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Jobs Report & Are We Still In A Bull Market?

Janet yellen printing money investwithalex

Good news is bad news, bad news is good news or is it the other way around? I have no idea, nor does anyone else.  Investors have been obsessing about today’s jobs report for over a week. Hoping it would clarify what the FED will do in December and how the stock market will react.

If you are still wondering, October jobs soared to 271K, smashing expectations. Unemployment rate is now at 5%. Bullish or bearish? 

In reality, you don’t really need this data point. What the FED will do is as clear as night and day. It goes something like this…..

  1. Can’t raise or won’t raise. Today’s economy or financial markets won’t be able to digest any rate increases at this juncture. Period. As talked about on this blog so many times before. Why The FED Will Not Raise Interest Rates If the FED members have even an ounce of intelligence, and I believe they do, they realize the same. Point being, they won’t raise in any meaningful way.
  2. If the market declines, issue a “Dovish” statement. Bring it up. (Late September)
  3. If the market recovers, issue a “Hawkish” statement. As they did last week. Remember, they don’t want things too overheated.
  4. Rinse and repeat while praying the market and/or the US Economy won’t implode on their own.

Here is another troubling fact. ‘We’re still in a bull market’: Dennis Gartman

If you have been following Mr. Gartman lately, you are very well aware of his 100% accurate track record. In reverse that is. As soon as he turns bearish the market bounces and as soon as he covers and goes bullish the market tops.

Are we still in a bull market?

I  believe that is a wrong question to ask. The right question should concentrate on where we are in the cyclical composition of the market.

That is, today’s bull cycle, off of 2009 lows, is way overextended by now. Valuations are crazy and most bears have been decimated. Most importantly, we are still in a secular 2000-2017 bear market. All such bear markets end with gut wrenching plunges at the end of their cycles. For instance, 1912-1914, 1946-1949 and 1981-1982. Will history repeat itself? We will find out soon enough.

z33

Jobs Report & Are We Still In A Bull Market? Google

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What Value Investors Ought To Know About Investing In Today’s Market

Daily Chart ANovember 5 InvestWithAlex

11/05/2015 – A negative day with the Dow Jones down 3 points (-0.02%) and the Nasdaq down 15 points (-0.29%).

Take TIMING away and I am a value investor at heart. Unfortunately, as I have mentioned here so many times before, there is nothing to invest in on the value side. Everything is incredibly overpriced as is evident from the Shiller’s P/E ratio.

Since the market is fairly quiet today, let’s take a look at some interesting quotes from A letter gives a rare glimpse into one of the world’s most secretive — and most successful — hedge funds I highly encourage you to read the whole thing. It is definitely worth a few minutes of your time.

  • “Traditional metrics like cash flow and asset values were being blatantly disregarded by the market in favor of newfound metrics such as eyeballs and clicks. High-tech companies were the darlings in a rapidly rising market while less-sexy value stocks significantly lagged. 
  • It turns out buying a dollar for 50 cents is a lot harder than it seems. Every day we added to these positions, thinking we were getting an even better bargain than the day before, only to wake up and watch prices drop further.
  • After countless late nights at the office, I would head home, collapse on my couch and stare at the ceiling. I was unable to read, watch television, or fall asleep. All I could do was worry about what we might have missed in our analysis.
  • We see distressed sellers, illiquid securities, huge redemptions, and an excess of paranoia and fear. We quickly find a number of interesting opportunities, deploying our significant cash balances as we trade our precious liquidity for mispriced securities. We may lose money in the short term, as we add to our portfolio while prices are dropping. But when markets turn, we expect multiple years of strong profitability.
  • Investing in tide markets takes chutzpah. To do so effectively, you need to fly in the face of public opinion, you have to fight normal human emotions, and you have to be prepared to double down on your bets when your conviction is most in question. As Benjamin Graham once said, ‘The investor’s chief problem and even his worst enemy is likely to be himself.’
  • On most days, it offers a menu full of bland, unhealthy, and fully-priced choices. We do enough work on the offerings to make sure we aren’t missing anything and often go home feeling unsatisfied and unproductive.
  • Warren Buffett said, ‘Big opportunities come infrequently. When it’s raining gold, reach for a bucket, not a thimble.’ When a great opportunity comes around, it is imperative to size it correctly.
  • This is by design. It is much easier to make reasoned decisions without someone screaming at you or second guessing your judgment. It’s not always easy, but we try to maintain the same atmosphere and investment process in all markets.

I had two takeaways from all of the above. First, it is never easy. Even buying dollar bills for 50….25…10 cents can be heart wrenching and downright scary at time. And second, if you can figure out market’s long-term swings (major moves) you would be ahead of 90% of investors out there. Coincidentally, that is exactly what we do at InvestWithAlex.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. 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 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. 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. Noveber 5th, 2015  InvestWithAlex.com

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

What Value Investors Ought To Know About Investing In Today’s Market Google

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Investment Wisdom Of The Day

socrates-drawing“I honor and love you: but why do you who are citizens of the great and mighty nation care so much about laying up the greatest amount of money and honor and reputation, and so little amount wisdom and truth and the greatest improvement of the soul? Are you not ashamed of these?… I do nothing but go about persuading you all, not to take thought for your persons and your properties, but first and chiefly to care about the greatest improvement of the soul. I tell you that virtue is not given by more, but that from virtue comes money and every other good of man. ” ― Socrates

Z30

Investment Wisdom Of The Day  Google

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Is Silicon Valley Way Undervalued?

silicon-valley-bubble-investwithalex

Don’t tell Warren Buffett, but apparently Silicon Valley’s start up sector is selling at dirt cheap valuations. At least according to Marc Andreessen. We’re in a long-term tech bust,’ not a bubble

“I think we’re in a bust. We’re in a long-term technology bust. I think technology has been undervalued since 2000, and we’re still undervalued,” Andreessen said. “The entire basket of unicorns is worth half of Microsoft.”

Well, I am sure if these so called “unicorns” had the same revenue/income base as Microsoft does, innovation or not, they wouldn’t be as “cheap” as Mr. Andreessen claims.

Considering the above, should you run out and start investing in tech startups? 

Not so fast. First, here is what another industry insider, Marc Cuban, has to say about the sector.

Mark Cuban is dead on in identifying Silicon Valley’s Tech Bubble 2.0: Why This Tech Bubble is Worse Than the Tech Bubble of 2000.  At the end of the day, Silicon Valley has about as much liquidity as California’s dried up reservoirs. Something that Angel investors, venture capitalists and stock option millionaires are about to find out.

How big is this bubble? Consider the following. Uber’s valuation went from $60 Million in 2011 to $50 Billion today(not a typo).  They must be making a ton of money…..right?WRONG. Bloomberg estimates that Uber showed $470 million in operating losses with $415 million in revenue last year. Plus, the company was set a major legal blow in California by requiring their drivers to be classified as employees. And as far as I am concerned, it is just a matter of time before other states and countries regulate Uber out of business to protect taxi drivers.

In other words, the valuation above is not only outrageous, it is, how should I put it, retardedly outrageous.

Back to Mark Cuban. It is now evident that most market pundits out there are dismissing Mark’s view. And while Mark talks about Angel Investors and illiquidity in that market, his analysis can just as easily be applied to today’s stock market. More about that in a second.

First, here is what most people don’t realize about Mark Cuban. After selling his first business Mark became a heck of a trader and investor in the 1990’s. His returns were so good at the time that Goldman Sachs tried to bring him in order to figure out what he was doing. This same ability helped him unload Broadcast.com for $5.7 Billion to Yahoo right at the top of the tech bubble. Here is what he thinks.

I have absolutely not doubt in my mind that most of these individual Angels and crowd funders are currently under water in their investments. Absolutely none. I say most. The percentage could be higher. Why? Because there is ZERO liquidity for any of those investments. None. Zero. Zip.

So why is this bubble far worse than the tech bubble of 2000 ?

Because the only thing worse than a market with collapsing valuations is a market with no valuations and no liquidity. If stock in a company is worth what somebody will pay for it, what is the stock of a company worth when there is no place to sell it ?

We often talk about the stock market, but we rarely look at this side of the equation. Mark is absolutely right. If you are an Angel Investors, good luck getting your money out. Especially when today’s Silicon Valley’s bubble bursts. Plus, the chances of hitting a good exit in tech are about as good as winning a lottery.

What’s more, the bubble Mark Cuban has identified in the tech industry is the same bubble I see in the stock market. The drivers behind both are the same. The only difference is the amount of liquidity available.

Z31

Is Silicon Valley Way Undervalued? Google

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Remain Calm & Keep Buying

Daily Chart ANovember 4 InvestWithAlex

11/4/2015 – A negative day with the Dow Jones down 49 points (-0.27%) and the Nasdaq down 3 points (-0.05%) 

At least according to the Wall Street.

Data be damned, Wall Street says all is well

Let’s see if we can unearth some gems from this masterpiece.

Wall Street strategists who normally live and breathe data are now pushing a curious new narrative: Don’t believe the data.

Alright, who should I believe then…… Janet Yellen…..Bank of Japan….Santa Claus?  This is just another way of saying “This time is different”.  But wait, it gets better……

More specifically, it’s become routine practice lately to disparage economic numbers as being not representative of underlying strength that the headlines just don’t seem to verify. Essentially, this means an economy that continues to grow without wage and price pressures, allowing easy monetary policy to continue but not doing much for a sustainable growth pattern. In Hartnett’s words, expressed in a note to clients, deflationary expansion entails a “slow, jerky transition to higher growth/higher rates, led by the U.S., (and a) China soft landing.”

Fair enough, but there is another way to look at the subject matter. For one, there is no reason to believe that growth will all of a sudden accelerate. Simply put, zero interest rates and QE took forward demand and spent it in between 2010-2014.  That is the reasons you see CAPEX dead in the water.

There is overcapacity in pretty much every industry, margins are being compressed and businesses see no need to invest. That is one of the reasons they are buying their own stocks at crazy valuation levels instead of investing that money into plant, research, equipment, etc… I just don’t see where this growth will come from. Particularly, with massive debt levels overhanging over the entire system.

Companies, meanwhile, seem more devoted to boosting short-term share prices than committing to long-term investments. Since 2010, corporate America has spent $296,000 on stock buybacks per each job it has created, according to a BofAML analysis.

There is part of your answer. The stock market is as expensive as it is due to corporate buybacks. It doesn’t take a genius to borrow at zero interest rates and then use that money to drive equity prices higher. And while that often leads to short-term gains, long-term pain is just a few steps behind. That has always been the case.

“Although we may have another quarter of inventory-related adjustments, the underlying growth fundamentals remain intact,” he said. “This is just one more worrying headline that, when you dig into it, is reasonable and nothing to worry about. Remain calm and carry on.”

In other words, keep buying stocks. The stock market is going much higher. Perhaps.

But, if he is not worried, this should do the trick. The stock market is in a massive valuation bubble. As is evident from Shillers Adjusted P/E ratio – 3rd highest level in history. The velocity of zero interest rates and QE, even if the rates go negative, is slowing down substantially. The FED cannot or will not raise rates in any meaningful way. We are still in a secular bear market that will only terminate in 2017. All bear markets end with a 2-3 year severe beatings.

That is to say, there are quite a few things to worry about if you ask me.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. 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 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. 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. Noveber 4th, 2015  InvestWithAlex.com

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

Remain Calm & Keep Buying Google

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Icahn, Faber, Druckenmiller Warn….No One Pays Attention

economic crazy investwithalex

What do Carl Icahn, Marc Faber and Stanley Druckenmiller have in common? The were all dead on in terms of predicting 2000 and 2007 disasters. And even though they are warning again, unfortunately, no one is paying attention.

Carl Icahn warns of a Fed ‘minefield’ ahead

“There are going to be real problems. We’re walking into a minefield of what’s going on with the Fed,” Icahn said. “I could go on and on here, but I think we have problems.”

Druckenmiller: Here’s how Fed ‘bubble’ will end

“All you do when you’re doing this is you’re pulling demand forward to today,” Druckenmiller said Tuesday at the annual DealBook conference. “This is not some permanent boost you get. You’re borrowing from the future. I think there’s been such a misallocation of resources that this has gone on so long and unnecessarily (and) the chickens will come home to roost.”

Dr. Doom calls bubble, adding to gloomy calls

“The Fed has basically created with their colleagues in Japan and at the European Central Bank (ECB) and the Bank of England (BOE), they’ve created a colossal asset bubble. And the returns going forward will be disappointing.”

The question you have to ask yourself as an investor is……Have these successful money managers lost their minds -OR- maybe, just maybe, they are once again seeing things that other investors do not. Things that will lead to an outright bloodbath in stocks in not so distant future. Read all of the above links and decide for yourself.

z32

Icahn, Faber, Druckenmiller Warn….No One Pays Attention Google

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Will Santa Deliver This Year?

Daily Chart ANovember 3 InvestWithAlex

11/3/2015 – Another up day with the Dow 89 points (+0.50%) and the Nasdaq up 18 points (+0.35%) 

While some believe this rally doesn’t make sense, others believe this rally is just getting started. That’s what makes the market. Let’s explore.

Get ready for a bigger Santa Claus rally: Strategist

“We looked at what happens when we have a big rally in October,” said Gibbs. “We found that on years where October is up over 5%, November and December end up being even higher than normal, with an average of 5.5%.”

Well, there you go. It is as simple as that. Who knows, based on that logic we might even get to see the Dow 20K by the end of the year. On the other hand….

There is a big problem with the rally

“This has been very prevalent among stocks that break out artificially and then fall back into the trading range and eventually break the support. So that’s something that we want to watch very carefully,” she said.

Basically, she is seeing the same things I am seeing. A number of non-confirmations. Particularly, the Russell 2000, NYSE, Dow Transports, Biotech, etc…. are not following primary indices such as the Dow/S&P/Nasdaq. To one degree or another.

Plus, the fundamental picture hasn’t changed. Shiller’s Adjusted S&P P/E Ratio is now at 27. The third highest level in history. Now behind 2007 top and on par with 1929. If anything, the fundamentals have gotten worse. Forward guidance in Q3 was down 2%. Biggest drop since 2008.

Finally, the market left a number of massive gaps to the downside. Gaps it will have to close sooner or later. This leads to rather simple conclusion. While it is possible that Santa will be extra generous this year, it is just as likely investors will be holding a lump of coal by the time Christmas arrives. I guess we will have to wait to find out.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. 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 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. 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. Noveber 3rd, 2015  InvestWithAlex.com

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

Will Santa Deliver This Year?  Google

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M&A Activity, Margin Debt and Volatility…..All Point To A Bear Market?

Daily Chart ANovember 2 InvestWithAlex

11/2/2015 – A positive day with the Dow Jones up 165 points (+0.94%) and the Nasdaq up 73 points (+1.45%) 

UBS believes so. In their recent note to their clients

Signs are accumulating that, after 6 1/2 years and price gains of more than 200%, the Bull Market has entered into the “Late Innings.” M&A activity — as revenue growth stays challenged — has been feverish, and the announcement of talks between Pfizer (PFE) and Allergan (AGN) is reminiscent of deals such as AOL/Time Warner in 2000 and RBS/ABN-AMRO in 2007, blockbusters in market leading sectors which were followed by major market tops.

Just a small correction here. What 6.5 years? The NYSE, largest index by capitalization, has topped out in July of 2014. That is 5.5 years into its bull cycle.

2015 is on schedule to become a record breaking M&A year. With 22% increase in global transactions year over year. Yet, as you very well know, we typically see this type of a surge in M&A at the tail end of bull runs. We saw the same thing happening at 2000 and 2007 tops.

In terms of margin debt, we have talked about it before.  Margin Debt Monstrosity & Fed’s Achilles Heel And while it appears margin debt is rolling over and on the way down, it is still 33% above 2007 and 50% above 2000 bubble level highs. Not a good sign as we are already sitting at bubble level valuations. And should margin debt continue with its downtrend, the stock market will follow.

margin debt3

Finally, long-term volatility is sitting at its cycle lows. And while it is incredibly hard to believe that VIX will see 50+ levels again, that is exactly what the history is telling us. When we combine these 3 data points, we get yet another confirmation point that serious market trouble might be just around the corner.

volatility chart

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. 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 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. 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. Noveber 2nd, 2015  InvestWithAlex.com

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

M&A Activity, Margin Debt and Volatility…..All Point To A Bear Market?  Google