The UNTHINKABLE is About to Happen to the Dollar (& 4 Stocks Built to Survive It)

Big tech stocks are surging again, but there's a lot still happening behind the scenes that could change everything for this market. Joining us today is Gavin Magor with Weiss Ratings. Gavin, so glad to have you on the show today. This is a really important topic and a different perspective for some investors to consider right now. Again, we have talked a lot on the channel this week about a rebound in AI. We've seen Nvidia do really well. We've seen a lot of these big tech stocks do well. But that fear piece behind the curtains of what's happening with the economy, what's happening with some of these geopolitical issues with the US dollar that investors should still be paying attention to and not get distracted by all of the big news and headlines happening in AI. We're going to dive into a big discussion today, Gavin, and I know you have four specific stocks to share with our viewers today that are important perspective to keep in mind for some diversity in your portfolio. But let's get started off with where you see the market and really the economy right now. >> Frankly, I think everybody should be a little scared. It it really is it is at that point and we've heard over the last couple of years predictions of a an upcoming collapse in the either the economy or the stock market or both. And the reality is all it's done is to go up. Yeah, I mean there's of course there's been months when there's been a little bit of a a hesitation or a move down depending on what's going on in the in the news. Um and that can happen all in the same day as we've noticed. So we have to be really flexible and look sort a little bit further back and say hey what are we really seeing overall? And the truth is that we we cannot avoid the the the growth towards the tech economy and the how important that's going to be moving forward. And this is going to make a tremendous difference to our lives. Good or bad, it's just going to make a difference. Yet at the same time, we're we are also in a position where we're becoming unaffordable as a as a country. I don't know if you recall, but back in the day, you you couldn't get a mortgage for you weren't expected to buy more than three times your average salary, right? Well, the median house price now is over 410,000. The median salary is 65,000. You're not going to get a mortgage for six times your salary. So, there is a massive problem out there that it's not caused by the boomers. I'm a boomer for goodness sake. I'm not that bad. Um but the the truth of it is that it is a real problem because it is unaffordable for the for younger people or those who who are older but are still trying to purchase a home. So the reality there means that there are is a tremendous gap in value. The dollar doesn't go as far as it used to. It it simply doesn't. We're trying to inflate our way out of the debt that we have in this country. I mean, $40 trillion. I I don't know what a trillion dollars looks like. Okay? I I I struggled when it got to a billion. I'm going what's a billion dollars look like, you know? But a trillion, that's that's something you can't even quant. You just can't see it. 40 trillion. It may as well be a 140 trillion. Probably will be soon. These numbers are scary to think about, but it's so easy for investors, I feel like, right now, to forget about these numbers. We all know that the the national debt is looming. We all feel the inflationary prices as you shop at the grocery store, and you can probably feel those home price issues in your own rental or, you know, mortgage payments that you are dealing with out there. So, these are things that everyone knows as a retail investor are out there. And yet, as an investor who's focused on growth in the market, you see all the tremendous growth, the growth outlooks for this big tech sector, and you go, "Well, things are good. The market's doing well. The the S&P 500 is continuing to stay around near all-time highs." Again, one of my favorite things about Market Beat as we talked to people who have lots of different perspectives, and we just had an analyst on this week who was predicting an even larger rally in the S&P 500 later on this year, that they expect the market to rally even further later on this year. And so yes, there is that bull case for the market and we talk so much about the market, but these other economic factors can't be ignored. So let's dive into that a little bit deeper. When it comes to all of these factors that you were just talking about, the US dollar is another one of those and that the value of the dollar. Um there's been a lot of talks about that in the economy and what that could mean for, you know, Americans and for the market moving forward. How are these all tied together when you talk about these broader economic pieces and fears that are out there? How could that end up impacting the market down the road? >> I think the thing to remember is that there are a lot of people who are suffering really suffering who who are not in investing. If you are lucky enough to be investing, you might be led by talk about the S&P 500 rising and you can see that and it does go up. However, if you segregate out the MAG 7 and you start looking at the rest of the S&P, the performance is not the same. And to be misled by headline performance numbers can sometimes uh be unhelpful for you because let's let's be realistic. In reality, if you had been offered 30 years ago the chance to invest your your your money and earn 7% every year and guaranteed you would have taken that like a shot. You would have said okay guaranteed 7% roll that in compound it I'm a rich man when I retire. Now we're looking at a position where first of all 7% doesn't seem all that much because we've certainly become spoiled by seeing enormous jumps and gains in in in stock prices. A lot of it has been technology-led but we we must not be completely led by technology. There are other areas that are uh much safer to be in and are much more protected. This this and this is the thing you've got a lot of volatility around you see where as soon as you start reading about the average person not being happy with having a data center next to them but they need the data to do to do their own work or or everything else. These things are are real. So there going to be really price sensitive going to be a lot of volatility. But you've also got to look at the more fundamental stocks. So what are what are the stocks that are out there that are are different that are giving you something that is safe from a point of view of that they've got some sort of a moat around them to protect them but but also are going to outperform the market because as we've said the inflationary pressures that we're seeing are destroying the value of the dollar in our pocket. >> Yeah. And that is absolutely impacting uh the wealth that you are working to build in your portfolio in your retirement accounts in these investments that viewers are making right now. That erosion of the value of the dollar is definitely something that everyone needs to be paying attention to. And it also means that safety looks different in the market right now. And I know you have four different stocks for investors to consider right now of what safety actually looks like for having a portfolio that's diversified and protected if some of those major economic factors we talked about really do start to erode away at the growth that we're seeing in the market. This is the way to protect yourself. So, we're going to get into those four names, but I know that you are also diving deep into the research of eroding away at retirement savings and some of the different economic factors, but also those government factors of things that are happening in Washington that are impacting your portfolio that you don't even know about. And I know you and your team at Weiss Ratings have come up with a special report right now that really gets into detail about what is happening behind closed doors and the impact it will have on your portfolio and really most of your investments. It's a fascinating report and if you want to watch what Gavin and his team have to say, you can scan the QR code or click the link we have in the description to take you to that report on Project Pyramid. Again, it's a fascinating concept for investors to pay attention to and it's something that if you own stocks, you should absolutely watch this report that has a really big warning for everyone. So, scan that QR code, click the link in the description, and you can go check out that special report from Gavin and his team and also a special offer to continue learning more from Gavin by signing up for his newsletter. Again, it's a special offer just for viewers today. So, you can find that at the link, too. Okay, Gavin, let's get into your list now. Talking about four ways to really look at safety before we get to that first name. What does safety mean in the market and the economic conditions that we're in today? >> And this is really important to think about because the old idea of a safe investment was built around dividend stocks with big yields sitting in slow boring dynamic dying industries. I mean these were utilities, the telecoms, tobacco even. And the formula was really simple. You just had to find a company that nobody expected to grow. Offered a fat payout to compensate for the lack of the upside and call it a day. That was a that was the that was the uh easy way. Safety meant sacrifice. You gave up growth to get stability. But if you think about it, if the dollar value disappears, that formula's broken. So the companies that are actually providing durable uh ways of improving your your life through the future in this cycle aren't the ones that are standing still. These companies are actually providing you something that's got pricing power that it's going to grow. It's got a structured edge that's going to allow it to grow and even as costs rise around them. If you think about these four companies and you may have heard of uh all of them but they are not the safe stock of the past. These are really looking at the safe stock of the future. So the the first one is Coca-Cola KO. I mean we we have a wise rating of B+ which is a buy. And not surprisingly, this this company's had 64 consecutive years of dividend increases through every recession, every inflation spike, every rate cycle in living memory. Coca-Cola has raised its payout. It It's proof, not promise, that the brand can push prices ahead of its own costs year after year. It's not coasting on that street because Q2 revenue rose 7% to 134.4 4 billion. And the trademark CocaCola brand, it's just posted its quarterly volume growth 17 years. 17 years outside of the pandemic bounce back. It's the strongest it's ever been. Shares are up 31% over the last 12 months and it's sitting just off about 2.6% off the August high at the moment. So KO doesn't need inflation to win. It just wins bigger when inflation comes along. Now, this is a name that a lot of investors might think about when they think about strong and steady stock. And I know you mentioned that the uh safe stocks of the future are less focused on dividend, but Coca-Cola does have a wonderful dividend. Are there other factors about Coca-Cola other than that strong and steady growth in their dividend that make this a safer choice for investors? >> Yes, it's it's about the fact that they are able to increase their prices, frankly, as they desire. a penny increase in in in their price is a tremendous gain overall. Just just think about it. You you go to your supermarket and and you might even see their deal of the month. Buy two, get get one free if you've so you bought 24 cans, you get another 12 cans. You've just wandered out with 36 cans of Coke. But they've just made a fortune just because they they showed you the value and you went, "Oh, I I drink this. I need this now. >> Very true. It's a brand that everybody is familiar with. Um I know another one of our analysts on the show said this is one of the names that he uh started buying for his daughter uh routinely because it's a name that you know it's a brand people connect with and love and it's one that you as a investor you can watch grow over time and and work for you. I want to talk about the returns that Coca-Cola has seen this year and how unusual that might be. I mean, looking at a company that's as uh solid and long-standing as Coca-Cola, seeing 30% returns in one year, is that unusual for this stock? >> I think that looking forward, our predictions are that that this is going to continue for them because the as they are able to make sure that they are not standing still in the products that they offer within their their their brands, they're going to be increasing their their throughput. And as they do that, they they are tremendously good at efficiency and they have it down to a a science and they are simply going to just keep on growing the company by acquisition, making sure that they're dominating their marketplace wherever they see fit, and then they're going to make sure that they are as efficient as possible. And as we all know, AI is going to come into a lot of what they're doing. I'm sure they use AI all the time. And they will be able to produce their their their drinks at an even cheaper price internally that will then simply increase the margins. >> I think that's an important note to talk about with this stock and the others that we're going to get to today. These might be strong, solid, safer investments for people to consider, but these are companies that are also going to be benefiting and changing because of AI because uh while we're not talking about investing in AI stocks today, it's undeniable that AI is going to change every industry and pretty much every stock in the market as well. So, I think that's a great point to consider for Coca-Cola. And for the next stock we want to get to on the list, we've got three others to cover here today. What's the second safer stock investors should be considering right now? This is a company we can all love to hate them uh but we often use them. This is Mastercard. They have a wise rating of uh B minus thereby and and simply billions of times a day somewhere someone is swiping or tapping their Mastercard through the network. Okay. And Mastercard they take a cut out of their dollar and it's not a flat fee. It's a percentage. And that's the whole point. As prices go up, the number on the receipt goes up and Mastercard's take goes is right up. So, I mean, Visa is the same, but from this point of view, this is automatic. There's no repricing decision required, and it's playing out in in real time. Their revenue in Q2 grew 14% to $9.3 billion. So, their adjusted earnings per share, that was $54. it. Shares have closed at a fresh 52- week high August 24th, up 16% in six just six months, and sitting on just less than 1% off that high at the moment. So, they're basically sitting there like the old uh toll booth on the on the uh the roads as somebody sort of leans out of leans out of the cottage window and they're they're grabbing the the money out of the uh travelers uh baskets as they pass by. you you have no choice. You want to use them, you're going to pay. It's And and when I say you're going to pay, you personally are going to pay. And and I think this is something that you probably have noticed since 2020 that a lot of companies have started adding, especially in restaurants, adding a a charge for using a card. And you've also seen that uh gas stations and other places they're adding a fee to it. Now I happened at one stage to have run a small business and we had to pay fees to the credit card agencies and we included those fees within our calculations for profitability and I'm fairly sure they're already included. So those companies that are breaking it out are really trying to just make a point to you of tugging it to your heartstrings and saying you know we're poor, we can't afford this. And true they are ridiculous. um those fees are are charged based on what you're what's going through the throughput and it is excessive but guess what you pay them you have no choice >> it is quite the moat and it is an area of the market that does not seem to be going away there will you know from certain generations and different times throughout the last few decades you'll hear a move to cash and avoid these 3% fees and yet what you're saying is is more trueer it's almost like you have no choice this is the way that everyone pays for everything these days So it does seem like a very strong moat for Mastercard. I want to talk a little bit about the volatility that we have seen in the stock because even the recent increases I would call volatility. We've seen some ups and downs in just the last 90 days with the stock. What's behind some of those moves for a company that has a moat? Just like you said, uh there's a lot of reasons that the stock is going to continue to rise, but why have we seen some of those sharp ups and downs? I I think that whenever there is some sort of talk about some legislative uh effort to curb fees or to change something then there is always going to be a reaction. It only has to be somebody with some sort of a uh a thought paper out there that can affect things. I mean in this information age I'm not it's even beyond the social media age. As soon as somebody says something, and frankly, it doesn't matter who it is. If it gets enough traction out there, people start to think about it as if it's a fact and start to consider the downside of that. I don't think you've seen anybody in a major investment firm who who's held a position in Master going, I think it's time to get out. >> Yeah. And I think when you look at the chart and see when we started to see the forward price action uh in Mastercard, it really came after that end of July earnings report where we saw really strong earnings for again likely a lot of the reasons that you said. I I want to talk about forward growth too. When you look at Mastercard, it's been around for forever. We are seeing growth. What do we see as far as future growth for Mastercard? >> Oh, they're encouraging inflation. I mean, frankly, they they really don't care. They want it. they they want us to be spending as much as they as we possibly can. Now, you've got to look at that as gain in the way that your dollar is also affected by this. So, yes, if inflation grows, the value of your dollar hasn't isn't the same. So, they they might argue that actually they're not growing or you could argue that they're not growing as quickly as they might be. But remember, Mastercard is not just based in the US. they've got a footprint around the world and so they are somewhat uh covered by various ways to protect themselves on than just exposure to the dollar. So, so it's it's not they're not so exposed to the dollar and that really is is is an additional moat for them because no matter what happens to the dollar, they can benefit at the other end. >> And that's another reason they are making your list of safer stocks investors should be considering right now. Let's move on to the third stock on this list. I know you have two more for us today. What's the third company that you are looking at as the safer investment of the future? Wheaton precious metals WPX that's a wise ratings buy at a B minus and Wheaton precious metals doesn't mine they they don't mine a single ounce of gold or silver and that's their edge. They pay miners up front for the right to buy their future production and then they sell the metal at whatever the market price is. So while the miners absorb the the cost of rising labor, energy, and equipment, uh most of their agreements that they've got, and I think they've got something like 42 of them, they pay a straight percentage of the spot metal price. So when gold and silver run, Weeden's revenue runs up with it uncapped. And Q2 was a record across the board, which which is interesting, especially given that it wasn't a peak for gold. So revenue was up 85% to $920 million. So just short of a billion. Net earnings up 86% to 543 million. And they've raised their dividend for the third straight year. So you talked about dividend stocks and how the old ones were dividend stocks and the new ones aren't, but they are. They pay a dividend, too. They've raised their dividend for the third straight year and their stock is up 61% over the last 12 months. and it's just shot up an extra 39% in in in one month as as metal prices started to rise again based on the the idea that uh gold actually had fallen further than expected. >> Right. The growth in gold and and really all metal prices in the last 3 years has been incredible and many investors have taken advantage of that. You've got people who are very much into gold investments themselves and others who've kind of stayed away from that market because of the volatility and the changes. Would you consider Weaten a safe stock or is it more prone to volatility than the other three companies we're talking about on this list simply because of its close tie and connection to the price of gold? >> Only from a point of view of how much money they can make. You know, it's it's a matter I mean, if gold prices collapsed 30%. Then they would only have made $700 million. you know, it's this is a matter of uh profitability, not uh or levels of profitability, not whether they're going to be profitable or not. They are really smart having the opportunity to just buy gold and and and silver. They they've they're in that position, which it would be nice. You you don't you're you're not committed to paying more than the market. Let's talk about having a precious metal stock like this and why that's an important part of that safety piece, especially when we're talking about the value of the dollar and other economic issues. Why is diversifying and making sure that you have at least some kind of investment in this particular market important? >> I think as with anything, you need to have diversification. Although I'm not a gold bug or a silver bug and uh I I know that some some folks on our team are, uh the reality is that having some diversification is always smart. Never never just say, "Hey, I'm just going to invest in uh gold stocks. One of them's going to pay off." I mean, that that's just simply you're just creating a situation where you could do very very well. But o overall it's not it's not a it's not a smart thing not to be diversified and and it doesn't it doesn't necessarily mean by company. This is by nature of your investment. So sure there are people who will literally stack um kilos of gold in their homes. They'll have a stack of coins if they're more um normal. Uh but uh some have kilos. the but the reality is that diversification is key and and gold has a place and and you're probably better off generally in not holding physical gold although there is a very strong argument for having a little bit around. So if you're going to invest in in precious metals think about the nature of your investment. How can you how can you make that in the in the safest way that you believe you can access most easily? >> Okay, diversification is a really good point for this one. Before we get to the last stock on your list, I I want to ask the question about this one in particular because I'd love to hear it's your first time on the show. Your investment theory when it comes to a stock that's already had a big runup like this. A lot of times we'll hear from viewers who look at a chart like Weatens and you see a really large runup in just the last month. is now a time you want to be looking at buying that stock or uh how do you approach stocks that have recently had a really nice runup? >> It's the same thing as in the opposite of uh when when's the best time to take a loss? It's it's now. It's immediately if if you've got if you're offering credit, you don't want to see that loss grow. However, in in these stocks, if you think that this is a company that's growing, the best time to get in is now because if you wait, yes, it it may pull back, in which case you can buy more and dollar cost average. But if if you keep on waiting and that keeps on going up, how much of that stock do you hold? And the answer is zero. So buy if you believe in a stock, buy it. Don't be waiting for it to hit some mythical target that you've set up in your own mind. This comes to a thing that I talk a lot about which is emotional investing. Don't invest emotionally ever. >> Well, thank you for sharing that. Taking the emotional piece out of investing is such a key part. It's also uh definitely plays a role with the excitement of the emotion. Sometimes that emotion is just excitement with the the the uh frenzy going on in the market especially when it comes to some of those AI names. That is why I know the the report that you and your team put out from Weiss Ratings all about Project Pyramid of looking at what is happening behind the scenes behind some of those headlines. What could actually be happening to some of your investments specifically in those rapidly growing headlinebased tech names? This report is essential to to keep that excitement emotion in check too. And I think that that's an important different perspective on the market to consider. So, if you want to check out this special report from Gavin and his team at Weiss Ratings, scan the QR code or click the link in the description to to get some more knowledge from Gavin and his team about what is happening in this current economy, what it could mean for your investments. And of course, you can continue to learn more from Gavin by signing up for his newsletter, too. We have a special offer uh connected to that link that's in the description. Okay, Gavin, you have one more stock for us today. Let's get to this last name to talk about. is an interesting one here because uh I do I do love a good Canadian. Um the Canadians are wonderful people, really smart. They've got uh great beer, beautiful scenery, lovely people, and they've also got a fantastic railway system. So Canadian National Railway, CNI, is is a buy. It's a B minus rating from from Weiss. You may at first glance when you look at the current stock price, it's taken a little bit of a a dip, but think about this. There are exactly two class one railroads in Canada and there will never be a third. Nobody's trying to build the right of way and capital to to build a competing rail network from scratch. So that scarcity is the moat. Nobody else is coming along and it shows up on the income statement every quarter. So in Q2 they their adjusted EPS grew 11% and they raised their fullear guidance the same year that it reported. So, how can they do that? I mean, we've all seen the the cost of fuel going out. But guess what? They're not they're not stupid, these guys. Fuel costs get passed straight through on a published index linked sir charge. So, energy inflation doesn't eat up their margin. It flows through to the customer by formula. Unfortunately, that means that you when you're buying something, it you're paying more anyway. But they are going up. Their shares are up 32% over the last 12 months. They're sitting about 3% off their high that were set on earnings day. You cannot take that infrastructure away. It's simply there now forever and they can write that check. >> I think that's a great argument about there's no one else is building railroads right now. They're not going to see any new competitors entering the market anytime soon. And I that's a very good argument for railroad stocks. I think looking at the four stocks that you have today, I just want to talk about diversity again because you've got four stocks in four completely different areas of the market, but are all safer stocks. And I think when it comes to looking for safety in the market and making sure that your own portfolio is diversified and not only in those big tech names making all the headlines right now, do you want to look at diversity that's well spread out throughout uh different areas of the market? Are these four names all good to own? Should you pick one of your favorites? uh what are your thoughts kind of on on a picture of safety and building that perfect portfolio? >> I mentioned diversity before and this is a real way to diversify within your your safety portfolio if you're going to set up a safety portfolio. Then then these stocks are are great thought starters for those. And if I were buying these these four stocks now, I would be buying these four stocks, not just one of them, not just two of them. I would be looking to diversify because as we've seen before, anything can happen in it at any given time. And even though in the long term I expect all of these stocks to really do exceptionally well and to be inflationproof, you still need to think about that all your eggs in one basket thing. It's not it's not a good idea to do that. No matter how much you like Nvidia, do not put in every single penny you've got into it. Even if it doubled for you when you did, please remember that diversity uh diversifying your portfolios is critical. it it's you you I think we've we've talked I think you've talked about to other guests the the the risk and and getting into different areas and how much how much uh risk there really is out there. This is the opposite. This is a these are stocks that are aimed to give you that that new safety. >> Wonderful advice for our viewers today. Gavin, thank you so much for diving into these four stocks today and also for reminding us of some of those other economic factors and fears in the market that investors should not forget about even as the market goes back into a little bit of a a tech rally this week right now. Thank you again for this video today. If you want to hear a completely different perspective on why the market could rally even further into this year that's more of a bullish outlook rather than a safety outlook, we've got that full interview here. Again, this channel is all about diversity as well. And you can hear a lot of different opinions and thoughts on the market and investing.