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Notes for the summer: what happened, what’s happening now and what’s next — Benedict Evans

Notes for the summer: what happened, what’s happening now and what’s next — Benedict Evans

Anunțuri

Short candidates for the upcoming bear market

The anticipation of the end of QE this month and the start of rate hikes next year has prompted the market to do a correction and has moved volatility into multiple year high territory. This may very well be a multi-year top being formed. And so we should use the current rebound to look at some good short candidates for a bear market.

I have some long bets (mostly AAPL and BIB) and I would like to hedge them using some shorts (put options). My ideal short is:

  • high flyer/close to a recent all time high;
  • has a broken model, or at least losses or an impossible high P/E and PEG;
  • has lost a lot of value during the Sept-Oct correction;
  • as high beta as possible.

So far I found the following:

Screen Shot 2014-10-23 at 19.12.02

The most interesting to me are:

ETFC – E-Trade is an online broker that will fall quickly when it won’t be profitable for retail investors to be long in the market anymore.

TSLA – Apart from their bet on self-driving cars (which is still a number of years away) they don’t have much growth coming, are still not profitable and overvalued. They fell a lot in the recent correction and even Elon Musk publicly admited that they are overvalued. I still like their vision and I am very sorry for listening to Cody and not betting on them at $77 as I wanted to. But now they must come down to Earth, especially in a bear market.

EBAY – Just pleased Icahn and decided to spin off PayPal, which is being disrupted by Apple Pay and its value has colapsed. And the online market business is attacked by BABA and AMZN. And they are not profitable. So there.

BABA – A lot of speculators here. And more shares coming to float in the next months. And overvalued, though their PEG is not as bad as Amazon’s. Little history, little insight into corporate governance, so wild card, but I guess in a bear market it will fall a lot.

YHOO – Profitable but overvalued and with low growth, and their only prop is the fact that they still own about 10% of BABA and the cash from selling another 15% at IPO.

LNKD – It’s been around forever, and I never liked it. They sell services to recruiters, but they are not profitable. But it fell already.

SONC – this smaller cap greasy cheap food chain shorted by Cody is priced to perfection while its business model is under attack from the green/healthy food movement. Profitable and with a big short ratio, it may continue to surge for a while.

NFLX – pressured by the cable operators with which they need to partner while they intend to disrupt, and not able to offer latest movies because of its cheap rates, NFLX has lost a lot after its last report and may rebounce a little, but its high valuation will come under attack in a bear market.

What do you think guys? Any edge on these stocks? Any other short ideas?

Miscari in portofoliu in ultima vreme

Am ramas in urma cu raportarea miscarilor in portofoliul meu. Iata ce am mai facut in ultima saptamana:

Joi am cumparat inca o transa de bull call spread AAPL 520/525 de ianuarie, pe care am platit $4.23. Apoi AAPL a luat-o in jos si am vandut-o luni la $3.75, adica cu o pierdere asumata de -11%. Tot luni am mai vandut transe la 3.95 (+84%) si 4.19 (+100%) din spreaduri luate muult mai ieftin in octombrie. Am mai ramas cu o transa in portofoliu si intentionez sa o tin pana la expirare vineri, cand iau $5 adica +138%.

Am vandut call-urile de VIX de ianuarie cu o medie de 0.52, o pierdere de -35%. VIX are rol de hedge pentru mine, desi uneori imi face si profituri. Intentionez sa iau din nou call-uri VIX de februarie sau martie cat de curand.

Am vandut si ultima transa de call FB 50 de ianuarie, cu $8 pentru un profit de +167%. A fost splendid! Facebook ramane pe radarul meu si astept o oportunitate tehnica sa intru din nou long.

Am mai cumparat o prima transa de spread AAPL 540/580 de iulie cu $15, pentru ca AAPL tocmai re-confirma trendul crescator si are rezistenta la 570-580. Intentionez sa mai adaug curand, poate chiar azi.

Apoi, pe criterii tehnice, am shortat BBY si NFLX, cumparand put-uri astfel: BBY martie Put 35 @2.15 si NFLX martie Put 325 @19.5. Ne propunem sa iesim cu +100% undeva in februarie.

Si in fine am „jucat” saptamana cu max pain pe short MSFT (max pain 35) si INTC (max pain 25). Am luat bear put spreads, de sfarsitul acestei saptamani, 36/35 MSFT la 0.35 si 25.5/25 INTC cu 0.18. La MSFT am avut peste +100% dar nu le-am dat, acum a revenit dar am sperante mari. La Intel nu merge bine deloc si le voi da azi-maine cu pierdere procentual semnificativa (dar sume mici).

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Am mai pus un ordin mare de cumparare Call AAPL 550 ianuarie 2015 cu limita $51. Vad tehnic un nou ciclu de crestere, dupa re-confirmarea trendului, iar fundamental ma astept la rezultate bune pe trimestrul anterior, la un plus semnificativ de la China Mobile si mai ales la o linie noua de produse in 2014, care ar putea trezi din nou interesul investitorilor de growth.