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Politicians Loading Up on One U.S. Energy Stock

Senator Ted Cruz, Bill Haggerty of Tennessee, Congressmen David Price, Patrick Fallon, Brian Babin, August Pfluger, Tom Malinowski, Pete Sessions… Both the GOP and the Dems are loading up on one stock.

Why? That’s the most interesting part.

Hello Stock Traders,

Navigating the vast ocean of the stock market can feel daunting, especially when countless options blur into an overwhelming haze. Even within specific sectors, narrowing down choices can be a hair-raising affair. But what if you could distill that vastness into three exceptional companies, positioned to thrive in the promising landscape of 2024?

For me, three names rise above the rest, not just through their impressive track records, but also because they embody a powerful principle: the virtuous cycle. These are companies that haven’t merely grown market share and fueled returns; they’ve built ecosystems, fostering a symbiosis that strengthens itself with each turn of the wheel.

Let’s step into the world of these remarkable players:

1. Amazon: Beyond E-Commerce, a Profitable Powerhouse

While everyone recognizes Amazon as the e-commerce behemoth, its true strength lies beyond the familiar orange boxes. Hidden beneath the surface are revenue streams like subscriptions and advertising, generating tens of billions with impressive margins. And then there’s the crown jewel: Amazon Web Services (AWS). This undisputed leader in cloud computing remains the engine driving most of Amazon’s operating income, even amidst increasing competition.

But 2023 showcased more than just resilience. Amazon returned to profitability, boasting a $20 billion net income compared to a $3 billion loss in the same period a year ago. This was largely fueled by slowing expense growth and a revitalized e-commerce and cloud computing sector. Investors took notice, sending the stock soaring by 85% in 2023.

Despite a seemingly high P/E ratio, it’s close to historical lows. With both core businesses showing renewed vigor and a track record of strategic foresight, Amazon is well-positioned for continued growth in 2024.

2. MercadoLibre: Building an Empire across Latin America

Not as familiar a name, MercadoLibre holds the distinction of being the father of e-commerce in Latin America. Following a similar path to Amazon, it has created a self-reinforcing ecosystem that strengthens with each turn of the wheel. Recognizing the region’s cash-based society, MercadoLibre built Mercado Pago, a fintech solution revolutionizing online purchases. This venture quickly blossomed into the leading fintech player in the region.

Another challenge, limited shipping options, was tackled through Mercado Envios, their own fulfillment and delivery network. These three segments work in tandem, creating a virtuous cycle that propelled MercadoLibre’s revenue by 36% in the first three quarters of 2023. Moreover, it achieved profitability and boasts a P/E ratio comparable to its established competitor, Amazon. As MercadoLibre’s ecosystem continues to flourish across Latin America, its stock price is likely to follow suit in 2024 and beyond.

3. Shopify: Empowering Dreams, Fueling Growth

In the bustling world of e-commerce platforms, Shopify stands out for its simplicity and expansive ecosystem. This user-friendly platform empowers entrepreneurs of all sizes to build beautiful and functional online stores, even without coding skills. But Shopify’s magic goes beyond accessibility. Its robust ecosystem provides everything from secure payment processing to built-in marketing tools, catering to every aspect of an online business.

Additionally, Shopify Plus caters to high-growth companies, offering advanced features and faster onboarding. And finally, the wise decision to abandon plans for a logistics business lifted a significant financial burden, allowing Shopify to return to profitability in the third quarter of 2023. As a result, the stock price surged by nearly 140%, despite a historically low P/S ratio.

These three companies aren’t just investments; they’re testaments to the power of adaptability, innovation, and strategic foresight in the dynamic e-commerce world. Amazon, MercadoLibre, and Shopify have defied the odds, showcasing resilience and growth potential that make them irresistible options for 2024 investors.

Forget mere survival. These aren’t companies clinging to life; they’re thriving. They’re rewriting the e-commerce landscape, pioneering new frontiers, and leaving competitors in their dust. And wouldn’t you want to be a part of that compelling story?

–James

Up next: Exploring the complexities of stock market predictions, this article delves into the debate surrounding the efficient market hypothesis and the impact of sentiment and human psychology on the S&P 500’s movements.

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When discussing the S&P 500 and the popular opinion on its current bull market, there’s a lot to unpack. I’ve been reading up on various takes in the stock market world, and I stumbled upon a perspective that really got me thinking.

It’s about the efficient market hypothesis, which suggests that the market accurately reflects all available information, making future price moves a function of new information.

This viewpoint essentially implies that chart analysis is pointless, as future market moves depend on predicting future information. The belief is that as long as the fundamental view remains optimistic (no imminent recession), the market should continue its upward trend.

Now, let’s dive into this a bit. The efficient market hypothesis sounds impressive, but in reality, it’s like an elegant theory that falls apart in the practical world. It completely ignores the emotional and sentiment-driven aspects of the market, which are often key players. The idea that one must predict future information to anticipate market moves is a bit mind-boggling. It’s as if we’re expected to have a crystal ball!

Research studies have challenged this theory too. A study by Cutler, Poterba, and Summers in 1988 found that macroeconomic news could only explain about one-fifth of stock market movements. Often, the largest market shifts happen without any major news events. This finding seriously questions the assumption that stock price movements are fully explained by news.

Further studies, like one by Tom Walker and another in 2008, also struggled to find a strong link between significant news events and stock market reactions. These studies suggest that even if you had news in advance, it’s still a gamble to predict market direction based on that information alone.

Take, for example, October 13, 2022. The market was expected to plummet following a hotter-than-expected CPI report. Instead, it rallied.

This kind of scenario, where the market moves contrary to what ‘future information’ might suggest, is not uncommon. It highlights the unpredictability and complexity of market dynamics.

Now, onto my personal journey. I have a background in economics and accounting, and even law and taxation. I used to believe in a fundamental, mechanical approach to the market. But that approach often left me no better than the average investor.

It was only when I began to understand and appreciate market psychology that things started to make more sense. I realized that the Efficient Market Hypothesis, with its disregard for human sentiment, was quite flawed.

Let’s address the dismissal of charts in market analysis. The idea that charts are unhelpful couldn’t be further from the truth in my experience. While fundamental narratives can mislead, chart analysis has provided me with much more accurate market insights.

For instance, chart analysis helped me anticipate significant rallies and downturns in the S&P 500, which were based on reading market sentiment rather than economic forecasts or news events.

In conclusion, I hope to offer a fresh perspective on how to view the markets. Moving away from a strictly fundamental analysis to considering market sentiment can be enlightening. It’s about recognizing that the stock market is not a machine that can be predicted purely on economic indicators or news.

It’s a complex system influenced by a multitude of factors, including human psychology and sentiment. Understanding this can lead to a more nuanced and potentially successful approach to market analysis. 

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