The Capitalist Investor - Episode 45

What stocks are SO spooky that we recommend you run away fast? What stock picks hold more risk than reward? When we build out stock portfolios, there are only a finite amount of positions. So we aren’t going to take gambles. We’re trying to get the best ideas in there and avoid the loser picks. So in this episode of The Capitalist Investor, we share some “spooky” stocks you may want to avoid in the near future. All of the stars and planets must align for a lot of these plays to work out.

Outline of This Episode

  • [0:24] Spooky Stock Picks: Proceed with Caution
  • [4:44] Stimulus or no stimulus? That IS the question
  • [7:45] Spooky Stock Sector #1: The entertainment industry
  • [12:02] Spooky Stock Sector #2: Travel and tourism
  • [16:00] Spooky Stock Sector #3: Retail + office space
  • [20:29] All about The Capitalist Investor swag
  • [22:51] Bonus Spooky Stock Sector: energy

The stock market is facing a LOT of uncertainty

There’s been talk about another stimulus bill for a while now. But Democrats and Republicans can’t seem to align. Democrats want a 2.4 trillion-dollar bill and Republicans want half that. Trump called off stimulus talks, but then back-pedaled and said they’d be selective on what bill is passed. The bottom line? We have no idea what’s going to happen.

On top of that, the presidential election is mere weeks away and we’re facing the fact that the Coronavirus is going to be around for a while. It’s not going to go away overnight. No one has a good grasp of what the vaccine will do and how quickly it can be effective. The market is facing a lot of uncertainty. So what does that mean for stocks?

Spooky Stock Sector #1: The entertainment industry

Regal Cinemas are closing their doors for a second time since the pandemic started. AMC stock has been problematic and will only get worse. We believe that more and more movies will go straight to streaming (such as Disney’s Mulan). People may go back to theatres for the experience—but most people won’t.

But people still want entertainment. Perhaps more people will move towards home theatres. Many people will take advantage of streaming services in lieu of movie theatres. So how do you play this? Apple, Amazon, Netflix, Disney+, and Best Buy could be decent picks. Derek even likes Costco as an option. Demand is not being lost for those entertainment services. What’s changing is how people are seeking entertainment.

Spooky Stock Sector #2: Travel and tourism

Hotels, airlines, and cruise lines are NOT good investments right now. Even Disney—despite its streaming services—could be a dangerous pick right now. Why? Because most of Disney’s business comes from amusement parks and they just laid off 20,000+ employees. Restrictions in California have been so tight that they’re barely operating. These sectors are smack in the middle of spooky stocks. What’s the alternative? Is there one? Listen to find out!

Spooky Stock Sector #3: Retail + office space

Stores like Kohl’s and Macy’s aren’t gonna come back. The trend has shifted toward direct-to-consumer. Commercial office space seems to be doomed in the foreseeable future because the work-from-home movement is here to stay for a while. Companies will err on the side of caution as long as they can. Even when companies move back into their office space, we may see shorter in-office work-weeks. If that’s the case, there is definitely a reduced need for office space. What do we think about the energy sector? Listen to hear our thoughts!

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Show Notes by

Keep Listening to The Capitalist Investor:
Episode 15:
Spending Strategies in a Bear Market, Ep #15
Episode 31:
Handicapping the 2020 Election, Ep #31
Episode 47:
11 Investments in Your Home That Pay Off, Ep #47
Episode 63:
Jeff Bezos and Amazon: Past, Present, and Future Ep #63
Episode 79:
7 Ways Biden Plans to Tax American Families (Part II), Ep #79
Episode 95:
5 Beaten Down Stocks to Buy on the Dip, Ep #95
Episode 111:
Special Episode – Talking Energy with Daniel Turner, Ep. #111
Episode 127:
Retail Earnings Tank & What The Heck is Greenflation? Ep. #127