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“My first thought when I saw the headline was not panic. It was: I wish the stock would drop even more.”

Karim Rahemtulla, Co-Founder, Monument Traders Alliance 

Dear Reader,

Yesterday, a warehouse storing Kimberly-Clark products in Ontario, California, burned down.

1.2 million square feet. The roof collapsed. A fire destroyed everything inside.

An employee of the third-party logistics company running the building is now in custody on arson charges.

KMB fell 5% and hit a 52-week low. That is the lowest price the stock has traded at in the past year.

My first thought when I saw the headline was not panic.

It was: I wish the stock would drop even more, so I could buy more shares.

That reaction comes from 30 years of learning to ask one question before responding to any piece of bad news about a company I own.

Is the damage permanent or temporary?

That is the only question that matters. Answer it correctly and you will make money on days when everyone else is losing. Answer it wrong, and you will sell the bottom of every panic for the rest of your investing life.

What the Market Does Every Single Time

The market does not stop to ask this question.

It reads the headline, calculates the fear, and sells. It treats a warehouse fire the same way it treats a structural collapse of a business model. It treats an external criminal act the same way it treats a fundamental failure of management.

It cannot tell the difference. Most investors never notice that gap. That is where the money is.

1982: The Poisoned Tylenol Bottles

Seven people in Chicago died after taking cyanide-laced Tylenol capsules. Someone walked into retail stores and tampered with the bottles.

The contamination had nothing to do with Johnson and Johnson’s manufacturing. An outside criminal committed an act involving their product.

The market sold J&J down 30%.

J&J pulled 31 million bottles from shelves at a cost of over $100 million, introduced tamper-proof packaging, and handled the crisis with complete transparency.

The stock recovered to its previous high in two months. A $1,000 investment made just before the tragedy was worth $22,000 twenty years later.

The damage looked catastrophic. It was not.

2020: The Grounded Engines

Rolls-Royce Holdings makes jet engines for commercial and military aircraft. Not the car company. That is BMW.

The revenue model is built on engine flying hours. That means the number of hours those engines actually spend in the air. Rolls-Royce earns recurring income through long-term service contracts tied directly to flight time.

When COVID grounded global aviation, that income stopped. The stock lost over 90% of its value, trading around $0.70 per share. Analysts questioned survival.

I saw something different.

Only three companies in the world can build engines for wide-body aircraft. Wide-body means the large long-haul planes – your 777s and A350S – the ones that fly international routes. You cannot simply switch suppliers. Certification takes decades, and the switching costs are enormous.

Rolls-Royce also held billions in contracted future revenue sitting in 20-plus-year maintenance agreements. Once flying resumed, that recurring income would return automatically. At the lows, the company was trading below what you could sell the parts for.

The thesis was straightforward: people would fly again. I did not know if it would take six months or two years. I knew it would happen.

One of our War Room members held 184,000 shares. They turned it into millions.

From that $0.70 low, the stock has risen over 2,100%. The thesis played out exactly as the business said it would.

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2026: The Arsonist

Kimberly-Clark did not own the burned warehouse. NFI Industries, a logistics company, leased and operated it. An NFI employee is now in custody on arson charges.

The fire touched no manufacturing assets. Every Kleenex, every Huggies, every Cottonelle is still coming off the same production lines it came off of Monday morning.

Kimberly-Clark has business interruption and property damage insurance in place. Contingency plans were activated within hours. Alternative warehousing secured.

The stock bounced 2% the following morning.

Kimberly-Clark has raised its dividend for over 50 consecutive years. It generates roughly $1.6 billion in free cash flow annually. Free cash flow is the money left over after a company covers all its operating costs and capital expenses. It is what funds dividends, growth, and buybacks.

An arsonist at a rented building changes none of that.

YOUR ACTION PLAN

Before reacting to any bad headline about a company you own, work through the actual damage.

Ask whether the event destroyed the company’s ability to serve customers long-term, eliminated a competitive advantage that took years to build, or exposed a structural flaw that will compound over time.

If none of those are true, you are looking at a temporary event the market is pricing like a permanent disaster.

J&J still had the same brand, the same market share, and the same manufacturing after they pulled the tampered bottles. Rolls-Royce still built the only engines capable of powering those routes.

KMB will find another warehouse.

If you want to know how I’m trading KMB specifically – the strategy, targets, and thesis – you can see it all in The War Room.Want more content like this?

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