This move is unsustainable. You will not believe me tomorrow, when the most retarded stocks known to mankind are off to the races. However, as sure as I am sitting here, you will believe me soon.
I’m long banks because there is a real value proposition in BAC/C. But this market is not being fueled by banks or retail stocks or tech stocks. It is being propped up by a new class of stocks, that trade separate to industry, logic, and far away from traditional valuation metrics. Just like people said the dot coms can keep going higher in 2000 and the banks could all soar to $300 and split 5 for 1, due to momentum, degenerate momentum traders are out and about saying the same shit about this new class of stocks—as if we haven’t seen this shit before.
Truth be told, momo stocks are incredibly hard to break and I do not suggest shorting them, since the laws of reason to not exist there. It’s sort of like trying to discern the difference between smoking three viles of crack or 10. You done fucked up with the first, no need to get snooty now. Ya dig?
One day, the following names, if not acquired by HPQ, will fuck up this market something awful:
AMZN, BIDU, LVS, CRM, VMW, NFLX, MELI, PXD, EGO, LULU, IOC, RAX, ARMH, ARUN, SNDK, CTXS, CMG etc.
Remember, earnings and growth look great until they don’t anymore. The proverbial rug is often pulled from companies when they least expect it. The simple truth of the matter is: money managers have been piling into the same stocks, in order to avoid risk. As odd as it sounds, from a macro perspective, there is far less risk buying AMZN at 50x, than a bank with billions in toxic assets. We are at a point where the bubble in momentum stocks is so egregious, no one dares bet against them. For the love of broken X-mas presents, NFLX just sprinted $40 past $100 in a few short months. Hello!? That’s a 40% increase in market cap. That my friends is what I call “fucktarded.” But who is gonna bet against them? Not me.
Look at the VIX–near new lows. That tells me we are awfully complacent with the current arrangement of things, which entails a woefully weak jobs market, high commodity prices and a banking system that continues to suck the tits of the Federal Reserve. All the while, the housing market remains mired in the biggest slump since Greece was burned down by barbarian hordes.
Here is my advice, condensed in a short few sentences:
Know the market you are investing in and do not bitch and complain when it goes against you. I am opting to play this tape, which I deem to be “bubblelicious” via a large cash position (40%). If I had conviction to short names, I would do so. Hell, during 2008, that’s pretty much all I did (short stocks). However, until the hypnotic spell is broken from the small brains of hedge fund managers, I will remain exceedingly cautious and play both sides of the tape, as I expect this market to remain range-bound, although buoyed by the most overvalued large cap stocks since the 2007 banking bubble.
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