I Will Try My Hardest Not to Buy Today

This is a tough one. Every inch of my cold soul wants to buy stock today. However, I’ve thought about it and will not buy anything until tomorrow or Friday. Today is the knee-jerk reaction day, the day when all of the plebs at all of the discount houses lever up their accounts to do business.

If I were to take my warnings that “this is 2000 all over again” seriously, I’d be using this bounce as an exit opportunity for some of my trading positions. But, truth be told, the conviction isn’t there for me yet. I’ve been programmed to believe there is a bid in this tape, no matter the circumstance. Deep down, under the cynicism, I am an optimist, just a guy trying to find his way in the wilderness of man.

I am walking away from the desk now, as it is the only way to prevent myself from buying something.

Talk to you gents in a few hours.

Listen to me. I’ve had all but 4 hours sleep over the past two nights, so I don’t have the mind to debate, offer links, research notes, or what have you. Just know, James Cramer is an idiot. I’ve eaten at his restaurant and it’s recklessly terrible.

The other night he said he wasn’t a believer in the great sand super cycle for fracking companies, SLCA, EMES and HCLP. He further elaborated that if forced to choose between the three, he’d buy EMES. Coincidentally, Goldman Sachs had upgraded the shares that very morning.

At the same time, old line fracking ceramics company, CRR, had just warned and its shares were and still are on death watch. This gave great opportunity for the perverts clad in burlap’d undergarments to sell short some of America’s finest companies, with a little help from the lunatic on the boob tube.

What people failed to understand is that CRR sucks and missed earnings because SLCA, HCLP and EMES are snatching share like a gold chain on a white guy in Harlem.

There is an opportunity ahead. Great American companies of industry are on sale because of miscommunication and fear. I will triple my SLCA position once the selling exhausts.

Instead of listening to me or Cramer, read the Cowen note from the other day.

U.S. Silica target raised to $83 at Cowen; Outperform (69.29 )
Cowen raises their SLCA tgt to $83 from $67. The U.S. Silica story keeps getting better. The 2014 analyst day included a positive update to current year guidance, the announcement of accretive capacity expansions, and the introduction of long-term targets which seek to double EBITDA every 3 years with 2020 possibly reaching $1B. Firm sees the investment case evolving to a more durable long-term thesis; Outperform.

Good night.

I don’t know when they will collapse; but I can all but guarantee that they will. If you point towards some recent deals, like TRLA or CNQR, they were done at and below 10x sales. This market is riddled with a group of stocks with valuations we have not seen since the dot com bubble.

There have been zero instances, aside from biotech FDA bonanzas, when a high valuation tech stock simply grew into its valuation, gracefully. A perenniel “high valuation” stock, CRM, is trading 7x sales and at its highest point of “crazy price to sales” status, it only traded 14x–back in 2005.

The following stocks have 50-75% downside potential.

CSLT
TWTR
SCTY
WDAY
FB
Z
FEYE
SPLK
ARMH
YELP
ATHM
CMCM
NOW
ZEN
DATA
WBAI
QUNR

Even the ludicrous TSLA is trading 12x sales. Bear in mind, the above stocks are all trading above 15x sales and I own a few of them, super bullish on names like YELP and FB for the long haul. But I am not disillusioned when looking at these stocks; I know what I am getting involved with.

It comes down to this.

Does the bubble continue and if so for how long? That’s all that really matters. When this run is over, the high valuation stocks will correct and resemble the endless names listed in the old tech cemetery, indexed by some old crowd favorites like CSCO, SCMR and JDSU.

Over 150 stocks are down more than 10% this past week, at the same time the Obama administration starts to fly armed drones shaped like Noble Peace prize awards over Syria. Coincidence?

I think not.

You’d like to remain in your cocoon indefinitely, then emerge later on to flowers and honey bees buzzing about the garden. But the winter is coming and up ahead is nothing but icy roads and homicidal zombies.

In the greatest lexicon of all investor handbooks, you’ve ignored the most important one of them all: The Book of Fly.

Judgement day is coming and when it does, you best to have some treasuries and utility shares to withstand the wrathfulness of it all.

After I penned my first blog of the day, I said to myself “Fly, why don’t you partake in a game of opposites?” I then answered myself, saying “asshole, what the fuck are you talking about? How does one partake in opposites?” I then retorted “whatever you think you’re going to do with all that money, just lying there, do the opposite. In this case, specifically, you would permit me to buy something instead of you.”

“Oh, so you want to wear the pants, tough guy? I’ll tell you what: I’ll give you 50% of the money to invest. After you make a complete jackass out of yourself, I get to kick you down a flight of stairs, laced with jumping jacks and mustard. Do we have a deal?”

“Done.”

With 50% of my cash, I bulked up on my utilities, buying size in both ETR and EXC.

The market looks very good this morning, doesn’t it? Apparently, all of you are ignoring the ominous HINDENBURG OMEN and have taken to the market like drone on ISIS. This is the part of the story when the hero takes a bold stand, only to be ambushed and held captive in a Siberian work camp for the next 6 months, before escaping and then finally defeating his enemies.

I am very pleased to see my stocks trade higher. I was going to buy some SLCA this morning, following Cramer’s inane comments, but opted to wait it out. I think the NASDAQ can run a quick 20 points from here and all will appear to be good again–until tomorrow when death itself calls upon you.

Be patient and remember the good days and the bad, when forming opinions on where to place your hard earned dollars. The last part of that sentence is important for you to acknowledge. These aren’t digits and numbers we’re playing with, but a lifetime’s worth of labor.

At any rate, my cash position is so high I might be forced to put a little money to work here.

Stay tuned.

Like a bat roaming through the wintry night, Le Fly is out for blood. He seeks the total and complete destruction of the retail investor, for selfish reasons of course. As luck has it, you happen to know this website address and might’ve found it through nefarious methods. Nonetheless, you are here now and get to glean information, knowledge and wisdom, from the very best in the business.

I will now present to you, the internet troll, deformed men too grotesque to be seen in public so they seek refuge and comforts from a computer screen, my watch list–sorted by sector.

Basic Materials: SLCA

Consumer Goods: POST

Financial: BCS

Healthcare: ARWR, GILD

Industrials: n/a

Services: BID

Tech: YY, YELP

Bear in mind, this list will evolve, as the selling deepens. The further the canaille falls into disrepair, the more emboldened Count Fly will become.

I sold out of GAS to raise more cash. I am going to keep an open mind here and not allow my bias to get in the way of buying a hardy dip.

Rich men are born in the pits of hell, not the clouds of elysiam. What’s important to know is that I lost less than the average folk today. I have a war chest of cash and many holdings in treasuries and utility shares. I have a heart to buy this decline, but my brain is telling me to slow my roll.

Tonight, over a few cups of black coffee and roasted beef sandwiches, I will build my ‘buy the dip list’ and share it with those of you who aren’t lunatics.

^^^that was me back in April, so yeah I called it.

So what I was right? Did you listen to my warnings, or venture off to be a cross-eyed gambler? Your first instinct was to be skeptical of the skeptics, which made you a buyer. You figured to yourself, “everyone is bearish, therefore, ergo, I shall be long.” But you were forming an opinion in a vacuum. Like it or not, the people that you view on a daily basis, even the folks on Stocktwits and Twitter, are fairly sophisticated investors. Their so called ‘sixth sense’ about the market topping out after BABA and in September is 100% foreign to the corn farmer getting his teeth kicked out in Nebraska.

Your second instinct will be to buy this dip now. It has all of the hallmarks of an oversold decline and you are a very greedy, fat, man. But that’ll be a mistake too.

See here, pal, this isn’t your garden variety sell off. This is Armageddon, the sort of decline you will one day tell your grandchildren about.

“I remember that fucking dip in 2014. It nearly took me eyebrows clear off me head.”

“Oooh, tell me more grandpa. Tell me more.”

“It all started after that evil chinese Rumpelstiltskin entered the US markets and stole everyone’s money. I was a wee lad on the internets and had an idea or two about buying dips. Boy was I wrong…”

There’s always a lot of noise in the markets. Back in the late 90’s, the sole driver of stocks was the internet. You weren’t grabbing beta unless you played a dot com. It was literally insane. Companies would change there name from Joe’s Water Coolers to JoesWaterCoolers.com and the fucking stock would go goat crazy to the upside. I remember another interested fad, which was to play the stocks that Joe Kernan from CNBC would mention in a piece 10 minutes before the close. It was easy to game, since he usually mentioned stocks that changed their names to .com. My friends and I would be on the bloomberg all afternoon, trying to narrow down the list. When we nailed one, we would sometimes make 100% in less than 10 minutes.

Like I said, it was insane.

Nowadays, the moves are less intense, but still meaningful. There isn’t that energy in the market, fueled by runaway growth. Instead, there are pockets of strength, small fads, and then the real avenues for long term growth.

You have to remember what I am about to tell you, for it is the only thing that matters.

In today’s market, 3-d stocks are bullshit. The only avenues for sustainable growth are in energy, social media and healthcare. That’s it.

There isn’t any hardware makers worth talking about or restaurant chains on the come up. This economy is stagnant and the consumer is fixated on super high end stuff. The shopping mall wares are simply too cheap for the wealthy to pay attention to any longer. Find a good oil company in the permian basin, a social media stock that is improving life for degenerate humans, and a company who is on the verge of curing a disease, and you will have a prosperous time in this market.