MarketVVizard's Market Thoughts

Top 540. Nov 22, 2003 8:11 AM

» Kirk - Re: ALAN ABELSON, Perennial Bear

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In response to message posted by pbradford6:

His bear case is too funny for words.

The always bearish Alan Abelson of Barrons had the following to say: NOT THE LEAST REASON WE REMAIN skeptical of the bullish case for the market is that the corporate top dogs themselves are so implacably skeptical about the prospects for the stocks of the very companies they run.

At the market TOP in the Spring and Summer of 2000:

John Chambers was promising Cisco would grow earnings 30 to 60% a year. Cisco was going to build a new city South of San Jose California in the Coyote Valley and they were playing political games on how to get a power plant to have enough energy for it... Today the ORIGINAL Cisco campus has empty buildings where the water in the toilets that keep sewer gas in the sewers dries up and the place stinks so they have to hire folks to go in and give them a flush so the buildings don't stink. Cisco doesn't need to build a new city. Cisco has some buildings they might rent you if you want to be near them.

Carly Fiorina took over HP and made a promise for 17 to 20% growth forever... She ignored history that said 15% growth was tough for a large company like HP. She forgot to ask us old employees who would celebrate 15% growth in past good times... she was wrong and looked foolish and clueless for many years. Analysts still don't trust her.

AMAT CEO (at the time) Jim Morgan was talking about how AMAT would be a $20B company in 5 years. AMAT made $5B this year just finished.

Print those three paragraphs out and keep them somewhere. Whenever someone tells you a CEO can predict the future direction of the economy better than economists or other "guessers" then copy that post for them to read.

SO, if you want to give me a chuckle, quote some of the top dogs at these great companies and use it to make your case.

-- posted by Kirk

Top 541. Nov 22, 2003 10:10 AM

» Normxxx - Re: Re: ALAN ABELSON, Perennial Bear

In response to message posted by Kirk:

Kirk: CEOs are paid to promote their companies. The only times they give negative outlooks is when the pit opens for everyone to see and they provide the proverbial "things look blackest just before the dawn" speech. I remember back in fall of 2000 when the CEOs were selling and the analysts were buying the concept that the bottom for SCs was in because "things were so bad, we must have hit bottom ..." I believe the same thing happened in 2002. So far, the great "surge" of SC spending has managed to raise the BTB ratio to a whole 1.0. Meanwhile the price of most SC companies has more than doubled.

I have been irregularly monitoring ThomsonFN's ratio of 'predictive' insiders (those whose purchases and sales are highly correlated with subsequent movements in their stock-- within 6 months). Nevertheless, I have seen days (very recently) when the sell/buy ratio (number of shares sold or bought) topped 12:1. The quarterly ratio has gone from less than 2.5:1 at the beginning of the year, to 4.5:1 currently. According to Thomson, anything worse than 1.5:1 is bearish.

How does this mania differ from that in 1999 and first quarter 2000, when the overall outlook was decidedly more positive-- a booming economy, strong international trade, a manageable international trade deficit, a strong dollar, peace everywhere, no budget deficit, unemployment around 5% for the first time in many years, and modest interest rates?

-- posted by Normxxx

Top 542. Nov 22, 2003 11:41 AM

» codfish - Insider selling

I'll start by saying that I'm no investment Guru, just a guy who tries to look at things logically. Now, it occurs to me that if an employee of a company gets a fair portion of his compensation in the form of stock options or the like, and if the value of the underlying security is depressed due to business cycle or bear market, then a savvy person would HOLD these securities during adverse conditions, and then sell them into a Market run-up. I would imagine that they would want to diversify their financial position somewhat, even if they thought the prospect for their business was excellent. I imagine some of these individuals are approaching "retirement age", and feel uncomfortable having such a high percentage in the Market in general, much less such a high percentage in ONE security. Some such individuals may even have the need for cash, and it would make sense to me to sell some at these levels, and play with House Money, kind of like what Kirk does in his portfolio.
Why would they BUY their stock, when they are probably already overinvested in it, from a total portfolio point of view. I know of a few Lucent employees who wish they'd sold into the peak there.
Anyway, that's what I'm thinking when I look at the insider selling numbers, and I take it with a few grains of salt.

-- posted by codfish

Waiting for the other shoe to drop

Top 543. Nov 22, 2003 12:33 PM

» Normxxx - Re: Insider selling

In response to message posted by codfish:

Sounds like a great theory. But, in fact, ThomsonFN monitors the actual actions of selected insiders and the resulting movement in their stock within 6 months, and only uses those with a high positive correlation. That is, of the insiders ThomsonFN monitors, when they have bought stock in their company, the stock moved up within the subsequent 6 months, and conversely when they sold.

Insiders do have more incentive to sell than buy, and this is relected in the ThomsonFN observation that anything less than a ratio of 1:1 is bullish, anything more than 1.5:1 is bearish, and between 1:1 and 1.5:1 is neutral.

Moreover, there is no evidence of a preponderance of insider selling at the end of any previous bear market or beginning of a new bull market. Quite the contrary, insiders were buying as fast as they could right after the 1974 and 1982 bottoms, the 1987 crash, and again in 1991-2.

I suggest you read these articles by Mark Hulbert:

Insider selling - take two

As a general rule, insider buying changes to selling after strong advances (such as the one we just experienced) and changes to buying after a sharp drop. But, I believe that the insider sell/buy ratio has exceended 1.5:1 since late last year, and the current ratios we are seeing are extraordinary and unprecedented. The ratio for tech stocks topped 100:1 back in May, I believe.

P.S. The Vickers data used in Hulbert's articles is the raw sell/buy data; Vickers makes no attempt to select 'predictive' insiders.

-- posted by Normxxx

Top 544. Nov 22, 2003 12:54 PM

» Jas_Jain - Two-Mouthed Kirk? -- Re: Re: ALAN ABELSON, Perennial Bear

In response to message posted by Kirk:

"Print those three paragraphs out and keep them somewhere. Whenever someone tells you a CEO can predict the future direction of the economy better than economists or other "guessers" then copy that post for them to read."

And here is what you had to say only yesterday, "…I have more respect and give more weight [than what Jas has to say] to what a John Chambers (Cisco CEO who gives much back to society) or Jim Morgan (Ex AMAT CEO whose giving in the valley is legendary) or some of the Intel founders might have to say.”

THE FACT IS THAT I KNEW CHAMBERS WAS LYING AT THE TIME HE WAS LYING AND THE REVNUE CAME AS **** I PREDICTED ****, FOR A REASON, AND NOT WHAT CHAMBERS PREDICTED. DON'T YOU GET IT? YOUR FAITH IN THE CROOKS OF SILLY.CON VALLEY SHOWS WHAT YOU ARE ALL ABOUT. YOU HAVE BEEN CORRUPTED BY BEING SURROUNDED BY TOO MANY CROOKS, KIRK.

BTW, where in the hell I said that "the worst decline lies ahead in the next 12 months" any time in 1999 or 2000 or 2001? Yes, I was bearish and correctly so. Yes, stocks have doubled after I went short, but I have more than recouped when they fell below my entry.

I issued a one-in-a-life-time opportunity in a specific CSCO put, in Feb'00, that DID go up more than 10 times, just as I had predicted. I don't issue such recommendations everyday, or every month, or every year. Yes, I have the e-mail that was sent to at least 25 people. One needs to be very patient when shorting bubble stocks in companies run by Crooks. I have learned it by paying my dues. I have already made a reasonable recovery from my recent losses (up 30% in my short calls account in the past couple of weeks, thanks to the Internuts); I have a ways to go, but the market has a ways to go down too. And when that happens, I will come on the top once again as I have done in the past.

You can bet on one thing: If stocks make new lows in 2004, I will make a killing and it will make your model portfolio performance, thus far, look like a work of a lucky amateur. Not very many people know how to short bubble stocks. No, MT is a not the solution.

Jas

-- posted by Jas_Jain

Top 545. Nov 22, 2003 2:27 PM

» Kirk - Re: Two-Mouthed Kirk? -- Re: Re: ALAN ABELSON, Perennial Bear

In response to message posted by Jas_Jain:

Jas... take a chill pill. I stand by what I said. Think realative. I value what some say more than others... that doesn't mean the top of that list can't still be very wrong.

My point is NOBODY can time this stuff. Not you, not Chambers, not Carley, not Morgan and FOR SURE not me!

I admit I can't time this stuff so I buy what I think is quality at a "reasonable" price and add a bit of trading with TA and kick ass on a measured portfolio. You, OTOH, make a bunch of noise and may or may not be right, but the noise continues where you insult those who don't agree with. IF you had a measured portfolio to show us how you've done, then I might be able to make a value judgement on the quality of your trades, but you don't so I can't.

I'd suggest growing up a bit and not being so black-and-white.

If you want to be taken seriously, why not start out TODAY with an imaginary $100K portfolio and manage it in real time on your forum here and we can see what you've got?

Do I hear the sound of poultry or is it just the sound of knees knocking? smile

-- posted by Kirk

Top 546. Nov 22, 2003 2:38 PM

» Kirk - Re: Re: Re: ALAN ABELSON, Perennial Bear

In response to message posted by Normxxx:

I added money to my portfolio to be a net buyer of equities in 2001 and 2002. I have probably taken enough profits now to have gotten all the cash out I added AND I have far more shares now than then.... Now I just continue to take profits as the market goes higher, or not.... and wait for opportunities to buy some back if I get fat pitches.

Market/Economy direction is pretty much a coin flip as I see it.

I look at investing much like a business... generate cash AND grow inventory of shares.

-- posted by Kirk

Top 547. Nov 22, 2003 3:47 PM

» MarketVVizard - Re: Re: Two-Mouthed Kirk? -- Re: Re: ALAN ABELSON, Perennial Bea

In response to message posted by Kirk:

"If you want to be taken seriously, why not start out TODAY with an imaginary $100K portfolio and manage it in real time on your forum here and we can see what you've got?"

Do imaginary portfolios really prove anything? I can easily see Jas making 50% a year selling naked call options (one trade a year is all it takes). Assuming you can bend SEC and/or broker regs you can make almost infinite "paper" profits this way. But what would this prove other than the fact that someone is willing to aggressively trade an imaginary portfolio with nothing to lose? Heck, even if someone did this with real money it would not impress me. How many times did Trump go bankrupt before and after making his millions?

Returns only impress me when they come by low volatility and relative risk (which is why I am so impressed with Dr. Hussman's track record). And this is coming from someone who admits they have used much leverage and experienced quite a lot of volatility over the years... today I know that the very best "survivors" in this game do about 20% year after year with low volatility.

-- posted by MarketVVizard

Top 548. Nov 22, 2003 6:29 PM

» Jas_Jain - Bernanke Is Bluffing--Re: For those that need me to spell...

In response to message posted by MarketVVizard:

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Because he knows that he can fool idiots who know nothing about the US govt's "Printing Press" and are afraid of it. Do you know anything, VViz, how the "Printing Press" operates and for what purpose? THE SO-CALLED "PRINTING MONEY" IS DEFLATIONARY, IF ONLY YOU KNEW WHAT IT REALLY IS! Idiots belive what they are told; they don't think or question.

Fed is conducting an Open Mouth Policy for a reason -- it is trying to bluff!

Crooks exploit the faith that idiots have in their power and integrity.

Bernanke knows that deflationary depression is very likely and he is scared. Fed is impotent in terms of policy and the only recourse is OMP.

Idiotic Americans keep denying the Japanese precedence that is one of the best guides. Deny any evidence that doesn't suit your views?

Jas

-- posted by Jas_Jain