Seeking Alpha

John Brodie Gay

 
View as an RSS Feed
View John Brodie Gay's Comments BY TICKER:
Latest  |  Highest rated
  • Reversing Fortunes: The Fractal Nature Of General Electric's Larger Trend [View article]
    Thanks for the reply and the article, I was simply very interested in the specifics of your thesis and the points you used to defend it, I realize that my comment may have came off as a tad negative.

    Cheers.
    Jun 3, 2014. 02:40 PM | Likes Like |Link to Comment
  • Reversing Fortunes: The Fractal Nature Of General Electric's Larger Trend [View article]
    I'm not sure what you were trying to achieve with the term 'fractal' in the title. Are you saying that the longer term movements are self similar to the shorter trends. Isn't this the case for Brownian motion and martingales in general. What makes GE's price action (in the long trend) more fractal in nature than other stocks.

    Perhaps you weren't referring to price action at all, in which case I am even more unsure of what you were trying to communicate with that title.

    Further you said that price movements have been recently "predictable" but the next sentence explains that performance has been fueled by news. I can only conclude that you are suggesting that news is predicable, but this contradicts the premise of news.

    Lastly, you said that recently the "stock's price underwent a correction characterized by high volatility." Then you continued to argue "volatility has also declined significantly and is forecasted to remain this way." In this sense, why would you be short Vega if volatility is low and is expected to remain low by every trader with access to a terminal with ARIMA and GARCH. This is precisely when taking a long vega stance would be optimal (not that I think this is a good strategy at all with GE, but I would never short vega on a consumer financing giant).

    Please comment.
    Jun 3, 2014. 11:48 AM | 4 Likes Like |Link to Comment
  • Make 40% A Year With Math And Without Shorting [View article]
    WARNING: Selection Bias

    I) Selection Bias:
    From Aug 22 to Oct 24, 2008: VIX takes off from 18 to 84 representing an increase in 466%. Recall that the 20 year bond did not respond whatsoever to the perceived volatility in the market until November when it plunged from the mid 4.xx% to 3% by year end.

    What does this mean:
    Your portfolio gets obliterated. Even if you believe XIV would behave as promised then this position would shrink to roughly less that 20% of its original value (loss of 80%) if we leave the portfolio passive.

    MOREOVER, if you follow your guidelines and re-balance weekly this loss is magnified. There were roughly 8 weeks of Armageddon for the VIX --> i.e. 8 iterations of re-upping a devastating position that will continue losing.

    Meanwhile, the other leg of this play is flat until the VIX crisis has subsided and doesn't start to kick in until November 2011 when the losing VIX position has slowly siphoned all of the money out of the 60% of whats left.

    II) I seriously doubt the accuracy of the back-test provided in this article around June 2011 when the XIV had the 10-1 stock split. Can the author provide day-to-day performance.
    Jun 2, 2014. 12:07 PM | 9 Likes Like |Link to Comment
  • Make 70% A Year With Math [View article]
    By virtue of you writing an article about this is enough to claim this cannot constitute arbitrage. I feel this is a misleading article to the masses.

    Imagine seeing $100 dollars on the ground and instead of picking it up you go on Seeking Alpha to tell everyone "hey there 100$ on the ground at XYZ location".

    This strategy is exposed to interest rate risk and to fat tail event risk --> Not Arbitrage
    May 31, 2014. 03:33 PM | 8 Likes Like |Link to Comment
  • Make 70% A Year With Math [View article]
    I think many other commentators have already mentioned this but I will resonate such an important point:

    "The idea behind Structural Arbitrage is that profits are possible by acting as a synthetic insurance company which sells expensive insurance in the volatility market, then synthetically reinsures that market risk with long duration government bonds."

    THIS IS NOT ARBITRAGE (arbitrage requires a risk-free component, whether statistically or absolutely), you are simply buying the fat tails from people who don't want to expose themselves to catastrophic losses. These fat tail events are so rare that you can go years without experiencing one.


    YOU are simply exposing yourself to catastrophic losses and collecting a premium for doing so. Simply simulate this strategy through 2000 and through 2007-2008.
    May 31, 2014. 03:28 PM | 9 Likes Like |Link to Comment
  • Comprehensive Investigation Of Cannabis Science, A Recurrence Of Misleading Investors And Executive Self-Dealing [View article]
    Great insight, and you are absolutely right about the insider selling, on its own it is not a compelling case.

    I have been long many of the names you posted in the opening line (namely MJNA, ERBB, PHOT, CANV and even CBIS at one time). I began reading the 10-Ks and got spooked into taking profits earlier in March. The only position I am currently holding is the CBIS short.

    I will try to reproduce the basket of marijuana related stocks in the coming months once news begins to flash about further states legalizing the stuff. However, this is more a play on crowd psychology than anything. It has not and will not ever exceed 5% of my portfolio (long and short combined).
    Apr 7, 2014. 09:17 PM | Likes Like |Link to Comment
  • The Only 20 Companies That Matter [View article]
    PS: I love Freddie and Fannie as much as the next guy but there is definitely a chance they will go bust in the next recession.
    Apr 6, 2014. 11:21 PM | Likes Like |Link to Comment
  • The Only 20 Companies That Matter [View article]
    Hey Jeffrey, loved the article, we all need a reminder once in a while that profits ultimately drive price,

    Word of caution,

    Beware of the selection bias. When looking at the profits TODAY, we can't trust the results of a historical price comparison vs. the S&P 500.

    For example,

    If, in 2009, we were to take the top 20 companies weighted by profits then surely Apple (which produced in excess of 400% returns up til today but earned profits of only $5B) would not be among the top 20.

    More importantly, Fannie and Freddie may have accounted for some of the largest ever earnings deficits in US history in 2008 ((60B) for FNMA), and would certainly not be part of this virtual portfolio (each are up about 400% as well).

    Lastly, this may have been mentioned in another comment but FNMA and FMCC have effectively $0 in profits since the conservator-ship was imposed.

    My point is that unless we know what profits will be 5 years from now then we would have actually been stuck with other names that may not have performed as well.

    What are your thoughts?
    Apr 6, 2014. 11:15 PM | Likes Like |Link to Comment
  • Comprehensive Investigation Of Cannabis Science, A Recurrence Of Misleading Investors And Executive Self-Dealing [View article]
    Interactive Brokers has some short supply left, check here for updated availability: http://bit.ly/PGlwso
    Apr 5, 2014. 06:47 PM | Likes Like |Link to Comment
  • Comprehensive Investigation Of Cannabis Science, A Recurrence Of Misleading Investors And Executive Self-Dealing [View article]
    you and me both
    Apr 5, 2014. 12:44 AM | Likes Like |Link to Comment
  • Comprehensive Investigation Of Cannabis Science, A Recurrence Of Misleading Investors And Executive Self-Dealing [View article]
    Its hard to tell, but I find it particularly dubious that many of the price actions, revenue stats, exec compensation schemes, accumulated deficits and board members are too similar to CBIS to ignore the correlation.
    Apr 4, 2014. 05:44 PM | 1 Like Like |Link to Comment
  • Comprehensive Investigation Of Cannabis Science, A Recurrence Of Misleading Investors And Executive Self-Dealing [View article]
    Thank you so much for posting this personal insight, I too have a strong belief in the industry. Invest Diligently
    Apr 4, 2014. 03:05 PM | Likes Like |Link to Comment
  • Comprehensive Investigation Of Cannabis Science, A Recurrence Of Misleading Investors And Executive Self-Dealing [View article]
    Absolutely, here are a couple of steps to take:

    1) Save records (screenshot, printout) of when you purchased and sold shares as well as the number of shares beneficially owned.

    2) Stay tuned to news about CBIS in the coming months for more information surrounding a potential investigation and class action claim

    3) Gather an opinion on what specific piece's of information you believe that you were mislead into believing (I think there is a lot more substance here than one might initial suspect between (a) Inaccurate SEC filings (i.e. failing to mention the resignation of CEO) (b) promise of progress in research activities (with no facilities or R&D spending) (c) Failure to disclose risk factors in any of filings... These are just some examples

    Unfortunately, most of the time, recovery of an entire cost basis is rare, especially if a legal action is unable to pierce the corporate veil. Additionally, these processes usually take quite some time.
    Apr 4, 2014. 01:48 PM | 1 Like Like |Link to Comment
  • Comprehensive Investigation Of Cannabis Science, A Recurrence Of Misleading Investors And Executive Self-Dealing [View article]
    It is what I suspected. On its own, a harmless detail, but quite frightening with respect to everything else that's going on.

    I wonder what ever happened to their Research Facility back in 2010.

    My hope is that one of our readers lives in the vicinity and doesn't mind getting a better look at the Headquarters to verify that it is indeed simply a PO box as this would lead to many more questions about their undisclosed property expenses.
    Apr 4, 2014. 01:40 PM | 1 Like Like |Link to Comment
  • Comprehensive Investigation Of Cannabis Science, A Recurrence Of Misleading Investors And Executive Self-Dealing [View article]
    Should have been more clear about those companies mentioned in the introduction. I couldn't agree more with you, I believe that the industry has a lot of potential especially under names like PHOT and MJNA.
    Apr 4, 2014. 01:36 PM | 3 Likes Like |Link to Comment
COMMENTS STATS
23 Comments
36 Likes