But Dem Yields Doe

With the Islamic State on the move, cutting heads off along their way to Allah, western treasuries continue to gain steam. I cannot stress this enough to all of you lads, drunk about the water cooler, drinking gin from a water bottle.

There is a safety trade taking place, at the same time application software stocks rip through roofs.

This is what I am going to do.

I will collect another monthly dividend from my TLT position, then liquidate it in september. I just sold out of my ECOM position because it refuses to rally. I don’t have time for that, so I took a 3% loss. With the cash on hand, I am going to buy a basket of utility stocks–some today, others next week.

I am going to hold said basket through september, or until I am proven right or wrong (this gives me room to wiggle). The way I see it, buying utilities is a preferable way to fade this rally without actually fading it. I don’t want to just go to cash because my temperament doesn’t allow me to sit idle for long periods of time.

Longer term, I still own a crap load of stuff, from GILD to ICPT to SLCA to HAIN. If the market melts up, I will not miss it entirely. I am simply shifting my trading assets into a bomb shelter.

Stay tuned.

Let’s assume that I am wrong about the coming correction. The September surprise never comes and we gingerly trade up until the New Year. All of the high beta stuff continues onward, trading up to 20, 25, even 30x sales. No one gives a shit, total honey badger market, and everyone gets rich– or dies trying (extra 50 cent).

But what if I’m right? How much downside does a stock trading 20x sales have in this market?

Well, I will have you know, CSCO was trading 22-25x sales at the peak of the market in 2000. Do you know where CSCO trades today?

2.5x sales.

Do you know where it traded in 2001?

5.5x sales.

Just imagine the downside pin action of that stock price and the people who got caught flat footed. I was one of these people, unfortunate and young, rich and careless: utterly retarded.

In September of 2000, the correction, in earnest, began. The market had gone up from the May lows and everyone was doing 100k in monthly gross commissions–until the party ended. CSCO dropped by 20% that month and went down the sewer drain ever since. I am not suggesting the market will endure that sort of pullback. However, it would be unworldly of you to not acknowledge that the drop in March-May was ‘special’ and not ordinary. It was bid less and no one believed we’d rebound.

Well here we are, living to tell the story, at new highs. I haven’t quite recovered from my losses yet, because I’ve been taking a methodical approach. Even still, I cut my losses from -37% to -13%, which isn’t too bad when considering the dire straights I was in.

Here is the reason for the post.

Back in 2000, had you shorted stocks in September, you made a mint. But there was another way to make a mint, without having to accept the idiot nature of being a short seller and the risks associated with such blackguardly actions.

Buy utilities.

I have a long list of utes that I am eying and will discuss in The PPT over the next few days. However, the XLU can suffice and did so in September of 2000, netting a 14% return amidst the agony and pain of once proud and brave stock brokers, like myself, then lined up for execution.

To this day I am still amazed at the people who come to visit the site, lacking decorum, generally sucking at life and throwing meatloaf at his fellow neighbors. I will have you know, “Le Fly”, as he is popularly known in France, is watching all of you, keeping a close eye on everyone–as if it was his duty to do so. I know where you live, where you dine and when you go to sleep.

DON’T MESS WITH ME, CHICO.

Stocks fell today, but many momo names like TWTR and XONE moved higher.

My largest position, TLT, keeps trending higher, as Russian oligarch money scurries about to find a home with safety. There is an arbitrage play between European and American treasuries, right now, and I believe TLT prints $120 tomorrow.

Some of my long term positions, like SLCA, GILD and HAIN continue to hit new highs. It feels good; but we’re definitely due for a pullback and soon.

There are three main drivers in this market, by which people are making fortunes in.

1. Energy

Whether it be alternative energy stocks, like PLUG, BLDP, PEIX or GPRE, investors want it. But there’s a better way to play it. We are in the middle of a renaissance in energy production–thanks to break through methods and technology. In energy, horizontal drilling has changed the game. The best way to play it is through fracking sand companies. There are lots of drillers and plenty of companies who can get the oil. But there are only a select few who supply the sand necessary to frack. Those stocks are EMES, HCLP and SLCA.

2. Biotechnology

I spoke to the good Dr. yesterday and asked him “Doc, if I told you 10 years ago there would be a cure for hep C and progress in NASH, would you believe me?” He said “never in a thousand years.” You may not realize it, but there is some serious and great progress being made in medicine. Look at the share prices of some of the largest biotech stocks–absolutely staggering. GILD cured hep C. ACHN is coming out with a competing drug, even cheaper. ARWR thinks they have a CURE for hep b and ICPT can reverse fatty liver. If you are invested, you must have exposure to this space.

3. Social Media

Humans are pack animals. We need to touch and talk to one another (no homo). When the internet was invented (thank you Al Gore) and web 1.0 rolled out, the world thought it would be used for information gathering and E-commerce. Companies like AOL, YAHOO and AMZN took the world by storm. A little later on GOOG came on the scene and revolutionized the way the human race sought information (fuck the library) and shortly thereafter venture capitalists started to fund companies who connected people. The first kind of social media was in the form of dating sites, like Match.com. You may not know it, but Match, a subsidiary of IACI, is enormously successful. Then a slew of social media companies emerged and changed the way the human race made decisions. We no longer needed a professional restaurant critic to tell us if Mel’s Diner was a dump or not. We had a consensus opinion by fellow foodies to give us the scoop. Companies like PCLN, YELP, TRIP, LNKD, FB, TWTR and Z are improving quality of life for the world.

These are ideas worth striving towards, a renaissance in productivity and innovation, and definitely worth our time as investors.

I sold out of CBST, CLDX, SODA, some YELP, and PIR, some for gains, others for losses. Nevertheless, I raised over 30% cash and allocated half of it to TLT. I am now very much overweight TLT and holding ample cash to buy any dip. Essentially, I am resetting here.

Trading positions that remain are ECOM, XONE, LITB and IFON (not really a trade).

I am having a hard time selling my trading positions. I like them too much.

Nonetheless, I let go of some YELP that I bought 31% lower and my entire CLDX position. I am not looking for replacements and simply bulking up a cash position.

What do you ball busters want? Would you like me to be nice to you, reserve threats of severe bodily harm for live and in person events? Some of you people take yourselves too seriously. I’m moonlighting here, friendo. The site, although profitable and generating more money per annum than some of you nerds will make in a lifetime, is a hobby.

Some of you ingrates will never understand, which is why I reserve the right to cancel your dumb asses from the site, without notice. I am giving you access to a world filled with information that you’d never have access to by yourselves. It’s sad, really, at how poorly your parents raised you.

Listen me to now and very closely: “The Fly” doesn’t need you. Poof! be gone and never come back again. Your player cards have been revoked.

As for stocks, my favorites are all in biotech now. The good Dr. gave me two new picks today, one of which trades in Paris. Another one, which many of you are familiar with, is ARWR.

https://www.youtube.com/watch?v=vWvgwjCt5Y0

I’ve banned over 1,200 creatures since this site began. Right now, as we speak, there are over 3,700 comments in moderation, the ultimate ‘fag box‘ for people who do not know how to behave themselves. Many of you people, not most but many, are filthy and disgusting animals, more deserving of a claw-hammer about the brains than receiving top shelf financial commentary from the free comforts of your hovels.

I thought I’d add that addendum to today’s commentary.

I’m back from Newport, RI–an amazing place for history buffs. The town is a relic of the gilded age, a time when women ran households to entertain during the summer, and the men smoked cigars with their top hatted neighbors–speaking about matters of excess. If you haven’t been there and live in the north east, I strongly recommend that you do. These important men of industry built monuments for themselves, the size of museums–all for nothing. The money was squandered. Inheritance was misappropriated and their family names are now in ruins (extra Anderson Cooper).

Coincidentally, we are in a new gilded age today. Instead of the money being made in rail, coal and steel, it is being made online and it is being made at a frantic pace. The amount of wealth that is being created, at the top, is staggering and unlike anything the world has ever known.

Snapchat is worth $10 billion? Really?

If so, YELP is too. Do the math and figure out where the stock is going.

I don’t care about market pullbacks and I’m not going to isolate myself inside of a nuclear bomb shelter either. At this moment in time, I am 100% long–with zero cash other than 25% of my assets in TLT. While it’s true, I believe there will be a significant pullback in high valuation stocks in September; it’s also true that history doesn’t repeat itself–it only rhymes. I’m open minded to being wrong. But rarely, if ever, am I proven to be wrong–so good luck betting against me.

With some of my trades ripping higher this morning, I might begin taking some money off the table.

The S&P is up nearly 4% for the month of August, putting in a fine showing. The last time we had this good a summer finale was in the year 2000.

The following month the S&P was poleaxed by a staggering 10.58%.

Enjoy the rest of your evening.

Please, for the love of God, one more bite…man.

I added to my XONE position.