HOW TAKING THE PACKERS IN THE SUPERBOWL REMINDS ME OF GOOG WHEN IT IPO’D
The GOOG ipo in 2004 was an event. I was in Sweden at the time visiting family. I remember a bunch of us huddled around the computer waiting for it to open. I was running my hedge fund at the time and I had absolutely no interest in the stock. Like the majority of Wall Street I thought that $100 for a company that had anything to do with the internet was absurd. You have to keep in mind what investors in the markets had been through the previous few years. The bursting of the internet bubble was a catastrophe for investors. Internet stocks at the time GOOG went public ranked right down there with Nigerian chain letters and DeLorean Motor Company as marketable investment ideas. People had seen their wealth evaporate as a result of these stocks. So when GOOG - an internet company - came out at $100 per share, people were immediately reminded of the madness that was the internet bubble. That was the trap...the diversion...the contrarian play. That was the reason GOOG went up multiple hundreds of percent in the years that followed. The premium that was charged for GOOG made a lot of investors, both professional and amateur, take the other side of the trade. Taking the other side of the trade in the stock, fueled the runup for the first year, as investors were caught with their pants down. They were eventually forced to cover shorts and/or buy into the stock at a heavy premium to the offering price. Only after the massive runup did investors finally begin to realize what a force GOOG was. The Packers in the Superbowl, being favored by 3 points, reminds me a lot of the GOOG premium on its IPO date. Just like GOOG in the first year of its public life there will be a lot of people taking the other side of the Packers trade i.e. the Steelers. Just like the GOOG ipo, the odds makers seem to be baiting the huge population of short sellers and doubters (Steelers fans) into taking the 3 points and banking. It seems too easy, just like shorting a $100 internet stock did when everyone couldn't stand hearing the words "internet stock". The betting public is heavily slanted towards the Steelers. And the Vegas bookmakers are being kind enough to give the betting public 3 points as a gift for playing. Just like the Wall Street bookmakers were kind enough to give all the internet stock haters a $100 stock to short or completely avoid in an era of internet company implosions. You must remember, at the time GOOG...
FURTHER BEARISH CONFIRMATION FROM A FORMER LEADER, AND THE GOOD OL’ BOYS: AAPL & NFLX
(click on the charts below to enlarge)
TODAY’S THOUGHTS – USUALLY FOR MEMBERS ONLY, TONIGHT I WANTED TO SHARE IT ON OUR BLOG
*****The following is the "Today's Thoughts" article that I send to our members on a nightly basis. I have removed the symbols of the stocks that we're invested in as these are for Zenpenny members only.***** February is off to vivacious start. Our own accounts and managed accounts all hit new all-time highs today. Of course, this is thanks to our overweight position in ****, which is looking more and more like it may be done with its short-lived correction. I sincerely hope that some of you managed to take advantage of the recent dip below 1.30 to stake your claim to a portion of this company. The upside, from everything I am observing, is extraordinary. Our most recent holding -- **** --should serve as the poster boy for the affliction that currently resides within the micro-cap/penny stock space. The lack of recognition and just plain apathy that exists in this stock and many others like it is a clear indication of the shift in landscape that has taken place in the equity markets over the past several years. You have a $ million company here that only one institution is really active in...that being **** Asset Management, as I outlined in the research report. And then you have the remnants of the individual investor class who are either so involved in companies like AAPL and NFLX that they can't look past their own noses or they are attempting to trade the markets based on some delusion that they can beat the system over the long-term in an era of high frequency trading programs that know everything they are about to do, many hours before they even draw up the plans to do it. Then you have what equates to a pile of cash sitting on the ground..in the form of companies like ****, ****, ****, and LASR a year ago. You know what happens here? Crickets happen... chirping...a guy with a taco and a street sweeper under the lights at 3am. That's all that's out there. It deserted and it's sad. It's a display of how lazy human beings really are. It's a testament to the fact that people think that with a minimal amount of work they can become rich in the financial markets. "All I gotta do is buy when this line crosses below this point, while these two green dots intersect on the chart". I mean, come on guys. Is there any other line of work out there that educated, well-respected people can just get up, read a book and think they are entitled to pick fruit from the tree at will? Can a guy...
JOHN PAULSON SAYS THAT HIS FUTURE RETURNS WILL COME FROM RESTRUCTURED EQUITIES…DUH.
There's a reason he stays on top of his game regardless of the vast ocean of assets he manages. http://www.marketfolly.com/2011/02/john-paulsons-year-end-letter.html Unfortunately for Paulson, he can't invest in micro-cap and penny stock restructurings due to his size. We can...we do...and we're the only website that focuses exclusively on this...
2 POTENTIAL OUTCOMES. PICK YOUR POISON.
The S&P 500, as I commented last night, is at a point where it is facing some stiff resistance ahead. What makes the task at hand that much more daunting is the fact that a majority of indicators are telling of an imbalance in the markets between bulls and bears, which is in real need of being readjusted. In other words, we've gotten ahead of ourselves and the bulls need a break in order to prepare for the next leg of this trip. The eventuality for the S&P 500 comes down to 2 distinct paths: 1. We begin a pullback within the next couple of days. It may be a pullback that is part of the top building process...perhaps we test the current highs one more time. My main point is that the top building process continues within the confines of the current range. 2. The S&P 500 blows out the top end of its ascending channel, going into overdrive and annihilating the bears completely and totally. On the surface, this may seem like a dream to the bulls. In reality, it will prove a lot more damaging in the long run. It will be similar to Charlie Sheen on his last bender before entering rehab. It's reckless, may cost the bulls a lot more money than its worth and will prolong the misery of the coming correction phase, otherwise known as rehab. The simple reason for this is that the more hardened bears you blow out of the water and the more anxious bulls you lure into the water, the more vacuous the bids that support the market during the coming correction become. Hollow bids equal more volatility and destruction. Moving through important resistance points at the top end of rallies causes those who would have ended up bidding the market up during a correction (the bear who wanted to take profits on his short or the buyer who wanted to take a position in his favorite stock) to become sellers as the market corrects, thereby exacerbating the downside of the market. These are the 2 potential outcomes for the market here. Pick your...
ZENPENNY IS NOW A CONTRIBUTOR ON THESTREET.COM
Beginning today, I am a contributor on www.thestreet.com I will writing articles for their site periodically about individual stocks, as well as the general markets, strategies etc. First article, published this morning appears here:...
THE S&P 500 AND NASDAQ. ONE IS A LIAR AND THE OTHER IS, WELL, A LIAR
(click on the charts below to enlarge)
HOW THE MARKET MAKES YOU EARN YOUR TRIP DOWN ITS PANTS
Intermediate to long-term reversal points in the financial markets are some of the most profitable trading opportunities. I've caught market tops and bottoms in the past that brought in enormous gains in just a couple of months. The problem is that they put me through the ringer first. It's similar to courting a girl who knows you will do anything to garner her affection. She will intentionally put you through the ringer in order to insure that your intentions are real. The market is no different. It sees that you want to go down its pants, so it makes sure that you prove yourself worthy of the trip before allowing you the first button. That's what we're seeing here, at this moment, with this market. There is no doubt that the long side is an extremely crowded trade. There is also no doubt that the market will want to shake the tree a bit before going up any further. Not because it wants to, but because it has to. Markets cannot successfully maintain a trend, up or down, without rebalancing the bids and the offers. That's why markets stop to correct, consolidate and frustrate for a period of time during even the most powerful of uptrends. Later tonight I will be posting charts that demonstrate exactly how the market is manipulating the bulls into believing that they are safe when they are anything but. Lastly, I should mention that following our first down month in many months in January, our portfolio had a stellar beginning to February. Our largest position (oil/gas spinoff) posted a gain of nearly 15%. It had recently pulled back off its highs, which we took advantage of to buy more...and are now in a fully allocated position with the stock. We're expecting the upside to be tremendous here...as insiders have loaded the boat recently and some real wise money has become involved in their efforts to grow the company. Zenpenny members prosper, it's guaranteed. Join...
BEARS ARE VOMITING UP THEIR SHORTS
S&P just blew through Friday's high...that was a vomit point for the bears. Nasdaq 100 has yet to move through this point. I'm surprised by how quickly the bulls were able to take the markets up to test this important point of resistance. S&P suddenly leading the Nasdaq higher. A shift in leadership at such a juncture, with several important indicators flashing bearish confirmations, may be the equivalent of the lie detector starting to vacillate wildly on the arm of a compulsive liar. Bulls have every incentive to be lying here...I'm hesitant to trust the picture they are painting. Bears have been caught off guard by this move, no doubt. You see it in the ferocity of the upmove...some real short seller panic taking place. I will be updating the charts...
THE 3 REASONS WHY INVESTING IN MICRO-CAP STOCKS BEARS THE MOST FRUIT, WITH THE LEAST AMOUNT OF WORRY
Not just any micro-cap stock, of course. You can't just go around throwing darts at companies with market caps under $50 million and expect to pull in 500%. What you want to do is target the most overlooked, the most misunderstood and the most complicated situations of all. Here are the reasons why: 1. Institutions are ABSENT. This is so important. The sharks aren't swimming in this part of the ocean. This causes trading conditions in these stocks to be a lot more transparent than your average stock that is being pulled every which way by thousands of different Wall Street pros. 2. Restructurings in this sector of the market are abandoned and ignored. Why? Individual investors don't care to understand them. They see the words bankruptcy, debt restructuring, activist, spinoff, renegotiation...and they either shut down completely and ignore the stock or they sell the stock and go away forever. 3. I've said it before...I'll keep saying it. These companies are like option contracts without the time decay. I don't have to be right over a window of 6 months, while the time value of my option contract slowly erodes. I know that if I do my research and find that stock that has potential, I can sit on it for as long as I want, and 9 times out of 10 it will bear fruit if I've done my research correctly. And the fruit these names bear are not of the 50% or even 100% variety. Option contracts without the time decay. It's not rocket science. I'm not looking to feed my ego in the markets by taking on every hedge fund manager in the game on a daily basis, attempting to prove I'm smarter than everyone else. I want the least stressful way to make the most amount of money. I've got a tiger by the tail and I ain't lettin' go. Join us...