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Trump-o-Nomics: Be Careful, Big Media

Over the last 12 hours Donald Trump has used his fingers-of-unusual-size to escalate his war on SuperPacs and Big Media.


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See also: The President America Deserves

I love Trump openly doing a professional level heel gimmick. Politics has been compared to wrestling for years. Until now that’s been an insult to wrestling and hack writing.

Now it’s finally true. Here’s a compilation of former MN Governor Jesse Ventura cutting promos. Note well the implausible boasts, endless name-dropping and totally unsubstantiated claims:

How is this different than Trump claiming to be self-made gazillionaire with enormous, graceful fingers? Trump isn’t just a Heel. He is a *great* Heel. That makes a decent percentage of the media public Marks. It’s not a compliment.

In wrestling parlance, Marks are the ones not in on the bit. They don’t get that they’re supposed to be calling the Heel a liar. They’re  supposed to be outraged, maybe even a little afraid. That’s how the show works. The Heel barks, the Marks get enraged and there’s fight in the parking lot.

Without a reaction the Heel can’t exist. There is no show if no one cares. Take one fake controversy: How much is Trump worth?

The correct answer is: He’s rich.*Shrug.

Wealth isn’t really a number. It’s how you shop. The richer you are the less often you have to look at price-tags. Trump has enough money to live like an Emir with bad taste. That makes him rich.

There is no practical distinction between having $3billion or $10billion. What matters to Trump is getting people to argue about the number.

If the media is fighting over Trump’s net worth they aren’t doing things like pointing out the Great Wall of China was built using the bones of slave labor and didn’t work as a defense.

Mission Accomplished:

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There have always been Heels. Before he became a universally beloved hero Muhammad Ali was  monster Heel. He claimed to be inspired by Gorgeous George, a flamboyant, despised wrestler in the 1950s. “It doesn’t matter if they pay to see me get whupped” Ali shouted, “as long as they come to the arena”.

Ali was also a member of the Nation of Islam, a group that claimed white people were Devils and killed Malcom X for not being militant enough. That was scary. Trump’s plan to build a 2,000 mile wall and bill Mexico for it is just dumb.


When I was 10 Jesse Ventura created a local stir by claiming Carly Simon wrote “You’re So Vain” about him. The children of Ventura Truthers are currently writing 5,000 word blogs about Trump only being worth $2b.

Heels feed on hatred. They need it. If all these media smarts would deign to watch pro wrestling they would have realized this by now.


Win or Lose, Trump Has Changed the Game

According to NPR there will be $4.4b spent on campaign ads this year, up more than 15% from 2012. Bet on the under. Thanks in no small part to his phenomenal Twitter and television Heel skills (see also: Trolling) Trump is running his campaign for a fraction of the cost of his rivals. Trump dominates the news cycle. What’s the point of buying a 30 second TV spot when you can get a 15 minute segment for free just by infuriating people?

Here’s what Romney and Obama spent running against one another. At the rate he’s spending Trump getting the GOP nod would cost the networks millions in ad dollars.

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Not only has Trump built his lead in the GOP race on the cheap but he’s spending about 1/5th what the Democrats are spending on their race. That’s remarkable considering the degree to which the Democrats are simply going the motions on the way to Clinton’s last big push.

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Campaign ads are a relic. Trump has completely blown up the old formula of huge donors controlling the election process. That Trump has done it through blunt force only reinforces the magnitude of the shift. By the next election cycle every candidate who makes its this far will have a sophisticated social media ground game. By 2018 every candidate will understand and embrace the power of social media presence in politics. The ones who don’t won’t win. It’s that simple.

They won’t all be angry howlers like Trump. There are plenty of smart, likable people who understand social media. Unfortunately none of them happen to be running for President this year.

In tech terms, Trump is a bit like Napster, rudely clearing the way for the more elegant (and profitable) iTunes quasi-monopoly.

If the prospect of grass-roots candidates Tweeting their way to election wins doesn’t scare the hell out of the networks it should. In a cord-cutting world Big Media can’t afford to lose its quadrennial Golden Goose.


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Facebook Of Death: Charting The Misery

The stock market is busted. You don’t need me to tell you that.

Please review Three Rules For Bear Markets. Rule 1 is Everyone Loses. You’re either losing money today, have lost money for years or will lose money tomorrow. You are not a special snowflake immune to portfolio meltdowns. Bear Market Rules apply to everyone.

Support for the S&P 500 remains 1850 on the close. Below that we’ve got the 2014 Ebola Low at 1820 and the Reversal of 1812 from January 20th. I wouldn’t pin too much hope on those latter levels. All bets are off in Gacy’s Basement

From Jan 14: The dreaded John Wayne Gacy's Basement formation...
From Jan 14: The dreaded John Wayne Gacy’s Basement formation…



Facebook shares were under $95 the day they reported earnings. Said earnings were absurdly good. The stock gapped higher the next day, eventually topping $117. As of this morning Facebook shares were back under $100. For my money, that’s close enough to Filling the Gap on the chart to make me interested on the long side.

Interested as in “Adding to existing long” not “back up the truck”.


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This isn’t advice because I have no idea what your portfolio looks like. If you’ve had cash on hand waiting for dip, well, this is a dip. Facebook filling the gap is textbook. Bull markets are about playing percentages, not swinging for the fences. FB under $100 with a stop at the pre-earnings lows seems like a decent spot to dip a toe into this eddy of pain.



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“Everyone Loses”: 3 Bear Market Rules



Everyone Loses

In the poker game of investing Bear Markets are the rake*. Everyone loses.

Bears are different than crashes. When stocks crash a small but vocal minority of investors get the timing right and make a fortune. The winners in bear markets are the investors who don’t die.


Yesterday the ursine claws of doom targeted the smug with particular relish. The FANGS got killed just because screw that stupid acronym. They were down 10% for the week. GoPro on the other hand was up 1.8% Friday (though it’s still down 45% YTD). And gold was strong. Pathetic holdings up and past winners trounced. The resulting sound of battle was a mash-up of gloating lepers still holding the GLD and robust cries of agony from freshly-killed champions.

It was horrifying.


McDonald’s fell 4.4% on Friday. Seriously… Screw you, bear market.

There are no winners here. It is a level playing field of misery.



“Air-Pockets” Lurk Everywhere

True students of the stock market tend not to believe in any one “system”. The game is fluid. Fundamentals are never as objective as devotees claim. Charts are only voodoo to people who don’t understand them.

Prices are ultimately set by humans. Humans are idiots. Imagine how boring life would be if we weren’t. Which is a nice way of spinning the fact that every morning when you turn on your computer there’s a reasonable chance a stock you own will have imploded.

Forget LNKD. Too Obvious. Here’s a 3 mo chart of Kohl’s:



Kohl’s is a dump. I find the stores maddening and I’ve never owned the stock. But right up until a couple days ago KSS was a very sexy looking chart. Going into earnings the stock was over $50 and looked to have support at about $46.50.

The stock lost $10 overnight on a warning. If you had a stop-loss it was hit $5 below support. Puts may have saved you but you had to be very good. For most KSS holders it was simply an instantaneous 20% loss.

Mr. Market is a Bad Mutha. He can smell hubris and fear. Seek to exude neither.

Bear Markets Are An Emotional Process

Investor moods aren’t binary. We don’t just feel Euphoria or Despair. Investing is deeply personal and entirely emotional. People grieve losses much like they grieve loved ones. Denial, anger, bargaining (eg “Please God, get me back to even”) etc.

Right now investors are starting to get a little pissed off. They’re looking to blame people for the sell-off and no one makes an easier target than the media and punditocracy.

I’ve got some experience with this. I don’t like to talk much about it but I’m kind of a big deal. By any objective measure I’m the 3rd or 4th Greatest Television Financial Pundit of the Modern Era. Really. That’s not a boast. It simply is.

The point is I know what it’s like to be on TV every night when the public starts looking for scapegoats. It’s ugly. People are mean.

Here’s some tough love: No one on financial television is running your portfolio. They didn’t make you buy a stock. They didn’t force you to sell. Some television pundits are good. Some are bad. None of them is paid to do anything other than share their opinion.

If you disagree with anyone in particular do the opposite of what they suggest. Don’t troll them. It’s mean and it makes you look like a whiner.

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Simple Rule of Thumb: Above is the Wong-Baker FACES Pain Rating Scale. It’s used by doctors world-wide to asses a patient’s level of suffering. If your portfolio makes you feel worse than 6 don’t Tweet anything directed at a television personality. I promise you, they are all trying their very best.

And if you make money short keep it to yourself. To paraphrase Brad Pitt in the Big Short, “You’re betting against America. Don’t dance”.

No one actually knows what’s going to happen next. The best you can do is get the odds slightly in your favor. For some perspective on the difficulty of predicting markets, here’s a Tweet from Neil deGrasse Tyson yesterday:

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Economics is the bastard love-child of Calculus and Sociology. It’s Physics for people who couldn’t quite hack the math. Economics is bullshit, is what I’m saying. Do you really think mass psychology can be broken down into a formula? Please.

No one is keeping the answer to this market a secret. We’re all just trying to figure out the same puzzle, some are just doing it in public.


The Week Ahead

In the 220-odd years of formal stock trading in the US  meaningful pullbacks have hit their lows during Friday twice (that I know of). Once in 2001 and again in 2004.

I’d expect the S&P at least retest the lows near 1800 in the next couple weeks. That’s not a trading suggestion. The most likely outcome is I’m right but there’s some sort of brutal, ironic twist that prevents it from being a useful observation. Like we go to 2000 then drop 200 overnight.

I can’t tell you what do. I can only help you learn how to think for yourself. There is a huge difference.


* Rounders reference. The Rake is the house take in poker tournaments. It’s the money that disappears, from the gamblers’ perspective. In Wall Street terms, The Rake = the money lost by longs but not made by offsetting shorts. Plenty of people were short LinkedIn but not nearly as much money was gained short as was lost long. The spread goes to money heaven. Because Bear markets maul everyone.


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Mourning LinkedIn And The Bull Market

LinkedIn picked the wrong night to take down estimates. Shares are off 40% after the spam-mailing job site apparently beat estimates and lowered guidance to negative one trillion dollars for current year.

Or something like that. I owned shares of LinkedIn for years. Finally sold it after the second Q of last year. In 10 weeks LNKD managed to crush shares by lowering guidance, rise after posting earnings in-line with the original number then plummet after slashing estimates yet again.

Which sounds like gibberish but it really happened.  That’s how LinkedIn rolls.  Here’s LNKD chart since it went public. Everyone of those islands was created by LNKD missing or beating estimates dramatically:

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LinkedIn was a trainwreck but if you were truly shocked you just haven’t been paying attention. If Amazon shares can lose 15% on weak guidance taking 40% out of LNKD makes sense, in bear market terms. Being long LNKD was a preventable tragedy. That’s what makes it so sad.

Not even good earnings save stocks in a bear tape. Facebook has gone from the low $90s to $118 and back to $104 since they reported. Google has gone from the highest market cap in America to a house of misery in the last 5 days. Some people traded it but most investors are just getting pistol whipped.

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There’s no hiding from the pain. The S&P 500 is holding up relatively well considering the beating going on under the surface. That doesn’t feel like it’s going to last. This market feels like it needs a flush.

This is how bear markets work. No one gets out totally unscathed. At the bottom investors are strewn across a barren landscape. When the living envy the Nationwide kid it’ll be time to buy in size. We’re not there yet.

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Market Panic! Your Action Plan

Women and Children First


Stocks are falling. You know that. We’re going into a 3 day weekend. If you are very uncomfortable at the moment the feeling will most likely get worse between now and Tuesday.

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I don’t believe in worst case scenarios. The sun will explode someday but it’s a lousy trade. That said, I do believe in market panic. I understand the animal spirits. I respect the power of the collective mood. There is nothing on earth that will dislocate a market quite like major currency problems. The basic assumption in any financial model is that valuation is based on a stable underlying currency. In the absence of said stability the numbers are gibberish.

There is no fundamental case to be made because who the hell knows what the Chinese are going to do if/when the Shanghai Comp burns like a wooden shed on Monday. Would a Chinese crash cause a recession here? I don’t know but the closer the $SSEC gets to zero the less I like our chances. Most stocks are worth more than zero but true value is not calculable. If you have no idea what a company will earn you can’t even create a PE ratio.

Under such conditions, doing nothing makes a ton of sense.



If the S&P500 drops to 1788 today we will have a genuine US Circuit Breaker. Presumably the Chinese would find this hysterical but, trust me, it won’t be funny here.

The last time the US markets triggered trading circuit breakers was 1998. The cause was “Impossible” currency fluctuations exacerbating the losing positions of a hyper-levered hedge fund called Long Term Capital Management. Most of you know the story. For those who don’t here’s a relatively lively academic overview.

On the topic of emotion being timeless, I’ve been reading up on the Panic of 1857 today. The trigger then was the end of artificially easy lending to fund the buildout of the the American rail infrastructure. Thank God nothing could happen like that today…

Here’s a link to a good summary of the 1857 Crash and a cartoon from the day. The man on the ground represents a banker who attempted to stop a market panic, as represented by the horse.


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As I’ve said before, we’ve always known intervention doesn’t work. Governments simply can’t help themselves.

Why would I link you to these things when the stock market is obviously crashing? Because 20yrs of experience tells me the best way to burn off your fight or flight energy is to study, rather than trade. Analogies are not a gameplan. This time is ALWAYS different in critical ways. But humans never change.

Your trading opportunity will come from other people panicking. Your job is to be the smart money. Pick away at your favorite longs. Slowly. And do some reading. The crisis will still be here when you get back.


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The Bear Strikes Back: Survival Guide

Stocks are down hard this morning because that’s how bear markets work.

For those of you who started trading after 2009, welcome to hell. You’ll find the heat a bit… stifling at first. I’m not going to lie, most of you are really going to hate the next few weeks. But, if I do my job and we all try to learn as we go along there’s no reason anyone needs to get wiped out like some house-flipping day-trader.

Stocks are set to erase all of Thursday’s gains right at the open. Blame China. Blame the GOP debate. Blame nothing at all. Price is reality. Here’s where we closed last night:

The Bear is Over!
The Bear is Over!


Here’s where we’re set to open this morning:


Sic Transit Gloria
Sic Transit Gloria


Digging deeper into the madness it looks like all the popular stocks (Either heavily-owned or those few with gains YTD) are down across the board:


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Today is a day when technicals are both very basic and important. Watch Wednesday’s lows. If we take them out every single person who “bought the dip” over the last two days will be underwater. Disciplined traders take profits before winners turn into losers. Newbies tend to wait until they’re down before conceding defeat. Either way, there will be sellers. This isn’t chartist jargon speak. It’s no more complicated than training a dog with a shock collar. When something hurts sentient beings seek to stop the hurt.

I can tell you from personal experience getting suckered into a headfake rally hurts. A lot. That means selling. The Trillion Dollar Question is this: Will there be buyers?

You don’t need a lot of new material this morning. All the charts from yesterday still apply (since, you know, Thursday basically never happened at this point). I covered the emotions and basic strategy in my morning write-up and the closing video.

Here’s one chart. It’s the S&P500 over the last two years:


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Counting from October 2014’s Ebola Lows (we hit 1820 intraday but closed in the mid-1800s) a reversal on the S&P500 anywhere between 1865 and 1850 would constitute a quadruple bottom.

Traders don’t believe in triple bottoms so you can imagine the suspicion with which they view the prospects of a knee-jerk bounce off ancient support. This is especially true in light of the freshness of yesterday’s pain.

Futures aren’t everything, as this week as proven. We could bounce but Friday’s are a matter of time. If we’re down hard at noon NYC time (with its fancy “NY Time Values”) there’s a decent chance today ends in tears.

Very few good decisions are made under pressure. Your instincts will probably betray you. Be afraid but not scared. Don’t make any trades without thinking about the risk-reward first.

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Grim Technical Indicators

On the opening trading day of 2016 I suggested making some charts to take the emotion out of the then-looming crash.

For those of you who’ve been understandably avoiding your portfolio, the crash is here. At least it for some stocks it is (RIP: GoPro).

As I type futures are higher but yesterday started strong and ended in tears. Bear markets, and we are in a bear market, don’t so much have “trends” as thrashing convulsions. Deal with these things as one would an enormous living fish in the bottom of a canoe. It’s caught you as much as you’ve caught it. Caution is advised.

Here are some charts from earlier this year, updated to represent the ongoing nightmare. Back later. Try not to rock the boat…

S&P500: Support at 1860 is too obvious… Headed for 1,700?

1708 is an official Bear Market. If you wait for someone on TV to tell you when a bear market has started you’re going to end up in the Bear’s stomach. I’m telling you it’s a Bear. I’m as qualified as anyone.

The dreaded John Wayne Gacy's Basement formation...
The dreaded John Wayne Gacy’s Basement formation…


Amazon: Filling gaps, as it does…

“Peak Amazon” was pretty good, as graph titles go. Shares are off 16%. History suggests about $525 is a decent spot to start building positions.

Amazon: Overloved
Amazon: Overloved


Amazon crashes all the time
Amazon crashes all the time


Apple: Honk if you’ve lowered your Q4 iPhone estimates!


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Rough Day for Facebook

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Twitter is like GoPro without the cool cameras… (Yes, I’m still long)

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The Red Menace at Summer Lows

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Waiting Out The Disaster

I don’t know why oil is down 6%.

I could make up lots of reasons. I’m a trained broadcast professional. I have an MBA from Stanford. I am practiced at the art of spouting best guesses with a confident, strong voice.

But those reasons don’t actually matter. Oil shouldn’t move 6% in one day. Oil isn’t Under Armour. It’s not FitBit. Crude should move in pennies. If oil is down 6% in one session it can only be because something in the marketplace is broken. Whatever it is if it can take oil down 6% it sure as hell can trash my shares of FaceBook.

Bear markets are hard. They take money from everyone. It’s too late to short and too early to buy. If you’re long a ton of broken GoPro et al and it’s keeping you up at night just sell it until you can relax. Otherwise, from where I’m sitting the best trade today is nothing.


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