ERShares In The News

Joel Shulman joins Maria Bartiromo to discuss performance YTD on Entrepreneurial stocks and notes that the top 20 firms in the Russell 1000 are all entrepreneurial companies. He further mentions that Entrepreneurial HealthCare and Technology firms have performed exceptionally well and believes COVID will only continue this trend going forward. Finally, he mentions that 2020 has been a stock pickers market and that many individual investors have generated better than average performance.

Joel Shulman discusses the strong performance of technology companies and notes that the top performers have been primarily led by Entrepreneurs. US large-cap Entrepreneurs have appreciated more than 15% YTD and a subset of these companies focused on Health Care and Technology have generated above 52%. He noted how the YTD highs of Market Indices of Feb 19 no longer acts as a threshold since many entrepreneurial companies have exceeded Feb 19 by a wide margin. He remains optimistic that Entrepreneurial companies will continue to provide strong performance in the months and years to follow.

Joel Shulman discussed questions surrounding the latest Market rally and noted that for many publicly-traded entrepreneurial companies (e.g. Amazon, Facebook, Netflix, Regeneron), the rally has never stopped. He addressed distinct winners and losers in YTD performance and believes the markets have been pursuing a new paradigm of investing with Health Care and Technology leading the way for the future. He cited examples of how passive indices, that are forced to hold unpopular sectors (e.g. energy, transportation, manufacturing, and financials) have underperformed many active and individual investors. The latter group has beaten passive indices simply applying common sense. They have been avoiding airlines, cruise companies, hotels, and restaurant companies and replacing them with Amazon, Facebook, etc. He ends his comments with a reminder that we have never before witnessed a Federal infusion of $3+ trillion into our Markets and that, in the short term, this provides a floor to downside risk and a potential boost to US Small Cap stocks. At the same time he reminds viewers that we are currently very close to February highs and vulnerable to additional shocks to the system (e.g. problems with China, increases in COVID infections, Fed spending ending).

Joel Shulman discusses publicly-traded Entrepreneurial companies and notes that YTD the US Large-Cap ETF (NYSE Ticker: ENTR) has appreciated approximately 6% while the S&P 500 has declined -12%. He cites evidence that Entrepreneurial companies go well beyond familiar names such as Amazon, Zoom, and Netflix and cites examples Regeneron, Masimo, and Seattle Genetics. The latter are just a few of the Entrepreneurial holdings that have performed well YTD, despite overall problems in the global marketplace. Moreover, he discusses how traditionally it is the Entrepreneurial companies that help lead our economy through difficult times and does not see this changing anytime soon.

Joel Shulman discusses the historic drop in oil prices on today's Fox Business with Charles Payne. He describes how plummeting prices will accelerate problems with oil companies by reducing issuer bond ratings to junk levels and increasing impending defaults. Oil company dividend yields approaching 50% are a trap, he says, since they will be forced to reduce or eliminate dividend payments due to negative cash flow. Further, companies receiving governmental support may be prevented from paying dividends, regardless. Shulman also discusses buying opportunities among stocks who are ripe for a short squeeze and mentions Entrepreneurial-based Wayfair as an example (+12% today). The online retailer has a 40% short position relative to free float (shares available to investors) and a short cover that exceeds 6 days (days it would take shorts to buy back their position). He notes that any unexpected good news from the company (such as work from home buyers adding furniture to a home office) may result in short sellers needing to buy back their stock. This would exacerbate the problems for short sellers since they would cause a further run-up in the stock price as they would need to buy (to cover their short position) at the same time regular investors buy the stock for good news. He ends his comments by mentioning how Entrepreneurial companies have performed well YTD despite the tumult in the marketplace (Entrepreneur US Large Cap--ENTR +4% YTD). He mentions how Entrepreneurial companies, such as Regeneron, Square, Gilead Sciences, Blackrock, etc. often emerge during difficult economic times. Entrepreneurs have traditionally capitalized on opportunistic market conditions and learn how to launch new ventures with limited resources. Great companies formed during market recessions in 2008, 2001, 1987 and even the Great Depression in the 1930s. We can only surmise that many Entrepreneurs are now building terrific companies that in the future, will reflect back on today.

Joel Shulman discusses publicly-traded Entrepreneurial companies such as Netflix, Amazon and Zoom Video (represented in Large Cap ETF-NYSE:ENTR). He notes how entrepreneurial leaders often pivot better (than other executives) during difficult times and adapt quickly to unusual circumstances. Entrepreneurs are also adept at maintaining strong balance sheets, investing in the future, and keeping their talent focused and motivated. He provides evidence that many of the best-performing stocks YTD are entrepreneurial companies.

Joel Shulman discusses the research that his firm produced discussing market bottoms and subsequent performance. He also discusses the advantages of avoiding passive indices in these markets and investing with common sense. Passive indices are forced to buy a basket of securities that will include a variety of energy, airline, tourism and restaurant stocks that savvy investors would otherwise avoid in these markets. Further, he notes that entrepreneurs often perform well in difficult markets and suggests investors seek out Entrepreneur-led companies for consideration.

Early this morning Joel Shulman provided an overview of the markets and suggested that we need a fiscal policy stimulus instead of a monetary policy. Using an in-house analysis, he noted that, historically, Bear Markets reach bottom within a few weeks after the first 20% drop signal (from prior peak) and that this Bear Market was the fastest on record (22 days from peak). He suggested that individuals should start buying now as historically, markets rise 53%, 74%, and 83% in the 1, 2, and 3 year time periods after reaching bottom. He concluded with comments that the Chinese Markets have over 900 public companies (out of 7,500) that have already appreciated more than 5% since our US Markets started declining on February 19. He reiterated several times that investors should not panic and use this time to invest in the Markets now.

Joel Shulman discusses volatility in the marketplace and compares to other historical periods experiencing large swings in positive and negative market days. He mentions that volatility is currently high (3 days this week with either +3% movement or -3% drop), though notes it is nothing like 2008. Over the past 50 years, there have only been 13 weeks like the current one, but 9 of those weeks occurred in 2008. In the other years when we had similar volatility, the markets generally ended the year at a positive level and Dr. Shulman believes this will likely continue again this year.

Joel Shulman, Founder/CIO of EntreprenurShares discusses the effect of Super Tuesday and how it is impacting Markets. He notes that the strength of certain political candidates, such as Sanders and Warren, have negatively affected the Markets, while others have had neutral or positive effects. He also notes that China’s economy is returning to full strength and believes the effect of the Coronavirus will have, at most, a one or two-quarter influence. He remains confident that given low-interest rates, the strength of entrepreneurial innovation and employment that year-end stock prices will be higher.