Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Did the News Hold Clues?

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If any metal embodies the chrome-like luster of the future, it is silver. This makes it the ideal candidate for an analysis using that most high-tech of investment tools, alternative data.

Silver has also been making headlines recently: in July of this year, it broke out of a long-term range it had been stuck in between $15-20 an ounce for over five years, reaching a peak of $29 on August 10.

The breakout could represent an important turning point in metal’s price-evolution. The question for us, however, is could anything in the news analytics of silver have forewarned investors such a significant move was on the horizon?

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Dan David Shorts Portnoy

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ValueWalk held its latest virtual contrarian investor conference, organized by ValueWalk, Contrarian Podcast and Breakout Point, today, and Dan David of Wolfpack Research was one of the presenters. He explained why he sees Remark Holdings Inc (NASDAQ:MARK) as a good short.

He said one of the most popular bull cases for Remark Holdings issued by promoters like David Portnoy, is the company’s 5% stake in Sharecare, a company popularized by Dr. Oz and worth up to $1 billion in an initial public offering. Remark has talked about the possibility of a Sharecare IPO for years.

The problem is that Remark Holdings’ stake in Sharecare has been repossessed and is being held by the Kent County Sheriff in Delaware. The company had agreed to payments of $1 million but didn’t make good on those payments. He believes there is no chance Remark will own a stake in Sharecare going forward.

David also said the company claims to own the Chinese company KanKan, but he doesn’t believe it does. He said Remark Holdings’ agreements don’t create contractual ownership. He said to comply with China‘s laws, which restrict foreign ownership of entities in industries the Chinese government sees as sensitive, Remark employs a structure known as a wholly owned enterprise and variable interest entity (VIE).

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Why Trupanion Could Plunge

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ValueWalk and its partners hosted its latest contrarian virtual conference, organized by ValueWalk, Contrarian Podcast and Breakout Point today, and one of the presenters was Bradley Safalow of PAA Research. He pitched pet insurance company Trupanion Inc (NASDAQ:TRUP) as a short position.

In fact, he said it’s one of his favorite short ideas and possibly the best short he’s come across in his career. The stock tumbled in premarket trading after his presentation, falling by as much as 7%.

Safalow expects the shares to fall below $10. He describes it as a “structurally flawed, unprofitable company positioned to growth investors as a tech/SAAS story.” He argues that Trupanion Inc will never be profitable.

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The Goldback

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At the time of writing, the S&P 500 was flat, and jobless claims fell far below official expectations. Secondly, the Federal interest rate was turning negative. Also, the measurement of Money Velocity reported that people are saving money more than spending it. As a result, this can adversely impact the US dollar and the GDP, creating the problem of inflation.

On the other hand, the gold price continues to grow and reaches new highs seemingly every day. Why is this happening? Basically, the gold price rises for the same reasons it usually does. Geopolitical unrest and events, waning faith in fiat currency, and the coronavirus are all major factors.

Currently, the gold price already grew 30% this year, so now it is on track for a great year similar to 1979. But if you are an investor in the stock market, hearing that inflation fears are driving up the precious metals prices might not put you in the best of spirits. Many new investors are entering the precious metals scene as a result, but many also lack direction. Are you worried about inflation and want to buy gold, but the gold price is off-putting? One solution is the Utah Goldback.

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Are Tech Giants Trading like Bonds?

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The tech giants are trading at valuation ratios that are close to unprecedented for such large companies. Currently, Amazon trades at a nosebleed price/earnings multiple of 122. Apple’s multiple is 33 which is extraordinary for a hardware manufacturer. Netflix clocks in at 84. Tesla leads the pack at 752, but that is largely due to its miniscule earnings. Overall, it is hard to look at these valuations without thinking “bubble.” But there is another interpretation.

At Cornell Capital Group we asked: What if the major tech giants (and I would exclude Tesla from this group) are trading as if they were quasi-bonds? That is a combination of their technology, their market power and the impact of Covid is such that their projected earnings are virtually locked-in. They are largely immune from the risk of competition and the fluctuations in the economy. If that were true, then the discount rate may be a good deal lower than that implied by traditional asset pricing models. To get an idea what this means, let’s go back to the basics.

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