Summertime volatility but AUTOMATION is the Long Term Trend

Today was a bad ending to a bad week.  But don’t despair…

The acquisition of Luminex (LMNX) by DiaSorin was completed 7/15/2021, so LMNX has been removed from my core holdings.  I’ve used those proceeds along with any new money to continue reinvesting in my existing positions. 

Short term the market is choppy, especially for the more volatile Small Cap stocks and the ReOpening Trade.  I’m not concerned. 

Shortages, COVID Variants, FED Policy Flip-flopping…these are all noise & static…that depress the Stock Market, but for the patient and disciplined, it creates a buying opportunity.

The pandemic has hastened the advancement of trends that were already occurring…namely AUTOMATION.  Productivity is enhanced by automation, and productivity is the key factor that drives Long Term profitability. 

Raytheon (RTX) is an example from the COVID90 portfolio.  RTX is down almost 7% from its June high.  The stock price is currently below its exponential short term and 50dma.    Am I worried?  No.  Do I plan to sell?  No.  RTX has excellent long term potential.  The noise & static that are currently dampening the price are short term volatility.  The stock price will eventually find support, I don’t know where, maybe at the 100dma, or perhaps the 200dma.  Rather than panic and sell, I’ll patiently wait, and use the dip as an opportunity to add to my holdings.

Here’s an excerpt from a recent Wall Street Journal article:

“Raytheon Technologies Corp. RTX, the biggest U.S. aerospace supplier by sales, laid off 21,000 employees and contractors in 2020 amid a drastic decline in air travel. Raytheon said in January that efforts to modernize its factories and back-office operations would boost profit margins and reduce the need to bring back all those jobs. The company said that most if not all of the 4,500 contract workers who were let go in 2020 wouldn’t be called back.”

The layoffs are bad news for the furloughed employees, but it’s GREAT news for the future stock price.  RTX will likely have fantastic earnings…in the future. 

The Wall Street Journal article also stated:

“As with past economic shocks, the pandemic-induced recession was a catalyst for employers to invest in automation and implement other changes designed to curb hiring. In industries ranging from hotels to aerospace to restaurants, businesses have reviewed their operations and discovered ways to save on labor costs for the long term.”

That Wall Street Journal article named five companies that are in the COVID90 portfolio, and it could have referenced nearly every company stock that I own.  I believe they’re all poised to make higher profits because of automation, digitization, and technological advancements. 

So I’m not fretting any summertime stock market volatility.  I’m banking on future profits.

FYI- if you haven’t read my book, The Robots are Coming: A Human’s Survival Guide to Profiting in the Age of Automation, maybe it’s time you should.

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