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How To Eat Nails For Breakfast

valeant

Participate in financial markets long enough and sooner or later you will get your head handed to you. And I don’t care how good you are, sometimes things are simply out of your control. Highly publicized Bill Ackman’s Valeant (VRX) investment is a perfect example of that.

Last week we talked about value investing and how difficult or gut wrenching it can be to purchase great businesses for 0.50….0.25…..0.10 cents on the dollar. What Value Investors Ought To Know About Investing In Today’s Market

Mr. Ackman offers another $2 Billion learning experience (his losses thus far). If you believe in your investment thesis strong enough and your analysis checks out, stay put. Even double up. All successful investors out there had similar defining moments. Ackman says Valeant stock ‘extraordinary bargain’

“Life will go on for Valeant,” he said. “While this has been a very damaging moment for the company … we think the Valeant business is quite robust.” Ackman said he thought the stock was “tremendously undervalued” and had an “89% upside.” He added that investors were forgetting the “rest of Valeant’s business.”

Perhaps another hedge fund manager, Whitney Tilson, has said it the best……

Every investor should analyze this case study to learn from Ackman’s experience, as every last one of us has had (and will have) to deal with a major investment going south. How do you collect more information, filter out the noise, analyze the situation, control your emotions, and ultimately make the right decision among four choices: dump it all, trim, hold, or buy? It is almost never obvious what the right answer is — rather, every option feels really crappy when you’ve lost a lot of money on an investment, especially if you’re in the hot glare of the public spotlight. I’ve been there and it’s no fun.

In other words, if you want to succeed in this business, learn to eat nails for breakfast. Preferably without milk.

Z31

How To Eat Nails For Breakfast Google

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These Shocking Charts Lead To Bullish Nightmares. At Least They Should.

Daily Chart ANovember 9 InvestWithAlex

11/9/2015 – A down day with the Dow Jones down 178 points (-0.99%) and the Nasdaq down 52 points (-1.01%) 

It’s all about the FED. Right?

Not so fast. Last week it was December rate hike priced in? Maybe, experts say  Today, we get a little sell-off and this headline pops up. Wall St. falls as rate hike looms and growth fears linger

Which one is it? 

At the risk of sounding like a broken record, the FED is now irrelevant. Why the FED will not raise rates in a meaningful way. 

Instead, investors should concentrate on what the market charts are telling them.

Before we get there, let me ask you something. What has changed between September 29th bottom and today? NOTHING FUNDAMENTAL, only investor sentiment. Where on September 29th investors were freaking out and numerous commentators were calling for an all out market crash, today it’s the opposite. Apparently, the bear market is over and we are getting ready to surge higher.

Yet, fundamentally speaking, we are still in the same conundrum. I continue to maintain that we are witnessing a major slow down in earnings and the US Economy.  Most corporates missing and guiding lower is a clear evidence of that. Forward guidance is down 2%. Sure, some companies like Google, Amazon, etc…. are outperforming, but they are an exception, not the rule. The FED remains between the rock and a hard place. Unable to raise interest rates or stimulate the economy further.

If anything, we are getting numerous confirmations that earnings and the US Economy are falling apart.

As they say, a picture is worth a thousand words. The charts below should at least give bulls indigestion. Please note, some of the charts below are a few days/weeks old. Yet, their meaning or composition have not changed.

Chart #1: Hey everyone, look at all of those gaps. If you think the market won’t come back to close them, sooner or later, you are living in a fantasy land. But listen, we are all adults here. Who am I to tell you NOT to buy Amazon, Facebook, Google, etc….at today’s ridiculous valuation levels. As Citigroup suggests, “Be brave and go long”.
Untitled

Chart #2: Oldie but goodie. Again, overall earnings/economy are slowing down while Shiller’s adjusted S&P ratio is at its 3rd highest level in history. Investors have paid more for stocks on two other occasions. In 1929 and 2000. But, unlike yours truly, most bulls don’t mind paying the same premium today.shillers PEChart #3: Look at all of these non-confirmations from Russell 2000, Dow Transports and Biotech (IBB). These are just a few. There are many other.  New Bull market??? Yeah, sure…..to infinity and beyond.

rut

transports

ibb

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 9th, 2015  InvestWithAlex.com

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

These Shocking Charts Lead To  Bullish Nightmares. At Least They Should. Google

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Global Indices, Futures, Bonds, Stocks, Commodities & Currencies. Plus, 300 Days Of NO Gains.

Daily Chart ANovember 6 InvestWithAlex

11/6/2015 – A positive day with the Dow Jones up 47 points (+0.26%) and the Nasdaq up 19 points (+0.38%). 

Despite the recent monster rally in stocks, most indices are sitting near their annual break even points. For instance, the Dow is just 80 points higher from where it opened on January 2nd. The S&P is slightly higher while the NYSE/Russell are sitting below their respective opening numbers. Only the Nasdaq is up for the year. That begs the question…. is that indicative of a speculative bubble or will other indices have to catch up? We will discuss that next week.

In the meantime, I am incredibly excited to announce our partnership with Demeter Research and Demeter Capital.  To increase our product offering and to offer you access to some of the most popular markets out there.  Plus, an active trading environment.

Matt’s work is some of the most accurate I have ever seen and it shows.  I will let our sales letter below explain everything in greater detail.  Should you have any questions, please don’t hesitate to contact me.

Global Stock Indices, Futures, Bonds and Stocks
Commodities & Currencies

Active Short-Term & Long-Term Trading Environment

Just How Much Money Would You Be Able To Make While Minimizing Risk
-OR-
Just How Much Would Your Investment Returns Improve
If You Knew….With a High Degree of Certainty
Where The Next Turning Point Is
Short-Term & Long-Term

Sometimes To The Penny and In All Of Your Favorite Markets.

WELL, NOW YOU CAN HAVE THIS INFORMATION AT YOUR FINGERTIPS
(***First, take a look at the video below)And that is exactly what happened.

Who is Matt Demeter?

mattMatt Demeter is a hedge fund manager at Demeter Capital and the person behind Demeter Research. Matt graduated from Duke University with a Bachelor’s degree in Biology and Genetics.  And after seven years as a laboratory scientist, Matt entered the money management business in 2004 by starting his own hedge fund and developing a unique technical analysis system. The system you see here.  Click Here To Learn More.

One thing is guaranteed;  you will not find this work and analysis anywhere else.

Here is just a brief summary of Matt Demeter’s approach…..

  • Matt’s work is based on calculating moving averages, trend lines and support/resistance lines in 3-Dimensional Space. As Alex Dvorkin has shown and proven in his book “Timed Value”, the stock market is a multidimensional entity that moves in at least 3-Dimensional Space. Matt’s work approaches the market in a similar fashion, leading to astonishing accuracy in selected markets. Learn More
  • Fast deployment in multiple markets and most popular financial instruments.
  • Incredible accuracy. Matt’s support and resistance calculations allow him to pin point minor and major reversal points within the 0.5% margin of error 50% of the time. The other 40% fluctuate within the 0.5-1% variance band.
  • Highly active long-term and/or short-term trading environment.
  • Minimization of risk. Matt’s system often yields the margin of error of just a few ticks or pennies. Allowing him to set stop loss or reversal points shockingly close to the original entry points.
  • Matt’s approach concentrates only on high probability trades in multiple markets. This allows for further risk minimization while positioning the overall portfolio for large gains.
  • Ability to know exactly where and when major tops and/or bottoms are put in place.
  • And much more……Lean More

In other words, Demeter Research system above allows investors to….

  1. Know exactly when most popular financial instruments are at their respective short-term or long-term turning points. Sometimes to the penny.
  2. Take position at the above mentioned turning points. At times with the tightest stop loss or reversal points in the industry.
  3. And as you can very well understand, all of the above leads to market beating gains, often by a considerable margin, and in a low risk environment.

click here to learn more

P.S. And don’t forget, you can start using Matt’s approach today to achieve market beating performance. What are you waiting for? Just Click Here.

MARKETS COVERED 

stockSTOCK INDICES bondsBONDS commoditiesCOMMODITIES  EUROCURRENCIES
Dow, S&P 500, Nasdaq
DAX and Euro Stoxx
Nikkei, Shanghai Composite
Brazilian Bovespa, Emerging Markets		 US 10 Year Treasury Rate
Long-Term Treasuries ETF
Junk Bond ETFs
Municipal Bond ETF		 Gold, Silver, Copper and Mining ETFs
Crude Oil and Energy ETFs
Wheat, Corn, Soybeans
Agricultural ETFs		 Australian Dollar British Pound
Canadian Dollar Euro
US Dollar Index Japanese Yen

Global Indices, Futures, Bonds, Stocks, Commodities & Currencies. Plus, 300 Days Of NO Gains.  Google

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COT Reports & Weekly Market Calendar – November 6th, 2015

COT Reports: If you are not familiar, the Commitments of Traders (COT) reports provide a breakdown of each Tuesday’s open interest for markets in which 20 or more traders hold positions. In other words, it gives us a preview of what commercial interests are buying or selling. As the theory goes, we want to be on the same side of the trade as the big guys.

While not a good timing tool, currencies, commodities and the stock market (to a lesser extent) tend to move in the direction of the bets made by the commercial players. Not always, but often enough.

Latest data, as of November 4th, 2015

Currencies: 

  • USD:  3K Long Vs. 56K Short – No changes. Substantial short interest remains.
  • Canadian Dollar: 43K Long Vs. 18K Short – Slight decrease in short interest. Significant long interest remains.
  • British Pound: 57K Long Vs. 16K Short – Slight decrease in net short interest. British pound remains bullish.
  • Japanese Yen: 96K Long Vs. 2K Short – Slight increase in net long exposure. Japanese Yen is now very bullish.
  • Euro: 127K Long Vs. 48K Short – Slight increase in net long exposure. Euro is now bullish.
  • Australian Dollar: 107K Long Vs. 12K Short – Slight increase in net long exposure. Significant long position remains.

Conclusion: Based on the information above, commercial interests expect the US Dollar to decline while Canadian Dollar, British Pound, Euro Japanese Yen and Australian Dollar rally. This is consistent with our view that the FED won’t raise rates. 

Markets/Commodities/Volatility: 

  • E-Mini S&P 500: 489K Long Vs. 382K Short – Net neutral position remains.
  • Nasdaq 100-Mini: 25K Long Vs. 195K Short – Sizable short position.
  • VIX: 47K Long Vs. 75K Short – Slight decrease in net short exposure.
  • Gold: 57 Long Vs. 89K Short – Descrease in net short exposure. Gold is back to being neutral.

Conclusion: Based on the information above, commercial interests are now net neutral the S&P, VIX and gold. We have also witnessed a decline in net short exposure in VIX. At the same time, commercials now have a very large short position on the Nasdaq. That is important. 

Next Week’s Market Calendar: 

  • Q-3 Earnings
  • Friday: Retail Sales

Z30

COT Reports & Weekly Market Calendar – November 6th, 2015 Google

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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