Rates Aren’t Going Up, Bozo

If the economy is strong enough to get off the QE tit, we’re all better for it, are we not? It’s also worth noting the difference between adding more stimulus and raising interest rates. We are nowhere close to a Fed rate hike, so chill out and go buy a house.

Speaking of which, housing related stocks are leading today’s charge. This is exactly what the market needs, real leadership in an industry that is vital to the economy. Stocks like BZH, MHO and TOL heading higher is exhilarating for stock market junkies like me. We read the headlines and know, from first hand experience, that the housing market is back. Blackstone is buying residential real estate with both hands and so is Public Storage. The best case scenario for this market, this economy, is to see the market rise, led by housing related names, which in turn will buoy materials and of course banks.

BALT trading lower sucks. I know. However, rates went up again today, spearheaded by Supramax. I cannot remember the last time Supramax rates went down. This is a rip roaring bull market and it’s all China related. Upwards of 65% of all iron ore shipments go to China. The surge in rates is due to a combination of two things: 1. lack of adequate shipping capacity. 2. The Chinese economy is strengthening.

Over the past two years, BRIC has been absent from the stock market euphoria we’ve enjoyed. What if they are finally turning the corner? What if the market’s next leg up is due to a lift in BRIC GDPs?

Something to think about. In the meantime, revenues and earnings power for the dry bulkers surge onward.

NOTE: For those of you who want to learn about options, take this opportunity to join the ranks of After Hours with Option Addict. He will be doing a very special 5 day crash course next week. Aside from that, he’s a true boss in picking stocks too, so don’t miss it.

Benjamin Bernanke is engineering one final stock market rout before the year ends, before he retires to the beaches of South Beach Miami, where he will continue the good work as a cocaine vendor.

Rickard Santelli, from the CNBC, is so mad that the futures are ripping higher on news that more jobs were created for the month of November. He is simply besides himself with venomous rage. He even said “stocks would eventually go down” once all of the realities were understood. Gorilla of a man.

Mr. Bernanke begs to differ.

From the darkest corner of his parlour, he sits, quietly, laughing at the rats scurry atop the ship, trying to discern “what is all means.” He smokes from his pipe, filled with marijuana leaves, mumbling to himself “got you bitches real good this time, ho, ho,ho. I’m Santa Claus, motherfuckers.”

Fin.

I have to be brutally honest with you. This industry is simply the best place to put funds. The only impediment, which happens to be a big one, is that for many bulkers, it’s too little too late. They’ve amassed too much debt and will either go bankrupt or dilute. That’s why you own the stocks with good balance sheets, like BALT and DSX.

Let’s do some back of the envelope math for BALT, using current day rates. Remember, unlike other bulkers who opted for charter rates during a depressed market, BALT chose to stick with spot. They did this because their balance sheet was good and could afford to ride out the storm.

4 Capesize $33,475= $133,900
2 Ultramax $18,000= $36,000
4 Supramax $15,222= $60,888
5 Handysize $7,820= $39,100

Total= $269,888 per day.

Let’s extrapolate the $269,888 per day by the number of days in a quarter, shall we?

SURVEY SAYS: $24,289,920.

The company did $9 million in revenues last quarter. That’s 166% revenue growth, quarter over quarter.

What’s changed?

Aside from rates spiking, they bought two Ultramax and two Capesize vessels, adding another $9+ million in quarterly revenues in the process. Understand something, what’s transpiring right now is a best case scenario for the company, providing rates remain elevated. They are going to make a mint at current levels and their share price, without a doubt, is going to skyrocket.

Take the last sentence with some salt, as I am archly biased, talking my own book.

Nevertheless, just because I am talking my own book doesn’t mean it ain’t true.

With today’s buys and market appreciation, BALT is now a 30% holding of mine. I am fully leveraged, extra tilt, at 140%. Other large positions include RBCN, NSTG, GIMO and YELP– with YELP being the smallest. SOL was a minor position and has been eliminated due to classic chinese burrito dealings.

As we speak, the market is weak, The PPT is not oversold yet, and I am up almost 3%.

I am still 15% off my annual highs and believe I can attain that feat before the end of the year. It’s a lofty goal that seems incredulous. However, if I am correct about my oversized positions, I will make it look rather easy.

The month of November was an abysmal one for me. Even more so than the losses was the stifling of activity, due to being hamstrung in flat to down positions that engendered an emotional response from me. I’ve resigned myself to seeing them through, at least for another month or so, in order to stay true to my convictions.

The overall market is in a bad spot, due to earnings misses in retail. For the most part, the consumer is on strike, shopping away at AMZN, but nowhere else. Buying retail stocks has never been more treacherous than now.

Yes it’s true, I am swinging for the fences, betting a lot on a few ideas, even though I am way ahead. Consider it my vice.

I sold SOL for a horrendous percentage loss. I don’t have time to mess around with chinese solar burritos who manage to miss estimate by 89 cents.

With the proceeds, I added to an already massive BALT position. The size of my BALT is now equal, on a percentage basis, to FTK, YELP and other thesis plays of mine.

The good news is Capesize rates are up more than 10% this morning, lighting a hot fire under the shares of dry bulkers. I expect to make a King’s ransom in BALT today. The bad news is SOL. These crazy people are having issues collecting money from China (shocker!). They managed to beat on the top line by $50 million, but took a major charge and missed the bottom line by 0.89!

I’d like to have the patience to understand what is going on there. I’d also like to know if I should be bailing on the stock here, down huge on a percentage basis, or double down. I don’t have a large position in SOL; but -15% hurts no matter how small it is.

For now, let’s celebrate the hedonism to come in the bulkers. Companies with most exposure to Capes are DRYS, GNK and DSX. However, BALT, thanks to their recent purchases, now have 4. More importantly, they just bought 2 Capes when rates were down to $17,000 per day. Now that day rates are above $33k per day, they look like the smartest men in the room.

My grandfather made a lot of money when he was young. He spent it as fast as he made it, never bothered to buy a house, and didn’t believe in saving for a rainy day. After all, he was a living ATM machine, an artist of sorts, refinisher of furniture at a time when people cared about craftsmanship. He had famous clients, such as “Mr. Progresso” and wore a yamaka whenever a jewish client walked into his shoppe. He knew how to make money and provided for his family for decades, until he woke up one morning without the ability to see.

High blood pressure was always an issue; but he never imagined it would take his vision and part of his hearing to boot. He could see a little bit, but not enough to cross a street, drive a car and definitely not enough to refinish furniture for Mr. Progresso.

Since he didn’t save any money and his business was 100% reliant upon his craftsmanship, he was thrusted into poverty, almost overnight. For years, until his death, he agonized over his missteps, almost daydreaming about “all of the money” he blew on bullshit. He had cars, clothes and rubbed elbows with the Sinatras and other unsavory characters, and then nothing. Total and absolute dependence on social security checks that amounted to no more than $1,000 per mo, because he was creative with his accounting when he was making money, if you know what I mean.

Seeing him struggle like that always motivated me to do something with my life. I didn’t want to just make a bunch of money, blow it on cocaine parties, then end up grilling a swordfish over a flaming barrel of garbage. Some men are like peacocks, dressing themselves up in flamboyant clothes, tattoos, and creative hairstyles, in order to attract the female species. These people have not evolved in over 400,000 years, base instincts on display like savage beasts.

Life has to be more than that. Happiness must derive from accomplishments and then using said accomplishments to make the world a better place. The world doesn’t have to be “the world” per se, but your sphere of influence.

I’m rambling a bit here. But the point is this: if you’re banking coin now, save for a rainy day. Live within your means and make sure you continue to grow as a person. Read things you wouldn’t normally read. Be curious and always adapt to change. As an advisor for people with a lot of money, the biggest mistake I see people making, aside from tax planning, is retirement planning.

Own your house. Build equity. Invest in stocks. Bank the coin. Build Orbital Space Cannon. That’s my life strategy. What’s yours?

I had a solid day, up 1.6%, led by BALT. NSTG gave it up into the bell. That stock is so illiquid it’s impossible to trade. You just have to hold on and hope for the best.

FRO is a beast to be reckoned with. Naturally, I regret selling that too. But BALT will be just as fantastical. You must exhibit a bit of patience in order to realize the vision.

Speaking of which, dark clouds circle the shares of IMMR. In my opinion, it’s due to forced selling from one of their largest shareholders, some bozo from Dialectic, Fichtorn or what have you. He is the reason why I sold my shares 40% higher. I knew he was selling and would be forced to sell more, since all of his other holdings sucked. He’s a big bear, gold bug, everything that’s wrong with 2013.

GOGO hurts me the most, only because I saw it so vividly. I sell these great stocks because I am greedy. I want to “get over” by selling high and buying back low. But if I was truly honest to this mantra, I’d be buying ANGI here hand over fist, being that I sold her north of $25.

I’m still heavy into YELP and RBCN and have been waiting for my holdings to make a move. Even though the market is at new highs, its been tough sledding in momentum names. Case in point: SOL. What a dog. However, as long as WTI crude keeps trending higher, there will always be a spot for solar in a gambling man’s portfolio. Plus anyway, these companies are knocking the cover off the ball.

Truth be told, I fixed myself in a variety of illiquid securities and have become hostage to their caprices.

When I said: “the Santa Claus rally begins now”, you didn’t think that included you, or did you?

Ever since that post, my fortunes have soared, alongside profits. Shares of NSTG, BALT, SOL, YELP and GIMO are sharply higher. All I need is RBCN to lift off and I’ll ask nothing more from the stock Gods.

People, after yesterday’s small rally into the bell, The PPT never did close at Oversold; but it is oversold now. Let the market close badly. Allow the people on CNBC punch each other in the face for a good scoop, hedge fund redemptions and the like. Rest assured, Santa didn’t forget you. You will get yours.

In the end, everyone gets what they deserve and that has nothing to do with fate. Be patient.

Buckle up: it’s gonna be a bumpy ride.

The PPT wins again.