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Why Is Warren Buffett Sitting On $50 Billion In Cash? I’ll Tell You Why

daily chart August 4 2014

8/4/2014 – An up day with the Dow Jones up 76 point (+0.46%) and the Nasdaq up 31 points (+0.72%).

The stock market continues to behave exactly as anticipated or as per our exact internal forecasts.  And while most market participants are in love with this market and see the recent sell off as yet another buying opportunity, at least Warren Buffett does not share in their optimism.

Buffett Waits on Fat Pitch as Cash Hoard Tops $50 Billion

I know, I know……only if all of us could have the same problem. Yet, it is a serious matter. Mr. Buffett is sitting on so much cash because it is impossible to allocate this capital in an appropriate fashion. Why? Because everything…and I mean everything has been driven up into a bubble valuation territory. Outside of a few special situation and a few potential turnaround stories, there is nothing to invest in. Particularly, if you are looking for value. In other words, the overall market is in a massive bubble and it will pop. As it always does. I can only imagine that Mr. Buffett will be buying hand over fist when there is blood in the streets. As he always does.

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. August 4th, 2014 InvestWithAlex.com

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

Why Is Warren Buffett Sitting On $50 Billion In Cash? I’ll Tell You Why  Google

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How You Could Have Made A Fortune Gambling

BYI

Continuation from Friday…..

FUNDAMENTAL ANALYSIS:

In order to establish a clear picture of what had happened between 1999 and today we must first analyze the fundamental growth of the company over the last 15 years.

Key Statistics 2000 2014
Price Per Share $1 $77.70
Market Cap $39 Million $3 Billion
Earnings Per Share $(1.47) $3.17
P/E Ratio N/A 24
Price/Sales Ratio 0.08 2.04
Price/Book Ratio N/A 10.3
Revenue $478 Million $ 1.14 Billion
Net Income $(15 Million) $124 Million
Annual Earnings Growth 4% (revenue) 39%
Total Cash $34 Million $90 Million
Total Debt $ 354 Million $580 Million
Book Value Per Share $N/A $5.81
Shares Outstanding 39 Million 39 Million
Total Assets $351 Million $1 Billion
Shareholder Equity $(51 Million) $120 Million

As we look at the data above, one issue becomes immediately apparent.  Just how much out of shape the company was back in 2000. And not just in 2000, between 1996 and 2000 the company lost a net total of $170 Million. A massive loss considering the company had a debt load of $354 Million, negative equity and a market capitalization of just $39 Million. In other words, at least from the financial statements perspective alone, the company was dying.

Further, while Bally’s financial performance had improved considerably between 2000 and 2014, this improved performance hardly justifies the 7,800% rise in its stock price.  With the revenue base growing at just 138% over a 14 year period of time and with the shareholders equity expanding by just $170 Million, it becomes puzzling how Bally’s market capitalization could have expanded from $39 Million to $3 Billion. Finally, while the company was selling at depressed valuation levels throughout 1999 and 2000, with a Price/Sales ratio of 0.08, it not entirely evident if this simple turnaround is what had caused the company’s stock price to expand by 78 bags

We must now go back into the 1995-2000 period and study the company in greater detail in order to determine why the company was underperforming,  losing money and on a verge of a financial collapse during that time. Further, we must ascertain what the company did between 2000 and today in order to turn things around. If this improved performance could have been anticipated. Most importantly, we have to figure out if we would have been smart enough to take a long position in either 1999 or 2000.

To Be Continued Tomorrow…..

Z30

How You Could Have Made A Fortune Gambling  Google

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Why Bond Yields Will Continue To Decline

daily chart August 1 2014

8/1/2014 – A down day with the Dow Jones down 70 points (-0.42%) and the Nasdaq down 17 points (-0.39%). 

The market continues to perform as per our internal forecasts……yada, yada, yada. When I parked a lot of my assets in the 10-Year Note on January 2nd of this year at 3% a lot of people thought that it was the stupidest investment decision yet. After all, the US Economy was supposed to catch on fire and the FED was tightening. Higher rates were a given. At least that’s what everyone else thought.

Thus far this year, with the Dow now in the negative, the 10-Year Note at 2.5% has proven to be one of the best investments out there. And while most investors continue to see this as a fluke, the best is yet to come. Bill Gross tends to agree…PIMCO’s Bill Gross names ‘the only safe haven’ in this market

Here is why yields will continue to decline and the yield curve will flatten further.

  1. The bond market is starting to see a severe recession and a bear market within the US Economy. Our mathematical and timing work confirms the same. Showing a significant recession and a bear market between 2014-2017. 
  2. Typically, 30-year bear markets in yield do not end in a V shape form. When such long moves complete they often set a secondary bottom (at least). This fits well within our overall economic forecast as we anticipate yields to set a secondary bottom over the next 2-3 years. In 2016 to be exact.
  3. There are a number of open gaps leading all the way down to 1.5-1.6% on a 10-Year Note. Again, it is highly probable yields will go there over the next 2-3 years.

When we put all of this together, it becomes evident that the US Economy and the US Stock Market are in real trouble going forward.

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. August 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!!!

Why Bond Yields Will Continue To Decline Google

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Let’s Play A Game

BYI

Company Name:  Bally Technologies Inc Stock Symbol:  BYI Industry:  Gaming
Percent Appreciation:  7,800% Number of Bags:  78 Holding Period: 14 Years
Entry Date & Price:  October, 2000 @$1.00 share Exit Date & Price: August,2014 Takeover @ $83.30 Original Investment($10,000): $780,000

Company Description: Bally Technologies, Inc. is a diversified, worldwide gaming company that innovates, designs, manufactures, operates, and distributes advanced technology-based gaming devices and systems, as well as interactive and mobile solutions.  As a global gaming-systems provider, we offer technology solutions which provide gaming operators with a wide range of marketing, data management and analysis, accounting, player tracking, security, and other software applications and tools to more effectively manage their operations.  Our primary hardware technologies include spinning-reel and video gaming devices, specialty gaming devices and wide-area progressive systems for traditional land-based, riverboat, and Native American casinos, video lottery and central determination markets, and specialized system-based hardware products.

Quick Trading Overview & Objective: While Bally Technology’s stock price has appreciated only a little over 300% since first going public in 1982, we will begin our analysis at a multi decade bottom that had occurred in 1999-2000.  Bally’s stock price hit bottom in May of 2000 at around $0.42 a share before staging an impressive 20,000% rally (a 200 bagger) between then and the January of 2014.  We will initiate our coverage at this 1999-2000 bottom of around $0.40-0.50 a share (split adjusted) in order to see what had caused the company to appreciate over 7,800% between 2000s tradable bottom and today.

We will go back in time and take an in depth look at the company in order to determine if we could have taken a long position at that time. More importantly, we will look at Bally’s fundamental and trading patterns over that period of time in order to ascertain if we would have been able to maintain our position over a 14 year period of time and/or until the takeover bid for Bally’s Technologies was announced on August 1st, 2014 by Scientific Games Corporation at $83.30 a share.

To Be Continued On Monday…….. 

Z30

Let’s Play A Game Google

Posted on

The Dow Goes Negative For The Year

daily chart July 31 2014

7/31/2014 – A big down day with the Dow Jones down 317 points (-1.88%) and the Nasdaq down 93 points (-2.09%).

BOOM and just like that the Dow is now in a negative territory for the year. The market opened with a large gap down, suggesting that at least a near term bounce is coming up sometime soon.

Over the last few months I have been adamant about my forecast that the market is accumulating energy for a sharp move in the very near future. Is that what we saw today? Perhaps. Yet, a much more important move is coming over the next few months. A move that will either set a blow off top or make you wish your kept your money under the mattress.

That is one of the things I constantly talk about in my subscriber section and why my subscribers are very well aware of what happens next. If fact, today’s move shouldn’t have been a surprise as the market continues to perform as per our exact internal forecasts. Find out what happens next or before a bear market kicks in.

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. July 31th, 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 Dow Goes Negative For The Year  Google

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How Many Burritos Does It Take To……

CMG2

Continuation from yesterday…..

CONCLUSION:

Chipotle Mexican Grill (CMG) presents us with a perfect case study of what to look for in potential Tenbaggers, when to take position and when to exist.

One of the things we have learned right away is that it wouldn’t be a wise decision to take a position in Chipotle’s stock right after its IPO in January of 2006. That was due to our inability to determine the stock’s structural trading patterns, price doubling at the open and subsequent excessive valuation levels.

Yet, the stock presented us with another buying opportunity at the end of 2008, when the company’s stock price declined 75%. At that time, Chipotle offered us a perfect Tenbagger investment opportunity for the following reasons.

  • Fundamental: Even though Chipotle’s stock collapsed 75% in the midst of the 2007-2009 financial crises, the company itself was doing incredibly well. Opening over 100 new stores, improving margins and growing at 25-30% per year.  What’s more, for the first time since going public, Chipotle’s valuation metrics were not too expensive.
  • Technical:  After establishing a clearly defined down trending channel between its 2007 top and its 2008 bottom, Chipotle’s stock broke out of this channel in the late November of 2008 at $42.20, giving us a clear signal to take a long position.
  • Timing:  An analyst aware of the overall structure of the market would know that a bear market mid cycle leg would terminate in the early 2009. This information alone would ensure that an analyst who was following Chipotle’s stock would be watching closely for an anticipated technical bottom.

It is not often that we get all three disciplines confirming each other.  Yet, when we do, it becomes increasingly easier to take a position as the risk/reward profile clearly benefits an investment. Just as was the case with Chipotle’s stock in November of 2008.

Finally, not only did Chipotle’s stock present us a perfect case study of when to go long in a potential Tenbagger, it also teaches us when to get out. As is the case today.  Making Chipotle’s stock a perfect financial instrument to follow over the next few years.  With an ability to profit on the short side before reversing course at the next bear market bottom to benefit from the next leg up. Perhaps just in time for the next Tenbagger run.

Final Prescription: Fundamental Analysis + Technical Analysis + Timing Analysis = A Massive ROI.

z32

How Many Burritos Does It Take To…… Google

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Is The U.S. Ready For A Nuclear War?

nuclear weapons locationsContinuation from yesterday……..If you still believe that nuclear war is impossible and what had occurred in 1962 is now ancient history, consider what had happened just 30 years ago. On September 26th, 1983, the Soviet Union’s early-warning system detected an incoming ballistic missile launch from the United States. At the time computer readouts suggested that no less than five ICBM’s have been launched by the Americans.  The Russian response should have been clear.  “Dead Hand” protocol instructs Russian military forces to retaliate immediately with an all out nuclear attack of their own.

Yet, the officer of duty, Stanislav Petrov, whose job it was to register apparent enemy missile launches, decided not to report them to his superiors. Instead, dismissing them as a false alarm in what was a major breach of his orders and a dereliction of his duty.

“I had all the data showing an ongoing missile attack. If I had sent my report up the chain of command, nobody would have said a word against it. The siren howled, but I just sat there for a few seconds, staring at the big, back-lit, red screen with the word ‘launch’ on it.  A minute later the siren went off again. The second missile was launched. Then the third, and the fourth, and the fifth. Computers changed their alerts from ‘launch’ to ‘missile strike’. All I had to do was to reach for the phone; to raise the direct line to our top commanders – but I couldn’t move. I felt like I was sitting on a hot frying pan” he told the BBC’s 30 years later.

The system was clear in showing him the “highest” level of alert and there should not have been a doubt that Americans had launched an attack. A quick report up the chain of the command and a push of a few buttons is all that stood in a way of an all out Nuclear War. Subsequent investigation showed that if he was to pick up the phone and present his data, a duty he was required to do, a retaliatory strike would have been immediately approved by the chain of command.  Anyone one else in his seat would have followed directions.  Yet, for some unknown reason Mr. Pertrov did not, saving the world in the process.

While you might believe it is only the Russians who are playing with fire, recent 60 Minutes and other reports showed just how out of touch with reality the U.S. nuclear forces are.  Run by the U.S. Air Force, the American nuclear arsenal readiness and security has been questioned after a number of recent scandals.  Much of the controversy involved test cheating scandals, personal problems, lack of security, complacency, missiles and missile silos that are falling apart and the command/control equipment that hasn’t been updated since the 1970s.

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

Z30

Is The U.S. Ready For A Nuclear War?  Google