I am new to this community and like what I see. I am a recovering Large Cap Growth Portfolio Manager. I used to command Billions of $ at my finger tips and tech stocks were my specialty. Now I am managing my own money and looking for a new gig. I know how the big boys think and how they behave. I am here to warn everyone! The jig is up and we are in the process of topping in this current 5 year Bull Market cycle.
I went to cash in the second week of January. I would like to tell you that I shorted these tech stocks and caught the top. Alas I did not but I have made some money on the way down. What you all need to know is that this current bull market is in month 62 (a new record). The longest prior 4 year cycle advances were both 60 months and were 1987 and 2007. This bull market’s foundation has been built on sand. Corporate profits have recovered due to cost cutting, share buybacks fueled by cheap leverage and government largesse in the form of extended unemployment benefits and food stamps. The multiple that we pay for that unsustainable stream has been provided by the Fed in the form of QE. The earnings are unsustainable and the Fed is tightening and that is all you really need to know. Yes it really is that simple! Don’t listen to CNBC, friends, family or collegues. Tune them out and feel the disturbance in the force. The Fly has mentioned the growth stocks as the canary in the coal mine. I believe he is correct. The trend is changing and what worked for you in the past is obsolete. Go from buying the dip to shorting the rallies.
How low do we go? If we are in a secular bear market, which I believe, then it is likely we take out the prior low of 666 on the S&P. I am not joking. There are two ways we get there: either a crash over a few months or a prolonged 18 month decline with a final push down.
Also, the large cap growth fund boys are like deer in headlights with Mo stocks. They are still long Mo for the most part. The price declines in Mo have come mostly from buyer exhaustion, hedge funds delevering a bit and some margin calls. Yes there are some stocks that have crashed already. Do not go bargain hunting! The real liquidation has not occurred yet. The sheeple look at the DOW and see it hitting new highs. I truly feel bad for most people. They do not know what is coming.
We could push to news highs for a brief period of time but I believe the market top is in or near.
I will post additional thoughts later on why this market set-up is eerily similar to the 1929 top. I am short AMZN, FB and own puts on IWM and DIA. I only have a third of my capital committed. Once the trend change is technically official I will go all in.
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Excellent first post. Excited to have you on board!
Below 666? You must be smoking crack!
He’s not smoking anything. He knows what he’s talking about better than you. I am expecting an 18 month correction, starting with a nice dive coming here very soon.
.
… that is either the most prophetic post I have ever read … Or, the most ridiculous !
666 ???
Only time will tell !!!
.
Lol
Break the 666 lows? I’d love to see that, from my fortified and booby trapped house!
Is this really Harry Dent?
Balls this guy is a former billion dollar hedge fund manager. At least zerohedge bloggers have some type of research. I don’t know if this is a joke or just pathetic.
A modest 65% drop
Jules
Let’s respect anonymity and simply look at the call instead of his past.
anything can happen in this market !!!
I can respect anonymity but if a self proclaimed former billion dollar manager is calling for a break of SPY 666 within a few months it’s not a good look. If he is correct I will eat my words and offer up my children to the almighty Bluestar. I’ll be sure to stock up on canned foods tonight though.
Bluestar, the model i am running show a current rotation into the old man stocks globally.
Is the next step to short term cash/equivalents?
Just double check if this is not a prank (cashing out on top and short hi-beta tech stocks, sounds too good to be t…)
Yikes only got my bunker half completed in 2009. Got to get back to work! 850 to 1000 would be my guess
This is going to go down as an epic first post
I agree top is forming. Treasuries & US dollar are signaling economic weakness beneath the headlines.
I think we get the slow waterfall: rally on fed news only to get hit by massive supply. Deflation first, then hyperinflation once fed goes all-in. A la James Rickards scenario.
If this is true how would everyone play this?
Look forward to reading more. was a good post.
Also what is your twitter.
Fly, here you go again. You unveil The Devil, he’s gone in a couple months. Now you trot out this guy. How come?
nevermind the twitter, found it
this call is right, short treasuries this time though both stocks and treasuries going down together
We are at zirp now and low inflation, that should be the sweet spot for equities. Yet I sense the broad market will not be able to ignore the crash in the speculative names due to over indulged financial connectedness.
I agree with Bullish… stay away form crack my son…. 666 lol… but yes we are topping and yes good first post… as i have been shorting some crap for the past 4 weeks it’s nice to see someone bearish .. welcome
Sorry for my initial comments. I look forward to reading your subsequent thoughts.
Also, do you find value in any sector? or is this more or less a broad market thing? Thanks.
jules
May 8, 2014 at 7:16 pm
“If this is true how would everyone play this?”
Simply follow The Fly. He’s done this before. We witnessed the magic right here from 2008-09. Toughest market to trade ever– He gained 60%.
The Fly is God.
Roubini, Faber and Grantham just collectively said….damn, son!
Exxcelllent.
Feel the force. I understand fundamentals and use my buddy tim wood the cyclesman to get the turns.
In 1929 we dropped 45% in a month and a half. then rallied 50% for 5 months then down a total of 80% for the next two years.
In the 2000 top tech fell hard but over all index was basically flat then feel 50 pluc % over the next 18 months
I’m with Jules and several others here, this is a ridiculous(ly absurd) first post even if his background is real.
This guy comes out of the blue (no pun intended), says we are in a secular bear (based on what? Some shit companies are selling off? Credit is rock solid, the market is within a few percent of highs) and then lays out a bunch of well-worn memes that are fully known to market players as the rationalization for a coming 65% decline?
A 10% correction from here would be a ridiculous buying opportunity, but hey, lets not let reality cloud some fine click-bait, Fly needs his $0.003.
Aside from my opinion, two questions:
1.) what is it about the commentary here that such a erudite PM such as yourself “likes”?
— Is it the incredibly haphazard fiduciary incompetence that is front and center with Fly lately?
— Or is the the band of brothers who stick by and self-reinforce one another no matter what?
2.) Funds have mandates…what was yours? What was the methodology you used? Funds run by guys who buy the kool-aid blow up all the time in all environments. Is this what happened? What would be a lot more interesting and of practical utility from a complete rando is…how exactly did you go from well-paid PM to random guy with account / free blogger?
Play carefully. Some leaps some cash shorts but have stops if I am wrong. I sold everything. 401k, PA, IRA and i am in the process of selling my house to rent.
Read this whole post in Gekko’s voice
@BobbyPeru I apologised for my initial comments. We need to think objectively. What is the catalyst to take this market higher? I respect his opinion.
Here come the trolls!
Beware.
Awesome post!
Hahaha! back to the toilet.
To add: I agree there is add’l downside ahead especially given softness in the Qs / IWM but the people I know (who, ahem, aren’t blowing up in momo names) are all squarely in the camp that the market can run super hard in late q3/q4 to new all time highs.
Running conservative numbers on a variety of “real businesses” not the whirling shit canisters that represent overvalued e-stocks is 10-12% down 20-30% up.
Bluestar
I wouldn’t sell the house to rent. If your scenario plays out the banks will never be able to foreclose. But if you rent, whoever owns it will be able to fire his shotgun at you. It’s always better to own
Dr FlyMay 8, 2014 at 7:57 pm
Here come the trolls!
Beware.
—
Yeah, beware to actually support your assertions in a debate rather than resort to crying all the way to the ban button.
I, for one, am interested in this guy’s view and will give his opinion the benefit of the doubt, provided he’s not as full of shit as you are
He said “super hard”. No homo
So serious around here. Everyone turn the frown upside down.
May 8, 2014 at 7:57 pm
@BobbyPeru I apologised for my initial comments. We need to think objectively. What is the catalyst to take this market higher? I respect his opinion.
—-
I would never apologize for an opinion, but I agree with you on your point Jules.
—–
I disagree with his assertions. I think they are known to the market and therefore cannot be cataclysmic for that reason.
Pull up a bloomberg, look at credit spreads. Look at earnings. Look at industries that didn’t rise 150% with diminishing rev growth and absurd valuations.
There is downside as I stated but it’s a buy op, market ends the year higher than it is right now
Bobby Peru
I managed a large cap growth fund. My benchmark was the Russell 1000 growth index. All good things must end.
These events usually have political catalysts that happen fairly contemporaneously. The Smoot Hawley Tarriff in 1929 and 9-11 coincided with tops you cited. Do you anticipate such a catalyst/trigger for your scenario and what probability do you assign to it?
I feel like I am in a movie, either that or I am having a psychotic break. Maybe both?
In fairness to this post, it’s very hard to predict black swan events. Very few do. So put your bbg terminal away jackass. It means nothing.
Db, you’re a smart guy, what probability do you assign to a future unknown that is wholly unpredictable? Lol.
I say it has to be …. one third! (rolls eyes)
Why is his wild ass guess better than yours? C’mon
—-
Plus, those “catalysts” represent new info that change the financial landscape, none of which he mentions in the post
Bobby peru sounds a lot like ORIGINAL DON
S&p futs are -1
Feel the horror
Db6
I am a believer in Cycles. Did you know that most tops form on good news. Only after the decline do the events appear. Leverage has caused this market to go up and the withdrawal of it will cause it to go down. The Fed is tightening and China is tightening. Its like the fat man in Monty Python meaning of life: “just one chocolate wafer thin mint” then he explodes. For this market the deleveraging has begun. Its intensity will pick up over time.
I’m gonna go back to my strawberry banana milkshake now.
Don’t you mean Jake Gint?
I am Bobby Peru:
http://www.youtube.com/watch?v=LUtn7e05C8M
Yeah. Similarities to 1929. SPX 1929. Done. Goodbye
Bluestar,
I think you just crashed this market… crash will start tomorrow open.
I love the name and will be shorting anything that moves.
BlueStar – Can you opine about the Financial Sector, either in the context of an investment? or ‘health’ of Capital Markets in general, Fixed Income and/or Equity?
I’m hearing ‘big’ layoffs coming at bulge. (maybe you can relate?!)
What a joke…please go post this on zerohedge, marketwatch, seekingalpha, or something other click bait chop shop that will sacrifice the quality of its content in order to get the next Joe Day Trader, Bob Hyperinflation, or Mike TheFedIsOutToGetUs to read this garbage. Do I think the market is set to rip like its 2013? No. Do I think the market is going to crash like its 2008? No. Do I have enough certainty in the direction of the market that I will sell everything, even my fucking 401k? You must get kidding me. I generally detest trolling, and the ones that roam these boards are some of the worst. But this shill of a post deserves it. Any billion dollar growth fund manager that is now blogging under a fake name with a picture of Gordon Gekko is either doing it because he’s lying, or because he blew up his fund spectacularly and his bosses realized he couldn’t balance a check book let alone manage a portfolio. Giving you the benefit of the doubt, which assumes that you were in fact a billion dollar manager, then probability suggest you suck at managing money, so why the hell should we listen to you anyway. Fly has had a tough run recently, but you don’t hear him screaming in the streets about 666 and selling your house. Give me a break
I’m burying my Kruger rands yet
More important than the market…what does it feel like to fuck Catherine Zeta ? Being in there… thats what we all really want to ask.
Fly,’
I think this guy is a good idea… too much buy this buy that .. We needed a bear voice.. should we expect any trading ideas?
WOW, you are really reaching Fly. How disappointing.
In the bear market of the late 60’s and 70’s, the price low was in 1974, and the valuation low was in 1982. From that point the market broke out and went on to rally 18 years. Our most recent bear market began in 2000. It reached a price low in March of 2009. It reached a valuation low on October 4th of 2011. From there the market went on to break out above past highs in 2013, putting us in a new secular bull market. After 2013 a 10-15% decline would not surprise. Welcome aboard Bluestar !
PG Warner
I didn’t write this. It’s a new blogger.
fly,
can you comment on solarcycles.net and his research. I know you are a thinking man and like to read..
Why is thinking about this in terms of likely outcomes so funny? Strategists do it all the time. Obviously Blue Star assigns a fairly high conviction to this. Black swan events are actually predicted fairly regularly usually by online ads or by those selling books and videos. You are essentially predicting we will have the Great Depression 2.0 that we avoided (postponed?) five years ago. If that is tonight’s topic and you are credentialed as you say, it is fair to ask what are the most likely scenarios and how should an investor respond.
gj
I am not a financials stock expert (had an analyst on team for that)but technically the financials are beginning to behave badly. However, I understand and study the market structure closely. First when he selling begins the HFT’s will disappear. Thats 40% of the volume currently. Also the bulge brackets have reduced the amount of capital they commit to both equity and fixed income due to Frank/dodd regulations. When the selling begins in earnest it will be like trying to thread a camel through the eye of a needle. This is really one ginormous carry trade that took five years to build and will unwind much quicker. The financials scare me.
I STRONGLY believe pizza delivery cars should be allowed to use sirens.
jbran
If we are in a secular bull you are correct. I don’t think we are. The rally out of the next major correction is key. If we fail to go to new highs then look out below.
I give a hat-tip to a gentleman posting at iBC without using crass language.
*tips hat*
ForgetAlpha
Such vitriol. I use technical analysis coupled with fundamental analysis. I use technicals for major turns in the market. Stock picking in a bear market is a waste of time. If we are still in a secular bear, which I believe we are then cycle analysis says that we will take out the previous four year cycle low which was 666. if not I am wrong. I am blogging to warn people about what I see coming. Many of my friends that I have told this to have your reaction. Very angry. They think I am crazy. I get that. I got 2008 right and then made the turn in 2009. I used cycle analysis for the turns. In large cap growth land that meant beating the bench both years. Still lost clients money but was a relative hero. My business exploded up and we gathered a lot of assets in 2009 and 2010. Left in 2012. All good things end.
Bluestar,
Are you currently short? If so, what sectors?
Are you long bonds?
S&P 1929 to present http://www.raymondjames.com/images/inv_strat/140505_1lg.gif
Everyone has their own take on things, well founded or not. I like to find the extremes, like zerohedge on the one end…CNBC bulls on other, and know the truth lies between. Large cash position is advisable now, and being a nimble trader. Not a great time to be a buy and hold type unless you need so cap losses.
Welcome bluestar… welcome indeud.
Db6strings
Tops occur on good news. BY the way most professional money managers are bullish and all in. When I talk to my friends in the business they think I am crazy and thats why I think I am right. They all say to that the Fed won’t let the market go down. So Mister and Mrs America your stewards of capital are relying on janet Yellen to protect them. When the deleveraging begins the fed can not stop it. I can not offer investment advice other than you should be very careful out there if you believe me. I am short with tight stop losses.
Mr Partige
Short AMZN and FB and own Puts on DIA and IWM. Using one third of capital so far. I am up 9% YTD.
Thank you
9% might be the best on this blog. Anyone doing better than that? How/In what?
I believe Chess is doing very well this year too.
Really don’t know what to make of this post out of the blue-star. At first I thought this post was “bullshit”, because your background that you claim to have doesn’t fit the mold with what you’re saying. But the more I think about what you’re saying, the more I’m intrigued. I need to do my own due diligence now. Thanks for posting.
By the way, I’ve been 75% cash for the past 3 weeks.
Until Obama leaves office, you aren’t going to see any of this scenario remotely take place. If you do think it could happen, get out in 2015. There’s no way a historical president like President Obama brings this country back from the brink of destruction to let it happen again at the end of his watch. It’s a game and he aims to win it. You will see sucky summer trading but keep on smoking the legal weed if you think this shit goes deep south on his watch.
Bushwacker2
If I still had my old Job I could never express this point of view internally with the firm. It would be considered heresy. Again in the insane world of benchmarking I was in I had to stay 95% invested. So I would express this view quitely by buying stocks with a beta of 1 or below and trim or sell the high flyers. The market would go down but if I lost 50% vs the Market down 65% i would be considered a hero. Is not that insane? Because I am free as a bird I can warn people about what I see coming. You don’t have to believe me. Most of my former friends think I am crazy. they thought I was crazy when I sold GOOG CRM AAPL et all in 2007 when the charts turned. AT turns fundamentals don’t matter. the market is sniffing out a storm. long duration growth stocks are the first to go then low beta later.
Marc David.
Cycles are out of the Presidents hands.
Bluestar I get what you’re saying. PMs that work for a big firm are expected to regurgitate the house view. Kudos to you for sticking with your beliefs even if it meant leaving a career like that. If my memory serves me correctly, what we’re seeing with the rotation from high beta stocks to low beta is the same script that played out in 2000 and 2007.
….before the SHTF
The fact that energy stocks have done well recently and utilities are hitting new highs is a signal that we may be somewhere between latter stage of the bull market cycle and the early stage of a bear market cycle forming.
Excellent point Fly– the best hedge is a huge mortgage. If the crash comes you stop making payments and stay in the house 3-4 years anyways.
Cascadian
The house sale is due to possible relocation more than worried about the world ending. I wouldn’t mind the capital from the house to trade. fortunes are made in bear markets if timed right.
If I were living on the East Coast, I’d relocate to FL. West Coast, Seattle or even Vegas. None of those places have a damn state income tax.
Bluestar – do you feel the same way about most markets globally or will there be any notable safe havens? Thx
good day mr.bluestar,
how about bce printing money . it starts june, go figure why fed and bce aren’t driving the ball again higher and hold thight the ribbons, when they now much better then you where we are with cicles bubbles and shits )
*know
Even if your thesis is wrong, it is noteworthy that margin debt and short selling are at record highs, which ironically could create a similar outcome. Using debt to ride the deleveraging trade.
So, Zion will be destroyed. It is inevitable, Neo. You must choose which one to save.
Thanks. I did not sleep much last night.
I don’t know Tim Woods work but I do know a few cycles guys and girls and they are no more right than anyone else and I do mean anyone else. They have a so-called edge in some markets and in others, they suck, to borrow a phrase. Sure, some cycles-peoples will be better than others.. but imo, cycles is just another term for short, intermediate or l/t overbought or oversold and within those cycles or swinging-waves are mini-cycles or waves. The entire creation is pulsations of swinging waves, all motion is wave-based, time is wave-based and therefore space is as well. Until we can travel through time and space, our markets will be subject to wave-based laws and thereafter, there will likely be no need for such markets as are present today. I applaud Tim Woods for attempting to predict markets based on swinging-wave-based motions that pulse through anything and everything, including financial markets but Woods 666 prediction will only happen in an apocalyptic scenario which always has some possibility considering the insanity of the humans residing on this planet and their so-called leaders and the power-, control- and greed-mongerers
I like this guy – good find Fly.
Welcome Home , Bluestar. Welcome Home
There will always be outliers: perma-bulls, perma-bears, Elliott wavers, gold bugs, etc. I got grief because I asked about probabilities, but all of these scenarios fit somewhere in a bell curve. People are fascinated with apocalyptic horror stories, but we have to have some hope that there is a plan, policy decisions or some silver lining event that gets us through to better times. Otherwise, why care? Why read this and reply? Right now you can listen to Harry Dent tell you that we are on the cusp of disaster. Roubini and Faber are trotted out on CNBC to host every sell off. The inernet is replete with stories of China cornering the gold market and displacing the dollar as the world’s reserve currency. Black swan stories abound with tales of the coming Apocalypse. IBC can postwhat it likes, but they need to consider who their customers are and want? Where does this fit for those merely trying to navigate today’s market? I sincerely hope BlueStar is unequivocally wrong. My family and I need him to be wrong. There has to be a constructive answer rather than betting on the house burning to the ground.
i would never be in such a mad state as to depend my family on a hope that someone prediction about financial markets ( on a supposed top ) is right or wrong ..take care
Great post bluestar, very thought provoking. No need to fear the big bear if you’re on the right side of the trade. You are so right that big $$$ can be made .
Yes, we’re taking out 666 because there’s a new credit crunch and all. These are the exact same theories of a “double dip” i have heard for years.
When we hear from Doug Kass’s friend Merlin in Europe, a firm bottom will be at hand. I give it a month or so…
Nice to have a new blogger here BlueStar! Looks like we finally have a full-time resident BEAR.
I have to respectfully disagree, however, but like that you’ve taken a hard stance in beartown–too many people out there screaming ‘i told you so’ after the fact.
Juice,
I marry fundamentals and Cycles. We are currently at the longest 4 year stock market cycle in history. if the Fed and China were not tightening i would not be making this call.
I think cold hard cash is your best bet. Shorting is tough.
The Fed and China told the Euroean central bank that it is their turn. my bet is that it will not be enough.
db6
their will be short covering all along the way down.
dae42
How do we bottom from a new high?
Finished listening to all your interviews with Tim last night and digested some of it. I found the dollar call interesting as well as the discussion of the relation to liquidity and will definitely be watching that much closer now.
Looking forward to hearing more, especially how you continue to play this.
It’s when I see these posts that I know bearishness has gotten to an extreme just as bullishness does. This is going to mark a short term bottom. Mark this post.
TJWP
Watch the dollar. A meaningful move up is a sign of deleveraging and the Fed losing control.
mtpennybags
yes you may be right. however i did get bearish in january. The nasdaq may rally. But the Dow is at a new high. This divergence will resolve itself. I may be early on a top but it is very close. Being long anything scares the living crap out me.
Just want to let you guys know that Dr. Blowup is now down -37% YTD following today’s sales of CRTO, RKUS, JAZZ.
His hasty purchases after his ill-conceived “PPT OS plan” managed to lose him 4% in a single week on top of an already -33% year!
Anyone who is this inept deserves the criticism they get. Cheers!
If he actually had a real MM biz, his next move would be to close up shoppe, change the name, and reset his “highwater” mark 😆
Bobby Peru
Anyone who is in the markets is wrong from time to time. I had an awful 2011. But an over all good track record. Worst year of my life. Go easy on the Fly. he admitted his mistake and cut his losses. Beware of anyone who has a perfect track record. Bernie maddof had one. How did that end?
Well anything is possible but I don’t like betting on a 3 legged horse. Sure if the horse comes in I’ll be set for life but I like to bet on the closest thing to a sure thing. I don’t get rich but at least I’m not stuck at the starting line.
Denninger is that you?
Well done Bluestar. I am 50% cash but looking to raise more. The end of QE will mark the top. Not hedged nearly enough on the short side.
Excellent first post !
going to see a correction , don’t know doom or not..
Bluestar what you think gold will do?
Blue star,
Interesting first post. Thanks for your comments. I’m curious what you think precious metals will do in the scenario you describe above….or shortly after fallout. Thanks.
MattDC
I am not a gold expert but my buddy Tim Wood believes Gold topped in 2011 and the cycle low is not due until 2015-2016. I think if I am right then the DXY will rally hard as the deleveraging begins. With the DXY as still the reserve currency of the world, the DXY could really get in gear to the upside as global deleveraging begins. The whole belief system of a dollar collapse is wrong at least in the initial phases of this carry trade unwind.
Billiejones
See previous reply. Gold goes lower first as deleveraging occurs. Many gold players are levered and in deleveraging you sell what you can not what you want to. There will be pressure on all financial assets. So $dollar goes up first gold bottoms later then explodes up as the idiot policy makers try to save the system again with more idiocy.
BillieJones and MattDC
The bulk of the credit that has relevered the system is denominated in Dollars due to our status as the reserve currency of the world. Credit expansion creates the need to sell dollars to buy the debt. This is what causes the debasing of our currency. When the carry trade unwinds (deflation) and people sell the $debt they hold, default on it or repay the debt there is a need to buy dollars and hence the dollar goes up in times of a liquidity crisis. In the 2008 financial crisis the dollar when straight up.
The dollar may collapse someday but not in the next crisis. When we loose the reserve currency status of the world then the dollar is toast. No other currency market is as deep or stable as ours. Just my opinion.
Sub-666 call is not beyond the pale.
Giant megaphone since 2000, takes us back to the 2002-2009 lows trendline.
http://tinyurl.com/lm56wft
After the final low (SPX 560)? Dollar collapse! Good times.
Christian G
I am with you on the Bond call. Bond made a three year cycle low in Decmeber.