Under no circumstances does the information in this document represent a recommendation to

buy or sell stocks or funds. It should not be assumed that the methods presented in this letter
will be profitable or that they will not result in losses. Past results are not necessarily indicative
of future results. This document is for educational and entertainment purposes only.

 
 
 
*covid infection fatality ratio
2020
WHAT .
A.
YEAR.
 
 
 
 
 
 
 
THE SUPERSTOCK LETTER 
 
*****After much back and forth, I've decided that I’ll be offering my twice-weekly 
Superstock Letter on a stand-alone basis in 2021 for a holiday rate of $2990. 
 
There will be no screening process, and it's 60% off the price of World 40 membership. 
If you're on the 2021 waitlist for World 40, please let me know if you're interested in the 
letter. 
 
For anyone else interested in a Superstock Letter subscription, please email me at 
worldforty@gmail.com 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2020: “GUNS, GOLD, AND DRUGS” 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
Merry Christmas Friends and Family! 
 
 
What a year?   
 
 
 
 
 
Special thanks to Sentimentrader and Crescat Capital for their outstanding research in 
today’s forecast. I highly recommend following them and/or subscribing to their 
research. 
 
 
 
 
 
2020. The ultimate year for politicians. 

 
 
Not so much for the rest of us. 

 
 
 
One prediction that I'm absolutely certain of for 2021 is that we'll see some amazing 
books published. If it takes 9 months to birth a book, the books should be rolling in right 
about now.  
 
For what it’s worth, this is the best book of 2020. And it’s free. 
https://www.navalmanack.com/
 
 
In 2020, it was fascinating for me to see just how differently people reacted to Covid 
from city to city and country to country. It’s business as usual in places like Florida and 
Mexico.   
 
It’s bordering on mass hysteria in parts of the States. My 2020 travels are actually quite 
funny considering that I sat on my butt for most of the year. Most of this action was me 
simply trying to outrun politician’s favorite hobby these days- lockdowns.  
 

 
 
  
 

 
 
 
 
 
 
 
 
One thing's for sure, politicians didn’t take statistics in college. The 2020 lockdowns 
will have extreme social and financial consequences for generations to come.  
If the lockdown madness persists over the long-term, buy Florida real estate hand-over 
-fist.  
 
 
 
 
 
 
 
 
 

In terms of the market, 2020 was and is the market that keeps on giving. I started moving into
defensive stocks a couple weeks ago and even that boring stuff has been taken along for the
ride. It’s been a wild wild wild ride this year. That’s for sure.

Exactly 2 years ago today, I sent this out in my annual forecast-

-“Since ‘84, (Excluding ‘08), when over 25% of NYSE and NASDAQ stocks are at a 52 week low, the S+P
returns the following 12 months were:

-9.5%, 15.5%,17.9%, 18%, 19.6%, 20.6%, 21.1%, 21.7%, 22.9%, 24%, 25.2%, 26.1%, 27.4%, 29.1%,
29.3%, 31.5%, 33.9%, 37.9%, 39.2%, and 66.6%.”​

Below is the extreme small cap bullish wedge at the time. Dumb money bullishness had just hit
a record low of I believe 9%. I expected big upside the next year given the extremes we were
seeing across the board. Pretty much every global market had hit its lower weekly band.
We had one more gut-wrenching fall the next session, then it was off to the races.
That forecast is a GREAT read if you want to know what global bottom setups look like.

https://docs.google.com/document/d/1_Fp_kWk8V-Ik744wx6TAD8D3t6-GTLY3Noskqv-eBzo/ed
it?usp=sharing

TODAY

Fast forward exactly 2 years and this is what we have today guys-

From 2 weeks ago:

And here is the inverted chart of small caps today.

I’m looking forward to the Georgia runoff and presidential transition(?) tailgate parties next
month:)

MARKET PARTICIPANTS
Let's think about long term market cycles for a second. Markets make multi-year bottoms when
the least number of market participants remain in the game. At the very beginning of multi-year
bull moves, the only players left are large institutions, pension funds, and some 401K’s.

At the end of a protracted bear market, traders have lost their fortunes and have moved on to
new careers….usually as real estate agents.

As a bull market advances over time, more and more market participants enter the market year
after year.
At the very end of a bull market, the general public floods into the market. At this juncture, the
market has sucked in the greatest possible number of market participants and the institutions
sell their inventory to them.

As we’ve seen in major parabolic market cycles like 2000 in the U.S. and ‘08 in China, at the
very end of the move, virtually everyone has been forced into the market chasing the hot stocks
of the day. With so many people entering the market, the ponzi scheme starts to run out of
steam as there’s nobody left on the sidelines to buy shares at higher prices.

“​By1999 there were ​9.7 million active online trading accounts​, three times as many
as there had been in 1997. After-hours trading was extended to the public around
the same time, so day traders didn’t just trade during the day. For the first time they
could buy and sell shares any time they liked from the comfort of their own home.

Many of these novices were completely uneducated—two thirds of investors had not
completed high school.”

"These two Chinese stock markets suddenly took off last summer (2007),
becoming a cauldron of voracious buying, selling and spectacular profit-taking.
Shares of newly listed companies soared thousands of percentage points within
months of their initial public offerings, driven upward by a new and growing
cadre of relatively unsophisticated private investors that included tens of millions
of ordinary workers, farmers, housewives and pensioners. According to one
widely cited survey of these new investors, 67% of them have less than a
high-school education.”

https://www.theguardian.com/world/2015/jul/16/why-chinas-stock-market-bu
bble-was-always-bound-burst
The China hangover​………

Fast forward to today and well….. we no longer have trading commissions, you
can buy just $5 worth of AAPL through "fractional trading", and due to the
circumstances of Covid, virtually everyone has been forced into the trading
business.
When you sit at home all day in your underwear, what else are you supposed to
do? (We’ll save Pornhub for another letter.)

Interestingly, I’m hearing that the popular thing for children (taxpayer
dependents) after the first round of stimulus checks was to put the $500 into the
stock market. I assume into stocks like Apple, Disney, and Netflix.

So due to the circumstances of 2020, virtually everyone has been forced into the
stock market and is trading a​ TON!
As we saw in 2000, the stocks that moved the most, were the stocks that had
(BY FAR) the worst fundamentals. Back then, if a stock was highly profitable, the
investing public wouldn’t touch it with a 10 foot pole. Frenzied traders were all
about “pre-revenue” .COM companies that MIGHT make a profit 10 or 15 years
down the road.

These same traders were piling their money into fresh IPO’s that were losing
money. These IPO’s had their opening price ranges raised 3,4,5 times and were
then bid up 100%, 200%, 300% or more on the first day of trading. It was
complete insanity.

Fast forward to 2020…

“​The most companies since the year 2000 are going public without first turning a
profit. As a ratio to money-making companies, money-losers are at record highs.
And never before in 35 years have such young companies managed to sell shares
to the public.

….When risk appetite is high, equity investors are willing to accept ideas and concepts
in lieu of revenue and profit. The only other time when both the average and median
age of a newly public company neared this low of an age was 2000.​” -Sentimentrader
  
 

LOL, I just saw this as I went to send the letter:

 
 
 
And don’t get me started about “SPAC’s”. Most of the fundamentals of these companies are so
bad that they couldn’t IPO. So instead, they “SPAC’d”...

 
And of course in 2000 and 2008 (in China), valuations simply didn’t matter anymore. 
They went parabolic. 
 
Valuations today? 
 

 
 
  
 

 
 

As the "stock market president", if I’m Trump, there’s NO WAY I’d want to win this election.
Imagine Trump’s Tweets if the market starts to falter next year.

“I told you so!”.

“I was the best stock market president in history!".

I’m thinking out loud here for a second...there’s massive incentive for Trump to take the
market down once Biden takes over. I honestly don’t know how he could do that. But Trump
surprises us CONSTANTLY.

Unfortunately, if the market falters, it would all be blamed on Biden because well….stupid
media “experts” and politics….

SECTOR BUBBLES
Every couple of years, we get a bubble in a hot sector with no fundamentals. New traders
argue that the stocks will “grow into their valuations”.
We saw this with the .COM stocks, Rare Earth mineral stocks, China ADR’s, 3-D Printing
stocks, Marijuana stocks etc.. We’re now seeing the same level of speculation in golf cart
stocks (EV’s).

Similar to the .COM era, most of these companies will never make any serious money.
There will be a couple big winners, the industry will be commoditized, and most players will
go bust.

Every company will soon be making these bigger, faster golf carts. As a matter of fact, both
BIDU and APPLE announced this week that they too will produce even fancier golf carts! :)
EXTREME RISK TAKING

It probably doesn’t need to be said, but the current level of speculation by active traders 
has never before been seen in history. There is EXTREME risk taking. And it’s been 
going on for several months now with practically zero downside protection. 
 
You can hang out at the Chicken Ranch in Vegas for a couple of days and probably be 
OK. But if you rent a room at the Ranch for a few months like Lamar Odom, you’re 
probably gonna end up in dire straits. 

 
 
"Since the number of new retail trading accounts has gone parabolic, chasing stocks has
paid off, not having stop losses has paid off, averaging down has paid off, going on full
margin has paid off, disregarding earnings has paid off... The market is conditioning more
and more people to be careless and overconfident in their ability." - Big Fred
PROTECTION

Currently, nobody is positioned for any market surprises. The funny thing is that
there are ​ALWAYS​ surprises. Heck, the media and hedge funds make them up
all the time ​when needed.

Short interest and put options serve as buffers when the market corrects. Shorts
decide to cover which serves as buying pressure supporting the market thus
things don’t get too crazy. When there are no shorts needing to cover, I get
nervous.

This chart totally boggles my mind given all of the historic extremes we're seeing.
SEMICONDUCTORS

My go-to sector is always the semiconductors. Semi’s are “high beta” which
means they tend to rise much more than the general market during bull markets
and fall much harder during bear markets. They’re highly cyclical.

When semi’s get extremely overbought, I prepare for a market decline. When
semi’s get oversold, I prepare for a market advance.
I keep thinking about upcoming semi “comps” in 2021. Analysts are
EXTREMELY bullish on semi's for 2021 as they are predicting 8% market
growth.

We saw massive panic semiconductor buying in 2020. The government forced

the public to wear a muzzle, lock themselves in a room, and spend trillions of
dollars of (bogus?) PPP funds and stimulus checks.

The public rushed out and stockpiled big screen TV’s, Roku devices, Amazon
Fire Sticks, new laptops, new smartphones, peloton bikes with monitors, home
theaters, computer monitors, modems, they remodeled kitchens with new
microwaves, stoves, kitchen devices etc..

They bought new RV’s and boats (even more TV’s, kitchens, electronic devices)
hand-over-fist in order to escape their prison cell.

To accommodate all of the new devices and dramatic surge in streaming, the
telecoms had to massively upgrade bandwidth.

What do all of these new devices and bandwidth upgrades require? You got it.
Loads and loads of semiconductors.

It just seems that the bar is set pretty high for semi's next year.
SOCIAL MEDIA GURUS: "BREADTH EXPANSION=NEW BULL MARKET”

The general consensus up and down Wall Street now is that the “breadth
expansion” of late signals a brand new bull market. I don’t know. I can’t recall a
bull market “starting” when its leaders look like this.
Now don’t get me wrong, I love bull flags as much as anybody else. I especially
love tight bull flags fresh out of solid bases.

But most of those charts above kinda look like heavy 1990 Cadillac Brougham’s
sitting on top of palm trees.
THE TEENAGERS

Over the course of 2020, we laughed at how ridiculous analyst EPS estimates
were. The bar was (intentionally?) set SUUUUPER low by those pesky analysts.

CEO’s and CFO’s have so many levers to pull to beat such a low bar. However,
for the first time in several quarters, the bar for Q1 doesn’t seem so comical.
GROWTH TO VALUE. FINALLY??!”!
Here are some excellent notes from Sentimentrader regarding growth vs value stocks.

11/10/20
“Buy-losers-and-sell-winners hits historic proportions: Monday's lurch from large to small stocks,
and from growth to value, was among the most extreme in 75 years. That builds on months of
wide swings between them. There have been 2 other periods in history when this happened,
both leading to massive shifts to small and value stocks.”
DEFENSIVE CORNERS OF THE MARKET FOR 2021
Can the market go higher? Sure. Absolutely.

It probably will. But unfortunately, I can't find any low risk chart patterns this year when it comes
to major sectors in the market. The areas of the market that appear to have the best risk/reward
are defensive in nature.

GOLD/SILVER
*Yes “dudes”, I very much like bitcoin, but the current chart is super overbought and the mining
companies don’t make any earnings to determine a price target :(

 
 
 
 
 
 

"23.6% of All US Dollars Were Created in the Last Year":​ @

​ TheStreet

 
 
 
 
 
With professional politicians eagerly creating massive unemployment and 
despair…..and our next generation being home-schooled by depressed unemployed 
drunks, we may encounter a problem.  
 
 
It appears as if the next round of stimulus checks might be sent out as soon as next 
week (changing by the hour).  
 
Biden just said that he will follow that up with another round of checks soon thereafter. 
https://www.yahoo.com/news/biden-promises-third-round-stimulus-210737418.html 
 
 
I don't know, but it kinda seems like a slippery slope is forming guys. What happens 
when you give your 12 year old daughter a $100/wk allowance for a year and then 
suddenly take it away from her? I don’t have a daughter. You tell me. 
 
On top of that, we have eviction, school loan, and mortgage moratoriums in effect. What 
happens when you take the moratoriums away? The question now might be………….. 
CAN​ the moratoriums be taken away? 
 
And tons and tons of unemployment benefits are expiring at the start of the year. I think 
it’s roughly 16 million people. I assume Biden will extend these. 
 
 
 
Once you start handing out freebies in the form of cash or Obamacare, it's VERY hard to 
yank it back. Look up “entitlement”.  
 
 
So it just seems like our friendly politicians will (have to?) keep on printing more and 
more and MORE dollars as we head into this mess they created. 
 
 
Since 70% of U.S. Dollars are held abroad, foreign governments suffer 
disproportionately when we print ourselves out of our ​STUPID​ problems.  
 
It looks and feels like the U.S. is now taking extreme advantage of foreign nations as it 
relates to the dollar being the global reserve currency.  
 
Our politicians FedEx’d trillions of dollars in 2020 to our Kardashian-loving citizens to 
renovate their homes, buy new cars, boats, and RVs… while exporting most of the cost 
to the rest of the world. 
 
 
With no end in sight to this free money grab bag, if I'm a foreign government, what do I 
do in regards to a reserve currency? 
 
 
This brings me to gold and silver as hedges to this increasing massive abuse of foreign 
nations. 
 

 
Pretty much the entire gold mining complex has hit their lower weekly Bollinger band and 50
week moving average. It’s pretty cool actually and none of the “experts” on social media are
seeing this...
 
 
 
 
*much Much MUch MUCh MUCH more to come for the U.S… What the f%uck are we doing?
China got in and out of this mess in literally a week and a half!

I devoted a recent Superstock Letter to the changing gold miner fundamentals, Berkshire
Hathaway Investment, and sector-wide long term setups in gold and silver miners. Great read.
 
https://docs.google.com/document/d/11wMe3WdaJ7gPlFysF3gwVtKReCkvcN7nE_ek
Nq2zbow/edit?usp=sharing 
DRUGS

Given the political egos involved, the drug lobbyists, and the tens of billions of profits pouring
into the drug companies, the government will be pushing the heck out of vaccines and drugs in
2021. If places like Florida were to reach herd immunity, there’s NO WAY the government,
media, and drug companies would ever recognize that fact.

It’s VERY easy to inflate Covid deaths.

https://alachuachronicle.com/death-certificate-review-raises-questions-about-official-number-of-
covid-19-deaths/

The financial and political ego sunk costs are far too high now. You’re gonna be pressured to
get your vaccine shot AND booster shot EVERY year for the rest of your life. Ka-Ching!

I don’t know about you but I’ve had a light case of Covid once and the flu several times. With the
flu, I literally thought I wouldn’t make it through the night on two occasions. Have I ever gotten a
flu shot? No. Will I get the Covid vaccine? I guess that depends on whether Carnival requires it
to board. Doh!

My billion dollar idea is to hire hundreds of aspiring models with Covid. Then opening kissing
booths all over the country. I don’t know about you, but I’d much rather go to the Covid kissing
booth than get a vaccine shot. The side effects are much more pleasant.
I honestly haven’t done too much research into the drug companies, but we’re seeing some nice
bases in the sector, especially in the generics space. Historically, this is a VERY defensive
sector to hide in. So far, the opioid settlements have been a light slap on the wrist, but I’m not a
legal expert…
The old Mylan Labs

*Note- The generic drug ETF GNRX apparently was liquidated :) :) :) :) :)

GUNS

If interested, here's my recent letter I sent out about the surge in the gun industry and SWBI
specifically. TONS of new gun buyers should mean lots of business for years to come.

SWBI LETTER
https://docs.google.com/document/d/1eki0Km92Nrw_pxpPOmNlXGWKAzCZhRxwoT3tjUc3LDA
/edit?usp=sharing
"PRINT TO PROSPERITY" 

 
 
 
 
 
The current argument is that the U.S. will keep on printing and printing and printing 
which inevitably will shoot the market higher and higher. 
 
Maybe. I’m no expert. 
 
 
 
 
But Greenspan printed a ​TON​ in '99 and early 2000 because of the upcoming Y2K bug 
(almost as deadly as Covid by the way).  
 
 
 

https://www.google.com/amp/s/www.wired.com/1999/12/fed-stockpiles-cash-for-y2k/amp

The NASDAQ peaked a few months after in March of 2000 and subsequently fell 84% 
(yes, 84% due to bloated valuations) over 2 years. 
JAPAN
Japan had a series of record-setting stimulus packages in ‘98 and ‘99.

I believe this was the last one (note these are 1999 dollars in a smaller country)-

https://www.latimes.com/archives/la-xpm-1999-nov-11-fi-32204-story.html

 
 
 
 
 
 
 
 
 
What happened in the 3 years after the stimulus? 
DOH!
 
 

A good Ken Fisher video on stimulus:

https://www.youtube.com/watch?v=N4p9909JYKU&feature=youtu.be&ab_cha
nnel=FisherInvestments

 
 
 
 
 
 
VENEZUELA 
 
Could our market follow Venezuela’s from a few years ago?  
 
Sure, why not? Their stock market surged while their country burned to the ground. 
Just buy call options :) 

 
 

INTEREST RATES
Linked to the printing press, keep a very close eye on rates. If rates start inching up, money will
flow from equities into treasuries and bonds.
KEY TAKEAWAYS

OK everyone, as I said earlier, I think 2021 will be the year of drugs, gold, guns, and books:)

As a matter of fact, Jerry Seinfeld just released a good one. Look it up.

These 2 links should get you started-

https://twitter.com/ShaneAParrish/status/1336485711957127171

https://twitter.com/SJosephBurns/status/133634078321405542
FAVORITE TWEETS OF 2020
Here are some of my favorite tweets of 2020:

I hated him.
Now I love him.
By far the #1 “tweet” of 2020.

https://www.youtube.com/watch?v=iaccTxk7NQs&ab_channel=JoelD
 
  
 
 
 
 
 
 
 

 
 
 
 

 
 
 
 
 

 
 
 
The only real test of intelligence is if you get what you want out of life”.-@naval 
 
 
 
 
 
 
 
 
 
 
 

That’s it for now. Have a very Merry Christmas everyone!

Cheers,

Jesse