Do This Instead of Reading Barron’s

Retail Gambling

Barron’s is late to the party again. Over the weekend, the media outlet offered a rather glowing slosh of research around the upcoming holiday season. Things could be great! We could see record levels of retail spending. Investors “could” or “may” consider American Eagle Outfitters (NYSE:AEO).

We’re six weeks away from the holiday season. Are we this far behind? I look at this situation and think: Could you help Wall Street anymore? A year ago, when a lot of retail struggled, big institutions could take risks, buy smaller stakes, and play the waiting game on the backs of dividends.

But now, what better opportunity does a big firm have than to have Barron’s recommend a bunch of stocks that likely have performance priced in… oh… the same week that many retail stores report earnings.

I don’t have many good things to say here about this game. Basically, we can anticipate some bullish forecasts this week, but a lot of these stocks might peak and then start a steady selloff into 2022.

What Investors Should Do Outside of Retail

Look elsewhere. Don’t get distracted. Consider stocks that are a year away from recovery or have strong fundamentals to support them. Think about travel and hospitality. Not too many people are thinking about the fact that 2022 is likely to set travel records. So, while everyone is focused on the holidays, now is the time to think about when stocks might peak in the travel industry. That would be around Memorial Day of 2022. 

And I look at the year ahead, and I’m not even touching the airline stocks or major hotels. I’ll focus on what is already working and then look for things to get better in the year ahead. 

So, I like Penn National Gaming (NASDAQ:PENN) on the backs of the huge quarter that casinos just had. And I love Century Casinos (NASDAQ:CNTY), which is near 52-week highs and has barely even touched its potential yet. 

We have to be a few months ahead of the Wall Street firms, and we have to ignore the media. I think that staying in the safe zone with casinos and the rising trend of American gambling is the right reopening trade. I don’t care at all about fashion.

Eyeing Momentum

Over the last four days, I was increasingly concerned about momentum in the market. There had been a little bit of selling pressure in the mid-cap and small-cap range. But the Fed eased about $85.4 billion last week. Remember, the central bank is going to pump about $120 billion into the market this month, and then claims it will slowly wind down by about $15 per month.

I don’t think they’ll stick to their timeline. They’re caught in a very tough situation. Cut too much, and we face a recession. Don’t cut enough, and they risk the likelihood of high inflation and potentially a recession. Great work, Fed. We don’t need you.

Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.
Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.

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