Seeking Alpha by Adding Beta

The market turmoil continues and President Trump and everyone on street started talking about how Federal Reserve Bank (FED) is keeping its blinders on and intent on keeping up with its chosen path of increasing interest rates. Basically they are "Fed" up and wants FED to change its stance on interest rates. We had seen this movie before. Interest rates start going up, markets have tantrum hoping fed will chance its stance. Then monthly and quarterly economic indicators start coming and everything looks ok giving fed ammunition to keep up its course and then markets adjust back to normal. It's almost like markets have 10-year itch (there is 7-year itch term in relationships). It happened in 1987, 1998, 2008 and now 2018. While there would be some hit to confidence, recent market turmoil also helps take out the excesses and set a good foundation for further upside movement. Mid-term elections also add to the uncertainty even though most of the polls are predicting that co...

In politics "October Surprise" means  any political event orchestrated (or apparently orchestrated) in the month before an election, in the hopes of affecting the outcome (from Wikipedia). In stock markets, October is known for sharp market corrections as seen during so many times(1929, 1987, 2008 and so on). So this October, its no surprise that we are having some gut-wrenching correction which exactly started on first day of October. Today and next couple of days would be critical in terms of momentum selling before it settles down and get ready for year-end rally. President Trump is calling fed "crazy" which almost feels like Turkey President directing its central bank what to do. (another similarity: both these presidents have their son-in-law in key government position). Last few weeks interesting political drama unfolded in which both parties tried to score some points with their constituencies by using Judge Kavanaugh's confirmation to Supreme Court. Mi...

What a week of theatrics by all the Ts mentioned. Let's look at each one of these! Trade:   Trade and tariffs continue to dominate the news with skirmishes between US and Canada, potential battle with Japan and escalating trade war with China. On the strength of US economy, US seems to have upper hand which Trump and his trade representative wants to fully exploit and extract most from its trade partners. Mexico fell in line so will most likely Canada resulting into NAFTA 2.0 by end of year. EU has started taking about "no tariffs or reciprocal tariffs" on cars. Japanese are smart not to ruffle feathers with Trump administration. And then there is China! The trade talks started two weeks back but did not made any progress. Most likely tariffs on another $200B Chinese goods  will happen and then serious negotiations will start resulting into some kind of deal by end of year. Till then trade will continue to dominate the economic news Tech: After reaching all time high i...

Happy Labor's Day to everyone. The month of Sept is here - one of the worst month in terms of market volatility and precursor to even dreaded Oct month. Sept 15 will be 10 year anniversary of famous Lehman Bankruptcy which started great recession of last decade. So it's time to pause, reflect and decide what's best strategy for remaining 4 months of 2018.  The market voted unanimously who is winning the battle of trade wars between US and China with US markets reaching all time highs and Chinese markets entering into bear territory. This is one the reason China is entering into discussions again. The "Game of Chicken" between US and China may be entering into decisive phase in next few weeks. And that's good for markets. Now let's look at best performing S&P stock of the year - AMD and what I mean by new "A" in FANG. As most of you must be knowing, FANG represents 6 companies (originally there were 4): Facebook, Apple/Amazon, Netflix/Nvidi...

The double negative verdicts of Aug 21 may be considered as start of end of Trump Presidency. Only history would tell us significance of events happened on that day. Almost exactly 20 years back, political news were filled with special counsel Ken Starr and possible impeachment of President Clinton. Now it is Muller and Trump filling the political news. Special counsel Muller may file his report sometime later this year and democrats may gain control of house triggering possible impeachment process of President Trump. So what impact will it have on markets? Looking back, markets in 1998 fell nearly 20% leading to release of Starr's report. But once report was out and actual impeachment process started in Nov, markets regained all the losses and some more. It gained 28% by the time senate acquitted President Clinton in early 1999. While Clinton became lame-duck in last 2 years, markets continued to gain momentum during dot.com era. Looking at this history, what could happen this ti...

Thanksgiving is more than 3 months away and world is already worried about "Turkey" because of Turkey Shoot.  A  turkey   shoot   is   a   fight   or   contest   where   one   side   is   so   much   stronger   than   the   other   that   the   weaker   side   has   no chance   of   winning.  That's exactly what is happening with President Trump taking the fight with Turkey's strongman Erdogan over release of American Pastor Andrew Branson. Turkish Lira dropped over 40% in 2018 (17% drop coming on Friday last week). This reminds the days of Asian  currency crisis 20 years back. What started in Thailand in 1997 with its currency dropping 40% quickly spread to other countries like Indonesia, Malaysia and South Korea and caused turmoil in worldwide markets. As they say, history does repeat itself. 20 years later, world is in very ...

As I mentioned in my previous blog in May about Race to Trillion , last week we did see first modern-day trillion $ market cap company. And the crown went to Apple as expected. As Q2 results started pouring in, it was clear that one of the two companies (Apple or Amazon) would claim the title. Both companies along with other two contenders Alphabet and Microsoft announced outstanding results and continued the momentum towards trillion. I won't be surprised if we see another trillion $ company in 2018 and most likely it would be Amazon. By end of 2019, expect all 4 companies to have crossed this milestone. Looks like Trillion is the new $500 Billion (of dotcom days). Lots of interesting events have happened in month of July. France won its third Soccer world cup, escalation in tariffs "war of words", continued early-morning twitter meltdown of President Trump, Fed staying the course of raising interest rates. Despite all of these potential market moving news (except Fran...

Want to start with big disclaimer. Even though I have keen interest in science behind biotech and many successful investments (and some spectacular failures), I have no formal education in biotech or for that matter investing in biotech. On top of that, investing in biotech is extremely risky due to binary nature of outcomes. So if you are not a person with extreme risk tolerance, you can stop reading this week's blog (and save few minutes:-) I got interested in biotech few years back due to science, potential to make outsize gains or losses (almost like bets) and just sheer progress happening in the field (personal situation was also one of the factor due to which I did lot of reading in this area). Last two years I started noticing emerging biotech companies in areas related to "genes".  In general these companies can be divided in two broad categories: Gene Therapy:  "the transplantation of normal genes into cells in place of missing or defective on...

If one asks the question "which is most valuable media company?", what would be your answer? With blockbuster franchises like Disney, Starwars, Marvel, Pixar, all Disneyworld theme parks, ABC, ESPN and many other valuable assets, answer should be obvious that Disney is most valuable media company in the world. And that answer would be correct for now! In 2019 most likely the answer is going to change to Netflix as most valuable media company. What a shakeup in span of just one decade. Ten years back, Netflix was struggling to survive and had to be rescued by Carl Ichan (who made billions on his investment) and now we are discussing Netflix becoming most valuable media company surpassing Disney. However this should not be surprise to students of how economy and markets progress. Old gets replaced by new. We had seen it in so many industries time and again. Let's see how these two companies stack up in 2018: Revenues: Netflix: $13B; Disney: $56B Market Cap: Netflix: $...

The earnings season is almost getting wrapped up and race to become first trillion $ company is getting to finish line. During dot-com bubble, there were couple of contenders mentioned (Cisco, Microsoft) but then bubble busted and these companies lost the momentum in that race. During last few years, the race is back on and most likely in 2018 we will see first even trillion $ company. Here are real contenders in that order: Apple: $927 Billion Amazon: $780 Billion Microsoft: $750 Billion Alphabet: $764 Billion Facebook: $550 Billion Not surprisingly that all of these are tech companies and within themselves they have market cap approaching $4 Trillion (exceeding GDP of all but top 4 countries - US, China, Japan and Germany). Given the momentum Apple has regained after latest earnings results, the crown would most likely go to Apple to become first company to cross this milestone in 2018 followed by Amazon either in 2018 or 2019. Remaining two companies (Google and Microsoft...

March madness continued for all of March with so many upsets in NCAA "March Madness" in which 100% of brackets got busted by end of 2nd round. Loyola Chicago's dream run (with inspiration from 98 year old nun) ended just before Easter Sunday. It came down to Villanova vs Michigan. If I have to bet, Villanova would win NCAA Men's Basketball championship tomorrow. White House Madness continued with few more resignations. People are getting used to White House version of Apprentice! However most surprising and dis-appointing news came out of Silicon Valley. The companies we got used to trusting with our photos, likes and shares had been taking our privacy too lightly and had major leaks across the board. Most significant revelation came from a whistle blower that Cambridge Analytica had account details of 50 million Facebook accounts and they used these details to influence outcomes of Brexit as well US presidential elections. Basically they stole privacy of 50 million...

Just little more than one week of March has ended and college NCAA basketball "March Madness" bracket of 68 teams is not even published. Yet given the events of last few days, it feels like we are already into March Madness. Let's recap some of the events of last few days. Republican president announcing tariffs on Steel and Aluminum. Isn't GOP supposed to be party of "free trade" and isn't America the beacon of "free trade" lecturing all other nations? Resignation of senior economic advisor Gary Cohn - that was not surprise when he lost "tariff" brawl in white house. Elon Musk supporting Trump policy of tariffs with justification that China has 25% duty on American made cars and US has only 2.5% on Chinese made cars (to this point, I agree that there is major imbalance in tariffs between US and China) Trump exempting Canada and Mexico and promising to exempt many countries who will play to his tune. I read Australia is next on ...

Around this time of year, I used to write my blog about Oscar predictions. However last week's announcement by Trump and unknown   Oscar lineup promoted me to write about something which has been brewing since Trump started campaign and finally coming to reality. What did Trump announced? He announced that US is considering putting tariffs on Steel and Aluminum imports. As definition, tariff is tax or duty to be paid on specific item. Before globalization, every country used to put tariffs for many reasons but most importantly for protecting domestic industry. US was major proponent of Globalization and worked/pushed countries/unions to remove tariffs. NAFTA is an excellent example where 3 North American countries (USA, Canada and Mexico) act as tariff less union. It's good concept as long as there is balance in imports and exports among countries. However over last 2-3 decades, it has been mostly one sided equation in which US imports vast amount of goods compared to exports...

Only 2 weeks back I wrote about markets "Melt Up" which really turned out to be a "Meltdown.  It all started with employment report on 2/2. DOW dropped 666 on 2/2 and continued into next week  with 1000 point swings on DOW. What may have suddenly triggered change of course for markets? There are multiple theories being hashed out. Before we get into some of those, let's learn little bit about history which seems to be repeating every 10 years. Let's look at 1998 and 2008. Year 1998: This is the time US was in its longest bull market and irrational exuberance was in full force with "dot.com" bubble forming. Another president (with somewhat similar personal character traits) was in white house. Experts (including Nobel Laureates behind LTCM) were making one-way bets on "convergence" in bond prices. Questionable dot.com companies were coming to markets with billion $ valuations with just some eye-balls as "customers". Generally life...

January of new year is almost wrapping up and I must say what an exciting way to start new year. It started with Intel (followed by other CPU vendors) announcing security vulnerability called " Meltdown ". Combined with " Spectre ", these security vulnerabilities were reminder of another Y2K type problem which impacted almost every known computing device. The CPU vendors including Intel handled the issue relatively well by coming out with patches and system/server/equipment vendors quickly integrated these patches into their software releases. To some in high-tech world, it also presented an opportunity to upgrade antiquated equipments with newer ones creating additional business. What started as major issue for Intel at start of year became an opportunity as seen in Intel's latest quarterly results. Intel stock crossed $50 after many years. That brings me to " MeltUp ". The way markets are rising with almost 7% return in Jan month itself, we can defi...

To all my readers, I wish you a very happy new year 2018. During holidays two of my friends gave me Satya Nadella's book "Hit Refresh". Initially I was little skeptical since we read about these companies and their CEOs almost on daily basis so I was wondering what new I would learn from reading the book. I must confess that I was totally wrong. Satya has narrated his personal life, his passion about cricket and corporate life effortlessly and authentically. It's more of a story of transformation he took personally and how he applied his personal experiences to transform a company like Microsoft. Over next few years Microsoft transformation will be similar to what Apple did at start of century. This book is for everyone (not only for those who work in tech) as it does provide some simple tips about life, empathy and culture. As happens to most of us, start of new year brings new resolutions (which get forgotten by Groundhog Day). So instead of making new resolutions...

We saw the musical " The Greatest Showman " based on one of the greatest showman of 19th century P.T. Barnum . I love musicals (who won't especially folks who grew up seeing bollywood movies - 99 out of 100 movies are musicals). After seeing Hugh Jackman singing in Les Miserables , this was must watch for us. I would recommend both movies if you love musicals. Finally Hugh Jackman is done with his Wolverine claws and exploring other genres (Hugh - there is an idea "Wolverine the Musical"). Now coming to PT Barnum - he was one of the most famous personalities of 19th century. He tried his hands in many fields from entrepreneurship to politics. Along the way he got famous (and infamous) for many of his quotes like: There's a sucker born every minute Without promotion, something terrible happens... nothing!  We have got something for everyone The noblest art is that of making others happy PT Barnum is also associated with " Barnum Effect ". I...

As millions of people, I was eagerly waiting for Star Wars: The Last Jedi. I even did advance booking  for all my team members back in Oct. The movie did meet the expectations of all the hype. The story line is kept simple and even though it was a bit long, it kept audience engaged. Now the wait starts for Episode 9! 2019 is going  to be big year with Cricket World Cup, GOT final season and Star Wars Final Episode! The final details of tax bill is out. Let's take another look at some of the " Good, Bad, Ugly " aspects we discussed back in Nov.  Tax brackets went back to 7 but still simplified with lowest starting at 10% and highest at 37%. Generally its good since overall rates have come down for everyone Corporate tax rate reduced from 35% to 21%. They could have settled down with 22% and given more tax cuts to individuals. But we know who controls GOP so this was expected Expands child tax credit - thanks to Marco Rubio. Looks like he is one of the rare ones in G...

Hope you had great Thanksgiving. Lot of interesting events have happened in last two weeks so its time to look at some of these - especially on two topics we have visited in past - Taxes and Bitcoin! Unless you are on different planet, you may have heard that Trump and GOP are working on tax cut plans to reward big corporations and their rich donor friends. As college students are getting ready for their finals in next 2 weeks, GOP finally did one night-out (almost) to get something done. They passed almost 500 page (some of that is hand-written) tax reform in senate. Now house and senate need to sort out their differences and vote on final bill. President Trump is going to push his party leaders to get it done before Christmas so that Trump can claim that he had given "Greatest Christmas Gift EVER to American People" for holidays. Watch out @realdonaldtrump twitter feed for such claims! Who benefits from these tax reforms?  Check out my earlier blog regarding this. I woul...

As holiday shopping season is upon us, millions of people would be shopping for gifts for their loved ones and for themselves. One week from now, Americans would have finished their Thanksgiving dinners and shopped till drop during "Black Friday" followed by "Cyber Monday" and "Terrific Tuesday" and "Wonderful Wednesdays" and so on. Retailers can be quite creative in coining the terms as we had seen with "Singles Day (11/11)" in China and "Prime Day (7/11) by Amazon". Thanks to Expanding Amazon Jungle , retail landscape is changing dramatically. In last 12 months, Amazon stock is up by 50% while combined market cap of key retailers (Target, Macy's and others) have gone down by 40%. Market is sending clear signals who is winning retail wars. And then there is Walmart. Last week Walmart published it's quarterly results and surprised everyone with kind of progress it had made. So what does it has to do with "Rumble ...