I am not going to try to find a bottom in crude. For all of you who are buying on the way down, I wish you luck. This isn’t like a stock that just missed earnings. Oil isn’t going to V-shape up. The major integrated oil companies are going to slash their capex budgets and the small players will be crushed because of it. Having said that, I am certain there is a violent upside bounce to be had somewhere. For me, I don’t feel like playing that game.
GPRO is trading sharply lower this morning, which is par for the course. It has morphed into a sickly stock, a regular Tiny Tim. Just a few weeks ago, it was a rock solid porn star, crushing the feeble skulls of those who bet against it. Now, geez, it’s just a paradiddle, easily crushed under the weight of weak sellers.
Instead of lamenting on my losers, which gets boring, let’s talk about the sea change that is taking place in fast food. MCD reported abysmal numbers this morning, which is a testament to how much America hates them. MCD, BKW, YUM and WEN are all on the way out, paving a path for new players like BWLD, CMG, HABT and PNRA.
To offer an analogy, HABT/Shake Shack and others of that ilk (high quality hamburger restaurant) are to MCD/BKW what Apple was to Compaq 10 years ago. MCD dominates the hamburger genre, but has lost its way. America is becoming a more health conscious society. You can easily see it in our consumption of soda vs water and cigarette use stats. The ascendency of WFM vs the bedraggled microbes at Pathmark and other ridiculous supermarkets is only the tip of the iceberg of what is coming.
Naturally, with any major shift in society, the move is incremental. Old schoolers will cling onto the past, bidding up MCD on any semblance of positive news. They will scoff at companies like HABT and Shake Shack as being ‘hyped’ or ‘overvalued’, point to lock up periods as a reason to hate the company–all noise. The bigger picture is market share shift and who will be the winners 5 years from now.
Let’s all take a moment to be thankful for the Dow Jones Industrial Average, as it approaches the historic number of 18,000. Never mind the fact that Visa made up 30% of the move higher, from 17,000 to 18,000, or that a myriad of high growth industries have been fucking pummeled into dust. Let’s simply ignore all of that and jerk off to the wonders of Dow 18,000.
One more thing before I go (extra Columbo), have a look at some of the returns of choice industries over these past 3, wonderful, months.
Generally speaking, when large and mini bubbles in the market pop, the maximum downside resides in the 70% range. We’ve recently seen this play out in May of 2014 with a wide array of tech stocks. We are seeing it unfold now in oil and have seen it play out many, many times in the history of stocks, from dot coms in 2001 to banks in 2008.
The Option Addict texted me an interesting stat this morning, alluding to the last time oil and stocks diverged like this, which was back in 1998. It’s funny that he should mention 1998, since it was the first and only time I thought about leaving the business. Times were so tough for me then, I thought nothing could salvage my young and miserable career as a stocked broker. I recall owning a lot of stock in a company called Gulf Island Fabrication, just before the collapse of oil prices.
Back then, INTC, MSFT and DELL were the darlings of Wall Street; everyone was buying them, GTW (Gateway computers) too. Being a contrarian, I didn’t want to buy tech, so I opted for oil.
BIG MISTAKE.
Oil went down to drill bits and GIFI descended with it.
Take a look at the pin action.
I recall blowing out of GIFI around $15, just before the collapse. I then began a fanatical campaign of buying UNDERPERFORMING dot com stocks. I used to spend hours and hours researching prospective internet companies on the bloomberg terminal. I shared these ideas with my friends and co-workers , who scoffed at me and said “MSFT will own everything”. Hardly anyone even knew about these stocks, like Earthlink, Mindspring, CMGI etc. I was an early adopter. What people know about the dot com era is that people made money. What they don’t know about the dot com era is lots of people lost money.
So in 1998, in the midst of a market meltdown, young Le Fly started to buy dot coms in earnest. My buying power was minuscule, but to me, back then, it was an enormous sum of money. One of the stocks I was buying was ELNK. Have a look at the pin action.
Working with the timeline I am laying out here, I sold out from GIFI around May-June and then I started buying ELNK, BYND, CMGI and others from June on. At first, it was dicey. As you can see by the drop in August, I was hating life to the maximum then, hanging around the office, all depressed and shit, playing Tetris. But then things started to pick up; things started to get real colorful (extra Randy Savage). By November of 1998, I was making a fucking fortune.
As 1999 rolled in, the old school tech names were dead money. I know this is hard to believe, since the NASDAQ was up 100% that year; but they were.
Here is the trading action for INTC that year.
Not impressive. During 1999, all of the assholes who were shitting on me in 1998 were now my cold callers. My production shot through the roof and they couldn’t catch up, mainly because they had no idea where the money was going. I knew it because I had done the homework.
We started buying networking stocks, B2B names and selling out of 2nd tier names like ELNK, who began to underperform, horribly.
Now if you were long ELNK or INTC in 1999, you felt like shit, especially when stocks like JDSU and CIEN were popping off.
JDSU
CIEN
Why was this happening? The market in its infinite wisdom concluded the internet was old hat, despite just being invented. Stocks like AMZN, who went from $5 to $30 in 1998, were now acting like old man stocks in 1999. Here was the mediocre performance of AMZN in 1999.
The theory was that the internet was growing. People had computers. Now we needed to speed up the networks, in order to make it work. So, like the railroads in the late 1800’s, America went on a frenzy to build out fiber optic networks. Companies like JDSU and CIEN were at the epicenter of this craze and their shares ran like wild dogs higher. This, of course, was a classic mistake, which led to over-capacity, which led to the eventual collapse of the industry.
In 2000, the party came to an abrupt halt. However, there were stocks that outperformed, like EXTR.
I remember a friend of mine riding that stock from nothing to its peak and right back down. So many people thought these networkers would outperform forever.
Another one of my favorite names was HLIT, another networker. This stock ran from $12 to over $130 in a year–then right back down in 2000.
HLITÂ 1999
HLIT 2000
The party was more or less over. Actually, the party was 100% over and I was inheriting 100 new clients from fired brokers per week, by the spring of 2001.
So what have we learned today, children?
1. When bubbles pop, the downside is your worst nightmare. They do not come back.
2. Pay attention to where the money is flowing, else end up a cold caller for an asshole broker.
3. Book profits.
4. Before you can book profits, you have to know where to find the waves.
In conclusion, I don’t know for sure if the oil bubble has popped or not. What I see with my eyes is an industry being taken to the woodshed by Wall Street on a daily basis. Perhaps it’s time to buy up the social media or other web 2.0 stocks now, considering oil is done? Or, maybe this is 2000 and everything is going to drop?
Actually, that’s not how it worked back then. See, while everyone was getting blown to smithereens in HLIT back then, people started to make a mint again in my old friend GIFI.
GIFI, circa 2000
Things work in cycles, people. 2008-2009 was an outlier event, one that saw both oil and stocks collapse in tandem. You and I both know this isn’t happening now. I don’t think we are going to see oil and the rest of the market trade down together. As a matter of fact, if oil continues lower, I believe it will pave the way for extreme upside in a number of high growth industries. Then after those stocks have run their course, you can start buying oil again and dance on the graves of all of those who overstayed their welcome at the party.
I’m so disgusted with myself; I’m thinking about calling it a year. Almost down 20%, YTD, this is, by far, my worst trading year since 2001. After the drubbing I took in 2001, I swore off tech stocks, and stocks in general, in favor for bonds and high yield instruments. It took the bull market of 2003 to lure me back into stocks. I remember the day, not too far from the bottom, just after G. Bush cut taxes and offered a tax holiday for monies held overseas, so that US corporations would bring them back.
All of those things should happen now, in order to jumpstart growth. Taxes should be cut and Obama should offer a tax holiday, so the trillion+ dollars hiding overseas can come back to where they belong. Instead, we get political horseshit, misdirection, and a woefully fucked up bull market. The broader indices do not tell the true story of this market, one wrought with terror and calamity.
GPRO reversed off the lows; but it’s a sick stock. As much as I hate to admit it, the secondary really messed with the dynamics of supply v demand. There is an endless stream of sellers coming in, dying to get out. I would not be surprised to see the stock in the $60’s by next week. My basis is about $68.
Lastly, aside from my top three holdings, the broader flavor of my positions are okay. I am not knocking the cover off the ball, but not underperforming either. I guess you can say the root of my depression lies in the fact that I was within 11% of break-even, just before Thanksgiving. Then Monday happened and now I find myself in the untenable position of being down 17%.
Grande Wizard Fucker of Faces, from Flydom, signing off.
This is outrageous. I sold COH for an 8% loss. What was I thinking anyhow? Normally, I’d be out there, chest puffed up, adding to some of my winning positions, like HGG or maybe some HABT. But I have no business investing money right now. Post BALT, GPRO let down, LITB post spectacular earnings demise, YELP, I’ve concluded that I’d be better served doing nothing at all.
I’ll simply wait here for some things to pan out, become a monk, climb mountains with a bearded face and become in tune with nature.
Didn’t I tell you I was doomed? Both YELP and GPRO are lower, as well as COH. Those are my top three positions and it’s terribly hilarious, the plight I find myself in. Bear in mind, I talked about buying DGLY at $11, only to simply watch it more than double over a week’s time.
Now you might be thinking: “Fly is just saying he’s cursed as an excuse for picking bad stocks.”
No, again, you’d be wrong on the front too. I am cursed and I can prove in more than one way; but you and I aren’t really friends, so I am not going to reveal anything to you. Trust me when I say, betting against me now is like shooting at fish in a barrel of sand–fracking sand to be exact.
Speaking of which, oil is hitting new lows. Boy do I love it. The principle avenues of growth, social media and oil, both getting lit up at the same time. It’s as if the two were intertwined, somehow. Well, I do own SLCA, YELP and TRIP, so there’s your connection.
Don’t worry, I am not as depressed as I lead you to believe. Twenty fourteen has been one giant let down for yours truly, a year of betrayal, mixed signals, and apathy. I’d tell you what I like now, but I’d merely contribute to your personal losses. Just know, I am monitoring my situation carefully and will let you know when the curse is lifted.
The United Steaks added 321,000 new jobs last month. I am not sure how many of those people were professional protesters. Nonetheless, it is a fine number, one that should get the juices flowing and the gimp active again.
Oil is a bottomless pit, a Texan torture device designed to skin alive its guests. I will have no choice but to sell all of my oil stocks, in order to lock in tax losses. This is a no-brainer, since they all trade as a phalanx and can easily be replaced by a peer member. For example, I can swap out SLCA for EMES and CHK for SWN.
Now European markets are flying off the handle. Italy is up more than 2.5%. However, I don’t have any faith in the likes of you. The first thing you’ll do it sell in order to preserve your skin. The mood and tenor of this tape is one of risk aversion, not speculation and risk.
Our futures are barely up because we reside in a nation of protesting neanderthals, more interested in the latest government cheese blend than hourly wage growth. To test my theory, go knock on your neighbors door and ask him.
Why should I bother posting blogs, two, three four times a day when I can tell you once the future with precision?
I am doomed. All of my stocks will trade lower and I should sell everything, call it a year, and toss myself into a lit fireplace.
Look, there isn’t any discernable reason why GPRO should trade lower like this each and every day, other than the fact I am long. Slowly but surely, I am watching my profits drift away into the ether of this multiverse that I reside in.
The ‘severe bear market’ continues to swing people from the gallows, just in time for the holiday season. Your clients will ponder the meaning of it all, how so many stocks can do so poorly whilst the grande indices continue to hit new highs.
Cannell Capital bothered to write a ridiculous letter to Jim Cramer and ThStreet.com. It’s making waves across the internets and social media this morning, rightfully so. The gist of the letter is asking Cramer to quit CNBC and work at TST full time, in order to help shareholders recover their losses. He rants about Cramer’s $3.5 million salary at TST and suggests he take draconian pay cuts in order to help out the small plebs who own TST.
Apparently, TheStreet.com has 41,500 paying subs. To me, that’s an amazing number. What’s even more amazing, having first hand experience in the business of premium online financial services, is the level of waste at TST. They should be netting extreme profits; but for some oddball reason, those retards can’t get their act together. Frankly, the answer to TST’s problems isn’t MOAR Cramer. They tried that for 15+ years and the stock is 2 bucks. The long term answer is to diversify away from Cramer and to use the position of TheStreet.com’s dominant position to grab share from the fucked faces who like to write about finance.
The fact that TST does $14.5 million in revenues and cannot book a profit is a fucking disgrace. The salaries given to the fuckheads who are driving that site into the ground should be cut by at least 50%, if not more. If they don’t like it, leave. Between cost of services and GnA, TST is spending upwards of $10 million per quarter, on complete horseshit.
They need to turn that company upside down and into a meritocracy.
Very simply, the robber barons at TST are milking the company for what it’s worth and Cramer knows it. Either he’s complicit in this sham and enjoys seeing his shareholders crushed under the weight of unparalleled hubris, or he is a complete incompetent, more interested in the price of guacamole in Brooklyn than the share price of TST in Manhattan.
Everything changed on Monday. I look at the indices hitting new all-time highs and I want to punch people in the face for it. That’s because my stocks are inside of the ice crusher, waiting for someone to push the button. On my future grave, I know, without a shadow of a doubt, that I am 100% fucked. I should just sell everything tomorrow and embarrass myself in less ruinous ways.
My emotional lows gets very low indeud and it’s gonna take a fucking mountainous explosion to the upside to get me in better spirits. Everything I see now is rotten, wretched, stale, putrid. I am not even interested in scanning for stocks any more, let alone think about earnings.
Last I checked, I just cut my own arms and legs off in a series of jackass trades that will go down as the very dumbest of all-time. Sure, my SLCA position was small; but now it’s even smaller. Great job riding that asshole from $45 to $70 and right back down to $30. Splendid money management, Lord Fly of the meat for brains.
I do credit myself for escaping a potential TRN raping. Then again, why was I long in the first place? Oh, that’s right, I was a ‘rail man’. Now I get rail nails to the head. Sure, I got out with just a 5% hickey. But, Jesus Christ was I wrong about this drop in crude. Let’s not forget other long term positions that have been knifed in the face, like BEAV, ICPT, BALT, and CHK–just to name a few.
I know I made a tonne of money last year and I am supposed to accept defeat as part of the game, the learning process that will eventually make me a better speculator. But I don’t want to. All I know is that I sucked and I am nothing, nothing at all, without Dr. Benjamin ‘blunt smoking’ Bernanke.
