Exile From the Herd - This is not investment advice

WSW Taking on 500 new members tomorrow at noon (early access below)

nospam@example.com (Mark Jeftovic) — Tue, 12 May 2009 11:06:57 -0400

In my role as a failed musician and absentee CEO, I'm often asked to do celebrity endorsements: hair restoration, hair removal, breath mints, etc. I rarely do unless it's a product or service I actually believe in.

So when Mike Swanson of Wall Street Window emailed me to tell me that tomorrow at noon he will open the gates of his Power Investor service to 500 new members, I took the time to forward the advance access link to a few friends of mine who were waiting for their next chance to sign up, and now I'm posting it here.

I've subscribed to endless newsletters and advisory services over the years and I rank them using three key criteria:

Number 1) Do they subject me to a never-ending barrage of intelligence-insulting sales letters attempting to upsell me to yet more products and services (Yes Agora publishing, I'm looking squarely at you guys - give it a rest)

Number 2) Are they merely a "black-box" service for "hot stock picks" expecting me to merely parrot their positions and mindlessly follow their recommendations?

Number 3) Do they claim some kind of Priests of the Temple exalted position in relation to the markets? Some special insight only they can comprehend and relate to us peons?

I prefer, and stick with services where the answer is "no" to all three of the above. They are few and far in between. Wall Street Window is one of those services. Even though as an investor, I gravitate toward "value investing" rather than technical analysis, it was Mike Swanson who helped me understand the validity of certain aspects of technical analysis. And it was from following Swanson and reading the books he recommended that finally helped me understand one key discipline any investor must understand about "the market": Our job as investors is to understand what the market is telling us about right now as opposed to what most of us actually do without even realizing it: try to impose our beliefs about what the market should do, onto it

I have been a 5-year subscriber to Wall Street Window, and I don't even make the same trades Swanson does. I just like the market analysis. I like that Swanson is a teacher and not a "stock-picker". I find his acumen in analyzing the secular trends and the macro forces versus the mass psychology that actually moves markets invaluable.

So tomorrow, noon, he's taking on 500 new subscribers, when he does this he usually maxes out those slots within a few hours. But you can get in today by following this link. In the interests of full disclosure: yes, I'm also an affiliate of WSW and will be compensated for any signups activated through the above link. I'm comfortable telling you that because this is a service I use and one that I'm happy with. (As part of his service he his "Stock Market Mastery" course is, in itself, worth the price of admission.)

Don't be surprised to see the Saudis embrace "Peak Oil"

nospam@example.com (Mark Jeftovic) — Wed, 14 Jan 2009 20:07:11 -0500

My first post of the year. I did mention briefly last year that I had gone long on oil. That position is of course, taking some heat. I started going long at about $46/barrel oil and it still had lot farther to fall. There is an old adage "The graveyards of Wall St. are littered with the skulls of those who were too early". They were probably margined out the hilt.

Fortunately, I'm not. So I just wait, well actually I've been buying more oil all the way down. I find this a lot different than piling into, say Nortel in 1999 somewhere north of $1000 and averaging down all the way to, maybe today where they hit .12 on their bankruptcy filing. Oil isn't going to file Chapter 7. There is a finite amount of oil in the world, and we use more and more of it almost literally every day. So softness aside, I see the price going nowhere but up from here. Keep in mind there's a reason I call this channel "This is not investment advice", because it's not. Do your own due diligence, remove cellophane before eating, etc.

But oil is too cheap. David Skarica points out in his newsletter that the gold-to-oil ratio is the highest it's been in decades, and the last two times it approached anywhere near these levels were 1994 and 1998, shortly before multi-year bull runs in the commodity.

Continue reading "Don't be surprised to see the Saudis embrace "Peak Oil""

The most idiotic thing I've heard all morning....

nospam@example.com (Mark Jeftovic) — Thu, 13 Nov 2008 11:22:08 -0500

In case I was doubting my going long on oil last week, this cinched it for me:

Lower heating costs predicted

WASHINGTON – The dramatic drop in world oil prices means a break this winter in heating costs, although households will still be paying more than they did last winter, the government says.

For starters, if a panel of government monkeys say "lower heating costs", prepare for the opposite. Always do this.

Next, if households are still going to pay more this winter than they did last winter, then guess what? Heating costs are HIGHER you damn dolts. If this winter's heating costs aren't going to be as brutal as they would have been with $100+ oil, but they're still more than last year, then NEWSFLASH: The cost of winter heating has gone up.

Jeezus, they don't even try to make it sound plausible any more.

What is keeping the lid on the price of silver?

nospam@example.com (Mark Jeftovic) — Tue, 14 Oct 2008 12:14:55 -0400

For anybody who isn't living in a cave without electricity, the past few weeks have been in a word "eventful". I have been delaying posting about what's been happening because so much has happened and it's been a long time since i wrote about it that penning one, comprehensive post to address it all just seemed a tad overwhelming.

So I've decided to just break it into chunks. Chunk #1 is called What is wrong with this picture?

Continue reading "What is keeping the lid on the price of silver?"

Tucows may be overlooked as a value stock (no, really)

nospam@example.com (Mark Jeftovic) — Mon, 07 Jul 2008 09:15:00 -0400

Some time ago Tucows (AMEX:TCX, TSX:TC) issued a press release reminding the world that they hold a sizable portfolio of premium domain names, the subtext to which was ostensibly "look at us, we're undervalued". Jay Westerdal over at DomainTools commented in his blog in essence that the premium domain portfolio of Tucows was not priced into the stock and in his estimation he could see the stock doubling within 2 years. Jay's assessment was an estimate. After looking at this in detail, I personally think Tucows has an intrinsic value between 0.94 and 1.58 per share (currently trading at .60) - Note that everything that follows is based on the CDN listing price.
Continue reading "Tucows may be overlooked as a value stock (no, really)"

What is wrong with this picture?

nospam@example.com (Mark Jeftovic) — Fri, 06 Jun 2008 09:33:35 -0400

Ad from Craigslist:

Pro Day Trader (Millions_) (Toronto)

Pro Day Trader Looking for venture capital
High return possible (potential Millions)Glad to negotiate
Several years experience in equities,futures
Only serious inquires !200k to do it right
Thank You Don

I've seen ads like this many times. It begs a few obvious questions:

Why seek outside capital to daytrade? The risk premium to the investor would make the cost-of-capital quite prohibitive
If these daytraders are so good, where is their own pile of cash that they've taken out of the market? And why aren't they using that to stake themselves?
What kinds of gains are these guys promising? I've talked to daytraders advertising on craigslist, some of whom claimed consistant, repeatable returns of 20% per month but couldn't explain to me why they weren't several orders of magnitude wealthier than Warren Buffet or George Soros who have managed 15-20% annual returns for decades (and who eschew daytrading like the plague, btw)

I have been following a couple of high-end daytraders (Wall St. Window and The Informed Trader) over the course of this last bear market after the credit markets locked up. They are both saying the same thing: this has been one of the toughest markets to trade that they have ever seen. They've both spent most of their time sitting on the sidelines, in cash watching the market for some feel of where it's going.

As professional daytraders know, "cash is a position" - often the best trade is no trade.

My suspicion when I see ads like this is that I'm reading the ad from a guy who's addicted to daytrading, gone bust and looking for somebody else
to stake him so he can wipe out again.

I've come to the conclusion that the only way to become a successful daytrader is to do it fulltime. You can't run a business and daytrade on the side. So personally I don't daytrade (anymore). But I do highly recommend The Investors Quotient: The Psychology of Successful Investing in Commodities and Stocks - which teaches us that the most important aspects of trading are having a coherent system one sticks to, mental discipline and other psychological factors. In other words, becoming a successful trader is not about conquering the markets, it's about mastering oneself.

In a couple weeks I'm off to the The Search for Value seminar at Western for a week where I hope to hone my acumen at fundamental analysis and value investing.

Q: How do you get out of a mess? A: don't cause one.

nospam@example.com (Mark Jeftovic) — Mon, 17 Mar 2008 14:05:58 -0400

I had to laugh out loud when I watched Jim Rogers interviewed on CNBC, after he lambasted Bernanke for his abject mishandling of the credit market implosion, one interviewer asked: "Tell me two things you would you do if you were Bernanke tomorrow?" - Without missing a beat he said 1: Abolish the fed and 2: Resign
Continue reading "Q: How do you get out of a mess? A: don't cause one."

Time to jump off the parabola

nospam@example.com (Mark Jeftovic) — Tue, 05 Jun 2007 14:29:49 -0400

As readers of this blog know, I typically stay away from "hot" investment sectors because I'm antisocial and dislike crowds. Over the last few days I have seen what can only be called red flashing warning lights from a few different places like The Privateer ("Warning lights flashing worldwide"), Larry Wallman's "Sunday Comments" ("We are someplace in the "mania" segment of the bull run." and George Ure's Urban Survival.

I have yet to read Marc Faber's May GloomBoomDoom but then again, he already said this last month. So imagine to my surprise when my memory jogs and I realize: I've been socking somewhere around 40% of my company RRSP contributions into emerging markets for over 5 years! Those same markets Bucker is calling "parabolic" and in the "blow-off" phase and with China taking near-weekly 8% dumps in the stock market. Oh my!

I nearly forgot about these holdings because I simply did a "set and forget" about 6 years ago, when I setup my corporate RRSP contribs go into 1) Emerging markets 2) Japan (don't laugh), 3) income producing real estate funds and 4) natural resources. I managed to average about a 20% annual return with that formula but I don't think his mix can continue that pace.

As such I've redeemed my emerging markets into cash (money markets) and lowered my contributions into Japanese equities. I've added an income fund and allotted more into money markets.

In short, as far as this particular RRSP goes, I've bailed on emerging markets, stuck it out with Japan (hey, they're due) and gone "above weight" in cash. Which bankers hate, but hey, when everything is overvalued what the hell else am I going to do with it? Buy domain names on the aftermarket?

Remember, this is not investment advice, remove cellophane before eating, etc.