U.S. Stocks Climb Higher

Catch Up Quick

• Economists say economy could grow at an annual rate of 30% in CY 2020 Q4

• The Conference Board's consumer confidence index rose ~14% in September

• Amazon reveals contactless palm-recognition check out in Seattle stores

• GM reiterates that it has not finalized its $2B minority investment in Nikola

• Joe Biden sees a fundraising boom following last night's presidential debate

• Disney said it would lay off about 28K employees at its domestic theme parks

• Steven Mnuchin (U.S. Sec. of Treasury) shows optimism for a new stimulus deal

• New York City's coronavirus positivity rate reached its highest rate since June

• Take our 15 second survey for a chance to win a $50 Amazon Gift Card

• Pending home sales in August skyrocket to record highs

Extended Thought of the Day

• Sometimes, risky investments can be relatively advantageous in risky markets, as the gap between the current volatility and long term volatility for such positions may actually be temporarily smaller than that of safer assets

• As the race for a coronavirus vaccine furthers, now might be an opportune time to reexamine industries hit hard by the pandemic that have potential for a quicker rebound, given huge short term potential upside amid a best case recovery

• Hot take: one particular industry of our interest is movie theaters

• Despite significant amount of risk, given reliance on government controlled reopening, among others, there are elements of a theater experience that streaming services can't compete with

• Not to mention, for larger budgeted films, a domestic box office is a much shorter path to recouping investment

• Unlike airlines, resorts, or cruise ships, theaters could recover much faster given they offer a cheap and easily accessible activity in which germ spread could more easily be controlled (disposable plastic cover on seats for each film, etc)

• These elements could very well provide quicker exposure to an economic rebound, once the time comes

• This year, Los Angeles has seen a 40% increase in film permit requests from July to August, potentially revealing Hollywood sentiment as well

• Amongst the crowd, Cinemark ($CNK) might be one to keep on your watch list for consideration

• The company boasts the highest Cash-to-Debt & Current Ratio alongside the lowest Debt-to-EBITDA ratio amongst peers

• $CNK is thus relatively safe from a solvency perspective as it could very well weather an extended crisis

• Furthermore $CNK EV/EBITDA also sits 36% lower than the industry, hinting at potential undervaluation

• Lastly, beaten down stocks with acceptable credit profiles make attractive acquisition targets from upmarket players in and beyond the industry

The Bottom Line

• Paraphrased from The Black Swan (Nassim Taleb): it is not bad strategy to have a portfolio with 90% safe haven assets and 10% highly risky assets— your risk will average out to be moderate while leaving exposure to huge upside volatility unachievable via passive strategy

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