Mexico is up 36 percent since Donald Trump became president (thanks Charlie) and it should get better because today Trump’s wall got $1.6 billion approved. I think Mexican investors hope the wall is 100 feet high.
As for Russia – the Putin Putz trade is on. The Russian market is down 9 percent since Trump was elected.
Today’s post comes from my upstairs porch on Coronado…if you put your ear to the picture you can hear the Pacific:
Ivan and I put together another ‘Momentum Monday’ (video is at end of the post). I love doing these and hope you enjoy. Below I outline some of what we discuss.
There is a lot of winning going on if you own the right stocks right now.
Priceline is at all-time highs. I continue to watch and marvel at the ease it shows moving higher. At the same time boomers retire and travel the world, the millennials choose travel experiences over new homes and malls. This trend is global.
Chinese internet stocks continue to rock.
India’s Sensex is at all-time highs.
Visa and Paypal and Square continue to hit all-time highs. This makes sense as consumers continue to spend, just not at malls.
As for the bad and the ugly…
I love this chart from Charlie called ‘The Disrupted’:
Meanwhile, Bitcoin is worth more than $40 billion and Forbes is hedging itself by calling the market it is hyping a bubble. Cute.
The people standing in front of the S&P bull market have been run over, but good short sellers have nothing to complain about in this market. The robots and quants may be in charge, but they have also made trading more interesting and potentially profitable than ever.
I love the setups and continue to go with the flow.
My niece and her boyfriend bought a condo today in Toronto. This was the text exchange that ensued on the news:
These crazy millennials!
Ok now to the real point of today’s post…malls!
I read this excellent two part piece from the Adventure Capitalist called ‘Mall Tour’.
Kuppy is a hedgie and he really wanted to dive into the following question:
Is retail suffering because of Amazon.com cannibalizing store-fronts or are rising health care costs, with stagnant wage growth, what’s really cannibalizing disposable spending power in middle-America? Is shopping still America’s pastime or do we prefer food and “experiences” instead? Every industry evolves. Why hasn’t the mall changed in the past three decades—it’s still the same cinema, crappy food court and undifferentiated retailers that I knew when I was a teen—where’s the fun in that? Other countries are perfecting “shoppertainment,” why hasn’t America? In summary, what is the real issue with retail?
We traders and investors are weird. Everything about investing has already been written, but we keep writing it over and over, remixing and making it our own.
A couple of thoughts from Jon’s post really stood out.
“If it’s so good, why would they sell it?”
This is one of the most egregious fallacies in the finance periphery. Why would they sell it? Why do you think? Do the math. Let’s take an example of an area where this is most commonly targeted; newsletter writers or subscription services. Imagine for a moment a trader has a $1m portfolio. He makes on average 10% a year, or $100k. That’s his trading income. If he also runs a subscription service that sells for a $1000 a year, he can get an additional $100k a year with 100 subs. That’s very nice passive income.
Now I used $1m in my example. In reality most traders are capitalized at $100k or less. They would only need 10 subscribers to get the same return. If they had 100 subs, it would match their entire portfolio value! The question then becomes not “If it’s so good why would they sell it?” but instead “If it’s so good, why wouldn’t they sell it?”
And it’s also grossly unfair to limit this logic to newsletter/sub services. If hedge fund managers are so good, why do they need clients? We know why. The fees. They can make way more from managing other people’s money than just their own. It’s the exact same principle.
I’ve seen many people get tarred with this brush unfairly, especially in the area of technical research, and yet fundamental research with its dire record gets a pass. I’ve seen it firsthand too. If you give something away for free people think it can’t be worth anything. If you charge for it “If it’s so good, why would you sell it?”
Jon is so right. I happily pay for mentorship and ideas.
I also love this part on exit’s over entries:
Entries, exits, position size.
Watch any trading software ad and you’ll likely hear lots about getting entry signals. The perception is it’s more important than the others, but it’s not. I think exits are more important. A good exit signal doesn’t just get you out when needed, a really good exit signal keeps you in, staying just below the action and not triggering until the trend is over.
Look back at the entry of a successful position you’ve held for many months. How important was it to enter at that precise time, that day? It’s likely what followed was more important. What allowed you to tolerate the volatility and ride it higher to where it is now, making it the big winner it is. That’s all exits and position size, not entry.
Sure, without an entry there’s no trade, but it’s only the exit signal that determines whether in relation to that entry the trade is a winner or loser. Even more important, the position size will determine by how much. Entries merely determine the frequency of trades, or how many signals you have.
The stocks have quickly given up all their gains since 2014. This is no small problem if software, solar, electric and autonomous car worries and Amazon are finally showing signs of eating into their businesses. Autozone has 65,000 employees.
AS for CNBC – I don’t watch of course, but I saw Rudy Havenstein share a key topic of discussion they were digging into and it made me laugh. It seems there are a lot of fake financial news sites (but no cable sites like themselves) ‘pumping stocks’:
We have Max at home with us for the rest of the summer.
He just finished up 21 days off the grid on an Outward Bound adventure. Vegas had him lasting 21 hours but these millennials are scrappy it they have to be.
Here he is catching up on his calls and Snapchats while we wait for his bag of filthy clothing which we shall burn.
Meanwhile he tells me he had a friend log in to his Snapchat account while he was away to keep his ‘streaks’ alive. I told him that when I was a kid Cal Ripken Jr. had the only streak that mattered. Max asked if Cal Ripken was a blogger.