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Don’t Mix Your Politics with Your Investing

October 27th, 2024|

Prior to the 2016 election, I heard the following phrase about 1,000 times: “If Trump wins, the market is going to crash.” I thought it was such a ridiculous statement that I wrote an article for Yahoo Finance a month before the election saying that he was going to win, and that the market would take off. It was the second most read article on Yahoo Finance that month and I got an INSANE amount of hate for it. The funny thing is I wrote in the article that it was not a political statement. It was simply analysis, but no one cared. Once people saw the title, they were triggered beyond belief (because most people are complete lunatics about politics), and I received over 500 emails in less than 24 hours telling me I’m an idiot.

Well, I’m doing the same thing now. What I’m about to say is not political. It is simply analysis. Over the past two months, I’ve heard the following phrase hundreds of times: “If Harris wins, the market is going to crash.” Again, this is an absolutely ridiculous statement. I don’t know who’s going to win the election, but I do know one thing, the market is NOT going to crash. If you think it is, it’s because you’re probably too wound up in the politics. Like Warren Buffett says, “If you mix your politics with your investing, you’re making a big mistake.”

Why do I think the market is NOT going to crash? Four reasons. 1) The Fed is on the market’s side. They are cutting rates and pumping liquidity into the system. The Fed is WAY more important for the markets than who’s President. Remember, don’t fight the Fed. 2) Seasonality. November and December are traditionally two of the strongest months of the year. 3) Technicals. All the major indexes are above their key moving averages, showing that the big institutions continue to support the market. In addition, many of the market leaders are acting well. Remember, so go the leaders, so goes the market. 4) Gridlock. With a split Congress, very little is likely to get passed.

I know so many people who have pulled their money out of the markets because they’re brainwashed, hate a certain side, and/or are living in fear. Based on what I’m seeing and a lot of the unusual options activity, I think the market finishes the year strong AFTER the election NO MATTER WHO WINS because the uncertainty of the event will be behind us. I apologize in advance for being a voice of reason. If you want to send me hate mail, you’re welcome to do so.
 
I can be reached at: jfahmy@zorcapital.com.

Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained on this blog constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned on this blog. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.

Stock Idea: Rocket Lab USA

October 13th, 2024|

A stock that could have decent potential over the next 6-12 months is Rocket Lab USA (Symbol: RKLB). Rocket Lab is an end-to-end space company delivering reliable launch services, spacecraft, satellite components, and on-orbit management. As a global leader in launch and space systems, they are transforming the way we access and use space. A recent Barron’s article said “Rocket Lab is quietly emerging as a SpaceX Competitor.”

Technicals – The stock is working on a rare, high tight flag pattern. It’s basically when a stock doubles in a short period of time and then barely gives anything back. My interpretation is that there is strong institutional accumulation beneath the surface, as seen in the tight closes on lighter volume over the past few weeks. These rare patterns can often lead to strong moves. If you’re interested in reading more about this pattern, there’s a website called Google where you can look up the definition.

Fundamentals – The company started with Electron, its small satellite launch. Now, they are developing their next generation launch vehicle called Neutron. Electron has seen approximately 53 launches and deployed 197 satellites for a diverse range of customers and missions, but is limited at 300kg lift capacity to Low Earth Orbit (LEO). The Neutron rocket will be able to handle approximately 13,000kg lift to LEO. This is a huge opportunity for Rocket Lab to compete more directly with SpaceX’s Falcon 9 and other medium-class launchers. In addition, their efforts to increase rocket reusability is seen as a potential game-changer. RKLB has a market cap of $4.8B and trades 9.3X EV/Sales with revenues seen rising 75% in FY24, 40% in FY25 and 45% in FY26 while EBITDA profitability inflection seen in FY26.

Unusual Options Activity – RKLB has seen plenty of bullish options positioning over the past two months with 3900 December 2026 $12 calls bought, 1175 June 2025 $20 calls bought, 5000 April $17 calls bought, and 3500 November $17 calls bought. This data is provided by OptionsHawk. Please visit his website to learn more about unusual options activity.

Full Disclosure – I currently hold a position in this stock for clients. I started the position around the $6 level and added this past week off the potential high tight flag formation. These purchases were also disclosed to my Educational Members. If you’re interested in becoming an Educational Member, you can sign up here.

The purpose of this blog post is to show you how I combine technicals, fundamentals, options activity, and other factors to help increase my probabilities of success. Please understand that this is a speculative idea and not suitable for everyone. Also, it’s impossible to guide people how to trade any idea because everyone has different time frames. If the market cooperates, I feel the stock can appreciate 30-50% over the next 6-12 months. The stock closed Friday (10/11/24) at $9.70 and should have strong support in the $6-7 range. Good luck!

I can be reached at: jfahmy@zorcapital.com.

Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained on this blog constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned on this blog. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.

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