My Bearish Scenario

When a group of 150 “high valuation” stocks collapsed in April, catching me off guard, the life of the market was damaged. A lot of you trollop types like to say these stocks are nothing more, or less, than trash. But that couldn’t be further from the truth. If you knew anything about investing, you’d know that speculation is the life blood of any bull market. After these stocks dropped by 30-70% inside of 8 weeks, I became convinced that this wasn’t your ordinary run of the mill decline (shocker).

The last time speculation was punished so severely was in April of 2000. The parallels are startling. The difference between then and now was the mega-cap nature of the dot com collapse, which directly affected the major indices. This time around, AAPL, ORCL, MSFT, INTC and CSCO are mature companies, stodgy like utilities. They dominate the NASDAQ weighting–and as a result stymie any dramatic decline.

Understand the dynamics of overvalued stocks collapsing, then rebounding, and try to discern whether or not a large group of widely unprofitable start ups can withstand the test of time, as it relates to a simmering time bomb of bearish sentiment at the precipice of explosion.

Here is the NASDAQ action from April-Oct of 2000. I do not want you to compare it to our NASDAQ. Instead, compare the price action to stocks like FEYE, WDAY and SPLK.

If I am right, we are about to enter the final phase of high valuation jubilance, followed by the top of tops, which will lead to the complete and indelible destruction of these vagrant stocks.

As discussed earlier, I intend to make a large deposit into my personal account soon for two reasons.

1. Take advantage of the August ramp higher via swing trades.

2. Hopefully get a chance to buy non-high valuation stocks into a trough of over bearish vulgarity.

At the end of the day, profitable businesses will be fine and the indices shouldn’t drop by too much. But the bubble stocks: they are entering the final salvo in what can only be described as the second coming of the dot com crash.

I am going to place a large deposit into my personal account soon and will be allocating funds designed for long term capital appreciation. On the blog, you often get to see me lather myself in glorious winship, via swing trading. I do have long term investments that would put you to sleep and aren’t very appealing to my ADD addled audience. Think of the blog as a television channel. In order to retain our powerful ratings, people must be killed, drama must be provided. At times, it’s beneficial to see “The Fly” fail, as that sort of trait resonates with most of you.

However, in this instance, you will get to bear witness to the very nascency of supreme winship, via my personal account holdings. I do not pretend to be able to, or want to for that matter, transform my barmitzvah (sp?) dollars into a multi-million dollar account. Instead, and what I am going to do, I will grow my multi-million dollar account, which was earned the old fashioned way, in a methodical and calculated manner. There will not be much trading involved here and I will not talk about it often.

As for the general market: I find myself up on a weak day, so I have zero complaints. My little Amazonian jungle mobile phone play, IFON, is ripping spines out and committing “Babalities” upon the people who doubted me. IFON should trade to $10 in our lifetime, so help me God.

One quick note: both JMEI and GOGO want to go. And, I really like AG here, and the rest of the gold/silver space. There is money to be made in them hills. Go and get some.

Reminder: All annual members of The PPT, 12631 and After Hours with Option Addict qualify for our 1st annual Labour Day Chinese Lotto Drawing, at which time I will gift two cash prizes–one for 1k and another for $500. If you’ve been on the fence about joining or upgrading your membership, get off the damned fence and do it. If you want further details, contact our customer service rep: [email protected]

“Your sturpid American companries make a no monrey–har, har, har.”

Chinese burritos stocks spit in the face of Amazon, while eating fetus soup.

Much to my surprise, most of my stocks are higher today–leading me to believe there is a wave of buying just around the corner.

Stay long.

Top picks: JMEI, GOGO, AG

We all want the degeneracy to begin in earnest. I know the markets are at new highs and most people have been doing well this year–but we want moar. We want to behave like pigs in mud, porking about the market because it’s the fun thing to do. Right now, it feels like a job.

Although mergers are good for sentiment, when they occur in low valuation second tier names it’s almost meaningless. Two deals come to mind.

OPEN was taken out at a nice premium, but ended up at only 12x sales.

Right now TRLA is up sharply and it’s trading a touch under 9x sales.

Believe it or not, compared to the main social media plays, the stocks that Janet Yellen is short, those are really cheap.

YELP trades at 19x sales, TWTR 27x, FB 20x, GRUB 15x, TRIP 15x and LNKD 12x.

Out of those names, LNKD fits the mold best for potential takeover candidate. Going down to the lower end names, stocks like ZNGA, ANGI, KING, GRPN and SALE “look” cheap. Right in the middle, from 7-12x sales are names like YOKU, WIX, ECOM, SFUN, YHOO, P,  AWAY,  SSTK, CTRP and PANW. I think the market is still trying to figure out if those stocks are premium quality or low end trash. There lies the opportunity, for those who like to gamble.

She also believed the earth, like many of you bible idiots, is only 6,000 years old.

Biotech and social media stocks are coming under pressure this morning, as the new Fed Chief throws her butterscotched candies at them. In case you’ve been under a rock, the new Fed chief all but endorsed rampant short sales in both social media and biotech stocks. I am sure these same people are feeling their oats now, gawking at their zeroed out account balances thanks to stocks like PBYI and FB.

You have to be a real moron to want to be a Fed chairman. More so, once you get to be the Fed chairman, you have to be a complete imbecile to offer financial advice to stock pickers. Everyone knows the speculator of stocks lines all 9 circles of hell.

That being said, I am enjoying the action in JMEI and have sold out of ANGI. If anyone of you misfits attempts to offer me life lessons on ANGI and how “you told me so,” as God is my witness, I will track you down like the dogs that you are and silence you.

I had ample opportunity to sell out of ANGI when it was above $12. Now that the company has decided to suck, I am left with only one option and that is to sell. This company should be take over in the most hostile way possible. If I was leading a consortium of investors to take this company over I’d make sure that management paid for their sins. Sadly, I am not leading a group of vindictive investors, hell bent on ‘revenge trading’, so I must sell. The good news is the position was very small, like a inconspicuous side table in a room filled with decadent furniture. You hardly know it’s there, unless you look for it.

All that aside, everything else looks fairly peachy. However, in light of ANGI’s explosion, I think you should be mindful of riding positions into earnings. If you’re diversified and have a longer term approach, ignore my warnings. But if you are the degenerate, vagrant sort of investor, heed them with every fiber of your existence.

Had you acted upon insider information and purchased just $10,000 worth of out of the money ‘insane’ PBYI calls, just prior to their clinical data party, you would have made 10,000% on your money, walking away from the casino table with more than a million dollars in profit (LOLz). I am sure the attorneys at the SEC would congratulate you on your win by offering to send you away, all expenses paid for, to one of their luxurious sleepover spas.

So what is the next 10,000% winner? Is your friend at the FDA still giving you tips?

Going the olde fashioned rout, I will attempt to guess at the next 10,000% winner by running a few laughable screens. I want stocks that are more than 25% off their all-time highs, liquid, and with prospects. Here is my list.

AEGR

INSY

MNTA

CLDX

SRPT

CLVS

ICPT

ALNY

ISIS

SGMO

GEVA

XON

SGEN

LGND

ACAD

RCPT

ANAC

Let the audience know if you have anything worthwhile. Otherwise, shut your mouths and take notes.

In light of the small pin-action in IFON, I thought I’d take this opportunity to remind you good gents that all of the mamacitas love a man with a VERYKOOL ‘ifon.’

Granted, the stock is 100% retarded and I could probably buy the entire company and turn it into a popsicle stand. Nevertheless, I like their style.

Who ventures down to the Amazon jungle to sell smartphones, based in San Diego?

INFOSONICS, that’s who.

Related: the company will likely report its 4th consecutive profitable quarter. Also, they have begun selling their wares inside of the United Steaks. With no debt and ample cash, it represents and interested niche play, deep from inside of the Amazon jungle.

Disclosure: I own a lot of shares.

I drove over to the Newtown Zoe’s to do ‘research’ on the dining experience. It’s your average, run of the mill, Greek diner with modern decor. Essentially, it’s okay. However, they tend to lather everything in feta cheese, something that Mrs. Fly despises with every fiber of her existence. This chain would do terrific if placed smartly adjacent to gyms. It’s a protein centric eatery, something hard to find amidst the rabble of WEN-MCD-YUM strip malls.

The bottom line: it’s niche and cannot appeal to the larger, CMG-like, audience.

Let the market meander around aimlessly for a while. I can go for a break now. I’m a bit drawn down from my 3 hour sleep schedule.

Sellers are making a valiant effort here, showing up in oddball, mega cap stocks. Under the gloss, there is an ugly market lurking in the breach. I couldn’t care less about any of that and know that prices are bound to go higher. In the interim, watch out for wild reversals, especially in the aforementioned chinese burritos. Don’t blame me for the sell off. Blame yourselves for not taking profits when you had the chance.

At any rate, even if the market reversed today, the sell off will be shallow and we’ll probably resume heading higher tomorrow.

Two days in a row my JAZZ gapped up more than $3, only to reverse lower–definitely a bearish sign. Then again, the biotech space is filled with surprises, such as 10,000% one day returns for PBYI Aug 105 calls.

As an aside, I’ve been doing some work on ZOES. I’d appreciate any anecdotal information you might have on this eatery. Do you slobs fancy yourself eating there often, or are you just a Wendy’s, Big Mac, Burger King type of guy?