Note to my subscribers and readers for the year end and the new year.
I will be the first to admit that 2009 was a disappointing year for my investment results. Although the first quarter of the year was the strongest that I ever had during the Asset Securitization Crisis, and I clearly saw the trend reversal coming at the end of the quarter (actually almost to the day since I put a comment out on BoomBustBlog that I was preparing for a very aggressive bear rally, but that granularity in timing was more luck than anything else), I significantly underestimated the length, breadth and depth of the trend reversal. I want all to be clear that I am not making excuses, but the probably reason for the lack of clarity was rampant and clandestine intervention in the equity and debt markets (moe on this later). There has been a lot of chatter in around the web about my performance, and although I am very disappointed at how the year turned out, I would like to put this into perspective. I am not a daytrader nor a swing trader and my research is not aimed in those directions. My stated investment horizon for the research on the blog is 3 to 18 months with a likely targeted range of action of 6 to 9 months. Since I rely primarily on the fundamentals and can't control markets and stock prices, I need to wait for my thesis to pan out.This entails taking some volatility at times. Of course I am the first to admit that the most aggressive rally in 70 years may be a bit much, but one must be able to ride the ups and downs of irrational market moves until one's thesis plays and your are proven right or wrong.This recent bear market rally was probably a once in a lifetime event, and in the case that it was not, we now have the tools to deal with it on an invested basis - even as a pure fundamental investor.
Click any graphic to enlarge.
Posting will be light for the Christmas holidays, but I am working on some very big things which I will bring out by the Monday after Christmas. I will also try to get some interesting data and perspective out through the Christmas weekend, if possible.
Happy Holidays to all!
I believe I have found the next GGP and I am spending to the time to do a very deep dive. I will update subscribers tomorrow afternoon, and follow up on the effects of the CRE crash on the now inflated price of insurance companies.
I have been getting emails from a few people who are interested in long research. I have started offering long biased research, and am in the process of implementing another scan for long candidates this weekend. What I want to remind many of is that this is a fundamental research site, and a pretty good one, at least in my opinion. We have been right roughly 90% of the time in reference to the fundamentals. With that being said, I cannot control stock prices. There are times when stock prices diverge from the fundamentals. Those are the periods that precede money making opportunities. The actual opportunity is (after recognizing the divergence) when reality and stock prices converge.
Now, there are many other methods of making money, ex. momentum/quant/algo trading, etc. That is not what I do. For those who feel that they are missing out on the market rally (which is quite understandable), I cannot give you advice, but I can tell you one simple maneuver that I have used. I have purchased SPX calls that allow me to participate on the broad market upside and provide a hedge against what I consider to be a divergence from the fundamentals. How much of a hedge is quite variable, of course.
My father is in the hospital with a very serious condition, and is under going post operative recovery. I will be posting from the hospital, but probably not till tomorrow.
I will be releasing the full long-biased research report then, complete with rebuttals to the bear arguments against it. I will also release comparisons of my researh with that of one of the major Wall Street brokerages to show all the difference in quality (withing 48 hours or so).
With the release of long-biased research, I will reach out to management to get their feedback, which should be quite interesting. Instead of hating me, ala GGP, they should find my opinion quite endearing :-)
As if Cramer on CNBC wasn't bad enough.. For those who haven't been following his rant and battle against financial bloggers, click the read more button below. It is a damn shame that this the most viewed financial programming in the world. There is no wonder why and how this financial crisis came about, take a gander at who is advising and how...
As is stated on my website, I am an investor that generates his own independent research. I usually use two teams of analysts to generate fundamental analysis reports and pursue macro research. These teams consist of consultants, CFAs and forensic CPAs. They often compete head to head, and they are encouraged to come up with their own independent ideas, openly challenge my thesis and findings, and most importantly to challenge each other's work in combination with a direct challenge to my theses, viewpoints and opinions. This creates a competitive, yet open environment where Hubris simply cannot survive, and where you must out your money where your mouth is in terms of backing up your viewpoints with facts and analysis. This is not the type of environment or analysis you can get from a sell side bank or brokerage firm!
I have just uploaded several internal documents illustrating a bull/bear debate we had over DeVry Inc. If you recall, I released a comparison of various companies in this sector along with a brief summary of DeVry. I never released the analytical and valuation work on DeVry, so the valuation portion of this is new to subscribers. All paying subscribers can download the debate here: The Battle of the BoomBustBlog Analysts - DeVry
For those who have been wondering, I have been rehashing previous research since the market had moved so aggressively against what I consider the fundamentals. I have to be sure that I am correct in my stance. The last thing I want to be guilty of is hubristic investing. In addition, many of the companies have increased so much in price that they represent a new opportunity to profit, as long as the investment thesis is still valid, hence the rehash of the previous research.
There is also a new crop of short candidates coming up (the short list is currently being whittled down), and for the firt time on the blog I will be releasing long candidates as well.
I have a fairly sophisticated audience, but I just want to remind all of the value of this blog as compared to that of the mainstream media (MSM). Glance at my news topics for this morning, as compared to that of the leading business news cable channel (click the graphic to enlarge).
This particular news item takes the cake: Kris Allen Upset Winner of "American Idol"
Arkansas student Kris Allen won the eighth season of "American Idol" on Wednesday, dealing an unexpected defeat to singing rival Adam Lambert on the most popular U.S. television show.
Allen, 23, who won over audiences with his all-American good looks and by putting his personal spin on popular tunes, appeared shocked as Lambert, a 27-year-old musical theater actor, embraced him after host Ryan Seacrest's announcement.
"It feels good, but Adam deserves this," Allen said to Seacrest. "I don't even know what to feel right now, this is crazy."
A record high of nearly 100 million votes were cast in the finale. Allen's "Idol" win guarantees him a recording contract.
Of the two finalists, Allen was more clean-cut. A devout Christian from Arkansas, he was a newly married college student before landing on "American Idol."
He often performed with his acoustic guitar, winning praise for rearranging well-known tunes, among them Michael Jackson's "Remember the Time" and Bill Withers' "Ain't No Sunshine."
As recently as last week, Allen was considered a long shot heading into the battle for the top two "Idol" spots, but he wowed the show's judges with his rendition of Kanye West's "Heartless," ousting early favorite Danny Gokey.
Now that we are all abreast of the prominent business and financial news for the day... If I didn't know any better, the MSM has an objective of lulling the masses into complacency:
- Geithner: Financial Markets Healing, But Stay Cautious
- GE CEO Sees Signs of Recovery in Capital Markets
- Worst Over for Banks, But Reform Pay: BofA's Lewis
- Equities' Downside Risks 'Limited' Now: Strategist
- Stock Picker: Ride the Rebound — and Sell in July
- Cramer: Stocks That Are Riding Upgrades
To think, there are actually people who move their life savings at the behest of "tabloid fodder: such as this. I know I am probably destroying my chances of appearing on CNBC, but so be it This is the truth as I see it. I should be releasing a raft of macro notes to subscribers today, detailing the support for remaining with my thesis or switching to a more bullish accord.
I would like to remind subscribers that they should check the subscriber download section for new releases regularly. Over the last 38 hours, two REIT quarterly updates and a banking update has been released. There is plenty more in the pipeline along with a recast of the banking models populated with the Fed's "real data".