by Phil Davis - September 27th, 2014 7:29 am
What a controversy!
By now, we've all seen the "Bengate" video of the iPhone 6+ being bent by hand but now it turns out that the video that's gone viral may have been FAKED!!! This is a video that knocked 5% off AAPL's stock price this week, costing its investors $30Bn in lost market value – so not a harmless hoax.
As a disclaimer, it's important to note that, in our first Webcast of the year, we picked AAPL as our top trade idea and again, on TV on March 6th, I was almost embarrassed to say AAPL was once again our trade of the year for BNN (it was last year's trade too). AAPL is up 33% since than and our initial trade idea is up over 300% (we used options for leverage) but we still have bullish AAPL trades in our Member Portfolios – so we do like the company and have some bias…
That being said, we don't know the bias of "Unbox Therapy" and we don't KNOW that it's a hoax but it's starting to seem like one as AAPL has already put out a rare public statement rebuffing the claim, stating that only 9 customers to date have complained of bent phones (out of 20M sold) and now Consumer Reports has done a test confirming that, indeed, you can't bend an iPhone 6 Plus with your bare hands.
Speaking of hands, there are some inconsistencies in the Unbox video that are very disturbing. First of all, look at the hands in the image above and then look at the guy narrating the video – people are saying those are not the same hands. That may or may not be the case but it is certainly the case that there's a huge discrepancy in the video itself:
As you can see, the phone he is bending "live" at 1:38 in the video says it's Tuesday, 23rd at 2:26 but then, 40 seconds later, the "same" phone says it's 1:58. This is not an editing discrepancy since he had an UNBENT phone just seconds before 2:26 that…
by Phil Davis - September 19th, 2014 7:26 am
How, you may wonder? Well, two ways: Back in October of 2007, before Alibaba IPO'd in China, I was touting the company when it had an $8Bn valuation ($1.10 per share – pre-split). I was the first and only analyst in the US to point out the benefits of Yahoo's investment back then and our Members who play the Asian markets were able to take advantage of that and today should be the culmination of the white whale of investing – the 20-bagger as Alibaba is expected to IPO in the US at $160Bn just 7 years later.
YHOO, on the other hand, took the long and winding road but it should finally be getting to our $50 target and that's another 100% gain on the stock – though a very small consolation to those who didn't pick up AliBaba directly. Fortunately, at Philstockworld, we know how to BE THE HOUSE – Not the Gambler and, back in June, when the rumors of the AliBaba IPO began we came up with a way for our Members to make 400% playing YHOO into the AliBaba IPO.
From our Live Member Chat Room:
YHOO/Albo – Why not just buy YHOO? YHOO is $35Bn and owns 22% of AliB while SFTBY is $91Bn and owns 33% of AliB, so you get a lot more bang for your buck with YHOO, whose forward p/e is only 19, than SFTBY, whose forward p/e is about 17 – so not all that significant. Of course, more significantly is the potential impact of (guessing) $50Bn worth of AliB on a $35Bn company!
So we don't even have to go crazy if we want to play the "YHOO is undervalued" game. The Jan $38/45 bull call spread is $1.60 on the $8 spread with 400% upside if YHOO gains 28%. I think that's worth $800 for 5 shares in the $25KP
by Phil Davis - February 18th, 2011 8:16 am
Fastest Double EVER!
That’s the verdict as the S&P 500 adds 666.79 points in 23 months, the fastest gain since the index was founded in 1957. "The scale of this rally is just enormous," said New York money manager Barry Ritholtz. He calls it the most intense rally since the Depression. Even during the go-go 1990s, the S&P typically took around three years to double. For instance, it first cleared 1,000 on Feb. 28, 1998 — 35 months after its first move above 500 on March 24, 1995.
Ritholtz says the average stock market bounce following a crash is 70% or so, and is stretched over a longer period. But of course, in previous cases the Fed wasn’t buying up half a year’s worth of Treasury issuance and holding short-term interest rates near zero.
"This one is unique," said Ritholtz. "Obviously the Fed is the key difference. We have never seen them throw this much liquidity into the mix." Accordingly, most market observers are now tapping their feet waiting for the inevitable pullback. The average correction following a postcrash bounce is 25%, Ritholtz said. According to Fortune: "There are all sorts of reasons to expect the momentum to turn against stocks after their unprecedented gains. They range from rising bond yields and stretched stock valuations to political unrest in the Middle East and another iteration of the ongoing debt crisis in Europe."
Of course, as Fortune should know, IT JUST DOESN’T MATTER what’s going on in the World as long as B-B-B-Bennie and the Fed continue to prime the pumps at the IBanks and last week, the Fed set a new record as well by expanding their balance sheet to $2,492,000,000,000 after adding $23Bn of US Government Securities.
Now I wouldn’t want to force you to draw any conclusions that may link those two items. After all, Doctor Bernanke himself says that the Fed’s actions have nothing to do with either inflation in the commodity pits or in the equity markets. They are merely providing ample liquidity to their Member banks who, in turn, lever that liquidity 10:1 and spend it in the same wise fashion they always have – like the 10s of Billions of Dollars of "toxic" securities they have been splurging on again, once again hoping to make a quick buck (and get a big bonus) before the bottom drops out – again.…
by Phil Davis - January 6th, 2011 7:29 am
Russell 8-0-0, Russell 8-0-0! Wherefore art thou Russell8-0-0? Deny thy dollar and refuse to fall, or, if thou spike not, be but consolidating at resistance and I’ll happily Capitulate….
If it’s good enough for fair Juliet, it’s going to have to be good enough for us as the Russell finally makes it over our 800 target – the last barrier that was keeping us on the bearish side. Above these lines – it’s time to stop worrying and love the rally as we romanticize the deadly combination of QE2 the Obama tax cuts as: "A pair of star-crossed lovers take their life, whose misadventured piteous overthrows doth with their death bury their parents’ strife."
Of course Willie Shakespeare has nothing on Jimmy Cramer, who’s pearls of wisdom are also sure to be repeated centuries from now. Last night the Bard of Wall Street sang a veritable sonnet in praise of the stock market and foretold a tale of woe for anyone dumb enough to take profits into this rally:
We got the correction this morning, Dow fell 35 points… Today’s action was proof positive that you need to stop worrying and learn to love corrections… What scares me, and what should scare you, is that if you sell your stocks here, you won’t be able to get back in. You should be worried about stocks getting away from you, because I think we can be on the verge of something big – something very positive. FORGET the fact that stocks have run up a lot in the last 6 months. For more than 10 years, this market has done nothing, THAT is the most important frame of reference…
What’s changed? We are finally starting to see big breakouts from a slew of breakouts from several large cap companies including: CAT, UTX, FCX, SWK, CBE, ETN, CSX, UNP and so many other big industrials. Ladies and gentlemen, we have waited over a decade for this move and what do people want to do now that it has arrived? They want to sell! That’s right, they want to sell. That’s right. They want to dump the stocks (sell button sound effect) because they are up way too much short-term or because they think the moves are illusory or driven by short squeezes that will
by Phil Davis - December 22nd, 2010 7:46 am
A Trillion Dollars – Muhaha!
After adding $209Bn (26.3%) in total assets so far this year, the US ETF industry has passed the Trillion Dollar mark led by $31Bn of inflows into fixed income ETFs, of all things as well as $29Bn of inflows into emerging markets, and $21Bn into domestic. Recent outflows have knocked commodity ETFs down to $11.4Bn, miles down from last year’s $32.6Bn inflow – rats leaving a sinking ship, perhaps? That would be very bad news for the firm that bought up 90% of the LME copper supply recently. Do ETF traders really know something or are they a lagging indicator?
“There is little doubt that money chases performance, so the bedrock for significant (ETF asset) growth is clearly a continuing move higher for risk assets,” said Nicholas Colas, chief market strategist at ConvergEx Group. He added that growth for ETF assets would essentially be a “tug of war” between hedge funds and retail investors. “As retail investors grow more confident in a continued rally in risk assets, they will shift capital from cash to equity ETFs,” said Mr Colas, who described growth for equity focused hedge funds as the “other side of the growth coin” for ETFs.
Mr Colas noted that hedge funds tended to use ETFs on the short side which was negative for asset growth. He said that as hedge funds expanded their equity trading books, a growing portion would come from from ETF short sales. “This will come through as ‘supply’, dampening demand for new shares.” Barry Ritholtz ponders the end game of the ETF madness and concludes that soon there will be more ETFs than ever:
There is growing speculation surrounding what is believed to be the next breakthrough product in the ETF marketplace: Single stock tracking ETFs. Unlike their index-based cousins, these new single stock trackers would, as the name implies, track only a single stock, trade at exactly the same price as the stock to which they’re linked and consequently eliminate the need for single stock ownership. A top executive with a money management firm who is familiar with his company’s plans to launch such a product and was granted anonymity so he could speak freely, put it this way: “Think about the prospect of, say, a GE tracking ETF — an investor could capture over 99% of the movement of GE
by Phil Davis - December 2nd, 2010 8:04 am
It’s very sad when you can get your best financial advice from cartoon characters.
I apologize for the language but this video pretty much says it all. As the man in green says: "Buy the f’ing dip, you f’ing idiot." That’s the entirety of the market strategy we are being trained like Pavlov’s dogs to follow. Also as the man says "Now, don’t forget this only works if you go out and tell all your friends and family to do the same. That way, when they are buying more expensively than you, you can sell back to them and collect your money."
Of course it’s a Ponzi scheme but it’s a gigantic, legal one and the best thing about it is that the Government FORCES everyone to play so you never run out of suckers. When there is a lack of actual new sucker/investors to put money in, the Government steps in with stimulus or buys equities (QE1) or buy Treasuries from the banks so they can have free capital to buy equities with (QE2). They debase the currency and drive inflation higher while talking it up even more so and virtually penalizing people for saving money and not shopping. In this way, the US Government places a tax on every single citizen through a systemic devaluation of their lifetime accumulation of wealth as well as unfavorable savings and inflation conditions that are aimed to force money into equities and commodities.
What is the logic to this? Well, none if you are a government that actually cares about the long-term benefit of 310M people but we haven’t had a government that was "for the people" since they put two in the back of Kennedy’s neck so why complain about it now? What we should be doing is celebrating the sheer stupidity of the situation and enjoying the ride as this stock market roller coaster clacks up the tracks – towards a drop that is certain to have investors screaming all the way down but, for now, let’s listen to what the Bernanke Bears have to say in their latest cartoon about the Bank America crisis with WikiLeaks as well as their advice on NFLX and CRM:
by Phil Davis - June 30th, 2010 8:27 am
Head and shoulders, knees and toes.
Sorry, I can’t think head and shoulders without adding the second part thanks to the darned Wiggles, which my kids were raised on – better than Barney, at least… The head and shoulders investors care about is the chart pattern (from the Chart Store) and, frankly, I could make a knees and toes case by extrapolating the left side of this disaster (which was actually a great bull run but would not be as much fun if we flip it).
TA is all about symmetry and pattern recognition, two things that are hard-wired into the pleasure center of the animal brain to help us develop cognitive skills early in life. Humans love finding patterns – it makes us happy. In this particular case, the fact that stocks go up and down and then get overbought and then get oversold as they correct to the mean has been cleverly identified by one primate (and I hope he gets a copyright fee) as a "head and shoulders" pattern and all the other media primates gather around the great obelisk and they howl and shriek at you every day and they cast their bones and make proclamatiotion as to what it foretells.
Unfortunately, Technical Analysis has so many devout followers that it often becomes a self-fulfilling prophesy. Even worse (and certainly more significant) than the head and shoulders pattern is the coincident "death cross" or "dark cross" that is being formed on our indexes (see yesterday’s post) as the 50-day moving average falls below the 200-day moving average, as indicated on this chart from Barry Ritholtz:
Mary Ann Bartels, Chief Bone-Caster at BAC, made the follwing prediction about the pattern she was seeing:
June 23, 2010 marked the 1-year anniversary of last June’s bullish Golden Cross of the 50-day moving average above the 200-day moving average. This Golden Cross signal preceded a 12-month return of 22.4% on the S&P 500. The average 12-month return for the 42 Golden Crosses that have occurred since 1928 is 9.6%. More importantly, the June 23, 2009 signal occurred during the NBER recession that began in December 2007 and Golden Crosses associated with recessions show a much stronger average 12-month return of 19.5%. The average 12-month return for the S&P 500 over the same period is 7.2%…
The bearish counterpart of the Golden Cross is called a Dark Cross. This signal
by Phil Davis - June 6th, 2010 8:27 am
That is the per capita average GDP for the 6Bn ape-like creatures on this planet who have pockets and purses. Of the still hairy and pocketless apes, there are only about 1M left and they are mainly prisoners so we won’t be worrying about them but it would be nice to consider the plight of our ancestors once in a while… Anyway, so 6Bn of us fill in those last 3 images in the planetary labor pool with the vast majority of us STILL FARMING and, of course, a select group of us are still hunting and gathering and contributing very little to the GDP.
None of our problems are new – as noted in this 2005 cartoon:
The United States of America with it’s highly evolved population of shopoholics has a per capita GDP of $46,381 – VERY IMPRESSIVE but we rank 6th! Brunei does a little better than we do and Singapore is up at $50,523 (so let’s hear it for corporal punishment) and Norway (one of my top choices of countries to flee to when it all hits the fan) is at $52,561 but Luxembourgh ($78,395 – banking) and Qatar ($83,841 – oil) simply trounce us in earnings power per person. For those of you who like to think Capitalism is all about keeping score – they must be better than you because they make more money, right?
Below the US, per capita GDP drops off fairly quickly. Rounding out the top 10 are Switzerland ($43,007 – watches and more bankers), Hong Kong ($42,748 – don’t tell China!), Netherlands ($39,938 – legal drugs!), Ireland ($39,468 – free beer when on wellfare!) and Australia ($38,911 – beer comes in oil cans plus gigantic bouncing rats). 20th on the list is Germany at $34,212, Greece is 25th at $29,882 (but not for long), 30th is South Korea at $27,978, 40th is Slovakia at $21,245. Lithuania comes in at 50 with $16,542 (1 ahead of Russia) and it steadies out there with emerging market star Brazil in 75th place with $10,514 and, keep in mind – that is where you FINALLY get to the average leverl of economic activity for the world.
Another BRIC in the global wall is mighty China, with a per capita GDP of $6,567 for each of their 1.2Bn persons and India’s Billion people average out at less than half of that, at $2,941, ranking 128th and still ahead of 53…
by Phil Davis - May 26th, 2010 8:28 am
I’m going to be quick today as I got caught up doing a new Buy List for Members.
This is my new favorite picture and I used it in this morning’s Alert to lead our Members in prayer and warn them: Dear Lloyd, lead us not into temptation…
I was VERY worried yesterday that I might have to send CNBC a box of chocolates and apologize for calling them a pack of dangerous fear-mongering morons who would trade their viewers souls for ad dollars but, it turns out I was right after all, as we quickly recovered from the 2nd CNBC-inspired market meltdown in one week and held my bottom targets on both the S&P and the Russell.
That was good enough for us to bring cash off the sideline and we went 100% against Jim Cramer’s (who began the panic with his Dow 9,500 call on Monday night) advice and sold not one but 3 naked puts to the panicking crowds in my 9:47 Alert to Members yesterday morning:
- USO June $30 puts sold for $1, now .70 – up 30%
- SSO June $30 puts sold for $1.60, now .80 – up 50%
- FAS June $17 puts sold for $1.45, now .77 – up 50%
Pretty good one-day profits, aren’t they? I explained why Cramer was totally wrong in the Weekly Wrap-Up, so no sense in going back over it here. I’m sure he’ll say something else that I can correct any minute now… By the way, I don’t have it "IN" for Cramer. He can press all the buttons he wants and bark buy and sell orders at his viewers but DON’T, Mr. Cramer, start giving out bad advice on options, especially advice that is so bad that it can really hurt people – that’s when I get pissed. Telling people that selling naked puts is dangerous is simply ignorant or misleading – you can decide which Jim is.
If I REALLY want to own USO long-term at net $29, then why shouldn’t I sell the June $30 puts for $1? USO barely touched $31 briefly yesterday yet we were able to score either a $29 net entry on the stock (if USO finishes below $30, the stock will be assigned to us for $30 a share) or, if USO remains above $30 through June expiration, we keep the $1 and that’s our profit for the month. Do that 12 times a year…
by Phil Davis - May 11th, 2010 8:24 am
Does anything about this ride feel familiar?
Oh yes, that’s right – good old 2008, when the "minor correction" of 2007 was behind us and the Dow rallied back from 11,500 to 13,200 based on stimulus packages, fake economic data and even faker earnings reports where banks, builders, automakers and retailers all lied, lied and lied (or perhaps they were just totally, densely ignorant) about their outlook and their operations and CNBC et al lied to investors and told them to BUYBUYBUY while the smart funds were SELLSELLSELLing as fast as they could.
The August 5th, 2008, with the Dow at 11,500, the Fed had a meeting and decided to keep rates at 2% saying:
Economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.
That gave the Dow a 332-point gain that Tuesday – kind of like yesterday’s gain. Our "friendbuddypal" Cramer says "Even after today’s run, the market is still oversold" (yes, I know, he just said "Don’t Buy Till Dow 9,000" on Friday – TFF) but I had to disagree (with Monday’s Cramer – hard to keep track…), telling Members in our 9:41 Alert to cash out our longs, saying: "Don’t be greedy, 5% in a day is A LOT" and I followed up just 15 minutes later with a comment in Member Chat saying: "Time to take money and run at 5% rule – we can reload if 4% holds." The only bullish play we made was on UNG, but it was well-hedged, we did go with DIA $105 puts at $1.16, which went over $1.30 during the day and should be better this morning.
Although we did finish in the bullish end of our 5% range, we got there on a big stick into the close so my closing comment to Members was: "Very indeterminate close. Cash still king. Europe does look like they can follow through and Asia has to catch up so we SHOULD get a nice, up open tomorrow, gapping back up to and maybe over today’s highs but I’d be…