By Konstantin Ogurchenkov, analyst, Casey Research
If you listen to the mainstream media, this holiday season is set to be a tough one.
We’ve got dire warnings to buy gifts well in advance…
Inflation is running rampant… sending prices of all goods up…
And we’re all busy trying to get our families together (some of us for the first time in nearly two years).
Well, the mainstream might be right about supply chain troubles… but what they won’t tell you is how to play all of this to ensure your (and your family’s) financial future.
Fortunately, we’ve got the answer.
If this is your first time reading the Dispatch, welcome. If you’ve been here before, welcome back.
At the Dispatch, we have two goals:
To introduce you to the most important investing themes of the day, and
To show you how to profit from them.
We do this by showcasing ideas from our in-house investing experts: Dave Forest and John Pangere. And from the founder of our business, Doug Casey.
The holiday season is busy for all of us.
We host parties, buy more food, drinks, and gifts. After all, we want to make great memories…
Thanksgiving quickly rolls into Christmas, and the shopping spree is non-stop until year-end.
An average family spends almost $1,500 on the holiday joy during these two months. This number is almost back to the pre-COVID level of 2019, estimated by the Deloitte Retail Survey.
Yet, this time it won’t be as easy as 2019…
Customers may be ready to buy stuff. However, the supply chain isn’t.
Shipment delays… a shortage of raw goods… a weak labor force… and the rising cost of commodities are taking a toll.
In fact, major supply chains are already facing high demand and putting limits on sales.
Publix (with 1,325 stores across the U.S.) put a limit on sales during the holidays. And not only for obvious holiday goods, but also everyday items like toilet paper.
The shipment chain is also in trouble.
For instance, major shipping company FedEx faced a labor force shortage in the third quarter of this year (ending in August, way before the holiday season). During the summer, FedEx reported higher costs of running the business and cut its earnings outlook for the entire year.
I doubt it has solved the problem since then.
Another major problem is the high fuel cost. Energy prices are on the rise.
They had reached a critical point when President Biden announced a release of oil from strategic reserves last week to support the strong holiday demand.
As a core of the economy, high energy costs will have a drastic effect on the cost of… pretty much everything.
We saw 6.2% inflation in October. I doubt it will be any lower by the year-end.
These holidays will be tough. Retail, services, and other holiday-related firms may face challenges.
As an investor, I would bet on other sectors that can benefit from the rising prices of commodities.
Betting on Winners
I see big potential for gains at the bottom of the supply chain.
Since the pandemic turmoil, raw material prices have been on the rise.
Softs (sugar, coffee, etc.)
These are essential parts of our everyday life and the reason for rising inflation. Higher prices of raw goods lifted costs of shelf items.
But instead of vilifying the above like the mainstream media… we can profit.
The chart below shows a high rise in commodities… and we think that will continue as we go deeper into the holiday season.
The Bloomberg Commodity Index tracks the major commodities, while the iPath Bloomberg Commodity Index Total Return ETN (DJP) tracks the index.
You may be familiar with exchange-traded funds (ETFs), but not with exchange-traded notes (ETNs).
Both track the underlying index, stock, or commodity. Yet, they are not the same:
An ETN is an unsecured debt instrument issued by a bank. It trades with a single ticker like an ETF or stock.
ETNs have better tracking records than ETFs… but they also carry credit risk. If the bank that issues the ETN goes bankrupt, so does the ETN.
Since ETNs don’t hold stocks like an ETF does, they are taxed at a long-term capital gains rate… unlike ETFs, which might be subject to capital gains taxes every year.
Overall, this ETN is a simple way to play the rise in prices – and it will keep you on the right side of securing your wealth as supply and inflation issues play out.
Analyst, Casey Research
P.S. At Casey Research, we prefer picking individual stocks to take advantage of the trends we see. And right now, Dave Forest, who I’ve worked with for years, is sounding the alarm on the next stage of the global supply crisis.
He says 95% of the global supply of a crucial tech component is about to vanish from the market. But he’s discovered a unique way to play the supply shock for huge gains.
His readers have seen gains of 252%, 825%, and even 1,019%. But the biggest wins are yet to come… if you get in before December 31.
Learn more about how to claim free shares in a potential 10-bagger right here.