There Will Never Be Another Recession…or Bear Market

I am not sure how you scare the global 1 percent in an era of so much wealth, liquidity and mobility.

The millennials not yet in the 1 percent are also unstoppable. They have endless time because the internet is in their hands and weed is legal.

People are so bullish they are literally jumping off cliffs while NOT being chased

Other signs that we are NOT in a bear market:

Tiffany’s gapped up 20 percent to more all-time highs.

$LULU made yet another all-time high.

Ferrari ($RACE) is at all-time highs.

Geeks in Silicon Valley are trolling Warren Buffett:

Fearless!

Maybe it’s the avocado’s?

Of course this all ends one day. In the meantime, I am glad I follow prices, not economists and TV pundits.

Have a great day!

PS – this is just hilarious…

Are There Any Good Ideas Left?

This tweet from Morgan Housel made me smile:

“All the low-hanging fruit has been picked” says nation that put wheels on luggage less than 20 years ago.

The stock market was all FANG (Facebook, Apple, Netflix and Google) all the time heading into 2018. Although FANG is all the media continues to talk about in 2018, the market of stocks is serving up a whole bunch of ‘wheels on luggage‘.

Oil is back at $72.

Chinese IPO’s are the rage.

The stock market is voting on guns by bidding up the shares of Taser. Taser was so embarrassed about being Taser they changed their name to Axon in 2017. I dismissed Axon when it broke out to all time highs late lat year because I figured AXON was a chemical stock (smacks forehead for 1 billionth time).

Investing never stops making me feel stupid, but I am so grateful for the opportunity to feel this stupid.

The macro world has never been more confusing to me, but the micro world has never seemed clearer to me.

Long story short…YES there are a shitpile of good ideas left.

PS – Here are two from last week alone…

The smart bike helmet that works with the apple watch is pretty damn smart and a cool

This CIVIC partnership with Budweiser is amazing in it’s audacity and common sense around identity:

Momentum Monday – I Love Markets of Stocks

It’s Monday, which means it is time for a tour of the markets and momentum.

As I mentioned last week, Marketsmith (by Investor’s Business Daily) is now a sponsor of the weekly show. All the charts you have been seeing and will continue to see are from Marketsmith. They are offering my readers a three week trial for $19.95. Click this link if you would like to try it out.

This weeks episode is 30 minutes. You can watch it HERE or just watch below:

This market of stocks is continuing. Stock picking has really mattered in 2018 as the global indexes chop around. Ivan and I go through all this in the episode.

I think this market of stocks is just beginning. The market finally had everyone completely bought into zero cost, passive, ‘set and forget ‘ S&P index and ETF investing.

The Small Cap and Microcap indexes are leading and Ivan goes through a few of his favorite financial stocks which are benefiting from the rise in interest rates.

The most interesting chart I see is Alibaba. Here is the ‘chart art’ from Marketsmith:

There is a battle around the $200 mark.

I also take another long look at Twitter (which I have been long):

I look at thousands of charts a day and this setup is a good one.

Speaking of Twitter…I saw this on Twitter today from Josh which made me laugh:

Slurpee should fire their head of product and hire this customer!

Sheep Logic and Short Selling

I have shared posts from Ben Hunt’s blog before and today I wanted to share an older one titled ‘Sheep Logic‘.

It is a longish, but fantastic read.

This paragraph really got me nodding:

Why are we being trained to think like sheep? Because sheep are wonderful prey animals. They pay the rent with their fleece, and when push comes to shove you can eat them, too. Plus they’re not helpless prey animals. Sheep are quite competent and rather self-sufficient prey animals, which from a smart owner’s perspective is really what you want. If sheep were truly docile and stupid, then they’d be way too much trouble to keep. Nope, with sheep you can let them wander around all day and do their thing. Just keep them from killing themselves in some really stupid accident and you can harvest them for years and years and years.

Pretty chilling.

This part really rang true to me as well:

How do we “see” a crowd in financial markets? Through the financial media outlets that are ubiquitous throughout every professional investment operation in the world — the Wall Street Journal, the Financial Times, CNBC, and Bloomberg. That’s it. These are the only four signal transmission and mediation channels that matter from a financial market Common Knowledge Game perspective because “everyone knows” that we all subscribe to these four channels. If a signal appears prominently in any one of these media outlets (and if it appears prominently in one, it becomes “news” and will appear in all), then every professional investor in the world automatically assumes that every other professional investor in the world heard the signal. So if Famous Investor X appears on CNBC and says that the latest Fed announcement is a great and wonderful thing for equity markets, then the market will go up. It won’t go up because investors agree with Famous Investor X’s assessment of the merits of the Fed announcement. The market will go up because every investor will believe that every other investor heard what Famous Investor X said, and every investor will be forced to update his or her estimation of what every other investor estimates the market will do. It doesn’t matter what the Truth with a capital T is about the Fed. It doesn’t matter what you think about the Fed. It doesn’t matter what everyone thinks about the Fed. What matters is what everyone thinks that everyone thinks about the Fed. That’s how sheep logic, aka the Common Knowledge Game, works in markets.

This is the exact reason I gave up news/information from ALL of the above (I would pay for a Bloomberg Terminal if I had the budget/luxury). They gave me ZERO edge. Turning them off completely is what finally gave me an edge.

I think it is ok to be a sheep in the markets as long as you know who your shepherd(s) is (are), what a flock of sheep is, and who the wolves and coyotes are.

I think Ben would be a fantastic trend follower, but he is a short-seller. Here is how he describes himself and short-sellers:

We swim against the current of narrative. Always. We are respected but disliked. By everyone. Our necessary attributes are suspicion and ego, we can never coast, and our rewards, if they come, are punctuated and short-lived. Short-selling will curdle you. If you let it.

I AM a short-seller. It’s my DNA. I just can’t abide the mendacity and the pleasant little lies and the outright raccoonery that I perceive as infesting the investment world. I wish I could ignore it and just go with the flow. I wish I were wired differently. But I’m not.

We need more Ben Hunt’s.

Campbell Soup – No Growth For You!

Here are all the amazing soup slogans Campbell Soup has given us over the decades:

Soup is still good food.

Delivering it Campbell Soup way (via cans)…not so much (at least in the eyes of Wall Street).

Looking at a one year chart of Campbell Soup you would think that Trump and Wilbur Ross hate soup:

Campbell Soup says that the steel tariffs hurt them.

It’s more likely that GrubHub hurt them than tariffs.

Here is a chart of the two (thanks Charlie):

Last year a few really smart software CEO’s who like to trade were calling me for my opinion on shorting GrubHub (it was near $40). I remember saying the most they could make was $40/per share. I think I talked them out of it, but I should have told them to get long Grubhub and short all the consumer packaged goods companies like Procter and Gamble and Campbell Soup.

The world is changing and so are food habits. Rachel and Max eat Ramen noodles all the time. Maruchan (the Ramen noodles you see everywhere) is a private company in Japan.

Campbell Soup is in a lot more trouble if they are blaming their soup problems on Trump and Ross.

Meanwhile, the private equity shops are licking their chops over the soup panic of 2018.

Summertime!

My summer starts next week.

Yes…I am lucky.

My work life is in Gmail, Google Docs and my iPhone.

In Phoenix, summer started a month ago when it started crossing 100 degrees daily. I am already sick of it.

When we moved back to Phoenix from Coronado a couple years ago, part of the deal I concocted with Ellen was to spend a month in Europe (part of May and June), summers in Coronado and the fall in New York.

Next weekend we go as a family to Tuscany to start the summer. A couple of my nephews are joining us and Rachel is bringing a friend.

From Tuscany we will go to Dublin for a few days as I am going to speak at Money 20/20 (June 12-13). Max and I will get a few rounds of golf with friends and Max can experience some real links golf.

I am excited to be going to Aspen as well for the Fortune Brainstorm Tech conference in mid July. I have never been in Aspen in the summer.

If you want to break into our home while we are gone, you will be disappointed because we live light. Please do feed the dogs though and don’t mess with the air conditioner.

Sports Betting and The Stock Market (Crypto Too)…Place Your Bets

There could be 32 states offering legal sports betting within five years…gambling may even be legal at Bushwood:

My good friend Greg Bettenelli just so happens to cover the sports betting industry from the angle of a Venture Capitalist in Los Angeles (he is also a great golfer and horse handicapper) and he just wrote about the big changes ahead.

The stock market makes it easy to rush out and place bets on the potential big winners, but Greg sees the risks as well:

Here’s the problem: Sports betting is a very low-margin business. The take rate of sports wagering is around 5 percent, while it’s closer to 20 percent in horse racing. And in unregulated markets (which will occur somewhere in U.S.), the price of the product is going to get close to zero. It’s going to be hard to make any money, and customer loyalty will be basically nonexistent without pricing power.

As a result, there will not be enough for everyone to split and be happy. Look at Robinhood, which has essentially taken all of the economics out of retail equity trading — overnight. Look at the margin of sports wagering in Vegas — it’s almost nothing. It likely won’t end well for most players. But a few are going to crush it (I hate saying that, but it’s true). And I bet the winners will surprise us.

Greg Walks through all the potential winners from the news and the list is long:

In addition to all the sports leagues like MLB, MLS, NCAA, NFL, NHL and the PGA, keep an eye on media companies like AT&T (DirecTV), CBS, Comcast (Golf Channel), Disney (ESPN), Fox, Time Warner (Turner), Verizon (Oath) and Action Network/Barstool Sports (with the backing of the Chernin, Kerns and Jacobs dream team). Don’t be shocked if StubHub and even Ticketmaster figure out a way to get in the game, as they know the customers with high propensity to bet on sports.

You will also learn a lot more about the likes of DraftKings and FanDuel (again), Boyd Gaming, Churchill Downs, IGT, MGM Resorts, Paddy Power/Betfair, Penn National, Stars Group (SkyBet), Stronach Group, William Hill, Wynn Resorts and then tribes like Mashantucket Pequot, Mohegan, Morongo, Pechanga and Seminole, which have all been active in gambling at the state level.

Greg does not even mention Scientific Games ($SGMS – lotteries and slots) whose stock was already on fire and exploded on the news:

Back in November, I was in Israel and wrote about Augur (The Augur and The Ogre). The Augur token was trading at $19 and now it is at $55.

Our fund, Social Leverage, invested in one sports gaming app a few years back called Linestar. We wanted to participate in the possible future of sports betting and fantasy sports. Linestar helps people build lineups for fantasy sports and is a profitable company. They had to get creative as the industry has been in a legal for much longer than anyone has expected.

I will be bugging Greg a lot more than usual in the coming months to make sure I catch the right trends in the public markets.

Fashology Breakout – Apple, LULU and Nike

Happy Ramadan…or as us Jews like to say…a great month to go to our favorite middle eastern restaurants.

To the markets…

I get excited about stupid things.

Today it is a big breakout confirmed in my ‘fashology‘ part of the portfolio.

Nike, LULU and Apple are all at all-time highs. Fashology is a big part of my 8 to 80 portfolio as all three stocks are in the current 14 stock portfolio.

I must insert the standard arguments against these three leaders:

1. There is no way that LULU, which sells overpriced gear with no visible logo, should be at all time highs.

2. Apple products are too expensive and there is nothing new.

3. Nike is too big and management is a mess!

On the macro side, we keep expecting this bull market to end because you know…length of expansion, valuations,Interest rates (see chart), Trump, Russia, China, trade deficit, health care costs, Penn Station, free trading, Bitcoin, 3rd world airports at LAX and JFK, global warming and of course ‘But Hillary’.

The problem/opportunity with all the fundamental negativity and the above specific opinions on Nike, Apple and LULU is these widespread negative opinions are public and already priced in to markets. Oh…and it is a bull market.

Fashology‘ companies will get hit, they always do, when they miss a season or product launch and that is always the risk with fashion and technology.

There are many other companies worthy of being in a ‘fashology’ index, but it’s my index and I want to select companies that are NOT too reliant on being brand rollups/conglomerates and those that are fashion leaders, not followers. Here is a list of companies I am considering right now:

Estee Lauder – $EL (I am pissed at all the women who read this blog including Ellen and Rachel for not connecting the dots for me 700 percent ago).

Canada Goose Holdings – $GOOS (too Canadian).

Adidas $ADDYY- (The shoes are obviously a smash hit, but I hate stripes).

Louis Vuitton – $LVMUY – (they seem very deserving and are continually on all-time high list).

America Eagle $AEO (too tween and teen, but great turnaround).

Ulta Beauty – $ULTA (not sure if the fashion AND tech are heavy enough, but one hell of a stock).

Deckers – $DECK (some great brands and a great stock, not sure about ‘fashion’).

Tesla – $TSLA (has it all but the financials are way too confusing – so will have to pay up later).

Luxottica – $LUX (too much of a roll up).

V.F. Corporation – $VFC (at $32 billion it is one hell of a rollup and Van’s is always great).

Hit me up with others that I am missing.

As Millennials work their way through the next 6 decades of working, living and spending.. a huge amount of money will be made riding the fashology trend.

R.I.P Good Times (Said Sequoia in October, 2008) and Nobody Knows Anything

David Frankel – a great Venture Capitalist – reminded me that R.I.P Good Times was written by Sequoia Capital almost 10 years ago today.

On Twitter he was pondering whether the $100 billion Softbank Vision Fund was the beginning of the end of this cycle. I replied to him with this tweet:

In October 2008 Sequoia Capital published R.I.P Good times… today Lime is raising $500 million because of the e-scooter wars… carry on.

Yes…e-scooter wars are real!

That same October back in 2008, Satoshi published his whitepaper and Bitcoin was born and the cryptocurrency market is down 50 percent and still at $400 billion!

The powerpoint Sequoia sent around to their CEO’s in the middle of the market panic is probably more valuable to read today. Every founder and investor should. These three slides were REALLY part of the 56 slide presentation:

Let me get to the point…

NOBODY KNOWS much when it comes to timing the markets.

It’s why I like to sell on the way up – or ‘when you can’.

I remember where I was sitting when I read this the first time. I blogged my cynicism at the time as Sequoia trying to scare everyone out of the market to scoop up deals for themselves. I wrote ‘Too Small to Fail‘ and kept pecking away at a few stocks and investing in startups. I was in the middle of starting Stocktwits.

Time sure has flown.

Momentum Monday – The Breadth is Real and Spectacular

It’s Monday, which means it is time for a tour of the markets and momentum.

Something new this week is that Marketsmith (by Investor’s Business Daily) is now a sponsor of the weekly show and I get to add some creative production over the next few months. All the charts you have been seeing and will continue to see are from Marketsmith. They are offering my readers a three week trial for $19.95. Click this link if you would like to try it out.

This week’s show is 22 minutes. Click here to watch, or watch right here:

The show has some new ideas. If you watched last week we really liked Baidu and Illumina and both have had monster weeks.

I love this Seinfled clip which is not about Breadth, but definitely on point for today.

The market breadth is spectacular right now:

As Peter Brandt says… Bear mkts in stocks begin when a small portion of stocks prop up general mkt while majority of stocks have begun decline. Just the opposite happening in U.S. equities.

As good as the momentum is, I would not be surprised to see a steep pullback, specifically in software stocks.

Here is Microsoft making fresh ALL-TIME HIGHS today (team Stocktwits says it is up 100,000 percent since the IPO). The technicians are starting to point out divergences in software stocks (here for instance is a chart of Microsoft) as they chug higher. Here is the divergence in the software index:

My goals on this blog, especially Monday’s, is to help people find trends and ride them, but getting off is part of the business as well. Booking some profits along the way is a key to investing for profit and joy.

Have a great Tuesday.