WTF is Easy Money?

My friend Ramp Capital makes me laugh a lot. Today he had this gem:

Let me go on record saying the easy money has not been made yet

Key word…NOT.

Ramp is correct. The easy money has NOT been made…. because it never will be.

Here are all the times mainstream media have have told us (since 2009) that the easy money has been made (thanks Morgan):

One of the joys of my career is that I read all day. The daily job is rather easy but making money and a living off of it is not.

Beware the people and organizations that tell you that the easy money has been made or can be made.

Risk is So On and Russia is So Off

Risk is so on.

I have no idea why (I have 10 million tweets telling me they know).

I have no idea when it ends (everyone else seems too).

I remember celebrating Dow 12,000 and all-time highs in 2006 with a Wallstrip.

Today The Dow closed at another all-time high of over 21,500.

I own more tickers than I can remember. Every time I sell down a winner, the market pulls me into a another stock. The rotation is strong.

The biotechs are breaking out led by behemoths Celgene and Amgen.

The Chinese internet sector is at all-time highs

The emerging markets are…well…emerging (good post from Michael again).

Chemical stocks are rocking led by Dupont which is at highs last seen in 1998.

Greece is up 95 percent the last two years….pretty much straight up since Clinton’s son in law closed his Greek focused hedge fund.

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.

The markets work in mysterious ways.

The Defiant Ones

Holy smokes.

The Dow hit all-time highs today, but The Dow is not the defiant one of which I speak today.

I spent the last few nights with Ellen watching HBO’s The Defiant Ones. The documentary is about the partnership of Dr. Dre and Jimmy Iovine.

It is fantastic.

These two guys have been relentless for decades.

There are so many lessons for creatives and entrepreneurs in the five hour documentary.

Some quick hits for you today….

Jimmy talks about putting blinders on. It’s why they put them on horses so they stay focused on the track in front of them.

‘Do it again, do it again, do it again’ – Gwen Stefani remembers this most about Jimmy pushing her in her career.

‘Stay in the Saddle’

‘Quit fucking around’

And always remember this – which Bono delivers perfectly – ‘Come on ..let’s have some lunch’.

Morgan Stanley…Pathetic

Morgan Stanley took $SNAP (Snapchat) public three months ago.

The thesis was future innovation.

Today Morgan Stanley downgraded Snapchat for lack of innovation.

And people wonder why ICO’s, Bitcoins and Tokens are the rage.

Meanwhile, I overheard my father in law grumbling about Amazons lack of profits as I barbecued tonight. I quickly rushed over to sell him a futures contract on my gold fillings.

This has to all be bullish for everything in my portfolio.

The Disrupted and Momentum Monday

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’:

This is not a boat accident!

It is no wonder Nike cut this huge deal with Amazon. Everyone should read this piece. Amazon is back at $1,000 per share and Nike is finally showing some strength again.

Yesterday I wrote about the death of the mall. Today, retail stocks were clobbered again led by Abercrombie (down 20 percent) and Best Buy (down 8 percent).

Amazon is going to push their own Geek Squad. The smart homes are owned by dumb people lest you forget.

Retailers are at 8-year lows relative to the S&P:

$XRT $M $JWN $JCP $WMT Retailers are trading at 8yr lows relative to $SPY. $AMZN effect? Economy down ticking? fwiw

— Heisenberg (@Mr_Derivatives) Jul. 9 at 03:54 PM

The automobile part retailers have had a forever bull market but even that seems done. Look at Autozone and it’s competitors:

Nothing new – auto parts stores stocks keep depreciating. $AAP $AZO $ORLY

— Ivaylo Ivanov (@ivanhoff) Jul. 5 at 07:55 AM

Software may finally be eating this sector of retail. Thank god we saved the coal industry!

One interesting sign of the times and a potential signal of at least a short term bottom in retailers is today’s launch of ETF’s that allow people to short the brick and mortar stocks. I hate my industry at times like this.

What else is NOT working right now?

Snapchat is down 42 percent from it’s post IPO highs and now below it’s actual IPO pricing of $17.

Telcos (Verizon at 17 month lows), utilities, and General Electric (the worst performing Dow stock of the year). It seems like the hipsters are making their avocado toast with Samsung toasters.

JC is more diplomatic…he says the market may be pricing in higher rates:

The rates rising trade may be a green light for further runs in financials and transports…this is a good view of that trade.

At the same time the market seems to be looking forward at higher rates…never before have mortgage rates been so low while job market is so good.

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.

The Death of the Mall?

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 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?

Here is the first piece.

Here is part two.

As a product of the mall generation I don’t care what happens to them. They led to a generation of anxiety and depression.

This generation has had the smartphone, Google, Facebook, Uber, Netflix, Youtube, Tinder, Snapchat and Amazon.

The next generation will have voice and robots.

Today, I am happy to own Apple, Nike and Amazon as my proxies for the ‘mall’ and the future of retail.

But, as Kuppy outlines in his posts, there are fortunes to be made off the reimagining and repurposing of America’s store-fronts.

Hope you enjoy and get a few ideas.

The Investing Journey…

My friend Jon has written a fantastic piece on some things he has learned over 30 years of investing. Jon is a trend follower like me.

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.

Thanks Jon!

Catching up on the Markets and a Quick Momentum Monday

It is great to be back at my desk in San Diego.

I caught up with a bunch of traders and investors to work on getting my feel back on the markets.

Ivan and I put together a ‘Momentum Monday‘ to help organize our own thoughts around what’s working right now and go through some of our ideas (it is only 11 minutes):

As for what is NOT working it would be auto part retailers which until this year had been immune to other retailer woes:

Nothing new – auto parts stores stocks keep depreciating. $AAP $AZO $ORLY

— Ivaylo Ivanov (@ivanhoff) Jul. 5 at 07:55 AM

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’:

PS – This is some incredible footage of an eagle flying over a canyon:

Welcome Home Max Lindzon

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.