All posts by Chad Shoop

Pot Stocks

This Controversial Industry Is Here to Stay

It’s hard to tell when a stock is at the end of a strong run, or if the broader market is running out of steam.

But one thing to look for is how stocks react to bad news.

The more sensitive the stocks are to the bad news, the closer we are to the end of a recent rally and possibly going into a bear market.

On the other hand, if negative news has little effect, then the stocks still have room to run higher.

One particular group of stocks went through this just the other week.

There was an announcement that had the potential to put companies out of business, yet, despite an initial negative reaction in the stocks, shares have rebounded and held steady.

This is one industry that I honestly haven’t followed that much yet, as it is somewhat out of my wheelhouse. But the way the group as a whole reacted to the news recently has convinced me it is here to stay, and if you don’t have exposure to it yet — now is the time.

Marijuana Stocks: A Movement

The industry is marijuana stocks.

And I know, a lot of people have avoided these stocks because, well, let’s face it — it’s a drug that is illegal in most states.

That’s the same reason I haven’t followed it much. I’m not really a fan of the movement.

But after I saw how marijuana stocks reacted, it has me convinced the movement is here to stay, and apparently, more people in general are jumping on the bandwagon.

Now that the majority of people seem to be in favor of legalizing marijuana, aka cannabis, the movement may be here to stay.

That’s why a recent announcement that shook the industry was so important — I wanted to see how the stocks reacted.

U.S. Attorney General Jeff Sessions announced plans to roll back federal policies that paved the way for states to legalize marijuana — the policies that have allowed marijuana stocks to flourish and raised expectations for recreational marijuana to be allowed in more states.

This is when publicly traded marijuana stocks tanked on the news. Some were down more than 30% because, like I mentioned, a ruling like this is potentially sending many of these stocks into bankruptcy.

I was watching it as the news developed, and I bought my first marijuana stock on the dip. The buzz around the office was that the movement wasn’t going to end — and many investors feel the same way.

If you haven’t dipped your toes into this speculative trade yet, there’s still time. I have two stocks for you today that will reap the benefits as the movement stays intact.

Speculating on Marijuana

I’ll precede these two stock picks as speculative plays. Speculative because, indeed, a change in jurisdiction in the U.S. could put many marijuana-related companies out of business, and the two below would not be immune to such a change.

Plus, they each depend on further advancements in the recreational marijuana movement, which may or may not happen. So invest with caution, but it is an industry that needs to be on everyone’s radar at this point.

The first is the largest U.S.-traded pure marijuana stock — Canopy Growth Corp. (OTC: TWMJF).

Yes, both of the stocks I mention today trade on the pink sheets, or over the counter. These are stocks that typically have low volume and are risky bets. But with marijuana stocks, it’s where they are all listed and still have plenty of volume.

Canopy Growth is actually a Canadian stock that’s listed in the U.S. on the pink sheets but has an average daily volume of more than 1 million shares. The company has the highest individual market share in Canada’s medical marijuana market and will be poised to benefit a lot if Canada approves recreational marijuana use, which is expected to be passed in the coming months.

The other is Cannabis Science Inc. (OTC: CBIS). This company sells marijuana-based pharmaceutical and recreational products. It is opening two licensed dispensaries in Los Angeles this month and plans to open one more this quarter.

If you want exposure to a possible booming U.S. recreational market, this is the stock to own. It is traded on the pink sheets, but it has an average daily volume of nearly 30 million shares, so there is plenty of liquidity. However, it is a “penny stock,” trading at just $0.10 at last glance.

Again, these are speculative trades in an industry that is not quite established yet. But considering the way these stocks have held up despite major negative news, they’re stocks you should have on your radar.

Regards,

Chad Shoop, CMT

Editor, Automatic Profits Alert

In this exciting NEW VIDEO, Wall Street legend and former multibillion hedge fund manager Paul Mampilly pulls back the curtain on the biggest investment opportunity in the market today. What insiders are calling “The Greatest Innovation in History,” this revolution will mint more millionaires and billions than any technology that came before it. Right now, the current market for this technology is just $235 billion, but given how fast this technology is moving experts predict it will soar to $19 trillion by 2020. But 8,000% growth is just the beginning—and now’s your chance to get in on the action. [CONTINUE TO VIDEO]

Source: Banyan Hill 

Technology

Tesla Is Going to Embarrass Warren Buffett

“I’ll meet you at Pilot” my future wife said to me before hanging up the phone.

She was explaining to me how to get to her parents’ house. (This was before our phones were a GPS device.)

But by meeting me at the Pilot gas station, I knew exactly where that was.

In the town she grew up in, it was a local landmark. Right off the highway, Pilot always had the cheapest gas and was a spot everyone knew of.

That was over 10 years ago, though.

 Now it’s just another gas station along the Interstate 40/Interstate 85 corridor in the middle of North Carolina.

However, even though it is just one of many gas stations with competitive gas prices across the country, legendary investor Warren Buffett felt the value was now ripe for an investment.

Last Tuesday, he announced his company, Berkshire Hathaway, would buy a 38.6% stake in Pilot Flying J, which operates the little truck stop I was meeting my future wife at.

To me, Warren Buffett is clearly going against one of his investing rules — never buy a stock you are not comfortable owning for 10 years.

And if you typically follow Buffett’s investments, this is one you should pass on. Here’s why.

Warren Buffett: The Oracle of Omaha

I have a lot of respect for the Oracle of Omaha. Who wouldn’t? Warren Buffett is the world’s third-richest person, and his success story is one of the greatest.

Many investors idolize him and simply buy whatever he buys.

However, I think he is making a mistake on his latest acquisition, Pilot Flying J.

It actually goes against one of his main rules, if you ask me.

I have used his No. 1 rule before, which is to never lose money, but he has a few other rules to invest by. One of them is to never buy something you don’t want to own for 10 years.

That’s his investment time frame in a nutshell. “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”

But Buffett’s latest acquisition is one I am uncertain about in just five years, and I question its existence 10 years from now.

Still, that hasn’t stopped investors from chasing his trade.

TravelCenters of America LLC (Nasdaq: TA) jumped 10% on the news, without even knowing the financial details of the transaction. That’s partly because the announcement of the Pilot acquisition mentioned Berkshire Hathaway’s capital and ability to expand, and TravelCenters may be one acquisition it is eying.

However, I doubt the usefulness of a truck stop/gas station in a future that is going electric and self-driving.

Going Electric

I find it extremely ironic that Warren Buffett made this acquisition in the same month that Tesla planned to unveil its electric, self-driving semitruck. Granted, it is several years away from being operational, but the fact remains that in five years, almost all of the new cars being released will be electric, as indicated by the major automobile manufacturers.

I’m sure Buffett has thought about this, and still finds the real estate that Pilot owns to be a worthy acquisition. But to me, in just five years this is a company that will be searching to find its place in a world that is going electric and autonomous.

Does Pilot just become a place to stop on long trips and use the restroom? Somewhere to get junk food? Or will it be branded as a completely different use? I don’t know.

But I do know that when major manufactures like Ford, General Motors and BMW make the shift over the next few years to an almost entirely electric and automatic fleet, the amount of charging stations will multiply. And I may be five years off, but that brings up Buffett’s 10-year time frame, and I don’t know what a gas station will be like in 10 years.

I just know it won’t be your typical gas station anymore. Because instead of having to stop at a gas station before you get home, you’ll simply charge up at your house.

And instead of having to stop for gas after a 300-mile trip, you’ll simply pull into the hotel and charge up while you stay there.

So this is not an investment I would want to own for the next 10 years. And I think trading TravelCenters is a risky bet at the moment too.

If you buy it, you’re hoping Berkshire Hathaway has its sights set on that company. Because if it doesn’t, TravelCenters will likely fall back. But betting against it is too much of a risk because of the possible acquisition.

For now, this is simply not the investment to follow Warren Buffett on. And I don’t say that often.

Regards,

Chad Shoop, CMT
Editor, Automatic Profits Alert

In this exciting NEW VIDEO, Wall Street legend and former multibillion hedge fund manager Paul Mampilly pulls back the curtain on the biggest investment opportunity in the market today. What insiders are calling “The Greatest Innovation in History,” this revolution will mint more millionaires and billions than any technology that came before it. Right now, the current market for this technology is just $235 billion, but given how fast this technology is moving experts predict it will soar to $19 trillion by 2020. But 8,000% growth is just the beginning—and now’s your chance to get in on the action. [CONTINUE TO VIDEO]

Source: Banyan Hill 

Options

The 1 Simple Strategy You Need to Use in 2018

It’s that time of year again … and I love it.

We get to take out our crystal balls and predict what 2018 has in store for us.

I’m taking an easy one today. Easy, but a highly profitable prediction that will undoubtedly come true.

That’s because the market has a natural ebb and flow to it of ups and downs that we’ve come to expect each year.

But in 2017 we saw an uncharacteristic market.

I wrote a few weeks ago about 2017 having the smallest drawdown so far this year since 1994. In short, the S&P 500 has only pulled back by 3%.

In a market like this, volatility has been kept to a historically low level as well. But, next year, this will change … and there’s one strategy that you must take advantage of.

Spikes in Volatility

Volatility, as tracked by the CBOE S&P 500 Volatility Index (VIX), reflects a minimal drawdown year as you’d expect — with minimal volatility.

 

But when you look at volatility over the past 12 months, you might think we saw some considerable spikes.

Take a look:
A spike in volatility is an ideal time to collect income by using one trading strategy in particular: selling put options. Here's how to do it.

 

And indeed, at those blue points, it spiked. But without any meaningful sell-off throughout the year, volatility quickly fell back to minimal levels.

A spike in volatility is an ideal time to collect income by using one trading strategy in particular: selling put options. Here's how to do it.

 

On this chart, you will notice the blue line.

That represents the 20 level for the VIX. This is my sweet spot. Once we see volatility spike above 20, it usually doesn’t take long for the market to settle down.

Knowing this, and understanding that the market is not yet near a point to enter a bear market, a spike in volatility is an ideal time to collect income by selling put options.

Selling Put Options

Selling put options is the main focus of my Pure Income service.

And the goal when selling a put option to collect income is for the options price to be higher. The higher the price of the option, the more income you collect — it’s that simple.

And when the VIX is going up, it means all things being equal, the price of that put option is going to be higher.

As you can imagine, seeing the VIX spike above 20 gets me a little excited about taking advantage of it by collecting income.

But, as the first chart showed, we haven’t had this opportunity over the past 12 months.

We’ve still been able to collect income, it is just tougher to find the good opportunities.

In 2018, it will get much, much easier as volatility picks up — and I’m excited about all the money that lies ahead for us.

If you want to learn more so that you can take advantage of this too, click here.

Regards,

Chad Shoop, CMT

Editor, Automatic Profits Alert

In this exciting NEW VIDEO, Wall Street legend and former multibillion hedge fund manager Paul Mampilly pulls back the curtain on the biggest investment opportunity in the market today. What insiders are calling “The Greatest Innovation in History,” this revolution will mint more millionaires and billions than any technology that came before it. Right now, the current market for this technology is just $235 billion, but given how fast this technology is moving experts predict it will soar to $19 trillion by 2020. But 8,000% growth is just the beginning—and now’s your chance to get in on the action. [CONTINUE TO VIDEO]

Source: Banyan Hill

Cryptocurrency

Bitcoin Has a Seasonal Trend Too

Last Sunday, bitcoin, the leading cryptocurrency, gained recognition after the Chicago Board Options Exchange (CBOE) added bitcoin futures contracts for investors to trade it under the symbol XBT.

And a larger futures market, the Chicago Mercantile Exchange (CME), plans to launch its own bitcoin futures this weekend.

Everyone is talking about it.

The buzz around the office this week was moving well beyond typical water cooler talk.

People are buying “rigs” to mine bitcoin and other cryptocurrencies. Others are buying partial coins.

I still don’t know what to think of bitcoin — whether it will hit $100,000, or collapse back to fractions of a penny, like it was worth when it first started.

 The first purchase recorded in bitcoin was in 2010, where a bitcoin enthusiast bought two large pizzas from a fellow enthusiast, all in bitcoin.

The price?

Just 10,000 bitcoins. In 2010, that equated to $25, or $0.0025 per bitcoin.

Today, 10,000 bitcoins are worth more than $170 million.

That is one expensive pizza today. But it also goes to show that the first people mining bitcoin had no idea of the value it would have less than a decade later.

Still, here we are with everyone buying hand over fist into the mysterious asset … and maybe you have too.

But now that it is a tradeable asset for many that have access to either futures or their own Coinbase account, let’s look at a key characteristic of the currency.

When I pull it up in a seasonal trend, a familiar pattern stands out. Take a look:

Last Sunday, bitcoin, the leading cryptocurrency, gained recognition after CBOE added bitcoin futures contracts for investors to trade.

You can see how bitcoin has a strong rally from the end of January through May. Then, it experiences a similar “sell in May and go away” phenomenon that the broader markets exhibit, as it flatlines until November. And then we have an end-of-the-year rally.

This year was unique for bitcoin, since the price went parabolic as reports of its acceptance spread and the futures market is allowing institutional investors to buy in.

We can expect bitcoin to begin to trade along other typical stock market patterns, like seasonality, next year, and this chart will be one I use to time any investments into it.

Regards,

Chad Shoop, CMT

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Source: Banyan Hill

Technology

Here’s How to Short Amazon

Amazon.com Inc. (Nasdaq: AMZN), the online retail giant, has seen its stock price skyrocket more than 50% over the last 12 months.

It has surged past the $1,000 price level, which was tricky to break through, and has continued to climb since then.

Many investors are looking at the euphoric Amazon stock price movement and wondering if now is a good time to short the stock.

The answer is no.

There’s never a good time to short a cult-like stock such as Amazon. It doesn’t trade on normal parameters, and it operates a business model that doesn’t have to generate a profitfor its stock to go up. These types of companies are almost impossible to short because of that.

But there is another way to profit, one I have shared with you in the past: not buying into the hype of the Amazon stock price.

Here’s what I mean…

 Grocery Stocks Got Slammed

Back in June, Amazon announced it would acquire Whole Foods to disrupt the grocery sector. Many investors bought the hype and immediately downgraded all sorts of grocery-related stocks expecting Amazon’s competition to weigh on the industry.

Then, in late August, Amazon completed the acquisition ahead of schedule.

Once again, grocery stocks got slammed.

I wrote an article on September 4 saying this bloodbath was your buying opportunity, and it paid off with an average gain of 15% since then on the five stocks I listed.

And out of the five stocks mentioned, The Kroger Co. (NYSE: KR), Sprouts Farmers Market Inc. (Nasdaq: SFM), Wal-Mart Stores Inc. (NYSE: WMT), Costco Wholesale Corp. (Nasdaq: COST) and SuperValu Inc. (NYSE: SVU), all but one has rallied basically 20% since then.

The one stock that is down is SuperValu, and even that stock popped 10% early on. Take a look:

The Amazon stock price has skyrocketed over 50% the last 12 months. But don't short the stock. Use this trading strategy instead.

Not a bad return considering Amazon was expected to crush the competition in the sector.

For reference, the S&P 500 is up about half of that amount over the same time period.

If you have seen gains like this in these stocks, and your sole purpose of owning them was to benefit from the rebound, then you can take profits off the table now.

Opportunities that come from buying into industries that Amazon attempts to disrupt occur often.

Just this year it has happened with delivery companies, pharmacy companies, grocery stocks and, last week, a new industry — dental stocks.

Overreactions to the Amazon Stock Price

Last Wednesday, dental supply stocks Henry Schein Inc. (Nasdaq: HSIC) and Patterson Cos. Inc. (Nasdaq: PDCO) closed down more than 4%.

The reason? Amazon.

Amazon is reported to now be buying dental products from a different direct manufacturer, Dentsply Sirona Inc. (Nasdaq: XRAY) — its shares were unchanged on the news.

A Henry Schein spokesperson said the company is “unaware of any market-leading dental manufacturer” having a direct relationship with Amazon, adding: “We believe that at this time Amazon is a minor player in the dental consumables market, with an insignificant market penetration.”

This doesn’t sound like a major threat to the way things are done, and it’s why buying these dental stocks on this weakness is an opportunity.

I wrote back in October about Amazon’s many failed attempts to disrupt industries. It’s what makes Amazon Amazon. But it’s also why these overreactions are buying opportunities.

Regards,

Chad Shoop, CMT

Editor, Automatic Profits Alert

In this exciting NEW VIDEO, Wall Street legend and former multibillion hedge fund manager Paul Mampilly pulls back the curtain on the biggest investment opportunity in the market today. What insiders are calling “The Greatest Innovation in History,” this revolution will mint more millionaires and billions than any technology that came before it. Right now, the current market for this technology is just $235 billion, but given how fast this technology is moving experts predict it will soar to $19 trillion by 2020. But 8,000% growth is just the beginning—and now’s your chance to get in on the action. [CONTINUE TO VIDEO]

Source: Banyan Hill 

ETF, Technology

3 Buy Signals for This Hated Sector

It seems like investors were writing off the real estate sector entirely.

With the rise of technology used to shop online, work from home and even go to school, real estate has been a hated sector.

But it’s a sector I have been a fan of this year, triggering gains of 15% and 17% in my Pure Income service.

That’s because even though I know the landscape for real estate is changing, I still see the crowds at the malls, the wait times at restaurants and the continued need for hospitals and health care facilities.

So the decline in values recently has looked like an opportunity to me.

But my personal experience or viewpoint doesn’t have anything to do with my recommendation today.

 Instead, three separate computer-based buy signals are flashing bullish signals on the real estate sector, and I have a possible triple-digit opportunity for you.

 

Let me explain.

Three Buy Signals for the Real Estate Sector

Let’s start with the three buy signals on the sector before I give you the opportunity.

The first is the most basic, a price chart of the SPDR Real Estate Select Sector ETF (NYSE: XLRE).

Three separate computer-based buy signals are flashing bullish signals on the hated real estate sector, and I have a possible triple-digit opportunity.

This is showing a possible breakout of a long trend channel.

It may have just had a false breakout, since the price jumped above the trendline, then fell back below it. But this can also hold as a new, steeper uptrend for the exchange-traded fund (ETF). As long as it can hold above its previous peak, around $33.50, prices should continue to climb.

The second is a seasonality chart.

Three separate computer-based buy signals are flashing bullish signals on the hated real estate sector, and I have a possible triple-digit opportunity.

Right now, it is a great time to enter the real estate sector based on a 10-year seasonal analysis of the Vanguard REIT ETF (NYSE: VNQ). I used this ETF because it has data going farther back that the newly listed XLRE in the price chart.

December is clearly the strongest month to be in real estate, and we just bought a real estate investment trust (REIT) in my seasonal service, Automatic Profits Alert, a couple of weeks ago that is already benefiting from this trend.

The third chart is something you may not be too familiar with, but it is a concept I have discussed before called a Relative Rotation Graph™.

If you want to learn more about the concept, you can click here to read more about it.

Basically, it’s the idea that stocks rotate in and out of leading and lagging the market. And there are key turning points, where a sector will shift from lagging, to improving and eventually leading the market.

The real estate sector is at such a point. Take a look:

Three separate computer-based buy signals are flashing bullish signals on the hated real estate sector, and I have a possible triple-digit opportunity.

If you can read the text, you’ll notice it is in the lagging section of the chart. But when an ETF is in that section and turns sharply higher, like XLRE did, that is a sign momentum is shifting and the sector is turning around — which is the exact time we want to jump in.

A Unique Way to Profit

All told, the real estate sector is a solid buy right now.

In my service, I handpick certain stocks to benefit from these trends. For today, I’m going to recommend a unique way to profit, and that’s to buy a call option on the XLRE real estate ETF.

The option we are going to buy is the February 16, 2018, $34 call option.

With this option, we are expecting the ETF to rise as predicted by the three charts above. However, whenever you buy an option, it’s important to remember you can lose everything you paid to buy the option. Even though we have three buy signals, there’s always a chance the trade doesn’t work out, so just keep that in mind.

This option costs roughly $0.55, depending on when you purchase it. Since one contract covers 100 shares, one contract will cost about $55.

Now, I want to highlight that this is not a position that I will be tracking or updating you on, so it will be up to you to pull the trigger to take profits or cut losses.

A good rule of thumb for a trade like this is to sell half of your position at a 50% gain, and manage the second half to either take profits if it begins to fall by about 30% in value, or start to sell the second half once it is above 100%.

For a loss, you can cut it if it falls to a 50% loss.

For the ETF, all we need is it to rise about 4.2% over the next three months to hand us a 100% gain.

Regards,

Chad Shoop, CMT

In this exciting NEW VIDEO, Wall Street legend and former multibillion hedge fund manager Paul Mampilly pulls back the curtain on the biggest investment opportunity in the market today. What insiders are calling “The Greatest Innovation in History,” this revolution will mint more millionaires and billions than any technology that came before it. Right now, the current market for this technology is just $235 billion, but given how fast this technology is moving experts predict it will soar to $19 trillion by 2020. But 8,000% growth is just the beginning—and now’s your chance to get in on the action. [CONTINUE TO VIDEO]

Source: Banyan Hill 

Bear

This Chart Shows Us More Volatility Is Coming

As the Federal Reserve is set to see a new leader, the one area all eyes will continue to watch is the diversion between the S&P 500 and rates on U.S. Treasuries, specifically the 10-year.

The two, historically, have moved in tandem, meaning as the S&P 500 rose, so did the yield for the 10-year Treasury. And when the S&P 500 declined for a prolonged period, the yield for the 10-year Treasury declined.

This can be explained rationally.

As stocks march higher, investors want greater returns, and therefore sell Treasury bonds and buy stocks. Selling bonds pushes those prices down and the yields up.

Likewise, when investors are experiencing losses in stocks, they look to find safety in Treasury bonds, pushing those prices higher and the yields lower.

It is a rational process, but one we haven’t seen for nearly a decade. Take a look:

As the Federal Reserve is set to see a new leader, all eyes will continue to watch this one area that could send shocks in both the bond and stock market.

This uncorrelation can be explained as well.

After the 2008 global financial crisis, the trend arrows indicate the general trend for both ends. That’s when central banks sent interest rates to historic lows, keeping pressure on the 10-year Treasury yield to remain subdued even as investors fled — the Fed has been a big enough buyer to make up for the selling of bonds by investors.

But, as the Fed gets set to normalize interest rates and its balance sheet, this correlation will be renewed.

And considering the wide disparity thus far, we can expect this to be an occurrence that sends shocks in both the bond and stock market. This would bring back volatility, which has been gone for many years as well.

Regards,

Chad Shoop, CMT
Editor, Automatic Profits Alert

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Source: Banyan Hill 

Bear

This Indicator Could Signal a Top

Stress. To us, it is measured by our pulse. Our economy, however, isn’t as easily tracked.

That’s why the St. Louis Federal Reserve has done its best to create a Financial Stress Index that tells the stress level of the economy.

The stress index, which is comprised of 12 weekly data indicators, is used to show when the economy is in certain stress situations — either above- or below-average stress.

Take a look:

The St. Louis Federal Reserve has done its best to create a Financial Stress Index that tells the stress level of the economy.

(Source: Federal Reserve)

The average is the zero line, so if the index is above zero, it’s above-average financial stress. Below zero, and below-average financial stress.

Right now, the index is at a reading of about -1.5, well below the zero line. In fact, it’s only been this low twice before, once in 2013 and once in 2014.

When the financial stress of the economy is higher, there’s a threat of a pullback in the stock market.

Take a look at the inverse relationship between the index and the S&P 500.

The St. Louis Federal Reserve has done its best to create a Financial Stress Index that tells the stress level of the economy.

Clearly, as the stress index (orange line) spikes higher, there’s almost always a pullback in the S&P 500 (black line).

Since we are at very low levels for the index, we know at some point financial stress will get worse.

So, what are some possible reasons for it to be worse?

Well, based on the indicators it uses, interest rates and yield spreads are the biggest factors. And President Donald Trump is eyeing John Taylor as the new Fed chair. Taylor is considered to be the most hawkish candidate on policy, meaning he is looking to raise rates at a more rapid pace than we have seen.

Trump’s decision will create moves in the interest-rate market over the next three to six months, so it could easily be the catalyst that creates a bottom in the stress index — and therefore a possible top in the stock market.

Regards,

Chad Shoop, CMT
Editor, Automatic Profits Alert

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Source: Banyan Hill

Technology

This Stock Could Soar up to 10% After Announcement

Analysts give Amazon.com Inc. (Nasdaq: AMZN) a lot of credit these days.

The company can single-handedly alter a business environment overnight … or at least that’s what analysts would lead you to believe.

Amazon’s latest market-moving announcement was that it was close to deciding on entering the online pharmaceutical drug marketplace.

Let me repeat that.

Amazon is “close to deciding.” It hasn’t even decided yet.

But that didn’t stop stocks like CVS Health Corp. (NYSE: CVS) from dropping over 7% in the days following the news. It’s as if analysts think whatever Amazon touches is automatically changed forever.

That’s simply not the case.

The reality is that Amazon is not afraid to fail. That’s what has made the company the giant it is today.

But it’s also given Amazon a long track record of failures when it comes to entering a new market.

As I’ll show you in a second, there are many failures as examples.

But it’s this history of failure for the company that causes me to see these attempts to enter new markets as an opportunity to buy the same stocks that were sold off on the announcement, despite what analysts say.

Let me explain…

Epic Fail

I’ll start with a list of Amazon’s failures over the years since these don’t seem to come up often when an analyst is praising the company.

The Fire Phone is probably the biggest.

Expected to compete with the iPhone and Samsung phones, and met with much praise right out of the gate from Amazon users, it ended up being a big flop. At one point, Amazon couldn’t even give the phone away for $0.99. Amazon wrote off $170 million for its failed attempt into the smartphone market.

It launched Destinations in 2015 to be a marketplace for hotel deals. This failed in just six months.

Amazon Local was launched in 2011 to take on Groupon and LivingSocial. That was deemed a failure in 2015.

Amazon Wallet was a mobile wallet to compete with Apple Pay and Samsung Pay. After just six months of being on the market, it was shut down and considered a failure.

Amazon Local Register was set to compete with Square Reader, an attachment on your mobile device to accept credit cards. In 2016, this product was shuttered and called a failure as well.

And these are just a few of its failed forays into new markets.

Some other failed attempts are Music Importer, TestDrive, WebPay, Endless.com, Askville and Kozmo.com. This list doesn’t include failed ideas that never made it to the market, or ideas that are currently on the market but have failed miserably at living up to analysts’ expectations.

For example, Amazon entered the food delivery space in 2015, attempting to make companies like GrubHub Inc. (NYSE: GRUB) irrelevant. But GrubHub still controls about half of that market thanks to a recent acquisition, compared to Amazon’s 11% market share.

And then there’s handmade goods.

Amazon entered this market in 2015 with Handmade at Amazon, and analysts were positive it would be the end for Etsy Inc. (Nasdaq: ETSY). But Etsy, the first to make homemade goods widely marketable and which Amazon was chasing, continues to thrive, with expected sales growth of more than 15% each year for the next three years.

To Amazon’s credit, it has gotten some things right — like selling books, an online marketplace and the cloud.

But the list of things it has gotten wrong is much longer.

That’s the reason why when Amazon wants to enter a new market, it doesn’t faze me.

A Lot of Red Tape for Amazon

And that brings me to your opportunity today.

With Amazon’s mention of the pharmaceutical drug space, CVS plunged on the news.

Look: Even if Amazon does make that move into the pharmaceutical drug market, it doesn’t mean everyone suddenly stops going to CVS.

CVS is the largest, and most diversified, pharmacy chain in the U.S. With 9,700 pharmacies across the country, it also has over 1,000 MinuteClinics to quickly get patients looked at for minor issues without having to go out of your way to go to a doctor’s office — which I think we can agree everyone hates doing.

Besides being able to get checked for an illness at the pharmacy, you can get your prescriptions filled almost right away.

CVS also has a mail-order segment, which is what Amazon wants to compete with, and a long-term care focus, among other specialty needs.

I know Amazon is all about online sales. But there is a lot of red tape, which I’m sure is what Amazon is looking at, about dropping pain meds on someone’s doorstep — most regulators don’t want pills ending up in just anyone’s hands.

So, there is a wall of red tape around that process, and CVS and others are working on breaking through that as well. So Amazon won’t be alone there.

That’s why I still like owning CVS even if Amazon enters the market. Because as Etsy, GrubHub and Amazon’s countless other failures have proven, not everything Amazon touches is disrupted.

And at this point, Amazon still may avoid this market altogether, and that announcement could send CVS popping 10% higher practically overnight.

Regards,

Chad Shoop, CMT
Editor, Automatic Profits Alert

In this exciting NEW VIDEO, Wall Street legend and former multibillion hedge fund manager Paul Mampilly pulls back the curtain on the biggest investment opportunity in the market today. What insiders are calling “The Greatest Innovation in History,” this revolution will mint more millionaires and billions than any technology that came before it. Right now, the current market for this technology is just $235 billion, but given how fast this technology is moving experts predict it will soar to $19 trillion by 2020. But 8,000% growth is just the beginning—and now’s your chance to get in on the action. [CONTINUE TO VIDEO]

Source: Banyan Hill 

Technology

Tesla Is Going to Embarrass Warren Buffett

“I’ll meet you at Pilot” my future wife said to me before hanging up the phone.

She was explaining to me how to get to her parents’ house. (This was before our phones were a GPS device.)

But by meeting me at the Pilot gas station, I knew exactly where that was.

In the town she grew up in, it was a local landmark. Right off the highway, Pilot always had the cheapest gas and was a spot everyone knew of.

That was over 10 years ago, though.

Now it’s just another gas station along the Interstate 40/Interstate 85 corridor in the middle of North Carolina.

However, even though it is just one of many gas stations with competitive gas prices across the country, legendary investor Warren Buffett felt the value was now ripe for an investment.

Last Tuesday, he announced his company, Berkshire Hathaway, would buy a 38.6% stake in Pilot Flying J, which operates the little truck stop I was meeting my future wife at.

To me, he is clearly going against one of his investing rules — never buy a stock you are not comfortable owning for 10 years.

And if you typically follow Buffett’s investments, this is one you should pass on. Here’s why.

The Oracle of Omaha

I have a lot of respect for the Oracle of Omaha. Who wouldn’t? He is the world’s third-richest person, and his success story is one of the greatest.

Many investors idolize him and simply buy whatever he buys.

However, I think he is making a mistake on his latest acquisition, Pilot Flying J.

It actually goes against one of his main rules, if you ask me.

I have used his No. 1 rule before, which is to never lose money, but he has a few other rules to invest by. One of them is to never buy something you don’t want to own for 10 years.

That’s his investment time frame in a nutshell. “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”

But Buffett’s latest acquisition is one I am uncertain about in just five years, and I question its existence 10 years from now.

Still, that hasn’t stopped investors from chasing his trade.

TravelCenters of America LLC (Nasdaq: TA) jumped 10% on the news, without even knowing the financial details of the transaction. That’s partly because the announcement of the Pilot acquisition mentioned Berkshire Hathaway’s capital and ability to expand, and TravelCenters may be one acquisition it is eying.

However, I doubt the usefulness of a truck stop/gas station in a future that is going electric and self-driving.

Going Electric

I find it extremely ironic that Buffett made this acquisition in the same month that Tesla planned to unveil its electric, self-driving semitruck. Granted, it is several years away from being operational, but the fact remains that in five years, almost all of the new cars being released will be electric, as indicated by the major automobile manufacturers.

I’m sure Buffett has thought about this, and still finds the real estate that Pilot owns to be a worthy acquisition. But to me, in just five years this is a company that will be searching to find its place in a world that is going electric and autonomous.

Does Pilot just become a place to stop on long trips and use the restroom? Somewhere to get junk food? Or will it be branded as a completely different use? I don’t know.

But I do know that when major manufactures like Ford, General Motors and BMW make the shift over the next few years to an almost entirely electric and automatic fleet, the amount of charging stations will multiply. And I may be five years off, but that brings up Buffett’s 10-year time frame, and I don’t know what a gas station will be like in 10 years.

I just know it won’t be your typical gas station anymore. Because instead of having to stop at a gas station before you get home, you’ll simply charge up at your house.

And instead of having to stop for gas after a 300-mile trip, you’ll simply pull into the hotel and charge up while you stay there.

So this is not an investment I would want to own for the next 10 years. And I think trading TravelCenters is a risky bet at the moment too.

If you buy it, you’re hoping Berkshire Hathaway has its sights set on that company. Because if it doesn’t, TravelCenters will likely fall back. But betting against it is too much of a risk because of the possible acquisition.

For now, this is simply not the investment to follow Buffett on. And I don’t say that often.

Regards,

Chad Shoop, CMT
Editor, Automatic Profits Alert

In this exciting NEW VIDEO, Wall Street legend and former multibillion hedge fund manager Paul Mampilly pulls back the curtain on the biggest investment opportunity in the market today. What insiders are calling “The Greatest Innovation in History,” this revolution will mint more millionaires and billions than any technology that came before it. Right now, the current market for this technology is just $235 billion, but given how fast this technology is moving experts predict it will soar to $19 trillion by 2020. But 8,000% growth is just the beginning—and now’s your chance to get in on the action. [CONTINUE TO VIDEO]

Source: Banyan Hill