Insomniac Hedge Fund Guy

Readers of the Sax Angle will recall that I blogged positively about Verizon a few days ago.   I thought this article Ahead of the Curve Updated: 26-Oct-12 14:24 ET Verizon FY12 Q3  was particularly interesting.  If you’re not already a subscriber to Briefing.com I encourage you to join up.  It’s one of the best market tools out there.  We also offer a free trial service from them as part of our Investment Survival Workshops. I quote from the article, Verizon continues to remain our pick as the best single stock to own in this market, on a risk-reward basis” It … Read more

There is a finite limit to the amount of rent most landlords can charge.  Whatever the number, $2500 per month or $7,000 per month the value of housing is intimately tied to the income stream it can provide, just like a stock, except the math is a little more straightforward.  For example a house that rents for $7000 per month, can reasonably be expected to provide no more than $70,000 per year in income (that’s 10x$7000 per month, the other two months account for taxes, maintenance, and repairs). That’s assuming you have the time and inclination to manage the property … Read more

The S&P 500 is down 1.8% MTD.  The VIXX is up 15.3%.  The market is nervous.  You can see this with the sudden movement of prices as volume dissipates and the machines take over. This is a good time to sell puts on stocks you want to own.  Pare your positions to about half size as you want to have plenty of fire power  left to actually buy some of the names you sold puts in.  Be ready for the election rally.  At this rate of market decline, either candidate will probably be viewed as positive.  It will just be … Read more

By BINYAMIN APPELBAUM Published: October 22 The next significant event for monetary policy is not the Federal Reserve’s meeting Tuesday and Wednesday, which is likely to pass quietly, but the presidential election two weeks later. Alex Wong/Getty ImagesBen Bernanke’s term as Fed chairman does not end till 2014.RelatedDealBook Column: Casting Dual Roles, at Treasury and the Fed October 22, 2012 Lucas Jackson/ReutersR. Glenn Hubbard is a possible Romney nominee to lead the Fed. Ted S. Warren/Associated PressJohn TaylorMitt Romney, the Republican nominee, has said that he opposes the Fed’s efforts to stimulate the economy as ineffective and inflationary. And as … Read more

The Dow Jones Credit Suisse Hedge Fund Index Finished Up 1.04% in September   New York, October 15, 2012 – The Dow Jones Credit Suisse Hedge Fund Index (the “Broad Index”) finished up 1.04% for the month of September. Performance for the Broad Index and its 10 sub-strategies is calculated monthly. September, August and YTD 2012 performance numbers are listed below and are available at www.hedgeindex.com.   Category Sep 2012 Aug 2012 YTD 12 Dow Jones Credit Suisse Hedge Fund Index 1.04% 0.84% 5.61% Convertible Arbitrage 0.40% 0.44% 5.86% Dedicated Short Bias -3.78% -4.25% -17.56% Emerging Markets 2.21% 0.84% 6.17% Equity Market Neutral … Read more

Warren Buffet is fond of comparing the game of baseball to investing.  There is no three strike rule you are out when it comes to investing, he says.  You can wait for that fat pitch to come along before you swing. That fat pitch is here now with the recent market pullback.  In a market already going down, traders pushed down the stock of Verizon at the very time you should be buying it. The rollout of the iPhone 5 and it’s LTE coverage is showcasing Verizon’s superior wireless network.  Just a week ago the Journal ran a story how … Read more

CHART OF THE DAY: This Is The Most Powerful Chart Weve Seen Yet That Shows The Market Is Afraid Of Mitt RomneyMatthew Boesler | Oct. 12, 2012, Below is perhaps the most powerful chart weve seen showing that the markets are afraid of Mitt Romney.It shows inflation expectations – a great proxy for risk – and it looks like the market expects more inflation supportive of risk assets like stocks if Barack Obama is re-elected as president than if Mitt Romney were to win the election. via Obamas Intrade Odds And Inflation – Business Insider.

The stock market has been on a tear but October has turned negative.  Is this an ominous sign?  The debate with Romney and Obama added a level of uncertainty to the market.  Before the debate it was a given that Obama was going to win.  Suddenly the outcome is in doubt and it’s causing the downdraft we’re seeing now.  The big question now in my mind is will Romney fulfill his campaign pledge to fire Ben Bernanke?  Or will he pivot to the center there as well? A change in the Federal Reserve policy on interest rates will have a big … Read more

“2013 could mark start of the Great Rotation.  The era of bond out performance has ended,” the article reads.  U. S. stocks not only outperformed Treasures over the past one and three years ,but also the past 10 years.  Gee I wonder which equities they refer to?  Certainly not the Merrill Lynch Focus list. An still the consensus asset allocation is long bonds and short stocks.

This quarter will probably prove to be a decisive period in the stock market.  The Presidential election is around the corner.  What appeared to be a foregone conclusion is now suddenly up in the air. Uncertainty about who the next President will be has increased due to Obama’s poor debate showing. Strangely enough the market seems to like either outcome, Obama or Romney. The S&P 500 is within striking distance of making an all time high!  That will be a big, gigantic headline.  After a decade of retracing the gains lost from the heights of 2000, we are about to … Read more

This chart and the link below gives you just how hard this market has been for the industry’s most talented managers.  With the S&P 500 up 16% year to dates few managers have earned their keep regardless of their market strategy.

The Dow Jones Credit Suisse Core Hedge Fund Index Closed Up 0.47% in September   New York, October 3, 2012 – The Dow Jones Credit Suisse Core Hedge Fund Index closed up 0.47% in September as five of the seven index component strategies reported positive results for the month. The Dow Jones Credit Suisse Core Hedge Fund Index provides daily published index values which seek to enable investors to track the impact of market events on the hedge fund industry. September, August and year-to-date 2012 performances are listed below and are available at www.hedgeindex.com. Index Sep-12 Aug-12 YTD 2012 Dow Jones Credit Suisse … Read more

The earnings gap between rich and poor Americans was the widest in more than four decades in 2011, Census data show, surpassing income inequality previously reported in Uganda and Kazakhstan. The notion that each generation does better than the last — one aspect of the American Dream — has been challenged by evidence that average family incomes fell last decade for the first time since World War II. In this recovery it’s proved better to own stock than a house. For stockholders like Hemsley, the value of all outstanding shares has soared $6 trillion to $17 trillion since June 2009, … Read more

Everyone knows the airline business can be enormously profitable when it’s not bankrupting the company.  Airline stocks are challenging for investors but traders can do well.  Note the CFO of DAL bought 50,000 shares  on 8-6-12 at $9.34.  A director followed up with 25,000 shares at $8.72.   Delta Air Lines Inc. DAL +3.17% on Tuesday boosted the bottom end of guidance for third-quarter operating profits as its new refinery helped lower fuel costs, while bookings in the current quarter were described as solid.The second-largest U.S. carrier by traffic expects to report an operating margin of 10% to 11% in the … Read more

We are putting on  a sizable short term bearish bet on Gold thru short futures and GLD. Note the bearish divergence on the RSI

Bill Gross: The US Is A Debt Meth Addict – Unless The Fiscal Gap Is Closed Soon “The Damage Will Be Beyond Repair”Submitted by Tyler Durden on 10/02/2012 07:37 -0400Apple Bill Gross Bond Brazil China Congressional Budget Office France Google Greece Gross Domestic Product International Monetary Fund Italy Japan Johnny Cash Medicare Mexico New Normal ratings Reserve Currency VigilantesThe highlights from Bill Gross latest monthly piece:Armageddon is not around the corner. I don’t believe in the imminent demise of the U.S. economy and its financial markets. But I’m afraid for them.The U.S. is no “clean dirty shirt.” The U.S., in … Read more

    We sold  one our largest positions in the portfolio, MCD, two days ago.  This morning the stock is under pressure from a downgrade.” I have to admire how efficient the market is. I say that sarcastically.  Note the target price is $100, well below the price it’s trading at. Coupled with a 3.3% solid secure dividend yield, McDonald’s is a fantastic investment.  We’re traders, though, and the charts were looking toppy  so we sold with the idea we could buy back later.  We’ve done this a few times this year on McDonald’s.  Eventually we might lose it as … Read more

With their high dividend yields and domestic exposure, both of these companies offer unusually safe and heady returns. We own both are wary of price pullbacks.   Cellphones Eating the Family BudgetPeople are spending more on phone bills as more Americans use smartphones, even as they have dialed back on dining out, clothes and entertainment. via Business News, Finance News, World, Political & Sports News from The Wall Street Journal – Wsj.com.

This is a stunning visual on why Verizon should clean up on AT&T’s lunch Where iPhone 5 will have 4GThe iPhone 5 will be the first version to support 4G-LTE networks. Heres a look at whos covered.  When you play with this interactive you’ll have a good idea of a pairs trade.  Long Verizon Short AT&T.  Just make sure you don’t get stuck paying AT&T’s dividend on the ex date.  In all fairness to the readers, I wouldn’t short AT&T.  I’d just go long Verizon as I don’t think enough people even care.  I for one don’t even want the … Read more

It doesn’t take a stock market guru to observe the quickest way to shareholder hearts is  a hefty dividend hike.  On August 15th when Cisco hiked its dividend by 75% to 14 cents it’s stock rallied nine percent that day.  That’s the kind of pin action we are looking for. With that in mind I spent some time searching through popular financial sites for a ready built dividend screen that might foretell companies that would dramatically raise their dividends.  I didn’t find exactly what I was looking for so I had to design one myself. There are a lot of dividend … Read more

By Michael Aneiro Not necessarily a new strategy to those versed in dividend stock investing, but the Wall Street Journal today prominently features a story saying investors are increasingly targeting companies that are likely to continue raising their dividends at a quick pace. Matt Jarzemsky reports: As yields on the 10-year Treasury wallow at near-record lows and “junk”-bond yields also are sinking, investors are seeking anything that offers some extra income. For months, that meant investors bought shares of nearly any high-dividend-paying company, be it telecommunications companies such as Verizon Communications Inc. VZ, AT&T Inc., T energy producers such as Sempra Energy SRE and tobacco company Altria … Read more

I’ll be on the world famous Randy Barton radio show Tuesday at 4:15PM MST.  Listeners can tune in at http://kpcw.org/the-station/listen/

ART CASHIN September is historically the worst month for stocks.  (So, far it doesn’t seem to be the case this year.) As many celebrate Rosh Hashanah today, Art Cashin offers a trade that would jibe with the September pattern: sell on Rosh via Art Cashing Sell On Rosh Hashanah – Business Insider.

Morningstar reports August U.S. long-term mutual fund inflows $20.7B Morningstar reported estimated U.S. long-term mutual fund inflows were $20.7B in August, as open-end U.S.-stock funds tallied yet another month of outflows, losing $14.3B. Investors poured $26.4B into taxable-bond funds and another $5.6B into municipal-bond funds in August. U.S.-stock mutual funds and ETFs bled $22.4B in August, making it the worst month in two years and the fifth worst during the past five years for the asset class.

I’m well aware of the difference between being early and wrong.  As the old saying goes, there is none.  I’ve attached a  snapshot of Smart Money’s Map of the Market.  As you can see the defensive sectors have sold off and financials, materials, energy are rallying.  I don’t believe this is the correct longer term trade.  Bernanke’s extraordinary admission of the country’s desperate financial health doesn’t make me think consumption and factory orders are going to quickly pick up.  In fact just the opposite.  By driving rates to zero and keeping them there ,it’s unlikely to foster what hasn’t worked … Read more

There’s one dividend ETF that stands heads and shoulders above the rest.  This i sone heavily weighted to some  of the highest credit quality dividend payers.  We’ve owned dividend ETFs before but we really like this one for both it’s credit quality and high yield. HDY iShares DJ Select Dividend Index AT&T INC 10.43% PFIZER INC 7.56% JOHNSON & JOHNSON 7.34% PROCTER & GAMBLE CO/THE 6.80% VERIZON COMMUNICATIONS INC 6.21% MERCK & CO. INC. 6.11% PHILIP MORRIS INTERNATIONAL 5.60% INTEL CORP 3.87% ABBOTT LABORATORIES 3.59% CONOCOPHILLIPS 3.48% Total 61.00%

The Punchline In His Own Words: Bernanke Advocates Blowing Asset Bubbles As The Antidote To Depression Submitted by Tyler Durden on 09/13/2012 16:02 -0400 Ben Bernanke Bond Main Street Monetary Policy If there was one absolutely must see moment exposing everything that is broken with the Fed’s brand new policy of QE-nfinity, it was this exchange between Reuters’ Pedro da Costa and the Chairman. It explains, beyond a reasonable doubt, that the only goal the Fed now has is to reflate the stock market bubble to previously unseen levels, to focus on generating jobs although not for everyone but only … Read more