Tuesday, November 21, 2017

What happens to stocks after an all time high?

Based on daily AMZN closing prices from 07/07/97 to 11/14/17 the issue made all time highs 249 times.  The issue continued to rally on the following day 128 times.  The largest following rally occurred on 11/23/98 when the issue closed higher by 21 percent.  The largest following correction occurred on 09/15/97 when the issue closed lower by -16 percent.

Based on daily BABA closing prices from 10/22/14 to 11/03/17 the issue made all time highs 44 times.  The issue continued to rally on the following day 26 times.  The largest following rally occurred on 11/04/14 when the issue closed higher by 4 percent.  The largest following correction occurred on 11/11/14 when the issue closed lower by -4 percent.

Based on daily PYPL closing prices from 07/15/15 to 11/20/17 the issue made all time highs 59 times.  The issue continued to rally on the following day 22 times.  The largest following rally occurred on 04/27/17 when the issue closed higher by 6 percent.  The largest following correction occurred on 07/21/15 when the issue closed lower by -3 percent.

Based on daily QQQ closing prices from 03/16/99 to 11/17/17 the issue made all time highs 154 times.  The issue continued to rally on the following day 83 times.  The largest following rally occurred on 12/21/99 when the issue closed higher by 4 percent.  The largest following correction occurred on 01/04/00 when the issue closed lower by -7 percent.

Based on daily SPY closing prices from 02/02/93 to 11/08/17 the issue made all time highs 476 times.  The issue continued to rally on the following day 221 times.  The largest following rally occurred on 06/12/97 when the issue closed higher by 2 percent.  The largest following correction occurred on 01/04/00 when the issue closed lower by -4 percent.

Based on daily SQ closing prices from 03/29/16 to 11/21/17 the issue made all time highs 58 times.  The issue continued to rally on the following day 34 times.  The largest following rally occurred on 03/30/16 when the issue closed higher by 9 percent.  The largest following correction occurred on 06/09/17 when the issue closed lower by -7 percent.


Read More: What happens a month after an all time high...

Sunday, November 12, 2017

What happens a year after an IPO?

Both SNAP and APRN have lost more than 50% since their IPOs earlier this year...find out what happened to some of these other market veterans their first year out of the gate.

Based on daily GOOGL closing prices from 08/20/04 to 08/19/05 the issue returned 176 percent.

Based on daily TSLA closing prices from 06/30/10 to 06/29/11 the issue returned 10 percent.
Based on daily AMZN closing prices from 05/16/97 to 05/18/98 the issue returned 273 percent.
Based on daily FB closing prices from 05/21/12 to 05/23/13 the issue returned -31 percent.
Based on daily BABA closing prices from 09/22/14 to 09/22/15 the issue returned -33 percent.
Based on daily EBAY closing prices from 09/25/98 to 09/24/99 the issue rose 863 percent.
Based on daily FCX closing prices from 07/11/95 to 07/08/96 the issue rose 29 percent.
Based on daily GILD closing prices from 01/23/92 to 01/20/93 the issue rose -12 percent.
Based on daily GS closing prices from 05/05/99 to 05/02/00 the issue rose 33 percent.
Based on daily MA closing prices from 05/26/06 to 05/29/07 the issue rose 211 percent.
Based on daily MDLZ closing prices from 06/14/01 to 06/19/02 the issue rose 37 percent.
Based on daily MET closing prices from 04/06/00 to 04/05/01 the issue rose 95 percent.
Based on daily MS closing prices from 02/24/93 to 02/18/94 the issue rose 12 percent.
Based on daily NWSA closing prices from 06/20/13 to 06/19/14 the issue rose 8 percent.
Based on daily PM closing prices from 03/18/08 to 03/17/09 the issue rose -23 percent.
Based on daily QCOM closing prices from 12/16/91 to 12/11/92 the issue rose 39 percent.
Based on daily SBUX closing prices from 06/29/92 to 06/25/93 the issue rose 123 percent.
Based on daily SPG closing prices from 12/16/93 to 12/14/94 the issue rose 7 percent.
Based on daily TWX closing prices from 03/20/92 to 03/18/93 the issue rose 93 percent.
Based on daily UPS closing prices from 11/11/99 to 11/08/00 the issue rose -13 percent.
Based on daily V closing prices from 03/20/08 to 03/19/09 the issue rose -10 percent.

Tuesday, November 7, 2017

What happens to stocks after a crash?

Based on daily LC closing prices from 02/25/15 to 05/11/16 the issue fell more than ten percent 4 times.  The issue continued to fall on the following day 3 times.  The largest following rally occurred on 02/26/15 when the issue closed higher by 4 percent.  The largest following correction occurred on 05/10/16 when the issue closed lower by -11 percent.

Based on daily SNAP closing prices from 03/06/17 to 08/14/17 the issue fell more than ten percent 3 times.  The issue continued to fall on the following day 1 times.  The largest following rally occurred on 08/14/17 when the issue closed higher by 7 percent.  The largest following correction occurred on 03/07/17 when the issue closed lower by -10 percent.

Based on daily PCLN closing prices from 04/15/99 to 06/27/16 the issue fell more than ten percent 68 times.  The issue continued to fall on the following day 33 times.  The largest following rally occurred on 02/23/01 when the issue closed higher by 26 percent.  The largest following correction occurred on 09/18/01 when the issue closed lower by -22 percent.

Based on daily TRIP closing prices from 12/22/11 to 02/17/17 the issue fell more than twenty percent 7 times.  The issue continued to fall on the following day 3 times.  The largest following rally occurred on 12/23/11 when the issue closed higher by 6 percent.  The largest following correction occurred on 07/26/12 when the issue closed lower by -3 percent.

Based on daily APRN closing prices from 07/11/17 to 11/03/17 the issue fell more than twenty percent 4 times.  The issue continued to fall on the following day 3 times.  The largest following rally occurred on 07/12/17 when the issue closed higher by 6 percent.  The largest following correction occurred on 07/18/17 when the issue closed lower by -3 percent.

Based on daily TSLA closing prices from 07/01/10 to 07/06/17 the issue fell more than six percent 43 times.  The issue continued to fall on the following day 26 times.  The largest following rally occurred on 01/17/12 when the issue closed higher by 17 percent.  The largest following correction occurred on 07/06/10 when the issue closed lower by -16 percent.

Based on daily UAA closing prices from 02/07/06 to 02/01/17 the issue fell more than twenty percent 4 times.  The issue continued to fall on the following day 3 times.  The largest following rally occurred on 01/22/08 when the issue closed higher by 12 percent.  The largest following correction occurred on 02/08/06 when the issue closed lower by -5 percent.

Read More: What happens the day after a selloff...

Friday, November 3, 2017

Which stocks have risen the most?

Based on daily AMZN closing prices from 05/16/97 to 11/03/17 the issue rose by 56364 percent.
Based on daily TWX closing prices from 03/20/92 to 11/03/17 the issue rose by 39780 percent.
Based on daily SBUX closing prices from 06/29/92 to 11/03/17 the issue rose by 16389 percent.
Based on daily NFLX closing prices from 05/24/02 to 11/03/17 the issue rose by 16371 percent.
Based on daily ORCL closing prices from 12/03/91 to 11/03/17 the issue rose by 14160 percent.
Based on daily NVDA closing prices from 01/25/99 to 11/03/17 the issue rose by 11685 percent.
Based on daily GILD closing prices from 01/23/92 to 11/03/17 the issue rose by 11095 percent.
Based on daily UNH closing prices from 12/03/91 to 11/03/17 the issue rose by 11067 percent.
Based on daily QCOM closing prices from 12/16/91 to 11/03/17 the issue rose by 11065 percent.
Based on daily CSCO closing prices from 12/03/91 to 11/03/17 the issue rose by 9446 percent.
Based on daily AAPL closing prices from 12/03/91 to 11/03/17 the issue rose by 9189 percent.
Based on daily LOW closing prices from 12/03/91 to 11/03/17 the issue rose by 8926 percent.
Based on daily TXN closing prices from 12/03/91 to 11/03/17 the issue rose by 5549 percent.
Based on daily EBAY closing prices from 09/25/98 to 11/03/17 the issue rose by 4600 percent.
Based on daily MSFT closing prices from 12/03/91 to 11/03/17 the issue rose by 3899 percent.
Based on daily INTC closing prices from 12/03/91 to 11/03/17 the issue rose by 3431 percent.
Based on daily GD closing prices from 12/03/91 to 11/03/17 the issue rose by 3249 percent.
Based on daily MA closing prices from 05/26/06 to 11/03/17 the issue rose by 3124 percent.
Based on daily NKE closing prices from 12/03/91 to 11/03/17 the issue rose by 2853 percent.
Based on daily FDX closing prices from 12/03/91 to 11/03/17 the issue rose by 2418 percent.
Based on daily CAT closing prices from 12/03/91 to 11/03/17 the issue rose by 2413 percent.
Based on daily HD closing prices from 12/03/91 to 11/03/17 the issue rose by 2296 percent.
Based on daily AMGN closing prices from 12/03/91 to 11/03/17 the issue rose by 2222 percent.
Based on daily UTX closing prices from 12/03/91 to 11/03/17 the issue rose by 1983 percent.
Based on daily GOOGL closing prices from 08/20/04 to 11/03/17 the issue rose by 1967 percent.
Based on daily CMCSA closing prices from 12/03/91 to 11/03/17 the issue rose by 1923 percent.
Based on daily USB closing prices from 12/03/91 to 11/03/17 the issue rose by 1895 percent.
Based on daily MCD closing prices from 12/03/91 to 11/03/17 the issue rose by 1884 percent.
Based on daily AXP closing prices from 12/03/91 to 11/03/17 the issue rose by 1623 percent.
Based on daily COF closing prices from 11/17/94 to 11/03/17 the issue rose by 1618 percent.
Based on daily MDT closing prices from 12/03/91 to 11/03/17 the issue rose by 1517 percent.
Based on daily UNP closing prices from 12/03/91 to 11/03/17 the issue rose by 1403 percent.
Based on daily WFC closing prices from 12/03/91 to 11/03/17 the issue rose by 1403 percent.
Based on daily HON closing prices from 12/03/91 to 11/03/17 the issue rose by 1386 percent.
Based on daily JPM closing prices from 12/03/91 to 11/03/17 the issue rose by 1299 percent.
Based on daily BK closing prices from 12/03/91 to 11/03/17 the issue rose by 1213 percent.
Based on daily CL closing prices from 12/03/91 to 11/03/17 the issue rose by 1213 percent.
Based on daily TGT closing prices from 12/03/91 to 11/03/17 the issue rose by 1107 percent.
Based on daily LMT closing prices from 03/17/95 to 11/03/17 the issue rose by 1098 percent.
Based on daily TSLA closing prices from 06/30/10 to 11/03/17 the issue rose by 1087 percent.
Based on daily BA closing prices from 12/03/91 to 11/03/17 the issue rose by 1067 percent.
Based on daily MO closing prices from 12/03/91 to 11/03/17 the issue rose by 1044 percent.
Based on daily JNJ closing prices from 12/03/91 to 11/03/17 the issue rose by 1035 percent.
Based on daily DIS closing prices from 12/03/91 to 11/03/17 the issue rose by 1006 percent.
Based on daily MON closing prices from 10/19/00 to 11/03/17 the issue rose by 990 percent.
Based on daily MMM closing prices from 12/03/91 to 11/03/17 the issue rose by 965 percent.
Based on daily HPQ closing prices from 12/03/91 to 11/03/17 the issue rose by 895 percent.
Based on daily ACN closing prices from 07/20/01 to 11/03/17 the issue rose by 857 percent.
Based on daily COST closing prices from 12/03/91 to 11/03/17 the issue rose by 842 percent.
Based on daily PG closing prices from 12/03/91 to 11/03/17 the issue rose by 750 percent.
Based on daily ABT closing prices from 12/03/91 to 11/03/17 the issue rose by 729 percent.
Based on daily APC closing prices from 12/03/91 to 11/03/17 the issue rose by 688 percent.
Based on daily V closing prices from 03/20/08 to 11/03/17 the issue rose by 663 percent.
Based on daily MS closing prices from 02/24/93 to 11/03/17 the issue rose by 647 percent.
Based on daily OXY closing prices from 12/03/91 to 11/03/17 the issue rose by 639 percent.
Based on daily SPG closing prices from 12/16/93 to 11/03/17 the issue rose by 633 percent.
Based on daily DVN closing prices from 12/03/91 to 11/03/17 the issue rose by 631 percent.
Based on daily WMT closing prices from 12/03/91 to 11/03/17 the issue rose by 623 percent.
Based on daily PEP closing prices from 12/03/91 to 11/03/17 the issue rose by 620 percent.
Based on daily NOV closing prices from 10/30/96 to 11/03/17 the issue rose by 611 percent.
Based on daily BAX closing prices from 12/03/91 to 11/03/17 the issue rose by 594 percent.
Based on daily NSC closing prices from 12/03/91 to 11/03/17 the issue rose by 586 percent.
Based on daily CVX closing prices from 12/03/91 to 11/03/17 the issue rose by 583 percent.
Based on daily ALL closing prices from 06/04/93 to 11/03/17 the issue rose by 572 percent.
Based on daily CVS closing prices from 12/03/91 to 11/03/17 the issue rose by 561 percent.
Based on daily IBM closing prices from 12/03/91 to 11/03/17 the issue rose by 561 percent.
Based on daily PFE closing prices from 12/03/91 to 11/03/17 the issue rose by 529 percent.
Based on daily APA closing prices from 12/03/91 to 11/03/17 the issue rose by 503 percent.
Based on daily COP closing prices from 12/03/91 to 11/03/17 the issue rose by 494 percent.
Based on daily HAL closing prices from 12/03/91 to 11/03/17 the issue rose by 476 percent.
Based on daily XOM closing prices from 12/03/91 to 11/03/17 the issue rose by 460 percent.
Based on daily SO closing prices from 12/03/91 to 11/03/17 the issue rose by 445 percent.
Based on daily EMR closing prices from 12/03/91 to 11/03/17 the issue rose by 441 percent.
Based on daily KO closing prices from 12/03/91 to 11/03/17 the issue rose by 413 percent.
Based on daily FB closing prices from 05/21/12 to 11/03/17 the issue rose by 390 percent.

Read More: Which stocks have risen the most...

Read More: Which ETFs have risen the most...

Which ETFs have risen the most?

Based on daily TECL closing prices from 12/19/08 to 10/30/17 the issue rose by 2958 percent.
Based on daily TQQQ closing prices from 02/16/10 to 10/30/17 the issue rose by 2311 percent.
Based on daily SVXY closing prices from 10/06/11 to 10/30/17 the issue rose by 1757 percent.
Based on daily UPRO closing prices from 06/29/09 to 10/30/17 the issue rose by 1610 percent.
Based on daily SOXL closing prices from 03/15/10 to 10/30/17 the issue rose by 1428 percent.
Based on daily DRN closing prices from 07/20/09 to 10/30/17 the issue rose by 1086 percent.
Based on daily UDOW closing prices from 02/16/10 to 10/30/17 the issue rose by 1038 percent.
Based on daily XIV closing prices from 12/02/10 to 10/30/17 the issue rose by 1006 percent.
Based on daily SPXL closing prices from 11/07/08 to 10/30/17 the issue rose by 999 percent.
Based on daily UMDD closing prices from 02/16/10 to 10/30/17 the issue rose by 825 percent.
Based on daily CURE closing prices from 06/17/11 to 10/30/17 the issue rose by 805 percent.
Based on daily MIDU closing prices from 01/12/09 to 10/30/17 the issue rose by 796 percent.
Based on daily MDY closing prices from 05/16/95 to 10/30/17 the issue rose by 769 percent.
Based on daily QLD closing prices from 06/23/06 to 10/30/17 the issue rose by 692 percent.
Based on daily RETL closing prices from 07/16/10 to 10/30/17 the issue rose by 665 percent.
Based on daily BIB closing prices from 04/12/10 to 10/30/17 the issue rose by 633 percent.
Based on daily URTY closing prices from 02/16/10 to 10/30/17 the issue rose by 584 percent.
Based on daily SPY closing prices from 02/02/93 to 10/30/17 the issue rose by 481 percent.
Based on daily TNA closing prices from 11/07/08 to 10/30/17 the issue rose by 466 percent.
Based on daily ROM closing prices from 02/05/07 to 10/30/17 the issue rose by 388 percent.
Based on daily RXL closing prices from 02/06/07 to 10/30/17 the issue rose by 372 percent.
Based on daily IJR closing prices from 05/31/00 to 10/30/17 the issue rose by 350 percent.
Based on daily EEM closing prices from 04/15/03 to 10/30/17 the issue rose by 306 percent.

Read More: Defending Leverage

Monday, July 31, 2017

What happens to stocks after falling below the 50d MA?

Based on daily $AAPL closing prices from 03/11/92 to 06/13/17 the issue fell below the 50 day moving average 220 times.  The issue continued to rally on the following day 119 times.  The largest following rally occurred on 10/14/99 when the issue closed higher by 14 percent.  The largest following correction occurred on 04/14/05 when the issue closed lower by -9 percent.

Based on daily $AMZN closing prices from 11/11/97 to 07/07/17 the issue fell below the 50 day moving average 168 times.  The issue continued to rally on the following day 83 times.  The largest following rally occurred on 07/25/07 when the issue closed higher by 24 percent.  The largest following correction occurred on 08/31/98 when the issue closed lower by -21 percent.

Read More: What happens the day after falling below the 50d MA...


Wednesday, May 10, 2017

What happens 60 days after an IPO?

After tonight's earnings release Snap $SNAP has lost more than 25% since its IPO earlier this year...find out what happened to some of the veterans of the S&P $SPX ($SPY) their first sixty days out of the gate.

Based on daily Apple $AAPL closing prices from 12/15/80 to 03/11/81 the issue returned -21 percent.


Based on daily Google $GOOGL closing prices from 08/20/04 to 11/12/04 the issue returned 80 percent.


Based on daily Microsoft $MSFT closing prices from 03/14/86 to 06/09/86 the issue returned 17 percent.


Based on daily Amazon $AMZN closing prices from 05/16/97 to 08/11/97 the issue returned 18 percent.


Based on daily Facebook $FB closing prices from 05/21/12 to 08/14/12 the issue returned -44 percent.


Based on daily Exxon $XOM closing prices from 01/05/70 to 03/31/70 the issue returned -8 percent.

Read More: What happens 30 days after an IPO...

Read More: What happens 60 days after an IPO...

Friday, May 5, 2017

Top Performing Leveraged ETFs

If you think that you know everything there is to know about leveraged ETFs, think again...

Based on daily $TQQQ closing prices from 2/12/10 to 5/5/17 the issue rose 1851 percent.

Based on daily $UPRO closing prices from 6/26/09 to 5/5/17 the issue rose 1302 percent.

Based on daily $SVXY closing prices from 10/5/11 to 5/5/17 the issue rose 1279 percent.

Based on daily $RETL closing prices from 7/15/10 to 5/5/17 the issue rose 925 percent.

Based on daily $SPXL closing prices from 11/6/08 to 5/5/17 the issue rose 696 percent.

Based on daily $UDOW closing prices from 2/12/10 to 5/5/17 the issue rose 764 percent.

Based on daily $XIV closing prices from 12/1/10 to 5/5/17 the issue rose 680 percent.

Based on daily $CURE closing prices from 6/16/11 to 5/5/17 the issue rose 656 percent.

Based on daily $BIB closing prices from 4/9/10 to 5/5/17 the issue rose 553 percent.

Based on daily $QLD closing prices from 6/22/06 to 5/5/17 the issue rose 542 percent.

Based on daily $TNA closing prices from 11/6/08 to 5/5/17 the issue rose 334 percent.

Read More: Defending Leverage

Thursday, April 27, 2017

What happens to stocks after a rally?

Based on daily Twitter $TWTR closing prices from 12/04/13 to 04/27/17 the issue rose more than five percent 48 times.  The issue continued to rally on the following day 23 times.  The largest following rally occurred on 12/24/13 when the issue closed higher by 8 percent.  The largest following correction occurred on 10/06/16 when the issue closed lower by -20 percent.

Based on daily Under Armour $UAA closing prices from 11/30/05 to 06/30/16 the issue rose more than five percent 116 times.  The issue continued to rally on the following day 70 times.  The largest following rally occurred on 08/23/11 when the issue closed higher by 12 percent.  The largest following correction occurred on 03/24/09 when the issue closed lower by -13 percent.

Read More: What happens the day after a rally?...

Based on daily Twitter $TWTR closing prices from 12/04/13 to 12/14/16 the issue rose more than five percent 48 times.  The issue continued to rally the following week 22 times.  The largest following rally occurred on 12/11/13 when the issue closed higher by 20 percent.  The largest following correction occurred on 10/12/16 when the issue closed lower by -27 percent.

Based on daily Under Armour $UAA closing prices from 11/30/05 to 07/07/16 the issue rose more than five percent 117 times.  The issue continued to rally the following week 68 times.  The largest following rally occurred on 12/28/05 when the issue closed higher by 30 percent.  The largest following correction occurred on 01/22/08 when the issue closed lower by -31 percent.

Read More: What happens the week after a rally?...

Sunday, April 9, 2017

What happens to stocks after an economic release?

The Employment Report

Based on daily S&P $SPY closing prices from 03/15/60 to 03/13/17 the issue traded after the Employment Report reported a less than 5% unemployment rate 180 times.  The issue rallied on the following day 93 times.  The largest following rally occurred on 09/08/98 when the issue closed higher by 5 percent.  The largest following correction occurred on 03/12/01 when the issue closed lower by -4 percent.

Based on daily $GLD closing prices from 07/08/05 to 03/13/17 the issue traded after the Employment Report reported a less than 5% unemployment rate 51 times.  The issue rallied on the following day 31 times.  The largest following rally occurred on 05/05/08 when the issue closed higher by 2 percent.  The largest following correction occurred on 05/09/16 when the issue closed lower by -2 percent.

Based on daily $TLT closing prices from 07/08/05 to 03/13/17 the issue traded after the Employment Report reported a less than 5% unemployment rate 51 times.  The issue rallied on the following day 27 times.  The largest following rally occurred on 02/08/16 when the issue closed higher by 2 percent.  The largest following correction occurred on 10/05/15 when the issue closed lower by -1 percent.

Based on daily $USO closing prices from 05/05/06 to 03/13/17 the issue traded after the Employment Report reported a less than 5% unemployment rate 41 times.  The issue rallied on the following day 15 times.  The largest following rally occurred on 03/07/16 when the issue closed higher by 5 percent.  The largest following correction occurred on 12/07/15 when the issue closed lower by -6 percent.

Read More: What happens the day after the Employment Report...

GDP

Based on daily S&P $SPY closing prices between 2/20/50 and 3/01/17 the index traded after 595 positive GDP reports.  The following day the index rose by some amount 307 times.  The largest rally occurred on 11/26/08 when the index rose by 4 percent.  The largest correction occurred on 9/29/08 when the index closed lower by 9 percent.

A Rate Hike

Based on daily $SPX $SPY closing prices from 9/27/82 to 3/15/17 the index rose 44 times the day after a rate hike and fell 31 times.  The largest rally occured on 5/26/87 when the index closed higher by 2.5%.  The largest reversal occured on 8/10/88 when the index closed lower by 1.7%.



Wednesday, March 29, 2017

What happens 30 days after an IPO?

Snap $SNAP has lost about 15% since its IPO earlier this month...find out what happened to some of the big boys of the S&P $SPY their first thirty days out of the gate.

Based on daily Apple $AAPL prices from 12/15/80 to 01/27/81 the issue returned 17 percent.

Based on daily Amazon $AMZN prices from 05/16/97 to 06/27/97 the issue returned -24 percent.

Based on daily Under Armour $UAA prices from 11/21/05 to 01/04/06 the issue returned 22 percent.

Based on daily JP Morgan $JPM prices from 01/03/84 to 02/13/84 the issue returned 10 percent.

Based on daily Johnson & Johnson $JNJ prices from 01/05/70 to 02/13/70 the issue returned -8 percent.

Read More: What happens 30 days after an IPO...

Saturday, February 11, 2017

The Index ETF Beating Nvidia

You may not have noticed but there is actually a non-leveraged index ETF that has been outperforming Nvidia over the past three months.  If you've never thought about selling the Volatility Index $VIX then you may want to think again.  Since November, Velocityshares Inverse Volatility ETF $XIV is up over 60% while $NVDA is up only 30%.  I know what you're thinking...selling volatility is dangerous...and you'd be correct in that statement with a few important exceptions.

Investments are only dangerous when you over-do them

An investment in inverse volatility can be a valuable income producing component to any well balanced diversified portfolio.  Since $VIX is correlated with the emotional sentiment embedded in the market a short position will outperform the S&P 500 $SPY when sentiment is positive and underperform when sentiment is negative.  The key to being successful with this investment is keeping it a small component of your overall portfolio.  You'll also want to add to this investment when fear is overwhelming investors and subtract when greed is doing the same.

It is natural for market volatility to depreciate over time

If the best assets to buy are things that appreciate over time like stocks, bonds and real estate then shouldn't the best assets to sell be things that depreciate over time?  Think about it, why shouldn't volatility persistently decrease over time?  People continuously create, invent, and imagine new technologies that remove uncertainty in the world.  We have the resiliency and the resolve to work through difficult problems, learn from our mistakes and come out stronger on the other end.  The free market mechanism itself is designed to achieve efficient price discovery which is all about eliminating volatility and uncertainty.  Think about building a long term investment in the idea that fear and uncertainty generally subside over time.

Do the Contango

I'll be honest, whenever I read the word contango I think of the Argentinian dance and it'll always be that way, so terrible word but great concept.  Contango is usually present in commodity markets like crude oil or corn because the price you pay for some commodity has to embed all of the costs of storage which can sometimes be very steep.  This is why it is so hard to make money buying and holding crude because all those storage costs will eat your investment alive.  The financial mechanics of how your investment becomes dinner is complex but has to do with the pricing of futures contracts so any investment that holds futures will usually suffer from this decay.

Selling volatility also involves the use of futures contracts but since you are selling rather than buying, those storage costs tend to benefit you rather than hurt you.  In fact, inverse volatility is the only asset that I know of that naturally appreciates and also pays storage costs; please tell me if you know of another one!  Why should other people pay you to hold this naturally appreciating asset?  I think that it has something to do with the persistency of fear embedded in financial markets.  The nature of risk is complex and can be a double-edged sword at times so don't try anything that makes you uncomfortable.  Take some time to read more about market volatility and when you're ready start small.  Remember...as always...don't over do it, stay diversified and think long term.

Saturday, January 28, 2017

Searching for Value at Dow 20,000

With the Dow Jones Industrial Average at such a high of highs are there any investments left that are not overvalued?  Here are several ideas that I find interesting.

Emerging Markets $EEM

Emerging markets are still off of their historic highs by more than 30%.  There are various reasons for this lagging performance such as a strong dollar as well as a global glut of commodities.  As Trump takes office and Brexit begins to move forward we seem to be entering an era of anti-globalization.  On the surface these events do not bode well for emerging markets.  It takes a keen eye to see that finding a way to manufacture goods in these downtrodden countries without stepping on a political landmine could be extremely lucrative going forward.

Biotech $IBB

The Biotech sector is off of its highs by more than 30% as well largely due to political rhetoric from both Clinton and Trump.  It is natural for politicians to rail against the high costs of healthcare but the truth is that advanced healthcare has never been in higher demand.  In fact, this demand will only increase as more and more baby boomers reach retirement age.  An investment in Biotech, regardless of the political rhetoric, is as much of a no-brainer as it gets.

Energy $XLE

The Energy sector is still off of its all time highs by more than 25% mostly for the same reasons as those with Emerging Markets.  So we discovered this new technology called Fracking...why should that be a bad thing for energy companies?  The fact that the market forced this new technology into existence speaks more to the everlasting demand for more energy rather than to the end of it.  Plus the new focus of the Trump administration on manufacturing and infrastructure projects as well as his pick for secretary of state should only yield positive news for the Energy sector going forward.

Twitter $TWTR

Twitter is more than 75% off of its highs set after its IPO in 2013.  If you successfully invested in Facebook against all of the analysis that said that it would not be possible for Facebook to monetize mobile then you need to be invested in Twitter as well.  The arguments are essentially the same...how does Twitter monetize this new medium of communication that it has created?  It is becoming increasingly apparent that if Facebook is used to connect with friends then Twitter can be used to connect with enemies.  It is no wonder that companies are shy to advertise on this platform due to its contentious nature.  It will take more time for most companies to figure Twitter out, though some like Wendy's are already beginning to discover the power of satirical promotion to create messages that sound less filtered and more real.  This very feature is also what Trump has leveraged to propel himself into the White House and is currently using as a political game changer.

Monday, January 2, 2017

Invest like a Predator in 2017

My personal expectation for the S&P 500 $SPY next year is a best case scenario of 3200, a worst case of 1700 and a most likely of 2450.  I suspect that the worst case would occur if we start to see the Eurozone unravel which is unlikely but also possible.  One catalyst on the horizon is the Euro being nearly at parity with the US dollar.  This is occuring because the world is panic selling Euros but on the flipside it also provides a natural stimulus to any Euro based economy.  Another unlikely catalyst is the presence of negative interest rates.  If the Eurozone was considered an economy on the verge of collapse negative rates would not be possible as there would be no bid for those bonds.  Going forward the Euro area can and should provide very many unique and rewarding opportunities to make outsized returns as risk moves back into the global market place. 

I suspect that the best case would occur if there is a significant rise in long term rates $TLT.  Most would interpret a rise in rates as a negative but to me that just shows risk and leverage coming back into the marketplace as the demand for debt begins to increase.  I think people give the Fed way too much credit regarding their control over the destiny of rates.  In my mind, the desire to borrow money has much more control over rates than Fed policy.  What would cause an increase in the demand for debt?  I think that it is simply optimism about making money in a growing economy.  As money making opportunities arise people borrow more and more money to invest as well as to spend.  This action causes rates to rise as borrowers bid higher for ever more expensive debt which eventually leads to a bubble.  Where could this source of demand possibly come from...Millienials, Boomers, GenXers?  This is the biggest question that will be on my mind going into 2017.

The year of 2017 is going to be favorable to those investors who behave like predators.  This means being able to be extremely patient while lying in wait for the best possible opportunities.  Waiting until a prime target is wounded is a sure way to increase your chances of success.  This means letting bad news work for you instead of against you.  Have you been noticing that over the past few years bad news only has a temporary effect on the market?  This is because the supply of buyers are beginning to overwhelm the supply of sellers.  With the dollar this high and interest rates this low...there are no more sellers...which is why you'll see the market continue to rise on bad news.

For example, Nvidia $NVDA was getting hit last week based on news from notorious short seller Andrew Left.  I agree with Left in that Nvidia has gotten way ahead of itself...so how would a predator invest in this situation?  Allow this news to wound Nvidia just enough for you to be able to catch up with it.  Practice extreme patience as well as persistence.  Ironically, the slowest ways to get rich end up being the fastest and the fastest ways end up being the slowest.

Finally, when investing in individual companies it is so important to be careful with the price that you pay.  Companies that have been around for a long time can be a lot more expensive than you think due to all of those share splits.  For example, take a look at Berkshire Hathaway A shares $BRK/A that haven't gone through any splits and are priced at over $250,000 per share!  Now how affordable are those shares?  To get a better perspective always look at total market capitalization and ask yourself if it makes sense that company XYZ should be worth so many billions because that is really the price that you are buying into.  Always remember to look for great companies as well as great prices and never accept one without the other.