Author Archives: Dominique Dassault

     

 

 

Both Political Candidates Demonstrate Economic Ignorance While Pandering For Votes

As we enter the final lap of the presidential race in the United States, as always, the two candidates will say just about anything to secure your vote. And of course the economy is a major topic of conversation. Loud calls for both higher wages and more jobs dominate the rhetoric.

 

Hill-DonThis year’s election may feature very polarizing and idiosyncratic candidates, but much of their rhetoric is not that much different from that heard on occasion of previous elections.

 

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The Only Move for the Fed is Talking Down the Dollar

The Fed has no more maneuvers other than to jawbone the dollar lower. Because for a variety of reasons a strong dollar, in the current market environment, is akin to tighter monetary policy.

 

federal reserveThe Eccles Building

 

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Home of the Anti-Bubble

It seems like almost everybody has an opinion about Twitter (TWTR) – both the company and the stock. As for the company it seems that their “window of opportunity” to massively succeed has essentially closed as user growth and revenue have both slowed, quite dramatically, over the past 18 months. Plus management turnover is clicking at a rapid pace. Company executives typically do not leave if the firm’s future seems bright.

 

DorseyJack Dorsey, the ubiquitous

Photo credit: John Sebastian Russo

 

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Not Just Wrong, but Monumentally Wrong

Massive flaws at SUNE (Sun Edison) + VRX (Valeant) were somehow missed by both of these high profile/ well resourced hedge funds.

 

einhorn-ackman-660x330David Einhorn (Greenlight Capital) and Bill Ackman (Pershing Square) – both fund managers had a terrible year 2015 (down about 20% each), but while Mr. Einhorn has changed his way and righted his ship so far in 2016, Mr. Ackman stubbornly stuck (and at one point even doubled down) on his biggest losing bet. As of early March, the performance spread between the two managers in 2016 had widened to 2,400 basis points in favor of Mr. Einhorn.

Photo credit: Brendan McDermid, Eduardo Munoz / Reuters

 

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Something Is Very Wrong Here

“Activist Investors”, the relatively new classification for corporate agitators, want you to believe that their intellectual tactics/strategies improve both corporate governance and shareholder returns. That may be true but they also seem to be involved in another, less savory, tactic… that is, inflating their company “ownership” claims with extremely large derivatives positions… as outlined in SEC disclosure filings.

 

Icahn-freeport
Carl Icahn, who recently acquired a sizable stake in Freeport

 

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Equity Risk Is Increasingly Non-Existent… By The Numbers

The concept of risk for hedge fund managers is a constant concern. The internal monologue goes something like this…what’s my downside if I initiate this position…how much can I lose if I am not right?”

The real answer is that you really have no idea…despite best efforts…even with stop losses [which I abhor]. The true, measurable risk of any position is only exactly known after you liquidate the position. Plus, risk management is more capital management than single stock management.

 

Beer-StierLittle did he know how it would all end …

Cartoon via wallstreetsurvivor.com

 

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“Game Over” for Greece

The drama… the drama. I’ve had enough of this. And after examining the details any reasonable person ought to agree. The bottom line = Greece is a “free-loading” country with a “free-loading” national manifesto. This nation, and its people, have lived beyond their means for long enough. Their Debt/GDP ratio is > 175% and climbing. More importantly, the outlook for any economic recovery is bleak as Greece’s structural reforms seem insurmountable and definitely, to them, not at all palatable. Plus, the perceived/tolerated graft associated with the people/government Greece is just monumental. The proverbial “ride” they’ve been on has now come to a deservedly screeching halt.

 

shove-it

 

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“The Man” is Playing with Fire 

 

businessman_cigar_money

Photo credit: Keystone

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“We Are All Doing The Same Thing”

I recently listened to a podcast with some all-star [there are awards for everything now] “Black Box” equity trader. It was quite a “telling” interview & I thank him for his insights but I’d heard it all before. His confidence was staggering considering the general unpredictability of the future and, of course, the equity markets. He explained how he had completely converted from a generally unsuccessful, discretionary technical trading style to a purely quantitative and scientific trading mode. He seemed to be so excited that his models, according to him, were pretty much “bullet proof”. Having had more than just some tangential experience with black box modeling and trading myself I thought … you know … some people will just never learn.

 

maxresdefault

Image via iwatchapple.it

 

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