Category Stocks

Decoding the Drop in Oil

Middle East tensions are rising. However, oil prices are dropping. Why? The Israeli missile attacks on Iran, while not entirely unforeseen, triggered a negative response in the oil market. Now this may seem curious... contrary to expectations of a price surge due to heightened geopolitical tensions, crude oil prices plunged ~5%. In short, market sentiment tends to prioritize economic supply and demand concerns over (short-term) geopolitical risks

Things Looking Better – But More to Do

For 23 straight weeks (from late October) - the market has effectively gone straight up. It added ~$12T in market cap with barely a pause - a rally for the ages. Now for ten of those weeks, it was in overbought territory - where the (weekly) Relative Strength Index (RSI) traded above 70. I cautioned readers of a likely (technical) correction. And whilst I stressed the market can remain overbought for several weeks (and it did) - it's also an area to be cautious. This is where sell-offs start. And it seems we could be seeing the start of a 7-10% correction... however it's still early.

Apple: Ready to Take Another Bite?

Apple is ~15% off its all time high as it lags its large cap peers. Concerns of iPhone growth and China have rattled investors. However, it's not unusual for this stock to pull back. Since 2107, we have seen 11 retraces - offering patient investors buying opportunity. From my lens, Apple is a reasonable long-term buy around $165. And if you can get it cheaper - add to it. Over the next 3 years - I think it will be well over $200 as earnings top $8.00 per share.

Has Tesla Lost its Halo?

This weekend I was reading The Art of Thinking Clearly by Rolf Dobelli. The book has a chapter called "The Halo Effect" - and references the company Cisco (CSCO) during the late 90s / early 2000's. It was timely - as it drew parallels to my post comparing the former market darling to Nvidia (NVDA). I demonstrated both technical and fundamental similarities. However, another company came to mind. Tesla (TSLA). For the past few years - TSLA had what Dobelli calls the 'halo effect'. However, is that now wearing off? And what implications does this have?

Lessons from 1999/2000

Momentum is a powerful force. Bet against it at your peril. John Maynard Keynes was believed to have said "...the market can remain irrational longer than you can remain solvent". Sound advice. Those expecting (or worse betting) the market would reverse to start 2024 are probably questioning their decision. It's been one record close after another. Higher highs beget higher highs.

Santa’s Rotten Apple

What happened to the Santa Clause Rally? Bahhh humbug! For those less familiar, a Santa Claus Rally involves a rise in stock prices during the last 5 trading days in December and the first 2 trading days in the following January. Over these 7 trading days in question, stock prices have historically risen 76% of the time (to the tune of ~1.3%) - far more than the average performance over a 7-day period. But this year the market received a fat lump of coal. Or more accurately - perhaps a "bad apple". Some feel that's potentially a bad omen for the year ahead... giving rise to the popular Wall St. maxim "... if Santa Claus should fail to call, bears may come to Broad and Wall"....

Did We Just Pull 2024’s Gains Forward?

Stocks were already partying into the Fed meeting (up ~12% over 6 weeks) - however when Powell provided his December update on monetary policy - he simply turned up the music. Risk was on. So here's my question - with stocks up an incredible 15% in just 7 weeks - how much of next year's potential gains have been pulled forward? Is it riskier now to buy stocks than it was a few weeks ago? To be clear, stocks are likely to add to their gains before the year is done - however we are now trading close to 20x next years earnings. That's not a bargain.

Bifurcated Markets Usually End the Same Way

If you're long the market - it was another rough week. My portfolio was no exception. My largest position (Google) was smoked - losing around 10%. The Index is now only up 7.24% for the year.... a long way from almost 20% higher in June. The next hurdle for the market comes next week - when we get payrolls. A soft print might give the market hope the Fed is almost done. However, if it comes in hot, the Fed may have no other choice but to hike again in December... given the uncomfortably high Core PCE last week.

“Big Short” Investor Goes Short… But Not on Housing

45 days after the end of every quarter - Wall Street's top fund managers are required to report their most recent holdings. These filings are known as 13Fs - and they reveal a lot about where the 'smart' money is going. Whilst there was nothing too out of the ordinary - a particular trade from Big Short investor - Michael Burry - caught my eye. He took a $1.6B short bet against the SPY and QQQ (in aggregate) using Put Options. Let's explore why he could have made that bet.... and he's not alone

Apple: An Incredible Business – But Don’t Overpay

This week the final two mega-cap tech names reported Q2 earnings. Amazon handily exceeded what were very low expectations. AWS (Cloud) sales rose 12% year over year - much better than feared - given the soft results reported from Microsoft's Azure. This sent the Cloud and eCommerce giant higher by ~11% . On the other hand, investors had a very different reaction to Apple's earnings. The iPhone maker's results were mostly inline. But "inline" is not good enough when it's trading ~30x to 31x forward earnings. So what is the right multiple to pay for Apple? And can it reignite growth looking ahead?