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Everything posted by Jimbo

  1. IS APPLE THE NEW NOKIA Given that unit sales of iphones are falling. Apple has a lot in common with Nokia. Which is down 80% since its peak in 2007. Yes Apple has more in common with Nokia than the market currently thinks.
  2. FALLING OFF THE CRYPTO CLIFF - THE STRANGE CASE OF NVIDIA Still valued at 90B The crypto crash went on all through out 2018 Terrible external frame all year for the company. Yet it only broke in October 2018. Was $280 now $140. Before the crypto boom it was selling for about $30 Still a long way to fall. Not a Coyote Cliff but definitely a Crypto Cliff!!!!!
  3. INTRODUCING THE COYOTE FAMILY OF ETF's The Running Coyote ETF This ETF invested in stock where management is borrowing billions to buy back large amounts of stock. The Coyote Cliff ETF This etf shorts stocks that are falling of the coyote cliff because they can't borrow any more to funds buybacks. The Recovering Coyote ETF This funds invests in stocks of companies that have gone over the coyote cliff and are in recovery mode i.e are successfully paying down their debt etc Eg GE , BHC, kinder Morgan et al
  4. THOUGHTS ON 2019 1/ Still lots of stocks that need to bleed out their Ponzi values. (the difference between the actual reality price and the market reality price) For instance Coca Cola needs to halve in value. Mondelez needs to halve in value. 2/ Bonds still bad value.
  5. MORE THOUGHTS ON INDEX FUNDS Index funds are a great idea and will beat the majority of hedge funds over the long term. However their archilles heal is value. At the end of a bull market index funds will typically be stuffed with over valued large capital stocks. Which will tend to give up a large part of their value. There needs to be some mechanism which allows index fund to hold large cash balances (or even bonds) when a fairly long term moving average technical indicator such as the 200 DMA is on a downward slope. A sort of "Get out of market free" card. But I guess a smart beta etf would have this covered already ?????
  6. THE GOVERNMENT SHUT DOWN QE When you thing about it the Government Shut down is a form of QE Instead of increasing demand for bonds you reduce the supply. Rates go down and money flows into stocks. But when the shutdown ends the QE ends. I am sure traders are positioning themselves for a short sharp fall in prices.
  7. CREATURES FROM THE QE SWAMP When you think about it Heinz Kaft and Inbev are sort of creatures from the QE swamp Corporate vehicles - publicly listed LBO's - with lots of debt- structurally designed to benefit from QE. BUT: Drain the debt swamp and their stock prices wilt. Both have gone over the coyote cliff and lost half of their market cap. Both need to eliminate their dividends and spend every dollar of FCF on debt reduction. This should stabilize their stock prices and lead to reasonably quick debt reduction. Indeed they are both prime candidates .......along with GE For a "Coyote Recovery ETF" This would invest in companies that have gone over the cliff and are now in recovery mode.
  8. DIWORSIFICATION Peter Lynch talked well about DIWORSIFICATION Altria is a prime case right now. Overpaying massively for Juul and Chronos. Altria would have been far better off using those funds to creep up the INBEV share register. Taking advantage of the fact that INBEV's share price has cratered due to its excessive debt. Sectors currently in a bubble: 1/ Pot Stocks 2/ Fintech 3/ Bonds
  9. THOUGHTS ON THE FED PUT The Fed put used to trade like a US treasury. Now it trades like a junk bond.
  10. WHAT WE LEARNED IN 2018 Trade wars and tariffs are actually bad for stocks. Rising interest rates are bad for stocks. Overvalued markets finally correct. Tarrifs are a classic case of Bastiat's seen and unseen Yes the protected industry expands. But the increased cost of the protected industries goods causes an overall decrease in total demand for that good and overall economic activity.
  11. MORE THOUGHTS ON APPLE given 1/ The iPhone has flatlined technologically - lengthening the replacement cycle. 2/ Apple can only increase sales and profits by raising prices I cannot see the actual real reality price of this stock increasing. I can only see it going down and taking the market reality price with it.
  12. 2018 - THE YEAR THE PUMP WAS REPLACED BY THE DUMP Despite the last end of year rally 2018 was the year the pump was replaced by the dump. I don't think the dump in 2019 will be that bad. Normalisation has to occur to save the pension funds from insolvency. Sill numerous stocks where their market reality price (MRP) has to adjust to their actual reality price (ARP) in 2019 Apple is now selling near its ARP.
  13. THE TAX CUT PUMP AND DUMP When you think about it the corporate tax cut operated in a similar manner to a pump and dump scheme. First the tax cut and repatriation of funds to pump the stocks. Then the bond market realises that they have to fund the tax cut - leading to treasuries falling taking corporate bonds with them - rates rising. Stock market suddenly realises that corporate bond rates will rise forcing corporates to cut back on borrowing and stock purchases - the dump part.
  14. THOUGHTS ON THE BEAR Why there was no Christmas rally? Too much Bear....in such a market all news (including good news) is bad news Thats why Mnuchin's attempt at a good news story about calling the PPT. Turned into a bad news story. The Trump bump and corporate tax cut was the final overvaluation push that set the market up for the bear market. The tax cut while short term bullish was actually long term bearish as it added to the deficit and pushed up interest rates which pushed down stocks!!!!!!!!!! All the Synthetic QE from Trump or Mnuchin will not be effective. Synthetic QE is only effective in BULL markets not BEAR ones. The thing they really need to do is cut the budget deficit to take the pressure off interest rates. But they wont do that. So its back to more printing.
  15. THE POWELL PUT Not a real put.....only worth 10-20 cents in the dollar tops. It seems that the markets cant handle "normalization"
  16. THE HONEST HEDGE FUND CLOSURE LETTER A lot of smart hedge fund mangers are closing up shop. However their closure letters to their investors I think leave something to be desired. In the spirit of Christmas giving and the truth, I have decided to produce a generic hedge fund closure letter that hedge funds that are closing can use as a template to craft their own letters: Dear Investors The game is finally over. It was wonderful while it lasted, but massive Central bank bond buying has sadly come to an end. Ever since they panicked big time in 2009 and introduced massive quantitative easing its been a wonderful ride for stocks and bonds. We have not had to do anything, no stock picking skills required, just every year collect our massive 2 and 20, take very expensive holidays and buy ourselves lots of very expensive presents for Christmas. THANKS FED. Its been a wonderful welfare scheme for investors and hedge funds, but the writing has been on the wall ever since that Trump fellow got elected President and those little riots in Paris just seem to confirm everything. We looked like geniuses by just sitting tight and doing nothing. But the very action of this inaction is now making us look like fools. Time to shut up shop and open that private office in order to take advantage of all the wonderful shorting opportunities, and then pick up all the cheap assets after the crash for cents in the dollar. Just remember: all good Ponzi's eventually come to an end. Sorry got to go, the private jet to my holiday destination is waiting on the tarmac.
  17. FRENCH GOVERNMENT BONDS ANYONE????? I think not. I think a theme in 2019 will be a sell off in European bonds.
  18. OVERVALUED STOCK OF THE DAY Coca Cola - why hasn't it broken yet??? $200 Billion in market cap and going nowhere fast No to negative growth in sales and FCF. Only has $6 billion in FCF Sells for 35 times free cash flow Has added debt over past few years to help pay for dividend. Needs to lose $100 Billion in market cap to be worth investing in.
  19. PUMP AND DUMP FOR ADULTS REDUX A lot of big cap stocks have a large "Ponzi value" included in their stock price due to all the stock buy backs financed by all the cheap QE debt (BBB rated debt). This Ponzi value will continue to bleed out in 2019.
  20. APPLE REDUX I bagged Apple on this Board a while ago. Apple subsequently loses $200 Billion in market cap. Which is rather annoying. Because I can no longer bag the stock. As at 800 billion in market cap it is within a reasonable value market parameter With 50 billion in FCF its worth about 750 Billion (15 times FCF) If you think of the stock as a bond (and that's a good way to think about a stock) its yielding 6-7% (FCF/Market Cap). Reasonably priced. Particularly in comparison with so many overpriced big caps out here.
  21. THE LBO....ING OF AMERICA When you think about it all the debt public corporations have taken on to buy back stocks is a from of PUBLIC COMPANY LBO. It has several benefits in the eyes of corporate management: 1/ Does wonderful things for executive stock option packages. 2/ Keeps the shareholders happy at least in the short term. 3/ Plenty of business (bond sales) for Wall Street which in return means anal ysts will sing the praises of the stock. 4/ Means that with a high stock price any private equity takeover artists or activist hedge funds will be incentivised to avoid your stock. As an aside why is the "Private Equity" industry called "Private Equity" when their companies are mainly financed by debt....shouldn't they be called "Private Debt"?????
  22. PUMP AND DUMP FOR ADULTS We all now about penny stock pump and dump. But that's just really pump and dump for kids. What we have had since 2008 is pump and dump for adults - large cap pump and dump Stock buybacks financed by billions in debt. GE was wildly pumped to the tune of $40 Billion in buybacks and has gone over the coyote cliff, and other corporations are following. All financed by the FED and its QE policies. All financed by BBB investment grade debt.
  23. THE ACTIVE VERSUS PASSIVE MYTH The whole active versus passive debate is a FALSE NARATIVE. Most so called passive funds are actually momentum funds that are more active than the so called Active funds which are actually quite passive in that they hang onto overvalued stocks while they are correcting down to their real values. i.e. the only way for so called active funds to outperform the passive funds over the long term is a anticipate price moves before they occur (both positive and negative). As most active funds underperform passive funds they therefore appear to lag price movements rather than anticipate them.
  24. ANOTHER GREAT YEAR FOR HEDGE FUNDS (NOT) When the FED has pushed assets from the ULUV quadrant (that's under leveraged and under valued) to the OLOV quadrant (that's over leveraged and overvalued) by massive QE and then ends the QE then....... I guess its not a good time to be a hedge fund. Christmas stockings will be a bit thin around the hedge fund tree this Christmas. The reality "FRAME" i.e. for financial assets, is negative for stocks and bonds The reality "FRAME" for real assets is simply much stronger.
  25. THE TEN YEAR BOND Needs to be yielding 5-6% to save the pension funds and provide a decent real return after inflation and taxes. 3% is still no real return.

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