4 CHARTS DEMONSTRATING A MARKET THAT IS HOME FROM THE HILL IN THE WEEK AHEAD
Mar30
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WHAT THE IPO MARKET AND PHASE 4 STOCKS ARE REALLY TELLING INVESTORS ABOUT A MARKET TOP
Mar30

WHAT THE IPO MARKET AND PHASE 4 STOCKS ARE REALLY TELLING INVESTORS ABOUT A MARKET TOP

What follows is the "Looking Ahead" section of my monthly report to investors to be released in the coming days. There are enough misconceptions, misinformation and downright naive analysis floating around about an impending top or potential bubble forming that I felt this deserved to be separated out on its own.  Being that gauging short, intermediate and especially long-term tops has become an obsession among the most recent generation of market participants, it is worthwhile to occasionally divert attention away from the micro and look at this secular bull market from a reasonable, measured perspective. This perspective relies heavily on lessons learned from secular bull markets of the past, with a special focus placed on the secular bull of the 90s. Why the 90s? It was the last innovation led rally that was guided greatly by technology, with an emphasis on new and emerging companies revolutionizing the way we communicate personally and professionally. It was a rally that was misunderstood, doubted and criticized nearly the entire way up. It was a rally that was resilient through numerous seemingly disastrous macro events. It was a rally that was also resilient through consistent and persistent overvaluation. The bull market of the 90s was born from two distinct negative events that influenced psychology (and monetary policy, for that matter) greatly. The 1987 crash effectively ended the secular bull market that started in 1982. The psychology of the investor class was further damaged by the recession of the early 90s that was exacerbated by events such as the Gulf War, rising oil prices, high unemployment and substantial deficits. These condemnatory events separated only by a few years resulted in a dramatic shift in investor psychology from what was the pervasive bullish sentiment of the mid-80s. This foundation of skepticism and fear provided the perfect foundation for what would be a historic rally throughout the 90s, taking the S&P 500 up some 300% during that decade. What has occurred from 2000-2012, effectively set the stage for what we are experiencing now.  There is no possibility of a substantial secular bull market being born from a point of outright optimism. Secular bull markets are born from the defeated psychology of investors who have little hope or desire of creating anything substantial out of the financial markets. Instead they have come to focus on cash preservation and alternative asset classes that are driven by the desperation of the avoidance of further financial pain. Due diligence becomes a choice phrase. Risk aversion becomes a wise choice. There is no deviating from this path until the reality of a bull market becomes so cemented in the investors mind...

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5 CHARTS DEMONSTRATING A JEKYLL AND HYDE MARKET FOR THE WEEK AHEAD
Mar23

5 CHARTS DEMONSTRATING A JEKYLL AND HYDE MARKET FOR THE WEEK AHEAD

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SIMPLIFICATION TO THE NTH DEGREE
Mar20

SIMPLIFICATION TO THE NTH DEGREE

Some changes in the portfolios to be reported in the days and weeks ahead. I've been adding brand new holdings. Getting rid of some other stuff, such as the small position in CIDM I sold today. I've felt the need to refocus here recently. There are some names that I am simply invested in because I have become comfortable using them as a trading tool. This strategy is fine when the market lacks depth in opportunity. However, rather suddenly, I have discovered a handful of names that possess extremely attractive risk profiles paired with appreciation potential in excess of 300%. Undiscovered, misunderstood, in the dirt names that have no coverage or interest. The types of names that investors either cannot find or have no interest in finding due to the various biases ingrained within their souls. Those who tell you this market lacks opportunity, do not know where to look. Those who tell you this market is overvalued are obscenely naive and misguided. Those who tell you this market is fraught with risk are victims of the psychological conditioning brought by the conflagration of the markets from 2000-2011. Those who can't embrace what is occurring will not do so until the final stages of the bull market when pain of missing any further opportunity of gains overwhelms their trepidation. No, we are not there yet. Not even close, in fact. Is there such a thing as oversimplification of facts in an environment where facts flow loosely, taking all shapes and sizes? There is not. The essence of the markets boils down to the prevailing trend that is dominating the market, at the moment. The core of that trend lies in a few places such as the semiconductor index, transports and financials. The engine of the trend is in the names that seem the most overvalued and over-hyped. In these places you will find the facts. I should say, in these places you will find simplified facts. These are facts that have been boiled down until all that is left are the minerals that make up their essence. Everything else is an additive. An additive that is predetermined through pseudo-intellectualism. Pretend know it alls that possess a flare for the useless and a pizzazz for the appearance of relevance. They should be ignored at all costs. Simplification to the nth degree. I'll have nothing more and nothing less. SOX hit a new high today on a shining range expansion. Does it get any more simple?  ...

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SERENITY AND MARKET TOPS
Mar17

SERENITY AND MARKET TOPS

I don't try to catch tops. I don't trade often. I don't care about the news. I don't take stock tips. I don't talk to the small companies that I am invested in. I don't have analysts. I don't read Wall Street research. I don't come up with new ideas often.  What I do is rather boring in nature compared to the classic image anyone may have in mind for an investor. If you find excitement on a daily basis in the markets odds are that you have either not been doing this a very long time or are going about it the wrong way, which means you won't be doing it for much longer. In either case, it is a sign of being a greenhorn.  There are moments of excitement, of course. Times when a company I am invested in makes an announcement that solidifies my thesis. Or when I discover an opportunity for the first time and the hairs on the back of my neck literally stand up. That excitement, however, is based on validation of my work as opposed to fluctuation in capital. That is what separates the boys from the men in this poker room.  March has been one of the least active months I have had in the markets for sometime. This lack of activity is inversely correlated to the powerful gains the portfolios have experienced during the month. You see, when a portfolio of stocks is functioning properly, the only thing an investor should do is observe from a distance. His hand should be far away from the buy or sell trigger as rhythm in the markets is as valuable an asset as anything. It takes only one reckless act to disrupt an otherwise harmonious portfolio of investments. The harmony I am experiencing here is reflected in the results. I don't have an opinion regarding any market top because I know that nobody can predict them in a powerful bull market. The only opinion I have is regarding the progress of the companies in the portfolios. As long as they are performing well in terms of price that is backed up by growth in the fundamentals and execution by management then who am I to stand in the way?  There will come risk/reward setups that favor one investment over another. I don't mind rotating into companies I am familiar with that seem poised to do better than other companies I am familiar with. A recent example being when I recently reduced CIDM to a small position in February in favor of getting into IWSY and SPNS. A reflection of my never ending quest to...

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5 CHARTS THAT WILL BRING THE UNIVERSE INTO THE PALM OF YOUR HAND FOR THE WEEK AHEAD
Mar09
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FEBRUARY PERFORMANCE SUMMARY AND LOOKING AHEAD TO MARCH
Mar04

FEBRUARY PERFORMANCE SUMMARY AND LOOKING AHEAD TO MARCH

*This is my monthly letter to investors summarizing the month. The full PDF version of the summary, including managed account performance data as well as a few added components is only available via email. Return data will no longer be published as a part of the summary. If you would like to be added to the monthly email list, please contact me at mail@t11capital.com   Download (PDF, Unknown)  ...

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