That's a lot of money. They claim the forward p/e of the 500 companies that make up the S&P 500 is only 20 - based on growth expectations, tax breaks, etc. That would be $1 TRILLION in earnings for just 500 companies and the S&P 500 is about 1/3 of the total US Markets so $60Tn and $3Tn in earnings for our mighty US stocks is very nice.
Why then, do these companies pay just $341Bn in taxes? That's only 11%. Why is it the top priority of the Trump Administration to LOWER Corporate Tax Rates so they can pay less and you can pay more. Why are we providing stimulus to Corporations, why are we taking away their regulations when they are underpaying their taxes by 66%?
So congratulations to the S&P 500 at 2,300, crossing the $20Tn threshold - I guess the average American would be doing very well too - if they only paid an 11% tax break, got massive stimulus packages, 0% interest loans and were bailed out by the Government whenever they screwed up. Big Government is a bad, bad thing - unless it's your Sugar Daddy. Sorry kids, Uncle Sam already has 500 dependent children he's taking good care of, he can't be bothered with 320M of you!
Well, you can't fight the tide (believe me, we've tried) so you may as well join the party and BUYBUYBUY the companies that benefit from our Nation's Generosity and, best of all, if we hold them for a year - we only get taxed 20% on those gains (soon to be 15% again - thanks Uncle Donald).
What? You are not rich enough to invest in equities? Well, go away then - didn't you hear, we won the election - the country decided and now it's PARTY TIME for the Top 1%! Soon the Trump administration will begin selling roads and bridges and water systems to private companies who will "tax" the living crap out of you with tolls and fees so they can "recover their investment" in the roads and bridges that were built with the taxes you (not they) paid. It's friggin' BRILLIANT!
So stop being a lazy taker and get rich so you too can be the one taking the tolls instead of paying the tolls. We had our Live Trading Seminar in Las Vegas yesterday and we added Secretary Rex Tillerson's Exxon (NYSE:XOM) to our Long-Term Portfolio along with Qualcom (NASDAQ:QCOM) and Supervalu (NYSE:SVU) and also added Cognizant Technology (NASDAQ:CTSH) to our Butterfly Portfolio.
Of the 4, XOM is the most heavily traded so I don't mind telling you how our Members are playing it, our Top Trade Idea was:
- Sell 5 XOM 2019 $80 puts for $8.50 ($4,250)
- Buy 10 XOM 2019 $70 calls for $15.20 ($15,200)
- Sell 10 XOM 2019 $85 calls for $6.25 ($6,250)
Net on this $15,000 spread is $4,700 so potential upside is $11,300 (240%) and ToS says $3,500 in margin so it's pretty efficient.
See how the rich get richer? We don't care how much inflation the administration causes or how high they drive the price of oil to enrich their buddies because making 240% returns on cash over less than 2 years will buy us a lot of gas. XOM is one of the companies that should benefit from tax reductions. Last year, mean old President Obama made them pay $5.4Bn on $22Bn in earnings - an outrageous 20%, leaving them with just over $16Bn in profits.
Now that President Trump is in charge, the oil XOM sells has already jumped 50% in price and much of that drops straight to XOM's bottom line because it's the exact same oil from the exact same wells produced by the exact same number of workers - they are just charging you a lot more for it! Isn't that great?
Speaking of oil, I apologize that yesterday morning's call to short Oil Futures (/CL) at $53.50 only yielded gains of $700 per contract and not the $1,000 per contract we were hoping for. Fortunately, oil is climbing back to $53.50 this morning and we can give shorting another chance - still looking for $52.50 or lower at some point this week.
As you can see from the chart, Oil Futures (/CL) are back to $53.40 and we're targeting $52.50 with our short.
The XOM trade above will make $11,300 on each set. All XOM has to do is go up $2 in two years - we're pretty confident in that one with Trump in charge and his Secretary of State being XOM's former CEO. I don't want to say the fix is in but...
Another fun trade we're watching is Silver (/SI), which we like long over the $18 line with tight stops below. We're looking for $19, which would be $5,000 per contract gained there. Silver Wheaton (NYSE:SLW) is our Trade of the Year for 2017 on the premise of rising silver prices. Silver still has a long way to go (and don't even ask how much we made on those futures!).
That SLW trade was a spread with a net cash outlay of $350 and we promised at least a double on that one but we missed by a mile as it's already net $3,485, just shy of a 900% return on cash in less than two months. Still, the potential for the spread is $7,500 - so it can still double from here. Even the scraps our Members leave behind are better than other people's best ideas!
So, S&P $20Tn, $25Tn, $30Tn - bring it on! We can always roll our cash into more and more inflationary bets and if we're making 900% in two months - I'm sure we'll stay ahead of inflation - at least until the Dollar completely collapses.
Disclosure: I am/we are long XOM, CTSH, SLW, SCO, TZA, SDS, SQQQ, SVU, AAPL, QCOM, GILD.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: Positions as indicated but subject to RAPIDLY change (currently mainly cash and an otherwise bearish mix of long and short positions - see previous posts for other trade ideas). Positions mentioned here have been previously discussed at http://www.Philstockworld.com - a Membership site teaching winning stock, options & futures trading, portfolio management skills and income-producing strategies to investors like you.