I was prepared to write an installment of My Gut Feeling (MGF) in time for Thanksgiving, but I had my hands full with the LakeView office renovation. So far, the walls were painted, and new floors were installed. So, I moved my base of operation to another room and worked off my laptop and iPad. In the process, it became apparent that I needed a new laptop as the old one was starting to show its age. So, once I moved back into the office, I called Dell and ordered a new 17” laptop, which I expect by the end of the week. Of course, I did not miss a minute of market action and needless to say, over here at LakeView Asset Management, client accounts, by strategy and in the aggregate had one of our best months ever in the 18 ½ years that we are in operation. So far, December is not too video shabby (see below)
During November, there were two major objectives that I sought to achieve. First, make portfolio adjustments to fit opportunities which will likely materialize during a Biden administration. Second, seek trading opportunities related to development of vaccines to prevent and/or treat COVID-19.
As for the new administration, I was seeking out sectors that would wake up from relative dormancy or under-performance over the past the past four years. Three candidates for a performance reversal were energy, materials, and financials. Energy seems doomed to be relegated to the stock market penalty box in the next administration. Financials will not move higher until interest rates rise. Opportunities will materialize in materials and mining stocks as demand will likely expand both from infrastructure construction and speculation. I began to dip my toe in the sector with purchases of Rio Tinto PLC (RIO).
RIO also satisfied another criteria for future investment, namely my expectations for a weaker US Dollar (USD). Under the Trump administration, foreign trade policy resulted in a stable to stronger dollar. I do not expect foreign trade to be staunchly America first, hence hurting the USD. Thus, I will be looking for weak USD stock plays, which essentially focuses my eyes on overseas opportunities over that of domestic ones. Be aware that some US based multinational companies could fit that criteria as well.
Now let us turn to the COVID vaccine. The market seems to be enthralled by the potential delivery of COVID vaccines. The trade-off between COVID vaccines and potential economic shut downs are what is driving the stock market right now. Currently, the two leading candidates are Pfizer (PFR) and Moderna (MRNA). Both are working on “mRNA” (messenger RNA) vaccines, which are new technologies in the world of epidemiology and immunization. mRNA vaccines do not carry a live virus. Rather it uses protein-based technology to trigger immune responses. These vaccines, from what I understand must be transported and maintained in super cold vessels. Furthermore, the COVID vaccines will require an initial injection followed up with a second booster shot. That is about as far as I will go on the topic, so I will stick to stocks.
PFE is a well-established pharmaceutical company which makes popular prescription drugs such as Viagra, Lyrica, Ibrance and Celebrex as well as over-the-counter products like Robitussin. While a COVID injection will be a shot-in-the-arm for PFE, it should not move the needle much on earnings. However, the anticipatory impact of the vaccine has been positive to the company’s stock.
PFE was removed from the Dow Jones Industrial Index (INDU) back in August, along with Exxon (XOM) and Raytheon (RTN). Despite the removal, PFE stock has advanced since the reformulation of the INDU. PFE is a staple in our Dividend Value portfolios.
MRNA, as the stock symbol indicates is focused solely on mRNA technologies. The stock is a pure play on a COVID vaccine. Earlier this year we traded MRNA for a healthy profit. More recently, in the past few weeks I have taken small trading positions in MRNA for our growth portfolio accounts. I will manage this as a trade. My Gut Feeling is that once the vaccine begins to be delivered en masse, it would be prudent to lock in gains and sell the stock. When and how I will do so (i.e., market sales or trailing stops) I have not yet determined.
As an aside, AstraZenica (AZN) is also working on their own COVID vaccine. Right now, that vaccine is in third place to PFE and MRNA.
We are winding down what has turned out to be a highly successful year at LakeView Asset Management. That being said, I will not likely have any time to rest until the last week of the year, which we intend on spending with our daughter in Arizona. My current plans for My Gut Feeling for the next few weeks are to pen another one or two daily MGF commentaries, followed by my annual list of 10 Things right before XMAS , then in early January, My Gut Feeling for 2020 – A Look Back and then My Gut Feeling for 2021.
Let me leave you with my best wishes for a Happy and Healthy Hanukkah. Let us all pray that there will be a miracle for you during the holiday somewhere. Of course, finally, the Original Hanukkah Song by Adam Sandler.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was MRNA & PFE – although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right-hand corner of the website. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
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