Matt Callow

Matt Callow
Contributor since: 2007
I would not consider Southwest a peer. How many flights to Europe and Asia does Southwest fly? Delta has only two peers. United and American. Rerun your numbers against that set of peers and you will see that Delta clearly leads the field.
All investments work this way. If stock XYZ loses 20% today, then gains 20% tomorrow, it's a net loss of 4%. Gain 30%, lose 30%, is a net loss of 9%. Any investment that is tied to an index (or another ETF) that moves RAPIDLY will be affected even more. In this case, XIV and VXX are both affected by the compounding decay, more so than a more steady stock like say, WMT.
Big K> A Permabear? Really? You must not have read my last article. I don't see "doomed" or "hopeless" anywhere in my article. I agree, the economy will recover, just not in the near future. I refuse to go along with the main-stream-media and hope and wish this market to higher highs. The reality is what it is. If you want to be a buy-and-holder at this point, go for it. I hope that plan works out for you.
You can find updates on my blog: themonthlystock.blogsp.... I just updated my results for these themes tonight. I'll post it here as well:
Just two months into the new year and we're cruising nicely with this year's Themes. Eight of our nine themes are up an average of 57%, with one theme down modestly:
Theme 1 (Short Banks): Up 100%
Theme 2 (Short Oil): Up 143%
Theme 3 (Short Tech): Up 13%
Theme 4 (Long Gold): Up 24%
Theme 5 (Short Real Estate): Up 37%
Theme 6 (Short China): Up 31%
Theme 7 (Short Euro Banks): Up 69%
Theme 8 (Short Consumers): Up 39%
Theme 9 (Short Toyota): Down 10%
Total portfolio return since January 1st, 2009: Up 49.54%
Update time...two weeks into the New Year and this portfolio is up an average of 16%. Seven out of Nine predictions are in the green. Maybe I should sell now, stuff my mattress and lock in a nice 16% gain on the year. But how fun would that be?
I did say in my predictions that I would be trading in and out of these themes during the year. With that said, I will be making some changes at tomorrow's open. Please see my blog for details.
onlyformoney> My oil call was based on my belief that we are just beginning the Global Recession, and that the deflation we saw in commodities is not over. Making any predictions regarding oil is risky as it is very difficult to foresee political events, which have a huge impact on the price of oil. Oil is getting elevated by two primary political factors right now, Israel fighting Hamas, and Russia pinching natural gas supplies. I expect the first event has less than a few weeks to go before it de-escalates. Russia, on the other hand, is a bit of a wild card and could carry on their actions for some time. In my opinion, barring any major new players joining the Israel/Hamas conflict, oil will begin heading south after Israel feels it has accomplished what it set out for and begins withdrawing troops.
For those who have called this strategy "suicidal" or "irresponsible" thanks for your opinion. Maybe I should have been more clear in my article. This is called an "Aggressive Trader Portfolio" for a reason. I certainly don't advocate anybody sticking nest eggs into this strategy. These are speculative trades (like all predictions) and should be traded as such. Like I said in the article, do your own research and invest at your own risk.
For those who have called this strategy "suicidal" or "irresponsible" thanks for your opinion. Maybe I should have been more clear in my article. This is called an "Aggressive Trader Portfolio" for a reason. I certainly don't advocate anybody sticking nest eggs into this strategy. These are speculative trades (like all predictions) and should be traded as such. Like I said in the article, do your own research and invest at your own risk.
I made an error regarding Theme 3 that I need to clarify. Although my overall results and theme results did not change, I actually predicted the Canadian Dollar would rise against the US Dollar in 2008. Therefore, I only got four of eight themes right.
Deepfryer999> Sorry for not replying sooner. The provided picture shows how much that trade has made since the last change. I have been in and out of the British Pound options all year and you can see all the calls on my blog. The original value placed in this theme was $125,000. It finished the year at $1,500,166.88 for a gain of 1100%. If you want evidence, you'll find it on my blog.
On Oct 23 08:23 AM Deepfryer999 wrote:
> How do we know theme 4 is really up 513%? The only data he provides
> shows it being up 43.83%.
Thursday's train wreck??? Delivered! Dow -678 points.
FYI, I wrote this article when the Dow was down about 100 points today. The fact that it fell another 578 prior to the close emphasizes the point of this article even more.
Here's my response to two of the posts:
AnonGeneral: Shorting the Russell 2000 should be just as profitable as shorting the Nasdaq or the Dow. However, small caps tend to lead large caps when coming out of a downturn, so I would expect the Russell 2000 to be the first of those three indexes to turn positive.
globalmacro: I think it's a bit unfair to jump on one bad pick. For the record, I have only written articles on Seeking Alpha for three stocks. If you visit my blog, you will see that my Monthly Stock Portfolio is up 3.92% since it's inception on October 1st. The S&P 500 is down 11% over the same period. That's nearly a 15% outperformance in just six months. When you go to my blog, feel free to see my Motley Fool Caps Ranking. I currently outrank over 98% of the other stock pickers on that site. I'm more than willing to admit a bad pick, but let's get the rest of the facts on the table before you go around trying to smear my reputation.
You are a wise man.
Solar stocks are the next bubble to burst. IMHO.
Great article, and in general, I agree with the relationship of when sentiment dives, it's time to buy. However, your six historical examples are based on when negative sentiment peaked. We don't know when or where it will peak this time around, so I think you are comparing apples to oranges. In the example where negative sentiment peaked at -37%, I wonder how they would have done if they bought when sentiment was at -15%???
Finally, I think the internet delivers info so fast today, that sentiment moves much faster than it ever did before. We can get to that -15% today, much quicker than we did in the early 90's.
Unlike GLD, I plan to hold SRS throughout most of the year. I'm not going to be trading into and out of this one, so since I was already in a position, I just adjusted that position to double the leverage. You may be right, and it may drop in the near term, but I am willing to ride that out.
If you read my first article laying out my eight themes, you may recall that I siad I was making eight broad-based bets on the market. I may not get them all right. I still believe that real estate will continue to weaken going forward.
You raised a lot of great points and I wanted to discuss ALL of them. You are absolutely right about the tax implications of GLD. I chose not to mention that since the Aggressive Trader Portfolio switches in and out of positions rapidly, and I doubt I will be in the GLD position for more than one year. Therefore, for this portfolio, the tax implication does not matter. For those looking to hold GLD in excess of one year, then yes, you may want to consider exactly what Bob mentioned.
Secondly, I wanted to make it clear that even though you called me an "advisor", I am not a Certified Financial Advisor. I receive no compensation for the calls I am putting out to the public.
In my first article, I said I'd play gold with futures. I switched that to GLD for the exact reason you mentioned...the possibility of a sharp downturn. If that occurred, it could quickly wipe out a futures account. By investing in GLD, as long as gold has some value, so will GLD.
Finally, how did Army do this year?
See my disclosure above.
Just a follow up for those who actually read the comments. First of all, thanks for all the positive comments. I wasn't expecting Seeking Alpha to make this article their headline story of the day. I did want to point out that the Loonie call was the toughest one for me to make. It does fly in the face of a lot of professional calls right now. Don't forget, I will be making this play selectively throughout the year. Also, please keep in mind that although I have eight separate plays, several are tied together, limiting the diversity. For example, rising gold should cause the dollar to push lower which should benefit all the currency plays I mentioned. So if my 2008 picture is inaccurate, this portfolio will be ugly at the end of the year. But I think my sight picture is pretty clear, and I hope it raises some opportunities for you this year.
One of the best articles I've read in a long time. Nice work. Someone willing to call it like it is. I have great fear for our economy's near future. Yes we are still in a bull market, but the dollar is slipping drastically on the global market. When people realize that a rising market in the face of a falling dollar is not getting them anywhere, they will run for the exits. With the ability to liquidate yourself in seconds in today's markets, I completely agree with you...several mini-panics before the crapola hits the fan. Adding to my gold positions as we speak.
I'm not sure you read my last comment, or maybe you just disagree with it. HERO is not in the liftboat business anymore (my opinion). Revenue from liftboats will fall from 52% to 9%. That is a huge statement! They are a driller now with their own liftboat fleet. Day rates will not matter much as they will be using their own boats to service their own drilling rigs. They will have the lowest operating costs of any driller. If they do use their own boats to service their own drills, revenue from liftboats will fall even further, which is the right move for this company seeking to move into the more profitable drilling sector.
In their Q207 earnings report, they stated that 48% of revenue came from drilling and 52% came from liftboats. At a recent Oil & Gas Conference, they presented a pie chart which showed where their revenue would have came from if combined with TODCOs assets for the First Half of 2007. TOTAL drilling accounted for 84% of revenues (my article incorrectly said 75%), Liftboats 9%, and the Delta Towing segment accounted for 8%. So you see why I make the claim that they are now a driller. So you have a drilling company that owns its own servicing fleet. Meaning, not only can they control their own liftboat utilization rate, they can pay wholesale costs for it as well, a HUGE advantage on the rest of the drillers. I don't think anyone knows what the bottomline will be, except the insiders maybe, and you know what they are doing.
Thanks for the insightful comment.
1) On the day that I drafted up this article, HERO was above its' 50 DMA. Just barely, but the price trend was up and the 50 DMA line was moving down rapidly. I still see a good case for upward momentum here. I prefer to focus more on fundamental analysis than technical.
2) HERO is more multinational than they ever have been. With the TODCO purchase they have positioned themselves well in global waters. Even though they may receive dollars, the dayrates they receive have been moving up as the dollar falls and demand increases. I have no doubt that the revenue will be there at the end of the quarter.
3) I agree with you on this point. I figured about 75% utilization. If you look at the relationship between the price of oil to the price of natural gas, historically, it has been about 7 to 1. Right now, it sits at 10 to 1. Natural gas is currently undervalued. If you look at the prices on futures of natural gas, you can see that traders believe that the price of natural gas is going to rise over the next 6 months, filling in this gap back to 7 to 1.
I expected many comments about the $100-$150 oil call. Your's does not surprise me. Only time will tell. But keep in mind, as the dollar falls, the value of oil to the rest of the world falls as well, unless the price of oil goes up. Even if supply and demand remained stagnant (highly unlikely) oil would still rise in price if the dollar continued to fall. As I pointed out, demand rising, supply and dollar falling, oil will continue to go up.