Thursday, March 24, 2016
3/24/16 Just when bears thought they were off the hook
The market reels them back in.
I'm sure that's how it feels, which is exactly how the market works. Why do prices keep moving up? It's referred to as the 'wall of worry.' When investors stop worrying, the music will stop. Until then, the indexes will continue to climb. It's starting to feel less like a bear market rally, and more like 'the real thing.'
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I haven't heard anything about an emergency meeting? They just had one and have another next month.
ReplyDeleteJobs numbers continue to look good and inflation is rising, so should hike I think.
It's amazing how every Fed meeting people say what the Fed should do, and then they do it, and then a couple of weeks later talk about why it was wrong. Personally, I think the fed has a lot less power than people give them credit for and they generally follow market rates with some tweaking, but little overall control.
Yeah I could have sworn I read it somewhere (emergency meeting). I just think it's silly that they downgraded their outlook on everything and then a week or so later they're out talking about hikes in April. WTF.
DeleteI used to think the Fed had less power but I'm beginning to doubt that. Although trends like a strong dollar etc were in place and seeable long before QE faded away. I saw this huge move up coming in the dollar 3 years ago (wish I realized oil would get hit the most) and that was when QE was just getting going. It was pretty easy to see.
WLL/CLR...fing A.
ReplyDeleteI still think ENPH is worth a shot in the 1.7--1.80 range.
ReplyDeleteYou think? I can't get past this being a commodity that will get priced down to nothing.
DeleteMMMMM...I don't really think so, just shit, at 1.70 is basically an option. If the whole battery/eco system can get a good foot it could really take off.
DeleteTough to compete against a brand like TSLA tho
DeleteVery...if they really are that interested in it. I'll call a few of my install buddies and see what's up. They probably wont know much cause it aint even available here yet. probably a few years off. Each State is like it's own freaking country when it comes to their power grid. Very difficult to make it work across the board.
DeleteI sold my SPXS earlier at a loss at $16.09. I took advantage of the selloffs in SAM, PFE, GS, MMYT, JCOM, and F.
ReplyDeleteDispute this?
ReplyDeletehttp://money.cnn.com/2016/03/24/investing/us-corporate-debt-rating-junk-15-year-low/index.html
Interesting.
DeleteI think a whole whack of people/companies/governments are going to be in trouble when rates start to rise. It's easy to afford expensive things with 2% interest, but wonder how many have budgetted to support it when it goes back to 4%
Biggest spread between US and European valuation in at least 35 years using CAPE
ReplyDeletehttps://smsfcommunity.ampcapital.com.au/t5/Forum-Investing-in-your-SMSF/European-equities-revisited/m-p/326#M61
CAPE is not a great tool, but help show potential of European stocks
God story about Swift Energy and how they went bankrupt
ReplyDeletehttps://www.washingtonpost.com/news/wonk/wp/2016/03/25/the-big-bust-in-the-oil-fields/
"All together, the more than $1 billion debt represented an amount so large that if the company had combined its profits from its 20 best years, it could not have paid the debt back."
Wonder if BXE can pay it's debt back in 20 years?
DeleteI guess NO ANSWER is a negative, no hope of paying down debt.
DeleteBut thanks anyway.
Interesting that a number of the market technicians are saying the recent move to overbought in the market is actually bullish and not cause to look for a pullback:
ReplyDeletehttp://lplresearch.com/2016/03/24/when-is-overbought-really-another-word-for-bullish-maybe-right-now/
Todays news about Anbang's desire to purchase Starwood basically at any price illustrates what will most likely be longer term support for higher prices for the US market. "
ReplyDelete"The company recognizes the long-term value of American firms, and is willing to overpay — with little pushback from shareholders. "
http://www.businessinsider.com/anbang-makes-revised-offer-for-starwood-2016-3
After reading this article I decided to just go all in for the first time this year. I think this is so bullish for the US market.
DeleteHolding 50% position in TNA at $52.79 avg and the rest in positions I bought on Friday.
Cleared out of many of my individual stock positions today (SAM, GS, UAL, DIS, AMCX, F, JCOM, PFE) and will only focus on TNA.
ReplyDeleteMight clear out of this as well and look to buy on extremely hourly weakness (ie RSI below 30).
DeleteThankfully, there's not a big difference between capitalism, socialism and communism.
ReplyDeleteWho's serious about carbon emissions?
ReplyDelete"In 2013, the European Union decided to demand that all airlines pay for their carbon emissions for flights into and out of EU airports. But following what almost became a trade war with key EU business partners, including China and the United States, the measure was frozen. In the US, President Obama sided with airlines and signed a law that would shield them from having to pay carbon fees."
BWEN - I don't suppose anyone's thought of wind as an alternative power source?
ReplyDeleteBoom TNA off the hook.
ReplyDeleteBB - A day like this really confirms to me the Fed has a significant impact on the market
Yes, and there are a few fed members who love going on tv to scare the hell out of people. They're manipulating markets by playing fear, IMO
DeleteAlso keep in mind what BB said he expects as rates rise equities should benefit, this has not been the case each time the fed talking heads threaten to raise the rate equities response is selling off.
DeleteThe reason is there's too much debt, BB isn't being honest with "himself" or us.
I do agree the fed has short term impacts on the markets, but I think longer term, they follow the market. For example, if the 2 year note was to rise to 2% due to market forces, they'd follow by raising the overnight few funds rate to say 1%. And for the 2 year note to rise, inflation would first have to rise. SO they say they are following inflation, and they are, but I think they are really more following how the market reacts to inflation and adjusting inline.
DeleteIn all fairness CP, the law of averages does imply that EVENTUALLY rates will rise. The issue, as is always the case with markets, is timing. I think its great to have your own opinion and to invest along with it. Better than second guessing everyone else making calls and we see lots of people in the markets doing that. No one is perfect and we're all trying to improve our own financial future and bound to make mistakes along the way.
DeleteBrent's time frame is longer term and if you own a dividend paying bank with a low payout ratio (ie lower risk company with higher potential future dividends) and a solid deposit base, I think eventually you will do well buying banks.
CP, right or not, I still believe rates rise and have positioned my portfolio accordingly. Not all of it as I always diversify, but I am dramatically overweight on the expectation of the following scenario:
Delete1. Jobs improve
2. Wages go up
3. Consumer demand goes up
4. Inflation goes up
5. Interest go up
6. Stocks have a good year lead by cheap stocks getting revalued and the benefits of the above
If I'm wrong, I think I still do OK as many of my stocks are exceptionally cheap, but if we do get some or all of the above things happening, I should outperform.
And if I'm wrong about rates going up this year, I feel even more confident they will in 2017 or 2018 and I am a patient investor who likes to buy good, cheap stocks and then wait for good things to happen.
Market is pricing lower rates, not higher. Assuming the FED does follow suit this means no funds rate increase.
DeleteA case could be made that low rates are the mean in a longer time horizon. We're subject to political whim from the perspective of employment opportunities, thus wages.
Anyone thing ESRX is worth a shot? You guys understand the US health care market much better than me, but it's really beat down and cheap on next year's forecasted earnings and has been a long term solid performer. The reason for the pushdown seems to be the consolidation of the major health insurers and their ability to bring drug buying inhouse, but not sure if that is realisticic?
ReplyDeleteWow that looks really good. I have always liked that business but it's rarely been this cheap (10x FCF).
DeleteThey must have made a huge purchased a few years ago because ROE dropped significantly (ie larger asset base), but still has 13% ROE and really high ROC.
Sold TNA at $57.05. May buy back today if need be.
ReplyDeleteGrabbed some MTCH and EXPE into the close. Today was the best day I've had in a while. Sold TNA too early but sticking to my plan to sell it above 80 hourly RSI.
ReplyDeleteUS$ was down about 1%, I assume in response to Yellen saying rates low for longer, which helps the exporters and broad US economy.
DeleteOne other point CP, when we do have those periods of rising rates, even if the broad markets go down, my portfolio almost always outperforms and will often go up on down market days (it also works the other way in that I generally underperform on days rates are falling!)
ReplyDeleteI like this as it shows my portfolio is overexposed to rising rates relative to the market, which I still like.
Such as DB, for instance.
DeleteCs interests me just bc it's such a good international brand
DeleteGrabbed some UAL and DIS after hours at $58.66 and $98.22. DIS isn't that cheap but it hasn't participated in the rally and deserves a premium to the market in my opinion (currently trading below the market multiple). Also bidding on some ESRX after hours.
ReplyDeleteDouble bottom in TA
ReplyDeleteHolding DIS, EXPE, GOOGL, MTCH and UAL heading into tomorrow. 100% long again. Been sitting 100% long for a couple of days now. I was thinking we would have a nice rally to finally clear above this resistance we have had and squeeze shorts / bears who have continually been dumping on the market. There's this guy that was on Fast Money a while ago that I always found really pompous, Keith McCullough, that has been talking trash for weeks about how the economy is toast. I always tune in from time to time on days like this. He's one of those guys that posts about 100 times a day on Twitter. Today he went silent. Another one is Doug Kass. The bears are getting crushed.
ReplyDeleteI'm glad I read the Anbang comment re: HOT yesterday. It completely changed my thinking about valuations and has me thinking melt up here despite being overvalued simply because the world is waking up to the fact that US assets / corporations have a much longer shelf life than others overseas and that demands a premium valuation.
I think I mentioned this about US real estate a while ago...I don't understand why the US real estate market wouldn't be the most expensive relative to income in the world. You have a stable economy, safe rule of law, stable government. Why would anyone pay more for real estate in other areas of the world when they tend to have much higher risk? So we could definitely be in an environment where all US assets melt up to even higher valuations. Doesn't make it safer in the long run but need to focus on the market in front of me now. I wouldn't be shocked to see a melt up to 2200 and then a reversal back down to 2,000-2,050.
Regarding the melt up to 2,200 then reversal, if you've ever studied the trading patterns from the 1950s - 70's you will see a lot of periods where you have this congestion, then run up to new highs, then reversal back to where it started. Given the valuation and lack of overall growth, I do think further rallies higher should be viewed skeptically.
DeleteLong term bonds ended their last downtrend in 1945, around the end of world war 2, then went up for 36 years. They've now been going down for 35 years (going up next year would be symmetrical at least).
ReplyDelete1945 was a good year, followed by a pullback in 1946, followed by 2.5 flat years followed by a strong 15 year bull market period.
European markets and the futures both up this morning. We are less than 5% from the highs on the S&P, so looks like we are taking a run at starting a new leg higher.
ReplyDeleteOther indexes, like the Russell 2000, are still 15% off their highs, so need to see some broader market participation to really get going.
TOF- Real estate...isn't that why that Chinese Co. is trying to buy MAR?
ReplyDeleteCP,
ReplyDeleteassuming you are trying to come up with an investment strategy and not just point out my mistake, one thing you should consider about interest rates is that, even though government rates are near the lows:
JNK, the junk bond ETF is at it's lowest point since mid-2009, meaning junk bond rates are at their highest in almost 7 years
LQD, the investment grade ETF, has moved up recently, but is still mid-range of the last 5 years, so rates are really just bouncing around.
If you look at the investments for insurance companies and banks, by a great margin they invest more in corporate bonds than US treasuries, so the fact that government rates are staying low isn't hurting their earnings performance that much. It is hurting their market valuations, as many investors tend to look at government rates and not drill down into the actual investments and quickly assume they will be hurt. But one of the reasons I really like financials is because their valuations are low, partially because of this.
No way we can hold this 2 day tear can we?? I probably just marked the top.
ReplyDeleteLOL...I sure as hell marked the day high in what I have!
DeleteWhat are you holding?
DeleteWow, SEDG just moved from flat to +3.5% in about 3 minutes. Wild.
ReplyDeleteTook everything off again. Getting cautious that This is becoming too easy
ReplyDeleteIreland 100 year yield is 2.3%. Note issued today.
ReplyDeleteWTF
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