Seeking Alpha by Adding Beta

Once in a while a week comes when so many events line up that it feels like we are reaching climax of many! Next week feels like that.  Let's look at some of the events which could reach climax Finals Week: Since both my kids are in college, I know when is Finals Week and what it means. Next week is finals week for them (one of the final is on today Sunday - who schedules final exams on Sunday?) Knowing the pressure of finals and maintaining grades, I am only imagine the relief these kids will have at end of week. I am definitely looking forward to seeing smiles on their faces after finals are over! Trade-War: While President Trump may say that there is no deadline, he has to make a call if he plans to put tariffs on rest of Chinese imports (including iPhones) on Dec 15 or not. That would give a signal to world if phase 1 deal is near or would continue what has been going on for last 12-18 months. So in a way, Dec 15 would be a day of climax for trade war between US and

Unicorn which is supposed to be rare is known to many people working in tech or general investment community. Let's look at Wikipedia definition:  The  unicorn  is a  legendary creature  that has been described since  antiquity  as a beast with a single large, pointed, spiraling  horn  projecting from its forehead. In private market (per-IPO) unicorn means startup which has billion $ valuation before IPO. This used to be very rare and hence association with unicorn! Based on latest Google search, there are over 300 "unicorns" (it used to around 100 in 2015). Let's look at journey of these unicorns from "Hope, Hype and Reality"! Hope: By definition, startups are all about hope of starting something new, changing the industry and world and improving lives of billion people. They are also about dreams of founders and employees to make big in terms of monetary rewards. VC community is able to fund these with initial capital, guidance and groom them to become

First of all, Happy Diwali - Festival of Lights to all my readers. Its' climax of series of Indian Festivals which start at end of summer and is considered biggest Indian festival. It's 5 day festival which also marks start of new Hindu calendar year! On eve of such festival which celebrates Lakshmi (Goddess of Wealth), S&P is within inches of reaching all time high. I am sure it will reach new highs next week on its way to 3100 as seasonal Santa Rally gets underway. So what changed in supposed scary October month? As in Halloween, markets have been playing "tricks" on investors with scare of upcoming recession but at same time "treating" patient investors for just staying invested. 2019 is turning out to be one of best year of returns with S&P returning over 20%. It does not feel that way due to recent drubbing software/cloud stocks took. That brings me to today's topic of Chips & Clouds! Chips: You can read this blog eating Chips and S

October is known for market moving events since most of the big downward moves (1929, 1987, 2008) have happened in Oct. Why Oct?  It could be Autumn Blues or upcoming time change with Fall Back, Back to school season... There are many potential topics for behavior finance scientists to study and may get some doctorates. This year's October started with its usual volatility in first week due to inflation and not-so-good manufacturing and services sector confidence readings. Second week  gave some positive signals on trade talks bringing back markets. Now let's look at events for remaining part of October.  All of these events again could impact markets! Brexit: Finally the deadline of Oct 31 is almost here and that has forced UK and EU to seriously talk to each other on some kind of deal - including the question of hard vs soft customs border between UK and N. Ireland. It will come down to the wire but my guess is that either deadline will be extended by another 3 months or

2019 was supposed to be multi-billion unicorns coming out to markets with big bang with their stocks going up by 50% plus on first day. But suddenly these unicorns are finding that staying private was much easier than public scrutiny on their books. WeWork had to cancel it's IPO because valuation it was getting was nearly 70% below last valuation of $47Billion. Uber and Lyft also had to reduce their valuations and they are further down by 30-40%. Peleton is down by 15% since their IPO price. Slack is down by 40% since opening day price. There are few exceptions like Zoom and Guardant Health. But generally mood is downbeat. Is IPO market having Autumn Blues or is this the start of trend similar to what we saw in late cycle during dot.com bubble? It feels very much like late 90's - similarities are too many to ignore. Let's look at them Longest economic cycles (1991-2001 and 2009-2019). So the economic cycle is getting tired and markets are betting that recession is in si

Three T's are driving the market sentiment and ups and downs (two of them are caused by another T). After increased volatility in which DOW was going up and down by 300-800 points on regular basis. August wrapped up where it started. So if you were enjoying your summer vacation without looking at daily ups-and-downs, you did not miss anything. Let's look at each of the T's and see where market is heading for rest of the year and 2020. Tweets: Tweets are the new norm on how policies are made and communicated on the fly. You know whom I am referring to. President Trump had almost made this as norm. I am sure his twitter followers know what's in his mind before his chief-of-staff. His decision on additional 5% tariffs on China, his constant criticism of Fed Chair Jay Powell or his supposed offer to mediate between India and Pakistan and his "hereby" order to American companies to move their production to USA - all of these would have been carefully thought a

Just came back from relaxing vacation in Kauai and surprisingly we did not even turn on TV during all of vacation. That must be some kind of personal record given the countless choices we have in world of streaming with Netflix, Prime Video, Hulu, HBO, Cinemax, Hotstar and so on! And given this week's announcement of upcoming bundle of Disney+, Hulu and ESPN+ coming in Nov 2019, more choices are coming! Not to be left alone, AT&T is going to launch HBO Max. Viacom and CBS are talking about combining their content. And each of these are offering some high quality content to watch almost on daily basis. What started as a small experimental stream by Netflix about decade back is turning out to be a flood-gate. By some counts combined spend on streaming content would exceed total US  movie box office collections (which was around $11B on annual basis). Netflix alone plans to spend over $12-15 Billion on content - majority of that would be on creating original "Netflix" o

As I wrote at start of year " Third year is Best ", 2019 is turning out to be exactly like that and more. In 3rd year of president's term, markets have been up on average of 15%. This year, S&P is up by 20% and only half the year is over. So does that mean we have seen all the gains for 2019 already? With earnings season about to get into high gear, let's look at key factors which would decide what's in store for markets. Earnings:  Next two weeks, large number of companies would be reporting 2nd quarter earnings and provide forecast for 2nd half. While some companies have started warning season (e.g ILMN), it has been relatively quiet on warnings front. Analysts have already lowered their expectations. Economy is not doing as badly as feared at start of year. Trade noise is subsiding. So majority of companies would meet/beat earning forecasts and provide cautiously optimistic forecast. The earnings show is becoming too predictable. No one likes surprises.

Its exciting time in sports with two world cups in progress. Being from India, I am fascinated by Cricket world cup which I have been following closely since 1983 when India won its first cricket world cup. I still remember the 1983 world cup final in which India (which was not even underdog) beat 2 times world champion West Indies with many stalwarts. It was and still the biggest Indian achievement in world of sports. Dhoni's team repeated the feat in 2011 and now its time for India to claim the Cup third time. The Indian sub-continent is crazy about cricket and even regular matches make viewing history. India-Pak match was watched by 700 million people - highest watched match possibly in any sports. If India makes into final, this record may also be broken. Just as reference, this is 7 times viewership Super Bowl gets! I won't be surprised to see billion people watching India-Pak match in 2023 world cup (which would be held in India). While I watch FIFA Men's soccer wo

First of all, the Greatest Show on Earth wrapped up on May 23 with Indian elections producing a resounding victory for PM Narendra Modi and his party BJP. Modi got complete mandate to lead India for next 5 years. Congrats to Indian voters for making a wise choice in electing Modi and rejecting one of the possible 22 PM candidates from smaller parties (yes - Rahul Gandhi is from a small party called Congress). Even if large number of Indian voters are un-educated, they have demonstrated lot more maturity in selecting their leader than educated electorate in Britain. As I said in last couple of blogs, "Sell in May and Go Away" was right on mark! It was one of the worst May month since 2011 and first down month of 2019. Just six weeks back S&P was on its way to 3000. And then it all fizzled out. Let's see what changed the narrative. Brexit - PM May had to announce her resignation due to Brexit mess. British must be thinking what mess they got into by narrowly votin

What seemed like final climax of trade negotiations turned out to be another round of back-and-forth negotiations between Americans and Chinese (from last count, they are in 11th or 12th round of negotiations). Last Sunday President Trump surprised the world and markets with his tweet that US is going to put 25% tariffs from Friday May 10. Markets took the note and tumbled 2-4% across the world. While Chinese team did come to Washington to continue negotiations, on Friday US increased tariffs from 10% to 25%. Chinese reaction was relatively mild but future of further trade discussions is uncertain. Markets and companies were expecting that Trump and Xi will sign deal in May or at most by G20 summit in Jun. Now that's most unlikely unless both sides back off little bit in give-and-take of negotiations. Both sides are banking on their relative expertise and history. On one side we have president who wrote "The Art of the Deal" book while other side prides itself on legacy

In today's world of UI/UX, people don't normally talk about its original term of "GUI" which means Graphical User Interface. In App world, it's all about UI/UX. The first GUI based computer was invented in PARC in 1973. Apple later popularized it with MAC. Apple then changed GUI to UI/UX with iPhone introduction by unleashing the App world. Now most of the companies developing apps have separate groups focused solely on UI/UX! But let's talk about another GUI!   GUI of economy is about (GDP) G rowth, U nemployment and I nflation. And given recent Q1 numbers demonstrate that we are in "Goldilocks" economy - not too hot, not too cold. Let's look at: GDP Growth: On back of major market churn in Q4, 2019 started with fears of growth falling below 1%. Slowly as quarter progressed, growth forecasts got revised to 2%. However actual GDP growth came in at 3.2% which was much stronger than anyone (except may be markets) was expecting. The adrenalin

It's Avengers Mania across the board with movie breaking all records in multiple countries (even in non-English speaking countries like India and China) and already collected over $1.2 Billion in 3 days! That's a juggernaut which would rule the box-office for next few weeks and would easily cross $2 Billion in matter of days. Looking at similar "culmination" events, 2019 turning out to be year of culminations. Let's look at these: Starwars:  Started in 1983 and after 8 movies, final episode is coming Dec 2019. So this saga is wrapping up after 36 years of fan-mania. It would be interesting to see if it will break "End Game" records. Avengers: It started with first Ironman Movie in May 2008. After 21 movies over 11 years "Avengers: End Game" brings all stories together. While this may be called as "End Game", I am sure Disney/Marvel will keep on churning new superhero movies. Now it's just matter of time, if there is Marvel a

From the title, one would wonder did I change narrative of my blog and started blogging on dance style or what? Well - yes and no. I like movies, music and of course nice choreographed songs (even though personally I am absolutely not good at dancing). DISCO was one of the major trend in early 80s and gave world some of the exciting dance moves! One of the bollywood producer Karan Johar also seem to like DISCO style and tries to mix one of the song with DISCO style in his movies. Check out It's time to DISCO song in Kal Ho Na Ho. But this blog is about investing. So let me explain what DISCO means. DISCO is new acronym coined by me to cover stocks which are relatively old tech/media companies but doing exceedingly well especially in 2019 and would be relevant in 21st century. All of these companies with exception of one are more than 30 years old and most importantly they are also dividend paying companies with yield ranging from 1.5% to 5%. These companies (with exception of o

You must be wondering what would be "The Greatest Show" on the planet we call The Earth! Many events would qualify for this honor. For college basketball fans, it would be March Madness which wrapped up last week (Virginia won). Then there was the biggest comeback in any sports with Tiger Woods winning Masters at Augusta. This would be his first major win since Jun 2008 - even before longest running bull market started. At age 43 and after a gap of 11 years, this can definitely be "biggest comeback" but does not qualify as greatest show. Last time he won any major was when Game of Thrones was only books! Now for "Game of Thrones" fans, first episode of final season which aired on Sunday Apr 14 could be called big show with highest TV ratings. But hey, those many people watch an average Indian soap-opera or an IPL match. Now 2019 IPL (Wildly popular 20 over cricket tournament between 8 teams in India) comes close to "Greatest Show" which happens

After brief hiatus due to around the world tour (first time in southern hemisphere), it's good to be back home. And of course it's March Madness season. It's futile to even come up with perfect bracket since even most advanced AI with all the data crunching in the world will not be able to predict perfect bracket even in 22nd century. Looks like after 40 games, there are two perfect brackets remaining (out of tens of millions) as of this writing. So let's pick only top 4 teams. Here are my picks: Virginia Cavaliers Kentucky Wildcats Duke Blue Devils Gonzaga Bulldogs Any one of these could win the championship. While college basketball march madness is in full swing, there are other events in the world which match the "madness" aspects! Let's look at them Brexit "May"hem: This is truly a " Shaskperean " class drama unfolding in Britain. At this time, no one knows what British people and politicians want. Accordingly to ru

Past few years on Oscar Sunday, I have wrote blogs titled "and Oscar goes to..." and most of the times my prediction rate was above 50-75%. This year Oscar event seems to be creating more and more controversies and overall event seems to get boring (as compared to other choices available to spend Sunday evening). Nevertheless, I love movies so here are my predictions for this year's Oscar winners: Best Picture - Roma (this would be historic recognition to streaming world) Best Director -  Alfonso Cuarón,  Roma Actor in leading role -  Rami Malek,  Bohemian Rhapsody Actress in leading role -  Glenn Close,  The Wife Actor in supporting role -  Mahershala Ali,  Green Book Actress in supporting role -  Regina King,  If Beale Street Could Talk Unfortunately I had not seen any of above mentioned movies (other than Roma) till now. No wonder there is less excitement about Oscars this year. The new category Academy tried to create (Popular movie) and then cancelled wou

Earnings season is almost wrapping up with most of the companies announcing results and forecast better than feared in Dec. With Fed on hold, avoidance of shutdown, incremental but positive progress on trade talks and economy's "goldilocks" state, markets are responding well with 11% gain YTD (largest since 1991 and 1987). IMO, biggest catalyst of trade deal with China is yet to come in Spring. So markets has some more upside left before summer.  Apple has amassed nearly $250 Billion cash and everyone has opinions on what they should do with the cash. With its flagship product iPhone sales slowing down, its obvious that Apple needs next big market to move the needle. So let's look at 4 new markets and potential companies Apple can acquire to get started! Entertainment:   The entertainment industry is changing to streaming world started by Netflix and boosted by Amazon Prime. Netflix original movie "Roma" winning Oscar next Sunday will make it officia

After stock markets had their Worst December since 1931 and Best January since 1988, one would wonder - what's next? As investors are always in dilemma, answering this question is important. Also while I don't believe in relation of market returns to Super Bowl winner or Chinese year, it's good to look at some of those predictors just for fun! The Super Bowl week of earnings just got over and as expected most of the companies announced decent earnings and forecasts (Amazon was major exception). That produced sixth week of market gains. Given Nvidia's dis-appointing pre-announcement and Intel's not-so-inspiring earnings, AMD's earnings were outstanding and it got rewarded for that. Finally the hypothesis I laid out in my blog about " AMD new A in FANG " 5 months back is playing out. If AMD continues its market share gains in datacenter CPU/GPU segment and holds its ground in server/consumer/embedded section with 7nm technology advantage, 2H2019 could

Super Bowl of NFL is just a week away when Patriots would be appearing 9th time since 2001 and Rams will be playing their first since moving to City of Angels! Who would win? It's match up between experience vs youth. Patriots' quarterback Tom Brady (age 41) and head coach Bill Belichick (age 66) have been playing/coaching football before their respective counterparts Rams' quarterback Jared Goff (Age 24 - Cal graduate. Go Bears!) and head coach Sean McVay (Age 33) were even born! In a way it's representation of today's society including corporate world. When it comes to which team I support - I am split. I stayed in New England for one year so would like to see Patriots win. But then Rams is now California team with quarterback from UC Berkeley (my alma mater). So I am just going to enjoy the game and let the best team win! But before we get to Super Bowl Sunday, let's look at this week's Super Bowl of economic events starting with earnings. This week can

About 15 months back, I wrote bog Four Horsemen of the Markets  about what could end the good times markets were having (back in 2017). Other than taxes, all other three (Fed, Earnings and Trump) played a role in market turmoil exactly one year later producing worst December since 1931. Looks like I was year earlier! Now that scenario has played out, let's look at antidotes for Four Horsemen of markets (for references to Four Horsemen, read on wikipedia and my blog) Markets have recovered half of their losses after reaching low on Christmas Eve and playing the theme of Markets take steps going up and take elevator coming down. Let's look at the antidotes which would keep markets chugging along potentially reaching all time highs in 2019 again! FED and Interest Rates:  Fed did act as horseman and played its role for Q4 turmoil by declaring its intentions of raising interest rates almost like autopilot. No one including President Trump liked it and Fed also realized that it

You may have heard the terms "Third time is the Charm" or "Third time's lucky". All of these terms have some meaning. For example, "Third time's lucky" has its origin in 19th century hanging in which one would be freed up from hanging if he survives third attempt. So how does this relates to "Third Year is Best"? 2019 is third year of Presidential term and based on historic data,  this is the best year for markets. Since 1950, markets are up 100% of time in third year. On an average  they are up by close to 15%. Check out WSJ article on this! General theory is that first two years Presidents spend on fulfilling difficult campaign promises as done by Obama with Health-care reform law and Trump did with tax reforms. In third year, President gets into campaign mode in first term and "Leaving Legacy" mode in 2nd term and start focusing on economy. The major policy changes in first two years start playing out in third year. In addi

Happy New Year to all. Finally 2018 is over and hopefully new year of 2019 would bring some much needed calm and sanity to the world of politics, economy and markets! 2018 ended as worst year for investing since great recession of 2008. While I have written about 2018 to be similar to 1998, it turned out to be worse than expected. Looking back at my recommendations at start of year, it turned out to be one of the worst year of recommendations. Let's take a look at it briefly. Overall returns were negative high double digit percentages (compared to negative 6.2% for S&P).  Only 6 out of 18 recommendations did better than market Best performers were NTNX, RGNX and QURE Worst performers were SN, NLNK and GE. The last one (GE) was real surprise. I never expected GE to be down by 57% in 2018. So overall it was quite dismal performance. It would have been better to just invest in S&P instead. But that was last year. The Q4 market turmoil has left many stocks at "di