Momentum Monday and Banking on Bitcoin

It is Monday which means it’s all about Momentum. Here is today’s tour of markets and momentum that Ivan and I put together (the embed is at the end of the post).

If today’s show was called ‘Shmomentum Monday‘ we might have talked about Shake Shack. The stock looks like it is dying, which is fitting because the salt in their products is killing their customers. Here is the chart:

Back to good momentum…

Global earnings are on the verge of doing something they have never done according to Schwab research lead Jeffrey Kleintop…that is break to all time highs.

Repeat after me….my pissy mood is not the same as the markets.

PS – Watch the Netflix documentary ‘Banking on Bitcoin‘ whether you like Bitcoin or Gold. It is the most interesting coverage of Bitcoin history and timeline. I really enjoyed it.

PSS – Tweet of the Day goes to Michael Batnick who referenced Trump, McCain, War Heroes and The Eclipse in less than 140 characters: ‘I like Suns that don’t get blocked’.

Lows are for Shmos

This made me laugh and worry for our future:

I try and avoid spending time with shmos.

Urban Dictionary defines a shmo as:

A dumb person, a person that has ignorance and no reality of life. A shmo thinks life revolves around them.

I have many shmo scars.

With stocks I like to say ‘lows are for shmos’.

On Friday, the percentage of stocks at new yearly lows was the highest since February.

For the most part the shmos of 2017 – energy and retail – are where they are for a reason.

The biggest shmo of them all is taking credit for the rally in stocks since January. I doubt he will be talking about the markets if the new lows persist.

PS – In 2009, most stocks were at lows. If you liked stocks you were considered a shmo, so all shmo bets were off.

Solving the Investment Puzzle

Morgan is out with a fantastic investing piece titled ‘The Unsolvable Puzzle‘.

This part really captures what gets me so excited about do-it-yourself investing:

Think about the investment factors that have changed in just the last 20 years.

Private equity assets have gone from $600 billion to more than $5 trillion. The number of public companies has halved. Index funds have attracted effectively all public equity asset flows. Annual reports went from being sent in the mail to being scanned for keywords by supercomputers. The cost of storing industrial amounts of data went from millions of dollars on rack servers to thousands of dollars in the cloud. Social media connects what used to be walled off. Stocks went from being traded by humans to high-frequency traders, and now the HFTs have competed themselves down to zero profits. The Federal Funds rate averaged 6.5% from 1960 to 2000. Now it’s been below 1% for 105 of the last 188 months.

Looks what’s changed just this year: ICOs have raised more money for startups than venture capital funds. SoftBank launched a fund that is larger than all U.S. IPO proceeds raised from 2010-2012. I’ve heard rumors that things are unusual in Washington.

Buying stocks for less than hard book value worked, until it didn’t. A dividend yield below Treasury yields was a sign of an overvalued stock, until it wasn’t. Discounted cash flow models were an edge, until a spreadsheet could make one. Convertible bond arbitrage was profitable, until other investors realized just how profitable. This doesn’t happen in a field like physics. Gravity doesn’t get arbitraged away due to popularity.

This mobile, social and global era has shrunk boom, bust cycles.

The booms from technology (for active trend investors like me at least) have drowned out the noise from the bear markets in industries left behind.

The bubble/crash that was supposed to take place in technology industries like the consumer internet just eased us into a new phase of the boom in crypto/digital assets.

The telecom boom was followed by the bust.

The financial leverage boom was followed by a bust.

Where is the bust the textbooks and talking heads promised us?

This ‘inconceivable rally’ (I have written about it since 2010) has spread to global markets.

The stock market remains one of America’s greatest freedoms and now the ICO markets – hatched from the advent of crypto assets – have expanded this freedom.

The investing puzzle just took on a new dimension so do not drive yourself mad looking for ‘the’ perfect strategy.

Once again from Morgan’s post:

The investing industry is filled with brilliant people and terrible results. The reason is that the field has less to do with the kind of knowledge that makes a good physicist, and more to do with the rare intellectual flexibility and nimbleness that makes a good flu vaccine researcher.

Leo Szilard once said: “If you want to succeed in the world, you don’t have to be much cleverer than other people. You just have to be one day earlier.”

What is Working?

Before I get into what’s working in the markets…

You must watch Tina Fey crush this 6 minute rant:

OK…

If you own the wrong stocks, this is one of the ugliest bear markets in history. Retail stocks continue to get hammered. Energy stocks are dreadful.

Those dumb baby boomers may be nervous and pissed, but the avocado toast eating, wool shoe wearing millennials are happy as clams.

So much is working if you are looking in the right places.

As shaky a week as it has been with spiking volatility, the technology sector closed at a 16 year high relative to the S&P.

Chinese consumer internet/media/gaming stocks continue to crush. Tencent and Alibaba are at all-time highs. That is nothing new.

What few are watching is the continued boom in Mexico:

Brazil has already recovered from the massive one day 17 percent crash (7 sigma move down)…that happened just a few months ago. That is crazy bullish.

JC shares another chart here showing Latin America breaking out relative to the S&P:

Oh and Bitcoin closed the week north of $4,000.

Big US financials have teased at a bigger run, but keep falling back along with rates that keep dropping. No big deal in the scheme of all the money still flowing into stocks.

It’s as if the markets knew Trump would implode the day after the election and that Bannon would be gone.

I guess global markets sell the news now that Bannon is out and Trump has no support, but it looks like that selloff would have tons of buyers.

Have a great weekend.

What Should I Do?

Before I get into it today, I wanted to shout out to my friend Mike Marquez a VC and banker who made me laugh today (as always). Mike was the corporate development lead at CBS and led the acquisition of my last Company Wallstrip in 2006. We became quick friends. Mike is such a pro. A few weeks ago we were having dinner in San Francisco and he slipped up and mentioned a deal he was working on thinking I knew about it because it was a portfolio company. I was pissed, but realized his job was to keep his mouth shut. So I did not press. Actually I pressed hard, but Mike threw me way off course.

Anyways, today I get a text asking me about ‘my meds’ …an old inside joke. I shot back that they were perfectly locked in and how was our ‘deal’ progressing?

He came back with ‘tracking along but going slow because everyone keeps punching me’.

I honestly did not get what he meant. I assumed it was banker cryptic talk.

Tonight I was walking with Ellen telling her about my exchanges with Mike and she said ‘punch a banker’ is what I always say on my blog and Mike reads my blog….that it was Mike being funny.

Sorry Mike. That was funny! You are a huggable banker.

Ok …onward…

Writing every day on this blog the last year has been fantastic for me. I feel connected to my work and the rhythms of the market.

I write to learn.

Josh has a good post up on the subject today.

The daily writing has also led to a flood of questions that I have let get way backed up.

The number one question I get continues to be ‘What Should I Do’? …with $10k, $250k, my career, should I buy Bitcoin…?

My standard response is I can’t/won’t tell you what to do, but I will share what I am doing. Generally in real time.

Beyond writing to learn, I try to stay true to being motivational and optimistic. I want people to participate.

I got interested in the markets during the 90’s when it was hip to be told what to buy. That peaked with TheStreet.com IPO and Yahoo Message Boards in 1999/2000.

This recent generation of investors is all about looking things up themselves and as Josh Brown says ‘right in front of you’.

If you found me, you can find thousands of people smarter than me by just following the people I follow.

You are on the right path.

I was with my nephew Jeremy as well tonight who is 19 and headed back to University of Arizona for his sophomore year. He is also my daughter Rachel’s roommate this year with two other friends. He’s wise beyond his years.

He has deleted his social apps and lives on gmail and texts. He reads my daily email. He also reads Fred Wilson’s blog. He follows Naval, reads Ben Thompson and the Stocktwits Daily Rip email. He just took a Udacity class on cryptography.

I felt like asking him ‘What Should I do?’

We are way too dismissive of the next generation.

Spotify and Airpods …Happiness

Ellen and I are helping Rachel move into her first apartment at school in Tuscon today. She is at school early to rush week. Excited for her.

I’m at Dairy Queen right now typing this post on my iPhone using the WordPress app while listening to Supertramp ‘Crime of the Century’ on Spotify though my wireless Airpods.

Freaking magic.

I’m sure I will lose my Airpods which is why I didn’t buy myself a pair. They were a gift.

I plan to pay this gift forward 100 times.

I can already tell there was life before Airpods and Spotify and life after.

Thanks to everyone that made this magic possible.

Charts as Facts…and Punch a Banker Hug A Technician

This tweet about Trump and facts today stood out from the thousands I skim:

What a putz.

Trump has never cared about facts.

Me, on the other hand…I love facts. I get a lot of my facts from charts.

If my off the cuff opinions on any subject could make me money and earn me power, life would be grand.

They don’t.

Financial charts are both facts and art to me because they are a snapshot of human behavior and emotion.

They may not be predictive, they can be misleading and of course can be dangerous if built on bad data, but the right set of charts is priceless.

I eyeball thousands of charts a day and have been doing so for 20 plus years so that I can have a feel for the markets. There are millions of people that do the same so my edge is not great if at all. But, I would not be able to invest without them as context.

PS – We have put our money where are mouth is over the years on charts as an important business. Social Leverage (our fund) is a seed investor in two companies with charts in the name…Ycharts and Chartiq. Both are doing very well building large enterprise financial platforms.

ChartIQ has had a fantastic few weeks and will soon powering both CNBC and Yahoo Finance charts. They already power the Nasdaq and Etrade.

PSS – Punch a banker hug a technician

Momentum Monday…FFFFFINTECH

It’s Monday and that means it’s time to discuss momentum with Ivanhoff. I have included the link and the embed to the show at the end of the post. Ivan and I walk through the markets and I catch up on the financials which are of interest to me and a few new ideas from our Marketwisdom filters.

Now you can’t talk about momentum without talking Bitcoin.

Today the total Bitcoin capitalization is north of $70 billion which is greater than the market caps of 85 percent of the companies in the S&P.

You need more context?

Bitcoin is bigger than Blackrock which has $11 billion in sales!

As fast as Bitcoin has grown, Bitcoin has not hurt financial stocks.

I continue to hold Visa (new all-time highs again today), Schwab, Goldman Sachs and Paypal. I own Apple which is also a bank. A few weeks ago on Momentum Monday, I added Chinese welath management company $NOAH. I own Ethereum and I am back owning Bitcoin again through a sale of Civic tokens last week. In fact, the best trade of the year may be that Coinbase has locked me out and the Bitcoins I wanted to sell at $3,500 are now $4,300.

This is one of the greatest moments in fintech.

I’ve mentioned it before, but it is really important to look beyond the US to understand fintech.

One favorite email I read is from Fintech Collective. It is worth a subscribe. They cover trends from Africa Europe and China as well.

Here is the show

Summer of Howie Coming to an End …

I have had a fantastic summer. The markets went up and I got to play a ton of golf.

This weekend I was the guest of my buddy Peter's member guest at La Jolla country club.

We didn't win but it was a blast to just play and play and play.

In the real world ….Rachel just went back to University of Arizona for sophomore year and we are getting Max ready for school this week.

The great summer is a prelude for an exciting fall. Ellen and I are going to spend it in New York. Should be a great adventure.

The Thank-You

Everyday I get fantastic ideas from people in my streams.

I am living in the future on any subject that interests me.

I try to thank as many people each day for this magic. In writing.

It's easy to click 'like' or 'retweet' but don't forget the thank-you note. I live on both sides of this trade as a writer and a reader. The currency that really matters is not the easy click.

And thank-you to all the great readers here daily.