Gregory Bergman
Editor-in-chief, CapitalWatch
It's all over.
Maybe not quite yet - and maybe not for some countries. But for this one? Absolutely.
Socially, politically, economically, racially, medically - the nation
is unraveling at the seams. To use a timely metaphor, America's mask is
slipping, revealing a bruised and battered face for all the world to
see.
Trump's election was proof that the American collective was in a far
worse place psychologically than some expected, a widespread madness
bubbling up from its bowels. But it was his actual tenure (I am speaking
in the past-tense hopeful for a change in November), that broke this
nation beyond repair. Whether stocks or up and down is almost entirely
meaningless at this point. And even then, one can trade the Bergman Buy
Index from anywhere (now up over 65% since we started it,15% in two
weeks while the S&P fell about 90 points).
So, where should I go? Denmark? Iceland? The fjords of Norway?
Do they still hunt whales in Norway? More importantly, how tall is
the average man there? At five-foot-nine and a half (five-eight and a
half, but I wear inch-high inserts in my shoes) I have to consider that;
the whaling, grotesque as it is, I can live with.
Greenland is the place to be in 100 years, climate scientists say.
But 100 years? I'm patient, and don't expect much in the way of
amenities but do they at least have decent Thai food in the meantime?
Access to fresh water and a currently cold climate soon to turn more temperate are the main factors to consider, they say.
What about New Zealand? They seem normal and competent enough, and
technically, they speak English. But will I be subjected to incessant
references to The Lord of the Rings trilogy? That would be a
dealbreaker.
How about a lake in Italy? Sure, the boot's a mess, but isn't it
always a mess? The mayor of Ollolai in Sardinia is offering 200 homes
with prices starting at 1 euro ($1.17). Does Sardinia have a lake?
Germany? Can that nation benefit as the lead broker between a rising
China and the sinking United States, or will economic failure in
Southern and Eastern Europe weigh it down even more in the future? What
about Switzerland? In that little alpine oasis, the government pays you
when you go to jail. That said, the Swiss jail easily; I was almost
arrested for yelling in a Starbucks after spilling coffee on myself.
Canada? No way. Never. To me, that's cheating.
I don't know. I just do not know. What I do know is that America is not a place to build a future long-term - not anymore.
Of course, I could be wrong. America could emerge stronger than ever
post-virus, entering a new era of small business entrepreneurship
generated by the trillions of dollars spent in stimulus - or so say some
Pollyannaish market commentators on CNBC.
If the country does have a promising future, things like universal
basic income, as stunningly promoted albeit only temporarily by Jerome
Powell, might need to remain permanent, as the prescient former
presidential candidate Andrew Yang championed during his bid for the
White House.
But it is not our economy so much as our democracy that worries me.
Oh, Henry!
The decision to relinquish citizenship and renounce any further
participation in the American experiment may be moot. Wherever I go, it
seems, catastrophe is likely to greet me according to a report from
Deutsche Bank which revealed some harrowing prognostications.
Analysts led by Henry Allen say there is a one-in-three chance that
at least one of four major "tail risks" will occur in the next 10 years.
Here are some of the fun possibilities:
1) A major influenza pandemic killing more than 2 million people (Covid-19 has already killed roughly 450,000)
2) A globally catastrophic volcanic eruption
3) A major solar flare
4) A global war
So, there is a one-in-three chance another Covid-19 level nightmare
strikes in a decade. Now, if you give it two decades, then there is a
56% chance of such a worldwide nightmare. (Earthquakes are not included
since the fallout is too localized.)
I know, solar flare? This obscure nightmare hasn't been on the radar
since the last severe one in 1859. Turns out, however, we are due for
another. Analysts list this event as more likely than a global war. The
recent violent skirmish between India and China might change that
calculus a bit, a border conflict whose exacerbation could ignite WWIII.
Finland?
Nah, seems too depressing. Plus, I am not sure they let Jews live where they have reindeer (but don't quote me on that).
Again, wherever I go or don't go, access to water will be a must. The
United Nations World Water Development report for 2020 says that water
shortages and contamination of crops from bad water are increasing
rapidly, while a National Resource Defense Council report says that from
2015 and 2018, nearly 30 million Americans were drinking water "from community systems that violated the EPA's Lead and Copper Rule."
Add to that a 2012 American Water Works Association (AWWA) report
which puts the cost of repairing existing water infrastructure at $1
trillion over the next quarter-century, and it is clear that the water
crisis is deeper than you may think.
Investors can play the water crisis a few ways - from companies
focusing on improving infrastructure to companies who bottle clean
drinking water to buying real estate in future desirable locations (2.2
billion people do not have access to fresh, safe drinking water).
A complex market space, one stock to start with is Xylem Inc. (NYSE: XYL),
a global player involved in many facets of the industry. Treatment,
dewatering, transport, applied water systems, analytics - Xylem is a
one-stop water stock involved in every stage of the water cycle. The
stock has been crushed by Covid-19, falling from $73 to $64 per share
just this month. Long-term, however (as in 18 months or more), if you
are betting on the end of water and the end of the world, this is a good
place to begin.
Teetering on the Tipping Point?
Despite the current horrors the imminent ones that await, I would be
remiss if in this week's lugubrious lamentations, I didn't mention what
is some very good news.
As the murder of George Floyd gruesomely illustrated, the police in
the U.S. are in serious need of reform. And the tide on this front is
turning, and fast.
Malcolm Gladwell, the bestselling author of "The Tipping Point," says
that it only takes 30% of the population to embrace an idea or a
product before it spreads like wildfire. This phenomenon he calls the
tipping point, is "the moment of critical mass, the threshold, the
boiling point."
In a nation so split along partisan lines (what else could possibly
explain more than 100,000 people expected to attend a Trump rally in the
middle of a pandemic?), a recent poll showed that the majority of both
Democrats and Republicans support sweeping police reform. More
specifically, 82% of Americans support the banning of police from using
chokeholds, 83% support banning racial profiling, and 92% want federal
police to be required to wear body cameras. These numbers reflect a
dramatic shift in popular opinion in a matter of weeks.
Is that a Non-Lethal Weapon in Your Pants or Are You Just Happy to See Me?
If police in the U.S. and around the world decide to stop killing
suspects with such frequency (police killings in the U.S. are actually
way from decades past, evidence of just how bad the problem is), the
market for non-lethal weapons will expand even more dramatically than
current figures suggest.
Non-lethal ammunition includes rubber bullets, wax rubber plastic
bullets, bean bag rounds, and sponge grenades. The term "non-lethal,"
however, should be taken with a grain of salt.
Take rubber bullets, for example, which have been widely used over the last few weeks on protestors. A study published in 2017 in the BMJ Open
found that 3% of people hit by rubber bullets died of the injury, while
15% of the 1,984 people studied were permanently injured. Rubber
bullets are called "kinetic impact projectiles" in law enforcement
lingo.
The market for these and other non-lethal weapons is projected to
grow from $5.65 billion in 2015 to $8.37 billion by 2020. Driving this
demand is not an increased desire on the part of police to limit
fatalities, but the desire for as many tools as possible to curb
increased civil unrest - and just wait until the world's coastal cities
are submerged by rising seas.
Lethal and non-lethal weaponry go hand-in-hand in the militarization
of law enforcement agencies around the world. However, in the U.S.,
where police are armed to the teeth with assault weapons and even tanks,
the demand for non-lethal alternatives is, by contrast, a good thing.
Between tasing George Floyd and kneeling on his neck, the former is
preferred alternative (not that tasing seemed a necessary use of force
for one guy surrounded by four cops). Yes, he was a big guy and may have
been high on methamphetamine, a drug found in his system according to
the autopsy report. But meth only makes you feel like Bruce Lee, not
actually become him. What happened was murder, period.
With significant police reform on the near horizon, some smaller
stocks in this space have taken center stage. Three stocks that stand to
benefit from the new landscape of increased police accountability
include Axon Enterprise (Nasdaq: AAXN) and Shotspotter (Nasdaq: SSTI),
and Byrna (CSE: BYRN; OTCQB: BYRN).
Axon, once called TASER, is best known for manufacturing stun guns or
TASERs. Today, however, it is also the market leader in police body
cameras and dashboard cameras. Evidence.com, its software database,
enables data collected from the cameras to be stored, shared, and
analyzed.
Protests and looting have been good for the company. And increased
civil unrest coupled with increased emphasis on police accountability
will only make its products more attractive.
"We have a big role to play in providing the tools and technology
backbone for much of police training," CEO Rick Smith told Yahoo!
Finance. "And we think there's a huge role for us to play in helping
introduce new ways to train police to really squash out some of the
behaviors that we saw that I think everybody agrees are unacceptable."
The stock just hit an all-time high.
Long-term, I am bullish on Axon. Short term, I would wait until it
falls back under $85 per share (the stock trades at $94 per share now up
from $75 last month) and/or it completes its planned secondary offering
before adding it to your portfolio.
Shotspotter does just what the name suggests - it alerts first
responders and law enforcement when a gun goes off, improving response
time which serves both the victim and the police called to investigate.
The company's mission is to assist police and end gun violence. The
technology it employs to accomplish this goal is unique.
Revenue growth has slowed since 2018, however, and Covid-19 has made
things worse. But this kind of environment that will bode well for the
company, which only serves three of the 10 largest U.S. cities as its
customers. With increased attention on policing and crime, Shotspotter
might be able to land a few more big municipalities to its customer
base.
Short term, this stock might see a big boost, but nothing like what happened this week to Byrna Technologies.
Byrna's stock skyrocketed this week after "newsman" and devil
incarnate Sean Hannity featured it on his strangely popular Fox News
program, suggesting that the company's personal security device might be
part of the solution to curb the unrest through non-lethal means.
Byrna's flagship product, Byrna HD (Home Defense) is a compact
non-lethal personal security device the company insists is the safest
and most effective non-lethal self-defense weapon on the market today.
It shoots .68 caliber projectiles filled with a powerful chemical
irritant. Unlike pepper spray and stun guns or tasers, it provides a
safety zone of 60 feet and comes with multiple easily reloadable
magazines. Basically, an almost lethal amount of non-lethality at your
hip.
After the Fox News bump, online orders exploded, exceeding $2.4
million worth in 24 hours. The company is racing to hire new workers and
boost capacity to fulfill the overnight rise in demand.
The morning after Hannity's segment aired, Byrna CEO Bryan Ganz
commented: "Last night reinforced our strong conviction that people on
all sides of the gun debate can agree on one thing - there is a need for
a truly effective personal security device that can stop a would-be
attacker without the risk of permanent injury or death."
While the product can be used by police, it was designed primarily as
a civilian tool to be used by homeowners looking to dissuade unwanted
houseguests.
The stock is trading at $1.37 per share as of Thursday, up from 62
cents per share on June 9. If you missed the bump, wait until it falls
closer to a dollar or $1.10 per share. Let momentum players cash out
before you buy.
As for the product itself, it looks like one worth buying. Anyone can get it, as no gun license is required.
The only question is: Can I bring it to Copenhagen?
Bergman Buy Index Up Over 65%!
Beginning Sum: 100k in Hypothetical Capital - Current Capital: $165,875.51
(A more than 15% increase in the last two weeks. To compare, the
S&P is down more than 90 points for the same period. Percentages are
based on closing prices for stocks as of Thursday's close)
Symbol Current Price Change Open High Low Purchase Price
DOCU 162.88 0.58000183 163.07 164.3543 161.67 162.3
PINS 23.53 0.47000122 23.37 24.34 23.28 23.36
BYD 21.41 -0.2800007 22.13 22.3 21.32 21.69
CMG 1029.805 -0.19494629 1040 1041.98 1020.4508 820.27
ACB 13.3263 0.31629944 13.18 13.89 12.97 9.61
CGC 17.255 0.074998856 17.86 17.82 17.121 13.25
REGN 609.36 12.01001 602.31 609.58 598.71 493.32
NVAX 63.59 4.3199997 63.28 63.76 61.75 15.61
INO 14.5799 0.23989964 14.43 14.74 14.12 7.74
SQ 99.29 1.0200043 100.1 102.26 98.43 53.43
WYNN 86.96 -1.4100037 90.35 90.96 86.6538 63.31
SEDG 155.2 4.199997 152.27 156.24 151.31 82.37
FSLR 50.84 0.36999893 51.28 51.56 50.55 35.63
BBY 81.21 -1.090004 83.84 83.91 80.72 62.47
HD 247.51 -1.7000122 249.36 254.3 246.38 190.55
GM 26.535 -0.5550003 27.74 27.77 26.5 18.14
F 6.3042 -0.025799751 6.64 6.69 6.28 4.33
PFE 33.2482 0.008197784 33.69 33.74 33.12 29.01
RHHBY 44.89 0.5099983 45 45.21 44.72 36.09
JNJ 143.705 0.29499817 145.79 145.88 143.26 119.89
WMT 118.93 0.94000244 118.89 119.34 117.75 113.97
QSR 55.39 -0.61999893 56.65 56.9662 55.31 32.02
DPZ 377.51 1.960022 380.81 380.96 373.59 299.95
DNKN 64.3 -0.20999908 65.13 65.3365 63.99 39.68
WEN 21.87 -0.1799984 22.32 22.45 21.7605 10.94
HES 52.19 0.5399971 49.87 53.55 51.94 34.92
MCD 187.59 -1.9000092 192.29 192.3565 187.13 148.49
RCL 56.32 -3.0299988 60.96 61.105 56.12 32.33
CLX 218.17 3.5800018 218.17 219.38 215.8453 173.26
MRNA 64.9369 -0.01309967 64.99 65.14 64.01 25.93
CODX 16.9499 1.0198994 15.95 16.97 15.82 13.23
AMZN 2672.904 18.924072 2678.08 2688 2659 1883.75
DG 189.65 -1.6700134 193.08 193.72 188.27 142.12
Gregory Bergman
Editor-in-chief, CapitalWatch
(The opinions expressed in this article do not reflect the position
of CapitalWatch or its journalists. The analyst has no business
relationship with any company whose stock is mentioned in this article.
Information provided is for educational purposes only and does not
constitute financial, legal, or investment advice)
