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The First Half of 2017 Proves to Be Stellar for Tech, Highlighted By Breakout in $BABA

If you condense everything about the first half of 2017, Wall Street bought the dips in China and healthcare, nibbled on some Trump inspired construction ideas, and furiously bid up the free cash flow tech giants to new heights.

While everyone was focused on Amazon, the clear breakout was BABA, gaining more than 60% for the first half — adding over $150b to its market cap. For years since coming public, Alibabba underperformed the market. I think the set up with people selling Chinese stocks heading into the New Year, fearing a trade war, coupled with their fantastic growth and size, truly gave money managers the excuse they needed to position heavily into the name.

In addition to BABA, several other Chinese related tech stocks shined, including NTES, YY, MOMO, WB and BABA competitor JD.

Both the S&P and Dow gained ~9%, while the tech heavy Nasdaq soared by 17%.

Amongst tech, none did better than large cap tech, in addition to some semis. One notable social media stock, rarely discussed, TDOC, crow-barred higher by 111%.

Here were some other bellwethers and their YTD returns: IAC +66%, NTDOY +70%, TSLA +70%, FB +31%, AMZN +30%, AAPL +25%, GOOGL +18%, MSFT +12%, NVDA +36%, ORCL +31%, AVGO +33%, PCLN +28%, NFLX +21%, PYPL +36%, CRM +27%, ISRG +47%, BBY +37%, SNE +36%.

The first half also provided some runway for some new, up and coming names in the tech space, such as W +117%, SHOP +102%, OLED +94%, SQ +72%, ANET +55%, VEEV +51%, NOW +42%, WDAY +47%, AAOI +170%, SGMS +86%, FIZZ +88%.

Think of the enormous gains in market cap some of the bellwethers just underwent. Stocks like PCLN, ISRG and AMZN continuing their torrid paths upwards, almost unabated for years. It is truly something to behold. Also, the fact that something other than biotech did well in the smaller cap names is extremely encouraging. Naturally, there were the biotech winners like KITE and PBYI, but there was also W, MBLY and STRP got bought out, 3-D stocks roared, a soda pop company nearly doubled and application software stocks defied gravity.

The Ebay spinoff Paypal broke out. Newcomers W and SHOP captivated momentum traders and a very old story stock finally did some significant business, which helped its shares double (OLED) for the half.

Commodities that enjoyed an upswing were palladium (+23%), Lithium (+19%), Timber (+15%), Wheat (+12%), Livestock (+11%), Gold, coal and copper (+7%).

On the downside were department stores (-34%), Oil and Gas (-39%), Auto stores (-27%), Home Furnishing stores (-24%), Food Wholesale (-23%).

Deflation was rampant in some raw commodities, such as sugar (-32%), coffee (-14%), cocoa (-14%), soybeans (-6%) and cotton (-5%). Natty got crushed by 28% and oil shed 14%.

Overall, the top sectors were in healthcare and tech — both sporting double digit returns. I suppose Trumpcare isn’t going to be deleterious to industry at all. In fact, based upon the +26% returns in healthcare insurance stocks for the half, they stand to make even more money.

Another interesting industry was ‘General Entertainment’, up 29% for the half. These are stocks like CCL, RCL, SIX, FUN and SNOW. People have money and want to be entertained.

Hell, even solar stocks rose by 22%.

As long as you avoided the basic material names and tried not to get sucked in on the Trump infrastructure promises that offered hope to a beguiled steel sector, you did well. Whether we can sustain these gains and add to them is another story. Often times investors like to buy beaten down sectors, while selling the winners. Let me remind you that time is a flat circle. It doesn’t abide by your calendar and offers zero correlation to dip buying adventures. More often than not, sectors that are hitting new highs comntinue to make new highs and vice versa.

Good luck in thw second half.

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Halftime Report

Well, we are halfway through 2010 and the markets are reeling. Despite minor year to date losses, the recent trends have been horrific, particularly in commodity related names. As always, there is a fight being played out, live in the markets, between the inflation and deflation crews. On one hand, common sense dictates that we are about to enter some brand of fucked up inflation, based upon the behavior of the Federal Reserve and incessant “bail out anyone” attitude of the Federal Government.

On the other hand, people seem to forget the banks are lying about their losses, thanks to new accounting rules, and will get sucked into the deflationary vortex, hard core, if some of the sovereign debt risk worsens. The losses are too great for the banks to bear. As a result, there will be a seizing up of credit, effectively pushing us over the ledge into the whimsical world of “double dip recession.” Plus, there seems to be a worldwide movement against easy money, vis a vis “austerity” measures and “responsible budgeting” here in the states.

Let me be clear: I am not here to tell you what is better for the economy. I am here because I know what will help stocks go higher. Say what you want about easy money and fucked up bailouts; but Wall Street likes it. Take the punch bowl away and we will all feel the pain immediately, some more so than others, indeud. Maybe we need to bite the bullet and throw this fucker into a deflationary vortex, so we can all come out “cool as fuck” on the other end, with mohawks and shit. However, something tells me deflation will lead to war and war will lead to a kick ass market. So, maybe I am for deflation?

Year to date, I am up 37% for clients and much more for myself. Coming off of 60% and 90% returns in 2008 and 2009, “The Fly” is enjoying an investment renaissance for the ages. With the grace of Santa Claus and God, I’ve been able to destroy my enemies and crush the markets, with ease and with dignity, all the while inventing the greatest investment tool ever known to mankind, The PPT.

Halfway done, I have a 65% cash position and decent sized holdings in FLS, CIEN, FTK, GS, SD, SHLD and TNA—just to name a few. My goal is to return more than 100% this year, which, if accomplished, will be the first time I’ve enjoyed triple digit returns since 2003. I am not particularly sure where this market is going, 3-6 months out. If forced to guess, I’d say we are going much, much lower. But, you never know what the Fed has up their gay sleeves. Keep in mind, the tougher things get, the greater the likelihood the Fed will intervene. Hell, we may get another stimulus package before it’s all said and done. After all, it is an election year.

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Halftime Report

So, we are half way through 2009 and the market is flat. I must admit, I am shocked by how well the market has responded to a flurry of bad news. However, I understand why it is going higher and that is why I am up 60%, year to date, with a very bullish bias.

In late 2008, I made some dire predictions for the market, underpinned by delusions of deflation. I thought, there was no way the credit markets could return, and as a result, commercial real estate firms/underfunded banks would fold under the pressure. Must to my surprise, the exact opposite occurred.

Maybe it was the devils from Goldman or just plain Leprechaun luck, but the credit markets are back in full force, financing all types of stupid shit. Hell, even the ipo market is back. One tell on how the credit markets are doing is via the price action in [[JNK]] . Put it on your little monitors and watch it very closely.

If you recall, I predicted a 50% first half slide in the markets and a monster 2nd half recovery. My year end prediction was for a decline of 15% in the Dow, which is still entirely possible. We have been blessed with some sort of odd version of “investment inflation,” whereby the price of “stuff” has increased due to asset allocation, as opposed to fundamentals. Some people scoff at such a move as manipulative fuckery. However, I view it in a very bullish way.

See folks, money is circulating again and it’s being invested, in a very egregious way. There are strong signals coming out of the technology space, in particular 4g/smartphone/semiconductor names. And, for the love of green shoots and red robins, oil stocks are ripping out the eyeballs of overzealous short sellers.

Going forward, I believe the markets will trend higher, until it is proven the “so called recovery” is false. To be honest, I have no way of knowing if the economy is going to continue to rebound; that’s the whole beauty of this rally: no one knows what the fuck is going on. We’re all sort of throwing shit against the wall and hoping that it sticks. In my estimation, we have at least another month or two of “easy money,” as economic data is obscured by government fuckery and inventory restocking. If the recovery is proven to be legit, we will end the year above 10,000. If not, well, we might see the market go back to the lows.

As a manager of assets, it is my job to gauge the temperament of the market and make directional bets. In my opinion, as long as people have hope, the market will go higher. Right now, much to the chagrin of many bearshitters, this market is chockful of hope.

As for my investment style, it is about to change in a dramatic way. I will be moving away from the randomly selected small cap space, in exchange for a heavy technology oriented theme, as outlined, exclusively, on The PPT. It will be egregiously Godly. And, most importantly, it will be profitable.

That’s all.

Via The PPT, here are the top 50 winners for 2009, thus far:

1 DDRX 6,319
2 VNDA 2,300
3 DTG 1,228
4 CTIC 1,114
5 AIG 1,093
6 UEC 880.65
7 BGP 820.00
8 NEPH 742.50
9 SMRT 702.65
10 PRSC 656.55
11 IFON 632.00
12 HEB 580.56
13 ANPI 561.54
14 STEC 507.59
15 WAVE 499.11
16 VVTV 490.91
17 PIR 483.78
18 DNDN 436.90
19 GSAT 435.00
20 PALM 434.53
21 NGSX 417.09
22 RAD 400.00
23 RFMD 399.00
24 LNET 398.57
25 CBOU 397.06
26 ENTR 388.00
27 VCI 387.88
28 ONTY 371.25
29 NBS 361.70
30 CHUX 361.50
31 DFT 357.49
32 SPPI 357.05
33 VM 355.95
34 COT 351.56
35 APAC 350.41
36 KIRK 342.26
37 CHLN 335.66
38 RT 332.69
39 MRNA 332.35
40 MGPI 330.15
41 TSTR 330.00
42 ISLE 328.44
43 ISCO 325.00
44 AGEN 320.85
45 NAVR 320.00
46 CMRG 319.23
47 KERX 318.32
48 JVA 313.25
49 WZEN 309.76
50 BZ 309.30

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