Category Archives: Sentiment

General Screwup

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ARGH! Aie-eeeeeeeeee!!!!!!!!!!!!

OK, I present to you my Royal Screwup Of The Day: General Motors. As some of you know, there’s nothing quite so painful about being correct on a trade and yet losing money on it. This is one of those times for me.

I have been bearish on General Motors for a variety of reasons. They came out with their earnings this morning. The Street loved what they heard. They bid the stock up massively (relatively speaking; we’re talking about General Motors, after all). (more…)

Einhorn Calls a Spade a Spade

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No less a publication than the Wall Street Journal has this as their most-read story (on the same day the Dow Jones Composite made a new lifetime high, never-before-seen-in-the-universe closing value):

0422-wsj

Here’s a morsel:

We have repeatedly noted that it is dangerous to short stocks that have disconnected from traditional valuation methods. After all, twice a silly price is not twice as silly; it’s still just silly. This understanding limited our enthusiasm for shorting the handful of momentum stocks that dominated the headlines last year. Now there is a clear consensus that we are witnessing our second tech bubble in 15 years. What is uncertain is how much further the bubble can expand, and what might pop it.

In our view the current bubble is an echo of the previous tech bubble, but with fewer large capitalization stocks and much less public enthusiasm.

Some indications that we are pretty far along include:

+ The rejection of conventional valuation methods;

+ Short-sellers forced to cover due to intolerable mark-to-market losses; and

+ Huge first day IPO pops for companies that have done little more than use the right buzzwords and attract the right venture capital.

Short Palo Alto

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My town has changed. When I first came here, in 1984, it was a pretty standard college town. Sure, the houses were kind of pricey, but the look and feel of the place wasn’t that much different than you’d probably get in any other town next to a big, well-known college.

But things have changed a lot lately. And I’ve got to say, the kinds of changes I’m seeing weren’t really apparent during the Internet bubble. For some reason, the self-importance and money-worship didn’t really take root until recently, after the financial crisis. (more…)