Seeking Alpha

Mercenary Trader

 
View as an RSS Feed
View Mercenary Trader's Comments BY TICKER:
Latest  |  Highest rated
  • Inflation Already Happened, U.S. Economy Strength No Reason To Buy, And QE4 Would Make Things Worse [View article]
    If we seem calmer than most, it may tie back to our awareness that the United States is the wealthiest country in the history of the world. We were already incredibly rich, and the shale boom has made us even richer by yet more orders of magnitude. Think of the hundreds of billions every single year that will not be flowing out of US coffers thanks to newfound sources of US energy. Also think of the fact that the vast majority of the most profitable corporations on the planet are US based, and that the next wave of breakthrough innovation creating trillions of dollars in new market value is likely to be US-centric. If you think of the USA as a company, our present cash flows and discounted future cash flows are so huge that they dwarf net liabilities.

    There is pain coming, and severe corrections and bear market potential etcetera, but on a deep structure fundamental basis the United States is actually in pole position to potentially dominate the 21st century with the same level of outperformance that it saw in the 20th.

    Collapses and crashes will happen, but that's a pretty firm footing that most of the super-doomers completely miss.
    Oct 22 12:45 AM | Likes Like |Link to Comment
  • Inflation Already Happened, U.S. Economy Strength No Reason To Buy, And QE4 Would Make Things Worse [View article]
    Conclusion sounds nice, but not exactly...

    William Hester: "since 1950 stock prices and earnings have moved in opposite directions about 40 percent of the time. Looking at only the years where profits rose, prices fell 25 percent of the time... The correlation between earnings and stock prices is surprisingly low: 0.01 since 1950...."

    via http://bit.ly/1s5Ud6r

    It is also, of course, possible to have an environment where economic growth continues but corporate earnings flatline, even as wage pressures cut into profit margins. If this flatline comes with a negative re-evaluation of risk premiums, guess what the market does.

    In other words, a recession is not at all required for stocks to enter severe correction mode, especially from a historically wide starting point for corporate profit margins and earnings that are astonishingly tilted toward financial engineering (case in point:IBM).
    Oct 22 12:07 AM | Likes Like |Link to Comment
  • Bear Market For Energy Stocks Is Here To Stay, S&P's 200-DMA Cross Foreshadows More Selling [View article]
    Have you seen the price of oil? Do you understand that supply growth can outpace demand growth, especially in times of global economic contraction?
    Oct 16 04:31 AM | Likes Like |Link to Comment
  • Profitless IPOs, German Slowdown, U.S. Strength Foreshadow 'Brutal' 12 Months For Equities [View article]
    If you aren't comfortable going short, consider learning to go short. Dip a toe in the water of understanding the shorting process.
    Oct 16 04:29 AM | Likes Like |Link to Comment
  • Profitless IPOs, German Slowdown, U.S. Strength Foreshadow 'Brutal' 12 Months For Equities [View article]
    Facts are propaganda? Okay...
    Oct 16 04:28 AM | Likes Like |Link to Comment
  • Profitless IPOs, German Slowdown, U.S. Strength Foreshadow 'Brutal' 12 Months For Equities [View article]
    That is a serious mangling of our case. First of all, to say that "the US economy is so strong and it's all Europe's fault" doesn't even make sense. As for what Germany should do, the only way they could follow the US example would be to uncover a game-changing energy revolution.

    And the fact that austerity is killing Europe, or that Germany is mainly responsible for that outcome, is not really debatable. There are no attractive answers for Germany, or Europe, because the euro was such a bad idea in the first place.

    You suggest we are ignorant because our view does not fit with a point you hold with ideological zeal (the US economy must be bad because they've "mortgaged the future") -- and yet you don't seem to understand what we actually said.

    The US federal deficit as a percentage of debt to GDP is lower on average than it was in the 1980s. The US is better off, in terms of debt to income ratio, than most everyone else (and far better off than China). The US shale boom is an incredible game changer on multiple fronts, capital flows not least impacted. The ones who are "ignorant" are those who parrot false, tired statements with a superficial understanding of the macro that runs two inches deep, and is based more on religious articles of faith than actual understanding of economic relationships or examination of empirical data.
    Oct 15 12:56 PM | Likes Like |Link to Comment
  • Profitless IPOs, German Slowdown, U.S. Strength Foreshadow 'Brutal' 12 Months For Equities [View article]
    Sticks and stones may break our bones...

    In your quest to seek confirmation of emotional biases you already hold, there are plenty of echo chambers to choose from. Best of luck.
    Oct 15 03:20 AM | 1 Like Like |Link to Comment
  • Europe Woes, Small Cap Decline, Corporate Buyback Excess Fuels Deep Risk For Equities [View article]
    Thanks! More where that came from:

    http://bit.ly/KY19NG
    Oct 9 08:35 AM | Likes Like |Link to Comment
  • The Alibaba Debut Bears Uncanny Similarity To A Year 2007 Top Event [View article]
    High yield and corporates are in a danger zone as risk appetite threatens to contract, but government bonds are tricky for the reasons you suggest. The potential for safe-haven bids to cancel out interest rate selling is significant. Elevated volatility ahead.
    Sep 23 05:35 PM | 2 Likes Like |Link to Comment
  • Not Even Wrong: Why Data-Mined Market Predictions Are Worse Than Useless [View article]
    We do not at all disagree that a confluence of inputs, which means various interpretations of data, can be useful in making smart investing or trading decisions. But this is a different kettle of fish than predicting an outcome off a single variable. It is less like competing theories of science and more like good science vs bad science. Mathematical relationships considered with robust testing, multi-variable analysis and logical explanatory backdrop, used to determine attractive odds-based opportunities, are akin to what Dalio and Bridgewater do, and a process we would have no quarrel with. But again that is miles apart from pulling a single marble out of a bag when the puller does not even seem to understand the bag.
    Sep 15 01:25 PM | Likes Like |Link to Comment
  • Not Even Wrong: Why Data-Mined Market Predictions Are Worse Than Useless [View article]
    Cute, but you didn't even bother to make a real case.

    Mimicking your syntax, someone could say: "As a retail investor, I feel the need to watch CNBC... Squawk Box is too short term... from my point of view Cramer's Mad Money is more useful... I've made some correct decisions using Cramer's calls, augmented with simple lines on a chart... I've found that listening to a television commentator serves as a good thought tool" etc etc.

    We aren't thin-skinned, but generally prefer blunt statements of criticism to come with substance...
    Sep 14 03:20 AM | 1 Like Like |Link to Comment
  • Not Even Wrong: Why Data-Mined Market Predictions Are Worse Than Useless [View article]
    That which you call semantics relates to a key thrust of the piece -- people make absurdly precise market predictions on a constant basis...
    Sep 14 03:11 AM | 2 Likes Like |Link to Comment
  • Not Even Wrong: Why Data-Mined Market Predictions Are Worse Than Useless [View article]
    No, you are either deliberately being obtuse or completely missing the basics of probablity.

    You can go onto CNBC on any given day and hear predictions of where the S&P will be in six months -- information transmitted in the basic format of "within X time frame, X will happen."

    A money manager who says "I believe the S&P will be at X level by year's end" and a money manager who says "I don't predict the future but I know good things happen to cheap stocks and the intrinsic valuation of my holdings are very favorable" are worlds apart.

    Similarly, a poker player uses odds and probabilities on a constant basis with no means of future prediction at all -- it is literally impossible to know in advance what a turn or river card will be without some elaborate form of cheating, yet decisions on a probabilistic basis can produce consistent profit over a cycle.
    Sep 14 03:06 AM | 1 Like Like |Link to Comment
  • Not Even Wrong: Why Data-Mined Market Predictions Are Worse Than Useless [View article]
    You are using semantics to play devil's advocate in a manner that blurs a useful distinction. There are many phenomena that appear similar on the surface, yet are qualitatively different on dimensions that are useful to understand -- for someone to come along and say "I don't see the difference," or to willfully deny the difference, adds no value.

    Probabilistic thinking and predicting the future are simply not the same. They are related but different. Failing to understand this perhaps reflects a lack of philosophical familiarity with probability itself. If you understand the divide we are talking about but still reject the difference as immaterial, that is on you.
    Sep 14 03:01 AM | 1 Like Like |Link to Comment
  • The Euro's Pain Is Just Beginning, And Passive Indexers Are Asking For A Punch In The Face [View article]
    Not that simple. First, Buffett himself has said that corporate profits to GDP is one of the best valuation gauges of the market, and by that ratio markets are incredibly overvalued. Second, Buffett has a strong incentive to keep the masses as involved in markets as possible, and uses his bully pulpit to do so. Third, those who follow a passive indexing philosophy often recommend thinking in multi-decade time horizons, which means gritting their teeth beforehand at the prospect of 30 to 50% declines and simply enduring them -- if that's you're cup of tea, good luck with that. Fourth, Buffett is openly hypocritical in saying macro forecasts have no value while strongly and openly making a long-term bullish macro call on the economic trajectory of the United States via US equity markets.

    I think Charlie Munger is the most honest about it. The way Munger puts it, more or less, most Americans are too incapable or irrational (i.e. dumb and panicky) to make wise investments and should just buy index funds because it's the best option they have. It is advice for sheep, and not just any sheep, but sheep with a stoic willingness to be sheared for incredibly large amounts and long periods from time to time. If you want to roll that way, there are trillions that already agree -- takes all kinds to make a market.
    Sep 13 05:08 PM | 1 Like Like |Link to Comment
COMMENTS STATS
687 Comments
824 Likes