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Robert Duval
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Full time Investor / Trader, 17 years. Specialist in risk management, with intermediate trade focus, US stocks, international ETFs and commodities. Believe in correlation of markets, must understand all markets to trade one well. Self taught through continuous study of myself and other... More
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  • Timeless Investment Principles I Follow...just For My Followers.....

    Shhhhh don't tell anyone else -- here are the secrets: (highly technical)

    1. cut losses

    2. cut losses

    3. see 1 and 2.

    4. Divorce ego from investment choices and mistakes. Losses are part of the game. Be wrong, OK, don't stay wrong.

    5. contra the herd, but don't get trampled.

    6. know yourself. Well. Invest with a style that is you.

    7. see #6.

    8. know what's going on worldwide even to invest domestically. It matters.

    9. be a permanent student of all factors. Study your mistakes.

    10. credit leads.

    11. be fearless when others are fearful, and vis versa

    12. buy good management, that means politically too when internationally investing.

    13. stay within your area of competence

    14. defense wins football games and in investing too, long term.

    15. have your own vision, don't be a follower.

    16. don't chase what's most popular. Be uncomfortable.

    17. Be humble; stay humble

    18. See # 1 again. Really.

    19. Buy Business's, assets, Management, not stocks.

    20. Work harder than anyone else. Believe in yourself.

    Jul 25 1:49 PM | Link | 6 Comments
  • Get Out Of China A Shares (And Anything China) A Classic Bubble Market Facing A Inevitable Crash

    China, and in particular the China "A" shares, have been THE bull market story of 2015, in the face of slowing growth and exploding debt levels.

    Now it not just the following parabolic charts I will show you that call for extreme caution, its the character of the rally and who is playing it.

    Rather than make my own case, I'll simply share the charts and information via posted links, and the reader can decide whether this period rhymes with any other, and then briefly conclude with the current US story and possible effects.

    First, (NYSEARCA:ASHS), China A small cap ETF, and Shenzen 100 index --- Wow.

    ASHS Chart

    ASHS data by YCharts

    ^SS399004 Chart

    ^SS399004 data by YCharts

    China New Retail trading accounts Opened:

    And Here:

    China Debt to GDP:

    CNBC video about Chinese Farmer Day - Traders:

    Hanergy Film Crash:

    Alibaba fake transactions and customers: (NYSE:BABA)

    Vipshop accounting and misrepresentation: (NYSE:VIPS)

    Sound like a prudent investment situation or a bubble? You decide.

    Turning to the US, I'm reading that the low numbers of bullish investors on the AAII survey mean individual Investors are not participating in the bull market, the survey is a contrary indicator, and so there is no near term risk of a US stock market correction.

    I call these assumptive, unsubstantiated statements without looking at the data in context. Lets examine not pundit opinions, but hard factual data.

    Its really distortive for SA to allow pundits to publish commentary completely out of context, without documented links.

    First; individual investors exposure to stocks is the highest since just prior to the 2000 major top, and higher than the 2000 highs. This isn't opinion, its Fact:

    (click to enlarge)

    Next, Here's some information about that AAII report, that strongly suggests AAII investors actual lean towards "smart money" -- they are NOT contrary indicators. Remember this is a very small survey --

    "Despite a market that has held up relatively well, only 20% of
    these supposedly mom-and-pop investors are expecting higher
    prices over the next six months. Shockingly, this is the 2nd lowest
    reading since the bull market began.

    But here's the thing - these folks can be anyone. It is an
    anonymous online survey with a tiny sample size compared to
    the population it's attempting to measure. They are also
    dedicated investors, who show some evidence of learning from
    past behavior. In other words, past market peaks have seen
    them becoming less and less bullish as prices rise.
    So...are these actually "smart money" investors?

    From the Data.....The correlation to stock prices is clear. The more bullish mom and pop were, the better stocks performed going forward, and vice-versa." (source --

    So much for hanging one's bullish hat on that theory.

    What about Margin Debt -- which the Perma- bulls continue to tell us is meaningless as it can rise to ever - increasing heights: Maybe.

    Here's a chart the bulls don't want you to focus on -- Market Cap to GDP -- approaching the 2000 highs:

    Now as an aside -- I've noted the Bulls LOVED to quote Doug Short as he tracked the "secular bull' -- Funny he isn't nearly as popular lately with these cautious comments!

    Here's where we really are -- not a place of prudence and fear, but a atmosphere of pure speculation: Source -- Barrons:

    "Meanwhile, according to an article in Investment News, brokerage firms are pushing securities-backed loans through independent investment advisors. For years, the big-name wire houses have marketed these loans to their own customers with the pitch that they're a cheap source of credit to fund big purchases, such as yachts or houses, without disturbing their investment portfolios.

    Of course, the firms get to make money on the loans and keep the assets from leaving the building, not a trivial consideration when asset size instead of transactions increasingly drives brokers' compensation. As for the customers, Josh Brown of Ritholtz Wealth Management was quoted as calling these loans the "rich man's subprime."

    Never mind the real mania these days -- Private Equity Valuations:

    (and more relevant how Post IPO investors are assuming great risk)

    Uber is now valued at 41 Billion, as one example.

    How about Junior Biotech?

    Prudently valued market or atmosphere of Speculation, low interest rates and the greater Fool theory?

    You decide.

    I'm not saying the broader S&P 500 cannot move higher in the long run, or that the US economy has many positives at this time (which I've detailed in prior writings)

    However in an interconnected world, one should be watching areas like China, Interest Rates and Private equities, to fully assess the risks in their investments.

    Best wishes to all investors.

    Short ,

    Tags: ASHS
    Jun 13 1:07 PM | Link | Comment!
  • A Great Day To Reduce Risk And Sell / Short US Shale Oil Producers

    Today we have had a big oversold rally in the indices; + 236 points on the Dow with a primary catalyst being celebrations over a Greece refunding deal.

    However; I was a heavy seller and even initiated several short positions as well as reducing long side risk, because in my view what's happening in Treasuries is turning out to be the real story of 2015, and a potentially far, far bigger story than Greece.

    Once again; per my last article its all about the Bonds, and the debt exposure of US shale producers combined with an oil rally that appears to be -- pardon the pun -- running out of gas, means its time to aggressively sell this sector in particular, and be wary of high PE sectors, as well.

    Levels I am looking at in terms of interest rates would be major resistance on 5 year rates (FVX)at 1.85%, as you can see we are there:

    ^FVX Chart

    ^FVX data by YCharts

    Long rates have had a huge move too: (TYX)

    ^TYX Chart

    ^TYX data by YCharts

    And Corporate debt (NYSEARCA:LQD) is definitely starting to weaken in response, which may be the canary in the coal mine for some sectors:

    LQD Chart

    LQD data by YCharts

    Its all about the debt levels and leverage, and after 6 years of low rates and ever expanding leverage and valuations, at least some sectors are vunerable to a rate adjustment. Essentially; the Bond market is the tail wagging the dog, and the Bond market is telling the Fed it wants rate hikes!

    Turning to oil itself, (NYSEARCA:USO) appears to be -- possibly -- forming a bear flag:

    USO Chart

    USO data by YCharts

    The fundamental rationale for continued weakness in (shale) oil producers, and perhaps the price of oil, is as follows: (Credit to

    "The US producers have every incentive to push production back up to all-time high levels already.

    At the same time, OPEC is handcuffed from being able to do anything about it, except up their own production. Since we are already sitting at record levels of inventory storage (glut), one cannot help but think this is going to lead to another sharp price break before long.

    If you are an individual producer here in the US, and you do not bring capacity back online that you shut down in Jan-Mar as soon as the market seems like its healing, and your competitor does, then you are making a sacrifice for the good of your competitor, taking a hit to your revenue stream in order to keep supply tighter in the marketplace so your competitor can make more by pumping more.

    Right now, it is in the best interest of every big producer to pump as much as they possibly can, no holds barred. That will create a group outcome that none of them want. This is the defining dynamic in any commodity bear market, and has played out many times before.

    While recent data is improving, there is no way to avoid the over-supply consequences that the system is pregnant with right now."

    I am short the following three producers that I see have political (COS.TO) and / or debt issues (NYSE:PXD) and (NYSE:WLL). Another strong avoid, which I have tried unsuccessfully to short, is (NASDAQ:LINE)

    COS Chart

    COS data by YCharts

    PXD Chart

    PXD data by YCharts

    WLL Chart

    WLL data by YCharts

    To summarize;

    History has never charted a period when rates were zero for this long, so simply, the simplistic statements I've read in various forums that the S&P 500 must go up during the incipient stages of rate rises is bordering on foolishness, considering how long rates have been this low.

    How much debt of various sorts, corporate and margin investment debt, is tied to long rates staying extremely low? I don't have a precise answer but after 6 years you can bet a boatload.

    My primary risk factor has been higher rates as inciting corrective activity, and I think we are there. 1.7% on 5 year rates is a big number for me and we've broken that.

    Other intermediate term risk factors I see

    A) -- continued weakness in transports on a multi week basis.

    B) A parabolic rise in China A shares that I think will burst at least into a nasty correction.

    I remain with my group of core longs but have more than hedged with shorts for the intermediate term. This potential "lower high" large bounce is a wise day in my view to reduce risk / reevaluate positions.

    I express no change in long term view with this move, I remain bullish on both the US economy, consumer, and long term US and certain international markets.

    Jun 10 4:37 PM | Link | 1 Comment
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  • No bounce in leveraged loans: #credit not confirming. #BKLN
    about 5 hours ago
  • I have not changed my primary views and see this as a bear market type rally. Reiterate raise cash. Risks to sub 1700. No I'm serious
    about 7 hours ago
  • Big Divergence #HYG with energy XLE. XLE ripped to mid - August highs, SPX back to Sept highs. #HYG not even close to either, Yet.
    1 day ago
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