Slope of Hope Blog Posts
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There are a couple of seemingly unrelated events approaching. First, in a few weeks, there is the 17th anniversary of the terrorist attacks of September 11 2001. Second, it seems nearly inevitable that Amazon will become the world’s second trillion dollar company, following in AAPL’s footsteps. I guess they are going in alphabetical order.
I was curious what the cheapest price Amazon was after the Internet bubble burst. It turns out it was on October 1, 2001. I was struck by that date, because it was so soon after the attacks. I decided to look at what Amazon did when the market reopened after the attacks, and I’ve tinted it below. As you can see, it’s pretty much a blip. Within a couple of weeks, it got down to $5.51, and it hasn’t looked back since. (It’s approaching $2,000 now).
The only red on my screen this morning (and it’s down only the tiniest bit) is bonds. This is a market I watch terribly closely, because as I’ve said through most of 2018, the core shift I’m looking for is an increase in interest rates and an accompanying decrease in real estate valuations. Through the course of the year, the now-broken trendline has done an effective job of repelling prices (arrows). At the moment, my fondest hope is that prices don’t either bother getting back to the trendline and instead turn away from that green tinted area.
General Electric has been falling for two solid years, having lost about two-thirds of its value. Let’s face it, ANY stock which can do that poorly in this completely fake, central-bank-supported, sugar-high of a market has got to have SERIOUS trouble. I thought it might manage to double bottom, but nope – – even with markets near lifetime highs, this piece of crap is breaking down to levels not seen since 2011.
Good morning, Slopers, and welcome to a new week. The earnings season is finally going to start ramping up, and of course there’s that Putin/Trump meeting happening, so it should be an interesting few days.
There aren’t exactly a lot of fireworks this morning, so let’s take a step back and look at a few basics. First, the bonds below remain completely intact for what I am hoping is a sea-change in the world of bonds and rates. The uptrend, having been broken, was challenging with a multi-week rally, but this mercifully seems to have been repelled where I’ve put the arrow. My only two options positions are substantial stakes in XLU and XLF January 2019 puts, and obviously the XLU is quite dependent on a strengthening interest rate market. My opinion is that we’ll see bond prices tumble away from this resistance point.
The Dow Utilities, against which I have January 2019 puts (by way of XLU), has been tearing higher since June 12th. The moving averages are still intact, and we’re coming up upon a wall of resistance that I believe will cease the public’s newfound adoration of utility companies.
Whenever someone argues against short-selling, they often bring up two very scary words: Infinite Risk. In other words, the most you could lose on a long position is 100%. But there is no mathematical limit to short losses. You could short a stock at $10 and it opens the next day at – – what – – let’s say $500,000. Shriek, right?
Well, yeah, but that doesn’t happen. I think the most horrendous wipeout I ever suffered was a 50% gap up, and since my positions are typically 1% of my portfolio, it wasn’t devastating. If someone is going to argue against short selling, I think a far better and more realistic argument is not that losses are unlimited but that profits are limited.
In other words, the most you can possibly make on a short is 100% and, let’s face it, stocks never go to zero. Hell, I think even Lehman Brothers is still trading in some form to this day. A gain or 20% or 30% – – maybe 50% once in a blue moon – – is a terrific success.
However, the profits on long positions are unlimited. Making more than 100% – – be it 500%, 1000%, 5000%, or even 100,000% – – is absolutely possible, and it’s been done by people all over the world. The main ingredient is timing and patience.
I’ve used SlopeCharts to create some percentage charts below, to illustrate some long-term winners as Intel……