Posts filed under “Analysts”

Curse of the Macro Tourists

Scene: Dinner, Monday night

Dramatis Personae: party of 8, including Fed staffer, Fund manager, VC, Trader, Media, et. al. (Notably absent were economists of any flavor, though some were present for pre-dinner drinks).

Discussion: Post-mortem of Bernanke Q&A at press conference, how & when the Fed unwinds, whether the economy is strong enough to withstand the taper, Just how screwed is China? and calls for the return of Lakshman Achuthan.

Investment Conclusion: Liquidate everything! Run! Hide!


Every now and again, a phrase catches my ear that perfectly sums up some phenomena. Recently, that phrase has been “Macro Tourist.” I do not recall exactly when I first heard it (nor who can lay claim to inventing it) but I suspect I first noticed it in this Mark Dow post from last summer. Dow was looking at why so many large and well known hedge funds were stinking the joint up. The obvious answer was their leaving a core competency (Value, Activist, Arbitrage, etc.) and jumping into the global Macro style of investing, despite a lack of experience and expertise in that arena. (You will find a short list of Macro Tourist themed articles at the end of this post).

What is the relationship between the Macro Tourists and last night’s dinner? As the conversation turned to all things Fed, Global, and economic, I found myself wanting to liquidate all of our equities and hide in a cave.

Looking at the conversation in the cool light of the morning dawn — consuming French Roast instead of Italian Barolo — presented a very different perspective. There was nothing said last night that was not true last month or last quarter or last year. Sure, we may be looking at a 1% print for Q2; we also have seen an inevitable spike up in rates. But the overall discussion could just have easily been had in 2010 or 2011 with the same resulting desire to raise cash and hide.

This emotional reaction to narrative (such as the above) is the source of many an investor’s biggest problem. Giving up on their plan, allowing the tale to trump the data, getting pulled into an eddy away from their comfort zone can become an expensive indulgence. I consider myself fortunate to have developed enough self-awareness over the years to recognize and contextualize these inputs for what they are: Transitory, compelling, ruinous bedtime stories.

Why ruinous? Experience teaches that the Macro approach to investing can be very problematic for many people. The first problem is the narrative form, discussed above. But the bigger issue lay with price. How much of the Macro story is truly a Variant Perception? What was discussed at dinner that was not well known, or at least understood by key players? Most importantly, how much of this has already been acted on in the market?

Variant Perception is quite a rarity. It happens every now and again, but that truly unique and insightful analysis not understood or even known to the investing world is not a typical event. When it gets made, when it happens before it being widely recognized and then acted upon, it presents an enormous possibility for the patient investor. Tremendous fortunes and made and lost on these beautiful and rare insights.

When considering Macro Tourism as an investing approach, ask yourself these simple questions: Is this known? Has it already been acted on? Is this trade late to the party? How early might it be, and how upside are you willing to get before it begins to pay off?

Search for the rare bird, but do not be confused by the common street pigeon . . . lest you become one.


Other articles about “Macro Tourists”:

• John Paulson (Motley Fool)

• Daniel Loeb (Guru Focus)

• Kyle Bass (Business Insider)

• Bill Ackman (Guru Focus)

• David Einhorn (Reuters)

And too many others to note . . .

Folks like Gorge Soros and Jim Rogers have been playing in that sand box for so long, we need to call them macro residents . . .

Category: Analysts, Apprenticed Investor, Investing, Psychology

Time for an important lesson with someone else picking up the tuition costs: It is the Meredith Whitney story, and it is instructive to those of us who work in finance and occasionally engage the media. Any of you who might think an outrageous call is the way to achieve lasting fame and fortune on…Read More

Category: Analysts, Credit, Really, really bad calls

US vs Canadian Bank Regulations: Money Boo Boo

Internal e-mails implicate credit rating agencies in the 2008 financial crisis.

Money Boo Boo

Monday June 24, 2013 (04:33)


Jason Jones teaches regulation-loving Canadian bankers the advantages of harmless free-market fun.

Money Boo Boo – The Canadian Banking System

Monday June 24, 2013 (05:49)

Category: Analysts, Bailouts, Derivatives, Humor, Really, really bad calls, Regulation, Television, Video

World’s Shortest Analyst Report

      Hat tip Mike P  

Category: Analysts, Trading

Analysts Are Not Paid to Make Stock Recommendations

Source: SSRN, Motley Fool   News flash: Analysts exist to generate investment banking business and trading commissions; they are not here to assist you in making stock buys or sells. That is the conclusion of a recent study, but let’s be blunt: If you have been paying attention, you probably already knew this. At this…Read More

Category: Analysts, Investing, Trading

US Quantitative Primer 2013

Last week, I mentioned Merrill Lynch’s Market Analysis Technical Handbook. I was somewhat smitten by the wire house attempt to explain the basics of technicals to a broader layperson audience. Several BP readers at Mother Merrill (as she used to be known) directed my attention to another annual release: US Quantitative Primer 2013. It is…Read More

Category: Analysts, Digital Media, Quantitative

Bloomberg Economics: Free 2 Month Trial

Yesterday, I used a chart from Bloomberg Economics. An emailer asked: “How do I get access to that publication? The answer is below:     Click fro a trial subscription Source: Bloomberg

Category: Analysts, Digital Media, Financial Press

Dave Ramsey Does Not Understand “All Time Highs”

My wife happened to mention hearing a financial guru on the radio a little while back. I am always interested in knowing what financial gurus are saying (and thinking maybe it was Ritholtz or Rosenberg or Levkovich or someone else I personally know). I asked her who it was.

“Dave Ramsey,” she said.

“Dave who?” was my reply.

So I asked around – colleagues, friends in the business, etc. etc. Couldn’t get a bid. I turned to The Google and in short order realized that Dave Ramsey is the male version of Suze Orman. He seems to be a self-promoter with little actual experience or knowledge of financial markets or economics. But what really struck me was the condescending, patronizing tone he directs toward his callers. This a site refers to him as a “Christian financial guru,” yet he doesn’t seem to preach in very Christ-like manner.

I could write a thesis about all that’s wrong with this ilk. But rather than take the 30,000 feet view (that’s BR’s province), let’s get granular:

Should I Invest In Gold?

Once again, investors are reacting to the uncertainty in the stock market by investing in gold. Since the third quarter of 2010, the price of gold has jumped 40%, peaking at just over $1,900 an ounce. The “experts” are touting gold as the only “safe” investment in a volatile market.

So is now the time to buy gold?

No way!

Think about it: Why would you buy something at its all-time high?

Before we move on to the idiocy of the final sentence, let’s consider another aspect of what’s going on here.

Later in that same post:

Gold Stash is a quality company that will gladly buy any of your unused gold and silver. They do business the right way, going above and beyond. Dave wouldn’t endorse them if they did any less. With Gold Stash, you can take advantage of the high gold prices in a safe and responsible way.

So, not only is Mr. Ramsey advising against gold under nearly all circumstances, he’s recommending selling it to a company he “endorses,” who coinicentally happens to be an advertiser?

Oct. 13, 2009: “He never has, and he never will [advise buying gold]. Companies like offer an outlet for you to make some money on your unwanted or unneeded jewelry. Dave will only endorse companies that he trusts, and Gold Stash is reputable, honest and absolutely trustworthy.” Gold price then: About $1,050/oz.).

Who is Gold Stash? Hmm. Well, there’s a tab that allows us to see who “Dave Recommends.” There’s Gold Stash. Funny thing is that at the bottom of that drop down is a link for us to “View all Advertisers.”



Gold Stash is an advertiser of his, and Dave wholeheartedly endorses them (and only them, apparently) and, coincidentally, is always – 100 percent of the time – bearish gold. Dave is so concerned about your financial well-being that he’s going to let those suckers at Gold Stash take the hit on your soon-to-be-worthless gold. What a guy.

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Category: Analysts, Really, really bad calls, Think Tank, UnGuru

Sheila Bair: On Ratings Agencies, Bank Leverage

Former Chairman of the FDIC Sheila Bair talks about President Barack Obama’s nomination of Jack Lew to Secreatery of the Treasury. She speaks on Bloomberg Television’s “Bloomberg Surveillance.”

Bair: “I Would Like to See Justice Done on Ratings”

Bair Says Ratings Companies Need Regulatory Changes


Banks Still Have Too Much Leverage, Bair Says


Is Wells Fargo Still the White Knight of Banking?

Source: Bloomberg, Jan. 11 2013

Category: Analysts, Credit, Video

The Collossal Gall of Bad Apple Investors

“In the last quarter of last year, especially with the change in tax rate coming, I think Investors got exasperated. There were a number of investors that this was their largest holding, And it destroyed their record for last year. There were ramifications for what the board did.”

-Lawrence Haverty, Gamco Investors on Apple’s $137 billion dollar cash hoard


That absurd quote above was heard this morning on Bloomberg with Tom Keene interviewing Haverty. The display of investing acumen cognitive dissonance is rather ironic.

As a longstanding Apple guy (think Mac Classic in 1989) and someone who was pushing the stock post iPod at $15 (pre-split), I cannot help but be astounded at the current crop of Apple shareholders. Wall Street has always misunderstood Apple but its now getting ridiculous.

Recall that during the run up from a near bankruptcy to the largest company on earth, creatively destroying all competitors in its path, the value guys all touted the cash as a reason the company was cheap. Ex-Cash, its a 9 P/E we heard.

Now, they insist the cash must be returned to its rightful owners — them.

If you want to know why Apple is holding onto all that money (aside from obvious tax considerations), just look at Dell. It is a cautionary tale than any technology company can miss the next shifting tech trend and quickly become irrelevant. Bang, you are the next Maytag. Even Microsoft’s history offers a foreboding look at using special dividends as a salve to investors concerned only with their quarterly P&L (and personal compensation via 2 & 20 fee structures).

David Einhorn is a great investor (and a nice guy), but he joined the Apple party somewhat late, and suffered a setback last year with the rest of shareholders once the law of big numbers set in. He is now suing the company because they have too much cash.

My takeaway is that Graham & Dodd value investors are terrible at buying technology companies (They don’t know how to manage positions)

Now we have guys like Lawrence Haverty the Gamco portfolio manager, who is the source of the quote above. Boo hoo for the investors who feasted on the way up, but — WTF?!? – saw a performance setback because after a 10,000% move, Apple now gave back 30%?

The cognitive dissonance comes from not admitting their error — hanging around too long — and instead blaming the board.

My criticism of the critics is not Monday morning quarterbacking — recall that we took some Apple off the table last year ($625-650) and advised clients to do the same. And we further took that warning public back in October and November of 2012. Those who overstayed their welcomes have only themselves to blame. (Aren’t hedge funds supposed to be, well, “hedged?”)

What should Apple do? For legal reasons, they should hear what these activist shareholder are suggesting, giving them a thorough hearing out, with all attendant chin stroking and “Hmmm, interesting” — prior to ignoring them.

Apple has a long-term strategic plan which for obvious competitive reasons is top secret. Sorry, activist investors, but we cannot share them with you because it would give an advantage to competitors like Samsung and Google and Amazon and Facebook. But rest assured, we have a plan.

However, Apple can tell investors that their strategies may or may not include the following:

-Funding a separate R&D division (like Xerox Parc) to keep fostering “outside the box” innovations;

-Creating a subscription based unlimited streaming music business;

-Make a series of strategic acquisitions (such as Pandora or Twitter);

-Funding a long term Venture Capital division to foster more innovations for the Apple ecosystem

-Supersecret plan X! Its so secret, it would risk of billions of dollars in business, so excuse us if we cannot tell you.


Technology is a fast moving sector of the economy, where trends shift quickly and alliances change overnight. Having a cash hoard gives Apple maximum flexibility to deal with this for their future.

Sorry if after 30 years, changing the dynamic in no less than 6 industries, creating the biggest technology firm in the world and briefly, the biggest company of any sort on the planet, we had a bad couple of quarters. That was inevitable.

It was obvious that Apple had to eventually run into the law of large numbers. Perhaps less obvious was the law of activist fund managers:  No matter how much money a company makes for investors, they all eventually want more . . .


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Category: Analysts, Really, really bad calls, Technology, Trading