I was amused by the feedback I received on my Real Money column Thursday. I'm glad there are some folks that can appreciate the genius of Bill Murray and remember Meatballs, a film that premiered in 1979.
When the market starts yelling "it just doesn't matter," as Bill did in that movie, I start to worry. Fortunately, pre-holiday trading like Friday's muted action gives me a chance to think of more Bill Murray quotes and apply them to the markets.
'So, I jumped ship in Hong Kong'
The beginning of Murray's famous monologue as Carl Spackler in Caddyshack accurately describes what is happening with the Chinese government's approach to the former British crown territory. Fellow Real Money columnist Alex Frew McMillan had an excellent piece Friday morning on the details around the new treason law that Beijing is applying to Hong Kong, and I will defer to him on the details.
In terms of the big picture, though, I think that decision plus Nasdaq's decision to restrict IPOs of Chinese companies plus the U.S. Senate's passage of a bill that would delist Chinese stocks from U.S. exchanges creates an extraordinarily poor geopolitical outlook for those stocks.
As Baidu BIDU rethinks its Nasdaq listing, I would be selling that name on its bounce from the Covid-19 lows and the other Chinese mega-cap stocks--- Alibaba BABA, Weibo WB, etc. -- here, as well.
'I wanna party with you, Cowboy'
In Stripes Murray's lovable slacker John Winger gives the ultimate mantra for FOMO-loving stock investors. Find a hot area and buy, buy, buy.
No stock represents that FOMO feeling more than Moderna MRNA. Suffice it to say, when Morgan Stanley comes bearing gifts (as it did Monday in the form of a $2.3 billion stock offering) I run the other way. Eight patients' worth of data just is not enough to justify a $26.6 billion valuation for what is basically a pre-revenue company.
We are all rooting for a coronavirus vaccine, but even with Dr. Fauci's cheerleading Friday morning, Moderna's mRNA-1273 is still a LONG way from the end zone, so be careful.
'Back off, man, I'm a scientist'
In Ghostbusters, Murray's Dr. Peter Venkman perfectly articulated my approach to equity and fixed-income valuation. I have been researching stocks for 30 years, and the lack of glamour is offset by the thrill of building Excel spreadsheets, believe me.
My scientific analysis shows that oil tanker shipping stocks are as cheap as any I have ever seen in terms of their ratios of enterprise value-to-free cash flow generation. The great thing about these stocks is that they give back that free cash flow in the form of dividends. Not as sexy as Moderna's mRNA research, to be sure, but financial science never is.
As the share prices of oil tanker companies fall due to fears that higher oil prices will kill the floating storage trade (a highly superficial and unscientific outlook,) I am buying DHT Holdings DHT, Nordic American Tankers NAT, Euronav EURN and Navios Maritime Acquisition NNA at bargain prices.
Do a little research yourself, and it will pay off. Don't ever listen to investment advice from any person who is not capable of and/or currently performing that type of research. It's just noise.