Posts by Jeff Macke
- Jeff Macke at Yahoo Finance12 days ago
Pity the young bankers and wannabes now finishing up their summer internships on Wall Street. Young and frisky, dressed like swells and capering about Manhattan oblivious to the dangers lurking beneath the pavement. They laugh at the old-timers with our nervous twitches and superstitions. The better-educated among the new breed have an academic mastery of the dot.com meltdown and Great Recession but market crashes are like earthquakes; if you haven’t actually experienced the sensation of the world dropping on your head you really don’t know anything.
Hubris has to be beaten out of investors. Wondering if the February selloff was going to screw up your chances at scoring a Goldman Sachs (GS) internship doesn’t count.
- Jeff Macke at Yahoo Finance13 days ago
We have met the enemy and he is us. Yesterday, in a series of hits as operatic and brutal as the last 15 minutes of the Godfather, the government effectively made inversion through corporate merger an offense punishable by corporate death.
Using the threat of an unlimited Treasury investigation, the President and Senator Dick Durbin stopped Walgreen (WAG) from moving to Switzerland. The wreckage of some $10 billion in lost stock value for mostly Main Street investors was left as a grim reminder not to cross the government by, in this case, following the letter of our own stupid laws.
Related: Walgreen stays at home
- Jeff Macke at Yahoo Finance14 days ago
Americans have no idea how lucky we are when it comes to water. Even with the drought ravaging Californiamost of us are completely unaware of the depths of the water crisis in the rest of the world. The stats are mind-blowing. 780 million people lack access to clean drinking water. Every 21 seconds a child dies from water-related disease.
As the water crisis moves from something that happens to other countries into the U.S., it’s a decent bet that American corporations will somehow, someway figure out ways to solve the problem at a profit. That’s how capitalism works, after all. The question is when.
In the attached clip Tom Lydon of ETFTrends.com says the time is now. Millions of gallons a year of dirty, treated water gets dumped back into the Pacific every day, explains Lydon in the attached clip. “If you can capture that water and clean it then sell it back to the industries that use it, there’s a great opportunity.”
- Jeff Macke at Yahoo Finance14 days ago
What's ailing the market? A bunch of things. Let's tick through them here. You're going to be hearing about this stuff all day so let's get it out of the way. We'll start with deals blowing up. This morning Walgreens (WAG) announced a completion of an acquisition for a foreign partner but it's not going to use the so-called inversion loophole and become a foreign domiciled corporation. Behind the scenes the U.S. Treasury, spurred on by the Obama administration, has vowed to make life complicated for U.S. corporations looking to move abroad. Inversions are dead.
- Jeff Macke at Yahoo Finance15 days ago
Earlier this year when Joe Fahmy of Zor Capital predicted shares of Zillow (Z) had the potential to double in fairly short-order the idea seemed aggressive, to be generous. Four months later Zillow is more than 50% higher and short sellers are getting their positions foreclosed on by margin clerks across Wall Street.
In the attached clip Fahmy says the same sort of explosive move higher could be in the cards for controversial electric car maker Tesla Motors (TSLA). Cars and houses are both purchases subject to loans and economic strength but the business models couldn’t be more different. What the two stocks have in common are relative strength and legions of haters.
- Jeff Macke at Yahoo Finance19 days ago
July brokerage statements are going to be sent out today and for the first time in five months the percentage of you who throw them away unopened will rise. In fact, while ratings on financial TV and traffic on stock websites will almost certainly show an impressive spike this week the number of you who log in to your e-broker to see how your portfolio is doing will drop.
The reason is simple: If you're an average investor, or even a better than average investor, there's a good chance you lost money in July. You don't want to look at your statements because you know there's bad news inside. The impulse isn't any different than when you'd want to hide a bad report card from your parents as a kid. That isn't an indictment of your maturity or sophistication. It validates your humanity. We are hard wired to avoid what is painful. The last few days have reminded us that investing can be a scary, painful experience.
- Jeff Macke at Yahoo Finance19 days ago
Like life in the middle ages this weeks sell-off in equities has been nasty, brutish and short. Also like the the forgotten centuries prior to the enlightenment there isn’t much of a legacy to speak of just yet. With a nearly 3% drop over the last five trading days the Dow Jones Industrial Average (^DJIA) has given away its meager gains for the 2014 but the S&P500 (^GSPC) is still well into the green heading into August. Related: The 20% market correction has already started
Perhaps most importantly to the collective psyche, Apple (AAPL) and Facebook (FB), the twin sweethearts of the American stock market are both well over 30% higher for the year. It’s basically too late to pretend all is well but too soon to buy the dip.
It’s a psychological fact that human beings are horrible at gauging their own emotional state. If there’s a thin line between love and hate the distinction between greed, boldness, prudence and fear can only be determined after the outcome is known. In real time your body just knows you’re stressed. If the trades you make while under pressure turn out to be profitable your actions are retroactively defined as bold, not reckless. If you sit the sidelines for years waiting for a crash that never comes your prudence morphs into money-losing fear.
This week seems to mark an aggressive shift in market behavior. After months of small moves and complacency the volume has been turned up in a huge way. The shift started when Facebook’s (FB) earnings beat triggered a big move that left many investors feeling left out of the party. Something in the collective mindset started to shift from a fear of getting caught exposed to stocks to panic over the prospect of missing the next big rally.
After a three month search Target (TGT) has found a new CEO. 55-year old Brian Cornell will become only the fourth person to head the company since 1984 and the first outsider to move straight into the top post. It's a smart move by Target's board. The nation's second largest mass-market discounter is coming off years of missteps and a humiliating 2013 full of scandals, revolts and credit card fraud. The place needed new blood and Cornell, with ten years experience at Pepsi (PEP) and three years heading Walmart's (WMT) Sam's Club stores seems like the right man for the job.
That doesn't mean it's going to be easy. I'm sure Brian has a pretty good handle on the situation but as the only person I know who actually gets choked up at the sight of a well-run store I can't help but offer a three step strategy that I think will get the Cornell era off to a bang-up start.
Step 1: End the revolt
Of the many disconnects between investing strategies suggested by financial media and reality, none is so glaring as the binary fiction of investing decisions on TV and the gray-scale reality of portfolio management. In a Bulls vs. Bear medium suggesting investors might be wise to tweak their portfolios systemically is frowned upon if not disallowed entirely.
Welcome to reality as presented by the irrepressible Jonathan Hoenig author of founder of Capitalistpig Asset Management. In the attached clip Hoenig puts forth the radical idea that, while the bull market remains intact, this is still a good time to move some money out of mega-cap U.S. stocks.
Yes, the economy is strong and momentum, though flagging a bit, remains bullish. Hoenig isn’t picking a fight with the Fed or the stock market. He just sees better opportunities overseas and in some assets other than equities.