11.23.13: Weekend Linkfest – Other Investors Worth Reading

There are a lot of quality “linkfests” which get distributed daily / weekly.

I have to do this since it forces me to read these investors (both men and women). I want to know what this group is thinking.

Gary Morrow, a long-time friend from TheStreet.com now posts to “This Week on Wall Street” with some hedge fund friends. Here is their latest. Note the Investor’s Intelligence Survey. Bespoke had something different in their weekly letter that was sent out Friday night, 11/22/13. Bespoke noted that the AAII survey “got more bearish this week”. Bearish sentiment rose to 29.5% from 27.5% last week. I continue to think that the key distinguishing characteristic about this SP 500 rally, is how bearish “sentiment” turns so rapidly. It is just an opinion, but I think that it is keeping a bid under the stock market.

Josh Brown, at TheReformedBroker, on another hedgie shutting down. I can only assume that Josh and others believe (when they cite this article) that today’s market is similar to the late 1990’s, and are drawing parallels to Julian Robertson of Tiger Management shutting his doors near the peak of the tech and large-cap growth stock bubble in 1999 – 2000. My only rebuttal or point to make, is “why not go long ?”. Who is the guy in Seattle (?) – Bill Fleckenstein – who was short the market in the late 1990’s, was long silver and gold (absolutely loved silver as a long, and even sat on the Board of Pan-American Silver (PAAS) I believe), and then started a long-only equity fund near the bottom in early, 2009. The guy is a genius in my book. I don’t know him at all, but whenever he appears in the press I try to read everything said about him. To Josh’s point (or maybe someone else said it), “do these guys quit, just because they prefer to make money for clients being short ?” or are they so ideologically rigorous in terms of valuation that when the market trades over 1.5(x) book value they think the market is so obscenely overvalued that it is beneath them to be long. It isn’t my place to question anyone’s motives or even methodology. To me, it represents almost a ideological martyrdom, to garner attention, but that could be an unfair judgment too.

In 2009, we were fired by our largest client at that time, and as the old saying goes, “that one left a mark”. A guy who started a small business in Chicago with himself and one employee, now has 1,500 people on his payroll and has probably been one of the most successful small business start-ups in the last 20 years, anywhere in the country. I’d rather not say anything else about him to protect his confidentiality since he prefers to remain very low key and under the radar, but when I read Josh Brown’s article about ultra high net worth advisors and how the ultra-rich get killed in the markets as well, I couldn’t help but think of that phone call. The change from Trinity was blamed on the “accountant recommendation”, which I thought was somewhat cheesy, but I don’t think he understood the “all the assets have a correlation of 1.0” type scenario. I really can’t blame him either. It is my job to protect clients from that type of event. We are still friends and exchange emails every once in a while. It was like a 1-day no-fault divorce. The problem with this business (if you can call it that) is that clients become friends, but in the end, they are just clients. You can do the job, or you can’t.

Ryan Detrick, from Schaeffers, on the seasonality of late November stock returns. (I guess Tumblr is the new Twitter.)

Ryan Detrick (again) with the SP 500 up 7 weeks in a row. What do returns look like 2 months later ? Maybe our 2014 SP 500 scenario isn’t too scary after all.

Norm Conley of JAG Capital out of St. Louis, hasn’t tweeted in a while, since November 15th. His thoughts are missed.

From Bob Brinker’s Twitter feed, maybe this will help the municipal bond market sustain a bid. We own BlackRock’s leveraged closed-end fund (ticker – MEN), yielding 7%. It is hard to find that in the taxable market.

Jeffrey Kleintop, LPL Strategist, one of the best thinkers on the Street in our opinion.

@Soberlook on the frothy credit levels. We have sold most of our corporate credit exposure, simply from a duration perspective, but if I think the SP 500 could have another decent year in 2014, as I do, then credit spreads should remain tight, and offer some protection to interest rate risk. Still if you are looking for absolute return, you probably need to be in the TBF or TBT.

JPM, BAC and CME – all Financials – all had a good week this past week, up 4.5% – 5%. Breaking out for sure. (Long all. Biggest financial positions are GS and SCHW.) Hard to find oversold stocks, but Facebook (FB) is actually one now oversold. (Long FB.) Tesla getting to that point, almost near its 200 day m/a. Never owned.

Given our sector update last night, Energy looks the most interesting for clients. Never been a good energy investor. Integrated oils, and oil service names are the only names we’ve ever bought for clients.

Enough for this weekend. Gotta go. Hawks vs. Vancouver Canucks in about 10 minutes.

Trinity Asset Management, Inc. by:

Brian Gilmartin, CFA

Portfolio manager



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