SNAPCHAT DEAD IN LESS THAN 3 MONTHS TRADING AS A PUBLIC ENTITY

This is shameful on behalf of the underwriters.  Both Morgan Stanley and Goldman Sachs (who the else, huh?) should go fuck themselves, for pricing the Snapchat IPO the way they did. There is no reasonable explanation as to why they’d price it so expensively, other than greed.

Greed on behalf of the venture capitalists in SNAP, such as Lightspeed Ventures, Benchmark, Institutional Venture Partners, General Catalyst, Coatue Management, Tencent, SV Angel, Graph Ventures and later Kleiner Perkins Caufield & Byers, the government of Singapore’s investment fund, Rizvi Traverse, Yahoo, Grupo Arcano, as well as Alibaba and Fidelity.

Greed for high underwriting fees by the leads and supporting investment banks.

Greed for high concessions that were taken by the participating investment advisors, doing the dirty work for their banks, in order to curry the favor of management (look like a team player) — luring their clients into a deal that was priced inappropriately.

And greed on behalf of the insiders at SNAP, who probably thought it was a good idea to fuck over Joe Public, because they were so good at doing it in the private markets.

Well, guess what, fucked faces? You’re not. Unlike the private markets, which are operated by literal ponzi scheme artists in the venture capital world, here in the public world, numbers matter. You missed earnings and subsequently fucked over shareholders on the very first earnings report since coming public.

This isn’t a laughing matter. I find the present situation of high growth companies being incubated until maximum maturity in the private markets at absurd ‘unicorn’ prices to be both reprehensible and demoralizing. Gone are the days when you could buy an IPO in the after market and hold it for a few years and make money. When they’re coming public at 2-3x normal maximum valuations, based on historical norms, you’re being set up for disaster.

Some argue that Facebook came public at a high valuation and has since soared. Correct. But it first got cut in half and it only soared after that because mobile wasn’t factored into its private valuations. Zuckerberg executed on mobile and Instagram much better than anyone expected, which led to the rise in the shares.

Other than that, there are very few “hot IPOs” that have outperformed over the past 7 years. I’m afraid it won’t change until the venture capitalists and the private equity devils are broken.

Snap misses by $0.26 (GAAP), misses on revs (22.97 -0.35)

Reports Q1 (Mar) GAAP loss of $2.31 per share, $0.26 worse than the GAAP Capital IQ Consensus of ($2.05); revenues rose 285.6% year/year to $149.6 mln vs the $158.32 mln Capital IQ Consensus.

Daily active users (DAU) — DAUs grew from 122 million in Q1 2016 to 166 million in Q1 2017 (roughly in-line with estimates), an increase of 36% year-over-year. DAUs increased 5% quarter-over-quarter, from 158 million in Q4 2016.

Average revenue per user (ARPU) — ARPU was $0.90 in Q1 2017, an increase of 181% over Q1 2016 when ARPU was $0.32. ARPU decreased 14% over Q4 2016 when ARPU was $1.05.

Hosting costs per DAU — Hosting costs per DAU were $0.60 in Q1 2017, as compared to $0.52 in Q1 2016 and $0.72 in Q4 2016.

I’ll be 41 in a few weeks. I’ve been trading nearly my whole life — since I was 10. Most of my peers didn’t start dabbling in markets until they were out of college. Relying on intuitive decisions has always been my hallmark, a gift that helped me finance my decadent lifestyle since I decided to enter into the business.

However, as some of you might’ve noticed, I am transitioning away from that dynamic strategy, which is wrought with error and dependent on the caprices of human emotion, in exchange for a more quantitative model that can be sterilized using the algorithms and tools already abundant in Exodus.

In layman’s terms, I have been racking my brain for months now developing trading models that are automated and can beat the S&P 500. While human intuition is important, the very essence and art of money management, I do believe there is a better way. Starting on Friday, I will begin to unveil some of the strategies that I’ve been working on inside Exodus — which are scalable and open for discussion.

When I’m picking stocks out of the sky, there isn’t much of a method or ‘secret sauce’ that I can scale or open up to the public for improvement. In my opinion, this is a major issue for both self directed investors and advisors. How can you enter the arena with confidence without a sound plan or strategy? On the same token, how can advisors convince sophisticated prospects or clients to send them money — based upon a whim that cannot be proven or properly examined? We’ll be getting into this important subject in greater detail in the months to come.

In the meantime, let’s do a top down analysis — examining what sectors and industries are absorbing money flow and outperforming. Then let’s discuss the process of putting together a strategy using this data.

(1 wk median return)
Basic Resources +3%
Oil & Gas Exploration +7.5%
Gold +4.3%
Copper +4%

Consumer Goods +0.39%
Household & Accessories +7.7%
LED Lighting +4.2%
Textile-Apparel +3.2%

Financial -0.28%
REIT- healthcare +2.2%
Foreign Regional Banks +1.6%
Property Management +1.2%

Healthcare +0.87%
Drug Delivery +2.9%
Hospitals +2.8%
Long term Care +2.6%

Industrials +0.10%
Residential Construction +2.2%
Machine Tools +1.4%
Industrial Electric Equip +1%

Services +1.02%
Apparel Stores +4.4%
Shipping +3.4%
Sporting Goods +3.2%

Technology +1.35%
3-D Printing +9%
Solar +7.45%
Multimedia & Graphics +6.17%

Utilities -0.05%
Nuclear +7.2%
Gas Utilities +0.28%
Foreign Utilities +0.02%

The strategy I am looking to pursue with this post is Alpha Sector Diversified, Equal Weighted, which means I am interested in high returns, zero hedges, diversified amongst the top performing industries in all of the market sectors, with money spread out evenly across each investment.

Makes sense?

Before getting into risk management, the goal here is to kick ass and try to capture momentum. I haven’t applied any fundamental inputs into this model, so I could be barreling into piles of shit — and that’s ok — providing I know and adhere to the rules.

I won’t map the entire process out — because it’ll take too long. But let’s go into the top industry in the top sector this week, Oil & Gas Exploration -> Basic Materials. How will I choose my stocks? Lucky for me, I have a quant at my disposal that grades them by fundamentals and technicals. There is also what’s called a ‘Hybrid score’ applied to each stock — which is a rank based on the combination of the two.

I am going to apply a minimum volume of 500k to this to negate liquidity risk. Here are the top two stocks.

WLL, ESV

Let’s imagine I selected two stocks from each industry from all 8 sectors — compiling a portfolio of 48 stocks. Allocations will be mapped according to the current market weightings across sectors, which is 12% basic materials, 11% consumer goods, 19% financials, 10% healthcare, 7% industrial goods, 13.6% services, 25% tech and 2.25% utilities. I  can further filter my selections to mirror the market cap weighting of the respective sectors and market as a whole, or I can base my selections purely on the top hybrid scores  — which adds the comforting feature of including some basic fundamental analysis.

My selection process and allocations are set, now for the trigger. I can trigger purchases immediately, or I can wait for a tipping point — such as an overall Exodus oversold signal, a significant market drawdown or even for esoteric reasons, such as Friday at 3:30pm. Let’s assume I buy immediately. Do I leave some cash for a rainy day? And if so, do I have a contingency plan to execute another strategy with it?

I do, as a matter of fact. Twenty percent of my money will be in cash waiting for an overall Hybrid Oversold signal, which is a mean-reversion strategy. Cash will be allocated into a macro ETF, like QQQ, and sold after 5 trading days upon purchasing it.

My model is almost complete. Now for risk management.

For this, I am going to forgo using stop losses or applying option strategies in favor of a reassessment of the overall strategy on a bi-weekly basis. Since I am buying 48 stocks, I want to keep commissions to a minimum, as I do not have an account with the fuckers from Robinhood yet. So at the end of the second week, this entire process will be repeated, ensuring that I’m chasing alpha and not dicking around in some underperforming assets.

Again, this is an aggressive strategy and not for everyone. If I wanted to tame it down, I could narrow the quintile of stocks to choose from based on a sundry of fundamental criteria and juxtapose that against market factors. Furthermore, I could assess the model on a weekly basis and implement triggers that would remove money from equities and place them in ‘risk off’ assets, like treasuries, munis or gold.  If I did that, I’d need to figure out how much money and where to place it amongst those ‘risk off’ asset classes. By doing this, I’d greatly reduce my systematic risk, as the market meanders into underperformance.

Naturally, all of these strategies should be backtested and optimized over time.

Aside from menacing my readership with polyprop blogs, this is what I’ve been doing in my spare time — trying to crack the code to unparalleled growth and success in money management, using a quantitative approach.

Accosted by a CBS reporter in a tunnel on his way to play a friendly game of hockey, Vladimir Putin commented on the James Comey firing, saying Trump ‘acting in accordance with his competence, in accordance with his law and Constitution.’

He then invited the elderly female reporter from CBS to a game of hockey.

“You see, I am going to play hockey with the hockey fans. And I invite you to do the same,” Putin said.

There you have it. Our expert on American law has spoken on the matter. Consider this case closed.

h/t: TraderConfessions

The NYT is reporting that former FBI Director James Comey met with Deputy AG, Rod Rosenstein, days before being fired and asked for additional funding and staff to pursue his Russian hacking witch-hunt.

Days before he was fired, James B. Comey, the former F.B.I. director, asked the Justice Department for a significant increase in money and personnel for the bureau’s investigation into Russia’s interference in the presidential election, according to three officials with knowledge of his request.

Mr. Comey asked for the resources during a meeting last week with Rod J. Rosenstein, the deputy attorney general who wrote the Justice Department’s memo that was used to justify the firing of the F.B.I. director this week.

Mr. Comey then briefed members of Congress on the meeting in recent days.

There are two diabolically different ways to look at this.

1. The main stream media and the left interpret the firing as evidence that Trump is trying to either disrupt or greatly damage the investigations into Russian election meddling. Moreover, the fact that Comey had just asked for more funding for the probe, just before being fired, is suspicious or ‘Nixonian’ to borrow some catch phrases from my Twitter feed. They coupled the firing of Yates and Comey and conclude Trump is a traitor.

2. The right view the firing as long overdue. Hardly anyone on the right believes that Russia had any involvement in hacking the election, nor connected to Wikileaks. They believe the democrat and media response, which is one and the same, is the result of being embarrassed by revelations in the Podesta leaks that proved DNC collusion against Sanders and widespread corruption amongst the parties elite. Moreover, the election loss of Hillary Clinton provoked this narrative to run into overdrive, also fueled by American meddling in Syria — which was negated by Russia’s support of the Assad regime. In other words, republicans believe that Comey was part of the problem, the swamp, and his dismissal was rightly justified, regardless of the timing.

One day after President Trump abruptly and maiciously fired FBI Director, James Comey, instead of holding a press conference with the American press to explain his actions, he’s resorted to shit-posting on Twitter, meeting with President Nixon’s Secretary of State, The Father of the Neocons aka Henry Kissinger, in addition to inviting some fine Russian gentlemen to the White House.

Trump feeling good with Foreign Minister Lavrov

Trump getting comfy with Henry Kissinger

Trump cordial with Ambassador Sergei Kislyak

You must admit, the optics of these meetings is terrible and it’s causing seizures amongst our dear leftist citizenry. Whoever scheduled these meetings for today is trolling like a motherfucker — purposely trying to make us think Nixon and Russian conspiracy theories.

But why?

Now that you’re here, republitards, FUCKING EXPLAIN THIS!

WTI’s gains are nearing 3%, after an EIA report said there was a larger than expected drawdown in crude supplies. As such, oil stocks are racing higher. But before you go out to buy a basket of oil stocks, bear in mind it is the worst performing industry in the market this year — with losses in the range of -25%. Moreover, even after today’s 3% returns, they’re still down over 6% on a median basis over the past month.

EIA Petroleum Inventory Data follow-up The EIA reports that for the week ending May 5:
Crude oil inventories had a of draw of 5.25 mln barrels (consensus called for a draw of about 1.8-2.0 mln)
Gasoline inventories had a draw of 0.150 mln barrels (consensus called for a draw)
Distillate inventories had a draw of 1.59 mln barrels

Today’s best performers are the one’s with the largest short positions, such as JONE, REN, CRC and SN.

For me to be interested in crude again, I’d need to see more than a mean reversion move to the upside. We need multiple up days to confirm real interest in the space and not just an oversold bounce.

In response to Senator Blumenthal’s criticism of Trump’s firing of James Comey, President Trump took to Twitter this morning to utterly eviscerate him — redirecting people’s attention to the fact that Blumenthal is, in fact, a huckster and a mountebank who lied about serving in Vietnam.

Watching Senator Richard Blumenthal speak of Comey is a joke. "Richie" devised one of the greatest military frauds in U.S. history. For….

— Donald J. Trump (@realDonaldTrump) May 10, 2017

years, as a pol in Connecticut, Blumenthal would talk of his great bravery and conquests in Vietnam – except he was never there. When….

— Donald J. Trump (@realDonaldTrump) May 10, 2017

caught, he cried like a baby and begged for forgiveness…and now he is judge & jury. He should be the one who is investigated for his acts.

— Donald J. Trump (@realDonaldTrump) May 10, 2017

Here’s Blumenthal in 2010 apologizing for ‘misspeaking’ about his service.

NOTEWORTHY: Neocon sum and chickenhawk, Bill Kristol, is disgusted by Trump’s attacks on Blumenthal. Why am I not surprised?

Just for the record: I find the attack by @realDonaldTrump on @SenBlumenthal disgusting.

— Bill Kristol (@BillKristol) May 10, 2017

The best way to sum up 2017, thus far, is to describe it as the year of low volatility, bitcoins and mega cap tech. If you’ve been playing this market from the ETF universe, you’re doing very well in some of the larger and more popular ones.

Here are the top performers, ytd.

GBTC (bitcoins): +89%
XIV (inverse VIX) +71%
SVXY (inverse VIX) +70%
INDL (India) +64%
TQQQ (leveraged Nasdaq) +57%
EDC (leveraged emerging markets) +52%
LABU (leveraged biotech) +47%
DRIP (inverse leveraged oil exploration) +41%

Our cro-magnon Sec. of State, Tillerson, just held a press conference with Russia’s FM Lavrov — discussing generalities concerning our two nations. Towards the end of the presser, American media shills began to press the Russian foreign minister over the firing of Comey; then hilarity ensued.

Russia is laughing at us, not because they’re happy over the firing of Comey. They’re laughing at how fucking lame the media is, shrill in their tone and demeanor — beset by irrational, non-fact based ideas that are no different than McCarthyism.

Your daily reminder: the US government and its media have yet to prove any Russian collusion or tampering with our elections or a relationship with Wikipedia. The whole Russian panic was born in Syria, where US policy to support terror groups in an effort to remove Assad was upended, resulting in another loss in the Middle East for the nation builders in our neocon led government.

By happenstance, I had sold out of my entire book two days ago. I must admit to being extremely comfortable in cash now, in light of the Comey firing and subsequent shit storm brewing in DC. Nonetheless, I’ll be unveiling a new investment strategy on Friday — using the Exodus engine in a way that I’ve never used it before.

Early going SPY futures are slightly lower — but the Dow is off by 70. Gold, silver, and oil are bouncing, and yields are dropping. There isn’t anything particularly scary about the market these days. Volatility is in the single digits and the path of least resistance is definitely higher. But since when has that been a recipe for constant success? I mean, the entire herd is heading in one direction, isn’t that supposed to scare us?

I don’t even like to talk about bearish things, because they’ve proven to be a waste of time and energy. Betting against record highs has been an exercise in futility — an arduous task which has resigned many — through attrition — to give up the game altogether. But, dare I say, the recent Trump kerfuffle in DC might serve as a keystone in the unraveling of his agenda. I was very optimistic about his agenda being pursued a few weeks ago — after he revealed himself to be a water carrier for the neocons.

The deal had been set, written in blood. Trump would provide the elite with the blood sacrifices they required, for their Luciferian rituals, and in return Trump would get tax cuts and maybe a small wall. But now, the Comey firing business might distract from his agenda — with the democrats in open revolt. The sentiment for pro-growth policies might moderate here, causing investors to step aside.