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warpspeed

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  • Is The Fed Capable Of Slowing An Exodus From Bond ETFs? [View article]
    The implications of endless QE are mind-boggling. The distortions imposed on the equity and bond markets will surely drive prices farther and farther away from any semblance of fundamental valuation. If central banks are unable to taper, (let alone raise interest rates as part of effective monetary policy) for fear of crashing the bond markets, isn't it just a matter of time until runaway asset inflation and the attendant risk of social unrest becomes inevitable?
    Nov 16 11:16 AM | 1 Like Like |Link to Comment
  • The Markets Will Not Do The ECB's Bidding [View article]
    "The ECB will start buying, but they will be the only buyers. And assuming they make the mistake and announce a rate cap, then the market will dump on their doorstep all the Spanish and Italian bonds the ECB is willing to purchase."

    I agree. How can the ECB commit to unlimited bond purchases without expanding their balance sheet? The process of sterilization relies on banks bidding on fixed one-week term deposits, at auction, to offset or absorb the liquidity introduced by an amount equivalent to the amount of bonds it has purchased. It seems that the ECB is relying on an unprecedented amount of largesse from the banks in order to keep their bond purchases sterilized. Eventually, either the bond purchases will end up being non-sterilized due to bank non-participation or the OMT program will be limited in it's scope due to the ECB's unwillingness to print euros for their ongoing purchases.
    Sep 6 06:58 PM | 2 Likes Like |Link to Comment
  • ECB Announcement Makes The Rally Even More Unsustainable [View article]
    I agree, to save the euro it would be necessary to debase the euro. That would come about with aggressive (and non-sterilized) bond purchases. Borrowing costs for debtor nations such as Spain and Italy need to come down, and an expansion of the supply of euros would lower the exchange rate. These monetary measures would restore the competitiveness of Spain and Italy, which would present the opportunity to make needed structural reforms. OMT program falls short, but at least affords both governments' the opportunity to fund ongoing debt commitments in the short term.
    Sep 6 05:56 PM | Likes Like |Link to Comment
  • ECB Announcement Makes The Rally Even More Unsustainable [View article]
    I'd be carefull shorting SPY during this central bank induced melt-up. Current conditions in Spain and Italy make it a certainty that both will have no choice but to apply for a bailout and participate in this "'new program". Conditionality will be agreed to and the consequences of not meeting agreed to reform targets will be pushed out into the future. The fact that the ECB hasn't always been successful in soaking-up the excess liquidity injected into the system via bond purchases in the past just reinforces my theory that strict sterilization is not a primary priority of the ECB. If some of the excess liquidity leaks into the system, it will be a stealth QE that will be of benefit to the banks, markets, and PIIGS. Mario Draghi has just executed an end run around the Bundesbank.
    Sep 6 05:00 PM | 2 Likes Like |Link to Comment
  • Not Enough Panic? [View article]
    Agree, except the banksters and Fed are in bed together. Fed (the doctor) is orchestrating this debt fueled currency expansion, or QE (the drug), in order to consolodate their power over the economy (the addict). The politicians (the nurse) are giving monetary injections, under order from the doctor, to prevent economic contraction (withdrawal). Like any addict, their tolerance of the drug increases over time, requiring larger doses (ie more monetary stimulus), to achieve the same high (economic expansion).

    The drugs given are not really free because of the interest rate payments paid back to the Fed on the T-Bonds they hold as collateral for creating new currency. Think of the Fed as the doctor creating more drug (currency) in the lab, and charging the government a fee (interest). Then payment is passed along to the addict in the form of taxes and inflation.
    May 24 02:09 PM | 5 Likes Like |Link to Comment
  • Apple Top Leads To Market Top As Predicted, So What's Next... An Epic Gold Entry Point [View article]
    Dialectical,
    From my perch, I think a close above 560 would be constructive and eventually lead to a test of the 50 day m/a of 587. That, to me, will be the real test of AAPL's strength because there is so much overhead resistance above. That being said, the increased volatility in the shares currently, could lead to a retest of 530 as investor psychology has definitely changed and fund flows are negative. General market sentiment is negative and my models show S&P levels below 1300 shortly. I think the most likely scenerio is that AAPL will follow the market down for a retest. Some have suggested a test of the 200 day m/a at 492 but I think that is unlikely, barring major negative EU macro events. I think AAPL is rangebound 530-585 until the next earnings report.
    May 22 03:43 PM | 1 Like Like |Link to Comment
  • Apple Top Leads To Market Top As Predicted, So What's Next... An Epic Gold Entry Point [View article]
    Dialectrical,

    Your fundamental analysis seems fair and reasonable to me. I'd be lying if I didn't admit that I don't totally ignore the fundamentals in my search for a potential investment. But, I have found that valid assumptions based on sound fundamental analysis rarely translates into share price movements which are aligned with my expectations, due to dynamic and ever changing market forces. I don't trade growth stocks using that type of analysis, because of previous experience, and it is therefore no longer part of my methodology with these types of investments. See my post in response to Demophilus above.

    To each his own. Nice chatting with you.
    May 22 02:25 PM | 2 Likes Like |Link to Comment
  • Apple Top Leads To Market Top As Predicted, So What's Next... An Epic Gold Entry Point [View article]
    Your argument and logic are based on the fundamental analysis of Apple's market share and the speculation of continued growth in these markets into the future. Apple's future market growth may continue and it's markets may or may not be saturated, who knows? I don't have a crystal ball and neither do you. You may be right in your assertions. Apple's market cap may continue to grow for a while longer. That does not necessarily mean that it's share price will continue to appreciate commensurate with this growth. And it does not change my belief that fundamental analysis cannot predict future share price movements with any consistency. And aren't share price movements, in discussing growth stocks, ultimately why we are all here on SA discussing various topics?

    I trade the technicals and they have proven to me, and my portfolio, that they give the greatest predictor of future share price movements, and thus the edge I need to be successful. Is my method 100% foolproof? No. But my battle scars in the market arena were almost exclusively caused by a previous reliance on company fundamentals, and spurious valuation metrics and fundamental data from "analysts" who had various agendas, not always in harmony with mine. I don't believe in "buy and hold" with growth stocks such as AAPL. I let the day to day market action be my guide in determining whether I go long or short. The AAPL chart and such metrics as on-balance volume etc. tell me that I should proceed with caution right here. That is not to say that I won't go long again if things change. I have seen too many of my fellow investors go down in flames due to "falling in love" with a particular stock and their refusal to bail when technicals dictate they should.
    May 22 01:45 PM | Likes Like |Link to Comment
  • Apple Top Leads To Market Top As Predicted, So What's Next... An Epic Gold Entry Point [View article]
    My two comments that "the market accurately discounts future company performance and that the iPhone 5 may already be priced in" are derived from technical analysis of AAPL's stock chart, fund flow analysis, and measurable investor sentiment levels. The technical analysis came first, and my extrapolation of these metrics into opinion about the share price going forward followed that. I believe that these metrics are the prime determinants of share price. Although company fundamentals are the "hook" that lures me to initially examine an individual equity, I trade exclusively on technicals and 30 years of trading has led me to an unwavering conclusion that fundamental analysis cannot predict future share price movements with any consistency. Fundamental analysis is only as good as the quality of data that is served up for consumption by the masses, and that quality can be spurious.
    May 22 12:49 PM | Likes Like |Link to Comment
  • Apple Top Leads To Market Top As Predicted, So What's Next... An Epic Gold Entry Point [View article]
    "Worrying that a down day or week or month somehow invalidates an investment thesis based on valuation is a beginner's mistake."

    OK, I'll bite. Let's use your "fundamental logic, earnings analysis" based model and see where we end up.So, let me ask you this: What happens if Mr. Market no longer gives AAPL a valuation that it has enjoyed during the last three years? Say there are NO future earnings hiccups even though there could be many disruptions due to any number of exogenous factors. There already has been ongoing multiple compression in this stock and in case you don't know what that means I'll give you the definition. Multiple compression is:
    "The effect that arises when a stock trades at a certain multiple and, while earnings may be strong, the stock price doesn't move up (or even goes down). The result is that the given multiple (P/E ratio) is reduced even though nothing is fundamentally wrong with the company. When the company's growth rates start to slow, investors might start to doubt its growth prospects, and thus not pay an expensive a premium as they once did." Confidence in future earnings growth is a powerful force in determining the price of any growth stock, even Apple.

    My point is that although AAPL reported an impressive 88% iPhone unit growth rate for the march quarter, considering the "end of lifecycle" of iPhone 4S, the next blowout earnings quarter will probably not happen until 2013, after iPhone 5 is introduced. Apple is currently earning ~$41/share and it's continued growth rate increase going forward is far from assured. That is key. If big money investors, ones with the firepower to move share price, lose confidence that this behemoth of a company can continue to grow earnings at their previous torrid pace, a distinct possibility in my view, then multiple compression and resulting share price depreciation would result. For a $500+ billion company to continually increase earnings at it's current rate would be quite a feat. But that's what it would have to do to prevent it's share price from falling. All while the pace of global smartphone adoption has reportedly slowed due to a general slowing of world economies.

    Apple is so big, it’s running up against the law of large numbers.
    Also known as the golden theorem, with a proof attributed to the 17th-century Swiss mathematician Jacob Bernoulli, the law states that a variable will revert to a mean over a large sample of results. In the case of the largest companies, it suggests that high earnings growth and a rapid rise in share price will slow as those companies grow ever larger. If Apple’s share price grew even 20 percent a year for the next decade, which is far below its current blistering pace, its $500 billion market capitalization would be more than $3 trillion by 2022. Apple almost doubled their earnings in calendar year 2011 and yet the stock is trading currently at a P/E multiple of less than 14. It’s trading below the market average, even though it’s growing way above the market average.

    History suggests that excessive enthusiasm can often precede a fall. Although I would not compare other, previous behemoth market cap companies with Apple due to differences in many valuation metrics, market sentiment, and general economic conditions, I believe that competition will erode Apple's current advantages and slow their growth rate just enough to cause "analysts" and investors to question their thesis that a $900+ or even a $700 stock price is achievable.

    But, Mr. Materialist, since your investment philosophy "is intended to capture long term gains from long term increases in stock." you probably don't have an exit strategy in place, just in case your beloved analysts are wrong (gasp!), or decide to slightly ratchet down their earnings estimates due to changing market conditions. Good luck with that!
    May 22 11:53 AM | Likes Like |Link to Comment
  • Apple Top Leads To Market Top As Predicted, So What's Next... An Epic Gold Entry Point [View article]
    Then, following your logic, AAPL should have soared when they recently came out with their blowout earnings report. How do you explain the sudden drop in share price? How'd your "earnings analysis" work out for you there?
    May 22 01:51 AM | Likes Like |Link to Comment
  • Apple Top Leads To Market Top As Predicted, So What's Next... An Epic Gold Entry Point [View article]
    Strict Elliott Wave technical analysis utilizing fibonacci retracement ratios, and the incorporation of market sentiment indicators utilizing and fund flow analysis in a proprietary, market-based decision making model.
    May 22 01:19 AM | Likes Like |Link to Comment
  • Apple Top Leads To Market Top As Predicted, So What's Next... An Epic Gold Entry Point [View article]
    "perhaps you could explain why AAPL was trading around 330 and a PE of 15 last year."

    Our current discussion concerns a possible "Apple market top". I happen to believe that we have seen it at 644. Haven't you ever heard that "Past performance is no guarantee of future results". I have seen many parabolic charts with accompanying "can't miss" sentiment, in my time, and your very insistence that "But the very reason that AAPL will be higher next spring than it was this past spring" confirms my view that sentiment is overly exuberant, and the top must be in. What model crystal ball are you using to be so sure of this future prediction? Even your beloved Apple is not immune from short sellers who would exploit your obvious long position when sentiment becomes extreme, as it currently is.

    One thing I have found to be true in investing is that fundamental analysis offers no predictive value in the movement of a stock's price. Market fundamentals are the existing conditions of a market based upon historical data. In order to utilize this information for predictive purposes, most investors will employ a form of linear trend extrapolation. This effectively presumes that the current market conditions will continue indefinitely into the future, until they do not. Is there any predictive value in being able identify a change in circumstances within current economic conditions by reviewing current economic data? It seems to me that most “analysts” are making “predictions” of the current economic condition, which will work as long as the economy moves along in a straight line. However, we know that the real world, and the economy, and equity price movements do not work in this way. Equity price movement is a non-linear process that is unable to be predicted with any sort of simple minded fundamental anaysis that you seem to be employing. If making money by deploying capital into equities were that easy, everyone would learn the technique, apply it to fundamentally sound companies, and become independently wealthy.

    So Mr. Materialist, continue to pin your long term, buy and hold "hope" strategy on the iPhone 5. I will continue to trade AAPL long and short as my technical models suggest.
    May 22 12:12 AM | 1 Like Like |Link to Comment
  • Apple Top Leads To Market Top As Predicted, So What's Next... An Epic Gold Entry Point [View article]
    Kudos to the author for pointing out the blatant technical weakness of the AAPL chart. Too many here on SA, and beyond, have fallen in love with Apple and will use any and all fundamental facts to justify their positions in the stock and to rationalize why Gene Munster et al must be right and that AAPL must go to 900+. The expectations for iPhone 5 are almost through the roof, known to all big money investors, and might already be reflected in the share price. Overwhelmingly bullish sentiment, a near parabolic rise in shares since late January, and increasingly volatile share prices sends up major red flags in my dispassionate assessment of this equity. The PE may not be even remotely as high as some of those dot.com high fliers of 1999-2000, but I have found the market to be a very accurate discounter of future company performance. Let's see how it handles it's 50 day m/a on the bounce. Great trade, but, only that.
    May 21 08:44 PM | 1 Like Like |Link to Comment
  • Why 'New York Times' Economist Paul Krugman Is Partly Right But Mostly Wrong [View article]
    C'mon, you can't be serious with your remark, "this legacy concept of Usury as a key tenent of Natural Law no longer relevant or applicable to modern economics?"

    Tell that to the governments of the PIIGS who are being forced to fund their sovereign debt through auction at current market rates.
    May 9 04:55 PM | Likes Like |Link to Comment
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