weeks, the exact same number.
Effectively the same number in the last 11 weeks, except for the holiday weeks (President’s Day and Easter).
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Consider
The US is a $28 trillion economy. It has 160 million workers.
Initial claims for unemployment insurance are state programs, with 50 state rules, hundreds of offices, and 50 websites to file. Weather, seasonality, holidays, and economic vibrations drive the number of people filing claims from week to week.
Yet this measure is so stable that it does not vary by even 1,000 applications a week.
Just the number of applications incorrectly filed out every week should cause it to vary more than this.
Antagonist’s take
Much could be said about how untrustworthy these numbers are, but I’ll simply say this: when it comes to your money, question everything.
Have a healthy skepticism about any data point, report, and forecast—no matter how “official” it claims to be.
With economics and finance, there is no such thing as a flawless source of information. That includes government entities, corporations, and even publications like this one!
I do my best to provide you with objective data and research—and to do so with full transparency. That’s why I post the sources of my information and share all my trade results (good and bad). Nevertheless, I’m far from perfect and will make mistakes.
I hope the Antagonist is your go-to resource for making investment decisions, and I’m always trying to improve it. Still, it’s essential to conduct your own due diligence to determine which investments and trades are best for you and your family.
2. Top companies will fall.
This visualization shows the top 10 U.S. companies by revenue in 1994 vs. 2023. Just two companies are on both lists.
Antagonist’s take
It may seem unfathomable that businesses like Apple, Google, Amazon, and Microsoft could loose their status as a top-10 revenue company. But that’s exactly what people thought about American automakers in the mid-90s.
Also, even after accounting for inflation, the biggest companies from 40 years ago are still far behind today’s revenue champions.
My point is that no company is too big to fail (or at least fall behind).
When you find a great business, invest in it and plan to hold your shares for decades. At the same time, however, resist having an iron grip.
Be ready to let it go when it’s no longer the world-class business it once was.
Just as importantly, look for the next wave of top companies that are set to overtake the incumbents.
That’s where generational wealth is made—owning great businesses but also constantly searching for new opportunities.
In last week’s OTW, I explained why asset allocation is vital to this strategy and to long-term wealth building. Check out that post to read more about this idea and how to easily implement it.
3. Stocks drop. Metals rise.
The S&P 500 dropped 3% last week, and the Nasdaq fell nearly 6%. That didn’t slow the rally in precious metals like gold, silver, and copper, however.
Tavi Costa believes this is just the beginning of a secular bull rally. In these two charts, he shows how junior gold miners (i.e., smaller companies) and silver are poised for even greater breakouts:
Antagonist’s take
I’ve been screaming—probably to the point of annoyance (sorry, not sorry :))—about the opportunity in precious metals and other commodities. If we truly are in a “higher-for-longer” phase of inflation—which I believe we are—these assets will continue to reward investors.
Premium members are already enjoying these returns. In our long-term Blend Portfolio and in our short-term Challenge Portfolio, several of our metals and commodities holdings are destroying the returns of the S&P 500 over the same time period that we’ve held them.
Here’s just a sample:
79% return on a copper stock vs. 22% for the S&P
78% return on a coal stock vs. 22% for the S&P
64% return on a uranium holding vs. 13% for the S&P
39% return on a small-cap oil stock vs. 22% for the S&P
26% return on a gold miner vs. 4% for the S&P
If you’re interested in seeing how premium members get access to gains like these, upgrade today. You’ll get 7 days to try it out for free. Cancel any time.
Last thing...
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Thank you for reading, and have a great weekend!
Jason Milton
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