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bmichaud

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Posts posted by bmichaud

    What are you buying today?

    in General Discussion

    Posted

    We started out in mid January with slightly OTM Feb SPY puts.

     

     

    To Cardboard's exact point - who can possibly utilize this strategy on a consistent basis? TWA is BRILLIANT - and as with Ericopoly, the "DO NOT TRY THIS AT HOME WITHOUT ADULT SUPERVISION" disclaimer should come at the bottom of every post  8)

    Howard Marks on "Getting Lucky"

    in General Discussion

    Posted

    Al,

     

    Ur spot on!! Why people bemoan "over followed" large caps and flock to small caps is beyond me - the more Wall Street idiots you get covering one company the more likely you get inefficient market reactions. Cramer was hammering Nike in mid 2011 because of a sales growth rate slowdown, and the stock has since more than doubled. Probably 20 analysts follow it. JPM as you pointed out, and obviously BAC and AIG are other prime examples.

    Industry Background of People on This Forum

    in General Discussion

    Posted

    Career advice and advice on matters of the heart.

     

    I hadn’t answered till now, because I think most of you already know what I do and what my background is. :)

    Though, I really envy your day job (besides investing, of course!)... ;D ;D ;D

     

    I don't envy that day job at all.  It sounds insanely stressful.  Maybe I just don't have the personality for it.  I always hate giving people advice on anything of importance.  If I do something and I'm wrong I can live with that.  But if I give someone else advice that turns out bad, I'd have a really hard time with that. It takes a certain confidence in oneself to do that type of thing that I certainly don't have.  I'll stick to designing circuits.

     

    Yes! But you know Kraven very well by now… He is full of self-confidence… Especially when matters of the heart are concerned!! ;D ;D ;D

     

    Gio

     

     

    I mean absolutely no offense to Kraven by saying this, if giving advice is in fact what he does, but I would've put money on it that he has said he invests full time and was thus kidding when he said "career advice and matters of the heart".

    Secular Bull?

    in General Discussion

    Posted

    Gio,

     

    That's precisely why I envy Buffett's current model - he has a natural on-going hedge that allows him to either continue to invest in attractive equities or build cash for a rainy day. He has the best of both worlds, as the continuing stream of cash allows him to never sell his wonderful businesses!

    Secular Bull?

    in General Discussion

    Posted

    Agreed, to each there own.

     

    For me, I know I've wasted a lot of time and effort on worrying about large downdraft  amidst a supposedly overvalued market. As such, I'd like to not spend the rest of my career worried about the market when I do not need to be worried. Buffett spent his entire hedge fund career worried about an overvalued market - just read his partnership letters. And look at the not-so-insignificant amount of ink graham spilled in trying to divine the fair value of the market. So yes - I would like to have my cake and eat it too via finding a method in which I can avoid largely being on the wrong side of the market, up and down, while being able to devout 99% of my time on figuring out SHLD and Fiat! Just take Sanjeev this year - Sanjeev has been what sounds like 30% cash since SPX 1500, and even if we get a 20% correction he will have only broken even. Think about the gains in BAC he missed out on by holding that cash, or best buy for that matter. All that great analysis for nothing while waiting for a correction.

    Secular Bull?

    in General Discussion

    Posted

    Merkhet,

     

    I used to be the same way, but after little success relying upon valuation and sentiment, I have found there to be far more merit to Dow theory-type methods than you would imagine. Those type of methods if utilized within a holistic market analysis help one participate and avoid major up and down moves.

     

    Just my two cents.

    Your highest conviction idea for 2014 + why

    in General Discussion

    Posted

    Aberhound compared the current environment to December 2007, hinting that being defensive here is as much of a no brainer as back then.

     

    December 2007:

    - Buffett, Burry and Tepper all say housing is a disaster. Jeff Saut and Ned Davis, two prominent market watchers were adamantly warning against housing as well.

    - housing and autos were declining

    - rail carloads declining

    - leverage was widespread

    - profit margins at record highs

    - Schiller PE was 27X

    - 10y treasury over 4%

    - low market breadth and rising volatility

     

    Now:

    - no prominent investor publicly pointing out significant risk

    - housing and autos rising

    - rail carloads rising

    - leverage has been significantly reduced

    - profit margins at record highs

    - Schiller PE at 25.5x

    - 10y at 3%

    - strong market breadth and low volatility

     

    Clearly overly optimistic sentiment and elevated valuation are not a recipe for a bad market, as this year demonstrated. There must be more to it. I'm trying to look at things on a more holistic basis in order to avoid bad hedging and missing out on individual opportunities.

     

    1. I don't think there is any denying recessions are the biggest drivers of large market declines. There is no recession on the horizon right now, in fact it appears there is acceleration.

     

    2. Volatility precedes even mild declines such as the 2011 mini bear. Right now I see strong leadership and low volatility. Yes this could change at any time, but it's not yet here and market tops take awhile to develop. 1929, 1987 and 2008 crashes were precedes by significant market weakness and volatility - in other words, the market tells you where it's going.

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