Vol. 6 No. 3 I’ll have a Corona; hold the virus!

Readers note: this combines both my former market blog and resurrects my wine blog. The opinions expressed are my own and disregard any you don’t agree with. Thank you for reading!

TB

I’ll have a Corona…hold the virus!

Another day, another boring press conference. Don’t know what happened to Trump in the last 24 hours but his press conference was awful. He stumbled through his notes, blamed the WHO for the failure to warn us (?), and then threatened to withdraw our support. All this while spouting disinformation on the number of tests completed. The station I was listening to (CBS) cut out to there scheduled programming before it was even over…a relief for TB who was starting to feel like HE had the virus! Too harsh? TB doesn’t think so! This the same day that his “Acting” Secretary of the Navy, Modly, who TB discussed in yesterday’s column, resigned rather than be fired, making him the second Secretary of the Navy to do so, the other following Trump’s tantrum about the Navy SEAL who was convicted, and then overturned by the Dumpster…oops, Trumpster.

So how did the markets fare? Uh, not well even with a continuation of the VIX decline, albeit modest. They started out strong, following a rally in the overnight markets that was fading, reversed the slippage and then made a U-shaped top, sliding into the close. Oops!

Which stocks did the worst? How about any stock that has been in favor but still lacks positive earnings? This was especially true in internet stocks like information technology. Negative earnings, even with positive growth combined with high or infinite multiples were losers along with real estate and lodging stocks, which like their companion REITS opened up, then caved all the way into the close, ending with modest gains but still within inches of their 52 week lows. Anyone hear a fat lady singing? Not TB!

Early on we heard that AirBnB had secured $1 billion in funding…later we learned that they had to pay 10%+ for it! Ouch! Can’t blame the VC’s though as they have been handed their lunch by the market. No way TB would consider staying in one even after the virus has passed not knowing how much cleaning was done. Only a gambler would touch the travel and leisure industry here.

How about Warren?…Buffett that is? The Oracle of Omaha is going to have problems, yet everyone keeps turning to him for advice. I’ll give him integrity based on my prior experience. When TB left his old firm to start his own RIA business he decided to reallocate his 401(k). Never having the timing right, he had never owned Berkshire Hathaway so it was one of the first stocks he bought…seemed safe enough. The year was 2004 and unbeknownst to TB Warren decide to place a $1 billion bet against the dollar! When this was announced, after the stock had tumbled, TB decided the Oracle’s run had ended like so many other ‘gurus’ in TB’s 45 year career. To his credit, in his yearend letter, Buffett praised every one of his managers for hitting their marks but that it was his bet that cost them money. Wasn’t it Warren who said, “if you can’t explain to me in five minutes why I should buy a stock, I won’t”? Guess he didn’t try to explain his reasons for making a $1 billion bet against the dollar. Since then however the stock has performed well but anything could have since March 2009, right? Till recently that is! TB bought it in March at $63 and sold out in November at $56 and remember that BRK doesn’t pay dividends

Just last week it was announced that he was pumping money into Occidental Petroleum whose stock has imploded since the Russians slashed the price of oil. Good money after bad? Time will tell.

Okay, here’s your choice: AirBnB or OXY…choose carefully and wisely…TB? He’ll just avoid both!

Wine

Size isn’t Everything

Who knows who the top two wine companies in the world are? Hint; the first is private, the other is publicly held and both are in California!

Gallo is the largest wine company in the world and still family owned. Their premium brand, named Gallo because that was the only way Gina Gallo’s dad would fund it, has proven to be a success. They are far and away the biggest wine producer in the world and provided quality in whichever price range their wines were in. TB used to say, “dollar for dollar Gallo is the best wine in the world.” You may not like it but in each category they appeal to their market.

Number two is Constellation Brands which appeared on the scene in 2004 when it bought out Robert Mondavi winery! The question was who were they? Nobody knew of them but their one and only ‘brand’ at that time was My Wild Irish Rose, a hit with the skid row denizens. To their credit it has been a success story although it has peaked. But here’s the thing: they have been selling off many of their brands and guess who is the big buyer? GALLO!!!

Recently, TB learned that Constellation (STZ not STD) is in talks to purchase Gallo! Now think about that for a minute: they sold many of their brands to the Gallo’s and now are buying them back. Smart?

Despite the success of STZ stock, in 2017 they made an investment in Canopy, a Canadian cannabis company, and the largest in the sector. Subsequently, all the hype turned into a huge glut of marijuana in the market and STZ had invested $190 million in the company for a 9.9% stake! Then they added an additional $4 billion a year ago. They are now trying to buy Canopy outright and produce cannibus infused drinks and now are considering medical marijuana…er cannabis! You see, even though marijuana is legal in most states in the U.S. it is not legal at the federal level. The exception would be medical cannibus.

Will buying Gallo be a success or a loser? Will buying Canopy be just a way to cover their mistake in investing in the company in the first place? Time will tell…always does!

Here are a few of the wines TB has been sampling while being a shut-in”

Epicuro 2015 Nero d’Avola available exclusively at Trader Joe’s for the princely price of $4.99 and to TB the best value under $10 and it doesn’t taste like it is in that price range.

San Felice, Chianti Classico, 2016, one of TB’s favorite small towns in Tuscany and a beautiful one to the southeast of Sienna.

Domaine Romy, Veilles Vignes, Les Pierres Dorëess 2017, fine single-vineyard Gamay from sourhtern Burgundy.

Turch Syrah, 2006! From Santa Barbara County.Passo Robles. I forgot about this wine and opened it thinking it was way over the hill…it was still fantastic! Can’t find the winery anymore, just Torch?

(c)traderbillonwine.com

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traderbill

How did Trader Bill originate? It was conceived by me as a way of providing information summaries of global financial markets so that friends and associates could bring themselves up to speed on events and changing market conditions upon their arrival at work. In addition, it provides information on speakers and economic releases that day with consensus estimates and level of last release so that the reader is prepared to react, or knows how the market might react upon the release of information. Who is Trader Bill? Initially any reference to me was as ‘i’. This is to remove the aura of ego and to suggest that i am but a humble reporter, albeit with 35 years of investment experience. Investments are demanding of ego, however, or one would not feel that he was qualified to manage someone else’s money in the first instance. Therefore i needed an ‘alter-ego’. Like Winchell and Mahoney, Edgar Bergen and Charlie McCarthy and especially Trader Vic and Mai Tai’s! Why Trader Vic? Because he was a likeable man who delivered pleasure to his customers and knew exactly what their desires were. The reason for the alter ego became obvious once I introduced Trader Bill into my commentaries: people started asking what Trader Bill thought. They had never asked me what I thought before, but suddenly they wanted to know what TB thought! Now mind you they KNEW that I was Trader Bill but for some reason he became bigger than life. Maybe it was the small ‘I’? What does Trader Bill try to do?His goal is to educate from his years of experience. Consider that most of the traders and people managing investments weren’t even around in 1987 for the crash! Consider that Graham and Dodd, and even Warren Buffet are not relevant to them, too old hat. Their historical perceptions of markets and fundamentals (earnings, price/earnings ratios, bonds, debt service coverage) are irrelevant in this fast moving world. This is the NEW ECONOMY, or is it? How did your style originate?Years ago i found that i had a knack and talent for writing. In addition, i developed an ability to analyze market news about 15 years ago. It took the Crash of ‘87. Prior to that i was just listening to what others said about the economy. But bond yields had been soaring in ‘87 yet the stock market just kept hitting new highs. That was when i began to learn about markets. i have both a dry and witty sense of humor (some call it inane!). Therefore i attempt to make even the worst news somewhat amusing: whether it is the absurdity of an economic release, or the comments of a CEO. This is trading desk humor (or gallows humor). It isn’t politically correct but it does ease tension. Ironically, it is seeing the light at the end of the tunnel (in the Navy they say: it’s always darkest before it’s pitch black!), that allows you to be more objective in your analysis, as bad as a situation is there will still be a tomorrow! You will see that i practice three-dot journalism, a style made famous by San Francisco reporter Herb Caen, whom i idolized. At least to me it is effective. What is so special about your analysis?Frankly, i don’t know that it is special, but at least it beats “the market closed down today on profit taking.” What i do know is that most of what you read is spat out without considering whether or not it is rational, like the above statement. Is it right? Sometimes yes and sometimes no, and that is the key to what is different about my analysis: it is meant to make you think. Is Dan Rather right or is Trader Bill right? If it causes you to stop and think about it, regardless of whether you agree, i win! Because THAT is my goal…not to have you think i am a guru, got that? Bet you never heard that ANYWHERE before in my business! Instead they want you to think just how smart they are but remember in this business if you are right 60% of the time you ARE a genius! Another thing that is different is when i am wrong on an analysis i will tell you, not hope you forget what i said. So now you have the tools to do what the speculators and hedge funds do: challenge authority, and if you make money it is because YOU did it not me. i was just a tool, your flunky to do the grunt work and let you decide…course you could be wrong too but at least you looked at the big picture. But the goal is also to have fun! This shouldn’t be a business of hushed tones and grim faces. It is a living, breathing thing and nowhere else in the world do you have the odds as much in your favor as here. Just beware of the guy who wants to put his arm around you and tell you he is your friend. So there you have it. I hope you select me as one of your sources for market information. If you do I promise to work my best for your financial success. Trader Bill

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