Seeking Alpha by Adding Beta

It's going to be an eventful Sunday (similar to those ones back in 2008/2009) when Washington is busy cooking something to deal with nation and world economies from plunging into a "cliff". Finally on last day, politicians would wake up and come up with some deal to avoid "fiscal cliff" and declare it as victory that they saved 98-99% of people from dreadful tax increases. When it comes to politicians, it always have to come to last day to make a deal. Maybe that's art of politics! Most likely Sunday on prime time TV, all 5 "leaders" would come on TV and announce that they have a deal to avoid tax-increases by 99% of Americans and would work together for larger deal on debt reduction and so on. World markets would cheer with DOW jumping up more than 200 points on Monday and everyone would welcome 2013 with late night parties! Since 2013 is almost here, here are my new year recommendations. Caveat: Please invest only after doing your own analysis

You must be wondering if I did spell check on title of this blog. If you are in America, you would understand what I mean by "Cliffmas" since not a day goes by when we don't hear about "Fiscal Cliff" in America. Fiscal Cliff is nothing but a name given to a situation which our politicians have created by agreeing to a deadline of Jan 1, 2013 when automatic tax increases for all Americans kick in and significant spending cuts also kick it - both at same time. This has potential to push America (and possibly world) in another recession in 2013. So no wonder there is so much talk about fiscal cliff in US. That's why this year it's not Christmas but rather "Cliffmas". Speaker Boehner's "Plan B" did not go thru since his own republican party did not support it. That was one of the major negotiation ploy speaker had. Now that it did not get enough support, it would be interesting on how he would deal in ongoing discussions with Preside

Now that DOW has finally touched 12500, I am changing my outlook for stack markets. It is ready to bounce back and DOW would close about 13000 by year end. Despite all nervousness around "fiscal cliff" and recession due to fiscal cliff, US politicians are not stupid to push country into recession. President Obama has upper hand in negotiations due to strong showing in re-election and finally republicans leaders have started showing some sense in their public talks (otherwise they know that they are going to lose control of house in 2014). So all indications are that there would be some kind of "grand bargain" between Thanksgiving and Christmas. Markets would start anticipating this starting from next week and start rising slowly but surely. This is why I am predicting DOW to close above 13000 and S&P near 1400. So what sectors I am bullish on? I still prefer REIT, Energy and Health-case sector. in REIT sector, recently I discovered new leveraged ETF - MORL (bet

Even though I was 99% sure that President Obama is going to win his re-election bid, I eagerly watched election night results till late night just to make sure that it did happen. History was made again on Nov 6, 2012 when America re-elected Mr Obama as her 45th President. This proved that 2008 was not a fluke and America is indeed ready for non-white-male President. Hats off to American People for making it happen! Now it's President Obama's turn to prove that 2008 was not a fluke and match his words with his actions. I was once more moved by his victory speech on election night and looking forward to his actions to match his speeches in next 4 years. Here are top priorities I would like him to focus and lead. Economy, Economy and Economy (you can also read as Jobs, Jobs, Jobs) Health-care for all (implementation of Obama-care without breaking the bank for country as well as businesses) Get America out of all wars (and don't start new ones) Education (make college

This is last weekend before one of the most important elections for all of us, future Americans and to some extent for world. I am personally endorsing Mr Barack Obama and congratulating him in advance for winning the election and 2nd term as President for USA. I have nothing against Mr Romney - in fact as person I like him and his values which come from his faith. However I have major differences when it comes to role of Government vs private sector with Mr Romney and his party. This was evident from last weeks effects of mega storm Sandy. If it is up to Romney and his party, they would outsource such responses from Federal government to state/local or even private companies. This is what we heard during earlier debates and we already had a taste of this during Hurricane Katrina response (when we had Republican President). Mr Obama handled response to Sandy very well by stopping his most important election campaign and focused all his energies to make sure that affected people get ne

Today morning I was wondering which "match" bay areas people would be most interested in and what would be likely outcome they would prefer. Both "matches" are over and I like results for both of them. Normally I do not follow baseball till playoffs and unless one of the Bay Areas teams are closer to world series. After lagging by 3-1, San Francisco Giants pulled am amazing feat by winning today's last game by 9-0 and hence entering world-series against Tigers. On second "match", President Obama won today's debate hands-down. Foreign policy is Obama's strongest suit and he demonstrated and articulated his vision and clarity on his approach to this very important aspect of Presidential responsibility. He also attacked Mr Romney by calling his policies as "wrong, reckless and all over the map" (which is true if anyone hears Romney's speeches in last 18 months). Now that 3rd and final Presidential Debate is over, debate scores stand

First week of October brought quite a few surprises. When week started, I thought election results would be "sealed" on Oct 3 with first Presidential debate. But given Mr Obama's lackluster debate performance, Mr. Romney got a slight opening but in the end that may not be enough (thanks God) and Mr Obama would win this election to get 2nd term. But he better practice his debating and most importantly attacking skills. I want to see Obama from 2008 who can lead from front. Hope his campaign managers learnt from first debate and would call on Mr Romney on his flip-flopping and in some cases complete lying! Then comes employment report with some good news of unemployment dipping to 7.8%. This is lowest since Obama took office. That was good news for Mr President. As usual some folks like Jack Welch started crying wolf that this number is tweaked by white house. In one tweet, Jack lost all the respect I had for him over last 20 years. He should know better that no one is st

One of the most important product launch for Apple in particular and all of tech world happened on Sept 12 and iphone5 started shipping on Friday Sept 21. This one product could be first ever $100 Billion product. I got mine on first day and has been using it for last 48 hours and I am impressed with two things which matter: Design and Speed. I used Galaxy SIII for last two months. Galaxy SIII itself is very impressive phone. But when I switched back to iphone5, there is no comparison when it comes to style and design. iphone5 is clear leader in today's smart phone world! I was little surprised that I could even get my hands on it on first day itself (for ipad I had to wait for 2 months and for iphone4 also I had to wait for 3 weeks). Looks like Tim Cook is finally putting his stamp on Apple bu making sure that enough supply is available for anyone who wants to buy it. Predictions are that over 8 million iphone5 would be sold in one weekend. That's like $4-5 Billion in revenu

It has been a while since I wrote my blog since I was just coming out of summer vacation/travel and some other personal things on family side. So many things have happened on economic front and stock markets which I wanted to write. But nothing was as important as events in last two weeks centered around two most important men in economic world: "Super"Mario Draghi and "Helicopter" Ben Bernanke. Both of them stay true to their promises of "Saving Euro at any cost" and "Printing dollars to address US high unemployment"! The markets liked what they saw and has jumped to their highest in nearly 5 years. Only time would tell us if this is "irrational exuberance" or start of a new bull market as seen during 1990's. There are so many uncertainties still around. Few of them are: US presidential elections - Obama campaign is definitely on right track and unless anything drastic happens, Obama would win second term as President of USA.

Next week Supreme Court of America would give ruling on one of the most awaited ruling in over 50 years. Would it strike out health care law in its entirety or would it hold it? Would individual mandate go but everything would remain? One way or other, this ruling would impact each and every American one way or other. Health care law is considered as one of the main policy initiative and could have as big impact as previous two initiatives - Social Security (passed in 1930s) and Medicare (passed in 1960s). So next week would not be only very important for President Obama for his re-election but most importantly for his legacy, it is also important for each and every American. With so much burden and expectations, here is I think Supreme Court ruling would come out: Would upheld most of the provisions in this law. Some of the important ones are like covering kids till age 26 on parents coverage and many others However it would strike down "individual mandate" on basis of

Finally Greece elections are over and pro-bailout parties winning slight majority over leftists should assure markets that Greece would remain in Euro and contagion to other PIIGS countries can be contained - at least for now! These elections could have profound impact on Greece, Europe and world economies and hence world markets. Lehman type moment has been avoided for now. Could this be a repeat of 2008 when Bear Sterns was rescued in March 2008 just to land into Lehman/AIG situation 6 months later in Sept 2008. Only time would tell. Hope European policy makers learn something from US policymakers actions back in 2008/2009 and take decisive actions to get ahead of crisis and provide a bazooka instead of patch-work rescue. ECB and Northern European countries has fire-power. What they need is will to use them. Whether Germans like it or not, they should start thinking of "United States of Europe" and start helping broke southern countries. Merkel may be most powerful person

May deja vu - third time in a row. If you go back in 2010 and 2011, one could have almost predicted what would happen in 2012 and could have saved tons of money by moving to cash at end of Apr. While I almost knew what was coming in May, I did not act on moving my investments to cash (luckily I told few folks who may be smarter in acting on it). Well now that May has again proved true to old saying of "Sell in May and Walk Away" and month is over, what's in store for rest of summer? Given Facebook IPO fiasco (which was supposed to be savior for markets) and continued political and policy mess in Europe, things don't look very promising. Dismal labor market conditions in USA and sudden slowing down of economies in China and India are adding fuel to the fire which Europe's lack of action has created. Here is my prediction on how it would play out: Markets would be very volatile till elections on Greece on Jun 17. Most likely Greece results would be slightly pos

Finally Facebook's IPO is here. One of the most hyped IPO (and it deserves all the hype it received) is finally here valuing Facebook at around $104 Billion - more than Cisco or Amazon as standalone or Dell/HP combined. Only time would tell if Facebook as company can grow into this valuation or is this top of its valuation! I am sure tomorrow's trading would be all about FB. I won't be surprised to see it pop over $50 at open. Interesting as I have predicted sometime back, savvy investors were taking profits out from Apple for investing in Facebook. Is it coincidental that Apple lost almost $100 Billion valuation from it's high - almost exactly same as Facebook valuation! After all stock market is all about capital moving from one company to another company. In late 1990s Yahoo/Ebay/Amzn/CSCO/MSFT were dominating stock market valuations. All the valuation moved to Google/Apple and now Facebook. It's just matter of time when capital moves from these companies to som

It's becoming too predictable - first 3 to 4 months of new year economy start looking up and along the way stock markets across the world go up. Then comes April and economic recovery starts faltering and investors start following "Sell in May and walk away" advise. Then comes "same old same old" stories from Europe. Somewhere in the middle some bank loses couple of billion dollars in few days. It happened in 2010 and 2011 and it's again happening in 2012. When are we going to get out of this pattern? Last week was interesting week across multiple fronts. Let's look at them and see if we can predict how events would turn out next week: French election results were predictable - so no real reaction Election results from Greece were un-predictable. Could this be catalyst for finally Greece leaving Europe. If Greeks are hell-bent in electing radical left, they better start preparing life without Euro . Left leader Tsipras is playing dangerous game of

Traditionally First weekend of May is start of summer movies and this time it started with a bang with Avengers breaking all records and becoming first ever movie to cross $200M mark for one Friday to Sunday collections @ Boxoffice. It broke the record by over $31 million held by last installment of Harry Potter. Myself, Yash and Guts saw it yesterday and looking at crowds, it was very apparent that this was going to break records. Regarding movie, for an action film, it was good. Main star was of course Robert Downy (aka Ironman). It would be interesting to see if Chris Nolan directed last Batman movie (which opens in mid-July) breaks this record! May is also start of another round of European roller-coaster. With two key elections wrapping up today, most likely direction of European policy would change. France is becoming socialist and Greeks are venting their anger on two main parties. It would not be surprising if Greeks had to face another election later this year. Would May 6,

As Facebook IPO date (May 17 or 24) comes near, everyone is getting ready to buy into this most awaited IPO since Google's IPO back in 2004 (same year when Facebook was founded). Only lucky few with connections to Wall Street or big brokerage accounts would get it at pre-IPO prices. Most of common investing public would have to wait to buy it on first day and given reaction to recent tech IPOs, this would most probably open 30-50% or more higher. So how does one participate in this Facebook mania without access to pre-IPO prices. Here is one way: Based on today's updated S1 filing by Facebook, ZNGA is still major source of revenue for Facebook contributing nearly 15% of revenue. As Facebook devises various schemes to diversify its revenue sources, I expect this to come down to 8-10%. That's still substantial. If we apply same financial matrix, ZNGA should be valued at about 8-10% of Facebook due to similar nature and tight co-dependence on each other. At IPO prices Facebo

Lot happened in last 3 weeks since I wrote on Sachin's 100th century. Romney sealed (almost) GOP Presidential Nomination. N. Korean had failed rocket launch (no surprise there). AOL made cool Billion $ by selling patents to Microsoft. Apple crossed $600 Billion market cap - only 2nd company to do so ever - first one was Microsoft back in Internet Bubble 1.0. But what caught my attention was Facebook buying 12 employee company Instagram for $1 Billion. This reminds heydays of Internet Bubble 1.0 when Time Warner bought AOL for $180 Billion, Cisco buying Cerent for $6.9 Billion. SJ Mercury News and WSJ were full of such news in those days. Is Silicon Valley back to its old tricks or glory days? Only time would tell but excitement would continue well into May when Facebook would have its first day of trading either on May 17 or May 24. It is one of the most awaited IPO since Google's IPO. Question to ponder is: Would Facebook be valued more than Google on it's first day of

In the world of Cricket, history was made on Friday March 16  when Sachin Tendulkar made his 100th century in international cricket - 51 in test cricket and 49 in one-day format. The significance of this record is that it will never be broken for potentially next 100 years or ever! This goes right in the league of Sir Don Bradman's record of average of 99 runs per match which had not been broken till now and will never be broken. Sachin's century of centuries came after 22 years of cricket (he started playing when he was 16 years old). Last year he and Indian team made history by winning Cricket World Cup and since then all of India was eagerly waiting for this milestone. It was a long wait but worth every moment of it. Congratulations The Little Master for making India proud. We love you! What's next for Sachin? Given his form over last 2-3 years, he still has quite a bit of cricket in him (even if he is 38 years old). But given that many senior players (Rahul Dravid)

Few weeks back I saw Brad Pitt's movie about Moneyball and I was really impressed with the concept, results and actual movie! If statistics can be applied to baseball and create a team of "undervalued" players which can break 106 year old record of continuous wins, why can't same principle be applied while selecting stocks to invest. I did Google on "Moneyball Investing" and not surprisingly found many well-written articles. So you must be wondering - why one more blog on same topic? Well - it's my take on this concept since I have been doing this in practice for last few years and in fact that's how I started my investing back in India. Here is my take on Moneyball approach to investing: Do detailed analysis and trust your analysis even if market signals are telling different story. That's how you discover "undervalued" stocks Don't go for "star" stocks e.g. Internet stocks in 2000, financing/housing stocks in 2005 and

Since the movie "Ides of March" came, I was intrigued by word "Ides". This is when my son Yash explained meaning of Ides to me and what it meant in context of "Ides of March". In brief,  a  seer  had foreseen that Julius Caesar would be harmed not later than the Ides of March and he warned him about this as "beware the Ides of March". And as we know from history, this is when he got stabbed 23 times in Roman Senate by group of conspirators. So how does this fits in today's investing world? Since Oct, stock markets have been on a tear ignoring so much uncertainty and geo-political risks around world. Last week, Dow crossed 1300 twice (but failed to close above it), S&P is at 4 year high, Nasdaq is as 11 year high. This is happening despite following: European debt mess Tensions around Iran's nuclear program - this week's economist article details risks around this. Some are predicting around 50% chance that Israel would take pr

This week Apple stock reached milestone price of $500 per share putting valuation of nearly $470 Billion to Apple. While Apple deserves every bit of this valuation, as investor one has to wonder how much more upside there is to Apple stock? I am sure you must have seen many articles on how Apple is still "cheap" at  $500. While on current valuation basis, I agree that it looks cheap, there are many potential dangers one has to worry if considering for long-term investment. Let's look at some of the past historical perspectives. Most valuable companies in recent past Microsoft in 1999 Cisco in 2000 (for few days) GE in 2000 Walmart (at some time in past one decade) GM - sometime in past 5 decades IBM - I don't know fact but I am sure it git this title at some time Exxon - Company which had this title for longest time in recent history Apple - current king of valuation Let's look at this differently: Current valuation of Apple ($470 Billion) is more than G

Jan month of 2012 is almost over and to stock investors, this month is turning out to be a pretty good month. This also means that 2012 overall would be a good year to be in stocks (as per statistics over decades). The markets are becoming more and more "stock pickers" markets. Forget about index investing in 2012. It's all about picking up right trends and stocks. Keeping that in mind, here is one idea of screening potential picks. I called it as "75% Club". The criteria is simple: Identify stocks which are down by at least 75% in last 12 months (52 week high/low should be 4:1) Research why stock is down by 75%. There can be multiple reasons for stock to go down by that much -  fears of bankruptcy (EK), change in business conditions or competition (SHLD, solar sector), stupid mistakes by management (NFLX), regulatory environment (BAC), macro-economic conditions like housing downtrend (MTG) Find out if companies identified are going to run out of money and h

Markets have been on tear for first 3 weeks of 2012. I decided to create a mock portfolio based on recommendations from my first post of 2012 by mock buying these picks in first 2 weeks at or below the prices mentioned. This portfolio is up by nearly 11% assuming all picks have equal amount of investment. Highest returns are BAC with 25% and then STX with 23%. So with yearly target of above 10% returns achieved in 3 weeks what should one do? All indexes are heading towards highs of 2011 which were reached in May and July before European mess pulled the indexes down for a flat year. European mess is no where near resolution (see debt negotiations between Greece and bondholders). These worries are again going to come to front lines in Feb/Mar. So at this time best course of action to take some gains off the table by selling some of the winners and keeping some dry powder. There would be quite a few buying opportunities when DOW would go below 12000 sometime in next 3-4 months. If one