2021's Crazes Are Still Kicking Today

Episode #362 | May 20, 2024

Episode #362 | May 20, 2024

2021's Crazes Are Still Kicking Today

In This Episode

On this week's Stansberry Investor Hour, Dan and Corey welcome their colleague Bryan Beach back to the show. Bryan is the editor of Stansberry Venture Value and a senior analyst on Stansberry's Investment Advisory. With a focus on small-cap value investing, he brings his unique perspective to the podcast to talk meme stocks, unpopular areas of the market he finds attractive, and how to value microcaps.

Bryan kicks the show off by discussing the GameStop meme-stock craze and the deep-value market dynamics that were at play during the whole debacle. He argues that the "dumb money" folks (such as Keith Gill) got a bad rep and the self-titled "smart money" folks weren't very smart. Here's what Bryan compares the entire situation to...

It's like the geeks got together, and they're like, "The oak tree behind the gym – let's all go there."... And they find some jocks there, and they just start pummeling them. And the jocks get scared. The jocks start calling their buddies over to the oak tree... But [the geeks] are smart, right? They know there's a thousand places we're going to get beat up, but we found this one spot, and we're going to exact revenge. 

Next, Bryan talks about the bubbles in special purpose acquisition companies ("SPACs") and Software as a Service ("SaaS"). He points out that the pendulum can quickly swing from overloved to overhated. Bryan shares that, because of this, he's still finding winners in the SPAC scrap heap and he believes SaaS valuations are far too low today. He also explains how retail investors got clobbered by the smart money on SPACs and why cannabis stocks present such a good opportunity now with the impending reclassification of marijuana.

Lastly, Bryan emphasizes the importance of stop losses and "guideposts" since they take the emotion out of investing. This leads to a discussion of Amazon and its many drawdowns over the course of its trading history that would have stopped investors out. After, Bryan brings up small-cap restaurant-software company Par Technology and why he has so much hope for its future performance. And here's what Bryan says about knowing when to sell a stock, even if the price hasn't triggered your stop loss...

If I like a company because it's growing and it's got a strong balance sheet and it's cash-flow positive... I'll set up quantitative guideposts... So I'm looking for 20% growth per year. If the first year it's 12% and the second year it's trending toward 8%, I got something wrong. I need to sell, regardless of what the stock price is doing.

Dan and Corey close things out by talking more about the resurgence of meme stocks – GameStop and AMC Entertainment, in particular – and what it means for the market as a whole. Plus, they talk about this new era of inflation we're in, the worst-case scenario of rebounding inflation, and the long-lasting consequences of low interest rates. As Dan notes...

In the long run, all of the attempts at making things more stable make them more unstable. When the crisis finally hits, it's bigger. It's worse because all of the mistakes pile up. We never let the mistakes flush out... We did this massive experiment with zero and negative rates for a long, long time... I don't think we'll know fully all the ramifications of that for a decade or more. People will still be figuring out what that did to us in 20 years... And now, we're just going through it. We're in it. We're fish in water. We can't really understand what we're in the middle of.