Friday, December 5, 2014

12/5/14 BRIC'd Up

(a)    RSX (Russia) off another -1.7% today to 18.35 (-15% since mid-November), a 5-year low.  Opening a position here.
(b)   EWZ (Brazil) has pulled back to 38.82, very near the February lows.  Opening a position here.
(c)    China has been on a tear.  It’s highly likely we’ll see the Shanghai Composite test 3000 in the near future, a level last printed in early 2011.  A 3-4 year ‘base’ in the 2000-2500 range offers decent support for a launch.
(d)   Will likely open a position in RYWVX (Rydex 2x Emerging Markets) at the 1030 est window.

205 comments:

  1. FCAU - Dang, wish I'd added a ton in AH.

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  2. Is Rudolf the red-nosed reindeer actually a symbolism for excessive holiday alcoholic binging? Kris Kringle kinda has that look about him too don't ya think, maybe poor Rudolf is a victim? :)

    DB - Long

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  3. BTU - These guys should frack their coal deposits, coal must outgass a ton of natty. Maybe I'm wrong that's why don't we hear anything about that?

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  4. TLM - Umm, so no bounce like natty is currently undergoing? Yeah, sure..... BS!

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  5. DUST - Yep, that's what I thought, PMs and the monetary scare tactics are pure BS.

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  6. PLUG - Surplies! Maybe not so easy to extract hydrogen from hydrocarbons? Obviously we need a law or subsidy to overcome this most basic law of physics.
    HDSN - Apparently we can't even subsidize refrigerant recycling (APD is the king of exotic gasses, in fact you should see what APD is capable of it b/c certain aspects of their technology should rightfully scare the holy hell out of you!).

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  7. Man one stock I'm really tempted to sell some of my FCAU for is Z. I just think that is one of the big winners out there longer term. They basically have a monopoly on the future of real estate.

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    Replies
    1. Always good to have some diversification - you never really know what might happen.

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    2. I agree but the only way to significantly outperform the market and be financially independent is through concentrated positions. Its essential to take on risk to get to where you want financially...actually in all aspects of life. Has to be a calculated risk though.

      Although going all in on one company is probably taking this concept a bit too far to the extreme.

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  8. I just picked up some Z in the high $118’s. Only 3% of the port. Will probably add more today.

    I don’t know where it goes short term but I view this as a major winner longer term. Buying a monopoly business growing 50%+ annually with a moat as big as GOOGL (in my opinion) is kind of a no brainer. I plan on building on this position. The only downside risk I see is if the FTC shoots down their merger with TRLA. Even then I don’t know a soul that uses trulia.com over zillow.com. Another thing to consider is they don't even operate internationally.

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    1. It would be interesting (and I would love) to see Zillow try come to Canada. I think they would have trouble though as a lot of the information I see on Zillow USA's houses is not electronically or even freely publicly available up here. Dumb, but the realtors and MLS have done a good job of keeping a lock on data and thereby job security. The government finally passed a law 2 years ago forcing MLS to allow listings from non-agent sources.

      The reason I bring this up is I wonder how replicatable it is. Not sure if Canada or USA is more the norm around the world.

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  9. NLY - Amazing, the change of heart from yesterday's close, huh?

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  10. RLGY - Wonder if real estate licenses are over rated much the same way Taxi licenses are? Why pay 6% to a realtor if a simple online auction service can provide comparable market exposure instead?

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    1. Never heard of anyone paying for a real estate license.

      I think the large majority of people are uncomfortable buying and selling a house on their own. You don't have to pay 6% anymore, and can negotiate, but I think people are just uncomfortable and worried and overpaying or underselling and the advice is worth the cost (Even though most agents just want to move the house as quickly as possible and move on).

      Probably the millennials will change all this, but will take time. Found this on wikipedia:

      According to a press release by the National Association of Realtors (NAR) regarding their 2009 annual survey of real estate consumers, 2009 Profile of Home Buyers and Sellers, 11% of 2009 US real estate transactions were FSBO, down from 13% in 2008, and a previous peak of 18% in 1997.[7] The record percentage of 20% of US real estate transactions (since tracking started in 1981) took place in 1987.

      Some critics of the National Association of Realtors' report believe those statistics may be misleading and suggest that the true size of the U.S. FSBO market is closer to 22% because the report also found that flat-fee MLS now makes up 10% of transactions. They argue that flat-fee MLS sellers are in substance FSBO sellers. Unlike traditional real estate agent clients, flat-fee sellers are not committed to paying a commission and still advertise their homes as being for sale by owner

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    2. Did I imply a real estate license was expensive? My point is the fees to the seller are rather steep. I don't see why an online service won't be able to pull an UBER on the NAR.

      As far as negotiating the fee, can't say I've been successful at accomplishing that feat. Rather it seems the shoe has been on the other foot as the agent kicks off attempting to lowball me.

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  11. Long day without internet/cable. No trades here although I did pick up some more shares of FCAU AH's yesterday.

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  12. Mark - I'd be curious to get your take on the impact of Zillow.

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  13. I ended up buying more Z than I anticipated. Upped it to 50% by the end of the day. Long term growth rates and opportunity for Z notwithstanding, Fiat is up 69% in Italy since the October lows. That move is warranted in my opinion, but there's a good chance we see a period of consolidation. And Z has traded sideways for 6 months so my thinking is it has a run in it back to the old highs. If FCAU runs higher from here it will probably have a sharp quick pullback after that and I will have a shot of getting in close to these prices. if not I have skin in the game plus I love the Zillow business model long term. I still think it's just getting started in disrupting the real estate world and I think they have a very defensive position against bigger internet players.

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  14. Have you guys ever done rental properties for real estate? Anyone know of anyone or have any personal experience with Airbnb?

    The reason I'm asking is we're looking closer at our financial situation from the longer term perspective. We have a really weird / unique set up financially and we need to consider the impact of state taxes on where we live. Several years ago I ended up putting basically all of my money into a IRA. The good part is the money has grown a ton and we can now live off our savings. The bad part is when we need money for living expenses I have to withdraw $$ from the IRA and for tax purposes they are treated as income and we pay taxes on that income. Additionally we have to pay early distribution penalties on withdrawals (10% for Federal plus California charges early withdrawal fees).

    In case you guys weren't aware, CA has the highest top state tax rate by far at 13.3%. Last year we paid around 8% I think and this year it will be around 9%. So we're contemplating moving to a state with no income tax for 9-10 months out of the year while the kids are in school to establish residency and then staying in San Diego for the other 2-3 months so we can be close to my wife's family. The savings over the next 15-18 years (when my kids go to college) when you add up the savings on state income taxes each year plus the state income taxes we we have to pay on a withdrawal to cover a down payment for a house will end up being about $900k to $1MM, assuming the money can be reinvested at 5% annually. That's a huge chunk of $$ and I don't know if it's worth staying here in San Diego for that if it means we have to change our lifestyle so that I no longer work from home and can be around my family a lot during the day. The downside is we won't be close to a place we love and close to my wife's parents for 3/4 of the year.

    So we are thinking of buying a house in some no income state (WA or TX maybe??) and going in with a friend of mine on a smaller house/apartment (prob 2 bedroom with a loft) near the beach in CA that we will rent out on Airbnb on a weekly basis to cover costs (and maybe have a small profit and appreciation) and live in while we are in town. Thus my question about Airbnb. Not really sure what we're going to do so we're looking at all options.

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    1. I'm not sure if this works down there, but you can do stuff like this up here:

      1. borrow $500K to invest outside IRA
      2. write off loan interest of $20K per year (4%
      3. Pull $20K out of IRA tax free (as it is offset by the interest deduction)
      4. Use the income from the $500K for spending as it low tax income if dividends or capital gains

      The trick is to then be very conservative with the offsetting $500K inside your IRA as you don't want to highly leverage yourself.

      I've got loads of spreadsheets trying to figure out the same here. One of the other keys is to pull money out in my and my wifes name so that our overall incomes are pretty much equal and avoiding the high marginal tax rates.

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    2. And to answer your question, never used airbnb. Not really sure what the difference would be over a regular BNB.

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    3. TOF, I used owner's direct for renting properties when going sking (http://www.ownerdirect.com/), in the past. Good.

      Property taxes will eat you alive in Texas, I would stay away. Talked with many high net worth doctor's there and most said they would not be able to retire there due prop taxes.

      If you do not consider a six hour drive onerous, I would check out Oro Valley in AZ state taxes are moderate with very reasonable property taxes. I'm about 8 miles above Oro Valley, beautiful mountains and an elevation of 3500 feet so cooler summer's.

      The benefits are that your about six hours, may be eight, from San Diego, so short trips possible. Summers here are 95-101 at worst generally, so the summer months are when you could be in San Diego when school is out.

      I looked at all the tax free states for over three years and ultimately for us AZ made the most sense. WA is an interesting choice, but we decided we did not want such a wet, cold climate.

      You reason for doing what you want is very savvy. The above is just something to consider, not a very far drive for investigation. Good luck in what you and your wife decide.

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    4. http://www.kiplinger.com/tool/retirement/T055-S001-state-by-state-guide-to-taxes-on-retirees/index.php

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    5. http://www.tax-rates.org/income-tax-calculator/?action=preload

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    6. Yes, I've rented several properties in both Austin and San Jose/Portola and I didn't use any service(s).

      Cali may have above average personal income tax but how does Cali rank in terms of real estate property tax? One thing you can count on is every state has to cover their expenses. For example, my property tax in Austin (Tx. has no income tax) was more than San Jose.

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    7. And I like dry as well. I agreeT3d made a good choice, it's pretty nice through there. Flagstaff has seasons, or at least that's the impression I've gotten the various times I've driven through. Trying to remember where my Volkswagen was crushed by two cars slipping in the snow, I think it was near there?

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  15. Why not move to Vegas? There must be a few neighborhoods with good schools, and within a day's drive of San Diego.

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    1. I'd be careful about Vegas, bigger potential water problem and when Hoover Dam drops another 30 feet, the turbines are above water and electrical power from such ends.

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    2. "when Hoover Dam drops another 30 feet, the turbines are above water and electrical power from such ends."

      Hip-hip hooray for coal and natty powered electric turbines????

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    3. Isn't most of the Hoover power sold to California, and used to pump water to cali as well?
      How's that rain coming along, is it going to refill Mead?

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  16. RSX printed an intraday low of 18.15, and closed near the day’s high @ 18.58.
    EEM printed an intraday low of 40.67, and closed near the day's high @ 40.88.
    EWZ printed an intraday low of 38.69, and closed near the day's high @ 39.33.
    RYWVX filled @ 68.95 (-1.36% from yesterday’s close) at the 1030 window. The 350 pm close was 69.73.

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  17. TOF, are you going camping this weekend?

    ". . . and no one can have an idea of what a good fire is who has never seen a camp-fire in the woods of America. Imagine four or five ash-trees, three feet in diameter and sixty feet long, cut and piled up, with all their limbs and branches, ten feet high, and then a fire kindled on the top with brush and dry leaves; and then under the smoke the party lies down and goes to sleep."

    John James Audubon, Cash Creek, Kentucky, 1810

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  18. This comment has been removed by the author.

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  19. GV - Insider bought $434k yesterday.
    NRG - Tailspin in progress, don't see any insider buying?

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  20. Hey guys - Thanks for all of the feedback. We're still in the researching phase but Nevada is out for sure. I think TX is a slight option (maybe Austin but it most likely not Texas) but we would only really consider WA bc we like the coast. My parents live in Colorado so that's a slight option but I don't think we could do the cold and middle of the country for that long.

    You guys mentioned property taxes...is there anything else I'm missing that could be higher? Sales tax in WA is about 1.5% higher than San Diego. However, when I looked at property taxes on all of the places California was still the highest so maybe I'm missing some other hidden costs?

    BB - I need to re-read your comments again. My mind is spinning...

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    1. TOF, pay attention to this site for comparison of income, sales, property, and business taxes. You can do it all from this site and have good numbers to assist your decision.

      Exciting no?

      http://www.tax-rates.org/taxtables/income-tax-by-state

      http://www.tax-rates.org/taxtables/sales-tax-by-state

      http://www.tax-rates.org/taxtables/property-tax-by-state

      http://www.tax-rates.org/taxtables/corporate-income-tax-by-state

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    2. Also, of the people I know that live in WA, they live close to the border with Oregon and do their shopping there at 0%.

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    3. I suppose border should read state line.

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    4. Oh yeah, many states exempt food and drugs from sales tax, so check that. Many variables for more head spinning.

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  21. Right, well California isn't going to be the cheapest place to live, I can bet you. Austin wouldn't have been too bad except for being gouged (IMO) on the property taxes.

    Some states have personal property tax, based on the value of your registered vehicles and toys. In the case of a boat for instance, annual property tax can cost more than the storage fees. If they new I had a bulldozer they'd be charging me property tax and I'd probably sell it just to avoid that.

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  22. And, if you decide to leave the no-income tax state make sure you sell your house before you leave otherwise the state you move to might expect you to pay them capital gains taxes despite you already paid via the increased property taxes. Not that it's a big deal really but capital gains on real estate can be substantial sometimes.

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  23. HMC - What do we think of this one, comments? Seems the '14 CRV is popular.

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  24. Pretty decent macro writeup, IMO.
    http://inthelongrun.co.uk/

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  25. ISRG - How do you like the May knockout? Seems that might be the same tactic playing out in energy right now.

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  26. MTOR - Looks like another $4 in this pattern, what could screw that up?
    STM - Looks like a run to catch up with the others.

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  27. HIMX - 2nd, have you given up on this one?

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  28. CP,

    HMC seems fairly valued to me. Not undervalued like FCAU or GM.

    They are probably fine to own for the next few years as the auto cycle plays out, but I don't think the big gains will be there.

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    1. Okay thanks, I was just considering the Yen might go to 240/$ or something like that and place a tailwind behind Japanese companies. Also the CRV seems popular. With that you still think FCAU/GM might outperform HMC?

      I really have no idea myself but was pondering the possibility.

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    2. You'd have to do more research on the Yen effects. Car manufacturers make cars all over the world, so currency effects are less. Plus, you'd be buying the ADR in US$.

      But based on simple multiples like p/e and market cap/auto production, it is more expensive than most, but deserves a higher ratio because it has a better long term track record.

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  29. FCAU my broker took down their $7.50 price target and there's still no rating. Wonder why they took it down, maybe they're feeling embarrassed for low balling it so long?

    BTW, I found a Ferrari review by a guy who freelances driving school lessons and he said the Ferrari is the best Ferrari he's driven, multiple thumbs up even over his favorite hot rod, the Viper. He also said Ferrari shouldn't be announcing their intention to increase production numbers, they should be keeping their mouths shut.

    Been reading great reviews on the Alpha too. Basically, it's rough around the edges where it counts.

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    1. Chrysler has lots of transmission failures, but maybe that's old news?

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  30. You guys realize the Cushing inventories are increasing due to TEP's pipeline from the Bakken has recently begun delivering to Cushing, right?

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  31. Looks like I forgot to short oil.....

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  32. http://jalopnik.com/ferrari-named-its-new-car-after-explicit-coitus-and-tha-1666175575

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    1. Wow. That is one nice looking car and 1000 horse, crazy. Should help keep up the ipo excitement too.

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    2. The more I look into these exclusive brands I wouldn't be shocked to see Ferrari worth $14 Billion or 40 times earnings, leaving the rest of the company worth about $3 Billion or so. There's something to be said for a brand that makes whatever profit they want to make, in good times or bad.

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  33. Been thinking, if 2015 is a really good year, like is indicated by the presidential cycle and the 5th year of the decade, it might be worth buying some call options. You can get Jan, 2016 at the money market options now for about a 5% premium. Seems like a pretty reasonable bet.

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    1. That is interesting. The economy seems to be doing quite well so the only shock seems likely to be a really sharp move higher in either the dollar and/or interest rates.

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  34. Toxic Coal Ash - Who's going to be cleaning up the monstrous coal ash ponds across the country that are leaching toxic heavy metals into rivers and groundwater?

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  35. weird i tried posting this earlier...I realized the error of my ways. Sold Z around $117.8 or $117.9 and bought back FCAU at around $13.6. I searched high and low for about 7 hours last evening/night for low risk low valuation stocks and I couldn't come up with anything better than FCAU as far as risk-reward goes. Sure it has gone up a lot recently but I need to keep in perspective where it has been. It was at $12 in April so a 10% move since then isn't that huge. And it was at $8 or so 18 months ago which also isn't a huge move in light of how much things have improved for them.

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  36. JONE - I guess this one ISN'T an energy company?

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    1. Don't worry it will act poorly in 3...2....1....

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    2. Bingo, there it goes. I guess some clientele capital had to be used to buy out the broker's position.

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  37. What the hell is going on, nearly everything is down a good amount?

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  38. Interesting from Jeff Saut this week:

    "Nevertheless, the consensus of the good folks at FOF was that oil prices are indeed in a bottoming phase. If correct, this implies buying the Energy complex into year’s end could prove to be the trade of the year for 2015."

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  39. TOF, I agree re rates and the dollar as the main risks and I think both are small. The other risks are political - Russia and some of the middle east countries are in a bind with low oil and could do something dramatic.

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    1. Right that is very true. The risk of that happening is rising daily as oil "barrels" lower.

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    2. BACML recently said not to expect rates to appreciate considerably, so we should probably be long TBT.

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    3. USCR is loving low energy prices.

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  40. BDI - Back to 952, bulk shipping rates are not in rally mode either. Too many ships or no demand?

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    1. too many ships + death of coal = mass destruction for the industry...that's my take now but it could change any minute!

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    2. Coal is definitely dead at least until natty is all gone. All conventional energy could be killed if cold fusion emerges, I hope you're monitoring cold fusion? I know it sounds like BS and I don't believe it either but more and more are saying it's here?

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  41. This is turning into quite the bloodbath of a day.

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    1. Not the averages but look at the moves high to low in a lot of these stocks:
      FCAU
      Z
      YELP
      GM
      PCRX
      FSLR
      SPWR
      TWTR
      YELP
      LNKD
      EWZ
      BALT
      NM
      CYBR
      GPRO

      Looks like the airlines are holding everything together!

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    2. My guess is people are using any excuse to sell stocks and will come to regret it in a few weeks.

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    3. Financials up today. If we are going to have a strong rally next year, financials will have to be a major part of it. They've still got low valuations for the most part and stand to gain from an improving economy.

      Healthcare and Utilities also up today, but I think that is just more of a defensive play.

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  42. Why is it when I buy something it immediately turns south?

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  43. Looks to me like the global central bank pump is finally getting dumped. Do you see the H&S in SPX chart that need a right shoulder?

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  44. BXE - Headed straight for $2.35 and maybe lower.

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  45. Replies
    1. Take a look:
      http://www.sacbee.com/sports/nfl/san-francisco-49ers/aggqtz/picture4332340/alternates/FREE_960/Raiders.JPG

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    2. I'm just a Warrior fan for now!

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  46. HII - Would it be fair to say this one has sorta outperformed BXE?

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  47. GDXJ - Okay now this commodities ETF is up well could probably buy DUST here.

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  48. I've nearly run out of money to throw into the pot, somehow the market knows this.

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    1. I'm still 80% cash but getting killed obviously.

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    2. Just sold NLY near the close, I'm not sure what could possibly happen to keep oil from dropping considerably lower (around $50?), hopefully $50 is priced here in but doubt it b/c not many are going to make money at $50 as far as I can tell?

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  49. Any of you guys have any stats on how a company's equity does after a convertible bond offering? I am looking for something concrete. I can't find much and I don't know if they're always shorted against as a hedge. Could be something to consider with FCAU

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    1. What if we assume it's shorted against as you're contemplating? I guess they know already if they need to dump or hold onto it, they're way ahead of everyone else b/c they have visibility we could only dream of.

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  50. IRE - Looks like this could be a fakeout @ $17

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  51. I ended up selling all of the shares of FCAU (and some extra) that I bought today for a $0.30 loss. Down to about 35% long.

    I've learned through trial and error to respect a few things over the past 5 years that have helped me out tremendously and the first one is to lighten up when my confidence is a bit shaken. There was a reason I sold FCAU on Friday and it was probably just as much a gut instinct (which is at best 50% accurate) as it was a fundamental reason. The fundamental reason is the convertibles are pricing some time this week and my gut instinct was this would potentially cause a temporary small air pocket back down to $12 or so, especially when taken in the context of the 70% rise in the stock in Italy (excludes currency effect) over the past 7 weeks. I'm trying to time this move so I could be wrong.

    I'm also mindful of the fact that lots of people are losing lots of money right now in energy and growth stuff and utilities and treasuries (defensive stuff) have been outperforming all year so to think that my luck will last and I'll remain unscathed is naive. I hate selling on a day like this because it's almost always bad timing.

    Two other things that are still messing with my mind is my own personal financial situation...we're at a place now where we have to choose the best option to live and making that choice involves having more money up front than usual to pay for a move / down payment etc. And I still deep down inside can't shake the feeling that because we have been on a massive 5 1/2 year bull run the risk continues to be elevated.

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    1. By the way, its amazing how much money we could save if we lived in Vancouver, WA and traveled into Portland to buy everything. We're talking about $35k per year in after tax savings. By the time my 3-year old son goes to college that would grow to $790k in savings after tax, assuming we could generate 5% per year on those savings.

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    2. TOF,

      in my experience, you have to plan for your personal situation first, then think about the markets. You dont want to be forced into making awkward decisions at difficult times.

      I personally think next year will be good, but realize risk has gone up and now have 2 years living expenses in cash. Before this year, one year cash was enough. If 2015 is a really good year, my thinking is I will want to up that to 3 years by the end of 2015 as risk will be even that much higher still.

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  52. Improving economy, is that in past-tense?

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  53. Wondering if you guys have noticed commercials COT is back to their same outsized short position as they were in Sept. just ahead of the Oct. crash, or it it just me?

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  54. "Been thinking, if 2015 is a really good year, like is indicated by the presidential cycle and the 5th year of the decade, it might be worth buying some call options. You can get Jan, 2016 at the money market options now for about a 5% premium. Seems like a pretty reasonable bet."

    BB - One thought I've had for a little while now is it might make sense to put some money into a leveraged long ETF on the overall market. I agree that the odds favor a pretty decent year next year because the US economy is clearly improving more than it has in the past and yet interest rates are really low and oil is plunging. have you considered this at all? Minimizes the sector risk...

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    1. I've been thinking some things similar. If we get into a large cap growth type market like the late 1990's, the type of stock picking I do may not be very effective. You saw a lot of value and small cap guys get crushed in 1998 / 1999 then due to money moving into the S&P 500 and especially tech.

      Plus, when I look at my personal long term track record, my outperformance has been much better in down or rebounding markets and less so in steady-eddy growth type years like I think 2015 will be. The other thing I am thinking about is how I pick stocks in general and how I can adjust it to try and stay better ahead of that type of market. But the idea of just buying the market and using my time elsewhere is interesting.

      I'm doing a fair amount of thinking now trying to figure out my strategy for 2015.

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  55. Replies
    1. what are you holding?

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  56. XLF has broken out, banks do well when the $US is strong, right? Is that likely to hold true for KRE as well?
    AMD - I remember since back in the 90's this one has support at $2.50, completely different company now though I suppose.

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  57. DB - Okay, maybe this explains today's selling "U.S. hits Deutsche Bank with $190 million tax fraud lawsuit at Fortune" I hadn't seen this yet.

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  58. Energy - What a frickin' (holy s__t!) disaster, I knew that was gonna happen as the oil and gas from the hundreds/thousands of new wells came to market. They're gonna keep drilling too, despite losing tons of money, so energy is gonna be cheap for a long, long time.

    We should be short oil.

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  59. Energy insiders buy most shares since 2012
    With valuations at a decade low, oil execs such as Chesapeake Energy’s (NYSE:CHK) Archie Dunham and Ring Energy's (NYSEMKT:REI) Tim Rochford are driving the sector's biggest wave of insider buying since 2012, according to Bloomberg data.Rochford and two other board members bought a total of more than 30K REI shares over the past month; the CEO says the company can stay profitable even should oil slip to $50/bbl.“Most of these execs that are buying have been in the industry as long as I have, so they know how supply and demand works and they’re buying quality stocks,” says Dunham, who recently bought 500K CHK shares in his biggest purchase since joining the company’s board in 2012.Loews Corp. (NYSE:L), which owns about half of Diamond Offshore (NYSE:DO), bought 1.18M DO shares in November and bought another ~410K shares last week.Halcon Resources (NYSE:HK) and Goodrich Petroleum (NYSE:GDP) are among companies operating in the costliest U.S. shale-producing regions, but execs from those companies are buyers as well.

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  60. JNK - This thing is collapsing too, does that indicate Treasury rates might be heading upward? Not sure the meaning of this.

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  61. TOF- I'm long in order of size...

    PENIS
    FCAU
    TLM
    BXE
    GPRO

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    1. Keeping em small, eh? :) You washed your hands of BALT?

      Delete
    2. Bro, this one's for you, if you have 5 minutes

      http://www.tastefullyoffensive.com/2014/07/84-year-old-man-surprises-americas-got.html

      Delete
    3. haha that's funny!

      Delete
    4. And what happened to ARR, still got it? I sold NLY due to two down days.

      Delete
  62. BB - Thanks for all of the info / advice.

    ReplyDelete
  63. TLM - Okay, what's up just rumor of talks?

    ReplyDelete
    Replies
    1. Like I posted before, by take is it will get sold.

      Delete
  64. CP- Yep, still have ARR sorry. I don't even consider it a trading position.

    ReplyDelete
  65. Investors in the Shanghai Composite wasted no time taking the index up to 3000 and beyond. This morning's -5% drop should be viewed in the context of a +23% climb over two weeks.

    (a) My positions, however, were collateral bets on Brazil, Russia, and Emerging Markets in general. Those positions are (or will be) off -5% this morning. When I'm wrong, I take losses immediately.
    (b) No regrets. At least, no time for regrets.

    ReplyDelete
  66. I suspect we get a green close today.

    ReplyDelete
  67. FCAU - Back in @ $23, for the ride down.

    ReplyDelete
  68. CONN- No way I could invest in this ticker.

    ReplyDelete
  69. Counter point

    per Cashin ubs

    A Longtime Bull Ponders A Pause – Few folks have called this bull move as correctly and adroitly as Jim Paulsen of
    Wells Capital Management. But in a Squawkbox interview yesterday, he seemed to express a bit of caution going
    into next year. With apologies for the punctuation, here's a bit from the CNBC website:
    With stocks at record highs and the Dow Jones Industrial Average (Dow Jones Global Indexes: .DJI) less 1
    percent from crossing 18,000 for the first time ever, strategist James Paulsen told CNBC on Monday he's
    going "underweight" the U.S. for 2015. A late-year surge has pushed the Dow up 8.3 percent for 2014
    as of Friday's record close. Paulsen, who's ridden the rally higher over the years, now sees a flat or even a
    negative year in 2015. "There's some really, really strong Wall Street consensus themes right now. And
    one of them is 'the U.S. is the place to be.' Another one is 'the dollar is only going to go up.' The third
    one [is] 'rates can stay lower for longer,'" the chief investment strategist at Wells Capital Management
    said in a "Squawk Box" interview. "I kind of think that 2015 might resolve in disappointing every one of
    those themes. I would tilt against them in portfolios." The Dow on Friday was less than 9 points from the
    key 18,000 level before trimming some gains to close at 17,958. Blue chips have gained 11.4 percent in
    less than two months. "The whole foundation of this bull market we've been in since 2009 has been
    climbing a chronic wall of worry. That's been the primary catalyst for this run. That, to me, is over,"
    Paulsen said, adding that good news is becoming bad news on Wall Street because it pushes the Federal
    Reserve closer to hiking interest rates. He acknowledges that the U.S. economy has been doing better,
    with an improving job market as evidenced by Friday's strong employment report. But he said, "The stock
    market reflects a lot of that already. I think there's got [to be] better bets in 2015 ... in markets that have
    underperformed the U.S. the last couple of years and that I think are likely to bounce in 2015."
    It should be noted that Paulsen doesn't say that U.S. stocks will go down, only that other markets may offer better
    opportunities.

    ReplyDelete
    Replies
    1. I think Paulsen's concepts are right but I think there are areas to play this that should hopefully work out better. If we assume a gradually improving economy then it seems to me that the areas that are directly tied to improving jobs and low oil that haven't gone nuts to the upside are the ones to benefit and focus on, even in what could be a bumpy 2015.

      But I think there's the potential that we get a stronger market than people are expecting. I think the impact of $100 oil is understated by a lot of people. I think on sentiment alone, $60 oil (or sub $3 gas here in California) is huge. And positive sentiment drives everything.

      Delete
  70. I managed to sell some FCAU pre market between $13.38 and $13.33, but it was only maybe 5% or so of my holdings. I'm holding 33% of what I had before, roughly. Looking to reload it but trying to decide where the short term floor is at...I was thinking it would test the $12.7 area again (spot it dropped to after hours on the conv bond info on thursday)

    ReplyDelete
    Replies
    1. My friend said he saw somewhere that they would be pricing the convertible on 12/10 so perhaps tomorrow is the bottom?

      Delete
  71. Picked up some WAC today at $18.16. I've been stalking this whole group for a while now. Group includes OCN and ASPS amongst others. I think we could get a bounce back due to tax loss selling as we head into the year end. Most of these are down at least 50% this year.

    ReplyDelete
    Replies
    1. Picked up ASPS at $49.5 as well.

      Delete
    2. ASPS is the red headed stepchild of OCN. They're in a lot of partnerships with them so it could get hairy if OCN goes down. They have a lot of other businesses that they're in aside from their relationship with OCN. I'm not looking to marry this trade but I think a bounce is due.

      Delete
  72. Picked up HCLP at $32.66 and EMES at $48.2.

    ReplyDelete
    Replies
    1. I'm thinking we could start seeing some rebounds as tax loss selling in the entire entire space lets up. I'll be out most likely soon to take advantage of the drop in FCAU but if oil does bottom out down around here then stocks like these two could be very good picks, offering a good deal of upside and high dividends. EMES is paying a dividend of 11% while HCLP is around 8% due to the recent price drops. Those are huge yields if they can maintain them.

      Delete
  73. Started buying a little FCAU back at $12.8

    ReplyDelete
    Replies
    1. Adding more as it heads lower. This is all due to the convertible in my opinion. Big boys need a lower price.

      Delete
  74. Bought a little HAL

    GILD and PCRX do not want to stay down

    OCN been on watch list for a month, just looking still

    want to buy back into FCAU

    ReplyDelete
  75. You probably saw this:

    Talisman Responds To Media Reports
    15 hours ago by Marketwire
    Talisman Energy Inc. (TSX: TLM) (NYSE: TLM) is issuing this press release at the request of Market Surveillance at IIROC on behalf of the Toronto Stock Exchange. Talisman acknowledges that it has been approached by a number of parties, including Repsol, with regards to various transactions. There is no assurance that any transaction will be agreed. Until such time as it is appropriate to make a public announcement on any potential transaction, Talisman does not intend to make any further comment on this matter.

    ReplyDelete
  76. Not sure if you guys have time for this but listen to the call for WAC:
    http://edge.media-server.com/m/p/eaxirz9c/lan/en/st/retail

    They talk a lot about asset sales that they are looking to partake in and they feel there's significant upside to stockholders. Obviously they're biased but if you look at the earnings power of their business, the stock at only 5 times EPS makes it look pretty compelling. They've taken a hit because they're in the same space as OCN but I think that guilt by association will go away. This whole area could be a decent place to look for undervalued stocks.

    ReplyDelete
  77. GDP - "Supposedly" a high-cost producer, up over 14%....

    ReplyDelete
  78. Replies
    1. bidding on SQM and FCAU, let's see if I can pull computer to my prices

      Delete
    2. I saw that SQNM popped the other day. Do you remember why? Not on my computer right now...

      Interesting that that one has held in. NSPH not so much. I think PACB has done well too..

      Delete
    3. I think the pop on SQNM was this on 12/3

      Sequenom (SQNM) Gains After Ending Patent Disputes with Illumina (ILM

      But SQM is a lithium play in Chile with potash as a by-product if memory serves. It was crushed when the Russian company broke up cartel pricing.

      FCAU came to me with a fill at 12.75, hope your thinking is correct on the convertible needing lower price, makes sense.

      Delete
    4. oh duh. SQM. sorry.

      Delete
  79. Looks like Mark may be right about the green close today - Nasdaq has bumped into green and rest approaching.

    ReplyDelete
  80. Re Paulson's comments, maybe I'm missing something, but rising rates help financials and many (probably most) financials are undervalued, so it still seem like they should do well with the improving economy.

    If I was going to guess, I think financials will be the best performing sector in the market next year.

    My 2nd choice would probably be energy as I think once oil stops going down, the stocks should be in place for a good rebound. I just don't think we are at that time yet.

    ReplyDelete
    Replies
    1. In my screen for stocks down the most heading into today, the top performers are oil and gas stocks. It's across the board. Not sure if this is the bottom but it sure feels like a good spot to trade from. Reminds me a lot of the bottom in the tech stocks like YELP back in early May.

      Delete
  81. KRE - Closed the gap up obligation, now green

    ReplyDelete
  82. FCAU - They can't sell this one fast enough, while HMC is positive on the day.

    ReplyDelete
    Replies
    1. It's all because of the convertible in my opinion. The issue with shorting a stock that has a convertible and holding through conversion is you will also have to short the Ferrari stock so that theory kind of goes out the window. My guess is this is panic selling ahead of the pricing date which I believe is after the close tomorrow. This is exactly what I was expecting to happen so I'm taking advantage of the dip and have been buying some more in the 12.60's.

      Delete
    2. Okay, after close tomorrow. So what might be a good way to play this, try to add around tomorrow's low(if more pullback happens) before close or wait till Thursday?

      Convertibles are driven with top up or down depending on weather. :)

      Delete
  83. In looking just at the charts of HCLP, EMES, WAC, ASPS, they all could reasonably go up 50% from here just to reach a reasonable prior resistance area. That's how beaten down they all are.

    ReplyDelete
  84. Why did you choose HCLP and EMES?

    ReplyDelete
    Replies
    1. it was between those two and SLCA. I like these because of the dividend (figure there's more support in them). I made a good chunk of change in those three a month or so ago but EMES went up the most with HCLP up the 2nd most. SLCA barely went up. So I'm naively assuming the same thing happens again. Also think the charts are setting up very similarly to YELP / NOW back in May. Market has been repeating patterns in a lot of stuff this year as it rotates through sectors so hopefully same thing happens here...40% gains in 1-2 months.

      Delete
    2. Maybe fracking goes away? Who knows. They've all been making good money with natty down in the $3's-$4's. Maybe oil collapses from here, but I bet it bounces first and that's all i'm trying to play. Lots of vested interest in it staying up so wouldn't be surprised to see something happen out of the blue. plus, sentiment is completely in the shitter, just like it was with growth stocks in May. I like using this site below for takes on sentiment...this guy is a energy trader and I think his sentiment mirrors the market with respect to oil/energy:

      http://ibankcoin.com/mr_cain_thaler/2014/12/09/cash-to-50/

      Delete
  85. If oil stays between $65 and $75-80 next year, Europe recovers substantially, and autos and housing improves another 5-7%, what do you think that could do to earnings? Anyone calling for a +15-20% year next year?

    Just trying to think of the upside given how sentiment still seems to be subdued.

    ReplyDelete
    Replies
    1. Plus the job market should improve, which will get people feeling better about the economy and the stock market in general.

      So, lets say we get 10% earnings growth and the multiple people are willing to pay goes from 16.4 times fwd earnings to 18 times forward earnings (would be almost 20 times trailing), then we are looking at a 25% year for 2015. I think as fear comes out of the market, it is reasonable that people will get sick of their 2% GIC's and see people making all this money in the market and start paying higher multiples.

      Who knows what will happen, but this scenario is certainly possible.

      Delete
    2. How much of the recent job market improvement is just part time seasonal, not much?
      I'm thinking Saudi Arabia isn't done with their attack on oil yet but how would I have any idea..... Crap shoot!

      Delete
  86. KB - Some big volume down here
    AEG - Could be downside is done.

    ReplyDelete
  87. TOF- Thanks for the feed back. The divy actually scares me a bit as they might cut it. Just thinking aloud...

    ReplyDelete
    Replies
    1. Mark - I'd agree except they just raised dividends when oil was around $80 (on 10/16). So I doubt they would slash it until the next quarterly report at the earliest and I'll be long gone by then.

      Delete
  88. This Bill McBride - http://www.calculatedriskblog.com/2014/12/the-futures-so-bright.html
    has a good handle on the economy, demographics and job market, etc. and is quite positive for 2015

    Worth reading and following on Twitter if you have the time

    ReplyDelete
  89. TOF,

    not that you are going to buy, but thought it may be interesting. Did more work on IRG.TO (the restaurant company) and am staying away.

    1. They tried to sell the company in 2014 and couldn't. That implies the smart buyers were not seeing great value and also that no takeout is likely.

    2. It appears that the dividends trade mainly on their yields and their current yield is about 5.6%. Many other Canadian restaurant chains trade at similar yields, so if I was to go into that space, I'd probably lean towards KEG-UN.TO (the steakhouse chain) as they have good growth both at the same store and number of store levels and IRG.TO is struggling with both. KEG-UN is more expensive on other metrics, but the key metric, dividend yield, will probably grow faster.

    3. IRG has not grown business in years and is still decreasing sales. They are trying to offset selling branded products in supermarkets, which is smart, but the reality is IRG's restaurant chains are in that weak area of the current restaurant market - the mid-priced dine in places as opposed to the quick-serves and high-end which seem to be doing well.

    4. Smart activist investor George Armoyan, who is also based in Halifax where IRG is located and well-connected, used to be a large owner of this stock and sold out a few years ago at a lower price. IF there was a good chance to turn this around and management was responsive, he'd probably be doing something.

    ReplyDelete
  90. CLNE - Here's one that might be ready to jump?

    ReplyDelete
  91. TSX Venture Exchange lowest level ever (really since 2001)

    http://business.financialpost.com/2014/12/09/falling-through-the-garbage-can-tsx-venture-sinks-to-record-low-amid-resource-sector-woes/

    ReplyDelete
    Replies
    1. Wonder where the bottom is? This action troubles me although maybe the place to be in 2015? Will this drag down the Canadian housing market and cause a chain reaction?

      Delete
    2. That is a concern for sure.

      Bear case is something like: Lower commodity priced mean less high-paying jobs for resource workers which means less home buying and more foreclosures which hurts the Canadian Banks.

      Bull case: lower commodities and cdn $ help manufacturing and services, so non-resource provinces grow and the country rebalances as people move out of west and housing market stays steady.

      Delete
    3. Seems to me Canada has been working towards less dependence on commodities production.

      Delete
  92. OPEC - Cutting production next year by 300k bpd?

    ReplyDelete
  93. Brandt says silver has bottomed and could retest ~$26

    ReplyDelete
  94. http://www.streetinsider.com/Rumors/Fiat+Chrysler+%28FCAU%29%3A+Ferrari+May+Relocate+Outside+Italy+-+Bloomberg/10084365.html?si_client=intbro

    ReplyDelete
  95. Chrysler 200 review not good, same as Dart was?

    ReplyDelete
  96. CP- OPEC cut 2015 demand out look. Not production.

    ReplyDelete
    Replies
    1. Yeah, I'm beginning to think the term "developing nations" is a misnomer b/c these countries that are "developing" are mostly already developed. For example, Uruguay isn't exactly a stone age country.

      The US could use a good deal of "development", to say the least.

      Delete
  97. DB - I fully expect DB will gap up tomorrow morning (based on past habitual gaping action)

    ReplyDelete
  98. BXE - This one still loses 0.20 per day without fail, what a fantastic short that keeps on giving and giving.

    ReplyDelete
  99. Well that was quick. Sold HCLP EMES for about 2-3% losses. I sense capitulation very near though.

    ReplyDelete
  100. Fully loaded back up on FCAU.

    ReplyDelete
    Replies
    1. Managed to get about 5% more shares than when I had 4 days ago. I will now hide under my desk and wait for you guys to give me the all clear..

      Delete
    2. Duck and cover, hilarious.

      https://www.youtube.com/watch?v=N_1jkLxhh20

      The atomic stocks.

      Delete
    3. wow. what a video! i've seen a shorter version of this before. Crazy this is what was shown to kids.

      Delete
    4. Climb under the desk, great idea!

      Delete
  101. Robot is short SPX yesterday @ 2038, so a little under water on that.

    ReplyDelete
    Replies
    1. Boy it kind of feels like we're on the verge of unraveling here very soon.

      Delete
    2. If I recall, it flipped from long 1900

      Delete
  102. YPF - Nicely red, wonder if Soros has unloaded or if he's accumulating?

    ReplyDelete
  103. HELI - Oh ouch, yesterday was another example of a nice fakeout.

    ReplyDelete
  104. RBA - This one should fly, considering the massive equipment auctions entering the pipeline.

    ReplyDelete
  105. FCAU - $10.50 would cover that one weekly bar by ~50%, seems like a logical obligation that could fruit in a scary market.

    ReplyDelete
    Replies
    1. Now why do you have to go and say that!?

      Delete
  106. JONE - This one is amazingly strong, I guess they must have artesian oil wells?

    ReplyDelete
  107. "State Budget Solutions' latest research reveals that state public pension plans are underfunded by $4.7 trillion, up from $4.1 trillion in 2013. Overall, the combined plans' funded status has dipped three percentage points to 36%. Split among all Americans, the unfunded liability is over $15,000 per person."

    Meanwhile, the CIA is waterboarding the Senate report while WMD's remain AWOL.

    ReplyDelete
  108. November 12th, supposedly unfunded liabilities growth trend remains in place:
    http://www.statebudgetsolutions.org/publications/detail/promises-made-promises-broken-2014-unfunded-liabilities-hit-47-trillion

    ReplyDelete
    Replies
    1. This is something we Canadians can help you with:

      http://dealbook.nytimes.com/2014/12/08/canada-finds-key-to-pension-fund-investing/?_r=0

      Delete
    2. Yeah, definitely need to make some changes. Not sure how we got into this predicament exactly, a little above my head to be honest. Probably embarked on some genious-level decision making processes.

      Delete
  109. JONE bought more land today too.

    Hopefully it turns out these are really smart guys taking advantage of distressed sellers and it turns into a big win.

    Guess it depends if this is a short term spike down in oil or the start of a long trend of lower prices

    ReplyDelete
  110. Succumbing a bit to the pressure and contemplating taking some off the table. Goes against my every fiber of being but I still can't ignore the pain being felt by multiple sectors right now and potential for even more pain in FCAU etc.

    ReplyDelete
  111. Just got back from Costco, glad I did not have to watch this. They are getting a nice piece of me today.

    ReplyDelete