Seeking Alpha by Adding Beta

Happy holidays to all. Year 2014 is almost ending. As we close on 2014, it was interesting to see that last week became kind of historical week with 3 different "communist" countries in news for different reasons. Russia - its currency ruble dropped by nearly 50% in last 6 months. Last week was capitulation when it ranged from 60 to 80. That's unheard in currency markets. Has ruble stabilized around 60. I doubt it. But worst may be over and it should hover between 40 to 60 for next few months unless Putin pulls up something like what he did in last spring. Oil dropping also did not hep Russia.  Cuba - Cuba was in news for good reasons, After nearly 55 years, US and Cuba has re-opened discussions and started process of normalizing relations. This could be good news to Cuba and America. Americans would be flocking to Cuba for vacations and buying lots of Cuban cigars North Korea - Looks like North Koreans found more effective way (than building nuclear bomb) to attack

Looks like bubbles have 7-year itch. Every 7 years one bubble starts bursting based on recent history: 2000-2001 - Dot-com bubble started to unravel 2007-2008 - Housing/Finance bubble 2014-2015 - Could this be unravelling of great energy bubble which was forming around oil and shale gas If oil price is any indication (down by nearly 45% in one year), that seems to be case. In capitalist system, there are always excesses which need to be adjusted by these bubble-bursting events. In today's WSJ, there is article about unravelling of oil boom  which provides pointer to seed of this oil bubble. Ironically it was planted right when previous housing bubble started bursting. I am sure if we go back to 2000-2001, we would notice that similar seeds were planted for housing bubble. Are these 7 year bubble cycles would be new norm? Similar to technology bubble which mostly impacted high-tech areas like Silicon Valley, this time pain would be mostly around oil producing states like Te

What a change few weeks can make? Just 5-6 weeks back, markets were collapsing and pundits were talking about possible recession coming and then come Oct 31, Japanese central bank started printing press to start printing yen. Suddenly market sentiment changed and all indexes are close to multi-year highs. So question is - what's next? Looking at historic patterns, holiday season has always been very good for markets. So I expect all clear to break some records and end the year on highs. In fact I would claim that DOW would break 18000 and S&P may touch (or come very close) to 2100. It may be little tougher for Nasdaq to break 5000 but you never know. So if don't do anything, you should expect 2-3% gain from here to year end. But having said that one could potentially start setting up for 2015. Here are some ideas with usual dis-claimers of watch out for risk. NFLX at $350 YELP at $55 SCTY below $50 SPWR below $27 CSIQ below $26 FEYE below $30 GILD below $96 BABA

We were at Berkeley campus yesterday for a course I am auditing and I noticed beautiful fall colors started appearing on trees.  Fall also brings interesting memories from markets in months of September and October. Historically September is worst performance month for markets. It is also filled with many events to remember (or not) from great recession of 2008/2009 which started with Lehman Brother's bankruptcy (anniversary of which is on Monday 9/15). So what it all means to remaining two weeks of September and upcoming October (which is normally most scary for markets) of this year. Let's look at some of the major market moving events which is coming up next week and what could be outcome of those events. FOMC 2-day meeting wrapping up on Wed 9/17 - most likely Fed would give some indication of timeline for interest rate increase by removing "considerable" word from their statement. This means interest rate increases would start in 6-9 months (1HCY2015). Marke

Given the recovery of biotech stocks over last few weeks, investors can almost say "In Biotech We Trust". Monday started with big biotech buyout with Roche buying Intermune (ITMN) for $8.5 Billion. This is a deal for company which has less than $150M yearly revenue. But hey, when did those things matter when you have a promising billion $ drug waiting for FDA approval which could come as early as Nov 2014. One could have easily made some dough by buying ITMN stock when rumors started about 2 weeks back that some European drug giants are interested in this company. Luckily I have been studying, tracking and investing in this company since mid-30s. This deal gave a major boost to other bio-techs which could be next buyout candidates. Here are some of my predictions for either buyout or positive response from FDA. Since these stocks are extremely volatile, I won't recommend them to anyone AT ALL since one could lose all their investments . The reason I am even writing th

I went into summer hibernation from updating my blog. After Modi's spectacular win, I could not find interesting enough topic for me to come out my hibernation and write about it. Finally now kids are back in school, summer trips are over, it's time for me to get into blog-writing mode. Yesterday I started auditing course at Haas School of Business, UC Berkeley (along with my friend). That is also motivation for me to write my blog which I started during my MBA days. Markets are all time high. Nasdaq is within teen percentage of all time high and it's just matter of time (most likely in early part of 2015) when Nasdaq would break it's all time record. So in such exuberant markets, what should an investor do? Go with the flow and invest in markets, sell all holdings and sit tight in cash (which may not be a bad decision given historically scary months of Sept/Oct) or pick-n-choose your stock selections. I am leaning towards 3rd option. While in long-run, efficient ma

Today is historic day for India. After three decades, one party has won majority on its own and should be able to provide a strong government free of coalition politics pulls. And all credit goes to Mr. Modi who single handedly created the history by his and his party BJP's historic win. My father would have been so happy since all his life he had been RSS/BJP member. He used to be BJP President of our small city for some time. He passed away 4 years back on exact day (16th May). I am sure his soul would be happy to see his dream of strong BJP government is getting fulfilled by Mr. Modi. Now that Modi and BJP got historic mandate, I started thinking of how this new government should be run. History provides very good lessons (and I like History). The situation in India is almost exactly same as that in USA in 1980. During those years, USA had a weak government and weak President (President Carter). India has same today. USA economy was in problem and inflation was rampant. Situat

Namo, Namo! It has become equivalent of Namaste in some sections of Indian society during these election times. Namo = Narendra Modi. After long time (nearly 20 years), one person has captured imagination, hope (and hatred on other side of aisle) in Indian politics. This reminds me US elections in 2008 when Obama ran for President. Every 5 years, there is biggest show on earth called Indian Elections when nearly 1 in 8 person on earth (815 million) have right o cast their vote and decide future of one of the most important country on earth. And the show normally carries on peacefully and reflects mood of country and generally create a viable government. Despite so much illiteracy, Indian voter have shown such level of maturity and intelligence which sometimes is missing in many developed countries. The elections which would start on Apr 7 wold finish by May 12 and counting would happen by May 16. By morning of May 17, most of the results would be out and next government formation woul

Almost 9 months back, I wrote in my blog on how Tesla is like Apple of car industry . That was when TSLA stock was around 80+ with market cap of around $10 Billion. Fast forward 9 months and TSLA stock is hovering around 210 with market cap of close to $25 Billion. And during these 9 months lot of things have changed for US economy as well as Silicon Valley. Bubble type valuations are back with FB buying WhatsApp for $19 Billion (nearly 1000 times annual revenue) and market rewarding FB in taking this bold step. While all this is happening, Apple lovers (including myself) are patiently waiting for iPhone 6 and iWatch (not for iTV). Apple as company is doing great but in these growth hungry world, stock is not getting any love. It's trading at P/E of less than 10 (after accounting for cash on balance sheet). Why? Because heyday of growth are over at Apple. Even to grow at 10%, Apple needs to not only maintain the momentum in iPhone and iPAD but also find additional product category

It is very rare to say public thanks to a public official But given what Mr. Bernanke has done as Fed chairman over last 5 years during financial crisis and almost single-handedly saved America (and to some extent) world economy from another depression, he deserves Thanks. Mr. Bernanke retired on Jan 31 and effective today he has become private citizen. I am sure he is proud of his achievements of saving world economy and most importantly saving millions and millions of jobs when politicians in Washington were fighting each other and doing nothing. We should consider ourselves fortunate that we had a student of depression era has Fed Chairman and was daring enough to follow un-conventional (and many times controversial) policies to prevent America from falling into another depression. For that Thank you and wish you best of luck Mr. Bernanke! This weekend is SuperBowl weekend. While we are little dis-appointed that 49ers did not make into SuperBowl, it's always fun to watch the B