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Michael Clark
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Michael J. Clark was born and raised in Sinclair, Wyoming. He is a poet, novelist, artist, historian, and market analyst. His fine arts portfolio can be found at the following address: http://www.hoalantrangallery.com/MJC2.htm His writing portfolio can be found at:... More
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  • IS THIS THE "BIG ONE"? 4 comments
    Apr 8, 2014 11:28 AM

    RE-BALANCING OUR PORTFOLIO: WHAT DOES THE NEW PORTFOLIO TELL US?

    We have used this week as an opportunity to re-balance our portfolio. Central to this task is the understanding that years of central bank nursing of assets appears to be ending. Fed tapering, and associated discussions of near-term interest rate increases, is at the root of this.

    Why would the Fed do this now, after years of 'not-printing' money to bestow upon the rich in an attempt to generate economic growth. QE was clearly anti-dollar in its original intent. The Yellen Fed is attempting to re-balance the Bernanke Fed extremism, which was designed to save the banks, and apparently also (if we believe the Fed) Western Civilization.

    Now apparently Western Civilization will be served by a salvaged US Dollar. Is the East (that is, Russia, with China, through India, and through the Brics and with Saudi Arabia and Iran) attempting to crush the US monopoly on energy payments (the so-called Petro-Dollar), hoping to crush the Dollar as the world's universal currency? Some writers speculate that this is the cause of recent Fed efforts to strengthen the Dollar (beginning with tapering).

    Clearly Russia can strike back when the West's sanctions paint them into a corner. Russian crushing of the Petro-Dollar would probably cause the US to go to war with Russia. We all like a fixed game. The Petro-Dollar is a fixed game, creating heavy demand for US Dollars, without which we would not be able to borrow as much as we do.

    And the market has finally reacted to all of this -- and to the spectre of the eventual elimination of High Frequency Trading, which has been all abuzz this past week. The FBI, the Fed, the Congress all suddenly care about the markets not being rigged to favor the rich. Odd that it took so long to make everyone care.

    Suddenly stocks are plummeting. Is this the BIG ONE. Is this the beginning of the end. I am reminded that the Nikkei Index, Japan's stock market, lost some 87% from 1989 (it's housing bubble popping) through 2010. We have been following Japan, step for step. Europe and England have been following us. Are we all going to hell?

    High-flying momentum stocks have been hammered. Our new portfolio shows all this. Is this a rotation into...what? Into more established companies that actually earn money with their business? We do see this. We see a rotation into safer issues. SAFETY. Suddenly safety is a bonus. Oddly we also see a rotation, at least short-term, into non-US markets, including China, and developing nations: Asia, Brazil, even Turkey. Really? Why Turkey?

    Of course, sophisticated money managers have learned to use a full palette in their cutting-edge investment technology. Shift your money from overbought markets into oversold markets. Is China oversold? This isn't clear. Clearly the developing world has seen its markets hammered recently.

    Is that all this is, just another shuffling of money to oversold places? Maybe. There is, in truth, not a lot to cheer about in the global economy, or in global politics. In fact, we seem to be slipping closer to the abyss each day. Bernanke's plan to save us from the abyss was to stall, by printing money to give to American and World bankers and corporations in hopes of staving off massive bankruptcies and defaults. He hope organic growth would return to the marketplace and save him and us all. He did not understand that DEBT, itself, was the problem. He helped to fuel a second housing bubble and a stock market bubble; he did not understand that the housing bubble, itself, was fatal to the global economy. Housing costs too much. Housing costs too much on either an overpriced mortgage or on a monthly rent that consumes most of the working poor's salaries. There is no money left over for anything else. Americans chose housing first; then they lined up by the millions for government food stamps, so they could afford to eat.

    Americans felt richer if they owned a house that tripled in value from 2004-2007, but this only allowed them to use that paper-wealth to borrow more at the bank. Clearly their children and their children's children would never be able to pay three times what their parents paid for their 'Las Vegas bonanza' house unless their salaries were three times higher than their parents' salaries - and their children were losing their jobs in record numbers, and their children's children were settling for jobs in McDonalds for minimum wage. What did Bernanke NOT understand about this picture.

    We hear from the media that American MOMO (Momentum) Nasdaq stocks were getting torched this week because they were overpriced. I remember hearing volatile arguments over the last year-and-a-half from 'experts' claiming that American stocks were not overpriced. I don't want to engage in that argument/discussion now. According to ZeroHedge, LinkedIn was trading at 718 times current earnings, Amazon.com 557 times current earnings, and Netflix 140 times current earnings. To some that does not qualify as overpriced.

    But it is not just the New Tech monsters (Nasdaq Bubble Two, remember 2000?) that were being sold off. Attached is a list of stocks we now are trading short in our re-balanced portfolio. We understand Tesla and Netflix and Pandora and Amazon and Facebook and Salesforce and Priceline being on this list, and all the overprice biotech companies as well. But Mastercard, Citicorp, Goldman Sachs, Scorpio Tankers, Royal Bank of Scotland, Boeing, Biogen, Ben Franklin and St. Jude Medical and MGM and Nike? That's a pretty wide swathe of injured birds. The Russell 2000 Index is on our short list; also so is DRG, the Amex Pharmaceutical Index.

    SHORT

    3D Systems

    Adobe Daily

    Affymetrics Inc.

    Agnico-Eagle Mines

    Akamai

    Allscripts Health Solutions

    Amazon

    American Barricks Gold

    Ameritrade Corp

    Annie's Inc

    Apollo Global Management

    Apollo Group

    Aruba Networks

    AVEO Pharmaceuticals

    Baidu

    Ben Franklin

    BioCryst Pharmaceuticals

    Biogen Idec

    Biotechnology ETF Daily

    Blackberry (RIMM)

    Blue Nile

    Boeing

    Boyd Gaming

    Bristol Meyers

    Cadence Design Systems

    Caesar's Entertainment

    Celgene Corp

    Cell Therapeutics

    Cepheid

    CH Robinson Worlwide

    China Sunergy Daily

    China Tech-Faith Wireless

    CITI Group

    Community Healthcare

    Computer Sciences

    Corinthian Colleges

    Cytori Therapeutics

    Dangdang E-Commerce China

    Direxion Daily Small Cap Bull

    Dover Corp

    DR Horton

    Dry Ships Daily

    E-Trade Financial

    Earthlink Inc

    Endo Pharmaceuticals

    Euro/Brazilian Real

    F5 Networks

    Facebook

    Fusion-IO

    Global Solar Energy ETF

    Gold Daily

    Gold ETF leveraged

    Gold Junior Minors ETF

    Gold Stock Index Daily

    Golden Star Resource Gold

    Goldman Sachs

    Google

    Groupon Inc

    Henry Schein

    Herballife

    Homebuilders ETF

    Homestake Mining

    Huron Consulting

    Illumina Corp

    Immersion Robotics

    Infosys

    Intl Educational Svc

    Intl Gaming Tech

    Ironwood Phama

    Japan Index ETF

    Kansas City Southernn

    KBH Home

    Liberty Global

    Lockheed Martin

    Mastercard

    Mechel Open Joint Stock Company

    MGM Mirage

    Monster Worldwide

    NA REIT Motgage Plus ETN

    Nanometrics Inc

    Nasdaq Index Daily

    Netflix

    Neurocrine Biosciences

    New Oriental Educations and Technology

    New Oriental Educations and Technology

    Nike Daily

    Northern Oil and Gas

    Ocwen Financial

    Orexigen Pharmaceuticals

    Pandora

    Pharmaceutical Index

    Philadelphia Gold and Silver Index Daily

    Plum Creek Timber

    Priceline

    Radian Group (Mortgage Insurance)

    Raven Industries

    Red Hat

    Royal Bank of Scotland Daily

    Russell SMall Cap Index

    Russian Index ETF

    Salesforce.com

    Sarepta Therapeutics

    Scorpio Tankers

    Sears Holdings

    SEI Investment Corp

    Silver Standard Resources

    Silver Wheaton

    Sina Corp

    Solar ETF

    St. Jude Medical

    Synaptics Inc

    Tableau Software

    Tesla Motors Daily

    Twitter

    Valeant Pharmaceuticals

    Vivus Inc

    Westport Innovations

    Williams Companies

    Xoma

    Yahoo Inc.

    Yandex NV

    Yingli Green Energy China

    YouKu China

    Our long list is more muted and clearly more 'defensive'.

    LONG

    3-M

    7-10 Year TBond Fund

    Agribusiness ETF

    Altria Group

    Australian Dollar ETF

    Coca Cola

    Cocoa ETF

    Direxion Daily Small Cap Bear -- this is a short, of course

    GameStop

    Genco Shipping Corp

    Gold Miners Bear 3x ETF -- this is a short also

    Grains ETF

    Lululemon

    Malaysia Index ETF

    Mcdonalds

    Microsoft

    Nam Thai Electronics

    Newfield Explorations

    Oil Stock Index

    PetroChina

    PNC Financial Svc Daily

    Proctor and Gamble Daily

    Royal Bank of Canada

    Sao Paolo Brazilian Index

    Sassol Ltd S Africa

    Schnitzer Steel Indust

    Short (Double Short) Oil -- this is also a short

    Short MSCI Japan ETF Daily -- short

    Short Russell 2000 Index ETF -- short

    Simon Property Group

    Sony

    Spider Oil Gas Exploration ETF

    Taiwan Weighted Index

    Toronto Dominion Bank

    Total S.A.

    Turkey Index ETF

    United Healthcare Daily

    Utility Index

    Walmart

    Wells Fargo

    Westpac Bank Corp (Aus)

    Xinyuan Real Estate China

    It needs to be remembered that we are traders and we will be quick to close a position once it breaks our own trend rules.

    We will provide follow-up charts and other discussions of this list.

    Experts have lined up all week to ensure the investing public not to panic and to hold long-term, for 'this is not the beginning of a bear market'. I don't think we can even talk about bull markets and bear markets any longer, since manipulation of every market by central banks and by governments through central banks has never happened on this level before. If we subtract the $4 trillion from market gain since 2008, this changes the picture of a bull market quite decidedly.

    Will someone get scared and jump up with trillions more to support stocks? Who? The Japanese tried it; and now they have a continuing disaster to deal with, and much greater debt levels. China? China is letting worthless companies go bankrupt finally, companies that were living off cheap loans that made it seem they were not failing. The trouble with low interest rates is that a company can live off low-interest loans. It is the bane of real capitalism.

    There is pressure on Europe to follow in the QE path. But it is not flying in Europe. Europeans understand that QE is stealing money from national citizens to give to failing banks who did not do their job right. That is a hard sell in Europe. In America, it was an easy sell. In America, businessmen (entrepreneurs) can apparently do no wrong.

    I won't even begin to talk about the coming war in the Ukraine.

    Best hunting,

    Michael J. Clark

    CGTS, Hanoi

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Comments (4)
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  • Maverick Trader
    , contributor
    Comments (171) | Send Message
     
    Excellent piece. Only wish you would write more articles on SA!
    8 Apr 2014, 03:17 PM Reply Like
  • minxx
    , contributor
    Comments (45) | Send Message
     
    Great article. Please be more active on Seeking Alpha.
    Thanks
    9 Apr 2014, 05:19 AM Reply Like
  • Michael Clark
    , contributor
    Comments (11719) | Send Message
     
    Author’s reply » I will try to be more active. The SA Censor Board does not allow me to post comments. They do allow me to write Instablogs however, which I intend to do more of.

     

    Thanks for your comment.
    9 Apr 2014, 03:20 PM Reply Like
  • Michael Clark
    , contributor
    Comments (11719) | Send Message
     
    Author’s reply » Thanks for your note, Maverick. I have a long history with SA. I am essentially black-balled. My views are not politically correct. I use too many religious metaphors; and I have too many strong opinions -- or so I have been told.

     

    I working to start my CGTS Newsletter again. So I will be posting more.

     

    SA does allow me to post instablogs -- only not post comments to written articles.

     

    Thanks for your note. Please keep reading.

     

    MJC
    9 Apr 2014, 03:20 PM Reply Like
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