Posts Tagged ‘Vitaliy Katsenelson’

QE2 is not only a mistake “it’s criminal” says Vitaliy Katsenelson: Tech Ticker

The Treasury market is rebounding Thursday. Yields have fallen from a six-month high, reached Wednesday, but are still up from where they were earlier in the week. Yields on the 10-year are trading at 3.23% today.

This is not what the Federal Reserve had in mind when the central bank announced the plan to purchase $600 billion in Treasury bonds — a move that was hoped would lower rates and stimulate the U.S. economy.

Of course, there are many critics of the Fed who say the second round of quantitative easing is wrong and even harmful. "The failure of QE2 doesn’t worry me, it’s the success that worries me," says Vitaliy Katsenelson of Investment Management Associates.

"I think it’s criminal," he tells Aaron in the accompanying clip. "They’re forcing people that should not be taking risk to take risk."  The fear is the Fed is repeating its past mistakes — helping to build an asset bubble that will eventually burst with grave consequences.

More here: qe2 is not only a mistake "it’s criminal" says vitaliy katsenelson: Tech Ticker, Yahoo! Finance.


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The case for Pfizer

The case for Pfizer

Courtesy of  Vitaliy Katsenelson, at Contrarian Edge

Pfizer Profits Drop After Pharmacia Charges

I understand why investors don’t want to own Pfizer (PFE); there is little excitement in the stock:

  •  It is down significantly from the Viagra-high it reached in 1998.  Yes, Pfizer is the maker of Viagra, the drug that spawned a slew of commercials that made TV unwatchable (especially if you have little kids who ask you if they or you need this medicine that makes people on TV hug each other, or ask you “What is reptile dysfunction?”).
  • Pfizer’s earnings have not gone anywhere for years.
  • As with almost anything medical-related, Pfizer is exposed to the political risks of Washington DC.
  • Finally, it is facing patent expirations of its major blockbuster drugs like Lipitor ($12 billion of sales) and a few others that will hinder PFE’s future growth for years. 
Viagra pills

There is not much one can do about TV commercials except cancel cable or watch less TV (I did both).  Nor there is not much one can do about the stock-price decline over the last ten years – maybe the only thing to do is learn not to buy hype; after all, Pfizer was trading at over 50 times earnings in the late ’90s. 

I don’t want to dismiss the political risk, but it seems that due to extensive lobbying efforts by pharmaceutical companies, political risk has turned into only a slight inconvenience.  Pharma companies have agreed to $80 billion of price concessions over the next ten years, but at the same time they’ll benefit from a larger customer base, as more people will have access to health insurance.

Instead of being mesmerized by huge drug expirations, we can do the value-investor kind of thing – estimate the impact of drug expirations on PFE’s cash flows and value the stock using discounted cash-flow analysis based on these assumptions. 

So let’s value Pfizer:

No New Drugs Scenario:  At the end of 2009 Pfizer acquired Wyeth (WYE), a large pharmaceutical company.  I’ll address this very important acquisition in a bit, but first, let’s look at Pfizer on a pre-Wyeth basis.  The fewer optimistic assumptions we use, the less likely the future will disappoint us.  Applying this logic, let’s assume that soon after a drug-patent expiration, as the generic version hits the market, revenue…
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Books that will help gain sanity in insane market – Part 2

Courtesy of Vitaliy Katsenelson

I originally wrote this list of recommended books last year; recently I updated and added a few more.  I hope to keep adding to it every year.  It contains six sections: Selling, Think Like an Investor, Behavioral Investing, Economics, Stock Market History, and Books for the Soul.  Due to its length, I divided it into two parts.  You can read part 1 by clicking here

Behavioral Investing

The right temperament is crucial in investing. Being a critical thinker and knowing how to value stocks is important, but it is all a waste if your emotions get the better of you. The following books will help you to recognize the shortcomings of your hard-wiring and help you to devise strategies to deal with it.

Psychology of Investing, by John R. Nofsinger, is short and to the point. You’ll become an expert on behavioral investing in about an hour. Well, not quite, but close.

Why Smart People Make Big Money Mistakes And How To Correct Them, by Gary Belsky and Thomas Gilovich.  This is a fun and easy read. It also addresses how shortcomings in our wiring impact money decisions, like buying cars and stereos.

Your Money and Your Brain, by Jason Zweig, is another selection. I have to admit that the two books above cover many topics in this book (though this one offers new angles and insights) and are likely to be more exciting reads, but Chapter 10 is what makes this book a must-read: it addresses happiness – yes, happiness. Although, as most of us know, money doesn’t buy happiness (unless you are starving or living on the street), money spent on acquisitions – things – brings a burst of happiness that quickly fades away. Think of your level of happiness when you bought the car of your dreams. Money spent on experiences – being – brings a higher utility of happiness. Recollecting experience brings happiness. I plan to reread this chapter at least a couple of times a year. Zweig also provides a list of things you can do that will make you happy, and none of them require you to spend a penny, which is a big positive in today’s economy.

Reminiscences of a Stock Operator, written in 1923 by Edwin Lefevre, tells from a first-person perspective the fictionalized tale of the early years of the great trader…
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The Conclusion: Beating a Dead Horse (to Death)

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Follow-up to Beating a Dead Horse by Vitaliy Katsenelson of Contrarian Edge and Active Value Investing 

The Conclusion: Beating a Dead Horse (to Death)

My “Beating the Dead Horse” article ended with a very insightful conclusion “Need I say more?”  I received a dozen emails that said – you DO need to say more.  So here I am saying more:

What do we take out of this?  The Chinese ascent over last decade has lowered the degree of separation between China and the global economy.  What happens in China doesn’t stay in China (not anymore); it spills over to the rest of the world. 

Today, Chinese economic growth is the force pushing the global economy. The quality of this growth, however, is low as it is predicated on massive (forced) lending and thus unsustainable.  As Chinese growth slows, China will turn from a wind into sails of global economy to its anchor.  The impact will be felt in many, often unsuspected places. 

It will tank the commodity markets, commodity producers and commodity exporting nations.  Let’s take oil, for instance.  As incremental demand from China collapses, oil prices will follow, taking the Russian economy with it, as Russia is for the most part a one-trick-petrochemical-pony.  According to GavKal Research China accounts for 15% of Brazil’s exports (up from 1.5% a decade ago), significantly impacting the economy of that South American nation.

Demand for industrial goods will fall off the cliff.  China consumed a lot of those goods – $550 billion worth annually (also according to GaveKal Research).  So if Caterpillar expects to sell more of its yellow earthmovers to China, it will have put that thought on hold for awhile.  (Side note: CAT’s CEO expects CAT’s earnings “$8 to $10 per share within five years if the world economy recovers”.  Let me put it into a proper context: in 2007-2008 circa when its margins and sales were at all time high, double their historical average, CAT earned about $5.50 a share.  Good luck!)

Finally, Chinese appetite for our fine currency will diminish, driving the dollar lower against the renminbi and boosting our interest rates higher. No more 5% mortgages and 6% car loans.

Identifying bubbles is a lot easier than timing them. …
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Beating a Dead Horse

Beating a Dead Horse

Courtesy of Vitaliy Katsenelson’s ContrarianEdge and Active Value Investing 

“'Beauty Samba' is by my father Naum Katsenelson" - VitaliyI know, I may sound like I’m beating a dead horse – how much printer cartridge can one spill over China?  – but I have a very high burden of proof to overcome.  Let me demonstrate it by this analogy:  Let’s rewind 20 years.  It is 1989 and I am writing that the Japanese economy is on the verge of severe decline.  I’m facing a lot of skepticism.  Most people are calling me crazy and throwing heavy objects at me.  After all, the Japanese are on top of the world.  Their economy has been a consistent grower for decades, with a rate of growth that trumps that of the US and Europe.  Japan has the manufacturing thing nailed – they are simply better and more efficient at it than us. 

Magazines and newspapers swarm with stories about Japan, how hard working they are, how unique their culture is (we of course, feel inferior, as lazy Americans).  Japanese exports significantly exceed their imports, generating huge capital-account surpluses – they are swimming in dollars and buying up America. Every other restaurant in Hawaii serves sushi and menus are in English and Japanese (not Spanish).  I may be exaggerating with the last part, a little, but not much.
 
So, in 1989, who am I to poke holes in Japanese grandness and predict their malaise.  Japan could do no wrong.  Of course, we know how that story played out: a bust of a major banking/real estate bubble, a contracting economy for almost two decades, accompanied by deflation, ballooning debt, etc. 
 
Fast-forward, and China today is where Japan was in the late ’80s, except with the greater political instability that comes with a semi-controlled economy and the lack of a social safety net (read: jobless, hungry people don’t write angry letters, they riot). 
 
china olympics opening ceremonySince China can do nothing wrong, everything I write about it is met with skepticism.  Today China projects to the world a similar image as Japan did in the 1980s.  My personal favorite is the incredible spectacle of the Chinese Summer Olympics opening ceremony: the elegant, wonderfully choreographed performance by fifteen thousand people, the marvels of modern technology (the 500-foot LCD screen comes to mind here), the…
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Are We There Yet? Is the Range-Bound Market Over?

Are We There Yet? Is the Range-Bound Market Over?

Courtesy of Vitaliy Katsenelson at The Contrarian Edge & Active Value Investing

For the next dozen years or so, the U.S. stock market will be a wild roller-coaster ride—setting all-time highs and multi-year lows in the process. While the twists and turns of this ride are still to be written by history, the long-term, sideways “range-bound” trajectory has already been set by the eighteen-year bull market that ended in 2000.

When the dust settles, only those who adapted their investment strategies to this range-bound market will have captured any meaningful profits. This is how I started my book Active Value Investing: Making Money in Range-Bound Markets (Wiley, 2007). The following presentation/speech answers the question: Are we there yet? Is the Range-Bound Market Over? (okay, two questions)

Here is a link to the presentation/speech of my book. This presentation/speech almost qualifies as a second (free) edition of the first part of my book – the part that explains why we are likely suffering through a range-bound market.  I updated the data; found a better way to explain old and new topics; changed my mind on some things; and answered questions that have been raised by readers.   I have to warn you this PDF is 20 pages long.  However, a lot of space is consumed by charts and tables thus don’t let the size scare you.  Kill some trees, don’t kill your eyes – print it. 

I hope you enjoy this and more importantly find it beneficial.  You are welcome to share it with your friends (and enemies). 

 

Vitaliy N. Katsenelson, CFA, is a portfolio manager/director of research at Investment Management Associates in Denver, Colo., and he teaches a graduate investment class at the University of Colorado at Denver. He is the author of "Active Value Investing: Making Money in Range-Bound Markets" (Wiley 2007).  To receive Vitaliy’s future articles my email, click here.

 


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Phil's Favorites

DNA testing companies offer telomere testing - but what does it tell you about aging and disease risk?

 

DNA testing companies offer telomere testing – but what does it tell you about aging and disease risk?

A telomere age test kit from Telomere Diagnostics Inc. and saliva. collection kit from 23andMe. Anna Hoychuk/Shutterstock.com

Courtesy of Patricia Opresko, University of Pittsburgh and Elise Fouquerel, Thomas Jefferson University

Over the past few years direct-t...



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Zero Hedge

WTI Extends Losses After Smaller Than Expected Crude Draw

Courtesy of ZeroHedge. View original post here.

Oil prices plunged today as Trump and Pompeo defused some tensions with Iran and geopolitical risk premiums were squeezed out suddenly.

“Bullish catalysts are in short supply,” analysts at London-based broker PVM Oil Associates Ltd. said in a note to clients.

“The Gulf Coast of Mexico hurricane premium is fading as offshore operations in the region resume. At the same time, the U.S. shale engine continues to give oil bulls a sleepless night.”

API

  • Crude -1.401mm...



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Kimble Charting Solutions

U.S. & Euro Financials Lagging Big Time! Should Stock Bulls Be Concerned?

Courtesy of Chris Kimble.

Historically its been positive to see Financials doing well at the same time the broad market is pushing higher! If financial stocks are lagging bit time, should stock bulls be concerned?

This chart compares banks and in the U.S. (XLF) & Europe (EUFN) to the S&P 500 over the past 18-months.

Currently, XLF is lagging the S&P by more than 11...



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Insider Scoop

Earnings Scheduled For July 16, 2019

Courtesy of Benzinga.

Companies Reporting Before The Bell
  • Goldman Sachs Group Inc (NYSE: GS) is projected to report quarterly earnings at $5.00 per share on revenue of $9.13 billion.
  • Domino's Pizza, Inc. (NYSE: DPZ) is expected to report quarterly earnings at $2.02 per share on revenue of $836.92 million.
  • JPMorgan Chase & Co. ...


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Digital Currencies

Bitcoin Breaks Back Below $10k, Crypto-Crash Accelerates As Asia Opens

Courtesy of ZeroHedge. View original post here.

Update 2010ET: Having briefly stabilized after this morning's weakness, cryptos are tumbling once again as Asian markets open.

Bitcoin has broken below $10,000 again...

*  *  *

While all eyes are on Bitcoin as it slides back towards $10,000, the real mover in the last 12 hours has been Ethereum after...



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Biotech

DNA testing companies offer telomere testing - but what does it tell you about aging and disease risk?

Reminder: We're is available to chat with Members, comments are found below each post.

 

DNA testing companies offer telomere testing – but what does it tell you about aging and disease risk?

A telomere age test kit from Telomere Diagnostics Inc. and saliva. collection kit from 23andMe. Anna Hoychuk/Shutterstock.com

Courtesy of Patricia Opresko, University of Pittsburgh and Elise Fouquerel, ...



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ValueWalk

Professor Shubha Ghosh On The Current State Of Gene Editing

 

Professor Shubha Ghosh On The Current State Of Gene Editing

Courtesy of Jacob Wolinsky, ValueWalk

ValueWalk’s Q&A session with Professor Shubha Ghosh, a professor of law and the director of the Syracuse Intellectual Property Law Institute. In this interview, Professor Ghosh discusses his background, the Human Genome Project, the current state of gene editing, 3D printing for organ operations, and gene editing regulation.

...

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Chart School

Gold Gann Angle Update

Courtesy of Read the Ticker.

Charts show us the golden brick road to high prices.

GLD Gann Angle has been working since 2016. Higher prices are expected. Who would say anything different, and why and how?

Click for popup. Clear your browser cache if image is not showing.



The GLD very wide channel shows us the way.
- Conservative: Tag the 10 year rally starting in 2001 to 2019 and it forecasts $750 GLD (or $7500 USD Gold Futures) in 10 years.
- Aggressive: Tag the 5 year rally starting in 1976 to 2019  and it forecasts $750 GLD (or $7500 USD Gold Futures) in 5 years.

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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