Market recap: It was quite a day for the tea-leaf readers. Stocks spiked early on release of Bernanke’s prepared testimony, then began to fade as he seemed to break with the dovish tone during his Q&A, and then turned red as the Fed meeting minutes indicated a bit of a dilemma over when to taper. Gold futures, up more than 1% early, finished negative. The dollar rallied; Treasurys fell, lifting 10-year yields to 2%. [View news story]
Tapering of QE will be done gradually and is a welcome sign that the economic recovery is becoming self-sustaining and robust, so don't panic, and if others panic, buy undervalued companies like GNW and WDC on the dip.
The Myth Of Liquidity And Bubbles In Financial Markets [View article]
Hi Tack,
I think you are right. QE will not be removed suddenly and entirely in one fell swoop as so many fear will cause a huge correction in the stock markets but incrementally and gradually over a period of many months. Furthermore, QE will only be removed after the economic recovery has become more or less self-sustaining; and interest rates will also only be raised incrementally and gradually over time so it will be a number of years before interest rates may become high enough to quash the stock markets. So the permabears are wrong. That said, no market goes up in a straight line...there will be corrections along the way, but such corrections should be viewed as buying opportunities rather than panic selling times.
Seagate (STX -3.6%) and Western Digital (WDC -1.8%) slump after Jim Chanos calls the hard drive makers value traps at the Sohn conference. Chanos, who was bearish on Dell before the bottom fell out of its PC business, calls the hard drive industry "PC with a year lag." "Most people have way too much storage as it is on their laptops and desktops," he adds. Seagate is Chanos' favorite short - he cites margin pressure, accounting issues (Chanos thinks $1B of goodwill from the Samsung deal could mask cash flow issues), and insider selling. [View news story]
Mr. Chanos is just one person with an opinion, and his opinion happens to be dead wrong, as the growth in big data will continue apace and a large portion of revenues for STX and WDC has shifted away from PCs into the cloud and other devices, and hybrid drives incorporating the best technology of both HDDs and SSDs are the wave of the future, plus STX and WDC are in a leadership position and basically have a duopoly and have the resources to shift into SSDs as the time comes. I continue to be surprised at how much one analyst's opinion moves Mr. Market, but I would consider this a buying opportunity as shares go on sale for STX and WDC.
What Are The Causes Of The 'Sell In May' Seasonal Market Phenomenon? [View article]
Hi Kerry,
Thanks for your kind words and the link to your article which I thoroughly enjoyed reading as well as the comments. After reading your article, I will definitely be paying more attention to the 17.6 cycles that seem like a rather robust statistical phenomenon in the markets. Looks like 2018 will be a great time for us to invest and meanwhile we should be trading the swings.
Genworth Financial Announces First Quarter 2013 Results [View article]
First quarter of 2013 net operating income of 30 cents per share much better than first quarter of 2012 3 cents per share, positive trend to continue as housing market continues recovery.
Western Digital's Robust Growth And Outlook Support $64 Value [View article]
Hi Trefis,
Thanks for the informative article that confirms my research that WDC is a strong buy and undervalued by the current market. WDC is not just a leading HDD company but is also a leading SSD company and HDD/SSD hybrid company, thus alleviating the concern by some that its' technology is becoming outmoded. WDC has the strong resources and smart management to adapt with the technology.
James Altucher: Why The Stock Market Is A Sucker's Game Right Now (And What Stocks I Own) [View article]
Hi James,
I love you man. Keep up the good work. I love your optimism in the face of so much shit. But I'm surprised that you are getting a bit pessimistic. I think our economic recovery from Great Depression redux is still in the early stages. For example, the central bankers around the world will keep pumping huge amounts of liquidity until the economic recoveries around the world are self-sustaining and that by definition means that economies will be strong and vibrant, no? I've read much of your writing and you have a great sense of humor and a great curiosity and a keen wit and I love that you are eccentric (as all geniuses are) and you don't give a damn what your hair looks like (just like Einstein, nonconformism is a sign of genius). Maybe I shouldn't belabor the point about your crazy hair but it got me thinking, Why should we have to waste so much time just keeping up appearances? Did you know that your average person (on average, women spend considerably longer time than men) spends/wastes 2+ years of their waking life worrying about and managing their hair (thinking about and looking at and checking and rechecking and combing and primping and brushing and shampooing and conditioning and coloring and shaving and plucking and waxing and moussing and cutting and styling and Rogaining and Hairclubbing etc)? Which is really crazy, the person with "wild" hair who doesn't worry about or manage their hair and shaving and whatnot and saves 2+ years of their waking life for more important things than just keeping up appearances or your average self-conscious conformist person who wastes 2+ years of their waking life worrying about their hair, shaving and reshaving etc? Which brings me back to the subject of the markets, your stock picks are rather nonconformist. I will look into your picks a bit but my initial impression is that since they are microcaps or listed on the pinksheets they are too risky and volatile for my nerves. What do you think of Genworth or Western Digital? I think those are better and safer bets, no? By the way, don't you think it's a bit hypocritically self-righteous and maybe even hyperbolically elitist of you to say that the market is a criminal enterprise and daytrading is bad after you have made a good living off of it? Best wishes, Nate.
Bank of America (BAC) shareholders better familiarize themselves with Article 77, writes Mark Palmer, as it's possible the $8.5B the bank has reserved to handle claims against Countrywide MBS will be woefully small. At issue is an Article 77 proceeding set to begin May 30 at which a judge could toss the $8.5B settlement. The number might then reach as high as $60.5B, writes Palmer - about 24% of the bank's book value. [View news story]
This is a phony risk conjured up by a short-seller because BAC could file a bankruptcy as to Countrywide Inc. and discharge all its assets and liabilities as they have taken great pains to keep as legally separate and distinct entities from BAC Inc. so in the highly unlikely event the $8.5 billion settlement is somehow overturned by the judge BAC could discharge and liquidate the Countrywide debt/potential debt entirely (and the settlement is very unlikely to be overturned by the judge because there is a very strong public policy and very strong laws favoring and upholding voluntary settlements between litigants).
Western Digital: The New Paradigm Unfolds [View article]
Hi Sunil,
Good article and solid analysis of an undervalued company that handily beat on earnings and revenues. WDC gets no respect from the market, trading at P/FCF 4.3 and forward P/E of 6.7. Amazing to me that it was up about 7% today and then went half a percent negative on the day after the great news, what happened?
I hope against hope that OCZ makes it and becomes profitable so they can pay money back in the class actions to all the shareholders they defrauded with their bogus financials, and I hope that Ryan Petersen is held personally liable and is forced to pay back all his money to compensate for defrauding investors.
2013 Outlook: Stock Bulls May Have Room To Run, Bond Vigilantes Lurk [View article]
Hi James,
I think you tend to be overly bearish in your longer term outlook. The megatrends of technological efficiencies through ever increasingly powerful and intelligent computers and robotics will drive record corporate profitability over the long term because corporations will be able to generate better and better products for less and less price. For one example, computers have gotten exponentially more powerful (Moore's Law) and yet are continually falling in price. To various degrees, Moore's Law applies to all technological advancements, not just chip performance. This is part of why geniuses such as Michio Kaku and Ray Kurzweil predict a coming age of abundance. So it would appear your long term bearishness may be misplaced, although I agree that there are some disturbing demographic trends.
Market recap: It was quite a day for the tea-leaf readers. Stocks spiked early on release of Bernanke’s prepared testimony, then began to fade as he seemed to break with the dovish tone during his Q&A, and then turned red as the Fed meeting minutes indicated a bit of a dilemma over when to taper. Gold futures, up more than 1% early, finished negative. The dollar rallied; Treasurys fell, lifting 10-year yields to 2%. [View news story]
The Myth Of Liquidity And Bubbles In Financial Markets [View article]
I think you are right. QE will not be removed suddenly and entirely in one fell swoop as so many fear will cause a huge correction in the stock markets but incrementally and gradually over a period of many months. Furthermore, QE will only be removed after the economic recovery has become more or less self-sustaining; and interest rates will also only be raised incrementally and gradually over time so it will be a number of years before interest rates may become high enough to quash the stock markets. So the permabears are wrong. That said, no market goes up in a straight line...there will be corrections along the way, but such corrections should be viewed as buying opportunities rather than panic selling times.
Nate
Beware Long-Term Damage From Stock Market Bubble Forming Now [View article]
Seagate (STX -3.6%) and Western Digital (WDC -1.8%) slump after Jim Chanos calls the hard drive makers value traps at the Sohn conference. Chanos, who was bearish on Dell before the bottom fell out of its PC business, calls the hard drive industry "PC with a year lag." "Most people have way too much storage as it is on their laptops and desktops," he adds. Seagate is Chanos' favorite short - he cites margin pressure, accounting issues (Chanos thinks $1B of goodwill from the Samsung deal could mask cash flow issues), and insider selling. [View news story]
Is This The Market Top? How To Best Position For A Sell-Off [View article]
What Are The Causes Of The 'Sell In May' Seasonal Market Phenomenon? [View article]
Thanks for your kind words and the link to your article which I thoroughly enjoyed reading as well as the comments. After reading your article, I will definitely be paying more attention to the 17.6 cycles that seem like a rather robust statistical phenomenon in the markets. Looks like 2018 will be a great time for us to invest and meanwhile we should be trading the swings.
Nate
Genworth Financial Announces First Quarter 2013 Results [View article]
Western Digital's Robust Growth And Outlook Support $64 Value [View article]
Thanks for the informative article that confirms my research that WDC is a strong buy and undervalued by the current market. WDC is not just a leading HDD company but is also a leading SSD company and HDD/SSD hybrid company, thus alleviating the concern by some that its' technology is becoming outmoded. WDC has the strong resources and smart management to adapt with the technology.
James Altucher: Why The Stock Market Is A Sucker's Game Right Now (And What Stocks I Own) [View article]
I love you man. Keep up the good work. I love your optimism in the face of so much shit. But I'm surprised that you are getting a bit pessimistic. I think our economic recovery from Great Depression redux is still in the early stages. For example, the central bankers around the world will keep pumping huge amounts of liquidity until the economic recoveries around the world are self-sustaining and that by definition means that economies will be strong and vibrant, no? I've read much of your writing and you have a great sense of humor and a great curiosity and a keen wit and I love that you are eccentric (as all geniuses are) and you don't give a damn what your hair looks like (just like Einstein, nonconformism is a sign of genius). Maybe I shouldn't belabor the point about your crazy hair but it got me thinking, Why should we have to waste so much time just keeping up appearances? Did you know that your average person (on average, women spend considerably longer time than men) spends/wastes 2+ years of their waking life worrying about and managing their hair (thinking about and looking at and checking and rechecking and combing and primping and brushing and shampooing and conditioning and coloring and shaving and plucking and waxing and moussing and cutting and styling and Rogaining and Hairclubbing etc)? Which is really crazy, the person with "wild" hair who doesn't worry about or manage their hair and shaving and whatnot and saves 2+ years of their waking life for more important things than just keeping up appearances or your average self-conscious conformist person who wastes 2+ years of their waking life worrying about their hair, shaving and reshaving etc? Which brings me back to the subject of the markets, your stock picks are rather nonconformist. I will look into your picks a bit but my initial impression is that since they are microcaps or listed on the pinksheets they are too risky and volatile for my nerves. What do you think of Genworth or Western Digital? I think those are better and safer bets, no? By the way, don't you think it's a bit hypocritically self-righteous and maybe even hyperbolically elitist of you to say that the market is a criminal enterprise and daytrading is bad after you have made a good living off of it? Best wishes, Nate.
Sell In May? [View article]
Bank of America (BAC) shareholders better familiarize themselves with Article 77, writes Mark Palmer, as it's possible the $8.5B the bank has reserved to handle claims against Countrywide MBS will be woefully small. At issue is an Article 77 proceeding set to begin May 30 at which a judge could toss the $8.5B settlement. The number might then reach as high as $60.5B, writes Palmer - about 24% of the bank's book value. [View news story]
Western Digital: The New Paradigm Unfolds [View article]
Good article and solid analysis of an undervalued company that handily beat on earnings and revenues. WDC gets no respect from the market, trading at P/FCF 4.3 and forward P/E of 6.7. Amazing to me that it was up about 7% today and then went half a percent negative on the day after the great news, what happened?
Nate Sterling
OCZ: Bankruptcy Within 6 Months? [View article]
2013 Outlook: Stock Bulls May Have Room To Run, Bond Vigilantes Lurk [View article]
I think you tend to be overly bearish in your longer term outlook. The megatrends of technological efficiencies through ever increasingly powerful and intelligent computers and robotics will drive record corporate profitability over the long term because corporations will be able to generate better and better products for less and less price. For one example, computers have gotten exponentially more powerful (Moore's Law) and yet are continually falling in price. To various degrees, Moore's Law applies to all technological advancements, not just chip performance. This is part of why geniuses such as Michio Kaku and Ray Kurzweil predict a coming age of abundance. So it would appear your long term bearishness may be misplaced, although I agree that there are some disturbing demographic trends.
Nate Sterling
Up 10%, Are Stocks Now Too Dangerous To Hold? [View article]
Thank you for another informative article. I agree with your longer-term bullish thesis, and of course there will be minor corrections along the way.
Nate Sterling