October 9, 2019
Greetings From Las Vegas
By Steven Longenecker, Publisher
Executive Editor Buck Sexton and I have spent the past two days with some of the most interesting folks that we know in economics, politics, and finance…
We’re at an investment conference in Las Vegas. And everything we’re hearing so far seems to indicate that folks are finding a ton of opportunity and danger in the market today.
For example, Diana Henriques, the longtime New York Times investigative journalist, detailed how Black Monday in 1987 showed us the future that is still with us today – a market in which several too-big-to-fail investors trade all markets… and they trade them all the same way. As she concluded:
Market amnesia and political gridlock have left us exposed to another 1987-style crash in which the market doesn’t just fall, it falls apart.
Then value investor and money manager Vitaliy Katsenelson noted that the average stock today is trading an incredible 73% above its average valuation… and that the only two times stocks were more expensive than right now were before the Great Depression and the dot-com bubble.
But opportunities abound…
Former hedge-fund manager and Empire Research founder Whitney Tilson detailed the opportunity in Fannie Mae (yes, that Fannie Mae, the one that the government rescued) and showed why it could make investors up to eight times their money.
As he put it, this investment does rely on a court decision to keep the government from keeping all of Fannie Mae’s profits. But when that happens…
Fannie Mae has earned $13 billion in profits over the last 12 months (though earnings can be lumpy). With a multiple of 13x to 16x earnings, that would be a market cap of $169 billion to $208 billion, giving a share price of $29 to $35. It is currently at $3.
And both Ken Lewis, CEO of APMEX, the largest physical gold seller in the world, and Steve Sjuggerud of “Melt Up” fame in these pages, saw opportunity ahead in gold.
The very funny Dennis Miller spoke for about an hour from topics ranging from green hotels (the only difference is that they make you want to stay in a good hotel) to Hillary Clinton and the likelihood that she comes back at the eleventh hour to run in 2020.
We also met with Professor Joel Litman, whose “Truth Detector” system we talked about in our September magazine… and discussed how his forensic accounting methodology helps reveal the hidden, true earnings of almost any publicly traded U.S. stock.
And Buck and I even had dinner with Garrett Reisman, the former NASA astronaut and director of space operations at SpaceX. More about that to come soon.
Last night, we screened our American Consequences 2020 documentary in front of several hundred viewers. I’ll let Buck share more about that tomorrow.
It’s been a whirlwind of a week… And we’ll bring as many of these folks as we can to the pages of American Consequences and share them with you soon.
Let us know who you want to hear from by writing to us at [email protected].
Now here are some of the stories we’re reading…
The difference between federal spending and revenue has only ever exceeded $1 trillion four times, in the period immediately following the global financial crisis.
“The message across all indicators is that this correction is about half complete, and should prove much shallower than last year’s.”
Warren’s claim that she was dismissed after her first year of teaching because she was pregnant has become a cornerstone of her stump speeches. She has used it to both explain her jump from teaching into the legal world as well as to showcase the difficulties that women face in the workplace.
First, they purchased medallions at bargain rates and established big fleets of cabs. Then, they pumped up medallion prices. Finally, they sold their medallions to their drivers and to rival fleet operators just before the collapse.
The issue of bond-market liquidity could become particularly pressing if sentiment about the economy worsens, investors said. That is because the steady growth of the economy, along with Fed interest-rate cuts, has supported bets on investment-grade and high-yield bonds.
Publisher, American Consequences
With P.J. O’Rourke and the Editorial Staff
October 9, 2019