Fly Sell: $MU

Locking in a big winner here, upping cash position to 55% in the process.

You don’t have to jump back in at the first sign of strength. The day is long and there is plenty of time to reverse lower. Plus anyway, you should be shopping for names that have been sold off, not hitting new highs. If that’s the case, these names are down 15% over the past month. If they’re going back to new highs again, what’s 1-3% of missed upside in the big scheme of things.

To crystallize my opinion: one should exhibit a modicum of patience here and not try to catch quick trades. The play is to buy larger cap or highly liquid names that have been sold off. If top tier REITs are off by 18%, why bother playing in the gutter with the filth and the offal?

Step 1: Have cash for dips. If you have cash, be patient. The market sell off can last much longer than you think.

Step 2: Buy quality; avoid filth.

Step 3: After catching a bounce, drink champagne.

Step 4: repeat steps 1-3.

I’ve been watching this market like an old, wise, owl–plotting moves and slapping elderly people in the face for frowning at me sideways. With my 45% cash horde, I am going to buy just three stocks, which will absorb all of my money–putting me at 100% invested–for the turn–for the win.

As the market marches lower, the list will change, naturally. Here’s what I have so far (don’t tell anyone else about this. We wouldn’t want other jackasses, aside from yourselves, front-running me).

AMAG
ANGI
APO
ARMH
ARR
CRM
EVR
FB
KBH
MAC
N
NMR
O
RAS
SCTY
SLCA
WDAY
WPC
YELP
Z

I closed flat today, even with the market getting hit. I do not want to trade in stocks of the day when the tape is bad. Those spec stocks can get crushed in an instant, so it’s not worth the risk.

I’m not gonna sell IMMR, MU or FRO. Everything else is fair game.

I will be looking for names that are growing revenues more than 15% yoy, that are down more than 10% over the past month. There is a very long list building and those who have been smartly placed in cash, especially those adhering to the core principles outlined inside of 12631, will reap the rewards when the market turns.

First you have to sack up and buy the blood. Therefore, you need to know what to buy.

I know you all want to hear the big gay call, long or short. But “The Fly” is here to tell you to quit wasting your time searching for unicorns. Markets do not crash anymore. They simply decline in a very orderly fashion, with a sense of style and honour. After the decline is viewed as “sufficient”, it is gently walked back up, amidst weeks of daily 40 point climbs.

Yes it’s true, the market is being flushed today. Major kudos to The Devil for making that call. However, this correction did not come out of the blue. I’ve been a coward for more than a week now, saddled with 45% cash.

Here is why I am hesitant.

That is an index that I call “The Risk Appetite Index” inside of The PPT. It is a compilation of muni, government and sovereign bond funds. It has plunged to new lows, thanks to renewed fears that the Fed hasn’t an exit strategy and rates are going up. This, of course, is ridiculous and will be proven wrong in time. But for now, this is the “prevailing wisdom.”

I will buy back into the markets when TLT stabilizes, The Risk Appetite Index stops going lower and IYR gaps higher on volume. Until then, we might grind lower for another 2-3 weeks, maybe even longer.

It’s June and if you’ve traded successfully this year, you have good gains to fall back on. Don’t be overzealous and press your luck into a poor risk environment.

There will be easier tapes than this one. Bank on it.

I have millions of dollars burning a hole through my pocket, orphaned cash looking for a home. For a solitude moment, I was thinking about allocating some of it into VXX and VIX related scams. Then I remembered they were of course scams. I’d rather miss out than lose money in those bastards ever again.

While the market sinks lower and The Devil presses his 8 figure short bet on IWM, I’ve been researching new issues. After all, the ipo market is where new, fresh, names will be found. Rarely will a small pennied stock climb from the ashes to become relevant. Using a specialty screen inside of The PPT, here are some of the ipos that interest me.

WDAY
RLGY
BLMN
EVTC
TMHC
WLH
AMBA
FWM
ANFI (I am Long)
SCTY
MZOR
FLTX

I am just sitting on a pile o cash, doing nothing but watch the paint dry. The tape, although higher, lacks the style and pizzaz that I’m used to. I just don’t feel like doing anything, long or short. Some of my friends are heavily short, looking for a crash. But I think that’s “wishful thinking” and this market will continue to mark time, grinding investors into dust and snorting them up with long straws.

Am I supposed to buy these shooters with real money? I need to own liquid names that can absorb a million dollar ticket without jarring the share price. Therefore, it goes without saying, I am patiently watching, trying to decipher the clues, almost desperate to find a good name to buy in size.

Look at these Japanese banks, swinging around like solar stocks.

NMR +8%
MTU +7.5%
MFG +8%
IX +8.1%

I don’t have any firm opinions on the markets or Japan. However, I think it’s fair to say “the powers that be” deserve the benefit of the doubt. They’re innocent before being proven to be guilty as sin. Markets have been good and we should assume they will continue to appreciate. The worldwide policy is to forget or abandon rebuilding the economies, in exchange for inflating asset prices. This means anyone with debt is screwed, or anyone who is trying to “make it”. It also means that if you have assets and have “made it” already, you are in the captain’s seat.

Enjoy.

I cannot help shake the feeling the market is going to swan dive soon. All of the oddball disruptions in the price of gold, NIKKEI, treasuries and foreign banks has me frozen in a state of fear, with pallor the color of that of a vampire.

Nomura is down 26% over the past two weeks. Am I supposed to blow it off as if it doesn’t mean anything?

Most of the people in my industry are fixated on created new relationships, raising more assets, not having to worry about how the money gets managed. They either toss the money, carelessly, into a set group of large cap stocks, mutual funds or ETFs, and then sit back, collecting fees along the way. Or, they simply hire qualified analysts to do it for them. They don’t worry about pullbacks or when they should go to cash. They will never go to cash because all they promise is to outperform the SPY, by passing the money off to someone else to manage. It’s the most absurd thing in the world and clients don’t even realize it.

They’re paying some schmuck 1-3% per annum to be a middle man, a seasoned salesman only interested in the next kill.

When the market’s get killed, these “investment professionals” pitch them new mutual funds with guarantees attached, only to earn more fees. I say, if you’re not incredibly busy at work (which most successful people are), try to direct your own investments.

The people I meet here on the internets are not very busy at all, since they have the time to rifle through my missives and learn about HORATIO CLAWHAMMER. There isn’t any reason for you to pay someone what you can do yourself, so give it a shot.

As for the market, I bought nothing today, even after I threatened to buy a bunch of stuff this morning. The more I think about the market and how it pertains to myself, the more I feel like putting up the “gone for a siesta” sign on my door and coming back to play in September.

Fifty percent of stocks were lower today, despite the 100+ point rally in the Dow. When this happens, I always feel terrible about my positions, clearly underperforming in an upward biased tape. From the FRO to IMMR to ANFI to USG–lower values across the board.

But I intend to sell some IMMR, north of $20, with the CEO, who is selling the stock in 5 point intervals. You will all panic when he sells at $20, and again at $25, then $30, then $35 etc.

Having my thumb in the wind, I can tell you the retail investor has very little patience for down periods. At the first sign of weakness, I am bombarded with text messages to liquidate and hide inside of a bunker.

Japan is off 17% in recent weeks, taking WETF with it–just a tad. I am hoping to buy back in south of $12. I’m also looking to buy back RAS, BX and others. Although the market isn’t appreciating good, sound, businesses now, I don’t feel at ease owning crap, exclusively for the purpose of ripping out quick trades. If I was 90% long and content with my holdings, I’d have no qualms taking 10% and rolling the dice with it. But with 45% cash and sucky positions losing value, I’d be acting in a manner not traditionally known as “gentlemanly” if I was to partake in outright gambling now–buying the crap.

In summary, it was a very depressing day for me. However, my greatest trade has yet to have been made.