I got infuriated this morning when I listened to an analyst talk about how you can track every move in this market to the Fed and the money supply. All you had to do, he said, was to stay focused on when that money supply number comes out, listen to the Fed, and make decisions entirely on those presumptions and it will not lead you astray.
Sure, if you are an S&P 500 buyer, the correlation between higher and lower rates and money supply can play a role on when you want to commit your 401(k) money. I like to contribute a little each decline of more than 5% and we haven't had one this year. I hope the people who are "all Fed, all of the time" are right, because I can time my investment to their lazy thinking.
But the whole notion of the grand inquisitor Fed is so out of whack with reality with the trench warfare of the moment that it makes me want to gag -- not unlike the way I felt when I recently got the Moderna (MRNA) booster.
Here's the real issue: The things you need to look at in this market are two-fold: first, the sector and then the company, which includes the CEO. You want sectors that are in bull market mode, even if they are microclimate markets. You want to stay away from the battlegrounds and the under-performers.
So, let's run stocks through this gauntlet and reach some conclusions. The semis are in bull market mode for certain and there are a host of great ones to choose from: NXP Semiconductors
(NXPI) , because they are dominant in auto, Qualcomm (QCOM) , owning cellphones, Marvell (MRVL) for high performance computing and 5G.
But I like AMD (AMD) and Nvidia (NVDA) , because of their product prowess and overall fabulous leadership. Lisa Su is closing in on the biggest deal of her life, the acquisition of Xilinx, which takes the company far beyond just gaming and personal computers, so she's no longer being brought down by the statements and claims of her competitor, Pat Gelsinger, from Intel (INTC) .
I call Jensen Huang a modern day Da Vinci for a reason. Da Vinci was a painter, a draftsman, a scientist, an engineer and an architect. Jensen's all of them and more. Plus, da Vinci never wore a cool motorcycle jacket and Jensen never stole cadavers.
As I told members of the Action Alerts PLUS club in my monthly call Wednesday, if Nvidia can close on Arm Holdings, this company will be the most important semiconductor enterprise of our time. Right now, it's pretty darned dominant. And did you notice Wednesday that the government is using cards from AMD and Nvidia for its super computer, as it awaits Intel's delayed product?
Says it all.
Housing's in bull market mode and that's because there's more demand from millennials and from hybrid workers, more demand than the companies can ever meet. I know the group trades on rates, but it should and ultimately will trade on the long-term demand for homes in a country that has underbuilt literally for decades. Those companies with land, companies like Toll Brothers (TOL) , which is on "Mad Money" tonight, or Lennar (LEN) , are going to be long-term winners.
What an incredible bull market we have in financials. Goldman Sachs (GS) , Morgan Stanley (MS) , JP Morgan (JPM) , Wells Fargo (WFC) , Bank of America (BAC) , you name it. Why? Because they are incredibly cheap and they could be just a few months away from a new rate cycle. They buy back stock all of the time, and why not? Relative to the rest of the market, they represent the greatest bargains.
It's easy to like the mask-vaccine stringent Goldman Sachs, which trades at a ridiculous single single-digit multiple after its 56% run. As an alumnus, I am shocked it trades so cheaply. It's kind of nutty given the capital it can return. What an easy case there is to be made for JP Morgan: It sells at the cheapest I have seen it ever relative to the group.
But, I say, go with Morgan Stanley and Wells Fargo. They are kind of the best and the worst, when you think about it. Morgan Stanley's not a bank anymore: It's an advisory service that does some banking. That means it's bank-light, and I like that. Wells Fargo was so horrible you have to wonder what was Warren Buffett thinking or doing about it all these years that he was a large shareholder. Maybe it doesn't matter? Maybe he never knew? He sold at the bottom, anyway. I like Charlie Scharf, the CEO, tough as nails who is done playing defense, fixing the board and his direct reports, and is now playing offense, while buying back a massive amount of stock. One day it will return to the high $50s, where it was when all hell broke loose. Until then, just stay the course.
I like the bull market in surviving retailers. Is it too late to buy the stock of Dicks (DKS) , up 134% for the year? No. It's giving you a special dividend, laying out a multi-year strategy and is still cheap based on that plan. That said, I prefer Best Buy (BBY) , which spends a fortune investing in the omnichannel, and has a membership club that will take care of all your home-office IT needs. Call me in.
But I am still drawn to Bed Bath & Beyond (BBBY) , with a stock up 63%, because I have seen the future at the amazing New York store, and I recognize that they are chockablock with enjoyment when you go there. They have all the tech you need in terms of shopping and buying, but what they really have is whimsy, a value that hitherto only Costco (COST) has had. I think that Mark Tritton is going to take this thing on a multi-year run. It is so galling to see that GameStop (GME) with an 11% short position remains the most beloved stock from a small cohort of vocal people who want to take it to the man and bust the shorts when Bed Bath has double the short position. In the end, you don't even really want your stock to be a meme stock, because it means that your company is in a heap of trouble and that's not this year's Bed Bath. Next year's, either.
You know the most unknown bull market? Agriculture. Anything ag -- from machinery to fertilizer. I have long been a favorite of Agco (AGCO) , but that Deere (DE) call last week? It was extraordinary. I scoffed at legendary money manager Cathie Wood, when she said she was buying Deere for its tech. I owe her an apology. The tech that Deere talked about was truly revolutionary and will save farmers billions of dollars in wages, while doing the job more efficiently. It's still a buy.
Finally, there is a bull market in what I am calling responsible energy, companies that are yahoos running around spending shareholders money and instead are being prudent and also being as eco-friendly as they can be.
If you want prudence, you buy Devon (DVN) or Pioneer (PXD) with those nifty variable dividends and balance sheets that are the envy of the industry, even as Pioneer is a very smart acquirer. If you want energy with pure respect for the environment, you want who we heard from Tuesday, you want Denbury (DEN) . I don't know about you, but I was blown away with what that company is doing with carbon capture. Exxon Mobile (XOM) would be silly not to buy it, if only to show that XOM really has changed its stripes. This company, once a pathetic also-ran hobbled with debt, is now almost debt-free with the best technology in the space. It's a buy, even after its 175% run. It should have never have been so low.
So, you can wait for the grand poobah to come down from a virtual Mount Teton or you can hang on every tidbit of money supply or fed bond buying, or you can run with the bulls. You know which one I am choosing.