Feb 09, 2021 | 12:20 PM EST DOUG KASS
Contrary to the Conventional View, the Case for Short Selling Has Improved
* The unfolding of recent events has created an abundance of short selling opportunities
Bull Markets emerge from adversity and bad news, while bear
markets are borne out of prosperity and good news.
So it is with investing methodologies and styles.
To wit, I can't remember when short selling was such a target as today.
And I can't remember - given the market's structural profile and economic/profit uncertainties -
when the opportunities to short have been so attractive.
It is my view to be greedy when others are fearful (of the short side) especially with the apparent distortion between current share price levels and my calculation of "fair market value."
Frankly, when hedge hoggers
duck for cover, and terminate their short research, for fear of their own safety - the green light to go red is shining as brilliantly as I can recall.
With a great deal of objection from the "peanut gallery", I went all in long in March, 2020 and I have gone all in short in
Coming up on @realmoney an interesting angle on the market meltup not discussed widely...
The Virtuous Cycle of Passive Investing - A Winter's Ball
* The teutonic shift from active to passive investing is an under appreciated reason for the recent market meltup
* Passive
investing has resulted in a massive buyer that is materially insensitive to price and indifferent towards fundamental analysis
* Passive inflows are "stickier" than active inflows - this helps to reinforce the (recent) virtuous market cycle and explains the steady surge in prices
* Passive investing, when accompanied with a period of constant product inflows, reduces the markets' "float" and supply of equities
* Lowered floats (and a reduced supply of equities) combined with unprecedented liquidity-driven demand have been a tasty cocktail that has taken
Coming up on @realmoney
A Silver Lining
* I am bullish on the price of silver and gold (and I have large holdings in both)
* This morning silver is +$2.80/0z (or +10.4%) to $29.73oz!
* In my "15 Surprises for 2021" I predicted that silver would outshine both gold and bitcoin
- rising to over $50/0z
"Surprise #7 A Decline in the U.S. Dollar Spurs an Advance In Gold (to $3,000/oz) and a Ramp of +50% in Bitcoin (to $40,000) - But Silver Is The Big Winner As It Doubles to Over $50/oz - Over easy policy, excessive liquidity, higher inflation and a rapid
rollout in the Covid-19 vaccine powers the prices of cryptocurrencies and precious metals higher. Silver, however, is the league leader as the rapidly rising demand for silver in industrial applications creates a supply crunch late in the year. Another challenge on the supply
The Bitter Irony Is That A Stock Named GameStop May Stop The Game
* Too many traders speculating today are throwing "Hail Marys" in their parents' basement - thinking that they will become the next Tom Brady.
* Bubbles rarely resolve themselves
without inflicting alot of financial damage -this will likely be no different than the collapse in the last 3 speculative cycles.
* 'We have met the enemy and he is us.'
* I remain very negative on the market outlook and I am now in a short and hold phase. @jimcramer@tomkeene
Jan 28, 2021 | 06:08 PM EST DOUG KASS
Here's a Ludicrous Idea
My Ludacris -- ludicrous -- forecast is that either Citadel or JPMorgan (JPM) takes over Robinhood and pays off their (GME) trading losses.
Jan 28, 2021 | 05:29 PM EST DOUG KASS
My Two Bits: Will This Be the Arrow That Kills Robinhood?
While I promised not to discuss ideology with regard to Reddit, Robinhood and the retail investors' trading platforms ... I highly suspect that the bulk of (GME) buying was large funds
, watching the private boards and then piling on.
Robinhood is toast, in my view. Dead.
Stopping clients overnight from buying and only allowing them to close positions? Those that just bought a few hours or days before? Guaranteed losses. Cue a lot of lawyers. I'll take the
@realmoney
Jan 27, 2021 | 10:40 AM EST DOUG KASS
The Fundamental Difference Between Being Short GameStop and Tesla
* Many are becoming hyperbolic and are ignoring the facts
I am seeing some comparisons made between (GME) and (TSLA) on the chat sites, on Twitter and e
lsewhere.
Some suggest that if GME can go to $380 why can't TSLA go to $2000?
Of course anything is possible - but I prefer dealing with facts and stats, especially as it relates to short interest which seems to be the primary reason why GME has rocketed into the
stratosphere.
The short position in GME is about 70 million shares, or 140% of the share float of 47 million shares.
By contrast, the short position in TSLA is only about 60 million shares compared to the float of 760 million shares, or only 8% of TSLA's float.
Speculative, heavily shorted gewgaws zoomed higher -- perhaps taking the oxygen from traditional high octane/growth equities.
Meanwhile, some of my fundamental shorts like ($PTON) (-$9.35) and ($CVNA) (-$11.44) cratered today. I have been adding consistently to
these over the last few weeks Disney (DIS) fell by -$2.33. M inexplicably rose by nearly +$2. Homebuilders were mixed.
One of my core and basic shorting tenets is never to short a stock in which short interest exceeds five to six days of average trading volume
(over the last month) and to avoid shorts in which company short interest exceeds 5% to 6% of the company's float.
The short squeezes in ($GME) and the other shiny objects of speculation over the last month are testimony to this strategy of risk control and provides validity