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  • Why The Correction Didn't Become A Crash [View article]
    @James:

    "Somebody was buying stocks and bidding up their prices when they dipped. Who, if not households and businesses? And with what money?"

    Could it be funds exiting from emerging markets, commodity futures and foreign currencies in addition to capital flight from the rest of the world to the U.S.A.? If my thesis is correct, then that would signal a long-term BULL market for U.S. equities and a long-term BEAR market for emerging markets, commodity futures and foreign currencies, with or without additional Fed QEs.

    Thanks anyway for your reply. Your article would have been excellent except you've missed the above factors to explain the massive uptrend that followed the "dip" which looks far more sensible to me.
    Nov 2, 2014. 05:12 AM | 1 Like Like |Link to Comment
  • Why The Correction Didn't Become A Crash [View article]
    @James:

    Thanks for your insightful article. Although I agree with your main thesis that excess liquidity is what's propping up the stock market, I disagree with your article on the ORIGIN and SOURCE of that excess liquidity. Please bear with me while I raise just a few points:

    "Therefore any correction in the stock market is likely to be met with significant demand from households and businesses looking to deploy some of their excess liquidity."

    No mention of the BOJ action, stronger USD, lower commodity prices and foreign capital inflows for propping up the stock market?

    The real reason why the "dip" didn't turn into a "correction" was due to the combined effects of the BOJ action, stronger USD, lower commodity prices and foreign capital inflows not to "households and businesses looking to deploy some of their excess liquidity".

    The top 1% of households are not dumb enough to buy into this "dip"; they're most likely cashing out at the market top right now and "looking to deploy some of their excess liquidity" in physical assets like real estate. Big corporations likewise saw most of their revenue growth outside the U.S.A. which allowed them to benefit from a weak USD during the past five years. But those big MNCs are not going to repatriate their hard-earned USD back into the U.S.A. to face a huge tax bill from the IRS. Instead, they're borrowing money at rock-bottom interest rates to buyback their shares. Just ask Tim Cook how he did it at Apple.

    I don't expect the market to crash as the Fed is always on standby to prevent that from happening. If the Fed is not even willing to tolerate a market correction for fear of inducing a crash, that says a lot about the financial health of the developed economies. Having said that, I think you're too overly sanguine about the prospects of economic recovery in the G-7 which seems to be the official party-line of the Fed. The much touted economic recovery which your article mentions is contradicted by the BOJ action which is an ominous sign portending of even more speculative capital flooding an overvalued market with excess liquidity thus creating even more volatility in the coming months.

    As the ancient Chinese saying goes: "we live in interesting times."
    Nov 1, 2014. 04:33 AM | 2 Likes Like |Link to Comment
  • Part Of Amazon.com's Core Is Dying [View article]
    Enjoy your BMW, Gary J! Just make sure you don't bet your house on AMZN unless you want to end up as a homeless dude in a BMW!
    Oct 25, 2014. 11:12 PM | 2 Likes Like |Link to Comment
  • I Concede Defeat In Amazon.com [View article]
    @wiesje:

    "AMZN biggest asset is Jeff Bezos, he understands WS much better than they understand him, but they are finally catching-up, it took them years, but they are seeing that the tipping point where volume becomes profits is a moving target and Bezos is moving that target further and further away."

    Jeff Bezos took Wall Street for a ride. What's AMZN's business model? It's a 20-year e-commerce business plan promising another 20-years of ZERO profits in exchange for interplanetary domination...or something like that.
    The tipping point was Alibaba's IPO. Let's see what BABA's numbers are when it reports on November 4. If BABA can come up with quarter after quarter of blistering revenue growth AND mind-boggling profit margins, then Wall Street would have a hard time parroting the Jeff Bezos party-line:

    "But we're investing in the future of e-commerce!"

    Wall Street has seen the future of e-commerce: it's called Alibaba not Amazon.
    Oct 25, 2014. 10:02 PM | 2 Likes Like |Link to Comment
  • I Concede Defeat In Amazon.com [View article]
    Congratulations to Paulo! Everyone here knew you made the right call on AMZN but got it wrong on the timing. The Fed decision to end money printing has precipitated AMZN's fall...The question now is how low will AMZN go?
    Oct 24, 2014. 09:02 PM | 1 Like Like |Link to Comment
  • Stop... Don't Buy Alibaba On Friday [View article]
    YHOO was the classic "buy the rumor -- sell the news" play.
    Sep 20, 2014. 03:26 AM | Likes Like |Link to Comment
  • Stop... Don't Buy Alibaba On Friday [View article]
    The Big Boys are running the show here so after the "flippers" and "shorts" do their thing, the Big Boys will move in to keep BABA steady...YHOO reports one month before BABA on the third week of October which makes it a good entry point before BABA reports in November...
    Sep 20, 2014. 03:15 AM | Likes Like |Link to Comment
  • Alibaba: An Opportunity Or The Opportunity [View article]
    But BABA's numbers are out-of-this-planet. Remember this: although BABA is a 15-year old company, their fastest growing business is mobile e-commerce which is going through the roof with the rapid adoption of smartphones and tablets in China. Their first quarterly earnings report will set the trend for BABA. And they'll report blowout figures quarter after quarter after quarter.

    Between now and then, the BABA hype will subside. That's when the long-term buy-and-hold investors will get into the BABA bandwagon to ride the secular trend going on in China.
    Sep 19, 2014. 02:47 PM | 3 Likes Like |Link to Comment
  • Stop... Don't Buy Alibaba On Friday [View article]
    Wait a few weeks for the BABA hype to settle down, then invest in the BABA phenomenon.
    Sep 19, 2014. 03:23 AM | 1 Like Like |Link to Comment
  • In Spite Of Its Mobile Growth, Mobile Monetization Concerns Continue To Linger For Alibaba [View article]
    This reminds me of FB's problem but BABA should do just fine. In fact, mobile revenue growth will accelerate with the O2O strategy that BABA has struck with retailers all over China. After the BABA hype settles down, then the world will witness the BABA phenomenon.
    Sep 19, 2014. 03:19 AM | 1 Like Like |Link to Comment
  • Alibaba: An Opportunity Or The Opportunity [View article]
    FB had a lot of retail interest while BABA has almost none. So I think BABA will be fairly steady as the institutional investors sort out amongst themselves how to "sell-out" the BABA hype. Those intending to "buy-in" the BABA phenomenon would probably wait a few weeks for the BABA hype to settle down. After its first quarterly earnings report then that's when the market will decide if BABA goes on an uptrend or downtrend.
    Sep 19, 2014. 03:12 AM | 5 Likes Like |Link to Comment
  • Rackspace can't find a buyer; -16.5% after-hours [View news story]
    RAX's problems is that its growth business -- cloud computing -- faces huge competitors with deep pockets slashing prices left and right. Although RAX was an early pioneer of cloud computing, that sector was overly hyped because all they do is offer outsourced hardware at commodity prices. Moving from its original business of web-hosting, RAX benefited from this all hype because it was the only publicly-listed independent player in the over-hyped space of cloud computing. But this field is already maturing with big players -- much larger than RAX -- having moved into this hot turf. That's why RAX was looking for buyers so it could compete against the big boys. But that option has passed. RAX could still exist as a viable stand-alone business but not at the current valuation.
    Sep 17, 2014. 05:16 PM | Likes Like |Link to Comment
  • Amazon.com Is Doing Its Very Best To Increase Earnings [View article]
    When the sky is falling, head for the exits...
    Apr 25, 2014. 02:58 PM | Likes Like |Link to Comment
  • China Mobile's Sagging Profit: Time To Buy? [View article]
    The short-term risks for CHL are micro-economic factors such as 1) CAPEX spending on 4G LTE base stations, 2) increased marketing expenses to promote 4G LTE and 3) slower revenue growth in voice calls and text messaging as more people use WeChat over WiFi on their mobile phones as the preferred mode of communication. The long-term case for CHL are macro-economic factors such as 1) increased urbanization expanding the middle class, 2) urban lifestyles centered around the Mobile Internet and 3) higher disposable incomes leading to more data consumption.

    After the turbulence of the financial markets subside due to short-term macro-economic factors such as 1). Fed tapering, 2) EM selloff and 3). soft landing of China's economy, CHL could become an interesting dividend growth stock if it succeeds in reclaiming its market dominance lost to its competitors namely CHA and CHU who are hampered by their inability to match the 4G network coverage of CHL. With its future 4G network, CHL will now have the first-mover advantage in capitalizing on the explosive growth of the Mobile Internet in China, something that it lacked during the 3G period.

    Compared to Internet names like Alibaba which is expected to IPO sometime this year and Tencent which is listed in HK, CHL is an inexpensive way for the conservative investor to get exposure to the explosive growth of the Mobile Internet in China.
    Mar 28, 2014. 08:46 AM | Likes Like |Link to Comment
  • The Nuclear Option: Russia's Threat To Dump Treasuries [View article]
    James:

    Thanks for this insightful article. Just one comment on your statement:

    "the reserve currency status of the USD is not something that occurs due to the generosity of other nations towards the US. It is a brute fact that flows from a combination of the US's economic position in the world the unplanned evolution of market processes over many decades. As such the dollar's role as the world's medium of exchange for international trade and finance is extremely entrenched. And for this reason, so is it's role as the world's preeminent reserve currency. You don't just change that with the the machinations of politicians."

    Remember Bretton Woods?

    The USD became the gold-standard reserve currency of the international monetary system by virtue of the agreement signed during the Bretton Woods Conference in July 1944. During Nixon's term, the gold-standard was dropped, turning the USD into a fiat reserve currency.

    So I think you're wrong to assume that the USD became the world's reserve currency by virture of "the unplanned evolution of market processes over many decades." Quite the contrary, it was the "machinations of politicians" during the Bretton Woods Conference after WWII that set the stage for the USD to become the world's reserve currency.

    A similar process could happen for the CNY to become an alternative reserve currency for the international monetary system. China could for example diversify its reserves to include more EURO or precious metals such as gold in addition to promoting its currency as another reserve currency.

    Anyway, I've always enjoyed your well-thought out articles. Good luck!
    Mar 15, 2014. 02:12 AM | Likes Like |Link to Comment
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