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What Will Happen To Netflix When A Bear Market Starts

fab 5 stocks

Continuation from yesterday……(Trading Netflix Using BLSH)

Netflix’s stock price broke above its higher high and down slopping trend line in January of 2012, suggesting that the decline was now over. As a result, our short position should have been covered at approximately $75 a share in January of 2012 or as soon as this confirmation was obtained.

Trade #3: Cover your short position at $75 and go long at the same time/price. Trade net realized gain $160 or 68%. Net realized gain up to date $395 or 1,480%.

Before surging higher in 2012 the stock re-tested its lows in the mid and late 2012. Setting in a lower low in the process. Investors should have been very careful at this juncture.  A consideration should have been given to the fact that the decline was not over and that we might have gotten back into the stock a little too early.  Luckily, the stock never broke below its critical support levels before rebounding and initiating its come back rally.

That brings us to today. As of September 2014, Netflix’s stock price trades in the $425-475 range. Yet, a bear market is brewing on the horizon. The overall stock market is selling at unsustainable valuation levels and Netflix’s stock is, once again, pushing into a bubble territory. In other words, the stock market is possibly sitting on a verge of a massive sell off and the Netflix might lead it down.  As a result, investors in the stock should be watching the situation very carefully. Ready to liquidate their net long position and to go short as soon as some sort of a confirmation is obtained.

Proposed Trade #4:  Liquidate your long position at $430 and go short at the same price/time. Net realized gain $355 or 473%. Net realized gain up to date $745 or 2,900%.

Compare this return to the Buy & Hold strategy ROI of 1,800% and you begin to realize just how powerful this approach is.  And that is before an upcoming bear market leg develops. If Netflix’s stock price declines just 30% in a bear market, the Buy & Hold strategy ROI will slide to 1,200%. That is while Buy Low, Sell High, Go Short & Cover investment strategy ROI will zoom up to 3,480%. Proving, once again, the validity of the strategy.

Justifiably, some will argue that constant trading in and out of your position can increase capital gains taxes and therefore reduce returns. Let’s take a quick look at the numbers based on the Netflix’s trading pattern above to settle the matter once and for all.  First, we have to make the following assumptions.

  • You fall into the 25-35% tax bracket and your long-term capital gains tax is 15%.
  • Your average ordinary income tax is 30%.
  • We liquidated our position as of today at $460. Giving us a net realized total return of 1,740% for “Buy and Hold” and 3,020% for “BLSH”.
  • Original investment of $100,000

To Be Continued Tomorrow…….

z33

What Will Happen To Netflix When A Bear Market Starts Google

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Trading Netflix Using BLSH

Continuation from Friday…..(Long/Short -OR- Buy Low, Sell High, Go Short & Cover?)

Shortly after its IPO in May of 2002 the company’s stock price settled into a fairly stable trading range.  Oscillating between $10 and $40 from mid 2003 to November of 2008. At which juncture the stock price broke out of its trading range to zoom up to its intermediate top of $300 by July of 2011. Collapsing to $64 or 78% shortly thereafter before staging a massive come back rally to approximately $475 by the third quarter of 2014. Where the stock price remains today. 

Let’s for a second assume that you were fortunate enough to invest in Netflix Inc, for whatever reason, sometime between 2003 and 2008 at an average price of $25. If you are still holding this investment your ROI is around 1,800%. A fairly good outcome considering a holding period of around 10 years. However, let’s take a look at what would have happened if Buy Low, Sell High, Go Short & Cover investment strategy was instituted instead.

Trade #1: Buy NFLX at an average price of $25 sometime between 2003 and 2008.

As the stock priced pushed into its 2011 July top, all Netflix investors should have been gravely concerned. For a number of reasons. First, the stock ran up close to 1,500% in just 2.5 years. Suggesting that a speculative bubble was forming. Second, by 2011 most of the company’s fundamentals were out of sync with any sort of reasonable valuation levels.  Finally, the cyclical and mathematical market structure suggested that a 5-year bull market that started in March of 2009 was about to take a one year break in its 2-1-2 internal composition.

In other words, given the circumstances above, investors should have been watching for signs of a reversal. Ready to liquidate their long positions and to go short immediately.

NFLX2

The first sign of a reversal occurred in August of 2011 when NFLX broke below its upward trending support line at around $265. Investors should have liquidated their long positions at that time and gone short as the correction was just beginning.

Trade #2: Liquidate your long position at $260 and go short at the same price.  Net realized gain up to date $235 or 940%.

Netflix’s stock price proceeded to quickly collapse to $64 by November of 2011. Representing a 79% decline from its top of $300 just four months earlier. This was a massive drop and all investors (long or short) should have been aware that such quick declines are unusual, the stock was now oversold and that some sort of a bounce was coming.  That is to say, investors should have been watching for a bottom. Ready to cover their short positions and to go long as soon as some sort of a reversal confirmation was obtained.

To Be Continued Tomorrow…….  

Z30

Trading Netflix Using BLSH Google

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The Shocking Truth Behind Possible Stock Market Crash

daily chart AOctober 3 2014

10/3/2014 – A big up day with the Dow Jones up 208 points (+1.24%) and the Nasdaq up 45 points (+1.03%).

The stock market continues to behave exactly as anticipated. If you would be interested in learning exactly what it is doing, but more importantly, what’s coming up next….. please CLICK HERE.

I am truly dumbfounded with today’s market, but not for the reasons most commonly associated with it. In all of my years in financial markets I have never seen a situation like this. And while some might argue that I haven’t seen every market environment, this sort of thinking doesn’t apply here. I have spent the last 10 years on an in depth research of the Dow going all the way back to May of 1790. In fact, I am so well versed in the index and all of its history that you can give me a year and I will give you where the Dow was. For instance, the Dow bottomed in June of 1859 @ 8.33 as the Civil War was about to begin. I had a feeling I should have gone long back then.

Still, I haven’t seen the environment we are facing today. What am I talking about?  

The psychological setup of the masses. Since its September 19th top the Dow declined a miserly 678 points from an all time high or 3.9% and the masses literally freaked out. With most investors going from their extremely bullish view to an extremely bearish one and with financial media predicting literal Armageddon. At the same time, others were suggesting that a 3.9% decline warrants the buying opportunity of a lifetime. For example, Cramer: The time to buy has arrived

What does it all mean?

Given today’s psychological backdrop (as above) we are in an extremely dangerous situation. It is a well known fact that today’s valuation levels are reminiscent of 2000 and 2007 tops, the FED is tightening, speculative fever is high, bears are non-existent and margin interest is at an all time high. In other words, its a perfect environment for a market crash. Just imagine what happens, god forbid, if the market declines 10-15%. A panic?

Let me put it this way. Today’s stock market is like a 40 ft container load full of TNT and margin interest combined with skittish psyche is like a lit fuse disappearing inside of it.

The only remaining question is……WHEN? 

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2014-2017 will start (to the day) and its internal composition, please CLICK HERE

(***Please Note: Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. October 3rd, 2014 InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

The Shocking Truth Behind Possible Stock Market Crash Google

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Energy Transformation

business meditation

Continuation from yesterday……..(Killing Stress).

She would understand that she is projecting a future that might or might not come to fruition. Creating a series of unnecessary worries in the process.  Once Mary is in this meditative state of mind she should proceed in the following fashion.

  • Entirely eliminate all job related worries through separation: This would allow her to fully dissociate herself from all incoming 911 calls and therefore remove all STRESS associated with dealing with such negative emotions in a high pressure environment. In essence, all incoming calls would become a game as opposed to a personal attachment.
  • Take back control: Through meditation she will realize that her boss has zero control over her emotional state. Further, she will understand that she can and will take her power back by either resolving the situation with higher ups or by looking for a new job.
  • Eradicate all future projections: She will understand that all of her worries and future projections are not real. As such, they have no influence whatsoever on her thought patterns, feelings and emotions.
  • Understanding Energy Flows: Once Mary is in a meditative state of mind she will be able to witness her energy flows and how they work. She will be able to trace all of her STRESS energies to their origin and to understand what had triggered them in the first place.

Finally, as she enters this state of higher consciousness and completes the steps above she will gain a simple understanding that her STRESS energy is simply energy. Giving her the ability to now mold it into whatever it is that she wants.

Energy Transformation:

Once Mary has this realization or understanding she will have the ability to take her STRESS energies in their totality and transform them into something positive.

How?

While understanding your energy flows and trigger points is the first step, flipping an internal switch is the other side of the coin. All you have to do is make a conscious decision, while in the state of meditation, to transform your STRESS related energies into positive energies. That’s it. Make an internal declaration while in the state of higher consciousness and then redirect the energy in question towards a positive avenue.

For instance, while Mary is in this meditative state of observation she can take her “Terrible Boss” energy bundle and transform it towards a positive aspect of looking for and getting a new job with higher pay. So, her thoughts would shift from “My boss is the worst kind of a human being, he controls my life, if he fires me my life will be over, I am worthless, etc…” to the following  “I can’t wait for a career change or my new job, it will be an amazing work environment, much better than it is today, my new boss will appreciate everything I do, plus I will be making a lot more money and will finally be able to afford a new car, etc…”.  Basically, this switch would allow her energy to flow in a positive direction. Transforming all STRESS associated energies in the process.

In short, this little trick would allow Mary to transform her life from living hell to life filled with excitement and opportunities.  In a similar fashion, she would have the ability to convert the rest of the garbage. For example, she will be able to transform….

  • Hate to love.
  • Her stressful job to a playful career.
  • Helplessness to power.
  • Worry to excitement.
  • Fear to courage.
  • Stress to pleasure.

And so on and so forth. You get the idea. However, one important thing to keep in mind is the fact that this cannot be achieved in a single sitting or in a single meditative session. It is a process. It takes time and effort on your part. Yet, once you learn how to identify, observe, control and transform your internal energies, your life will change in an unimaginable way. In a vastly positive fashion.

To Be Continued On Monday ……..(Why Am I Seeing This On A Financial Website?)

Z31

Energy Transformation  Google

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Long/Short -OR- Buy Low, Sell High, Go Short & Cover?

Continuation from yesterday……(What You Ought To Know About Buy Low, Sell High, Go Short & Cover)

Long/Short investment strategy is not that dissimilar from taking a directional long bet or what most people tend to do in the stock market. The only difference is the ability to participate on both sides of the market while playing with various market metrics in order to control risk. In other words, the ROI available to long/short equity is typically on par with long only strategies and comes down to one’s stock picking ability. Whether it is on the long or short side is inconsequential.

In comparison, “Buy Low, Sell High, Go Short & Cover” is a completely different animal.  Instead of concentrating on holding positions through their ups and downs for as long as various fundamental or technical metrics satisfy one’s requirements, our newly proposed investment strategy concentrates on squeezing every last dollar out of every possible stock while minimizing risk. It forces investors to pay attention and to act accordingly at all times.

For instance, investors who follow this strategy will no longer be able to sit around and wonder why their stock XYZ has declined 10%, 20%, 30%, 80%, etc….. To wonder when, if ever, the stock in question will go up to their break even point so they can liquidate their position. In order to forget this nightmare ever happened.

No, if they are to follow “Buy Low, Sell High, Go Short & Cover” they will be forced to start asking question after the first 2-3% down. They will be forced to make a decision on whether or not they should liquidate their position as soon as various technical confirmations arrive. They will be forced to make a decision if it makes sense to go short in the same underlying security in order to make money on the downside.

As a matter of fact, some of the most profitable trades or investment opportunities develop in this very fashion. It is often the most popular stocks that trend higher for many years, appreciating at many multiples to the market. Only to stop abruptly for no apparent reason and then decline 50-80%. Presenting “Buy Low, Sell High, Go Short & Cover” investment strategy followers with amazing opportunities to profit from both sides of the equation.

Let’s take a look at one of such companies. Netflix, Inc (NFLX).

nflx

Company Description: Netflix, Inc. operates as an Internet television network, is engaged in the Internet delivery of TV shows and movies directly on TVs, computers, and mobile devices in the United States and internationally. The company operates in three segments: Domestic Streaming, International Streaming, and Domestic DVD. The company also provides DVDs-by-mail membership services. As of May 21, 2014, it had approximately 48 million customers in approximately 40 countries. The company was founded in 1997 and is headquartered in Los Gatos, California.

To Be Continued On Monday…….

z32

Long/Short -OR- Buy Low, Sell High, Go Short & Cover?  Google

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What You Ought To Know About Buy Low, Sell High, Go Short & Cover

short selling

Continuation from yesterday…….(The Future Of Nasdaq)

Trade #6 (Anticipated): Exit your long position at 4,300 and go short. Anticipated move gain 2,950 points. Anticipated net realized gain up to date 12,780 or 1,675%.

To quickly summarize, our three investment strategies yielded the following returns between November of 1994 and September of 2014.

  • Buy & Hold: 525%
  • Most Likely Outcome (Average): 425%
  • Buy Low, Sell High, Go Short & Cover: 1,675%

What’s more, by the time a bear market of 2014-2017 completes itself, the first two investment strategies should see their ROI slashed to approximately 300% while the Buy Low, Sell High, Go Short & Cover investment strategy should see its return zoom up to approximately 1,900%. A return on investment that is more than six times higher when compared to what others were able to achieve.  Finally putting to rest the question of what general investment strategy is the best.

Is it really possible to achieve this 16% annualized rate of return without taking on any additional risk?

What most people don’t realize about the proposed investment strategy is that it minimizes risk, not increases it. Think about it in the following fashion. What was more risky, remaining fully invested on the Nasdaq at 2000 and 2007 tops or going short when the tops were confirmed?

Contrary to a popular believe it was exponentially more risky to remain net long at both tops for the following reasons. First, the markets were extremely overvalued and speculative at the time, assuring that any future gains would be miniscule.  Second, the risks associated of major declines and even crashes were too great at both tops.  Finally, the Nasdaq’s cyclical composition clearly showed that dangerous sell offs were just ahead.   Just as it does today.

The best part about Buy Low, Sell High, Go Short & Cover is that this investment strategy works on all time frames and on most commonly used financial instruments. For instance, while the Nasdaq example above uses long-term market developments, the same strategy can be applied to daily trading of any individual stock. For as long as the trader knows exactly where they are in the cyclical composition of the underlying security.

How is this different from Long/Short investment strategy?

If you are not familiar, Long/Short investment strategy is most commonly associated with hedge funds and other professional investors who play on both sides of the market. It involves buying long equities that are expected to increase in value and selling short equities that are expected to decrease in value.  And while it might appear similar to Buy Low, Sell High, Go Short & Cover, it is anything but.  Here is why.

To Be Continued Tomorrow………

Z30

What You Ought To Know About Buy Low, Sell High, Go Short & Cover Google

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Are Bears Getting Ahead Of Themselves?

daily chart AOctober 2014

10/1/2014 – A big down day with the Dow Jones down 238 points (-1.40%) and the Nasdaq down 72 points (-1.59%). 

The market continues to perform just as anticipated. Click Here. That is not to say that I am incredibly bearish here. Yet, in last nights update to my subscribers I suggested that a big move we saw today was coming. That’s exactly what we got and just like that the Dow is up less than 1% for the year. With the Russell 2000 now in a negative territory and below its key support levels.

So, is this the 5-10% correction everyone was talking about on the way to the Dow 20,000 by the end of the year or is this something more? 

Well, here is what most market participants believe today. S&P 500 to hit 2,050 by year end: Stovall  Of course, if you want to make investment decisions based on seasonality, election year politics and other related stupidity, be my guest. As the saying goes, fool and his money are soon parted.

Yet, today’s market environment is not as simple as saying that we are either in a bull or a bear market. As I have suggested so many times before, the market of 2014-2017 will frustrate both bulls and bears to no end. Just when bears think they have control the market will bounce, retracing most of the gains. And vice versa. If you would be interested in learning exactly what is going on in today’s market and what happens next, please Click Here. 

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2014-2017 will start (to the day) and its internal composition, please CLICK HERE

(***Please Note: Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. October 1st, 2014 InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Are Bears Getting Ahead Of Themselves? Google