@TSTRMPro
Jan 26, 2022 | 06:20 AM EST DOUG KASS
I Call BS
* More lessons learned
Warren Buffett famously said "you can't tell who is swimming naked until the tide goes out."
If nothing else the recent dive in stock prices has again taught us some important lessons:
* Trust yourself and maintain your risk discipline and stay within your risk profile.
* Never use leverage.
* Do your own homework.
* Listen, whether its technical or fundamental, and develop strong resources.
* Don't rely on commentators who either have no skin in the game
or are trying to sell you a service.
* If commentators do not provide a record of the results of their investment advice - turn off the volume.
* In mature Bull Markets, stick with quality and avoid gewgaws.
* Avoid the herd and "group stink."
The last month has revealed a number of swimmers who are swimming naked.
Remember some of the more confident and forceful recommendations - General Motors ($GM) , Coinbase ($COIN) , PayPal ($PYPL) , Robinhood ($HOOD) , Nvidia ($NVDA) , etc.
Now look at the charts.
And recall who forcefully recommended the stocks throughout the entire decline.
And now recognize that you get nothing but crickets from these fools, and a handful of large investment losses.
Mind you, there is nothing wrong with being wrong.
There is something wrong with
having excessive hubris, being too confident and not taking ownership of their mistakes.
Me? I am often wrong and always in doubt - that will never change. Everyday, as Grandma Koufax used to remind me... I worry about the (market) Cossacks coming. I am always questioning
Opener on @realmoneyrealmoney.thestreet.com/dougs-daily-di…
Opportunity Will Soon Be Knocking
* Embrace opportunity, don't shy from it
* When it's time to buy, you won't want to
* Are you kind?
"Well the first days are the hardest days, don't you worry any more
'Cause when life looks like easy street, there is danger at your door
Think this through with me, let me know your mind
Woah-oh, what I want to know, is are you kind?"
- The Grateful Dead, Uncle John's Band
@TSTRMPro Jan 10, 2022 | 12:50 PM EST DOUG KASS
Some of My Stronger Convictions
"The best lack all conviction, while the worst are full of passionate intensity."
- William Butler Yates
I recently wrote an honest column about my lack of conviction and my general confusion in
viewing a market at all-time highs, with so many adverse outcomes possible/likely.
However, I do have several strong conviction views:
* Markets rise and fall, but, on a risk/reward basis, the S&P Index is unattractive given the current level of valuations, elevated by
historical standards, and the many possible economic and profit headwinds.
* The Bull Market is old and many/most stocks (save "The Nifty Five") are technically broken.
* The odds now favor that Mr. Market is making a broad, distributive and important top.
* Significant supply
@TSTRMPro
Jan 10, 2022 | 08:30 AM EST DOUG KASS
It's Different This Time
* The policy and market setup in January, 2022 is far different than late 2018 or early 2021
* We have likely entered a new regime of higher interest rates and heightened volatility
* The making of a broad,
distributive and important market top remains my baseline expectation
* Market participants have been "shocked" by the swift and abrupt rotation from growth to value during the first week of the year - but the overall decline in the averages to date has been mild
@TSTRMPro Oct 14, 2021 | 03:10 PM EDT DOUG KASS
Uh, Oh, FIFO!
Here is one of the important reasons I do not own any retail stocks (and I am short a bunch of 'em!).
Almost every retailer has abandoned LIFO -- last in, first out -- accounting.
So, there is no shield to inflation
for retailers now.
Retailers will now have to pay taxes on inventory profits, which are mythical. For example, goods bought for $4, now cost $5 per unit to replenish -- and $1 more working capital is now needed.
This must be financed in the short-term credit market.
This was not pretty, as was learned by food analysts in 1973-1974.
I have never forgotten that period.
Eventually, as prices rise beyond incomes (as they are now doing) consumers will buy fewer units.
Inventories pile up and you get a recession ... and likely a bear market.
@TSTRMPro
Oct 12, 2021 | 08:30 AM EDT DOUG KASS
Why I Shorted Disney Last Week
* The ever popular and heavily institutionally owned $DIS is seen by many as the perfect reopening trade
* We are less certain
* Following strong 3Q results (in August), most analysts raised their
EPS forecasts and price targets - that may have been premature
* Since then, Disney reported weakness in Disney + (analysts rationalized the disappointment)
* Going forward, the company faces unusual execution challenges in streaming, legacy television, movies , cruises and in
theme parks - in an unsteady and uncertain macroeconomic backdrop
* Consequently, sell side consensus expectations - for Disney's EPS to rise from $2.10 this year to over $6/share in 2023 - may be too ambitious
* Disney's high valuation incorporates successful execution in a
Next up bank earnings, don't get sucked into trading them on the long side:
Oct 11, 2021 | 01:10 PM EDT DOUG KASS
Why I Would Be Cautious on Banks Going Into Reporting Season
Bank stocks are among the most favored value plays of many money managers and strategists based on the
fact that the industry is a direct beneficiary of higher interest rates.
This is indeed true - as banks are balance sheet and income statement sensitive to a steepening yield curve and higher interest rates.
But for banks to profit after a great run since March, 2020, rising
rates I believe have to be accompanied by an improving economy - not just higher inflation.
And, unfortunately, as expressed in yesterday's opener, that is not the case:
* Citigroup's Global Economic Surprise Index has turned negative and has fallen to levels historically