Investment Grin Of The Day Google
Is Alibaba (BABA) Getting Desperate?
Since it’s IPO, I have argued that Alibaba (BABA) is one giant overpriced and over hyped stock. By comparison and considering it’s valuation, Amazon (AMZN) is being given away. For instance, Alibaba Stupidity and Alibaba (BABA): More Money Than Brains?
Here is what peaked my interest.
Jack Ma, sparking America’s next gold rush?
“We want to connect small business in the West with the largest, fastest-growing market in the East,” he wrote. The strategy, according to Ma, is “simple and clear.” “Chinese consumers will get to buy the American products they want,” and this, in turn, he said, “will help create American jobs and increase U.S. exports.”
While that sounds good on paper, I believe it is to be an impossible task. At least at this time. About 3 years ago I was part of a group that was trying to identify what European or American consumer products we could sell in China (not commodity or industry related). We couldn’t find any. Whatever products we did identify, domestic Chinese suppliers were offering the same at 30-70% our costs.
So, a gold rush? I have my doubts. Perhaps another conclusion. It appears that Alibaba is getting desperate for growth. Considering its overall and massive overvaluation, it is not a good sign.
Bear Hate Mail, Low Interest Rates & Infinite Valuations
6/10/2015 – A positive day with the Dow Jones up 234 points (1.32%) and the Nasdaq up 63 points (1.25%)
This is anecdotal at best, but I do find the following fascinating. Over the last few days I have noticed a significant increase in “bear hate e-mails”. They typically contain one or more profanities, tell me how wrong I am and then proceed to challenge my sanity or intelligence.
As accurate as their point of view might be, here is what I find interesting. A miserly 600 point drop on the Dow is bringing out the bulls in droves. This is important and here is why. A lot of people are on margin and super bullish. Yet, they are nervous and not convinced in this market. Imagine what happens when a sell-off turns into a typical 10-20% correction. Do I smell a panic?
Now, Jeffrey Gundlach brings up an excellent point. Borrow Infinite Amount At Negative Interest Rates
In theory, you can borrow massive amounts of money today and then use that leverage to juice up your returns. While nice in theory, it much more difficult to implement. Here is why…..
What are you going to invest in?
- The US Equity Markets? With the S&P Shiller P/E ratio being at the 3rd highest level in history (right behind 1929 and 2000 tops), any 10-20% decline can very quickly wipe you out.
- The Bond Market? At 0-2% interest rates? No, thank you. Even in arbitrage, with hedges and foreign exchange risks, it is a no win situation.
- Business Capacity? Interest rates have been low enough and for long enough for most businesses to increase their capacity to the max. That is the primary reason as to why we didn’t see an expansion in capital investment this business cycle.
- China’s bubble stock market? Yeah, good luck with that.
Just thinking out loud here. Even if I am able to borrow a Billion dollars today, I wouldn’t know what to do with it. Even if I take a massive short position at an opportune time, that carries a significant risk when borrowed money is involved.
In other words, we are at the end of this business cycle of capital expansion. There is nothing to invest in, even with FREE capital. Sure, you can speculate with above mentioned capital, but that is a totally different conversation. There is no scenario where this ends well.
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. June 10th, 2015 InvestWithAlex.com
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Bear Hate Mail, Low Interest Rates & Infinite Valuations Google
Why You Should Never Disclose Your Trading Position
I always pay attention when somebody, big or small, begin to run around yapping about their stock position. But not in a positive way. I am always interested if there is an opportunity to take the other side of the trade.
Let me give you an example. A few months ago some guy was running around in various public forums and screaming at the top of his longs that Netflix (NFLX) was going to collapse based on his fundamental research. Not only that, he was so confident that he wasn’t shying away from disclosing his massive Put Option position. As accurate as his fundamental analysis might have been, Netflix did the exact opposite, staging a massive rally. Gaps included. I can only imagine that the person in question was whipped out in a matter of minutes.
Here we go again, The last time Apple did this, it rallied 55%
Sure, the chart above can be interpreted as “base building” before the next push higher, it can also be interpreted as “distribution”. It is anything but strong. And just because that’s the way it worked out last time, doesn’t mean it will play in the same fashion again. Plus, there is this, Alert: Smart Money Is Trying To Distribute Apple (AAPL) To Fools
In the final analysis, don’t ever disclose your trading position. It rarely pays off.
Investment Wisdom Of The Day
What Does Today’s Trading Range Mean?
The stock market can either move in time, price or both. As is evident from the charts above, the overall stock market (NYSE) hasn’t gone anywhere over last 11 months. Compressing even more since the beginning of the year. S&P 500 at Smallest Price Range in 20 Years
What does that mean?
Standard technical analysis would suggest that we are either going through a period of distribution or consolidation. They would be right right, but there is much more to it.
Think about it in the following fashion. The stock market is accumulating energy for a big move ahead. If we are to employ physics, it is identical to winding up a spring. Once released, a large amount of energy is let out at once. The exact same thing will happen in the stock market.
Once the timing is right, a tremendous amount of volatility and volume will come back. And since most investors will be fast asleep, due to today’s tight trading range, most will be caught unprepared. If you would like to find out exactly when that date is, in terms of completion of this tight trading rage, please Click Here.
What Does The Stock Market Care About?
6/9/2015 – A slightly negative day with the Dow Jones down 4 points (-0.02%) and the Nasdaq down 8 points (-0.15%)
So, is there anything to worry about when it comes to the stock market?
Not according to the bulls. For instance….
Possible Q2 earnings recession nothing to lose sleep over
“When we see the price of oil this quarter, or last quarter which will affect this quarter’s earnings, it has gone up,” Drogen added. “And so we’re looking for better numbers than the Street is this quarter again and we don’t think there’s going to be an earnings recession. Currently, the magnitude of potential earnings growth is around negative 1% for this quarter, but there are still a few weeks left for the numbers shift as more data comes in.
Well, call me stupid, but I wouldn’t worry about earnings falling into a slightly negative territory if the S&P’s P/E ratio was, well, let’s say at around 5-10. However, I would have nightmares if Shiller P/E ratio was sitting at the 3rd highest reading in history (as it does today) and we had negative earnings growth.
What else the bulls don’t care about?
- Upcoming interest rate hikes – who cares, it’s already priced it.
- The US Economy rolling over into a recession – doesn’t matter.
- Velocity of capital is slowing – this metric is for losers.
- 11 Months of Distribution/Consolidation on NYSE – It’s 100% consolidation for sure.
- This 6 year bull cycle is pushing its limits – another 10 years to go. We are in a brand new secular bull market baby, +20% annual gains are a sure thing.
- Dow Transports are not confirming – confirming what….who cares.
- Multiple divergences on primary indices – the Fed will not let this market fall.
- Margin debt setting extreme record highs – well, duh, it’s a sure one way bet.
- Etc….
That’s quite a bit of “blissful ignorance” if you ask me. If history is any guide, this never ends well.
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. June 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!!!
Should The Rich Be Allowed To Live Up To 200 Years Or More?
Most Americans can agree at least on one thing. Our entire healthcare system is beyond repair. Not in terms of quality and associated technologies, which are by far the best in the world, but due to a sheer wastage/cost of our insurance based system.
And with new technologies and drugs coming onto the market at increasingly unbelievable prices, costs only the rich will be able to afford, an important question arises. Should the rich be allowed to live longer, perhaps twice as long as the rest of the populace?
There is no question that our lifespans have increased dramatically, as a whole, over the last 200 or so years. Yet, should the ruling class have the ability to live 200-500 years while the rest die? I don’t have the answer to that, but it is definitely something worth thinking about.
Should The Rich Be Able To Live Up To 200 Years Or More? Google
Investment Grin Of The Day
Will There Be A Blow Off Top?
Despite the fact the overall stock market hasn’t gone anywhere in 11 months, the overall bullish sentiment remains near historic highs. If anything, most bulls agree on one thing. Even though the stock market is on a expensive side, we won’t have a top until some sort of a “euphoric blow off top” is set. And since we are not there yet, not by a long shot, there is nothing to worry about.
Case and point….
- COOPERMAN: Four signs that we’re entering a bear market
- Investors are nervous about everything… which is great news for the stock market
“At the market peak in 2000, 66% of individual investors were bullish. Likewise, at the peak in 2007, 55% were bullish. Today, just 25% of individual investors are bullish stocks. Until investors become significantly less nervous about the future for stocks, the longer-term bull market likely remains intact.“
First, I am not sure what planet she is getting that 25% number from. You just have to look at the margin debt, P/E ratios and VIX/VXX to realize the statement above is complete nonsense. I have written about it before Ameritrade CEO Confirms A Bull Trap
In terms of anticipated “blow off top”. I wish investing was this easy. Yet, a simple truth applies. When everyone expects and banks on a certain development, particularly in the stock market, it rarely comes to fruition.