investmentwatchblog--2020-11-23--MoneyShow: Investing When Markets Detach From The Economy

“ The stock market is not the economy.
” Such remains the “ Siren ’ s Song ” of investors as valuation expansion is the sole driver of the market ’ s performance .
Given that corporations derive their revenue from economic activity , how do you invest when the economy is detached from the economy ?
I explored this issue in my presentation at the MoneyShow Virtual Expo last week .
In the presentation I cover : • Why we are still in a “ bull market.
” • The stock market is not the economy .
• The @ @ @ @ @ @ @ market • Where to invest in 2021 The following articles I recently wrote provide more clarity on the issues I discuss in the following presentation .
With the Federal Reserve creating “ moral hazard ” in financial markets , it certainly seems as if stocks can never go down .
The problem , of course , is that is exactly what sentiment was like prior to the last two major bear markets .
Currently , just about every measure of valuation is predicting low to negative returns over the next decade .
While @ @ @ @ @ @ @ will be negative , it suggests we will likely witness increased volatility and more frequent declines .
As Michael Lebowitz , CFA recently noted : “ Regardless of the economic environment , taking significant risks , and accepting pitiful expected returns is a bad idea .
However , there is one more factor we must consider .
The Federal Reserve supplies a massive amount of liquidity , much of which is finding its way into the asset markets .
The Fed will likely continue as long as inflation is held at bay .
@ @ @ @ @ @ @ continue to rise , and valuations eclipse all prior norms .
However , the music will stop someday , and the facts presented here will be apparent.
” The trend is your friend , currently .
The Fed will continue to supply liquidity , which will help the market ignore the reality of valuations , technical deviations , and excessive bullishness for now .
However , as we saw in March , such does not preclude hair-raising volatility and large declines , but it does support prices on the margin regardless of the @ @ @ @ @ @ @ Fed backs off , whether by its design , inflation , or an inability to absorb larger levels of debt issuance from the Government .
At that point , slower economic growth , massive debt overhead , and rich valuations will matter .
Investors would do well to remember the words of the then-chairman of the Securities and Exchange Commission Arthur Levitt in a 1998 speech entitled “ The Numbers Game : ” There are a tremendous number of things that can go wrong in the months ahead .
Such is particularly the @ @ @ @ @ @ @ weakening fundamentals .
While investors cling to the “ hope ” that the Fed has everything under control , there is more than a reasonable chance they don ’ t .
Regardless , there is a straightforward truth .
The PDF of the slide deck is provided below for your convenience .

by Lance Roberts
“The stock market is not the economy.” Such remains the “Siren’s Song” of investors as valuation expansion is the sole driver of the market’s performance. Given that corporations derive their revenue from economic activity, how do you invest when the economy is detached from the economy?
I explored this issue in my presentation at the MoneyShow Virtual Expo last week. In the presentation I cover:
Why we are still in a “bull market.”
The stock market is not the economy.
The linkage between the economy and the stock market
Where to invest in 2021
The trading rules to follow.
The following articles I recently wrote provide more clarity on the issues I discuss in the following presentation.
With the Federal Reserve creating “moral hazard” in financial markets, it certainly seems as if stocks can never go down. The problem, of course, is that is exactly what sentiment was like prior to the last two major bear markets.
Currently, just about every measure of valuation is predicting low to negative returns over the next decade.
While such does not mean that every year will be negative, it suggests we will likely witness increased volatility and more frequent declines. As Michael Lebowitz, CFA recently noted:
“Regardless of the economic environment, taking significant risks, and accepting pitiful expected returns is a bad idea. However, there is one more factor we must consider. The Federal Reserve supplies a massive amount of liquidity, much of which is finding its way into the asset markets. The Fed will likely continue as long as inflation is held at bay. The result may be that stock prices continue to rise, and valuations eclipse all prior norms. However, the music will stop someday, and the facts presented here will be apparent.”
2021 May Be A Challenge
The trend is your friend, currently. The Fed will continue to supply liquidity, which will help the market ignore the reality of valuations, technical deviations, and excessive bullishness for now.
We are primarily funded by readers. Please subscribe and donate to support us!
However, as we saw in March, such does not preclude hair-raising volatility and large declines, but it does support prices on the margin regardless of the environment. The problem comes when the Fed backs off, whether by its design, inflation, or an inability to absorb larger levels of debt issuance from the Government. At that point, slower economic growth, massive debt overhead, and rich valuations will matter.
Investors would do well to remember the words of the then-chairman of the Securities and Exchange Commission Arthur Levitt in a 1998 speech entitled “The Numbers Game:”
“While the temptations are great, and the pressures strong, illusions in numbers are only that—ephemeral, and ultimately self-destructive.”
There are a tremendous number of things that can go wrong in the months ahead. Such is particularly the case of a surging stock market against weakening fundamentals.
While investors cling to the “hope” that the Fed has everything under control, there is more than a reasonable chance they don’t.
Regardless, there is a straightforward truth.
“The stock market is NOT the economy.But the economy is a reflection of the very thing that supports higher asset prices – corporate profits.”
Enjoy the presentation.
The MoneyShow: Investing In 2021
I hope you enjoyed it.
MoneyShow Presentation Deck
The PDF of the slide deck is provided below for your convenience.


investmentwatchblog--2020-11-23--Don’t Blame the Pandemic for the $277 Trillion Debt Pile

How do you even begin to visualize $ 277 trillion ?
If we convert it into seconds , 277 trillion is the equivalent of 8.8 million years .
I ’ m not sure what was happening that long ago , but I guarantee you it didn ’ t involve people .
It ’ s been estimated that Jeff Bezos increases his net worth by about $ 321 million a day .
At that rate , you ’ d have to work for close to 863,000 days , or 2,364 years , to reach $ 277 trillion .
You get the @ @ @ @ @ @ @ sum .
It ’ s also the total amount of debt the world is expected to hit by year-end .
That ’ s according to the Institute of International Finance ( IIF ) , whose members include some 400 banks and financial firms around the globe .
This year alone , as of the end of September , the world added $ 15 trillion to the debt pile , with government borrowing accounting for half of the increase , the IIF says .
Debt in developed markets is set to hit 432 % @ @ @ @ @ @ @ .
For emerging markets , it ’ s closer to 250 % .
By 2030 , the IIF estimates , we could be looking at $ 360 trillion in total debt .
So how did we get here , and what can investors do to protect their own wealth ?
As you may expect , the economic fallout from the pandemic has dealt a huge blow to government coffers .
So far in 2020 , the U.S. has added more than $ 4.8 trillion to the federal debt , the most ever for @ @ @ @ @ @ @ total federal debt up to a record $ 27 trillion , or 143 % of U.S. GDP .
Debt per U.S. taxpayer now comes in at a staggering $ 218,450 .
We can ’ t blame everything on the pandemic .
According to the IIF , the past four years have seen the largest debt buildup on record , with $ 52 trillion accumulated since 2016 .
What this means is that , even during the pre-pandemic economic boom years , governments were not practicing sound fiscal management .
Granted , governments weren @ @ @ @ @ @ @ debt buildup , but they represent a huge part of it .
Knowing this , there ’ s no way we can reasonably expect them to get us out of this mess .
“ There is significant uncertainty about how the global economy can deleverage in the future without significant adverse implications for economic activity , ” IIF economists say .
Last week , Bloomberg published an article by Jared Dillian , investment strategist at Mauldin Economics .
In the article , titled “ Gold Is a Hedge Against Bad Government Decisions , @ @ @ @ @ @ @ that gold is a hedge against inflation and stock market crashes .
Instead , he writes , gold “ is a hedge on policymakers screwing up , and there has been a lot of screwing up in the last 20 years.
” Since the year 2000 , U.S.-denominated gold has surged roughly 555 % versus 146 % for the S & P 500 Index .
The reason for this , according to Dillian , is that “ significantly looser financial conditions ” have meant that there are “ no constraints on monetary and @ @ @ @ @ @ @ is stuck in a low-rate environment .
As of right now , no 10-year government bond in any major economy in Europe or North America has a yield higher than 1 % .
Several countries—including France , Germany , Sweden , the Netherlands and Switzerland—issue debt with a negative yield .
And that ’ s the nominal yield , before factoring in inflation .
On Friday , in fact , the amount of government debt around the world trading with a negative yield rose to $ 17.1 trillion , a troubling new record @ @ @ @ @ @ @ it ’ s only likely to accelerate .
If you ’ re seeking to protect your family ’ s wealth against the failures of governments and central banks , I don ’ t believe there ’ s a more prudent option than hard assets .
That includes not just gold and precious metals but also real estate , housing and , if you can stand the volatility , cryptocurrencies such as Bitcoin and Ethereum .
Speaking of which , Bitcoin has been on a tear this year , having climbed almost 160 % @ @ @ @ @ @ @ s largest digital currency by market cap traded above $ 18,000 , hitting its highest for the first time since December 2017 .
Ethereum , meanwhile , broke above $ 500 , its highest level since June 2018 .
The difference between then and now is that , whereas the 2017 Bitcoin rally was highly speculative and retail-driven , today ’ s surge appears to be propelled by smart money seeking to hedge against the things we just talked about .
That ’ s the assessment of ex-hedge fund manager Mike Novogratz .
@ @ @ @ @ @ @ said he believes Bitcoin has “ hit escape velocity ” as the cryptocurrency enjoys increasingly greater demand from institutional investors .
He has an end-of-year price target of $ 20,000 and sees $ 60,000 by the end of 2021 .
For what it ’ s worth , other fund managers aren ’ t in agreement with Novogratz .
Less than 5 % of those surveyed by Bank of America believe Bitcoin will outperform next year .
Meanwhile , close to half of managers say they believe emerging markets are the place to be @ @ @ @ @ @ @ S & P 500 , oil and gold .
Investors are betting that a vaccine against COVID-19 could benefit emerging economies the most .
A weaker U.S. dollar may also make emerging markets more competitive .
The U.S. Dollar Index is down more than 3 % year-to-date .

by Frank Holmes, CEO, U.S. Global Investors
How do you even begin to visualize $277 trillion?
If we convert it into seconds, 277 trillion is the equivalent of 8.8 million years. I’m not sure what was happening that long ago, but I guarantee you it didn’t involve people.
It’s been estimated that Jeff Bezos increases his net worth by about $321 million a day. At that rate, you’d have to work for close to 863,000 days, or 2,364 years, to reach $277 trillion.
You get the point. It’s an unfathomable sum.
It’s also the total amount of debt the world is expected to hit by year-end. That’s according to the Institute of International Finance (IIF), whose members include some 400 banks and financial firms around the globe.
This year alone, as of the end of September, the world added $15 trillion to the debt pile, with government borrowing accounting for half of the increase, the IIF says. Debt in developed markets is set to hit 432% of gross domestic product (GDP). For emerging markets, it’s closer to 250%.
By 2030, the IIF estimates, we could be looking at $360 trillion in total debt.
click to enlarge
So how did we get here, and what can investors do to protect their own wealth?
As you may expect, the economic fallout from the pandemic has dealt a huge blow to government coffers. So far in 2020, the U.S. has added more than $4.8 trillion to the federal debt, the most ever for a single year.
This has brought total federal debt up to a record $27 trillion, or 143% of U.S. GDP. Debt per U.S. taxpayer now comes in at a staggering $218,450.
click to enlarge
We can’t blame everything on the pandemic. According to the IIF, the past four years have seen the largest debt buildup on record, with $52 trillion accumulated since 2016.
What this means is that, even during the pre-pandemic economic boom years, governments were not practicing sound fiscal management. Granted, governments weren’t the only contributors to the debt buildup, but they represent a huge part of it.
Knowing this, there’s no way we can reasonably expect them to get us out of this mess.
We are primarily funded by readers. Please subscribe and donate to support us!
“There is significant uncertainty about how the global economy can deleverage in the future without significant adverse implications for economic activity,” IIF economists say.
Jared Dillian: Gold Is A Hedge Against Bad Government Decisions
Last week, Bloomberg published an article by Jared Dillian, investment strategist at Mauldin Economics.
In the article, titled “Gold Is a Hedge Against Bad Government Decisions,” Dillian argues that investors mistakenly believe that gold is a hedge against inflation and stock market crashes.
Instead, he writes, gold “is a hedge on policymakers screwing up, and there has been a lot of screwing up in the last 20 years.”
Since the year 2000, U.S.-denominated gold has surged roughly 555% versus 146% for the S&P 500 Index. The reason for this, according to Dillian, is that “significantly looser financial conditions” have meant that there are “no constraints on monetary and fiscal policy.”
Indeed, the world is stuck in a low-rate environment. As of right now, no 10-year government bond in any major economy in Europe or North America has a yield higher than 1%. Several countries—including France, Germany, Sweden, the Netherlands and Switzerland—issue debt with a negative yield. And that’s the nominal yield, before factoring in inflation.
On Friday, in fact, the amount of government debt around the world trading with a negative yield rose to $17.1 trillion, a troubling new record.
click to enlarge
Currency devaluation is real, and it’s only likely to accelerate. If you’re seeking to protect your family’s wealth against the failures of governments and central banks, I don’t believe there’s a more prudent option than hard assets. That includes not just gold and precious metals but also real estate, housing and, if you can stand the volatility, cryptocurrencies such as Bitcoin and Ethereum.
Cryptos at a Nearly Three-Year High
Speaking of which, Bitcoin has been on a tear this year, having climbed almost 160%. On Friday, the world’s largest digital currency by market cap traded above $18,000, hitting its highest for the first time since December 2017. Ethereum, meanwhile, broke above $500, its highest level since June 2018.
The difference between then and now is that, whereas the 2017 Bitcoin rally was highly speculative and retail-driven, today’s surge appears to be propelled by smart money seeking to hedge against the things we just talked about.
That’s the assessment of ex-hedge fund manager Mike Novogratz. Speaking to CNBC last week, Novogratz said he believes Bitcoin has “hit escape velocity” as the cryptocurrency enjoys increasingly greater demand from institutional investors. He has an end-of-year price target of $20,000 and sees $60,000 by the end of 2021.
Emerging Markets to Outperform in 2021?
For what it’s worth, other fund managers aren’t in agreement with Novogratz. Less than 5% of those surveyed by Bank of America believe Bitcoin will outperform next year. Meanwhile, close to half of managers say they believe emerging markets are the place to be heading into 2021, ahead of the S&P 500, oil and gold.
click to enlarge
Investors are betting that a vaccine against COVID-19 could benefit emerging economies the most. A weaker U.S. dollar may also make emerging markets more competitive. The U.S. Dollar Index is down more than 3% year-to-date.


investmentwatchblog--2020-11-23--Would they lie to us?

Would they lie to us?

I open today with one simple thought : those like Soros , the folks at Davos , Globalist business , neocon diplomats and senior military have all spent the last twenty years , directly and indirectly , bombing economies into rubble , depriving Western labour of jobs , exploiting Third World workers , developing robotisation to kill yet more jobs , and developing inter-bank trading that created unreal accountancy money to destroy the value of paper money .
They have made you work longer hours for less money , dumbed down your kids ’ education , removed most of your @ @ @ @ @ @ @ employment levels and inflation rates , corrupted the police , the judiciary , the media and the politicians….and used tactics in the last six months removing your right to freedom of travel , association , free speech and every form of social conviviality .
So in the light of this less than glowing track-record , why do so many of us swallow the idea that global pharmaceutical combines ’ sole motivation is , suddenly , to heal the sick without any ulterior motive ?
The above happens to be one of my favourite @ @ @ @ @ @ @ , hugely inventive and most of the time devoid of limp jokes about Brexit racists and climate change sceptics , sorry , deniers .
Imagine if the panel members each week were Klaus Schwab , Peter Horby , Boris Johnson , Carrie Symonds , Angela Rayner….and Diane Abbott because we need a black person and she ’ s always good for a laugh .
It wouldn ’ t work , would it ?
They ’ d all pull out cards saying they once did insanely daft things , and everyone would say ‘ @ @ @ @ @ @ @ policemen 46p a day , I once caused thousands of unnecessary deaths by fiddling the HCQ trials , I once suggested humans should marry robots and so on .
One might try to freshen up the format by handing the decision over to the audience and let the panellists give out steaming great lies : Angela Rayner says there ’ s no basis at all to allegations of fraud in the US elections , Boris Johnson says Russsia is the only place that makes Novichok , and Carrie Symonds projects the idea that @ @ @ @ @ @ @ .
Yet again , the audience would vote ‘ TRUE ’ .
So not very entertaining , then – but profoundly disturbing .
If an entire ruling class had form when it came to ramming a yardbrush up one ’ s posteria – and a prime member of that class edged towards you again armed with an even bigger yardbrush – you ’ d give the bugger a wide berth , shouting “ Not today , thank you ” would you not ?
Well of course you would .
But then , you @ @ @ @ @ @ @ of regular readership here , there ’ s only around 11,000 of you .
John Fitzgerald Kennedy was elected to the US Presidency 60 years ago this month .
57 years ago yesterday , he was shot dead in Dallas .
He took on the Shadow State , and so they rubbed him out .
Now they ’ re running everything from the Pentagon via Wall Street to the State Department , the media , the banking system , the energy strategy and the electoral software .
This time next year , they @ @ @ @ @ @ @ health provision and techno-surveillance .
I ’ ll have been writing this blog for ten years next month .
Supporting the SPA reform victims in the UK , defending kids against systemic paedophiles , protecting innocent men from false Newscorp-Cop sex charges and phone hacking , nailing Jeremy Hunt as the fixer in the BSkyB takeover bid , calling out pc and global warning fantasies , deconstructing the lies surrounding Brexit , writing over seventy posts to ilustrate the conniving madness behind Covid19 , and trying to sort out what really happened last @ @ @ @ @ @ @ score is The People 0 The Corporate State 9 .
There ’ s no getting away from it friends , we ’ ve been trounced .
2021 is going to be the Last Chance Saloon .
Either we find a John Wayne to shoot Liberty Valance on behalf of James Stewart , or it really is all over .
The Western World is physically addicted to lies that offer gullible comfort .
Just as with alcoholics , the giant step is accepting that you have a problem .
A United Front of Civil @ @ @ @ @ @ @ your minds – and then close ranks against the pirates .

by John Ward
I open today with one simple thought: those like Soros, the folks at Davos, Globalist business, neocon diplomats and senior military have all spent the last twenty years, directly and indirectly, bombing economies into rubble, depriving Western labour of jobs, exploiting Third World workers, developing robotisation to kill yet more jobs, and developing inter-bank trading that created unreal accountancy money to destroy the value of paper money.
They have made you work longer hours for less money, dumbed down your kids’ education, removed most of your employment rights, lied to you about employment levels and inflation rates, corrupted the police, the judiciary, the media and the politicians….and used tactics in the last six months removing your right to freedom of travel, association, free speech and every form of social conviviality.
So in the light of this less than glowing track-record, why do so many of us swallow the idea that global pharmaceutical combines’ sole motivation is, suddenly, to heal the sick without any ulterior motive?
The above happens to be one of my favourite programmes: it’s very funny, hugely inventive and most of the time devoid of limp jokes about Brexit racists and climate change sceptics, sorry, deniers.
Imagine if the panel members each week were Klaus Schwab, Peter Horby, Boris Johnson, Carrie Symonds, Angela Rayner….and Diane Abbott because we need a black person and she’s always good for a laugh.
It wouldn’t work, would it? They’d all pull out cards saying they once did insanely daft things, and everyone would say ‘TRUE”: I once recommended paying policemen 46p a day, I once caused thousands of unnecessary deaths by fiddling the HCQ trials, I once suggested humans should marry robots and so on.
One might try to freshen up the format by handing the decision over to the audience and let the panellists give out steaming great lies: Angela Rayner says there’s no basis at all to allegations of fraud in the US elections, Boris Johnson says Russsia is the only place that makes Novichok, and Carrie Symonds projects the idea that Dominic Cummings was actually a lockdown hawk. Yet again, the audience would vote ‘TRUE’.
So not very entertaining, then – but profoundly disturbing.
We are primarily funded by readers. Please subscribe and donate to support us!
If an entire ruling class had form when it came to ramming a yardbrush up one’s posteria – and a prime member of that class edged towards you again armed with an even bigger yardbrush – you’d give the bugger a wide berth, shouting “Not today, thank you” would you not?
Well of course you would. But then, you’re Sloggers. And in terms of regular readership here, there’s only around 11,000 of you.
John Fitzgerald Kennedy was elected to the US Presidency 60 years ago this month. 57 years ago yesterday, he was shot dead in Dallas. He took on the Shadow State, and so they rubbed him out.
Now they’re running everything from the Pentagon via Wall Street to the State Department, the media, the banking system, the energy strategy and the electoral software. This time next year, they’ll have full control of global health provision and techno-surveillance.
I’ll have been writing this blog for ten years next month. Supporting the SPA reform victims in the UK, defending kids against systemic paedophiles, protecting innocent men from false Newscorp-Cop sex charges and phone hacking, nailing Jeremy Hunt as the fixer in the BSkyB takeover bid, calling out pc and global warning fantasies, deconstructing the lies surrounding Brexit, writing over seventy posts to ilustrate the conniving madness behind Covid19, and trying to sort out what really happened last November 3rd.
So far, the score is The People 0 The Corporate State 9. There’s no getting away from it friends, we’ve been trounced.
2021 is going to be the Last Chance Saloon. Either we find a John Wayne to shoot Liberty Valance on behalf of James Stewart, or it really is all over. The Western World is physically addicted to lies that offer gullible comfort. Just as with alcoholics, the giant step is accepting that you have a problem.
A United Front of Civil Disobedience is the only way: open your minds – and then close ranks against the pirates.


investmentwatchblog--2020-11-23--TRUMP SAVES ANOTHER INDUSTRY:

TRUMP SAVES ANOTHER INDUSTRY:

Fall 2021 Law School Admissions At The Quarter-Pole : Applicants Are Up 32 % , With Biggest Increases Among The Highest LSAT Bands And Applicants Of Color .
Following up on my previous posts on the Fall 2021 law school admissions season : • 6 % Through the Season : Applicants Are Up Over 35 % , With Biggest Increases Among The Highest LSAT Bands ( Oct. 5 , 2020 ) • 16 % Through the Season : Applicants Are Up Over 35 % , With Biggest Increases Among The Highest LSAT Bands And Applicants Of Color ( Nov. 2 @ @ @ @ @ @ @ % of the way through Fall 2021 law school admissions season .
The number of law school applicants are up 31.7 % : Mike Spivey projects that applicants will be up 28 % for the full admissions season , but Jeff Thomas cautions that the increase in applicants may be an illusion because first-time LSAT test-takers are down 3 % thus far .
Applicants are up the most in the New England ( 52.5 % ) , Midwest ( 48.9 % ) , and Northeast ( 39.1 % ) ; and up the @ @ @ @ @ @ @ % ) , South Central ( 21.9 % ) , Northwest ( 27.2 % ) .

Fall 2021 Law School Admissions At The Quarter-Pole: Applicants Are Up 32%, With Biggest Increases Among The Highest LSAT Bands And Applicants Of Color.
Following up on my previous posts on the Fall 2021 law school admissions season:
We are now 25% of the way through Fall 2021 law school admissions season. The number of law school applicants are up 31.7%:
Mike Spivey projects that applicants will be up 28% for the full admissions season, but Jeff Thomas cautions that the increase in applicants may be an illusion because first-time LSAT test-takers are down 3% thus far.
Applicants are up the most in the New England (52.5%), Midwest (48.9%), and Northeast (39.1%); and up the least in the Great Lakes (18.8%), South Central (21.9%), Northwest (27.2%).


investmentwatchblog--2020-11-23--China Caught Spending Millions on U.S. Media Publications: @WSJ, @latimes, @ForeignPolicy, @latimes,

China Caught Spending Millions on U.S. Media Publications: @WSJ, @latimes, @ForeignPolicy, @latimes, @HoustonChron, and @BostonGlobe

China Daily , controlled by the Chinese Communist Party ’ s propaganda department , paid @ WSJ $ 85,000 , @ @ @ @ @ , @ ForeignPolicy $ 100,000 , among other U.S. newspapers for advertising campaigns between May @ @ @ @ @ Daily also paid $ 110,000 to the @ latimes , $ 92,000 to @ HoustonChron @ @ @ @ @ @ BostonGlobe for printing costs .
They 've spent a total of more than $ @ @ @ @ @ distribution , advertising and administration over the past six monthst.co/aoNkGc8B2d

China Daily, controlled by the Chinese Communist Party’s propaganda department, paid @WSJ $85,000, the @latimes $340,000, @ForeignPolicy $100,000, among other U.S. newspapers for advertising campaigns between May and October 2020 t.co/aoNkGc8B2d
China Daily also paid $110,000 to the @latimes, $92,000 to @HoustonChron, and $76,000 to @BostonGlobe for printing costs.
They've spent a total of more than $4.4 million on printing, distribution, advertising and administration over the past six monthst.co/aoNkGc8B2d
— Daily Caller (@DailyCaller) November 23, 2020


investmentwatchblog--2020-11-23--Just days before the 2nd biggest retail week of the year many places plan to increase their lockdown

Just days before the 2nd biggest retail week of the year many places plan to increase their lockdown restrictions. Making it harder for small business & middleclass America to survive. I 100% guarantee Amazon smashes Cyber Monday & holiday sales records.

My county and many others , many cities , and many states are increasing their lockdown levels just days before one of the largest retail weeks of the year .
A week that countless small businesses and middle-class people needed to get them through the holiday season after an already horrible year .
How convenient it is that lockdown restrictions just so happen to take place days before a holiday shopping week millions of businesses and workers across the country needed .
Sounds great for places like Amazon who will undoubtedly set Cyber Monday records .
Sounds great for places @ @ @ @ @ @ @ that wont be required to limit head count or close down .
Of course , Americans will flock to these places to buy shit they don ’ t need , to increase debt they already have , and to consolidate the wealth in this country even more .
I ’ m all for social distancing , but the increase in lockdown restrictions have already scared consumers into staying home and panic buying essentials .
We small businesses desperately needed this week and a strong Q4 to survive .
After an already horrible year @ @ @ @ @ @ @ election , the stim check equating to roughly $ 5.40 a day ( at this point ) , and now tighter restrictions and increased fear of another full on lockdown , this holiday season will be the final nail in small business America ’ s coffin .
This Q4 could very well be the end of the American Dream .
There ’ s no second check coming , there is no rent freeze coming , there is nothing coming for people like you and me .
Just a reminder that the government does @ @ @ @ @ @ @ reminder that this pandemic , while real , was a perfect opportunity for the elite ruling class to create an even larger wealth division in our country and set the table for the future they want .
Disclaimer : This content does not necessarily represent the views of IWB .

by Scander11
My county and many others, many cities, and many states are increasing their lockdown levels just days before one of the largest retail weeks of the year. A week that countless small businesses and middle-class people needed to get them through the holiday season after an already horrible year. How convenient it is that lockdown restrictions just so happen to take place days before a holiday shopping week millions of businesses and workers across the country needed.
Sounds great for places like Amazon who will undoubtedly set Cyber Monday records. Sounds great for places like Walmart, Target, etc., that wont be required to limit head count or close down. Of course, Americans will flock to these places to buy shit they don’t need, to increase debt they already have, and to consolidate the wealth in this country even more.
I’m all for social distancing, but the increase in lockdown restrictions have already scared consumers into staying home and panic buying essentials.
We are primarily funded by readers. Please subscribe and donate to support us!
We small businesses desperately needed this week and a strong Q4 to survive. After an already horrible year, a slow down due to the election, the stim check equating to roughly $5.40 a day (at this point), and now tighter restrictions and increased fear of another full on lockdown, this holiday season will be the final nail in small business America’s coffin.
This Q4 could very well be the end of the American Dream. There’s no second check coming, there is no rent freeze coming, there is nothing coming for people like you and me. Just a reminder that the government does not care about you. Just a reminder that this pandemic, while real, was a perfect opportunity for the elite ruling class to create an even larger wealth division in our country and set the table for the future they want.
Disclaimer: This content does not necessarily represent the views of IWB.


investmentwatchblog--2020-11-23--The same people claiming flu season is practically non-existent this year due to masks and social di

The same people claiming flu season is practically non-existent this year due to masks and social distancing are the ones telling us COVID is skyrocketing because we aren’t masking and social distancing.

Two months into flu season , Washington state has reported ONE lab-confirmed case of influenza : The one thing that should INFURIATE anyone who doesn ’ t live in fear of COVID-19 is the demonstrable over-reporting of the coronavirus compared to other ailments , including the flu .
Are US flu death figures more PR than science ?
US data on influenza deaths are a mess .
The Centers for Disease Control and Prevention ( CDC ) acknowledges a difference between flu death and flu associated death yet uses the terms interchangeably .
Additionally , there are significant statistical incompatibilities @ @ @ @ @ @ @ data .
Compounding these problems is a marketing of fear—a CDC communications strategy in which medical experts “ predict dire outcomes ” during flu seasons .
The CDC website states what has become commonly accepted and widely reported in the lay and scientific press : annually “ about 36 000 [ Americans ] die from flu ” ( www.cdc.gov/flu/about/disease.htm ) and “ influenza/pneumonia ” is the seventh leading cause of death in the United States ( www.cdc.gov/nchs/fastats/lcod.htm ) .
But why are flu and pneumonia bundled together ?
Is the relationship so strong @ @ @ @ @ @ @ a single cause of death ?
Here ’ s the rub : They ’ re lying through their teeth about “ the flu ” .
The “ flu ” is their convenient excuse for the mass poisoning of the population with their lethal pharmaceuticals and vaccines .
This is the single stupidest and most obvious hoax in the history of mankind .
Wake up folks , or we ’ re in BIG trouble .

by axolotl_peyotl
Two months into flu season, Washington state has reported ONE lab-confirmed case of influenza: The one thing that should INFURIATE anyone who doesn’t live in fear of COVID-19 is the demonstrable over-reporting of the coronavirus compared to other ailments, including the flu.
Years ago, a brilliant scientist named Peter Doshi eviscerated the flu hoax:
Are US flu death figures more PR than science?
US data on influenza deaths are a mess. The Centers for Disease Control and Prevention (CDC) acknowledges a difference between flu death and flu associated death yet uses the terms interchangeably. Additionally, there are significant statistical incompatibilities between official estimates and national vital statistics data. Compounding these problems is a marketing of fear—a CDC communications strategy in which medical experts “predict dire outcomes” during flu seasons. The CDC website states what has become commonly accepted and widely reported in the lay and scientific press: annually “about 36 000 [Americans] die from flu” (www.cdc.gov/flu/about/disease.htm) and “influenza/pneumonia” is the seventh leading cause of death in the United States (www.cdc.gov/nchs/fastats/lcod.htm). But why are flu and pneumonia bundled together? Is the relationship so strong or unique to warrant characterising them as a single cause of death?
Here’s the rub: They’re lying through their teeth about “the flu”.
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The “flu” is their convenient excuse for the mass poisoning of the population with their lethal pharmaceuticals and vaccines.
Lockdowns didn’t reduce “flu” cases…they’re just calling “flu” cases “COVID-19”.
This is the single stupidest and most obvious hoax in the history of mankind.
Wake up folks, or we’re in BIG trouble.


investmentwatchblog--2020-11-23--Why Can’t Americans Just Go Along With Quarantines Like Those Orderly Chinese?

Shanghai airport is plunged into chaos after a ‘ worker tested positive for Covid-19 prompting Hazmat-clad staff to herd THOUSANDS @ @ @ @ @ testing before they make bid for freedom.
’ • Were being forced into basement area @ @ @ @ @ airport • But , amid fears of mandatory 14-day quarantine , the group tried to @ @ @ @ @ was plunged into chaos last night after a worker tested positive for Covid-19 prompting officials @ @ @ @ @ witnesses claim .
Hazmat suit-clad staff were filmed herding a huge crowd into a basement @ @ @ @ @ Airport in the country ’ s financial hub .
But , amid fears of mandatory @ @ @ @ @ staged a mass bid for freedom .
They were filmed pushing as the officials – @ @ @ @ @ linked arms to keep them in line .

Chaos in Shanghai!100k quarantined
People vs Deadliest Virus in the world 🤣🤣 100k people… getting my 🍿 rdy. t.co/HGCzhJnd89 — StraightRight (@StraightRight3) November 22, 2020
Shanghai airport is plunged into chaos after a ‘worker tested positive for Covid-19 prompting Hazmat-clad staff to herd THOUSANDS of people into basement for testing before they make bid for freedom.’
Hazmat suit-clad airport staff were filmed pushing against a massive crowd
Were being forced into basement area inside Shanghai’s international airport
But, amid fears of mandatory 14-day quarantine, the group tried to escape
An airport in China was plunged into chaos last night after a worker tested positive for Covid-19 prompting officials to order airport-wide testing, witnesses claim.
Hazmat suit-clad staff were filmed herding a huge crowd into a basement area inside Shanghai Pudong International Airport in the country’s financial hub.
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But, amid fears of mandatory 14-day quarantine, the group staged a mass bid for freedom.
They were filmed pushing as the officials – wearing plastic face shields – linked arms to keep them in line.
h/t Glenn


investmentwatchblog--2020-11-23--But of course: Biden considering Rahm Emanuel for Transportation Secretary

According to CNN , if Biden steals the election , he ’ s considering Rahm “ Never Let a Crisis go to Waste ” Emanuel for Transportation Secretary .
Why is Rahm qualified for this job ?
Number one : He ’ s a demorat .
Number two : He has experience in the executive and legislative branch .
Never mind the fact that while Rahm was mayor of Chiraq , his vast experience resulted in the following : City pension debt grew by $ 7 billion ; Record high property tax increase ; A new tax on water and @ @ @ @ @ @ @ emergency fee on telephone lines Sounds like the perfect man to manage our country ’ s infrastructure .
Because we all know the real reason Rahm is perfect for any job in demorat politics : “ Never let a crisis go to waste : Rahm Emanuel calls for gas tax increase ” “ Rahm Emanuel declares Chicago a “ Trump-free zone ” on Colbert ’ s Late Show ” “ Emanuel ordinance would require videotaping of gun sales ” “ Chicago city lawyers offered Laquan McDonald family $ 5 million in “ hush @ @

by DCG
According to CNN, if Biden steals the election, he’s considering Rahm “Never Let a Crisis go to Waste” Emanuel for Transportation Secretary.
Why is Rahm qualified for this job? Number one: He’s a demorat. Number two: He has experience in the executive and legislative branch.
Never mind the fact that while Rahm was mayor of Chiraq, his vast experience resulted in the following: City pension debt grew by $7 billion; Record high property tax increase; A new tax on water and sewer service; and a higher 911 emergency fee on telephone lines
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Sounds like the perfect man to manage our country’s infrastructure. Because we all know the real reason Rahm is perfect for any job in demorat politics:
See also:
“Never let a crisis go to waste: Rahm Emanuel calls for gas tax increase”
“Rahm Emanuel declares Chicago a “Trump-free zone” on Colbert’s Late Show”
“Emanuel ordinance would require videotaping of gun sales”
“Chicago city lawyers offered Laquan McDonald family $5 million in “hush money”
DCG


investmentwatchblog--2020-11-23--Short thesis on Big Lots ($BIG)

Short thesis on Big Lots ($BIG)

I was curious to what was happening with the company because they ’ re trading at a very low P/E and I figured that this may be a value stock just off of that alone but I dug into their most recent 10-K and found some thing that turned a potential long thesis into a short thesis .
Why I ’ m short $ BIG : -Adjusted for buybacks , their capital base has grown faster than EPS and FCF .
They need more money to return little to shareholders .
They ’ ve bought back stock at aggressive paces @ @ @ @ @ @ @ % since 2010 .
This move has levered the company as buybacks lower the cost of capital ( to a point ) but they have a lot of debt now so either they issue shares , diluting returns , or take out more debt , which is problematic in itself .
More on that later .
Even if you leave buybacks there and don ’ t add them back then you still have the same exact problem .
Their capital base has grown faster than EPS and FCF growth .
-The new CEO @ @ @ @ @ @ @ Wearhouse and they ’ re getting ready to leave restructuring bankruptcy .
I ’ m not going to throw all that blame on him as that would be unfair .
The various economic headwinds that Mens Wearhouse faced due to Amazon and the like aren ’ t fair to throw onto a management team .
But you have to look at who is running the company .
That much can ’ t be ignored .
I ’ m immediately raising eyebrows if a CEO left a company and that company is in financial @ @ @ @ @ @ @ company .
-Total debt has grown 14.88 % while total asset have grown only 7.82 % over the past ten years .
DSI has grown from 60.34 days in 2017 , bloating to 67.56 days in FY2019 , to 63.16 days in FY2020 .
They make a lot of their sales from furniture and home decor , thins that people aren ’ t readily buying every single day so I have to keep in mind that a high DSI may be reasonable based on what they sell .
But COVID has backed up @ @ @ @ @ @ @ and DSI was rising when there was a bull market .
How are they going to get bad inventory off of their books now when COVID is causing closures to their stores and their supply chains ?
Consignment sales ?
Who is going to buy it ?
Inventory write downs ?
Market won ’ t like that .
Reducing their prices ?
Cut their margins and the market won ’ t like that .
-Last year alone selling their distribution center in CA made up 53 % of EBIT last fiscal year .
@ @ @ @ @ @ @ income saw a massive decline .
This isn ’ t the first time that selling distribution centers has made up large chunks of EBIT .
You can only sell a property once so even if you ’ re fine with them doing that to boost EBIT you still have the problem of it being a one time event .
They ’ ve been entering into a lot of leaseback transactions as well that I think ultimately obscure low quality earnings and cash flow .
How many more properties can they sell off to @ @ @ @ @ @ @ store footprint already at 1,400 stores .
They ’ re economically profitable at gross margins around 40 % with little standard deviation over the past decade .
They can make money in their sleep .
Looking down the income statement tells you that they can ’ t hold onto it for long because EBIT margins don ’ t even outpace historical inflation rates .
-Ollie ’ s , their most direct competitor , has 12.2 % EBIT margins .
In their proxy statement ’ s peer compensation section their don ’ t see @ @ @ @ @ @ @ “ peer ” market though .
They seem to think they compete alongside companies like Tractor Supply ( 8.3 % ) , DICK ’ S Sporting Goods ( 4.3 % ) , Advance Auto Parts ( 7.0 % ) , L Brands ( 7.6 % ) , Dollar General ( 8.3 % ) , and Five Below ( 11.8 % ) .
Look at all their EBIT margins and they still fall so short of EBIT margins against their competitors .
$ BIG had 2.9 % EBIT margin this past year .
Even @ @ @ @ @ @ @ peer compensation review creates an accurate market for them to compete in they still , by the list they ’ ve created , fall far away from being peers to them in this regard .
-CA , FL , TX , and OH gave them 33 % of net sales in FY2020 .
OH and CA just announced curfews to control COVID outbreaks and I suspect FL and TX will be forced to deal with COVID outbreaks later on in the same way .
Ignoring it means more deaths and ultimately they will @ @ @ @ @ @ @ rates .
Big Lots aims to sell to the JCPenny demographic , the “ I want more bang for my buck/I want to feel like I ’ m getting a deal at your expense ” crowd .
This crowd is hurting badly from unemployment rates being high and government financial support being low .
What cash do they think their customers have to pay for furniture that they couldn ’ t sell when the economy was doing good ?
I don ’ t see them making those sales back soon enough to fix @ @ @ @ @ @ @ was aiming to take them private but the leaseback transactions that Big Lots was doing at the time of those talks made Apollo drop the idea .
It seems Big Lots may be left to flounder in the public markets for a little while longer .
TL ; DR : This company makes money in its sleep with high gross margins but management can ’ t seem to keep a lot of it in the business due to poor corporate governance .
Aggressive buybacks over the past ten years has levered the company @ @ @ @ @ @ @ levered in 2020 and they ’ ve been struggling to get inventory out of their stores in good times , let alone during bad times .
This is my first short thesis .
Please critique , comment , revise , insult , I don ’ t care .
But make me better at this .
I ’ ve been teaching myself investing for the past few years so whatever you can do to help me be better at short or long picks please let me know .
Disclaimer : This information is only @ @ @ @ @ @ @ any investment decisions based on the information in this article .
Do you own due diligence or consult your financial professional before making any investment decision .

by howtoreadspaghetti
Disclaimer: I am short Big Lots. A small short position but a position nonetheless.
I was curious to what was happening with the company because they’re trading at a very low P/E and I figured that this may be a value stock just off of that alone but I dug into their most recent 10-K and found some thing that turned a potential long thesis into a short thesis. Why I’m short $BIG:
-Adjusted for buybacks, their capital base has grown faster than EPS and FCF. They need more money to return little to shareholders. They’ve bought back stock at aggressive paces, reducing outstanding shares by almost 50% since 2010. This move has levered the company as buybacks lower the cost of capital (to a point) but they have a lot of debt now so either they issue shares, diluting returns, or take out more debt, which is problematic in itself. More on that later. Even if you leave buybacks there and don’t add them back then you still have the same exact problem. Their capital base has grown faster than EPS and FCF growth.
-The new CEO, Bruce Thorn, recently left Mens Wearhouse and they’re getting ready to leave restructuring bankruptcy. I’m not going to throw all that blame on him as that would be unfair. The various economic headwinds that Mens Wearhouse faced due to Amazon and the like aren’t fair to throw onto a management team. But you have to look at who is running the company. That much can’t be ignored. I’m immediately raising eyebrows if a CEO left a company and that company is in financial trouble and goes to run a new company.
-Total debt has grown 14.88% while total asset have grown only 7.82% over the past ten years. DSI has grown from 60.34 days in 2017, bloating to 67.56 days in FY2019, to 63.16 days in FY2020. They make a lot of their sales from furniture and home decor, thins that people aren’t readily buying every single day so I have to keep in mind that a high DSI may be reasonable based on what they sell. But COVID has backed up supply chains for receiving furniture to sell and DSI was rising when there was a bull market. How are they going to get bad inventory off of their books now when COVID is causing closures to their stores and their supply chains? Consignment sales? Who is going to buy it? Inventory write downs? Market won’t like that. Reducing their prices? Cut their margins and the market won’t like that.
-Last year alone selling their distribution center in CA made up 53% of EBIT last fiscal year. Pull that out and EBIT and net income saw a massive decline. This isn’t the first time that selling distribution centers has made up large chunks of EBIT. You can only sell a property once so even if you’re fine with them doing that to boost EBIT you still have the problem of it being a one time event. They’ve been entering into a lot of leaseback transactions as well that I think ultimately obscure low quality earnings and cash flow. How many more properties can they sell off to boost EBIT? They have a massive store footprint already at 1,400 stores. They’re economically profitable at gross margins around 40% with little standard deviation over the past decade. They can make money in their sleep. Looking down the income statement tells you that they can’t hold onto it for long because EBIT margins don’t even outpace historical inflation rates.
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-Ollie’s, their most direct competitor, has 12.2% EBIT margins. In their proxy statement’s peer compensation section their don’t see Ollie’s as part of their “peer” market though. They seem to think they compete alongside companies like Tractor Supply (8.3%), DICK’S Sporting Goods (4.3%), Advance Auto Parts (7.0%), L Brands (7.6%), Dollar General (8.3%), and Five Below (11.8%). Look at all their EBIT margins and they still fall so short of EBIT margins against their competitors. $BIG had 2.9% EBIT margin this past year. Even if I agree with them that their peer compensation review creates an accurate market for them to compete in they still, by the list they’ve created, fall far away from being peers to them in this regard.
-CA, FL, TX, and OH gave them 33% of net sales in FY2020. OH and CA just announced curfews to control COVID outbreaks and I suspect FL and TX will be forced to deal with COVID outbreaks later on in the same way. Ignoring it means more deaths and ultimately they will have to do something to curb infection rates. Big Lots aims to sell to the JCPenny demographic, the “I want more bang for my buck/I want to feel like I’m getting a deal at your expense” crowd. This crowd is hurting badly from unemployment rates being high and government financial support being low. What cash do they think their customers have to pay for furniture that they couldn’t sell when the economy was doing good? I don’t see them making those sales back soon enough to fix problems the business has. Apollo Management was aiming to take them private but the leaseback transactions that Big Lots was doing at the time of those talks made Apollo drop the idea. It seems Big Lots may be left to flounder in the public markets for a little while longer.

TL;DR: This company makes money in its sleep with high gross margins but management can’t seem to keep a lot of it in the business due to poor corporate governance. Aggressive buybacks over the past ten years has levered the company up at the worst time to be levered in 2020 and they’ve been struggling to get inventory out of their stores in good times, let alone during bad times.

This is my first short thesis. Please critique, comment, revise, insult, I don’t care. But make me better at this. I’ve been teaching myself investing for the past few years so whatever you can do to help me be better at short or long picks please let me know.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.


investmentwatchblog--2020-11-23--Who Owns Reddit? A breakdown of the type and nationality of shareholders.

According to wikipedia , Advance Publications is owned by “ the Newhouse family ” .
I also looked into Tencent prior to this post .
I didn ’ t feel it would be fair to give this breakdown in the image though because I didn ’ t break down any of the VC firms either .
• Series B , 10 % to various American venture capitalists ( 5 + 1 lead ) and 10 American individuals www.crunchbase.com/funding_round/reddit-series-b–662ba273 • Series C , 11.1 % to 8 American venture capitalists , one Dubai VC , and one individual www.crunchbase.com/funding_round/reddit-series-c–168f04d0 • Series @ @ @ @ @ @ @ and three American Venture Capitalists www.crunchbase.com/funding_round/reddit-series-d–c9282e50 • this round was led by Tencent , they got 5 % of the round www.theverge.com/2019/2/11/18216134/reddit-tencent-investment-deal-memes-amount-winnie-the-pooh-tank-man-china • In reddits series B and Series D half the capital was provided by the lead .
We assume that the series C approximately follows this rule .
• We assume that the rest of the non-lead investors split the remaining amount roughly evenly .
• We assume approx .
100 % of shares were purchased and roughly 0 % of the shares have been provided as compensation since acquisition by @ @ @ @ @ @ @ We assume that none of the shares have been transferred .
Investors selling illiquid pre-IPO shares is atypical .
www.quora.com/Is-it-possible-or-relevant-for-a-seed-investor-to-sell-his-shares-of-a-startup-to-a-series-A-or-series-B-investor/answer/Gil-Silberman • Conde Nast ( AP ) 100 % acquisition • was diluted by 10 % , 11.1 % , then 10 % ( multiply by 0.72 ) • Series B lead VC : 5 % , individuals : 2/3 * 5 % , other American VCs : 1/3 * 5 % • Diluted 11.1 % by series C , then 10 % by series D ( multiply stake by 0.8 ) • Series @ @ @ @ @ @ @ % American VCs • No dilution yet ( multiply by 1.0 )

by andrewlapp
According to wikipedia, Advance Publications is owned by “the Newhouse family”.
I also looked into Tencent prior to this post. I didn’t feel it would be fair to give this breakdown in the image though because I didn’t break down any of the VC firms either.
Tencent ownership:
largest shareholder 31%: Prosus (Netherlands)
minority shareholder at 8.5%: co-founder Hua Teng Ma (China)
History of investment and acquisition:
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October 2006: Condé Nast Publications acquired the site www.nytimes.com/2012/09/03/business/media/reddit-thrives-after-advance-publications-let-it-sink-or-swim.html
Series B, 10% to various American venture capitalists (5 + 1 lead) and 10 American individuals www.crunchbase.com/funding_round/reddit-series-b–662ba273
Series C, 11.1% to 8 American venture capitalists, one Dubai VC, and one individual www.crunchbase.com/funding_round/reddit-series-c–168f04d0
Series D, 10% to Tencent, and three American Venture Capitalists www.crunchbase.com/funding_round/reddit-series-d–c9282e50 this round was led by Tencent, they got 5% of the round www.theverge.com/2019/2/11/18216134/reddit-tencent-investment-deal-memes-amount-winnie-the-pooh-tank-man-china
Assumptions
In reddits series B and Series D half the capital was provided by the lead. We assume that the series C approximately follows this rule.
We assume that the rest of the non-lead investors split the remaining amount roughly evenly.
We assume approx. 100% of shares were purchased and roughly 0% of the shares have been provided as compensation since acquisition by Conde Nast (AP).
We assume that none of the shares have been transferred. Investors selling illiquid pre-IPO shares is atypical. www.quora.com/Is-it-possible-or-relevant-for-a-seed-investor-to-sell-his-shares-of-a-startup-to-a-series-A-or-series-B-investor/answer/Gil-Silberman
Breakdown by round:
Conde Nast (AP) 100% acquisition was diluted by 10%, 11.1%, then 10% (multiply by 0.72)
Series B lead VC: 5%, individuals: 2/3 * 5%, other American VCs: 1/3 * 5% Diluted 11.1% by series C, then 10% by series D (multiply stake by 0.8)
Series C lead VC: 1/2 * 11.1%, individuals: 1/18 * 11.1%, Dubai VC: 1/18 * 11.1%, American VCs: 7/18 * 11.1% Diluted 10% by series D (multiply by 0.9)
Series D: 5% Tencent, 5% American VCs No dilution yet (multiply by 1.0)
Calculations:
Conde Nast (AP) : 100% * 0.72 = 72%
: 100% * 0.72 = American VCs : (5% + 1/3 * 5%) * 0.8 + (1/2 * 11.1% + 7/18 * 11.1%) * 0.9 + 5% * 1.0 = 19.21%
: (5% + 1/3 * 5%) * 0.8 + (1/2 * 11.1% + 7/18 * 11.1%) * 0.9 + 5% * 1.0 = American individuals : (2/3 * 5%) * 0.8 + (1/18 * 11.1%) * 0.91 = 3.23%
: (2/3 * 5%) * 0.8 + (1/18 * 11.1%) * 0.91 = Dubai VC : (1/18 * 11.1%) * 0.9 = 0.56%
: (1/18 * 11.1%) * 0.9 = Tencent : 5% * 1.0 = 5%
: 5% * 1.0 = Sum: 100%
Chart made with meta-chart.com


investmentwatchblog--2020-11-23--The Tesla Bull Case in Brief

The Tesla Bull Case in Brief

I have no financial position in Tesla at this point in time and no interest in initiating one within the next month .
There seems to be a strong sentiment among some that Tesla is vastly overvalued , and that the current stock price is completely unrooted in reality .
I understand the viewpoint , but don ’ t really share the belief .
That ’ s not particularly surprising as I consider myself a Tesla optimist .
I decided to present in brief the case for Tesla ’ s valuation as I understand it .
Tesla ’ s current @ @ @ @ @ @ @ , especially when compared to their peers in the automotive sector as these charts so clearly illustrate .
In fact , the charts actually understate things as Tesla ’ s market cap currently seats at around $ 464 billion .
You could add another Daimler to the US and EU listed companies and they would still have a lower market capitalisation than Tesla .
This really is the case for Tesla being overvalued : it ’ s automotive revenues is many times it ’ s current market capitalisation .
Per MarketWatch , Tesla @ @ @ @ @ @ @ so it ’ s not as if Tesla is especially profitable either .
On a fundamentals basis , Tesla appears to be grossly overvalued .
The above chart doesn ’ t necessarily indicate that Tesla ’ s current market capitalisation is an extremely speculative bubble that could burst soon , but more that Tesla is not valued based on its current financial situation .
Tesla is valued as an extreme growth company , and it ’ s growth over the past five years bears this out .
Over the last decade , Tesla @ @ @ @ @ @ @ s reason to believe that they can continue to show impressive growth ( albeit lowered going forward ) .
The first two quarters of 2020 were battered by a pandemic ( Tesla factories faced lockdowns due to the pandemic ) , and as a result are somewhat of an exception .
There were no lockdowns during Q3 .
Looking at Tesla ’ s Q3 results , we see that the formidable growth story continues ; Wall Street seems to expect the growth story to continue .
Per Market Insider , here are the @ @ @ @ @ @ @ years : I personally think that analyst consensus estimates are significantly underestimating Tesla ’ s growth .
In particular their figures for 2020 seem off by $ 2 billion or more .
Analyst estimates for Q3 2020 were off by $ 495 million , and the estimate of $ 9,884M for Q4 seems off by around $ 1,500M ( assuming Tesla meets the 180K delivery target ) without accounting for the recognition of any deferred revenue .
Tesla had $ 1,258M in deferred revenue at the end of Q3 .
This may seem @ @ @ @ @ @ @ to hold me to do this on January 28th 2021 .
Despite their ( potential ) underestimation of Tesla , analysts expect a 5 year CAGR in 2024 of 33 % .
Tesla is expected to continue to show formidable growth to the end of the decade .
Tesla would execute on this formidable growth story through capital expenditure .
They will build numerous service centres and gigafactories .
The goal is to have giga factories on all 6 economic continents ( with some continents having several factories ) in order to lower @ @ @ @ @ @ @ and to streamline logistics .
Currently , Tesla is building two new gigafactories in Berlin and Austin and is currently expanding Giga Shanghai .
An inherent assumption is that the market has the demand to absorb all this extra supply .
Many states have committed to phasing out ICE vehicles .
Around 13 states have committed to phasing out ICE vehicles on or before 2030 .
Over the coming decade , the EV total addressable market is projected to grow to 27 million by 2030 ( at a CAGR of 21 % ) @ @ @ @ @ @ @ conservative .
EV sales were down in the first half of 2020 ( due to the pandemic ) , but in July sales grew 77 % YoY .
Some states have also pulled forward their timelines for phasing out fossil fuels since the forecast was initially made .
Tesla would face stiff competition going forward , but the total addressable market would grow fast enough to absorb all of Tesla ’ s growth in supply if they can successfully market their vehicles .
The risk here is that Tesla would fail to execute @ @ @ @ @ @ @ ’ t large enough .
As an optimist , I ’ m fine betting on Tesla ’ s ability to execute .
To fund the massive expansion expected of them , Tesla would need to spend a lot on capital expenditure .
Fortunately , access to capital is not a problem for Tesla .
• Tesla ’ s cash on hand at the end of Q3 2020 was $ 14.5 billion .
• Per their 10Q filing this is already sufficient to fund their capex needs up to 2023 .
• Free cash @ @ @ @ @ @ @ .
• Giving their current market capitalisation ( $ 464 billion ) and the mandatory demand from index funds on their inclusion ( $ 60 billion ) , Tesla has an opportunity to raise $ 10 – $ 20 billion in a new capital raise .
• A $ 20 billion raise would give them enough cash on hand at the end of 2020 to finance their expansion plans for several years going forward .
• Free cash flow is expected to rise going forward : • In Q3 there was a 234 @ @ @ @ @ @ @ increase YoY .
• Tesla has been seeing increased efficiency of capital expenditures .
Another component of the Tesla bull case is that in addition to hyper growth in revenues , Tesla ’ s profit margins would also rise significantly over the next decade .
This is readily apparent if we look at Tesla ’ s past four quarters .
Automotive gross margins have steadily risen from 22.8 % a year ago to 25.4 % last quarter and seem set to continue their upwards trajectory .
Total gross margins have risen from 18.9 @ @ @ @ @ @ @ good reasons to expect the rise to continue and maybe even accelerate going forward : As Tesla continues to ramp up production and innovate , they will be able to drive down the manufacturing cost of their vehicles , benefit even further from economies of scale ( both in their production and their supply lines as EV demand heats up globally ) .
Tesla ’ s capital expenditure will become even more efficient ; they will be able to squeeze out more manufacturing capacity , from the same amount of capital expenditures .
@ @ @ @ @ @ @ is apparent when you compare their capex expenditure in 2020 ( construction of Giga Berlin , Giga Texas , Fremont Model Y ramp , and expansion of Giga Shanghai ) to capex expenditure in 2017 ( Fremont Model 3 ramp ) .
Despite the lower capex in 2020 , Tesla is building a lot more cars .
In addition to the aforementioned favourable trends , there are concrete reasons to expect Tesla to perform very well on the capex efficiency front over the next decade .
At Tesla ’ s battery day , @ @ @ @ @ @ @ increases in efficiency .
Tesla is forecasting a 69 % !
!
!
increase in capex efficiency in the coming years .
Furthermore , the cost of batteries is forecast to fall by as much as 56 % .
Batteries are a significant component of the total cost , and the reduction in the cost of batteries would further improve Tesla ’ s margins .
Aside from batteries , and capex efficiency , Tesla should also be able to drive down the cost of manufacturing other components of their electric cars due to @ @ @ @ @ @ @ would pass on some of these cost savings to the consumer , they wouldn ’ t pass on all of them .
This is evidenced by Tesla ’ s improved margins in 2020 despite several price cuts .
Tesla ’ s network services are included with their automotive revenues , but represent a novel high margin business that isn ’ t part of the traditional automotive playbook .
Using Tesla ’ s fleet as the platform , Tesla can sell software products , subscriptions and other services to their customers .
The recurring @ @ @ @ @ @ @ cause for optimism ( especially given the potential high margins ) .
• Software • Enhanced Autopilot : $ 4,000 • This isn ’ t currently available was previously an option Tesla has only a few such products now , but they would likely develop more such products in time .
Morgan Stanley analyst Adam Jonas referred to this as “ the internet of cars ” .
It ’ s a common statement among Tesla bulls that Tesla is not just an automaker .
In my experience sceptics tend to be annoyed by @ @ @ @ @ @ @ that the supermajority of Tesla ’ s revenue comes from traditional automotive endeavours ( selling their cars ) .
While this is true now , it ’ s not necessarily the case 10 years from now , and there ’ s reason to believe that traditional automotive activities may no longer constitute a majority of Tesla ’ s revenue , and may represent an even smaller portion of Tesla ’ s profits .
I ’ ll cover some other businesses of Tesla ’ s that are poised to grow over the next 10 @ @ @ @ @ @ @ is poised to benefit substantially from the shift towards renewable power sources .
In particular , Tesla ’ s battery storage businesses stands a lot to gain .
Per the Financial Times , total energy storage capacity would grow rapidly over the coming decade to over 700 Gwh by 2030 .
The total addressable market is once again large enough to soak up hyper growth from Tesla over the next decade .
Musk himself has stated that he expects Tesla ’ s energy business to be as large as their automotive business long @ @ @ @ @ @ @ s targeted end state is 20 million cars per year ) .
If Tesla can sufficiently advance their autonomy technology , they may finally be able to launch their autonomous ridesharing network .
While Tesla ’ s autonomy technology is currently not yet up to par for this application , their ongoing beta has been rapidly improving with weekly updates .
The beta testers have been reporting significant improvements in capability since it was rolled out a month ago .
The bet is that Tesla would be able to reach superhuman driving capability @ @ @ @ @ @ @ would let them scale up operations much more quickly than geofenced competitors ( e.g .
Waymo ) .
Tesla collates extensive data regarding vehicle usage and the driving patterns of their customers .
Combined with their driver assist software , Tesla should be in a privileged position regarding risk assessments for Tesla customers .
Using their abundant available data , Tesla may be able to prepare the most compelling insurance package for a sizable fraction of Tesla drivers .
Tesla insurance may also have a synergistic relationship with Tesla ’ s warranty processing @ @ @ @ @ @ @ may be offered discounts on service that wouldn ’ t be available to customers of other insurance providers .
For public accountability purposes , I ’ ll register my Tesla expectations for this year , next year and 2025 .
I ’ m not a financial analyst or otherwise particularly financially savvy , so I ’ ll keep it pretty simple .
I ’ ll report my 25 % – 75 % confidence interval on the following metrics : The growing variation in the interquartile range is a representation of my growing uncertainty @ @ @ @ @ @ @ a price target for $ TSLA nor concrete expectations for its stock price ( I ’ ve said in public before that $ TSLA might go to $ 200 before going to $ 600 ) .
I simply believe that Tesla will demonstrate hyper growth over the next decade and have a > 10 year investment horizon , so I would be comfortable investing in $ TSLA using dollar cost averaging .
Many are dubious regarding Tesla ’ s ability to deliver on the formidable vision outlined above .
There are certainly numerous @ @ @ @ @ @ @ ability to deliver on hyper growth .
However , as mentioned above , the main challenge to the hypergrowth narrative is execution risks .
Fundamentally , it ’ s a question of if Tesla can execute on the vision presented above .
Giving their formidable track record so far ( and the comparatively less than impressive records of the sceptics ) , I ’ m willing to bet that they can .
While I have no financial position in $ TSLA , I ’ m sort of an anomalous case .
I only @ @ @ @ @ @ @ months ago , and I decided to defer any investments I would make until January 2021 to mitigate exposure to political risks .
If I did have a portfolio , I ’ d expect $ TSLA would feature in it ( probably at around a 10 % initial weighting ) .
Disclaimer : This information is only for educational purposes .
Do not make any investment decisions based on the information in this article .
Do you own due diligence or consult your financial professional before making any investment decision .

by DragonGod2718
Disclaimer
I have no financial position in Tesla at this point in time and no interest in initiating one within the next month.

Introduction
There seems to be a strong sentiment among some that Tesla is vastly overvalued, and that the current stock price is completely unrooted in reality. I understand the viewpoint, but don’t really share the belief. That’s not particularly surprising as I consider myself a Tesla optimist. I decided to present in brief the case for Tesla’s valuation as I understand it.

Overvalued?
Tesla’s current market capitalisation appears to be grossly overvalued, especially when compared to their peers in the automotive sector as these charts so clearly illustrate.
In fact, the charts actually understate things as Tesla’s market cap currently seats at around $464 billion. You could add another Daimler to the US and EU listed companies and they would still have a lower market capitalisation than Tesla.
This really is the case for Tesla being overvalued: it’s automotive revenues is many times it’s current market capitalisation. Per MarketWatch, Tesla’s trailing PE is 978.44, so it’s not as if Tesla is especially profitable either.
On a fundamentals basis, Tesla appears to be grossly overvalued.

Growth
The above chart doesn’t necessarily indicate that Tesla’s current market capitalisation is an extremely speculative bubble that could burst soon, but more that Tesla is not valued based on its current financial situation. Tesla is valued as an extreme growth company, and it’s growth over the past five years bears this out.
Revenue
Year Revenue (USD millions) Growth (%) 2008 15 – 2009 112 646.67 2010 117 4.46 2011 204 74.36% 2012 413 102.45 2013 2,013 387.41 2014 3,198 58.87 2015 4,046 26.52 2016 7,000 73.01 2017 11,759 67.99 2018 21,461 82.51 2019 24,578 14.52
Source (Macro Trends)

To contextualise this, here’s Tesla’s trailing CAGR:
Time span CAGR (%) 5 years 50.36% 7 years 79.27% 10 years 71.45%
Over the last decade, Tesla has demonstrated formidable growth. There’s reason to believe that they can continue to show impressive growth (albeit lowered going forward).
The first two quarters of 2020 were battered by a pandemic (Tesla factories faced lockdowns due to the pandemic), and as a result are somewhat of an exception. There were no lockdowns during Q3.
Looking at Tesla’s Q3 results, we see that the formidable growth story continues;
Q3 2019 Q3 2020 Growth (%) Vehicle Deliveries 97,186 139,593 44 Automotive Revenues (USD millions) 5,353 7,611 42 Storage Deployed (MW) 477 759 59 Solar Deployed 43 57 33 Energy Revenue 402 579 44 Total Revenue (USD millions) 6,303 8,771 39
Source (Tesla Investor Relations)

Going Forward
Wall Street seems to expect the growth story to continue. Per Market Insider, here are the consensus analyst estimates for the next five years:
Year Revenue (USD Millions) Growth (%) 2020 30,626 24.61 2021 44,937 46.73 2022 55,963 24.54 2023 79,620 42.27 2024 102,526 28.77
Source (Markets Insider)

I personally think that analyst consensus estimates are significantly underestimating Tesla’s growth. In particular their figures for 2020 seem off by $2 billion or more. Analyst estimates for Q3 2020 were off by $495 million, and the estimate of $9,884M for Q4 seems off by around $1,500M (assuming Tesla meets the 180K delivery target) without accounting for the recognition of any deferred revenue. Tesla had $1,258M in deferred revenue at the end of Q3.
This may seem optimistic, but you’re welcome to hold me to do this on January 28th 2021.
Despite their (potential) underestimation of Tesla, analysts expect a 5 year CAGR in 2024 of 33%. Tesla is expected to continue to show formidable growth to the end of the decade.

Expansion
Tesla would execute on this formidable growth story through capital expenditure. They will build numerous service centres and gigafactories. The goal is to have giga factories on all 6 economic continents (with some continents having several factories) in order to lower the expenses involved in distributing the cars and to streamline logistics. Currently, Tesla is building two new gigafactories in Berlin and Austin and is currently expanding Giga Shanghai.
An inherent assumption is that the market has the demand to absorb all this extra supply. Many states have committed to phasing out ICE vehicles.
Source (Wikipedia)

Around 13 states have committed to phasing out ICE vehicles on or before 2030. Over the coming decade, the EV total addressable market is projected to grow to 27 million by 2030 (at a CAGR of 21%). This again seems a bit too conservative. EV sales were down in the first half of 2020 (due to the pandemic), but in July sales grew 77% YoY. Some states have also pulled forward their timelines for phasing out fossil fuels since the forecast was initially made.
Tesla would face stiff competition going forward, but the total addressable market would grow fast enough to absorb all of Tesla’s growth in supply if they can successfully market their vehicles. The risk here is that Tesla would fail to execute not that the total addressable market isn’t large enough.
As an optimist, I’m fine betting on Tesla’s ability to execute.

Access to Capital
To fund the massive expansion expected of them, Tesla would need to spend a lot on capital expenditure. Fortunately, access to capital is not a problem for Tesla.
Tesla’s cash on hand at the end of Q3 2020 was $14.5 billion. Per their 10Q filing this is already sufficient to fund their capex needs up to 2023.
Free cash flow for the quarter was $1,395M.
Giving their current market capitalisation ($464 billion) and the mandatory demand from index funds on their inclusion ($60 billion), Tesla has an opportunity to raise $10 – $20 billion in a new capital raise. A $20 billion raise would give them enough cash on hand at the end of 2020 to finance their expansion plans for several years going forward.
Free cash flow is expected to rise going forward: In Q3 there was a 234% increase QoQ and a 276% increase YoY. Tesla has been seeing increased efficiency of capital expenditures.

Margins
Another component of the Tesla bull case is that in addition to hyper growth in revenues, Tesla’s profit margins would also rise significantly over the next decade. This is readily apparent if we look at Tesla’s past four quarters.
Source (Tesla Investor Relations)

Automotive gross margins have steadily risen from 22.8% a year ago to 25.4% last quarter and seem set to continue their upwards trajectory. Total gross margins have risen from 18.9% to 23.5%. There are good reasons to expect the rise to continue and maybe even accelerate going forward:
Manufacturing Efficiencies
Network Services

Manufacturing Efficiencies
As Tesla continues to ramp up production and innovate, they will be able to drive down the manufacturing cost of their vehicles, benefit even further from economies of scale (both in their production and their supply lines as EV demand heats up globally). Tesla’s capital expenditure will become even more efficient; they will be able to squeeze out more manufacturing capacity, from the same amount of capital expenditures.
Tesla’s rise in capex efficiency is apparent when you compare their capex expenditure in 2020 (construction of Giga Berlin, Giga Texas, Fremont Model Y ramp, and expansion of Giga Shanghai) to capex expenditure in 2017 (Fremont Model 3 ramp).
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Source (Hypercharts)

Despite the lower capex in 2020, Tesla is building a lot more cars.
Source (Statista)

In addition to the aforementioned favourable trends, there are concrete reasons to expect Tesla to perform very well on the capex efficiency front over the next decade. At Tesla’s battery day, Tesla laid out a roadmap to drastic increases in efficiency.
Source (Tesla Investor Relations)

Tesla is forecasting a 69%!!! increase in capex efficiency in the coming years.
Furthermore, the cost of batteries is forecast to fall by as much as 56%. Batteries are a significant component of the total cost, and the reduction in the cost of batteries would further improve Tesla’s margins.
Aside from batteries, and capex efficiency, Tesla should also be able to drive down the cost of manufacturing other components of their electric cars due to Wright’s Law.
While Tesla would pass on some of these cost savings to the consumer, they wouldn’t pass on all of them. This is evidenced by Tesla’s improved margins in 2020 despite several price cuts.

Network Services
Tesla’s network services are included with their automotive revenues, but represent a novel high margin business that isn’t part of the traditional automotive playbook. Using Tesla’s fleet as the platform, Tesla can sell software products, subscriptions and other services to their customers. The recurring revenue of subscriptions in particular is a cause for optimism (especially given the potential high margins).
Tesla’s existing products:
Software Full Self Driving: $10,000 Enhanced Autopilot: $4,000 This isn’t currently available was previously an option Acceleration Boosts Model 3: $2,000 Model Y: $2,000
Subscriptions Premium Connectivity: $10/month Full Self Driving: ??? Reportedly coming soon
Miscellaneous Supercharging
Tesla has only a few such products now, but they would likely develop more such products in time. Morgan Stanley analyst Adam Jonas referred to this as “the internet of cars”.

Beyond Traditional Automotive Revenues
It’s a common statement among Tesla bulls that Tesla is not just an automaker. In my experience sceptics tend to be annoyed by this and (rightly) point out that the supermajority of Tesla’s revenue comes from traditional automotive endeavours (selling their cars). While this is true now, it’s not necessarily the case 10 years from now, and there’s reason to believe that traditional automotive activities may no longer constitute a majority of Tesla’s revenue, and may represent an even smaller portion of Tesla’s profits.
I’ll cover some other businesses of Tesla’s that are poised to grow over the next 10 years:
The aforementioned Network Services
Energy
Ridesharing
Insurance

Energy
Tesla’s energy business is poised to benefit substantially from the shift towards renewable power sources. In particular, Tesla’s battery storage businesses stands a lot to gain. Per the Financial Times, total energy storage capacity would grow rapidly over the coming decade to over 700 Gwh by 2030.
Source (Financial Times)

The total addressable market is once again large enough to soak up hyper growth from Tesla over the next decade. Musk himself has stated that he expects Tesla’s energy business to be as large as their automotive business long term (a reminder that Tesla’s targeted end state is 20 million cars per year).
A refresher on Tesla Energy’s available products:
Solar Tesla solar panels: $1.49/watt (after incentives) Solar Roof
Battery Storage Power Wall (residential) Power Pack (commercial) Mega Pack (utility scale)

Ridesharing
If Tesla can sufficiently advance their autonomy technology, they may finally be able to launch their autonomous ridesharing network. While Tesla’s autonomy technology is currently not yet up to par for this application, their ongoing beta has been rapidly improving with weekly updates. The beta testers have been reporting significant improvements in capability since it was rolled out a month ago.
The bet is that Tesla would be able to reach superhuman driving capability before 2025. Their location agnostic approach would let them scale up operations much more quickly than geofenced competitors (e.g. Waymo).

Insurance
Tesla collates extensive data regarding vehicle usage and the driving patterns of their customers. Combined with their driver assist software, Tesla should be in a privileged position regarding risk assessments for Tesla customers. Using their abundant available data, Tesla may be able to prepare the most compelling insurance package for a sizable fraction of Tesla drivers.
Tesla insurance may also have a synergistic relationship with Tesla’s warranty processing and service centres. Tesla insurance customers may be offered discounts on service that wouldn’t be available to customers of other insurance providers.

Expectations
For public accountability purposes, I’ll register my Tesla expectations for this year, next year and 2025. I’m not a financial analyst or otherwise particularly financially savvy, so I’ll keep it pretty simple. I’ll report my 25% – 75% confidence interval on the following metrics:
Vehicle deliveries
Total revenue

25% 75% 2020 Deliveries 160,000 200,000 2020 Revenue (USD millions) 30,000 36,000 2021 Deliveries 800,000 1,200,000 2021 Revenue (USD millions) 48,000 78,000 2025 Deliveries 3,000,000 5,000,000 2025 Revenue (USD millions) 135,000 350,000

The growing variation in the interquartile range is a representation of my growing uncertainty about the business.
I have neither a price target for $TSLA nor concrete expectations for its stock price (I’ve said in public before that $TSLA might go to $200 before going to $600).
I simply believe that Tesla will demonstrate hyper growth over the next decade and have a > 10 year investment horizon, so I would be comfortable investing in $TSLA using dollar cost averaging.

Closing Remarks
Many are dubious regarding Tesla’s ability to deliver on the formidable vision outlined above. There are certainly numerous risks that may challenge Tesla’s ability to deliver on hyper growth. However, as mentioned above, the main challenge to the hypergrowth narrative is execution risks. Fundamentally, it’s a question of if Tesla can execute on the vision presented above. Giving their formidable track record so far (and the comparatively less than impressive records of the sceptics), I’m willing to bet that they can.

Additional Disclosure
While I have no financial position in $TSLA, I’m sort of an anomalous case. I only became interested in investing a couple of months ago, and I decided to defer any investments I would make until January 2021 to mitigate exposure to political risks. If I did have a portfolio, I’d expect $TSLA would feature in it (probably at around a 10% initial weighting).
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.


investmentwatchblog--2020-11-23--Everyone is all in. 11 of 15 valuation factors for US equities are undisputedly at record levels. Th

Everyone is all in. 11 of 15 valuation factors for US equities are undisputedly at record levels. The other 4, also near all-time highs.

Everyone is all in pic.twitter.com/g4ZCpbrwgw — Alessio Urban (@AlessioUrban) November 23, 2020
Here it is. 15 valuation factors for US equities. 11 of them are undisputedly at record levels. The other 4, also near all-time highs.t.co/yeU4w5ep6W pic.twitter.com/9YyBBtx9zx — Otavio (Tavi) Costa (@TaviCosta) November 22, 2020
Could this be the biggest story of 2021? The ratio of Financials to Tech (aka Value to Growth) looks super interesting here… $XLK $XLF pic.twitter.com/6mtGaR6nLW — Michael A. Gayed, CFA (@leadlagreport) November 22, 2020
Median $SPX stock short interest back to lowest levels…ever pic.twitter.com/TTENqAEJ8V — Teddy Vallee (@TeddyVallee) November 22, 2020
A Vicious Debt Spiral… Crescat’s November Research Letter full version: t.co/gmx1uXpgsA pic.twitter.com/HHV9cpVrPX — Crescat Capital (@Crescat_Capital) November 23, 2020
Leverage and multiples cannot grow to the sky forever. The days of risk parity strategies where investors pile into levered long bond portfolios alongside broad equity portfolios are numbered. t.co/Y5uF1gYmxA pic.twitter.com/LOf018R8ci — Kevin C. Smith, CFA (@crescatkevin) November 22, 2020


investmentwatchblog--2020-11-23--WHERE’S THE SCIENCE? As my local Board of Health ponders closing gyms and bars their own data doesn’

WHERE’S THE SCIENCE? As my local Board of Health ponders closing gyms and bars their own data doesn’t support that action:

So why close bars and gyms , sending people to spend more time in these gatherings ?
From the comments to this post , the Tennessee Department of Health data don ’ t seem to support the restrictions , or even the statement about restaurants above .
As I ’ ve said before , my concern is that they ’ re not following the science .
They ’ ve twice admitted that their own data don ’ t show bars and restaurants as significant sources of infection , yet they ’ ve continued to treat them as such .
In @ @ @ @ @ @ @ ’ t know much , going by hunch and supposition was forgivable .
Now we ’ ve got over 6 months of contact tracing data , and going by hunch and supposition isn ’ t forgivable anymore .
Any government action must at the very least show a reasonable relationship between a legitimate governmental purpose and the action taken .
At this point I don ’ t think they can show that for the bar and restaurant regulations .
UPDATE : National Study Confirms It ’ s Safe To Work Out At The @ @ @ @ @ @ @ of COVID-19 Spread in Gyms .
It ’ s a big study , though it relies on self-reporting of infections .
But , like the contact tracing data above , suggests that gyms aren ’ t much of a threat .
Face mask trial didn ’ t stop coronavirus spread , but it shows why more mask-wearing is needed .

via wbir:
Charity Menefee said that small social gatherings between friends and coworkers at homes, offices and restaurants are the most significant causes for COVID-19 cases.
So why close bars and gyms, sending people to spend more time in these gatherings? From the comments to this post, the Tennessee Department of Health data don’t seem to support the restrictions, or even the statement about restaurants above.
As I’ve said before, my concern is that they’re not following the science. They’ve twice admitted that their own data don’t show bars and restaurants as significant sources of infection, yet they’ve continued to treat them as such. In the early days, when we didn’t know much, going by hunch and supposition was forgivable. Now we’ve got over 6 months of contact tracing data, and going by hunch and supposition isn’t forgivable anymore. Any government action must at the very least show a reasonable relationship between a legitimate governmental purpose and the action taken. At this point I don’t think they can show that for the bar and restaurant regulations.
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UPDATE: National Study Confirms It’s Safe To Work Out At The Gym: Current Data Shows No Evidence of COVID-19 Spread in Gyms. It’s a big study, though it relies on self-reporting of infections. But, like the contact tracing data above, suggests that gyms aren’t much of a threat.
Face mask trial didn’t stop coronavirus spread, but it shows why more mask-wearing is needed.
h/t Glenn


investmentwatchblog--2020-11-23--Trump Is Winning a Second Term (and the market knows it)

The market is closed Thursday for Thanksgiving while Friday is only a half day .
As such , this is a holiday week and most of Wall Street will be away from their desks .
This means we can see greater volatility as trading volumes will be very light this week .
This means the few traders/funds/ institutions that will be active this week will have a much easier time moving the market .
The bigger news concerns what is happening in the political arena in the U.S .
The mainstream media continues to push the completely false narrative that @ @ @ @ @ @ @ the United States .
The people claiming this are either ignorant or lying .
Unless President Trump concedes , Joe Biden has NOT won anything .
This is not opinion .
This is fact .
NO ONE has won the election until the states formally cast their electoral college votes on December 14th .
That is how things work under normal circumstances .
However , this election is anything but normal .
First and foremost , the margin of victory for Joe Biden in most swing states is under 0.5 % .
, @ @ @ @ @ @ @ is MANDATORY .
Secondly , there are multiple lawsuits , some from the Trump campaign , others from private citizens , and some from state legislators themselves arguing that there is ample evidence of voter fraud and vote manipulation .
Once lawsuits are filed , the election is now in the court system .
This means that what I think , what you think , what the media thinks , what Joe Biden thinks , what anyone thinks but the judge ruling the case is irrelevant .
The only items that matter are @ @ @ @ @ @ @ on the case .
On top of this , what any particular judge rules is irrelevant to some degree because the Trump campaign can appeal a ruling , or take the case to a higher court , and ultimately to the Supreme Court .
This is why those pundits and media types who applauding the fact that an-Obama appointed judge ruled against the Trump campaign in Pennsylvania are myopic at best and simply ignorant at worst .
Applauding a particular court ruling as a big deal at this point is like applauding a @ @ @ @ @ @ @ of the Super Bowl : there is a LOT of time between now and when the game ends and a LOT of things can happen .
Ultimately , President Trump can take his case to the Supreme Court .
If his campaign and prove significant voter fraud ( they have several more weeks to build their case ) , then the SCOTUS can rule to have the federal vote audited , invalidated ( meaning state legislators pick the president ) or any number of specific rulings on specific states .
All of this @ @ @ @ @ @ @ during elections .
It ’ s not a question of if , but how much .
And with the SCOTUS now stacked 6-3 , or at least 5-4 conservatives to liberals , the likelihood of President Trump winning this election are MUCH HIGHER than most people realize .
And the markets know it .
The Biden campaign has made it clear that it is in favor of more lockdowns , higher taxes , greater regulations , and the Green New Deal .
Arguing that these policies are good for the stocks is LUDICROUS @ @ @ @ @ @ @ for the S & P 500 suggests a Trump win is coming .
The S & P 500 broke out of a three-month consolidation phase last week .
It has since back-tested this breakout , which suggests it is the REAL DEAL and the start of the new major leg higher .
If you find that hard to believe , consider that the Energy sector ( XLE ) has been THE top performing sector since election night .
Indeed , XLE has more than TRIPLED the performance of the Tech sector ( XLK @ @ @ @ @ @ @ .
President Trump has made it clear he wants fracking and all domestic production of oil pushed aggressively in his second term .
By way of contrast , Joe Biden has made it clear he is against fracking and wants to push for clean energy in the U.S. Who do you think the market is predicting as winner of this election ?
The pro-Oil candidate or the pro-climate change candidate ?
With that in mind , I stand by my original forecast that President Trump will end up winning this election .
And @ @ @ @ @ @ @ our new special report titled… The MAGA Portfolio : Five Investments That Will Make Fortunes During Trump ’ s Second Term .
In it , we detail five unique investments that we expect will produce the most extraordinary gains during President Trump ’ s second term .
Each one of these investments is in a unique position to profit from the combination of Trump economic reforms and Fed monetary easing , combining high growth opportunities with extreme profitability .
We are offering this report exclusively to subscribers of our e-letter Gains Pains & @ @ @ @ @ @ @ please swing by :

The market is closed Thursday for Thanksgiving while Friday is only a half day. As such, this is a holiday week and most of Wall Street will be away from their desks.
This means we can see greater volatility as trading volumes will be very light this week. This means the few traders/funds/ institutions that will be active this week will have a much easier time moving the market.
The bigger news concerns what is happening in the political arena in the U.S.
The mainstream media continues to push the completely false narrative that Joe Biden is the next president of the United States.
The people claiming this are either ignorant or lying. Unless President Trump concedes, Joe Biden has NOT won anything. This is not opinion. This is fact. NO ONE has won the election until the states formally cast their electoral college votes on December 14th.
That is how things work under normal circumstances. However, this election is anything but normal.
First and foremost, the margin of victory for Joe Biden in most swing states is under 0.5%., By law, this means a recount is MANDATORY.
Secondly, there are multiple lawsuits, some from the Trump campaign, others from private citizens, and some from state legislators themselves arguing that there is ample evidence of voter fraud and vote manipulation.
Once lawsuits are filed, the election is now in the court system.
This means that what I think, what you think, what the media thinks, what Joe Biden thinks, what anyone thinks but the judge ruling the case is irrelevant. The only items that matter are the evidence and what the judge rules on the case.
On top of this, what any particular judge rules is irrelevant to some degree because the Trump campaign can appeal a ruling, or take the case to a higher court, and ultimately to the Supreme Court.
This is why those pundits and media types who applauding the fact that an-Obama appointed judge ruled against the Trump campaign in Pennsylvania are myopic at best and simply ignorant at worst.
Applauding a particular court ruling as a big deal at this point is like applauding a field goal in the first three minutes of the Super Bowl: there is a LOT of time between now and when the game ends and a LOT of things can happen.
Ultimately, President Trump can take his case to the Supreme Court. If his campaign and prove significant voter fraud (they have several more weeks to build their case), then the SCOTUS can rule to have the federal vote audited, invalidated (meaning state legislators pick the president) or any number of specific rulings on specific states.
All of this FAVORS Trump.
Everyone knows fraud occurs during elections. It’s not a question of if, but how much. And with the SCOTUS now stacked 6-3, or at least 5-4 conservatives to liberals, the likelihood of President Trump winning this election are MUCH HIGHER than most people realize.
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And the markets know it.
The Biden campaign has made it clear that it is in favor of more lockdowns, higher taxes, greater regulations, and the Green New Deal. Arguing that these policies are good for the stocks is LUDICROUS.
Which is why the recent breakout for the S&P 500 suggests a Trump win is coming. The S&P 500 broke out of a three-month consolidation phase last week. It has since back-tested this breakout, which suggests it is the REAL DEAL and the start of the new major leg higher.
If you find that hard to believe, consider that the Energy sector (XLE) has been THE top performing sector since election night. Indeed, XLE has more than TRIPLED the performance of the Tech sector (XLK) which was the former market leader.
President Trump has made it clear he wants fracking and all domestic production of oil pushed aggressively in his second term. By way of contrast, Joe Biden has made it clear he is against fracking and wants to push for clean energy in the U.S.
Who do you think the market is predicting as winner of this election? The pro-Oil candidate or the pro-climate change candidate?
With that in mind, I stand by my original forecast that President Trump will end up winning this election. And our clients are already doing this with our new special report titled…
The MAGA Portfolio: Five Investments That Will Make Fortunes During Trump’s Second Term.
In it, we detail five unique investments that we expect will produce the most extraordinary gains during President Trump’s second term.
Each one of these investments is in a unique position to profit from the combination of Trump economic reforms and Fed monetary easing, combining high growth opportunities with extreme profitability.
We are offering this report exclusively to subscribers of our e-letter Gains Pains & Capital. To pick up your copy please swing by:
phoenixcapitalmarketing.com/MAGA.html
Best Regards
Graham Summers
Chief Market Strategist
Phoenix Capital Research