Apple May Be Worth $1111, But Shares Won't Get There Anytime Soon [View article]
"Apple is the new Nokia, its shares will contiune fall for like 10-12 years.
Apple is still in the denial phase, not sure they have understood theire own problem."
These seem to be the types of comments made by someone who has absolutely no money invested in the marketplace but plenty of time to post nonsensical opinions without any factual support.
"What is overlooked is that when the Fed prints more dollars, it typically uses them to buy bonds. Traders know this, so they are stocking up on bonds at ridiculous prices just to flip them to the Fed. They don't care that, in the long run, the Fed's policies will destroy the bonds' value because in the short run, the weak dollar policy serves as a tremendous subsidy to bond sellers."
The traders' behavior is not only expected but also rational. There is no moral flow here either, nor should they "care" about the FED's pitfalls. It may sound harsh, but it is the traders and investors' job to do their best to profit from the circumstances, even if this means profiting from the FED's mistakes.
The FED, on the other hand, does have a moral obligation to, ultimately, benefit the overall population and, hence, it should be held accountable for its policies and decisions.
Consumer Confidence Is Weak, But So What? [View article]
"We don't need new jobs to have a stronger economy, since the existing workforce can work harder and more efficiently"
You must be joking! that is utterly selfish and senseless. We don't need new jobs? why don't you tell that to the millions and their families who don't have a job!
11 Reasons Why the Gold Bubble Will Burst [View article]
Cyrus, you and Mr. Ingram may disagree with the analysis presented by Mr. Altucher, that is your prerogative, but that doesn’t necessarily make it wrong. Neither does belittling Mr. Altucher nor shouting about it.
Due to a plethora of reasons, I too believe that at the current levels the potential mid to long-term upside for gold is quite small (perhaps 10%) while the downside looms quite large (40% to 60%). The better risk-reward trade, hence, is on the downside.
Accordingly, not only have I already sold all my gold positions, I have also significantly shorted it and will continue to do so unless the current circumstances change considerably, in which case I will be happy to reconsider.
Handicapping The Icahn Position In Herbalife [View article]
Nice post.
The beauty of Icahn's play is that he purposely increased the float of stock available for borrowing (that's the hook for the short sellers to increase their position) while, at the same time, changing the future control of that stock from the stock lenders to himself.
Since most of the short sellers need to borrow the stock to then be able to short it, they are vulnerable and would be forced to close their short position if the stock lenders recall the stock from them. As pointed out, this is bound to happen when Icahn exercises his options and the stock lenders have to deliver the stock to him. Most short sellers will have to close their short positions by buying back the stock in the open market which, naturally, will drive the stock price up without the need of any natural buyers.
That is a classic short squeeze with a twist that makes it very painful for the short sellers: It is short sellers self-causing short squeeze, as they will move the stock up by themselves and squeeze each other out of their positions.
In the end, for most short sellers it won't matter if they are 'right or wrong' about the company or the stock. They will, most probably not have time to prove they are right because Icahn will have given them a painful lesson on the most simple of economic concepts: supply and demand.
Good lord, Matt, are you so deep into shorting HLF that you are losing it? If not, why do keep on writing these kind of comments?
There is a large difference between writing a negative article about Herbalife claiming objectivity, which you have already done before, and going off the rails with these type of comments.
If you want to write on this site and reach a serious audience, you better reign your own biases and prejudices. Otherwise you turn yourself into a mockery of an analyst and commentator and lose all credibility.
Sorry Matt, what do you mean by my thesis? I am surely missing your point.
I don't know what you understood by my thesis, but my hypothesis is simple: The authorities are unlikely to act and without them acting, and quickly, the stock will go up and most shorts (maybe not Ackman) will be squeezed.
I did not own HLF in the past and, most probably, will not own it in the future. In the short term, though, I fully intend to see the reality as objectively as possible, discern from it a way to trade intelligently and profit from it. That is what an investor is supposed to do. That is, simply, it!
What about you, Matt?
BTW, under the current circumstances a discussion of HLF's P/E is completely meaningless. It doesn't matter, at all.
Facebook (FB) slides 4.4% to $21.85 premarket following a Barron's cover story suggesting the shares could be deemed expensive even at $15. [View news story]
"Ban short selling"... seriously? Short selling prevents bubbles and is a very healthy arbitrageur for the market place.
If you think Facebook is worth a higher price, you buy it. If you think it has reached the right price, you sell it. And if you think it is overpriced, you (borrow the shares and) short it. That's how healthy markets are supposed to operate. There is absolutely nothing wrong with proper short selling.
Short selling is only harmful when done illegally. That is, when the short sell proceeds without having previously secured the borrowed shares. Other than that, short selling is very healthy for the marketplace.
Up to now the ECB and BOE had been tightening, while British and European policy makers had been pushing austerity measures, which where squishing the growth out of the economy. Meanwhile Geitner and the U.S. had repeatedly asked the Europeans to loosen up monetary policy and austerity measures to support markets and aid growth. Well, Europe is finally listening and these actions should help confidence and help stabilize markets. Confidence, more than ever, underpins the movements of the markets nowadays.
The FED has a double mandate, which is supposed to deal with inflation and unemployment, but seems to have done little to truly help the latter. Inflation maybe the lesser of two evils in this case, at this stage of the cycle. The U.S. could easily live with a bit more inflation and lower unemployment.
No apology necessary. Your suggestion to buy USL instead of USO was NOT wrong. It was, and it is still the correct call. It is just that you are now looking at your advise a few weeks out, an exceedingly short time frame to come to your conclusion.
Tactically, it was the wrong short term trading advise; simple bad timing. Strategically, though, it was good investment advise.
Clearly, most people wanting to have exposure to oil would still be better off with USL, which spreads out the risk, than with USO. USO is a good short-term trading tool but a dangerous long-term investment one. The only possibility for USO to outperform in the long run would be to have long term sustainable backwardation and that is not likely to happen.
Wouldn’t you agree that, in the long run, oil contango is still the most likely scenario and, thus, USO will likely continue to suffer from this systemic drag and underperform? Stick to USL.
Very good article. I confess I usually enjoy your articles. They are very well written, thoughtful and meaningful.
Sometimes, though, I wish you would follow your thought process all the way through to an actionable conclusion (or various possibilities if necessary). I realize this implies somewhat committing yourself (you can always use common disclaimers) but, although there is clear value in untangling the macroeconomic web, if you truly believe in your ideas, distilling them to one or more tradable conclusions would truly set you apart.
In this case, for instance, it may as simple as stating something like: "as soon as there is evidence that the FED is forced to sell long term debt into the market, short long-dated treasuries."
Remember that you trade the market and not the economy and the market leads the economy for about six months, so by the time you get the confirmation you seek, you will be too late.
Also, one should not be more invested in being right than in making money.
Apple May Be Worth $1111, But Shares Won't Get There Anytime Soon [View article]
Apple is still in the denial phase, not sure they have understood theire own problem."
These seem to be the types of comments made by someone who has absolutely no money invested in the marketplace but plenty of time to post nonsensical opinions without any factual support.
I guess that's how one gets to 726 posts.
Fed Mandates Inflation [View article]
"What is overlooked is that when the Fed prints more dollars, it typically uses them to buy bonds. Traders know this, so they are stocking up on bonds at ridiculous prices just to flip them to the Fed. They don't care that, in the long run, the Fed's policies will destroy the bonds' value because in the short run, the weak dollar policy serves as a tremendous subsidy to bond sellers."
The traders' behavior is not only expected but also rational. There is no moral flow here either, nor should they "care" about the FED's pitfalls. It may sound harsh, but it is the traders and investors' job to do their best to profit from the circumstances, even if this means profiting from the FED's mistakes.
The FED, on the other hand, does have a moral obligation to, ultimately, benefit the overall population and, hence, it should be held accountable for its policies and decisions.
3 Under-Appreciated GDP Facts [View article]
"The government bailed out the people and imprisoned the banksters. The opposite of what the US and the rest of Europe did."
Consumer Confidence Is Weak, But So What? [View article]
You must be joking! that is utterly selfish and senseless.
We don't need new jobs? why don't you tell that to the millions and their families who don't have a job!
11 Reasons Why the Gold Bubble Will Burst [View article]
Due to a plethora of reasons, I too believe that at the current levels the potential mid to long-term upside for gold is quite small (perhaps 10%) while the downside looms quite large (40% to 60%). The better risk-reward trade, hence, is on the downside.
Accordingly, not only have I already sold all my gold positions, I have also significantly shorted it and will continue to do so unless the current circumstances change considerably, in which case I will be happy to reconsider.
Handicapping The Icahn Position In Herbalife [View article]
The beauty of Icahn's play is that he purposely increased the float of stock available for borrowing (that's the hook for the short sellers to increase their position) while, at the same time, changing the future control of that stock from the stock lenders to himself.
Since most of the short sellers need to borrow the stock to then be able to short it, they are vulnerable and would be forced to close their short position if the stock lenders recall the stock from them. As pointed out, this is bound to happen when Icahn exercises his options and the stock lenders have to deliver the stock to him. Most short sellers will have to close their short positions by buying back the stock in the open market which, naturally, will drive the stock price up without the need of any natural buyers.
That is a classic short squeeze with a twist that makes it very painful for the short sellers: It is short sellers self-causing short squeeze, as they will move the stock up by themselves and squeeze each other out of their positions.
In the end, for most short sellers it won't matter if they are 'right or wrong' about the company or the stock. They will, most probably not have time to prove they are right because Icahn will have given them a painful lesson on the most simple of economic concepts: supply and demand.
Herbalife Is Not Going To Zero [View article]
There is a large difference between writing a negative article about Herbalife claiming objectivity, which you have already done before, and going off the rails with these type of comments.
If you want to write on this site and reach a serious audience, you better reign your own biases and prejudices. Otherwise you turn yourself into a mockery of an analyst and commentator and lose all credibility.
Herbalife Is An Endless Chain [View article]
I don't know what you understood by my thesis, but my hypothesis is simple: The authorities are unlikely to act and without them acting, and quickly, the stock will go up and most shorts (maybe not Ackman) will be squeezed.
I did not own HLF in the past and, most probably, will not own it in the future. In the short term, though, I fully intend to see the reality as objectively as possible, discern from it a way to trade intelligently and profit from it. That is what an investor is supposed to do. That is, simply, it!
What about you, Matt?
BTW, under the current circumstances a discussion of HLF's P/E is completely meaningless. It doesn't matter, at all.
Facebook (FB) slides 4.4% to $21.85 premarket following a Barron's cover story suggesting the shares could be deemed expensive even at $15. [View news story]
If you think Facebook is worth a higher price, you buy it. If you think it has reached the right price, you sell it. And if you think it is overpriced, you (borrow the shares and) short it. That's how healthy markets are supposed to operate. There is absolutely nothing wrong with proper short selling.
Short selling is only harmful when done illegally. That is, when the short sell proceeds without having previously secured the borrowed shares. Other than that, short selling is very healthy for the marketplace.
Fire Hoses Pumping Again [View article]
The FED has a double mandate, which is supposed to deal with inflation and unemployment, but seems to have done little to truly help the latter. Inflation maybe the lesser of two evils in this case, at this stage of the cycle. The U.S. could easily live with a bit more inflation and lower unemployment.
USL, USO and the Contango Collapse [View article]
No apology necessary. Your suggestion to buy USL instead of USO was NOT wrong. It was, and it is still the correct call. It is just that you are now looking at your advise a few weeks out, an exceedingly short time frame to come to your conclusion.
Tactically, it was the wrong short term trading advise; simple bad timing. Strategically, though, it was good investment advise.
Clearly, most people wanting to have exposure to oil would still be better off with USL, which spreads out the risk, than with USO. USO is a good short-term trading tool but a dangerous long-term investment one. The only possibility for USO to outperform in the long run would be to have long term sustainable backwardation and that is not likely to happen.
Wouldn’t you agree that, in the long run, oil contango is still the most likely scenario and, thus, USO will likely continue to suffer from this systemic drag and underperform? Stick to USL.
Apple Is Not Worth $460 [View article]
The Stock Market Rebound Is Coming [View article]
Making Things Worse [View article]
Sometimes, though, I wish you would follow your thought process all the way through to an actionable conclusion (or various possibilities if necessary). I realize this implies somewhat committing yourself (you can always use common disclaimers) but, although there is clear value in untangling the macroeconomic web, if you truly believe in your ideas, distilling them to one or more tradable conclusions would truly set you apart.
In this case, for instance, it may as simple as stating something like: "as soon as there is evidence that the FED is forced to sell long term debt into the market, short long-dated treasuries."
Just an idea.
Sucker's Rally? [View article]
Also, one should not be more invested in being right than in making money.