How I Track the Markets – A Koyfin Demo

We have a new portfolio company at Social Leverage called Koyfin. I asked my friend Rob Koyfman, the founder of Koyfin, to do a demo of his product with me.

HERE IS THE DEMO.

It is fun to have a powerful desktop terminal, with incredible charting, for tracking markets, portfolios and doing research. The mobile web version is also fast and clean.

Hit me up with features you would like to see and I will share with Rob.

Investing a Lump Sum in The Stock Market

I am off to Breckeridge this morning from New York. As usual, I planned late and the hotel for the conference my pal JC is organizing is sold out. I texted JC to see if he could help and got a friendly reminder that I am still a nobody:

Onwards…

I talk to young people about investing all the time and the question in the title of the post comes up a lot!

Nick has the answer to that:

What if the market crashes right after you invest? Wouldn’t it be better to average-in over time (i.e. dollar-cost averaging/DCA) to smooth out any unlucky timing on your part?

Statistically, the answer is no. In a paper from 2012, Vanguard found that 66% of the time it is better to invest your money right away (“Lump Sum”) rather than buying in over 12 months (“DCA”). I don’t disagree with Vanguard’s results (my results were strikingly similar), but I don’t think they went deep enough in explaining why this is true.

The rest of Nick’s article has a lot more good data and reasoning. Take a read.

Here is Vanguard’s research and paper on the same subject.

Alpha …Continued

I wrote about Alpha a few days back and it has been a continued topic of discussion for me in my meetings and calls this week.

Ben Carlson wrote this excellent pice titled ‘First Mover Alpha‘ that has a great explanation of how alpha changes over time – at least in the public markets. Read it all. This one stat really stood out.

In 1963, there were 284 people who took the CFA exam. Last year there were more than 256,000 CFA candidates.

In the 1950s, retail investors controlled 95% of all trades. Today 95% of trades are executed by professional investors.

Make sure to read Ed Thorp’s books that Ben highlights if this subject interests you. They make a great gift for any friend or family member that likes to trade and invest.

Green Beans and Orange Bears

I have a couple of charts to show you today…

First is a chart of the price of coffee:

Coffee prices are down 70 percent since 2010…no wonder Starbucks is back at all-time highs. Imagine if they sold weed…

Charlie Bilello posted this market statistic on bear markets that caught me by suprise…

From its intraday low on Dec 26, the S&P 500 has rallied over 18%. It needs another 6% to hit new highs and make the 2018 Bear Market one of the shortest in history.

Prepare yourself for Fat Nixon gloating if the shortest bear market unfolds…

Momentum Monday – Everyone Back In The Stocks Pool?

As a reminder, Marketsmith (by Investor’s Business Daily) is now a sponsor of the weekly show. All the charts you have been seeing in the videos 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.

Onwards…

Weekends are a very important time for me to catch up on markets. I like seeing weekly charts and not having the distractions of the work week to digest the prices.

Ivanhoff and I have started to make our Momentum Monday shows on Sunday in the spirit of being ready for the week and I like the subtle change.

I will get right to this weeks episode, which is a great one if I do say so myself. There are a lot of interesting setups (outside of just software) from healthcare to old economy stocks and biotech.

Click here to watch it.

At this point, December never mattered if you were off the grid. Stocks have gone from ‘just shred the December statement’ into ‘checking my statement every hour’.

The Dow is up 11.4% in 2019 with 27 out of 30 members positive. Boeing leading all Dow stocks at +30% YTD and another all-time high.

The biggest change for now seems to be the move away from FAANG to smaller stocks and old economy drug, energy and industrial stocks.

This equal weighted chart of the Nasdaq 100 shows how much broader this rally is becoming over just the same old FAANG of 2012-2018…

Before you get too excited and chase every idea in today’s episode, take a look at how other years with great starts have ended.

I am off to New York today but will end the week skiing with my ‘charting pals‘ in Breckenridge.

Have a great week.

Alpha – In Your Eyes, Your Ears and Your Feet

Ben Hunt started a good conversation today about stock market returns and alpha. It started with this:

Alpha = private information. Period. Full stop.

It continued:

I understand that we’d like to think that smarts + process + time = alpha. It’s one of the little lies that we tell ourselves to get through the day. Here’s the 10-year chart of Berkshire vs. S&P total return. Without private information (and often with it) THERE IS NO ALPHA.

Next:

And if you’re hoping for an active management renaissance … as passive, price-insensitive investing grows as a % of flows, alpha becomes *harder* to achieve, not easier. Alpha creation is not a mean-reverting phenomenon.

And finally:

When did fundamental active management begin to die? In August 2000, when Reg FD made it illegal to get private information from public companies. If Reg FD dated back to 1980, you would have never heard of Peter Lynch and Warren Buffett.

People have been arguing the thread and the definition of the words ‘private information’ all day long and will argue this until the end of time, but I am in agreement with Ben as to alpha.

I was crazy/silly enough to start a hedge fund in 1998, especially without an edge in private information. I am glad that I don’t have to compete against the S&P anymore.

Picking stocks is a really fun hobby, and if you can afford it…lifestyle, but it was a terrible career decision.

I love my life as a founder and angel.

The alpha seems endless and indexing is still years away (though it is coming).

Back in 2013 I wrote that ‘Alpha Was In Your Eyes and Your Feet‘. The post is still timely and relevant.

Building private information…with your own eyes, ears and feet…through your global social networks and passionate pursuit of domain experience is how you ‘out’ Warren Buffett all the wannabe Warren Buffett’s.

Checking In On The Death of Retail…And Not Jewish

I see crazy memes of people doing stupid things all day on social media and I will tag them with ‘Not Jewish’ every once in a while.

Today’s winner.

The death of retail has been an endless meme of smartypant venture capitalists and analysts and they have been mostly right the last 4 years:

That has not stopped Autozone:

It still pays to walk the malls and check the stores if you like investing in stocks.

Have a great weekend.

The Glitch is Gone…Bring On The National Emergency

We went from a stock market ‘glitch’ in December to a National Emergency in February.

All the while, the S&P has moved about 40 percent to be in the same place.

This turbulence has definitely shaken out some weak hands in the stock market.

On the eve of this national emergency I checked the all-time high list to see what investors are clamoring for. Here is a list of the largest companies on that list.

Starbucks
Autozone
Waste Management
Union Pacific
Salesforce

One thing not working is FAANG (Facebook, Apple, Amazon, Netflix and Google).

Warren Buffett has been selling some Apple and Amazon walked away from a New York headquarters.

I remember the ‘pundits’ saying the markets would crater without FAANG leadership and Jamie Dimon saying Bitcoin/Crypto was a fraud.

All of this nonsense is really just a reminder to turn off your television, spend more time looking around you not down at your phone, and as always punch a banker.

If the railroads like Union Pacific can be at all-time highs 140 years after their initial bubble, imagine where the modern railroads (internet leadership) will be in 140 years.

FAANG in some form or another will be back real soon. They are resting and licking some wounds but their spending will pay dividends .

In America it pays to be bullish 80 percent of the time. Nasdaq 10,000 here we come.

The Daily Grind

I am really struggling with my writing. The rest of my life is fantastic… so only the daily readers are suffering with my struggle. I do feel your pain.

I have always assumed that by writing something every day on this blog, my writing habit would just get stronger and writing would just be easy.

El wrongo!

When I started Wallstrip back in 2006 I would be crazy about every aspect of the daily show, not just the company. Each episode had to be great because if even one show was weak, the next show would have to be even better so why relent for even a minute.

While many episodes were of course bad, it was the attitude that most mattered.

That pace was ridiculous on the budget we had so it was great that CBS came along and acquired us.

Things are a little different today in blogtown USA. Nobody is coming to buy my blog, though a few ex CBS’ers do read this…so I just have to grind it out and take my daily swings.

Thanks for stopping in while I ride out the slump.

PS – Someone not in a slump is Dave Chapelle. Dave had his slump, but lately Google/Youtube serve nothing but Dave to me because I recently went down a Chapelle rabbit hole. Those damn AI robots have me in a perpetual Chapelle rabbit hole for the time being.

My gift to readers today is minute 19 of this Dave Chapelle interview on Sway where he talks about what he would do now if he was seated in the front row of Macworld when Steve Jobs announced the Smartphone. Very ‘Dead Zone‘.

The Writing Experiment

I gave my son Max an extra ‘work’ assignment for his second semester of college…three paragraphs about his daily life.

I set up a Google document and told him not to stress about grammar and just let it flow.

The blank page is a daunting beast each and every day. I was not sure what to expect.

I figured worst case Max would become a better storyteller, but if he embraced the spirit of the assignment he would hone a skill that would make him a better employee/leader/citizen.

We are now six weeks into the experiment. Yesterday Max wrote that he ‘loves writing’ (at least in this format) and I certainly feel I have a great look into how he is managing life.

I hope one day he turns this inside out and just blogs. He is really funny as he spills his guts on the digital blank canvas.

It has never been easier to write…too many don’t even try.