Waking the Zombies!

Thursday, October 26, 2023   Starting next Monday, Postcards from the Florida Republic will migrate to Substack. Be sure to sign up for [a free subscription right here.]( Index Momentum S&P 500 Red Nasdaq Red Russell Red Waking the Zombies! Dear Fellow Expat: Some people ask why the aliens haven’t made contact yet. It could be that we’re too busy as a species being distracted by pop stars dating NFL players… Or that we spend all of our time restlessly worried about politics. It’s possible they got here and turned around after watching a Presidential debate. If there is an intelligent life out there, I’m sure they understand modern finance better than us. They probably look at our stock market… and wonder why we continue to throw good money at bad companies. How do we constantly allow our money to chase an entire class of fantastically absurd public stocks with no business existing? Let’s discuss. Today, I quickly screened stocks on GuruFocus with three simple factors. I’m looking for companies that shouldn’t have much shelf-life in the future. First, I removed all drug manufacturing, biotech, financial, and real estate firms. I included stocks in every other sector that were traded on exchanges. Second, we screened for unprofitable companies… That’s easy because their Price-to-earnings (PE ratio) will run at a loss. Third, we added companies with a price-to-sales ratio of over 10. Remember… these companies would need to pay ten or more years of revenue (not profits - every dollar coming in the door) to justify their valuations. This valuation is mathematically insane to anyone who lived through the Dot Com bubble. That left me with a list of 107 companies. Many software, cybersecurity, and hardware companies are priced for extreme growth within these categories. But for every one of these companies that does grow into its valuation, we can anticipate that two or three won’t make it. There are dozens of other companies that leave me scratching my head… How are they not still tiny investments backed by niche venture capital investors? Why do big ETFs run by BlackRock so widely hold them? Why are retail investors investing in unprofitable, niche stocks poised to go to zero eventually? The answer… starts with the Fed… and then results from bad incentives. I’m not saying these companies are founded on bad ideas. But many of them are not ready for prime time. [Click here to continue reading this postcard...]( Stay positive, Garrett {NAME} Secretary of Finance     PREMIUM CONTENT Dive into an in-depth analysis of Crescent Energy, a rising star in the energy sector and one of my top energy choices for 2023-2024. Guided by John Goff's strategic prowess and bolstered by a game-changing partnership with KKR, Crescent has set new benchmarks in the energy sector. Beyond its compelling backstory, this video uncovers the mechanics of Crescent's success, illuminating its strategy, potential, and future trajectory. [Sneak A Peek Inside the Trading Room](   REPORTS [The Momentum Handbook]( [The Secret to Huge Value Investing Profits]( [Twitter]( [Youtube]( [Instagram]( [Tiktok]( [Discord]( [LinkedIn]( You are receiving this e-mail at {EMAIL}, as part of your subscription to Postcards. To remove your email from this list: [unsubscribe here]( Please do not reply to this email as this address is not monitored. To cancel, or for any other questions or requests, please contact our Customer Service team: Online: [Customer Service Form]( Phone: 888-384-8339 (North America) 443-353-4519 (International) Mail: Postcards | Attn: Member Services | 1125 N Charles Street | Baltimore, MD 21201 Fax: 410-622-3050 Our Customer Service team is available Monday ­ Friday between 9:00 AM and 5:00 PM ET. © 2023 Money Map Press. All Rights Reserved. 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