A 10 YEAR HIGH THAT HAS INVESTORS RUNNING SCARED
This article also featured on TheStreet & Fidelity There are different points in time since the mid-90's that I can classify based on their ability to produce fear and greed on either a short-term, intermediate-term or long-term basis. What I mean by that is that I have vivid memories of the manner in which pullbacks were greeted during each time period or market cycle. The amount of fear during each time period was determined by what had occurred in the period preceding. For example, there was little fear during the pullback that started the internet collapse in 2000 since we saw a near uninterrupted bull market in the years prior. Following the internet bubble collapsing it took a period of YEARS for investors to finally understand that dips should not be bought. It was only when this fact was understood completely that the markets were ready to move the other direction. All the excesses had been unwound. Fear was easily generated through even the most moderate of pullbacks. Fast forward to 2007-2008. Retail investors were too busy getting rich off of their homes to pay much attention the markets. It was the institutions, hedge funds and professionals who were going to be victimized this time around. The collapse that occurred in 2008 was a direct assassination of the professional investors psyche. Those hedge fund and institutions that survived are like battle scarred war vets. They jump at every loud noise and are startled by small children making sudden movements. We are now at a point in the financial markets when even normal pullbacks, such as the one we saw over the past several weeks, are greeted by a mentality that anticipates the end of world imminently arriving. This creates the proper dose of fear necessary to make bullish moves like we have seen the past few days. Of even greater significance is the fact that the move up we are seeing currently is being greeted by the same skepticism that said the markets had more to go on the downside last week. You can see the eager attitude with which investors will take on a bearish stance by the squeeze in companies with a high amount of short interest over the past few days. Last week I presented 5 stocks that I came up with as a result of a scan that pinpointed companies showing relative strength during the bull market run. I scanned for a high amount of short interest, low float, market cap under $2 billion and a few more qualifiers. That portfolio is up 12% since last week. A boatload of other companies that I track...
WHY AAPL, GOOG AND EBAY WILL SLASH AND BURN INVESTORS
This article also appears on Forbes We are squarely in the middle of a point in history where the speed of innovation is causing entrepreneurs, innovators and investors to question everything they know about business. Never have we witnessed a point in time when companies that were thought to be bulletproof so quickly fall into the trash heap labeled: has been and wanna be. To be an established technology company in such an environment is an exercise in prescription drug dependence and paranoia. To be an up and coming technology entrepreneur during such a time is an exercise in opportunity and limitless possibility. 10 years ago investors thought companies like MSFT, CSCO and YHOO possessed the dominance and relative value necessary to blossom into investments that would put their kids through college, fund an expensive bathroom with an odd looking sink, or perhaps support an addiction that had become way too fun to give up. Instead these companies have been left behind by investors as technology has already turned them into dinosaurs. Even worse than becoming a dinosaur is becoming a fossil embedded in solid rock, covered up by mounds of dirt. Companies like Palm, Nokia, Vonage, Sirius and RIMM are all flashes in the pan. Judging by that list, it would seem that the world of wireless is the fastest moving technology innovator. And why wouldn't it be? We use these devices nearly every single minute of every single day. They are the devices that have come the furthest in terms of innovation over the past 5 years. They are also the devices that will see the most changes and innovative add-ons in the next 5-10 years. With all this said, here is a list of 3 companies that should keep you up at night if you are a long-term investor in any of the names. Their futures, while appearing solid, are anything but due to the whims of the modern day consumer, the speed of the technology cycle and the path that technology is currently taking: - AAPL - Cult following. Everybody has at least one of their devices. There is nothing but a circle of love and praise being hailed upon the company. They recently made plans to build a circular spaceship type of office. Pretty cool. At the same time, it reminds me of other grandiose plans that have marked the top of not just companies, but entire civilizations of people. The bottom line with AAPL is that it is a maker of gadgets. Gadgets will only get you so far before consumers and technology move onto other products and companies that are moving in...
10 CHARTS THAT WILL KEEP YOU FROM BECOMING A MOUTH-BREATHING ZOMBIE IN THE WEEK AHEAD
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1. 5 DISCIPLINARY MEASURES THAT WILL MAKE YOU THE KING-KONG OF TRADING 2. WHAT I LEARNED ABOUT THE MARKETS FROM THE MILLIONAIRE MASSEUSE AND THOUSANDS OF RETAIL INVESTORS 3. LINKEDIN: A DREAM FOR BULLS, CONTRARIANS AND ANYBODY WHO BELIEVES IN WALL...
LINKEDIN: A DREAM FOR BULLS, CONTRARIANS AND ANYBODY WHO BELIEVES IN WALL STREET
This article also featured on TheStreet.com Opinions swirl. Information is exchanged at a lightening pace. Money is made. Money is lost. Somebody smiles. Somebody cries. Somebody quits trading. Somebody is having their first profitable day. Lessons are learned on a daily basis. If you have had enough days in the markets those lessons hopefully end up making you into a better trader or investor. Out of all the lessons I have learned in the financial markets, there has been one constant: the financial markets want you, me and anybody else who attempts to pick fruit from its bountiful tree to tumble from our ladder and break a leg, at a minimum. Death is preferable. It's one giant psychological mouse trap. Doubt fuels rallies. Fear makes solid bottoms. Greed creates long-term tops. What do doubt, fear and greed share in common? They all take place during periods of time when they are precisely the incorrect emotion at precisely the incorrect time. LNKD is the new poster boy for a demonstration of the psychological mouse trap in real time. It used to be that NFLX was my go to guy for a lesson in how and why the markets do what they do. LNKD has taken the dynamic to a whole new level. With LNKD we have the following set of circumstances: - I'm not a member of LNKD. Most of the guys who I didn't like from high school and college are on there. It seems like a gigantic job board to me when I look at it. Maybe with a social angle thrown in so it's not just another HotJobs. I'm assuming that most people that look at it from the outside see something similar. On the surface, it doesn't seem like anything special. - A nearly $10 billion market cap. NFLX is $13 billion by comparison. Only difference is that it took NFLX 10 years to get there in the public markets. LNKD did it in one day. Magical. - Astronomical valuations on price to earnings, sales, book value, cash flow. Whatever ratio you want to apply. It's extremely overvalued. - A very low float making for some extremely volatile trading conditions. - Skepticism galore. Just read the headlines. There are more articles about shorting LNKD than anything else. It is fair to assume that the underwriters knew precisely the type of skepticism that would ensue if Linkedin had even a mildly successful IPO. It is also fair to assume that they knew that short interest and put buying would become commonplace in the weeks following the IPO given the amount of skepticism the valuation would be greeted...
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