| By Grant Wasylik, analyst, Palm Beach Daily While zombies are most commonly found in horror, fantasy, and voodoo stories, you can also find them in the stock market. A “zombie” company is one that needs a bailout… or only has enough funds to service the interest on its loans, but not the debt itself. COVID-19 has created a new type of zombie… | Recommended Link | | Silicon Valley guru Jeff Brown: "The first trillionaires will come from this" Is it possible for a lone investor to become a trillionaire? According to Silicon Valley experts… including a billionaire "Shark" from the popular business show… The answer is yes! All it takes is the right opportunity. And the new device you see above is expected to grow into a $15.7 trillion market. Better yet, only three companies dominate this technology. You can get in now for around $226. | | | -- | Now, we’re talking entire industries instead of individual companies. Airlines, department stores, hotels, resorts and casinos, and restaurants could be mortally wounded by the coronavirus pandemic. Many need massive bailouts or will go bankrupt and cost their investors millions of dollars in losses. J.Crew… J.C. Penney… Modell’s Sporting Goods… Neiman Marcus… Pier 1… They’re just a few of many retailers to recently file for bankruptcy. Then there’s hotel occupancy rates. They’ve gone down as much as 70% during the outbreak. And then there’s airline traffic. From April to May 2019, the TSA averaged 2.4 million airport screenings per day. Over the same span this year, the average is down to 178,000 – a stunning 93% drop. Here’s why I’m telling you this… Since its March 23 bottom… the market has rallied more than 30%. But even with the bounce back, certain industries are still down 40–70% this year. They might be the “walking dead” for some time. So in today’s essay, I’ll tell you where these industries are lurking… and more importantly, how to avoid them. | Recommended Link | | Your Future Depends on This Black Box America's future lies in this black box you see here. Americans have waited over 3 years for the technology inside this box. Today, it's built and perfected by a tiny $8 company with over 124 patents. And this company could net you a six-figure windfall, as this technology goes mainstream. For full details on this opportunity… | | | -- | New Normal All 50 states are reopening. But the floodgates aren’t yet. Many sectors have heavy restrictions in place and are operating at 25% or 50% capacity. And even when states fully reopen, social distancing protocols will likely still be in place. Sure, things will bounce back. But how long will it take? People can’t rush back out in droves, nor do many want to. There’s still a higher risk for elderly folks – and those with preexisting health conditions – to catch COVID-19. Even if you’re younger and healthy, when will you be ready to attend a ball game, go to the movies, or book a flight? The fact is, no one knows. In fact, several recent earnings calls paint a picture of years, not months, to reach regularity… We do not expect things to return to where they were at any time soon. – Denny’s CEO, John Miller Traffic levels will not be back to 100%. I believe it’s three full years before we return to the traffic levels that we had just in 2019, and then probably another two before we begin to return to the growth rates that we used to have. – Boeing CEO, Dave Calhoun 2020 is a wasted year. 2021 will be a transition year. Then you can start the rebuilding in earnest in 2022 forward. – Norwegian Cruise Line CEO, Frank Del Rio Now, even if you don’t own airline, cruise line, or restaurant stocks… you should pay close attention to what I have to say. You see, many zombie industries are tucked away in exchange-traded funds (ETFs). Recognized for their flexibility, ETFs have been highly popular with investors. They have outpaced mutual funds inflows nine of the last 10 years. ETFs even have a higher adoption rate than social media, e-commerce sales, and industrial robots over the last decade. If you have a brokerage account, you likely have exposure to ETFs. And many of them are loaded up on these industries. So I decided to do some zombie-hunting in ETF land. I reached out to a colleague who’s one of the world’s top ETF experts… | Recommended Link | He set out to make $70,000 live on camera… What happened next left us speechless… Did you catch this interview with Market Wizard Larry Benedict? Keep in mind: This guy was named by Barron's as a top 1% hedge fund manager 3 separate times… generated $274 million in bottom-line profit over an 8-year period… and was featured in the famous book series Market Wizards, right after the chapter on billionaire Ray Dalio. There's very little left for Larry to achieve in the financial space… Yet, he still put his entire reputation on the line… He wanted to challenge himself. So he attempted to generate $70,000 or more in a single trading day. If he won, he said he'd give all of the money – every penny – to a local charity. If he lost, we agreed to show that, too. | | | -- | Meet the Real ETF Zombies Mike Venuto is the CIO of Toroso Investments. His firm manages a handful of active ETFs and has over $2 billion in assets under management and advisement. Mike’s been named a “Top 10 ETF All Star.” And he’s the brains behind an innovative “ETF Think Tank.” He and his team crunch a lot of ETF data. They singled out 25 zombie industries, including airports, gambling, luxury goods, office real estate investment trusts (REITs), and travel services. In terms of large-, mid-, and small-cap ETFs, zombie exposures are 5%, 15%, and 13%, respectively. So if you own a large-cap ETF, like the SPDR S&P 500 ETF Trust (SPY), your zombie exposure is likely about 5%. And if you own a mid- or small-cap ETF, like the Vanguard Mid-Cap ETF (VO) or iShares Russell 2000 ETF (IWM), your zombie exposure is probably between 10% and 15%. That’s a good rule of thumb to start with. But Mike’s team took it a step further by looking at all 1,375 equity ETFs and whittling the list down to 10 with some of the highest zombie exposure… ETF | Zombie % | | iShares Mortgage Real Estate Capped ETF (REM) | 97.7 | | U.S. Global Jets ETF (JETS) | 87.3 | | SPDR Dow Jones International Real Estate ETF (RWX) | 75.9 | | Vanguard Real Estate ETF (VNQ) | 61.7 | | Invesco Dynamic Leisure and Entertainment ETF (PEJ) | 59.2 | | Global X SuperDividend ETF (SDIV) | 31.3 | | Invesco KBW High Dividend Yield Financial ETF (KBWD) | 30.6 | | VanEck Vectors Vietnam ETF (VNM) | 30.3 | | Consumer Discretionary Select Sector SPDR Fund (XLY) | 30.2 | | SPDR S&P Retail ETF (XRT) | 28.4 | These 10 ETFs have an average zombie exposure of 53.3%, hurting their year-to-date performance. They’re down an average of 31%. Pay close attention to ETFs with “real estate” or “REIT,” “consumer,” “retail,” “mid” or “small,” or “value” in their names. They’re loaded with zombies. So you may want to avoid them for now. Regards, Grant Wasylik
Analyst, Palm Beach Daily P.S. If you want to avoid losing money, then stay away from zombie industries like airlines, restaurants, and retailers for now. They’re the walking dead. Instead, the big money will flow into tech stocks in the post-COVID-19 age. In fact, Daily editor Teeka Tiwari has identified one cutting-edge tech that’s helping in the fight against the pandemic. He calls it his No. 1 investment of the decade. Click here to learn more…
Like what you’re reading? Send us your thoughts by clicking here. IN CASE YOU MISSED IT… A stock market crash does NOT have to mean financial instability No one wants to experience the devastating effects of a stock market crash… But when bad things happen… There are people who prosper… And you could be one of them. Millionaire trader Jeff Clark is known for saying “2008 was one of the best years of my career.” Because the fact is – if you can see a crash coming early enough – you could make tens of thousands of dollars, over and over again, as it transpires. He knows because he’s done it. Get the full story about his unique strategy here. 
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