The Pragmatic Capitalist

What Are the Best Hedge Funds Buying Now?

Where does this post mention anything about value or my specific ideas on AAPL?


On Nov 19 08:30 AM Timeline Strategy Consulting wrote:

> Contradicts your last posting about AAPL being overvalued.

Amazon, Apple Stock Going Vertical: This Never Ends Well

I'll bend on AAPL. You could certainly make the argument that AAPL is not overvalued. But you could easily make the argument that at 5 times sales and 1.5 PEG it is overvalued. You could also make the argument that there is very little value left in the shares using aggressive estimates in a DCF model. $10 at 18% growth puts us roughly at $225. Not overvalued, but what happens if the economy dips and/or AAPL loses market share? Nowhere near as bloated as AMZN, but how good is the risk/reward in this scenario?

I think there is no question Amazon is overvalued.


On Nov 19 12:48 PM Wireless Wiz wrote:

> Seriously Pragmatic Capitalist? What are the valuations for AMZN
> and APPL? I am talking about free cash flow multiples, not earnings.
>
>
> For AAPL it's only about 14.5X trailing 12 month FCF net of cash.
>
>
> For Amazon, the multiple is 35X trailing 12 months FCF net of cash.
>
>
> Don't throw AAPL in with AMZN when talking about high valuations.
> That shows you are not living up to your name. (My figures come
> directly from company press releases.)

Why You Can't Short This Market: The Expectation Ratio

I don't ever pretend to have played this rally perfectly. I sold out of my bottom call long position FAR too early and have only gone heavily long on a few other occasions since then. But after calling the crash last year, returning 19% in a -45% year, calling the bottom (to the day), participating in a sizable chunk of the rally's upside and sitting on an all-time high I think I have the right to defend my long-term record. Of course, SA readers only get to read what the SA staff picks off my site so the calls aren't easy to follow here.....

I don't pretend to get all the calls right, but my risk adjusted returns and calls have been good. The overall premise of that article was spot on in my opinion:

"I believe hedging strategies will achieve good risk adjusted returns in the coming months."

PS - article should say that I recently sold at 1,100....


On Nov 19 11:19 AM SeekingTruth wrote:

> While I agreed with this article "overall", I think readers should
> go back and read the author's article: "Risk/Reward in a Bear:" to
> put his current info in a more balanced framework and perspective.

Why You Can't Short This Market: The Expectation Ratio

There's a big difference between having a negative macro outlook and trading within that outlook on a micro basis. I was still very bearish at the March 8 bottom, but felt that a long bias would serve me well. You can be quite bullish in the short-term regardless of your macro outlook....I have been bullish at many stages during this rally, but only actually went short on June 1st for a few weeks. I have maintained throughout this rally that it is primarily a government driven recovery and that it could not be stepped in front of on the short side....


On Nov 19 10:36 AM mcl_mixer wrote:

> "Ever since our March 8th bottom call, I have maintained that the
> market could not be shorted."
>
> Perhaps you should read your own writings.
>
> seekingalpha.com/artic...

Who Is the Mystery Buyer?

Perhaps you are correct. Perhaps they represent nothing. That would be a relief, however, as someone that used to execute large institutional orders I have a hard time rationalizing why anyone in their right mind would execute a several hundred million dollar block trade well above the asking price on a relatively quiet day. These orders are generally filtered thru several brokers over the course of several hours or even days. What motive does such a large buyer have besides jamming the price higher? It would be conspiratorial if it weren't true....

Perhaps I am wrong and someone has a rational explanation, but it simply doesn't add up.

Furthermore, I have been long at several critical junctures of this rally including calling the March 8th bottom to the day (pragcap.com/coming-thi...) and before each earnings season. So no, I am not just some bitter short seller who can't explain why the market keeps rising....Just another investor trying to connect the dots. Heck, perhaps this is a reason to be bullish?


On Nov 10 10:14 PM Mike McCurdy wrote:

> If I am not heavily long at the time of these conspiratorial spikes
> then clearly, it is the shadow government market manipulators that
> are juicing the futures.
>
> PS - those two charts quantify nothing.

Markets Cheer the Buffett Buy

Oh come on. So you're a good gambler if you bet on black and it lands on red and the pit boss comes over and moves the ball onto a black slot and hands you your "winnings"? Please explain to me how that logic computes?

That's exactly what happened. He got bailed out just like the rest of the banks. That doesn't make the GS trade a great investment it makes it a lucky gamble.


On Nov 03 03:15 PM User 504111 wrote:

> "IF" GS would have went under"....of course we would have been saying
> something different....We also wouldn't be following Buffet "IF"
> all his other investments would have failed.....but they didn't....That
> might be the worst argument I've ever heard

Markets Cheer the Buffett Buy

Very interesting to see most of the comments here implying that Buffett's Goldman deal was some stroke of brilliance when in reality, it was a near disaster save for a hefty dose of taxpayer help. I wonder what everyone would say about Buffett if Goldman had gone bankrupt (as they almost certainly would have without taxpayer help). I think the comments here would be quite different.

There is no denying that Buffett's success is unmatched, but there is little proof showing that Buffett is anything more than an outlier in a massive statistical data set. I doubt that anyone who praises his past performance is thanking BRKA for their early retirement....

Regardless, the point remains, it is an unusual type of deal for Buffett and that was the main point here. That doesn't mean it will fail, but there's no denying that it is a bit unorthodox for a Buffett merger.

Jeff Saut: Unwaveringly Bullish

I am and have been long for much of this rally. Don't confuse my macro outlook with my micro moves.


On Oct 21 01:14 PM DormRoom wrote:

> I think you're misinterpretating Mr. Saut's argument. His argument
> is simple: It's better to make money, than be 'right'.
>
> His actions may be inconsistent in so far as he looks @ his technical
> analysis indicators to suggest his course of action. And I believe
> they are telling him the markets are still trending bullish. If/when
> those those indicators change bearish, he'll sell/short, and make
> money on the way down.
>
> In the end you may be right in your thesis Pragmatic Capitalist.
> But I find it ironic that your moniker is 'pragmatic capitalist',
> yet you seemed so beholden to your conjecture; theories that are
> preventing you from maximizing gains on this bullish run.

Regarding Osinski, Toxic Assets, and Felix Salmon

If you think everything you read on the internet with regards to stocks is categorized as "financial advice" then you have another thing coming for you and your portfolio. That is just flat out undeniably wrong.

And if you think that a group of diversified growth and income funds as well as three of the most highly traded ETF's on Wall Street are dangerous, then I don't even know what to say....

Your comment essentially implies that anyone who bought XLF or Goldman Sachs after Warren Buffett got that sweetheart preferreds deal last year, should have never even bothered. That sort of trade is no different and your logic doesn't compute.

Sorry, but you're wrong.


On Oct 16 04:54 PM newbietech wrote:

> "So how can you consider joining Michael Osinski and invest in toxic
> assets?"
> It is quite disingenous of you to say you are not offering investment
> advice.
>
> Somewhere in your piece you write, "The best options for small investors
> are via the closed-end fund market and exchange-traded funds (ETFs)".
> So even though you deny it here I will take this to mean you are
> addressing 'most investors' since small investors are much larger
> in number than institutional and professional investors.
>
> There is no point to writing your piece if it is not to point out
> how small investors can invest in something approaching the kind
> of investments that Osinski was talking about.
>
> Felix's post is quite clear in saying that small investors should
> not even try. This is much more categorical than what you were saying
> and it's good advice.

Regarding Osinski, Toxic Assets, and Felix Salmon

Trust me, it wasted a lot more of mine....


On Oct 16 06:29 AM a fat panda wrote:

> Thanks for wasting 40 seconds of my life...

Regarding Osinski, Toxic Assets, and Felix Salmon

The comment section on my site pretty much puts this one to rest, but if Felix wants to have the last word I'd be more than willing to let him post a comment on my site. pragcap.com/please-all...

Regarding Osinski, Toxic Assets, and Felix Salmon

I was asked to submit it.....I accepted. So crucify me.

Has the Rally Already Exhausted Itself?

Rick,

How can you not call it a bubble? Global housing bubble, multiple stock bubbles (China, India), a massive debt bubble, oil bubble.....Smells like a duck, quacks like a duck....

An Artificial Recovery?

Upgrayed,

Thanks for pointing that out. You're obviously not a reader of my site because. As I often point out, you can have a macro bearish view and be quite bullish at times. Yes, I believe the secular bear is still with us, but I have been VERY bullish at times. In fact, I first bought stocks this year the DAY BEFORE THE MARKET BOTTOMED on March 8th:

pragcap.com/coming-thi...

I nailed the government induced rally better than just about anyone. But thanks for pointing out a common misconception so I could clarify.


On Aug 03 09:40 AM upgrayed wrote:

> Hey bear market capitalist, I'm looking at you 3/12 article, "The
> Bear Market Is Still Alive". You missed the boat by a mile. If
> you really knew what you were doing wouldn't you have been able to
> identify the greatest investing opportunity in decades? I buy all
> the negative arguments too but there is a 5000 lb gorilla in the
> room, a raging rally that most of the SA bloggers were completely
> blind to. Why don't you step away from your comfort zone and really
> analyze why you failed so miserably instead of making excuses. We
> might well fall back into a bear market but if I had profited correctly
> during this period, I would have been in better shape to weather
> the storm.

This Recession Isn't Over: Now for the Hard Part

The recent leading indicators figures are almost entirely stock market returns. The stock market returns have contributed over 50% of the figures strength. It's mind boggling that so many "professionals" just read the headline figure without understanding the contributing components. This is nothing more than double counting. If you're using past stock market returns to gauge future economic strength you're in for some serious portfolio pain.

I cited Japan as the classic example where GDP turned up and the stock market continued sideways to down for years. Look at the data. Positive GDP does not necessarily mean company profits are going to soar.

It's quite obvious that you have fallen for the green shoots theory and completely fail to understand the magnitude of the deleveraging cycle that we are confronted with. Don't worry, almost every living person is making the same mistake because they haven't experienced this type of economic cycle. People are living in a dream where we just repeat the soft business recessions of the 80's and 90's. This is a totally different animal.


On Jul 09 04:10 AM Michael Murphy wrote:

> Can you explain why The Conference Board leading indicators are showing
> such strength? And why the ECRI Weekly Leading Indicator is so strong
> that they are pounding the table to tell their clients that the recession
> is ending now?
>
> Also, you said: "There is nothing significant about the technical
> end of a recession. Positive GDP growth does not mean stock prices
> will be higher...In other words if you're buying and selling stocks
> based on what the NBER says about a technical recession you're making
> an enormous mistake."
>
> Please cite a single case where a major recession ended but stock
> prices did not turn up sharply either in advance or very shortly
> after the recession ended.
>
> Obviously, I completely disagree with your article. Watching the
> lagging indicators for signs of strength while the market takes off
> without you is not very pragmatic. The recession is over.
>
> seekingalpha.com/artic...