Betting Against Bonds, Are You?

TLT is up 5 months in a row. I cannot find an occurrence when this has happened in the past. Even during the dark days of 2008, when the world was burning, there were down months. Granted, this move isn’t as fanatical as that one, taking a much more methodical approach higher. But its been a winner, nonetheless.

I hate to be that guy who says “since TLT is up 5 months in a row, it must be topping.” That’s loser group think. I like to view these outlier events pragmatically and try to understand the root cause. I’ve always felt Russian oligarch money was finding its way, ironically, into the hands of the US govt–via bonds. Ever since this Ukraine business started, bonds have held up remarkably well. So well, it has people whispering to one another in dark alley ways, trying to figure this thing out.

Truth be told, none of that matters–in the big scheme of things. Both the Dow and S&P have held up considerably well, much more than anyone would’ve anticipated, given the circumstances. Right now we have a weak tape–with 60% of stocks lower for the day. The hole is shallow, but the width is wide.

I have one stock outperforming and that is JAZZ–an absurdly cheap biotech/pharma stock that is a cash cow–yet treated like a piece of chewing gum under a school desk. Eventually, JAZZ gets acquired. Eventually, “The Fly” can string together more than 2 days of winship. And, eventually, bonds will go lower.

Everything has an expiration date, even misery.

Here are some facts.

1. Utilities are now trading at absurd PE, p/s, p/b ratios, relative to their historical norms. Look at EIX and SRE for proof. Since when do utes trade 22x earnings?

2. Utilities do fantastic in bear markets. It’s not unusual to see them up 15% in a single month when the market gets routed.

3. Electric utilities are now +10% for the year, some are up a lot more than that.

This is an unsustainable trend. The old man sector isn’t richly valued yet. There is still room for expansion there, but not too much. I realize my holding period for the old man space is limited. But what else is there to buy? Surely, you cannot expect me to jump back into the fire-pot and vote at the annual FEYE shareholder meeting, do you? I don’t have the appetite for money losing tech anymore. However, the healthcare industry is interesting: highly profitable, favorable demographics, lenient FDA. Stocks like GILD are sure to outperform, at least that’s what I am told.

Here’s an interesting question, in which I will answer. Which profitable, liquid, large cap stocks are down more than 10% over the past three months, with FPEs under 25, that might be worth looking at?

Here is my short list. Feel free to let me know which one’s you favor, or not. Either option is entirely acceptable courses of action for me.

YNDX
ADS
NTAP
HMC
SMFG
LULU
ESRX
AKAM
BAC
YHOO
JAZZ
REGN
AMGN
QIHU

At some point in this cycle of ours, the above stocks might begin to be attractive to the ute crowd, the guys with burlap underwear and velcro hoodies. Simply buying electric utilities here is not-so-much-different from roasting large bundles of cash over a flaming barrels of garbage.

Everything has been bought and paid for with the blood of the canaille–the nelipots running about the city in search of degeneracy. All of these lavish pension funds are commingled assets of the vagrant population (firemen, cops, paramedics, pharmacists etc), yet they don’t seem to have a voice in how this game plays out. On one hand, I want to drive African Spears through the chest cavities of those in charge, the power brokers–always jockeying for a reason to send my son to Asia for war. On the other, I despise the OTB crowd, the government grilled cheese sandwich eateries where I am sure much of the ‘reading class’ of this site is all too familiar with.

This blogging experiment turned into a business by accident. I never intended to do this all the time–only for sport and full chested laughs. But as time moved on and I got to see what you people were subjected to out there, I knew it was my birthright to lay claim to the financial blogosphere, much like the african race monopolizes sickle cell anemia.

Many of you throw your hands in the air in protest because my words offend your effeminate sensibilities. I invite you to man up and to put half the effort that you dedicate towards me, towards your business.

When someone says to you: “Hello, how are you today?” Do you replay: “I am doing well, thanks. And you?” Or do you lazily retort “Good thanks?”

Think of all the things that men do to destroy their lives. They chase women, drugs and dreams down the toilet bowl, into a sewer filled with hungry alligators. I see the worst in people here, but also the best–a grande pastiche of civilization at my finger tips.

I am not required to blog about stocks each and every post. If I was forced to do so, I’d quit. I see the comments section has quieted down a bit, ever since I stopped hemorrhaging part of last year’s gains. If a new reader was to listen to what many of you have said about me in the comments, they’d think I never made a cent in this market. The relevant facts will always be irrelevant to the reading class. That’s just how blogging goes.

A great pox and shame will strike all of your houses before the year this through. A brontide of winship approaches in the not-so-distant future. I hope you stick around to see it.

I added to IFON

Here is a look at the new PPT, scheduled for release before the year 2,100.

I was up 1.5% today.

SPLK is getting murdered. But look at my GSK, about to go ex-divvy, paying a 5%+ dividend. How about PG, ACE, MSFT, KMB? There are a myriad of mega cap dividend paying stocks that you can buy now, bank a little coin, preserve capital, while you wait for those devils to get off the mat.

My last high beta stock of decent size left is IFON. But they just reported their 3rd consecutive profitable quarter in a row, selling their “iFON’s” to unsuspecting people, indigenous to the equator. People down there are very happy to buy a “very kool” phone and are doing so in droves. Sales are +49% year over year. You’re telling me this company isn’t even worth 50 million? PFfffffffft.

I’m up 0.7% today, olde man flow, demonstrating the patience of an elephant, sitting on elephantine losses. I’m just a real guy with some BIG ASS LOSSES (BALs).

I’m no longer focused on individual names. I’m much more concerned with the overall performance of my holdings. Yesterday I gained 1.76%, reducing my losses to about 35%. Most of my fees have been waived for the year and now I’m only interested in recouping some losses. If I can end the year down 10%, that would be a big success. If, by chance, I end the year up, that would be a miracle.

Two names, purely from a valuation perspective, are of interest to me: CONN and TSL. I’d like to add one or both of them to the mix.

Following yesterday’s dramatic swing to the upside, this market is GUILTY until proven innocent. However, there was a certain change in tone to yesterday’s tape, with 82% of stocks traded higher. The last time we had that sort of breadth was on March 4th. Perhaps we are going to bounce in May like I suspected.

All I know is, I put together a “Bubble Basket” of 100 stocks a few weeks ago and it’s down more than 15% since then. High multiple/money burning enterprises have been crucified and earnings beats don’t appear to be halting their downward spiral.  Comparatively, inside of The PPT, I have a semi-annual managed portfolio of growth at a reasonable price index, which is barely down 5% for the year. The marked difference between my GARP and the Bubble Stocks is the former is filled with companies who have earnings.

Although it’s possible for these bubble stocks to bounce here, even net outrageous returns if a real short squeeze occurs, I’d advise avoiding these names in favor for companies with PE multiples. This wasn’t a garden variety sell off and I don’t think it’s safe to go swimming in the shark infested waters just yet. So many of these hedge funds, these Tiger Cubs, were tied up in stocks like WDAY, SPLK and FEYE. They were mega-cap, liquid, growth stocks and now they’re coffins. The unwind is bound to keep pressure on these names for at least another quarter.

On the other hand, you have T rumored to be interested in buying DTV and KO upping its stake in GMCR. Again, positive action in profitable businesses.

The time for value investing is now.

There is a certain barbarity about this man.

I’d love to be long the variety of stocks up 10% today. Sadly, I am only long one of them: IFON. I cannot afford the risk of being long river boat gambling casino stocks because I was a loser a few weeks ago. Until I can recoup some of my losses via these olde man stocks (dated till 2100), things are gonna be a little moribund around here. Then again, boring for me is race car driving for you ham and eggers.

Today was a day to reminisce about the good old days, the times when stocks forklifted short sellers right out of their chairs and ramming  their big stupid heads into their respective computer terminals.

Top picks: JAZZ, WCC,ACE and FANG

Bear caves: a place where angry people cavort with one another, plotting for the extermination of mankind and the Earth. They amuse themselves with tall tales of the apocalypse and would rather people die from starvation than pestilence. Whenever the stock market goes higher, they warn others that the end is near and “just because stocks are hitting new, all-time, highs, that doesn’t  mean the world isn’t coming to an end.” Anyone buying stocks, at any price north of 5,000 Dow, is merely an idle idiot, deserving of a verbal lashing and mockery. Like children, the bear only responds to proper scolding and will not keep quiet unless you teach them a lesson in civility. In this case, magnanimous stock market gains are necessary, especially during inflection points and historically significant periods in time.

For the better half of 9 weeks, “The Fly” has drunkardly stood by and watched his business burn up in flames, as the bears farctated themselves on his positions to the point of sheer lunacy. All of that is about to change. God willing, on Jupiter’s Stone, you are all deserving of my most caustic attacks upon your person– and a grande assault upon your purse. Even though I’ve dialed my positions down a bit, favoring profitable business over river boat gambling, I still have every intention of recapturing all of my lost coin. I haven’t forgotten and will never forget, for as long as I live.

To that end, I wish you good luck, bears. I will pray for a most gruesome and drawn out death for you.

https://www.youtube.com/watch?v=9EdxTiu9CwI

I wanted to write that title for two reasons.

1. To remind myself, even though my positioning was wrong, there are plenty of stocks going higher. This is a healthy market for the vast majority of stocks out there.

2. To invite the more pessimistic aspects of the barbarian horde who cavort around here to moderate yourselves, as it is betting boring.

As you wait for the world to burn, companies are merging with one another (PF was acquired this morning) and there are plenty of deals in the works. The problem that most of us are having is seeing the forest through the trees. So many of us have lived in this world of high-tech, social media, biotech degeneracy, always interested in the Fast Money, that we’ve forgotten about the real economy. Companies like PG, ACE and EL are doing just fine. Valuations are reasonable and their businesses have never been better.

This whole IPO business is really making me sick. My friends at some of the large bracket firms are flipping out of these IPOs on day 1. I was surprised to hear this, as it’s usually customary for underwriters to encourage their brokers to hold for a minimum time frame. Back in the old days, they’d place a ‘penalty bid’ on any deal flipped for quick profit, basically snatching away commissions from the broker. It was his job to keep clients in. However, these days, the banks are actually encouraging 1 day flips, essentially getting liquid on the unsuspecting public.

There are many things I do not like about this market. The way high growth stocks collapsed, the behavior of bonds, the unbelievable earnings blow ups, and the extended nature of the current bull run all have me a bit on edge. But I must remember: markets do not crash from all-time highs.  Markets are not supposed to be feared at all-time highs. There is a great divergence taking place between profitable vs unprofitable companies. However, other than that, the Dow Jones Industrial Average is at new all-time highs and there is nothing bearish about that.