Dear Reader,
A lot of you have written in asking whether I still like Meta up here.
After its earnings release the stock jumped up about $100, about 20% from our recommended price.
I was very happy with Meta’s earnings, Microsoft’s earnings, Visa’s earnings.
This was the week all these companies on my bear market watchlist reported earnings and I’ve been very happy with what I’ve seen.
But we still have a split-screen scenario. I cannot emphasize this enough:
We have companies reporting earnings for the first quarter – January 1st through March 31st.
Remember, Trump’s Liberation Day tariffs landed April 2nd, after the end of Q1.
So we don’t know how those will show up in Q2 reports.
And we really won’t see the full impact until Q3 reports come out in the fall.
At the end of the day, as people ask me, “are you filling the rest of your position? Should I be buying it up here?” etc., etc….
First of all – I don’t give anybody personalized investment advice – it’s against the law.
What I am telling you is, for myself, I have a split-screen scenario where I see the market rallying based on Q1 numbers that look really solid for the stocks I like, like Meta, Visa, Microsoft…
On the other side, the impacts of tariffs are not baked into those reports.
For a lot of investors it’s hard to hold two opposing concepts in their heads at the same time.
They see these earnings reports and rush in – “All is well! Happy days are here again!”
They just go crazy. They go all-in.
I always say this, but it is absolutely true:
“Everybody has a plan until they get punched in the face.” – Mike Tyson
Look, I love that Meta reported strong earnings. And it didn’t surprise me at all.
But it’s not Q1 we’re worried about.
We have to see the impact of tariffs on companies over Q2, Q3.
As I discussed yesterday, a lot of very sophisticated people (and some not so sophisticated people) are expecting a recession.
And even though companies may be reporting solid Q1 earnings…
First quarter U.S. GDP came in at negative .3%.
It only takes one more quarter of negative growth, and we have a textbook recession.
Make no mistake about it – we are flirting with recession right now.
Even if it’s not an official recession, if it’s just a “profit drawdown”…
Remember – companies like Meta are advertising platforms.
Who advertises on Meta?
A lot of small businesses looking to get new customers.
If small businesses in the real economy start to see a shipment’s not coming in from China, they stop advertising on Meta.
That’s something we have to look out for in Q2 and especially in Q3 if these policies remain.
We’re not out of the woods yet.
Don’t let Q1 earnings coming out now fool you.
As I’ve been almost overcommunicating, especially with Takeover Targets members…
Sending two, three emails a week, because Midnight in America is something we’ve talked about a lot in Takeover Targets…
We’ve received a lot of emails from readers thanking us for this overcommunication.
Apparently they’ve dealt with other independent research firms and editors who basically hide under their desks, or panic when things go wrong.
That’s one thing we’ll never do.
We don’t panic.
We don’t hide.
We face the music.
Here’s why:
You may remember the story about how I lost everything on one trade.
I was young on Wall Street, just starting out, early twenties…
And the big shot at my firm – I won’t say his name, but he was The Man … fancy watches, Central Park apartment, respected by everybody –
He recommended this stock – Comptronix, CMPX – told me to load the boat on it.
I did – I put everything I had into that stock at $22 and three quarters. I didn’t know better back then. I trusted this guy.
I came into the office one day and it was at $2 and a quarter.
There had been fraud at the company.
I couldn’t believe my eyes.
I walked up to him and he didn’t say a word to me.
He acted like he didn’t know me.
He acted like he never recommended it, and he never talked about it again.
I remember thinking to myself, my God, how off-putting is that? To recommend something and when things go wrong, to never talk about it again.
I vowed that if I ever got in a position like that, I would NEVER treat anyone that way.
To me, it’s a serious defect in character.
We’re all adults here – we win some, we lose some.
I make recommendations. Sometimes they go higher, sometimes they don’t.
But one thing I promise you I will never, ever do is hide under my desk when something goes wrong.
And I will never leave you alone during market turmoil, sucking my thumb, waiting for it to be over to crawl out again after the dust settles and make myself a hero.
We don’t play the game that way. It’s not even in my DNA.
I will be here with you every step of the way.
If you’ve been with me a while you know. It’s my nature.
Period.
They’d have to take me out of here on a stretcher for me not to record these videos or send you emails to help you understand what’s going on and how to play it.
Because we are close to or in retirement, and that doesn’t wait for anyone.
You’ve trusted me with your hard-earned money and that means something to me.
So, I’m here for you – with a sore throat, forgot my glasses, here early recording for you before going to take care of my son who’s home with strep throat, so forgive my babbling.
Take care,
Dylan
“The Buck Stops Here,”
