Very good , clear analysis. But also there is factor sell in may and go away. Very big rise was on stocks and indexes this year, so who wilol be first to reap the gains? Or boom will continue through all summer?
- | Joined Jul 2008 | Status: Member | 709 Posts
{quote}Hi Split, we are here!!! I wish i have something to post, but if the market is difficult for you these days, think what it is for me!!!!!
gregofx, what do you think of Argentine oil company YPF?
{quote} Thanks for your input Greg, much appreciated! These are my facts on YPF: Full disclosure: I am long YPF
You've done a very good external analysis of YPF, but you have not taken into account the internal factors of Argentina.
Perhaps, the branch does not allow me to see the forest...
In any case, I think YPF has everything to win in the long run!!! We'll see what happens after the parliamentary elections...
- | Joined Jul 2008 | Status: Member | 709 Posts
{quote} Well, I'm not as optimistic about the development of YPF in the short term. Also, I think the worst is over for the company, but Argentina's domestic situation is not entirely favorable. And although it sounds strange, the evolution of trial witres funds has a significant impact on the local market, which is small but extremely complex due to the incidence of political and social factors. You've done a very good external analysis of YPF, but you have not taken into account the internal factors of Argentina. Perhaps, the branch does not allow...
Its very cool to have someone from there tell me about the Company
thanks Greg 
My full thesis on the stock could be found here.
By the time things clear out and the economical issues are resolved, YPF would be long gone. Just look at Greece and its equities market, the US now after the great recession. You have to be early if you want to catch the big money, and you have to be a contrarian. If you do what every else does, you can only expect to perform like them. Despite all of this, I am not saying YPF is a sure winner. It can go in either direction, one of many things could go wrong like being early in the stock or being flat out wrong. That is what makes risk management critical. I like taking risks when things are undervalued or cheap. And YPF is a good example where the stock might be undervalued, cheap and misunderstood.
{quote} Its very cool to have someone from there tell me about the Company
- | Joined Jul 2008 | Status: Member | 709 Posts
Hi Split, what do you think about Gold and Silver on this days? I heard some analysts talk about the possibility of returning to the gold pattern for the economies. What is your opinion about? Greg.
Gold is a very controversial topic these days, the gold bugs keep on hyping gold and that it is under valued and the bears argue on the opposite; mainly on that gold has no intrinsic value. In situations like these where the fundamentals are difficult to assess; I am left with two options:
A. I do nothing and watch from the sidelines
B. I participate solely on technical analysis.
One thing that boggles me is how people seem to "predict the next level gold would stop at, and reverse. How on earth do they know? Gold is a commodity that is driven by supply and demand. Saying for instance that gold would stop at $1200 is a fools game. No one really knows where gold is headed, and who ever says the opposite is deliberately misleading the public.
I recently found this stunning chart online of gold vs. TIPS, which stand for: Treasury Inflation Protected Securities. Look at the striking correlation between the two; gold declined in lien with the TIPS. The decline was and still is a decline due to deflation fears, especially now after the fed indicated slowing its Q.E programs. Investors are confused at the moment because they can't put their money in bonds due to the record low yields; they can't invest in gold and commodities due to deflation fears (which may not be completely justified); they can't invest in stocks due to the end of Q.E (the decline in equities is primarily based on over valuation and over optimism followed by panic selling when the fed signaled tapering, if they stopped for a second and though why the Fed considering slowing its program, this panic selling would have probably eased). The Fed is considering slowing its program because the economy is Improving!
But the market is overall run by its participants and if they think that the market would go down then I also find it feasible that it does, the fundamental reason behind this is that a rise in bond yields would eventually results in higher borrowing costs for US companies which would ultimately reduce corporate earnings. I personally am more inclined to be more bullish, I don't think the Fed is going to allow for yields to rise quickly. Bernanke already signal that the Fed would resume Q.E operations when ever it was deemed necessary. In this environment, I expect a choppy market. We will get a correction, and I expect we only get a correction and not a full blown crisis. If I had to put probabilities to future market directions I'd say that we have a 50% chance of going sideways, 25% declining and 25% of heading higher.
That being said, I apologize for the long explanation. Back to gold! I am short the shiny metal on technicals, and for the reason that I see a correction coming in equities. And simply put; a decline or a correction in equities would incline that participants are fearful of a slowing economy and hence deflation, which is the killer of gold. A commodity that is currently in a bust, my stops are tight however as we are about to see some interesting times.
- | Joined Jul 2008 | Status: Member | 709 Posts
{quote} Well, I totally agree with your estimate of the odds of future market directions. Your analysis is very clear and convincing.Thank you for sharing your thoughts.
Inflation or inflation expectation (up) = Yield on fixed income (up) and their prices (down) = equities (?) = gold (up)
Inflation or inflation expectation (down) = Yield on fixed income (down) and their prices (up) = equities (?) = gold (down)
I deliberately left (?) on equities, they aren't called a risky asset class out of thin air. Stocks are volatile and highly dependent on perception of its buyers and sellers. Everything in this financial world is variable and it depends on the participants perception of things, these participants are also human and are prone to mistakes. What happened in the past doesn't entirely matter because peoples perception of things change. And what happens in the future is impossible to predict because no one can know for sure how people will react in the future. What doesn't change about investors through history is their behavior, if you can analyse behavior then you have a better shot at investing or trading.
You need to be a contrarian by nature and to buy or sell things when others are doing the opposite. You can't follow the crowd and expect to achieve higher than average returns. How do you do this? You can do this by analyzing price in relation to its fundamental variables. Hence technical and fundamental analysis. My thinking on gold above goes like this:
Technicals: Price is down and in bust mode, investors are extremely bearish on the shinny metal and supply is being dumped on the market. Do I wan to come in and buy some of this supply now because it is based on herd reaction and overblown fears of deflation? No, I dont. I respect the herd and I understand that they may not be done selling. I am not brave enough to catch a falling knife with no underlying fundamentals.
Fundamentals: I can't fully analyse gold like a gold stock because it has no earnings! No business to assess and hence no benchmark to assess to other than economic inflation indicators. The chart in the previous post between gold and the TIPS was intuitive because they move in tandem. Now, if I can analyse the TIPS, then that should bring me closer to analysing gold fundamentals. TIP's are rising because the Fed are considering slowing their Q.E program because the economy is recovering. Recovering economy inclines higher inflation and that inclines fixed income yields to rise. Rising yields could incline that bond investment is declining and hence that could signal that the money is going elsewhere onto equities therefore creating a self re-enforcing cycle. The caveat of this is that all of these flow on to equities could create higher inflation which ultimately equals higher gold. I reduced my gold exposure recently due to the current environment, the market isn't wrong for too long, when it turns it creates bottoms and climaxes. I don't want to be ripped apart by a bottom climax.
I know this may seem complicated to the avid reader, I could write a freaking book on the current environment because describing it in the liens above is injustice to the other unmentioned possibilities. I may or may not be aware of the possibilities, I may or may not be right in my analysis and hence I have risk management.
P.S. I am yet to encounter a situation of: Inflation or inflation expectation (down) = Gold (up). If I was wrong about my analysis I would appreciate it if I was corrected.
- | Joined Jul 2008 | Status: Member | 709 Posts
Hi Split, what is your view about Citigroup?{image}
Update on YPF: http://www.ft.com/intl/cms/s/0/cb5d6...#axzz2ZHND4u1u
{quote} I expect the entire banking industry to head higher as interest rates rise and as the economy recovers, the fundamentals look good. As for the technicals, they also look good. I like the potential breakout, should it break out and hold; expect it to head much higher. Short term over the next month or so, watching how price reacts to resistance at $53.00 will be critical. Update on YPF: http://www.ft.com/intl/cms/s/0/cb5d6...#axzz2ZHND4u1u
Thanks Split for your share!
I wil follow Ctitigroup.
Greg.
- | Joined Jul 2008 | Status: Member | 709 Posts
Ohhh I'm sorry, I have made a mistake. I was talking about Netflix (NFLX). I leave you the chart now. {quote} {image}