Looking at Tiger Woods, Oil, Sirius, Airlines, Salesforce.com, RIMM, Nintendo and Yahoo today has me thinking about momentum. It’s all around us and a profit miracle for small investors. Yet, small investors have no clue it seems. They watch CNBC, read USA Today and subscribe to trading services for green lights and red light signals.
Here is how momentum has reared it’s profitable but sometimes deadly head just the last few days:
1. Tiger Woods – his announcement of a season ending injury is an outlier event. Sometimes momentum just ends with a bang. I was twittering the other day that Golf and Tiger Woods were at all-time highs. Nike too. NOT. The golf dip buyers will come out of the woodwork as golf implodes for the next 12 months, but barring Tiger’s appearance or change of status, the trend is OVER! Bull to Bear in one day. It sucks, but if you can’t grasp this, don’t ever invest your money.
2. Oil – forget everything you think you know or need to know. If you learn to embrace momentum, you have owned this gorgeous trend. I can’t say oil will continue, but another trend is starting somewhere today so if you are not a hog and have some sell rules, it is never too late to enter a trend and you will have money left to try it again if you have the worst luck and toptick the market.. Just remember the Tiger Woods story above.
3. We all know airlines suck balls as investments for common shareholders. If you want to brag about the great up runs they occasionally have and the profits you can reap, go piss in a polluted lake. Sometimes you just need to cross shit off your lists to uncomplicated things so do that with Airlines.
4. Satellite Radio…hello? Package the stock with GM and Ford and sell an ETF called ‘ZERO’
5. Salesforce.com, Amazon and RIMM – I don’t remember the last big story about Salesforce.com as it closes at another all-time high. All I read about with RIMM is how their margins will be squashed in short order. As Amazon has held the storm in the 80’s while retailers implode on their stock buybacks and debt and the consumer is tapped, I want to scream at the yutz’s writing negative pieces regarding valuation and imminent Google crushings. You should look at the lack of articles and/or negative noise with glee. Momentum is trumping valuation.
6. Ninetendo – If I walked the streets of Toronto for 2 weeks and asked people the stock symbol of Nintendo, they would say ‘AssHoser says what’. The same people would recite 10 oil companies in the Yukon that have raised 50 million to buy equipment to go drilling. I use this example not as the sign of an oil top, because I have not actually asked poepl on the streets, just a sneaking suspicion .
7. Last, but not least is Yahoo…what a big freaking mashup of Putz Soup. The momentum in this case is negative and accelerating. Management of this company since 2003 or so should be giving back any and all of their option profits or bonuses and a special hall of Internet Shame should be set up with Yahoo as a first time ballot honoree.
Yahoo’s implosion is the most shameless, wreckless and avoidable of the negative momentum names. While smart people and dumb alike try to call a bottom, the brain exodus underway will only increase the speed of it’s short-term demise. It will take some serious surgery and recovery time to fix…save another bid.
I would not be so bothered about Yahoo if the investment world was not so focused on it. That’s good for eyeballs and clicks, bad for small investors looking to profit. If Yahoo catches a bid it’s no different than Tiger breaking his leg. An outlier event not worth speculating.
I made a lot of money in Crocs last year. The shortsellers are having their way with it this year. It’s a carcass at this point. The smart shortsellers entered the trade after the stock was broken in the 40’s. The lunatics started shorting at 20, 30, 40, 50, 60 and 70 only to cover in pain and miss the payday. A few lucky shortseller top tickers caught the big move, but the next rocket will blow them up so who cares about them.
The freaking story always ends the same way. It’s why you sell on the way up in a disciplined fashion and forget about catching tops. I remember selling in the 40’s and 50’s and selling the last piece was lazy. That in hindsight looks fine.
Crocs management had some power to manage this ending in a better way They behaved the same as management at all highflying stocks, they believed their own shit. The few that might have had religion and preached a diversification strategy would be SCOFFED at Board Meetings.
Here is what they should do in rapid succession:
1. Split 8 for 1 . That will confuse and frighten short-sellers.
2. Give away Crocs at airports all over the world. $20 million worth of Crocs in a weekend bonanza. Just hand them out as people approach the X-Ray machines. Instant customers. Instant.
3. Announce a share buyback.
4. Fire their Bankers for no reason. Just say the whores wanted us to dilute you, our wonderful common shareholders in a big public display. Use a Pinata that looks like the Goldman Sachs logo as you ring the opening Bell.
Here is What will likely Happen:
1. Goldman and other Bankers will convince management to do a massive secondary offering.
2. They will use that money to help you buy a bunch of useless companies
3. You will lose focus and Crocs Underwear will be a flop. Men with amazingly sweaty balls will sue you.
Stock will roundtrip.
Can’t say when
Now we know when. It will get worse before it gets better if it gets better at all. Great product for sure but the thrill is gone.
HOUSING…All we are left with is another case study in fear greed and leverage. I started writing the case study back in February of 2007 (Wall Street set this case study in motion when housing stocks first broke out to new highs in 2002):
Homebuilders – The NEW Value Trap
Five years from now when the homebuilding stocks are 20-30 percent lower and marking time, small investors will all own shares in what the institutions have distributed to them since mid 2006.
The companies are not crap and they won’t be in 5 years, but the stocks will be value traps. Victims of a badly ended trend where the stocks were overowned and overhyped.
It is no one person’s fault, it is just the way Wall Street works. They are just not real growth stocks. Nothing was different this time and no particular CEO or management team will be totally immune.
The industry will continue to go out of favor with Mutual Funds. That does not mean you should sell your home or get bearish on the world. Hundreds of new trends have been emerging since the homebuilders peaked last spring.
Do not overthink it and get sucked into buying value. That’s for Warren Buffett and a select few, great value managers.
Housing stocks, not housing as a business in general are done. Housing is cyclical, always has been, always will be. You CAN overbuild, just like you can make too much capacity for semiconductors. With homebuilders, leverage sped things up. I disregarded my own analysis and in the Fall I bought the housing sector for a short-term bounce trade. That was my worst idea of the year. I quickly took my losses and have watching the mess once again from the sidelines.
I never tried to call a top in housing, but definitely warned that it would get worse after they had already fallen 50 percent back in February. I followed up repeatedly . I guess that’s why the permabears ‘disgust’ me so. As if calling a top makes you a special gifted market person.
I guess I was wrong about housing stocks being a value trap way back when . They never made it to value, just straight to bankruptcy.
Owning them now is not for anyone other than forensic accountants who have a crystal ball into The Fed and lenders tolerance or for penny stock speculators.
Jeff Matthews just just did a great look back at his housing call . Jeff is not scared of shorting on the way up. That’s why I would NEVER act on his posts. But, he has seen all the cycles. More than some 30 year old analyst writing 312 page missives on homebuilders or internet stocks. As I mentioned last week about the JP Morgan internet analyst – that’s a pathetic waste of time. We get to read Jeff’s missives for FREE. You just need to know ‘HOW’ to read them. Here is my fave and money part of the blog post:
I bought Time Magazine today for the first time since…probably since 9/11, when I bought every newspaper and magazine available with a cover story on the World Trade Center attacks. The relevance of a weekly “news magazine” these days is, after all, right up there with “Book-of-the-Month” clubs and the Sears Catalogue.
Nevertheless, I bought this new issue of Time Magazine because the front cover is titled “Home Sweet Home” (stamped in large letters, the “S” converted into a Dollar sign) with an illustration showing a man covetously hugging a house. The sub-title reads: “Why we’re going gaga over real estate.”
I bought it, quite simply, because this Time Magazine is as good a “cover story” kind of market-mania, surely-we-are-approaching-a-top indicator as I have ever seen.
If you had been excited Jeff’s great post in June of 2005 and sold all your housing stocks and even shorted, you would have been right, just a little early.
Both China and Solar are Case Studies in waiting. It’s the exact same. Wall Street is cooking up the supply. Timimg when it overtakes demand is a fool’s game, but it will happen. China is on the verge of another break, while Solar seems to be just getting legs. Both will end the same way, but you don’t need to predict when, just avoid being the YUTZ’s holding the shares once it is clear the trend has run it’s course.
He is on the cover of Time Magazine as ‘Person of the Year’. Please. Guy is a total Napolean. Small man’s disease and right place right time. I am sure he is a smart guy, but come on Time. Russia is part of a ginat commodity boom and sweeping trend of wealth that had to trickle down even to this forever f@#ked up nation. The stock chart says the same thing …undecided. It has been a wonderful few years for sure and the stock price is in no man’s land, but still in a massive uptrend.
My friend Tim Post, who I follow on Twitter , lives and works abroad in Russia. I trust his instincts on the country. He obviously believes…he lives there.
Here is his 2008 prediction on Twitter:
New Year’s Prediction: Putins resigns. Medvedev is President. Putin Prime Minister. Medvedev wins in March. Putin resigns as Prime Minister.
Tim also just twitted that 80 percent of the people vacationing at Val D’Isere Switzerland are Russian.
That’s some major wealth being accumulated and spent around Europe. That taste of wealth and the first true passing down to a younger generation of wealth as Time Magazine describes, could be long-term powerful.
I wish I could trust that political culture, it would be a laydown. The taste of wealth and freedom is intoxicating, but whose to say they don’t lock everybody up tomorrow.
India, China, Brazil, Mexico and Russia and Malaysia. They all have this in common…massive 5-year runs. Will they continue though?
Wealth makes even hardened ruler freaks do the right thing in favor of further wealth.
Sure the criminals are raging too, but the little people have a taste of money and they like it. ALWAYS. The rich powerful dudes know this and only the sickest leadership f#*s deny citizens their fair share. Bush Jr. may suck balls, but he has become the crazy white dude that walks into post offices shooting. Iraq is just a bigger post office. Psycho leaders are on notice.
The Arabs may even be starting to get supply and demand. Saudi Arabia just had a market crash and so they are being forced to learn as well. About time, but you get the point.
It’s not just Chipotle’s that can glean info from hardened international McDonald’s execs on how to grow faster and smarter…countries can do it too.
We live in a time where information and technology is flowing so freely and cheaply that maybe we are getting smarter on a global basis and maybe things may just be good (save the war and human atrocities – that shit never changes).
The glass is always half-full in my house. You need to look at it that way too to make the easy money. The market has been handing it out the last few years. Don’t overthink it.
Disclosure – Long EWM, oil, gold, SINA and a dumb bull.
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