I saw a great line somewhere today (can't remember where) that LinkedIn is one Facebook press release from becoming Monster Worldwide (i.e. stock decimated). I'm an owner of Zillow since the New Year. Not counting my chickens, as it's a high multiple, high vol stock that can move 20% for basically no reason, but if I had to choose (and I have chosen) from some of these recent tech IPOs or high PE multiple stocks, it'd be $Z by a mile.
I think another "nuclear level liquidity injection" is inevitable, though as you say probably not for some time. PMs for me are a secular investment play not a trade, so long as the overall fundamental drivers remain in place (i.e. global economy does not return to durable 'normal' growth, debt and deficits stay high, central banks keep printing). Personally I see no prospect that these will change in the foreseeable future and I'll take any price weakness as a chance to add. Assuming we even see such weakness... The price action in gold doesn't look bearish to me (sideways consolidation in a steady, stable uptrend). Silver is a bit iffier. My reckoning of sentiment on both is that it still has a long ways to go before we reach a real "mania" type of state, and every decline in gold is met with a flood of news articles declaring the end of the bull.
My personal rule is not to short secular bull markets. Since that is my view on the commodity sector, I can be bullish or neutral but not short
If the details are as you posted, a couple of criticisms: 1. Most of it is based on mean reversion, and mean reversion is inherently dangerous. Trading a mean reversion strategy with anything other than options is, IMO, a recipe for blowing up. 2. Re the 2nd condition specifically: this is based, I'm sure, on historical data and backtesting. The problem with it is that since 2000 volatility, over the long term, has increased significantly. Over the short term, there's been a huge change in how the market is traded since 2000 (the line between pre and post 2000 is actually very sharp and well defined), which I won't go into since it's part of my strategy. But the latter is a function of the former: people change what they do if they get more unsure, which of course is what happens when volatility rises. So a rule based on a certain percent change over a certain period of time is going to be prone to failure in a period like the one we're going through now. It'll be right eventually, but defining "eventually" could kill you.
What about 2 years more of rock bottom rates despite sound economic recovery, and credit expansion starting up again, stoking inflation fears? That seems like a pretty bullish scenario for PMs. And with the current debt loads and fragile banking system, politicians and bankers have every incentive to inflate away the problem. Rates might only go up once the public becomes more scared of inflation than unemployment. The more salient question is this - are PMs a slam-dunk, trade of the year candidate on the short-side right now? No. So why deplete time, focus, and capital wondering if this will work? Stick to the high percentage conviction plays with great risk-reward ratios.
You cannot compare a dominant retail business doing 40bn in sales, with a market cap of 80bn, with a startup social network doing 500m in sales, and a market cap of 9bn. The scope for growth in the latter is clearly much greater, merely due to its small size. The economics are totally different, the outlook is different, the valuation is different - it is frivolous to compare them. Also, growth stocks aren't valued on historic earnings, they are valued on future earnings estimates - as in, what will they be earning in 5 or 10 years time. So forget today's PE because it is irrelevant, what matters is the 2020 EPS and whether today's price under or overestimates the likelihood of getting there. A growth stock might have negative earnings for 2012, but be making 5 billion a year by 2020. Whereas a 'cheap' value stock might be making 1 billion this year, and be losing money 5 years in a row by 2020. Historic earnings are almost irrelevant for businesses undergoing rapid change (whether positive or negative). Take a look at some past growth stocks e.g. YHOO, MSFT, CSCO, DELL etc (or even earlier AAPL) during their growth phases and look at what PE they sold at and how their EPS grew, and what that all meant for the valuation of the stock.
C failed stress test by 0.1 while JPM passed by 0.4 And the difference is a large dividend hike and huge buybacks?Way to go Fed
Let's say AMZN is a great short. What's the best way to play it? 1. Short outright immediately, as a hedge against other longs in your portfolio. If so, what % of total capital should be short AMZN? 2. Wait for a bear trend in the stock, then place a trading short (with a stop etc). 3. Buy some long-dated puts. 4. Write bear call spreads each month.
This is pure data-mining. Data-mining doesn't work reliably in complex systems, and financial markets are a complex system. His sample size is incredibly small and based only on one stock market - the US market. He has not tested this data on the dozens (probably hundreds now) of stock markets in the rest of the world. He has done no out-of-sample testing either. It's worthless unverified bunk.