Monday, November 30, 2015
I win a lot. About
Joined Nov 10, 2007
11,169 Blog Posts

Where There’s Smoke, There’s Plenty of Fire

Let’s not mince words here: the high growth part of the market is crashing. More specifically, any company with operating losses is being hurried down as if a credit crunch loomed. Actually, that’s exactly what is transpiring.

Just like in March of 2000, stocks dropped for the sake of dropping. After the downtrend became obvious, panic set in and people ran for the exits. Hundreds of companies went bankrupt within a year because capital markets closed for them. All of these cool high growth companies that are operating with losses will need to raise capital somehow.

How will they do it?

Without collateral, a web company can’t issue bonds.

So, they will do dilutive secondaries.

But, could you even fathom FEYE doing another secondary now or YELP? Who in their right minds would invest, unless it was priced at a 20% discount.

THIS is what is happening now. Wall Street is making a prediction that the pain we are seeing in high growth money losers will be exacerabated by the fact that they will need to raise capital, at some point in the future.

On the other hand, this sort of pin less hand grenade action could also present opportunity, especially in names that have positive free cash flow or who are on the cusp of profitability, like YELP. But I wouldn’t dare venture off into the murky waters now, as it has the stench of blood in them. I will wait to buy the blood via broad index and sell it shortly thereafter, win or lose.

This is a renters market.


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  1. isn’t everyone afraid of the correction at the moment ?
    so everyone somewhat pulling out ( with losses..)?

    so next trend is up?

    • There is always a next trend. But right now it’s down.

    • That’s always the difficult part … trying to extrapolate who “everyone” is. We have to account for different groups of people:

      – Mutual funds, hedge funds, pension funds, and other institutional investors
      – Active traders generally
      – People on this blog
      – Mom and pop / Joe 6-pack

      Whenever someone talks about sentiment or what “everyone” is doing, I think it’s important to try to understand who we’re really talking about.

  2. Was so sure YELP would get taken out. Now I’m not sure about shit…

  3. The Futures last night spiked because Russia was in buying up Euro’s, nothing more. Asia Session was ugly. IMHO THIS is all a China Story, with that China Defaulted Bond we have massive fear that China Govt won’t back Shadow Bank Loans, so as a foreign investor, why would you use Hot Money to fund those loans? It was a bubble that was bound to pop, just amazed that Central Bankers allowed it to grow so ugly. Fly is right, no one is going to loan to these Companies…WELL, unless some QE Driven Central Banker throws Trillions at it again, (hate when that happens).

  4. ifon at the 200d looks nice for an add

  5. .

    … my FAZmobile is purrin’ on down tha road !


  6. I bet you can see the stress leaving your body after selling all those Growth anchors

  7. Shorting everything what moves…

  8. For the sake of accuracy you may want to change your headline slogan from ” I win a lot ” to a more up-to-date ” I lose a lot “

  9. Thats nice, so all we have to do is shorting them on the next leg upright fly.. Eventually bear market is long over due ..

  10. Lots of market support at zero

  11. Did you sell AMZN also ?

  12. Raise taxes, lower spending

    At least you didn’t sell at the bottom. Think of all the money you saved today.

  13. That was actually a very prudent move to sell it looks like (no sarcasm).

  14. What is GS role in all of this carnage?

    When does the SPY go into free fall?

  15. Plenty of fire boss….

  16. .

    “Surely the AAPL is the noblest of fruits.”

    ~ Henry David Thoreau ~


  17. Freddy Fishsticks

    What about CRM?

  18. we’re going higher soon

  19. LRAD I own it

  20. Did the Momos just bottom?

  21. and its very quiet here again.

  22. VIX barely went + and the emerging markets via EEM are + notwithstanding selloff.
    Turnaround time.

    • This market reminds me of that new mercedes benz commercial “It’s almost as if it couldn’t crash even if it tried.”

  23. Interesting take. Which Einhorn Bubble Basket (ebb) stocks would be candidate for a bailout buyout? Yahoo, the soon to be nouveau riche will be shopping with the other cash heavy players. This feeding frenzy could get extraordinarily oversold for longer periods of time before it attracts buyers who will stick around. As you note, it is a renter’s market. Thanks, Fly

  24. .

    I guess the “NEW” has worn off recent IPO … Weibo (WB) …

    Took about a week !

    DOWN ~ 30% … from the HIGH of it’s debut !


  25. SPX 1840-1850 is the key support. if the bears can break that then we are going lower.

  26. wow. my portfolio sux. big reversal rally in nasd and my account barely budged. Fuk solar and china

  27. Over sold bounce coming. but that’s about it. its going to be a gutting of the bulls at some point. The wheels haven’t began to come off. All the good earning are baked into this mkt. They have been for months

  28. Raise taxes, lower spending

    Energy is looking better.

  29. I’m wondering if this game can actually be won?

  30. 200% long one day
    200% short the next day

    Welcome to the topping process

  31. grabbed some $body. whish me luck .