TIMING IS EVERYTHING

I missed it! I didn’t buy the stock of Beyond Meat (BYND) the day it went public. Yup, I missed making a lot of money over just one month.

Trading started at $46 on May 2.  It soared to a high of $186.43 on June 10.

I will file it away in my huge file cabinet labelled, “Missed Opportunities.” However, having traded the markets for more than 4 decades, I had no regrets. After some bad experiences when I was young and foolish, I make it a habit not to buy ‘dreams of riches,’ bubbles, manias, or what I consider to be scams.

The next day on June 11, the above stock plunged to a low of 125.23, giving up 43% of its entire gain in a few hours.

But market manias don’t end on the first plunge. Now the ‘bargain hunters’ who missed the first surge would jump in, causing another surge. One week later the stock hit a new high of 201.88.

Then it plunged again a few days later to 138, locking all the bargain hunters in with big losses. At this writing, it is trading at 169. It might try to get back to the high of 201…but without me. I am making very nice profits trading what I consider “fundamentally sounder” areas.

It would have been very difficult for anyone to trade this roller coaster without incurring huge losses and some sleepless nights, except those who manipulated the market. I felt vindicated. You see, I had looked into the company and the product and decided that I wouldn’t touch it or other imitation foods with a ten foot pole—as an investment—or as a food.

I learned decades ago that the risk of faddish stocks is far higher than the potential rewards. I always look at risk first, and potential profits second. Loss of my own capital is much more important than the potential loss of opportunity. I will miss a boat, but that’s better than catching one that sinks.

Here are my fundamental findings:

Beyond Meat seems to have nothing proprietary. Any company can get in on the fad… and they already are. Now we hear a multitude of companies announcing products for the “meatless meat.” Is that a contradiction in terms, or an oxymoron like “a big shrimp?”

In fact, these companies have existed for years. They just didn’t get promoted by the Wall Street publicity machine and the hoopla of going public with their stock.

“Fake” is in. Look at all the “fake designer” products, “fake news” networks, the “fake” political polls, and much more. But will “fake foods” eventually be shunned by consumers?

Today’s ‘juicy’ profit margin will fade away as competition from much stronger companies heats up. Prices will come down as the cost of ingredients rises. That’s not good for investors.

Let’s also look at the health aspect, based on information available publicly and our knowledge of the apparent ingredients based on years of my researching food additives. In fairness, we must point out that the majority of the supermarket foods contain these very unhealthy compounds. According to its website, the current formulation of the Beyond Burger is much better than it was. It now contains:

Water, Pea Protein Isolate*, Expeller-Pressed Canola Oil, Refined Coconut Oil, Rice Protein, Natural Flavors, Cocoa Butter, Mung Bean Protein, Methylcellulose, Potato Starch, Apple Extract, Salt, Potassium Chloride, Vinegar, Lemon Juice Concentrate, Sunflower Lecithin, Pomegranate Fruit Powder, Beet Juice Extract (for color)

The ingredients seem to change often.  The above is from their website on 7-16-2019. It may have changed the next day, perhaps to be able to attack critics by saying they were wrong on the ingredients.

Here are several websites that tell you about common food ingredients you should avoid. You will be amazed what people who don’t read the ingredient list do to their bodies and their health:

  • Titanium Dioxide, which is a carcinogen. It is used to make white paint.

I am an equal opportunity offender. So, let’s look at another ‘fake meat’ product,  ‘The Impossible Burger,’ made by a private company, and sold through many restaurants including Burger King. According to articles, it contains the following:

Water, Soy Protein Concentrate, Coconut Oil, Sunflower Oil, Natural Flavors, 2% or less of: Potato Protein, Methylcellulose, Yeast Extract, Cultured Dextrose, Food Starch Modified, Soy Leghemoglobin, Salt, Soy Protein Isolate, Mixed Tocopherols (Vitamin E), Zinc Gluconate, Thiamine Hydrochloride (Vitamin B1), Sodium Ascorbate (Vitamin C), Niacin, Pyridoxine Hydrochloride (Vitamin B6), Riboflavin (Vitamin B2), Vitamin B12.

 

For legal reasons, I must point out that product ingredients can change without notice, so this listing may no longer be valid after a while.

Most of the “fake foods,” “fake chicken,” “fake fish” all have problem with similar ingredients which a number of well-known doctors say are very unhealthy.

For example, the term “natural flavors,” sounds healthy. Actually it is anything but “natural.”  That is allowed by the FDA, which many observers say is controlled by the industries they are supposed to regulate.

Articles say that according to the FDA, “Natural flavors can contain both artificial and synthetic chemicals” Furthermore, informed people know that MSG (monosodium glutamate) is bad for your brain. So the food industry calls it by different names, such as “modified food starch, yeast extract,” etc. You have to read the labels of everything you buy. You will be amazed. According to neurosurgeon Dr. Russell Blaylock and others, these are very bad “excitoxins” for your brain. I would like to keep my brain as is for the rest of my life.

“Yeast extract” is in many of the fake meat, etc. This is just another name for very unhealthy MSG, which is an excitotoxin for the brain. I don’t know about you, but my brain is very precious for me.

Other ingredients to beware of are “isolates,” carrageenan, titanium oxide, canola oil, etc.

I believe that more articles will be written about the potentially harmful ingredients of these imitation products. Eventually that should be bearish for these stocks… when the speculative fever is extinguished.

CONCLUSION: If you are health-conscious, you may lose your appetite if you do some reading. If you don’t read, you may lose your health.

From a health viewpoint, and as a chemist, I prefer foods without all the chemicals. But that is a personal choice.

Judging by all the foods that contain them, people either like the chemicals, are ignorant of the harm they can do, or they believe the so-called “food scientists” who tell you “don’t worry, there is no evidence of being harmful.”

We heard that about smoking for about 100 years.

However, as an investor, it’s smart to anticipate possible future problems of a company or its products. I consider that better than catching a fad, which can end overnight and causing me to lose my shirt.

I suspect that this fad will end badly.  There is a small chance that the industry might decide to clean up its products as so many other much larger food companies should. But don’t hold your breath as that might have worse results than eating the burger.

If by any chance you want to know more about consuming these products, (why would you), go to these links. Warning: you may lose your appetite.

It seems there is a campaign against those who write negative articles about these foods. We have seen articles deleted. Therefore, if this one suddenly disappears, you will know why.

Wishing you good health and prosperous investing,

Bert Dohmen, Founder
Dohmen Capital Research
Dohmen Strategies, LLC