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Akram's Razor  

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  • I Have No Fear Of A Market Crash Or A Significant Correction, Here's Why: Part 1 [View article]
    It's hard to criticze someone like Chuck as he's been at this for a long time, and is such a stand up guy when it comes to respecting others opinions and engaging in an open debate. However, there were a lot of things that bothered me about this article, and to be frank that I found quite surprising coming from a seasoned veteran. You can't make a macro case and cite how well dividend stocks have done since the crash without talking policy. Markets are not a vacuum, and to throw charts on a screen and pretend that there was not an epic intervention in markets to facilitate a rapid reflate of asset prices is misleading at best.

    Also, i would strongly disagree with the statement that stocks not recovering for 'forever or a long time' is a misconception. There are a boat load of dividend champions who went bankrupt over the last hundred years. Excessive leverage, technological disruption, reg changes, and countless other factors can be cited for what caused their extinctions. And when it comes to people and money time is a factor. If a crash hits me at the end of my peak earnings and obliterates my savings; I simply don't have the luxury of remaining invested for the next cycle or if i'm lucky enough the biggest federal intervention in market history. And this is putting it mildly because human nature is such that most people get caught by the warm fuzzy feeling of someone writing an article saying don't worry about a crash or a correction. Then when one comes by virtue of having believed such nonsense they panic because they positioned in a fearless manner.

    The market is essentially about picking pockets of suckers, weak nerved individuals, excessivelly exhuberant people, and every other human extreme you can think of. If everyone was rational, there would be few opportunities to make money. Thus, advising people to worry about nothing is in my humble opinion bad advice. Always worry, and worry a lot more when you have a market like this one with the stimulus we have seen since march 2009. I stopped paying much attention to macro news about 15 months ago because it frankly got predictable, and i could get the sense nobody really cared much any more about any real economic/market risk jolts. That's obviously a great time to be long blue chips or if you do a lot of shorting like me make sure you pick the right pockets to focus on. I now have started to dial back into my macro news flow/old favourite prognosticators because i think this benign environment is coming to an end. It's hitting these points that define investing success. A minority of individuals actually end up holding a stock for 10-15 years. This was more normal back when people had 30 yr careers at companies, but in todays global corporate world the income cover for such horizons doesn't exist. You need to get lucky cycle wise or else you are screwed. And since leaving that much to luck is a bad idea, I prefer remaining paranoid at all times. That's about the only thing that works at all times. Otherwise i think you always need to analyze a multitude of factors whenever you buy a stock, and that there is no equation to it. Yes, owning coke is not going to keep you up at night, but when everyone starts to think that you should maybe start burning a candle.
    Jun 26, 2014. 12:18 AM | 4 Likes Like |Link to Comment
  • I Have No Fear Of A Market Crash Or A Significant Correction, Here's Why: Part 1 [View article]
    2014 is not quite as frothy?

    Interesting that this is basically a macro take article on investing and no mention whatsoever of the extreme policy environment. 0% rates for year 5 and a fed balance sheet north of a couple trillion + negative rates in europe and extreme policy measures in japan are things one should not get complacent about. A normal cyclical dip in the economy here won't feel 'normal' considering what's left in the tank policy wise. There is always a tradeoff in policy, and that's what you got holding bluechips post 2008. Though i do like how hindsight is 20/20 here and nobody is including any financial companies in there list of bluechip holdings. Wasn't GE the ultimate blue chip before the crash? What about Citi? Merril? Lehman?

    Bottom line is everyone that is so confident here about buying the next dip has zero clue about what happens to stocks when rates everywhere take off. Policy makers where supposed to be there to help smooth out the cycles in the economy and not to inflate assets. In their quest to pursue the latter they no longer have adequate resources for the former.
    Jun 21, 2014. 03:08 AM | 3 Likes Like |Link to Comment
  • Short The Lemon [View article]
    Lulu -30% kors +40%....doesn't get better than that
    Jan 13, 2014. 01:11 PM | 1 Like Like |Link to Comment
  • Google Is Way Overpriced, Trading At 51 Times Forward Free Cash Flow [View article]
    As a long-term google bull despite my extensive short-bent I would normally shoot something like this down. However, I think at this juncture you are right. Risk/reward wise it is now unattractive, and more compelling as a short. That being said there are a lot more compelling shorts out there, but in 100bil+ tech land you definitely need to consider shifting to an underweight here. At least until they show us they have developed an actual android...
    Dec 27, 2013. 06:36 AM | 2 Likes Like |Link to Comment
  • Yes Mrs. Yellen, QE Is Creating An Asset Bubble [View article]
    Nice one. I can assure you Grandma will never see a bubble. I do wonder from a job standpoint what type of person would want to be fed chair after bernanke. The whole thing seems like a lose lose proposition. Unwinding the balance sheet is the tricky part of QE, and while i doubt she will even do that, the risk of having to would make me seriously consider taking such a job. Furthermore, if the economy runs into trouble, all she has to work with is the dulled knife bernanke left behind in the form of qe. It will be like treating an evolving strain with a now virtually ineffective antibody.

    What's her upside?
    Nov 18, 2013. 07:07 PM | 2 Likes Like |Link to Comment
  • What Snapchat/Facebook Means For Social Media [View article]
    I have been following snapchat from infancy, and I get why it is hot. But i can assure you fb will be happy they rejected this offer. I have always believed this company is one sexual child predator disaster away from the fbi shutting them down. Anyonymity is great, but when you create the optimal environment for porn peddling what can go wrong will. And based on the news last few days the first major scar has started. What makes fb boring is also what makes it a viable long term business...identity control and content regulation.
    Nov 18, 2013. 06:39 PM | 4 Likes Like |Link to Comment
  • Chegg: Bubbles And Slipping Through The IPO Cracks [View article]
    If you had put 75ml into this company and your cost basis was closer $8 you'd want 12.50 too. Will be interesting to see of demand rights kick in on dec 1 and they start selling. Point is the structure of the deal was enough to stay away regardless of 'the business'. Chegg's original model that they raised substantial capital on has not worked....they need another 200mil to be able to navigate the transition...and that is not the type of investment risk/reward scenarios vc's pony up for. Basically, without an ipo raising the capital needed would have been difficult to impossible.
    Nov 18, 2013. 06:09 PM | 1 Like Like |Link to Comment
  • Chegg: Bubbles And Slipping Through The IPO Cracks [View article]
    Nope. Completely useless as far as making money goes, but i expected that. In all honesty, I wrote 99% of this nearly a month ago, I just didn't see the value in putting it out pre-ipo and making floating this thing anymore difficult than it probably was. Original title was "Please Spare us this Ipo"
    Nov 14, 2013. 06:39 PM | 1 Like Like |Link to Comment
  • F5 Networks: Multiple Contraction Storm Coming [View article]
    The gross service revenue number on margins is not the margin number. As for the slight variance of 1% i'm guessing it rounding. The lack of guidance on service revenue remains quite interesting.
    Nov 14, 2013. 03:27 PM | Likes Like |Link to Comment
  • Chegg: Bubbles And Slipping Through The IPO Cracks [View article]
    Is that what this was about? Or where they looking at Web 2.0 and what model could be adopted to cash in on the mania. Not that there is anything wrong with that. Because if they were trying to revolutionize something, they would have dumped renting the books and focused on the services a while ago...but when ur investors are 150ml can't focus on need to get them their money back before you are bankrupt.
    Nov 14, 2013. 03:24 PM | Likes Like |Link to Comment
  • Chegg: Bubbles And Slipping Through The IPO Cracks [View article]
    In reality, its been the opposite. The renting of textbooks at a massive loss has given them users, and they have been now trying to cross sell them services. And since you clearly didn't read the piece..."not sure about the exact numbers" total nonprint text book renting revenue is less than 20%. That includes selling leads, slipping red bulls in textbooks, ebooks, and homework help. So, the actual services to students that is subscription revenue is single digits. Point is from a revenue base since there are nothing but massive losses bought a textbook renter....otherwise you'd have paid close to what they paid to buy cramster or notehall or anything else along those lines....which btw wont get you to $50mil
    Nov 14, 2013. 09:49 AM | 1 Like Like |Link to Comment
  • Chegg: Bubbles And Slipping Through The IPO Cracks [View article]
    And that generates how much revenue a quarter?
    Nov 14, 2013. 09:16 AM | 1 Like Like |Link to Comment
  • Chegg: Bubbles And Slipping Through The IPO Cracks [View article]
    Also, to be frank, if I was a VC in this deal I would be kissing his feet. He has saved these guys from a catastrophic loss by orchestrating a soft landing here. Business model challenges and institutional sales distribution client disregard aside (how many of you beleived in this deal?), he has over the past 24 months managed to to make the moves needed to get to a float.
    Nov 14, 2013. 05:57 AM | Likes Like |Link to Comment
  • Chegg: Bubbles And Slipping Through The IPO Cracks [View article]
    No the author is clueless about everything. Nice first time commenter btw. Also, this is not a review site for college textbook services. It is an investing website. If you care to contribute on why renting print textbooks will be a highly profitable business at some point, I am all ears.
    Nov 14, 2013. 03:24 AM | 5 Likes Like |Link to Comment
  • Chegg: Bubbles And Slipping Through The IPO Cracks [View article]
    Thanks. But backing out depc expense when ur core biz is renting a highly depreciating asset doesnt jive... right? The cash flow is more than incinerated every year by purchases of new books, and sadly they are not making money selling these things off. Though from an efficient market standpoint....the ipo just gave them the kind of capital they need to play this game for a considerbal while longer
    Nov 14, 2013. 01:14 AM | Likes Like |Link to Comment