Month: April 2014

I believe that you will soon see a noticeable and rather unwelcome uptick in inflation due to the rise in asset prices and the improving employment picture. The Federal Reserve has a dual mandate, to strive for full employment and to keep inflation in check. In order to help the nation recover from the deep recession of 2008, the Fed has used zero interest rates and quantitative easing, QE, as policy tools. Cheap money has driven up asset prices across real estate, the stock market, collectibles and art, and now it’s having an impact on real prices. The Fed has … Read more

When I trained brokers at Paine Webber we used to bring in mutual fund wholesalers to pitch us their latest and greatest funds.  It was an optional meeting and had good attendance.  After all it was a free lunch without leaving the building.  One day out of frustration, I told the wholesaler we wanted to do something different today. “Normally you come in here and tell us about the latest and greatest fund that you have.  We go out and sell  your best fund to our clients and all too often, it turns out to be your worst performing fund. … Read more

  DJ United CEO Back in Market; That’s Been Harbinger — Market Talk 15:48 EDT – United Continental (UAL) CEO Jeff Smisek’s purchase of 20K shares Monday “bodes quite well” for the airline’s stock if his history of buying at bottoms the past several years was repeated this week, says Wolfe Research. The firm, which says the $792K purchase is the 6th-biggest insider purchase of the past quarter-century in the airline space, notes the top 10 by executives logged an average 41% return the next 6 months. For Smisek, his 5 other open-market buys saw his company’s stock outperform the … Read more

Why stocks may be sniffing out inflation.  Is it time to buy gold or gold miners?  We think its a favorable trade.  It wasn’t that long ago that it was gospel to have 5-10% of a conservative portfolio in gold.  The price of gold plunged 28% last year. Now that everyone has been punished for following prudent advice, it might just be the perfect time to reconsider.  Two ideas we have for this is the GLD ETF and the largest gold miner,  Barrick Gold.  ABX is in talks with Newmont Mining to merge the two large miners into the world’s largest gold mining company. … Read more

Trading Desk Photos – Business Insider.   Yours truly  about 17 down or so. The  one from Park City of course. Not a bad place to have to trade from.

Einhorn Sees Tech Bubble – Business Insider. Hedge fund manager David Einhorn, who runs Greenlight Capital, says that we’re witnessing a tech bubble, CNBC reported citing his fund’s quarterly investor letter. “Now there is a clear consensus that we are witnessing our second tech bubble in 15 years. What is uncertain is how much further the bubble can expand, and what might pop it,” Einhorn wrote in the letter. I couldn’t agree more but it is a very painful short road to stake out. Read more: http://www.businessinsider.com/einhorn-sees-tech-bubble-2014-4#ixzz2zdxnMVfU

The Momentum Stock Meltdown Has Exposed A Big Flaw In A Very Popular Investing Strategy Passive investing, or investing in a benchmark index and letting the money ride, is probably the most time-tested and most prescribed investment strategy in the world.However, the recent sell-off in the momentum stocks might have exposed a flaw in strategies that take passive investing too literally. via The Flaw In Passive Investing – Business Insider.

The relentless cram down of IPOs has come to a screeching halt as 4 of the 8 deals to price Thursday night got postponed.  The insane valuations many Internet stocks traded at and still trade at got taken to the woodshed.  Amazon, Facebook, LinkedIn, Google, Yelp, and many others not as well known ended one of the bloodies tech weeks since 2000.  The selling in those names may have climaxed for now as many could stage some brief but sharp reversals.  Also income tax due April 15th probably had something to do with the poor market action for the bulls. … Read more

http://online.wsj.com/news/articles/SB10001424052702303847804579479841325311678?mg=reno64-wsj

Somewhat counter-intuitively, history shows that buying the market at a lower relative P.E. is likely to be hazardous to your financial health in the short term.  It is important to mention that these results are totally skewed by your time basis.  For example the S&P 500 total returns since January 2001 thru Feb 2014 are cumulative 82.08% yet the returns immediately after 2000 were -11.88% year 2001, -22.11% year 2002.  Similar phenomenon occurred in year 1973 when the DJIA had a P/E ratio of nearly 7x.  That year in 1973 the DJII returned -16.3%, and the following year, 1974, was … Read more