Don’t fight the government: it’s a piece of investing advice I’ve given time and again. Life is rife with corroborating instances. And it looks like Nokia (NYSE:NOK) stock might be the market’s latest example of a top government official bestowing his imprimatur upon a specific asset.
We can debate back and forth the ethical considerations all day long. But the fact remains that Uncle Sam — or at least, U.S. Attorney General William Barr — would evidently prefer to see the Nokia share price move north. That in itself could propel NOK stock higher, but the big-picture question remains: are we buying to be patriotic, or because the stock’s actually worth buying?
A “Monumental” Reason to Buy?
Though it hasn’t been front and center in the headlines lately, the U.S.-China trade war remains a vital issue, fiscally and otherwise. The government continues to fight this war on multiple fronts, including the current presidential administration discussing offering incentives to U.S.-based funds to take a stake in Nokia.
This is of course a salvo against Huawei and therefore against China as the company and the nation threaten to dominate the emerging 5G-network technology landscape. Barr, fully aware of the perception that China could outpace America in its 5G rollout, recently called this scenario “a monumental danger.”
Barr’s response to Huawei’s apparent threat to America’s security and economy is — drum roll, please — for the U.S. and its allies to load up on shares of Nokia and Ericsson (NASDAQ:ERIC):
Some propose that these concerns could be met by the United States aligning itself with Nokia and/or Ericsson through American ownership of a controlling stake, either directly or through a consortium of private American and allied companies…We and our closest allies certainly need to be actively considering this approach.
I couldn’t make this stuff up, folks. Have you ever watched those old film clips from the 1940’s wherein the government recommends buying war bonds? This kind of reminds me of that, though I suspect that in hindsight, Barr’s call to action won’t be remembered as a history-altering moment.
Barr Gets Bizarre
In case Barr’s aforementioned jawboning wouldn’t get the job done, the AG augmented his sales pitch with the following piece of verbal artwork:
Putting our large market and financial muscle behind one or both of these firms would make it a more formidable competitor and eliminate concerns over its staying power.
Pardon me if it sounds like my words are dripping with sarcasm, but one has to wonder whether Mr. Barr has considered the wisdom of weaponizing stock-staking — or whether he actually looked at Nokia’s fundamentals.
As you may recall, the company lowered its fiscal outlook in October while halting its dividend payouts. Meanwhile, a cursory glance at Nokia’s trailing 12-month earnings per share reveals a negative figure: -19.2 cents to be exact, but who’s counting when national security is on the line?
In any case, in what I will hereby deem “the Barr pop” (feel free to use that as you wish — no need to thank me), NOK shares spiked 4% upon the release of the AG’s anti-Huawei screed. The share price could certainly continue higher based on Barr’s blessing, but I suspect that’s already been baked into the proverbial pie, whose shelf life may be woefully brief.
The Takeaway on NOK Stock
After finding it in your heart, dear reader, to forgive me for my brash send-up of William Barr’s speech, I hope you’ll put your national and political affiliations aside long enough to conduct your due diligence and consider whether Nokia shares are actually worth owning. I’ll be the last one to battle the government, you see, but I’ll be the first one to question its priorities.
And your fiscal health, I imagine, isn’t atop their list.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.
