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Playing the Ponzi
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Why “Playing the Ponzi”? I view the entire monetary and financial system as something of a Ponzi scheme. Starting with currency that is created as debt, and running straight through a global economic model that is based on infinite growth in a finite world. This won’t end well. I’d go a step... More
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Playing the Ponzi
  • CMG: Breaking Down 0 comments
    Apr 20, 2012 1:44 PM | about stocks: CMG

    CMG has been one of the biggest "momo" stories of the last couple years. It's trading at a listed P/E of near 60. Reasonable for a fast food company, no? It's growing faster than 20% per year, which is great - though nowhere near the multiple. But valuation isn't really my reason for shorting CMG. It's the chart. It's always the chart. And in the chart below, we see that CMG has hit the upper band of a rising channel that's been in place for over a year. It has also broken under the steeper rising trendline of its most recent 5 month rally. A return to the bottom of the channel would likely bring CMG under $380.

    (click to enlarge)

    I am definitely playing with "momo" fire, as I am now short both AAPL and CMG.

    Disclosure: I am short CMG.

    Stocks: CMG
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