Inflation is rising at its fastest pace since 1982 and stocks, of course are rising on the news -- Hey, it coulda been worse. That inflation data point from Friday's consumer price index report inspired me to look for events that happened in 1982. That was the year that Michael Jackson's album "Thriller" was released. Still certified as the best-selling album of all-time, Jackson's seminal work stands up.
The relevance to current markets rests in the songs that Jackson and producer Quincy Jones chose to include on the album. From "Billie Jean" and "Beat It," to the title track and its legendary John Landis-directed video, the tracks on the album give us a clue to the zeitgeist that informs the ridiculously overvalued stock market of 2021.
Beat It: It is time to lighten up on stocks. Just lower the percentage you have allocated to them. Just as "Thriller," and this track in particular, had frequent use of studio musicians, especially members of Toto (it is Toto's Steve Lukather who plays the crunching guitar riff that leads off "Beat It" and leads into Eddie Van Halen's legendary, face-melting solo) you might need some help from your friends to decide which names to keep.
Wanna Be Starting Something: This would be a great time to initiate a short position or two. Stocks are near an all-time high, so sell some. Very logical. My favorite short ideas in order are a follows:
Peloton (PTON) has been a glorious underperformer this year, with a mild 72% decline. At $40 a share, this name is still massively overvalued and massively underreserved in terms of warranty provisions. In case you needed additional intellectual justification to short Peloton, Credit Suisse downgraded its rating on PTON on Friday morning to neutral from outperform. Thanks for the timely call, guys!
Twitter (TWTR) . Still a cesspool of hate speech and censorship of legitimate free speech, Twitter, if possible, is likely to become even worse as Parag Agarwal takes over as CEO from founder Jack Dorsey. Twitter has no moat and no real revenue generation and its shareholders may be even dumber than those that spew nonsense over its platform. When in doubt over a short call, I always quote investor Cathie Wood ... and do the opposite of what she is doing.
Here's a quote now: "What we're seeing is that this platform, which used to be dominated by tweens, teens and celebrities in 2012 when we first evolved our research ecosystem, has now evolved to knowledge workers."
Knowledge workers? What does that mean? Is that quote even in English?
Thriller: The biggest thrill of all is of course Tesla (TSLA) , another Cathie Wood's favorite. I mentioned the reported Securities and Exchange Commission investigation into Tesla's solar business in my column Thursday, and now I will once again not talk about the cars.
Tesla chief Elon Musk is selling. A lot. If you don't see that as a commentary on the intermediate-term prospects for the firm -- true of any insider sales, always -- then you have been listening to too much financial TV and not enough Michael Jackson. When CEOs are selling, investors should not be buying. Ever. Why? Why? Tell 'em that it's Human Nature.
Fear and greed never lose. Just make sure your portfolio is steeled -- with hands making the claw gesture as in the Thriller video -- against the foulest stench that is currently in this market's air. The funk of forty thousand years.
