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What Do They Hate Now?

Posted May 3, 2022

Baron Rothschild is credited with saying, “The time to buy is when blood is running in the streets.”

He's been re-quoted by everyone from Mobius to Rockefeller. But through extensive research, I uncovered this bit from The New York Times circa 1931

It is told of this Baron Rothschild that in the days following the defeat of France in the Franco-Prussian War, when the mob ruled Paris, that a friend went to him and said, “What are you going to do to protect your interests in this dreadful hour?” The Baron said to him, “Can you keep a secret?” He said, “Yes,” and the Baron said, “Well, if the truth must be told, I am protecting myself by buying real estate.” His friend said, “Do you mean to say you are buying real estate with the gutters of Paris running with blood and the city in the hands of a mob?”

Rothschild said, “Yes, my friend, I mean that very thing, and that is the only time, when the gutters are running with blood, that you can buy real estate at $0.50 on the dollar.” 

Coal to Diamonds

Buying with blood in the streets has become a hoary Wall Street platitude because it is extremely profitable.

For example, about three years ago I went to a coal conference in Nashville. There were coal producers and train operators, as well as processors and barge companies. All of them said something along the lines of “if this trend keeps going, we are going out of business — must be time to buy.”

Few people did, but coal companies like Alliance Resource Partners (NASDAQ: ARLP) went up 487% all the while paying a hefty dividend. At the bottom it was more than 20%. Heck, it is still paying 7.82% today.

In September of 2001, Amazon got down to $5.97 a share in the aftermath of the dot-com bubble. Today, just 22 years later, it trades at $2,417 a share. That’s a tremendous gain.

Right now, the doom and gloomers have taken over the financial media. They push what sells and when stocks are down they go fully bearish and vice versa.

If you listen to these guys, you will always be on the wrong foot. But the greatest investor in history — Warren Buffett — has been a big buyer over the past three months. This is after sitting on cash for years.

He spent $41 billion to buy stock in Chevron and Activision Blizzard. Berkshire’s cash pile dropped to $106 billion which is the lowest since 2018.

I, too, have been buying energy companies. Cheniere Energy (NYSE: LNG) is up 105%, Range Resources (NYSE: RRC) is up 90.48%, and Natural Resource Partners (NYSE: NRP) is up 56.78%.

The question you should ask yourself when researching investments is, “What are the most hated stocks right now?”

Right now it is broadcasting media and cable TV. The declines are led by Disney (NYSE: DIS) and Netflix (NASDAQ: NFLX), which are down 40% and 62% respectively. Disney is particularly interesting because parks, experiences, and products make up 33% of its operating income. Disney has sold off from $189 to $111 a share. It is sitting at support and all the data is pointing to a record-breaking tourist year. Furthermore, a new Marvel film, "Dr. Strange in the Multiverse of Madness," is coming out on Friday and the company reports earnings on May 11. Also, a new Guardians of the Galaxy roller coaster opens at EPCOT on Memorial Day.

If you are looking for blood in the streets, look no further than Disney (NYSE: DIS).

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Christian DeHaemer

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Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor's page.

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