Why Active Investing is Better Than Passive Investing

 

Active Vs Passive Cropped

The difference between passive and active investing is not difficult to understand. But even so, my standard attempts to explain the concept usually cause my friends and family’s eyes to glaze over….

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The 3 Reasons Druckenmiller is Bullish On Amazon and Why You Should Be Too

Legendary hedge fund manager Stanley Druckenmiller had a lot to say at the recent New York Times Dealbook conference.

When The Druck speaks, you should listen.

One of his more interesting segments involved him proclaiming his love for Amazon. But these aren’t just words, Druck tends to put his money where his mouth is. According to Business Insider, Druckenmiller’s family office Duquesne Capital bought a large amount of Amazon shares during the third quarter. Druckenmiller is bullish on Amazon for 3 reasons – their focus on the long term, their profitable cloud-computing business AWS, and their ability to eventually flip a switch to drastically increase profits.

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The Fed Is Hiking Rates In December And What That Means For Markets

The all important job numbers came out Friday. US employers hired at their strongest clip so far this year and more importantly wage growth ticked up.

  • Non-farm payrolls rose a seasonally adjusted 271,000 in the month of October
  • Average hourly earnings of private-sector workers rose 9 cents to $25.20
  • This puts hourly earnings up 2.5% year over year (a substantial increase in wage growth over the previous 6 years)
  • The unemployment rate fell to 5.0% (its lowest reading since April 2008)

The strong jobs print helps solidify the likelihood of seeing the Fed move rates higher in December, Morgan Stanley’s Ted Wieseman notes (via WSJ):

“Strong report, reversing the weakness seen in the prior two months. With [Chairwoman] Janet Yellen having suggested a low bar for moving in her testimony Wednesday, this should leave little doubt the Fed is going to hike rates in December barring some sort of unexpected shock in the next month.”

The market is now pricing in a 72% likelihood that the Fed will hike next month. 

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IBM: The Poster Child Of Capital Misallocation

IBM has quickly become the poster child of the popular “buybacks-trump-everything” financial engineering phenomenon. This will not end well for its stock price.

Big Blue used to lead American innovation, but not anymore. Instead, it now epitomizes everything wrong with the greedy short-term thinking that plagues c-suite ideology.

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Facebook Ready to Reach the Moon

  • Winner take all tech is manifesting itself in the market
  • Facebook is ripping to new highs on a great Q3 earnings report
  • Emphasis on long term growth instead of short term earnings makes Facebook the most loved stock on Wall Street

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Why You Need To Red Team Everything

Have you ever had an investment idea that you just knew was going to be a slam-dunk and make you a ton of money? So you put on a large position, maybe your whole nut, because why not… right? It’s a sure thing!

And you’re the genius who discovered it! Now you’re gonna ride this sucker all the way to the moon while leveraged to the tits.

You’re already asking for top shelf margaritas because your future profits are as good as in the bank. Dammit you deserve to treat yourself for all your hard work in the markets!

There’s not any possible downside to this trade. Those who say otherwise are dismissed with heartfelt sympathy for their lack of vision. Those poor fools….

Then… suddenly… the unthinkable happens. At least it’s unthinkable to you because you couldn’t conceive of such a thing.

The trade goes south.

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Invest with the Patience of a Sniper

“You dumb f*$@ing pig!! What the hell do you think you’re doing!?”

My sniper instructor screamed in my face after I had ID’d and shot a target on the stalk lane, all while remaining hidden. The beratement confused me. I had just successfully completed a stalk lane, and on one of my first attempts at Marine sniper school too. This is not an easy thing to do. Luckily, I had plenty of time to ponder my instructor’s “feedback” as I did push ups in a full ghillie suit with my rifle and gear strapped on my back.

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