Wise Investors Know…

September 27, 2023

Emily Clancy

“Buy to the sound of cannons”
Stocks slog through the “September struggle”
Is your local pharmacy closing?
One-year anniversary: Nord Stream bombing
Even a broken clock

“Buy to the Sound of Cannons”

“Most stocks are sinking as the ‘September struggle’ remains in full effect,” says Paradigm’s chart hound Greg Guenthner, kicking off our issue today.

“The market weakness we’ve seen this month shouldn’t surprise anyone who’s paid close attention to seasonal trends to determine when the market might hit rough patches.

“The S&P, for instance, tends to flame out around the end of June during a typical pre-election year, and remain in a choppy range until a year-end push,” Greg notes.

“The averages are following this pre-election year script, with the minor exception of a strong summer rally that peaked at the end of July,” he says.

“August is generally a weaker-performing month (check). Then, September and October get a little hairy (double-check). If this pre-election year correlation continues, we can look forward to a final push higher into December.”

Until then? “Pullbacks and corrections are not only normal, but necessary,” Greg says. “If anything, you should feel uneasy if the averages don’t retreat at least 5–10% a couple times a year.”

“When the stock market pulls back, it's hard to step up to the plate and invest,” admits Paradigm’s income-investing advocate Zach Scheidt.

“With that in mind, I want to look at income investing so you can see why it makes sense to buy more of these plays in this challenging market,” he says.

First, unlike some new-kid-on-the-block tech stock — “expected to generate a profit years from now,” says Zach — “there are a handful of dividend stocks that simply churn out income quarter after quarter, in good times and bad.

“These stocks are great investments for your retirement account because they don't fluctuate nearly as much as some of the more popular tech stocks.

“Owning these steady-dividend stocks can help you sleep at night knowing that your retirement won't fluctuate too much, even if the broad market pulls back.

“Another reason I like income plays in today's market is because of the decisions you can make when cash payments hit your account,” Zach says.

A dividend reinvestment program (DRIP) “automatically uses the cash from your dividend payments to buy new shares of stock.

“It's my No. 1 suggestion for most dividend stock investors,” he says. “But in a stock market pullback, you can use the cash you receive from dividend payments in other ways too.

“If you've got your eye on a particular stock that’s trading lower and want to make a long-term investment, for instance, you can use your dividend payments to buy shares at a discount.

“Buying these stocks during a pullback gives you more shares for the amount of money that you invest. And since you're using cash from your dividend payments, you don't have to sell any of your other positions to make the purchase.

“You can use income from dividends in plenty of other ways too,” Zach adds, “like buying precious metals, investing in a business or covering your day-to-day expenses.

“The point is that dividend stocks generate extra cash flow, which you can use, depending on your personal needs.

“While dividend stocks tend to hold their value better than many other types of stocks, we still have to weather the normal ebbs and flows of markets,” says Zach.

“But the beauty of these ebbs and flows is that when dividend stocks pull back, the companies still pay the same dividends every quarter.

“You can buy more shares with the same amount of money, which means you get more income for every dollar invested.

“This is one of the reasons why I always recommend keeping some extra cash on hand in your retirement account,” Zach says.

“When the very best dividend stocks pull back, you can use that extra cash to buy more shares, setting yourself up for more income every time these companies send out another payment.

“Wise investors know pullbacks are buying opportunities,” Zach says, particularly for quality stocks.

“And when everyone else wants to buy, that's often the right time to sell and lock in profits.”

Zach’s key takeaway? “I've still got some concerns when it comes to this market, especially for the high-priced tech stocks that don't generate income.

“But for reliable dividend stocks,” he says, “now is the perfect time to add income plays to your retirement account.”

Stocks Slog Through the “September Struggle”

Mr. Market is seeing red again today. The three major stock indexes are floundering, with the Dow down 0.50% to 33,440… the S&P 500 down 0.40% to 4,255… and the tech-heavy Nasdaq down 0.30% to 13,020.

Meanwhile, the price of crude is revving up 3.7% to $93.73 for a barrel of WTI. (What’s that about a price target at $150?) But it’s a no-good day for precious metals: Gold is down 1% to $1,879.60 per ounce, according to Kitco; similarly, silver is down 1.25% to $22.55.

Crypto, on the other hand, is hanging out by a thread in the green with Bitcoin at $26,255 and Ethereum just a hair under $1,600.

The day’s big economic number is durable goods orders — up 0.2% in August, much better than the -0.5% expected. If you exclude aircraft and military hardware orders, the “core capital goods” raced up to 0.9%. But that number might be specious: July’s number was revised from +0.1% down to -0.4%.

Is Your Local Pharmacy Closing?

CVS and Target are closing hundreds of brick-and-mortar stores nationwide.

CVS, the largest drugstore chain in the U.S., is scheduled to shutter 900 stores through 2024. This comes after CVS announced it’s spinning off a new company, called Cordavis, which aims to bring down drug costs for consumers by backing generic medications.

The company plans on launching its first drug, Hyrimoz — which is a “biosimilar” for Humira — during the first quarter of 2024. Humira is a rheumatoid arthritis treatment… that’s also the bestselling drug of all time. “CVS said Hyrimoz's list price will be 80% lower than Humira's,” says trade publication Fierce Healthcare.

Meanwhile, Target announced it will close nine stores. “We cannot continue operating these stores because theft and organized retail crime are threatening the safety of our team and guests, and contributing to unsustainable business performance,” the company says.

“The stores Target plans to close will shut their doors on Oct. 21,” CNN says. “The stores include the East Harlem location in New York City, two locations in Seattle, three locations in Portland and three locations in San Francisco and Oakland.”

Hmm…

One-Year Anniversary: Nord Stream Bombing

“You could call it the perfect crime,” says Award-winning investigative journalist Seymour Hersh.

At his Substack account in June, Mr. Hersh published a bombshell account of the Sept. 26, 2022, Nord Stream disaster — which we summarized — blaming the Biden administration for planning and carrying out the pipeline attack. Although the perpetrator seemed clear to Hersh, the motive was still up in the air.

“Back to the Nord Stream pipelines,” Hersh says, “It is important to understand that no Russian gas was flowing to Germany through the Nord Stream pipelines when Joe Biden ordered them blown up last Sept. 26.”

Nord Stream 1 had been pumping “low-cost” Russian natural gas to Germany since 2011, a resource that “helped bolster Germany’s status as a manufacturing and industrial colossus.” But about six months into the Ukraine War, Russia throttled Europe’s central natural gas conduit.

“Nord Stream 2 was completed in September 2021 but was blocked from delivering gas by the German government headed by Chancellor Olaf Scholz two days prior to Russia’s invasion of Ukraine,” Hersh says.

Here it’s important to note: Since JFK was in office, the White House has been cognizant that Russia could weaponize its vast natural resources against the U.S.

“That view remains dominant among Biden and his hawkish foreign policy advisers, Secretary of State Antony Blinken; National Security Adviser Jake Sullivan; and Victoria Nuland, now the acting deputy to Blinken,” says Hersh.

“Sullivan convened a series of high-level national security meetings late in 2021, as Russia was building up its forces along the border of Ukraine, with an invasion seen as almost inevitable.

“The group, which included representatives from the CIA, was urged to come up with a proposal for action that could serve as a deterrent to Putin,” Hersh says.

Hersh’s unnamed source told him: “The challenge it gave to the intelligence community was to come up with a way that was powerful enough to do that, and to make a strong statement of American capability.”

By early January 2022, he says, “The administration put Nord Stream on the table because it was the only one we could access and it would be totally deniable.”

map

Map by Samuel Bailey/Wikimedia Commons.

“Our assumption,” the source continues, “was that the president would use the threat against Nord Stream as a deterrent to avoid the war.”

Early in 2022, then, the CIA — working in concert with Norwegian divers — rigged Nord Stream 1 and 2 with explosives. “The CIA planning group was told by the White House that there would be no immediate attack on the two pipelines.”

Instead, they were told to “be ready to trigger them ‘on demand.’” But months after Russia invaded Ukraine, the order never came. “The White House’s silence and denials were [the source said] ‘a betrayal of what we were doing… If you are going to do it, do it when it would have made a difference.’”

In the final analysis, according to Hersh’s source: “We realized that the destruction of the two Russian pipelines was not related to the Ukrainian war, but was part of a neocon political agenda to keep Scholz and Germany, with winter coming up and the pipelines shut down, from getting cold feet and opening up” Nord Stream 2.

Given that explanation, the final piece of the Nord Stream puzzle falls into place for Hersh — namely, motive. “The Biden administration blew up the pipelines but the action had little to do with winning or stopping the war in Ukraine,” he says.

“It resulted from fears in the White House [that] Germany and then NATO, for economic reasons, would fall under the sway of Russia and its extensive and inexpensive natural resources.

“And thus followed the ultimate fear: that America would lose its long-standing primacy in Western Europe,” Hersh concludes.

Even a Broken Clock