This is not a business for the faint of heart. Some like to sneak around the side of the house, burglar a little when the owners are sleeping, then escape into holes in the ground, fearful of being caught. “The Fly” is not a man, such as this.
“The Fly” kicks down the front door during your supper, cordially introduces himself whilst lighting his pipe. He then walks into your living room, disconnects your television, then walks out with it. Before leaving, he dumps his ashes onto your dinner plate, saying “good day to you Sir,” then makes way via pink cadillac at 155mph.
That’s how I trade, always have and always will.
I’ve made my bed and now I am going to lay down in it.
Here we go again. The market is selling off and oil is down the tubes. To be clear, my hunch on oil is only that– and I am using seasonality factors to justify my bullish position, coupled with the notion that this decline must cessate sometime.
The market was supposed to offer us 100 NASDAQS. Instead, we get none. Had it not been for Apple, we’d be lower today.
I cannot control sentiment and can only offer inalienable facts. The conditions for a very strong market are present. The number one roadblock to it, and I mentioned this the other day when reviewing the classic Buñuel film The Exterminating Angel, is human emotion. We are a fearful creature, always scratching about the door, trying to escape this, that and the other.
I thought we’d get winship today. Instead, by the looks of it, we will get death and destruction (extra hunch back from 300, part 2).
I know it has been discussed ad nauseam, but how awesome is Apple? They made a record $18 billion for the quarter and will have close to $200 billion in cash after next quarter. It’s like they’re building their own sovereign wealth fund. Imagine 10 years from now when Apple’s fund is worth in excess of a trillion dollars. Then what? Something tells me Apple will play a very big role in finance, ten, twenty, thirty years from now.
Futures are slightly higher and my X is up about 8% in pre-market trading–thanks to much better than expected earnings. They cited a big pick up in consumer spending and flat-rolled products, tracking well with GDP.
Listen to me, you’re a super-jackass for shorting this tape. Inflation is non-existent and CPI numbers are going to be negative this year. Corporate earnings are great and europe is printing money. Our Fed, mind you, will eventually respond to negative CPI numbers and begin another round of QE. I’ve always said this was going to happen, so this is nothing new.
The biotech industry is making retarded money, which is why so many stocks are priced in the triple digits. This is it, folks. The economic renaissance that you’ve always wanted and dreamt about is here. The only thing that can stifle it, or delay the inevitable melt up in stocks, is human behavior through sentiment. All of that is transient, however. Outside of the matrix of your fictitious, horrible world, is a place that is booming with innovation, connectivity, and ideal for economic expansion.
One small side note about oil that none of you ham and eggers are talking about is the seasonality aspect. Oil never trades up in January, but tends to forklift higher ahead of the driving season.
That’s right, even when times were good for the fat slobs in Venezuela, oil traded lower 8 of the past 9 years in January. That trend would reverse in February and March, setting up for a very timely long-trade in late January.
Because of this, coupled with dollar weakness, I started a position in SN.
Let me show you a new tool in soon to be released Exodus, the second iteration of The PPT. Our algorithms grade each stock, sector and ETF. We’ve added a lot of visuals to the software, showing stress points and ranges. Last week, inside The PPT, I highlighted how biotech was at the bottom of the range. Now it’s near the top. When I say “range”, I do not refer to stock price, but Hybrid score, which is a combination of technical and fundamental scores, mixed in with lots of sub rosa grading metrics.
Have a look at gold today.
I was going to buy gold yesterday, based on this chart alone. However, I hate gold, deep to the core of my bones, so I was deterred.
As for this sell off: the CAT-MSFT axis of evil cannot be taken seriously. Several of my top positions are up and the dollar is weak, which is good for oil. Gravitate towards commodities today and you should be fine.
I love Shake Shack. It is my favorite burger joint on the planet. I’ve never seen a fast food restaurant as busy since MCD in the 1980’s or CMG right now. Although I love SHAK, I am having a hard time coming to grips with the $500 million+ market cap, despite being smaller than HABT.
Here is how SHAK, HABT and CMG stack up.
So let me get this straight: SHAK is going to trade more than 2x HABT’s market cap, yet do $60 million less in revenues and sport a growth rate equal to them? This smells of NYC snobbery, considering SHAK has 7 stores in the city. I am going to buy SHAK, one way or another. I am comfortable with owning it and allowing the growth to fill in the high valuation.
Again, SHAK is going to trade upwards of 3.5x sales, and HABT is at 1.5X.
UPDATE: Fucking shit data was wrong on HABT, using Yahoo finance. I had checked it against another source and was the same. The valuation argument goes out the window and this is simply a long term value proposition.
Only one thing makes sense here: HABT is significantly undervalued and should trade upwards of $50 in 2015. Every stupid restaurant stock on the market has rallied over the past month, but HABT. The time has come for an extreme melt up.
Regarding the genre of owning higher end casual dining restaurants: this is the single best place to be in retail. You get the chance to buy HABT or SHAK in its nascency, with the advantage of not having McDonald’s, or some VC, incubate them– like CMG or BWLD–for an inordinate amount of time before coming public. If the concept works, which we know it does, all that matters is store growth.
Back in 2001, BWLD had 150 stores. That stock is up 300% over the past 5 years.
How big is the hamburger market?
How about 35,0000 stores large?
Domestically, there is room for at least 2,000 franchises for SHAK and HABT, who will rob and steal market share away from old legacy, lesser quality names, like MCD and QSR and WEN.
Back in 2002, CMG had about 250 stores. With the advantage of hindsight, how would you like to invest in CMG back then?
That stock is up 641% over the past 5 years.
SHAK and HABT are to BWLD and CMG what they were to MCD and QSR, only much, much earlier–which presents early investors with a unique opportunity for massive upside potential.
I want 500 feet of snow, the NYSE shut down and Wall Street removed from the map–replaced with a tundra. I gander outside of my window and see the flakes started to stick. The kids are playing about the sled and I made 2.5% today.
Because of the sensitivity of my situation, I shall be coy about my next moves and keep a relatively low profile. Just know that I believe today was a pivotal day in the big scheme of things. The market rose when it was supposed to fall. Beaten down dogs rose from the ashes and set fire to the bears who were mollycoddled into believing Greek elections were going to help them grow their nest-eggs, via inverse means.
Listen to me now: the rally has begun. See to your affairs and prepare for winship.
