Seeking Alpha by Adding Beta

Last week was one of the most eventful week - elections, crypto crash, soft inflation triggered massive rally in stock markets, layoffs at Meta and many other tech peers, slow counting of votes and of course the chaos at Twitter.....each of these can be a blog topic. But let's focus on how FTX "House of Cards" came crashing due to "Game of Thrones" in Crypto Universe! I have written about Cryptos in my previous blogs  " Coinbase IPO : Netscape or Webvan moment for Crypto",  " Crypto-currencies : Fad, Fraud or Frontier",  " Tulips, Eyeballs and Dogecoin " Many of those hypothesis and predictions came to forefront this week which led to collapse of FTX - once valued at $32 Billion and its young founder Sam Bankman-Fried became from hero to villain.  FTX was saving crypto world during summer meltdown by buying or supporting other smaller "houses of cards" built on fraud coins, over-leverage, no regulations...no one had any id...

Many of you know the famous Gordon Gekko (played by Michael Douglas) dialogue from the 1987 movie Wall Street - "Greed is Good". Well - on the eve of mid-term elections, let me tweak that dialogue into a political context and say "Gridlock is Good". Over the last two years, we've had a one-sided government within all branches of government (President, House and Senate controlled by Democrats). We got some meaningful policy actions done by Biden and Congress. But some of those actions also created the inflation mess that the economy is dealing with (another reason is slow action by Fed in raising interest rates) as well as gyrations in stock markets. Most of the predictions suggest that Democrats are going to lose House by a few seats and there is small possibility that they may lose control of Senate (my prediction is that the Senate will remain 50:50). Either way, with the House gone to GOP, there would be "gridlock" in Washington. Here are my reason...

I have a written few blog posts about Tesla while it was still a small company with a market cap of less than $10B (unfortunately, I did not follow my own advice of owning the stock instead of or in addition to the car; as the saying goes, hindsight is 20/20). Now that Tesla is a much bigger company (with a market cap equal to or greater than all the other car companies in the world combined), it's time to take another look at the company and the stock. So here it goes. $TSLA reached a 52 week low this week despite very optimistic "pedal to the metal" projections from Elon Musk. After touching a $1 trillion valuation, it has been sliding down (call it the trillion dollar curse, similar to what Meta also experienced – but that's another blog topic) and lost over 40% in 2022. What's impacting Tesla and its stock? There are 4 "C"s which will decide what's next for the company. Competition: It used to be EV + Autonomous Driving + Cool Factor = Tesla just...

After long hiatus due to personal reasons, it's time to get back to blogging. And what better day to start than on first day after historically worst month for markets. This year was no different. Sept kept to its reputation as worst month with markets ending at lowest point for 2022 (S&P down by 25% and Nasdaq by 32%). This week saw the leaders (like Apple etc) taking the hit...that may be an indication that markets may be getting closer to bottom...now that we are in Oct which had the reputation of having worst crashes, we may get one or two big crashes...that would be clear sign of market bottom. As they say "Don't fight the Fed" - that holds true in both directions. Fed is determined to get back it's credibility and will not (and should not) pause interest rate hikes till inflation indicators show clear downward trend....It's possible that Fed may do more than needed and damage the economy at least for short run...Economists, companies and policy maker...

Mayday  is an emergency  procedure word  used internationally as a  distress signal  in  voice-procedure  radio communications. May 4, or, "May the 4th Be With You,"  marks a celebration of all things Star Wars  attributed to famous phrase "May the Force be with You" used by Jedi Masters! After dreadful month of Apr and worst start of year for Nasdaq ever, high-tech growth stocks are sending "Mayday" signal and hoping that some kind of Force would save them from daily pounding. It feels like dot.com bust all over again. Covid pandemic pulled forward growth of many high-flying stocks. Now that pandemic is over as worldwide issue despite spurts in Chinese cities and even in New York, investors are worried about lack of growth for once high-flying growth companies. Even "FANG" group is not spared. Many stocks are back to where they were before pandemic. For few of them, 5 years of gains got wiped out in last 5 months.  So obvious quest...

It's that time of the season when NCAA Basketball have their March Madness tournament in which college basketball teams play to win National Championship and millions of brackets are published. At one time, Buffet announced  $1 Billion prize money to anyone with 100% accurate bracket - no one won it. It's just impossible probability ( one in 9.2 quintillion ). But it's fun - This year my ranking is close to half-million in CBS Sports Men's Bracket Challenge even with 30 correct predictions till now. March also brings another interesting aspect about markets - in last 15 years, markets have reached bottom 2 times during March. March 9, 2009 during housing bubble crash and March 23, 2020 during pandemic induced crash. So we may be in for repeat of this pattern when S&P reached short-term bottom on Mar 7 2022  (at 4170).  Based on how most of the indexes recovered since then, it feels that way. Even Chinese stocks seem to have reached bottom on Mar 15, 2022 and roar...

Similar to The Four Ps of marketing mix (Product, Price, Place and Promotion), I was thinking of The Four Ps of (current state) of Stock Markets. Let's look at "The Four Ps of Markets" Post P andemic Growth: Pandemic pulled forward growth of many companies such as Zoom, Roku, Netflix streaming numbers, enterprise spending, cloud growth etc. 2 years later Pandemic seems to be on its way out and world is returning to normalcy. Post earnings calls. Markets started worrying about what would post pandemic growth look like for high-growth companies. Stock prices of most of these companies reached peak 12-15 months back and are now 50-80% down from those peaks (Zoom stock reached peak in Oct 2020 when it was valued more than IBM). High double digit (in some cases triple digit) growth is over and these companies must be valued based on growth going forward. Even achieving 30-50% growth on bigger numbers is going to be difficult. And we all know what happens when growth music stop...

Exactly two years back first COVID case was detected in US. Two years, Two Presidents from two parties with very different approaches to dealing with COVID and USA is still having highest daily cases, highest hospitalizations and unfortunately deaths due to COVID. Unfortunate state of affairs despite having three effective vaccines and majority of people vaccinated. After two years,  people are frustated and have moved on and treating COVID like endemic which is going to stay with us for many years to come. That's going to be normal world in 2022. All of us should continue to wear masks and take eligible vaccine boosters when available. While world is adjusting to Covid as endemic, markets are trying to adjust to post-pandemic economic world. Let's look at few macro attributes and their effects on stock markets in 2022 Inflation running very hot and is at 40 year high reminding people of Volcker Fed days Supply and labor shortages - I experienced it first hand 30 min to pick co...

To all my readers, wish you belated happy new year. After travel back from India I kept on postponing my new year blog for no reason...In a way it was good thing since I would not have expected so much market action in first three days of new year. Before we get into what could be in store for 2022, let's look at how some of the predictions/recommendations did for 2021. Macro Predictions: GDP growth, interest rates and unemployment rates were on target as per predictions. S&P did much better than predicted (20% better) Schools did open in Fall'21 COVID predictions were completely off the mark partially due to emergence of Delta and Omicron variants - who would have thought that we would be having million cases (daily) in US in 2022? Stock recommendations: Winners: SPG (94%), MAC (75%) and WFC (75%), XOM (59%), OKE (51%) Losers: CLVS (46%), BABA (44%), SQ (36%), NIO (33%) Overall portfolio of recommendations did no better than S&P's return of 27% (when it comes to my...

Next week starts the biggest shopping season of the year in US with Black Friday. Millions of people would be heading to malls to spend on holiday gifts. And given that people were stuck at home for last year with only option of online shopping, this year they want to go in malls in person and enjoy the shopping. That brings me to my blog topic - is this the Retail Renaissance? ( The Renaissance was a fervent period  of European cultural, artistic, political and economic “rebirth”  following the Middle Ages) During depths of COVID pandemic, most of the in-person retail (except for essentials) was closed for multiple weeks. Holiday shopping of 2020 was mostly online. Since people were scared to go out.  Online giants like Amazon did a wonderful job in delivering everything from essentials to holiday gifts. No wonder stocks of traditional retail companies were trading as if they are going out of business. Retail was facing double whammy - short term pain of Pandemic and lon...

Kids are known to blame their dogs for eating their homework! Looking at one of the photo forwarded by a friend, I can blame supply chain for "Who ate my Donut?" The Supply Chain issues are seen everywhere - from corporate earnings to weird economics of used cars selling more than they were bought for. Supply chain issues are mentioned in every earning call multiple times - even by companies which are supposed to be all digital. The ports are backlogged with ships lined up for miles to get unloaded. What happened in the world priding itself "just-in-time" and efficient, all connected flat world. Pandemic threw a wrench in this supposedly well-oiled supply chain engine.  When Pandemic hit in early 2020 across the world, after initial spurt of demand in consumables (remember toilet paper shortage?) demand for travel, autos etc vanished overnight including labor.  No wonder crude price went negative briefly. Governments pumped up trillions of $$ to keep their economies...

Exactly 18 months back in depths of COVID induced panic, Crude oil fell to -37 US $ per barrel....yes you read it right. It was minus..means someone was ready to pay $37 to take one barrel of oil off their hands...weird but it did happened albeit for very short time....That was then..and now same barrel of oil has reached $80 - highest since 2014. Oil price is just one of the very widely tracked indicators which reflect multiple factors. Let's look at some other trends Oil at 7 years high Natural gas at multi year highs crossing $6 per BTU Power cuts in China due to coal shortage. Even in most progressive country priding itself to transition to green power Germany also having potential power cuts due to coal shortage UK citizens are living in their 70s with long lines at gas stations to refill their cars.  Avg time to ship holiday goods from Asia to America has gone to 80 days - twice of pre-pandemic days and prices have gone up multi-fold Labor shortages all across - UK is having ...

One would think that leader of capitalism USA and only large communist nation (which matters) China would have very different problems. However if you pay closer attention to what's happening in Washington and Beijing and reasons behind it, you would wonder if both systems have created similar societies and trying to address the problem with only slight variations in their approach, Last 3 decades saw explosive growth in economies and corresponding wealth creation. After financial crisis of 2008-09 it has increased the wealth gap significantly. By some accounts, top 1% of population has 15 times more wealth than bottom 50% . Unicorns (startups valued at more than billion $) are being created every day. Even in China wealth at top has been very concentrated. President Xi is determined to address this with force of regulations as well as policies. In US, progressives are putting pressure on President Biden to enact $3.5 trillion "social contract" bill (and they are willing ...

History repeats. No wonder last week's events are being referred as "The Fall of Kabul" (similar to The Fall of Saigon in 1975). 100 years back British learned their lessons giving Afghans independence in 1919. Russians learned their lessons in 80's and now it was turn of another superpower to learn same lesson - 20 years, $2 trillion and thousands of American and Afghan lives lost. And it feels like back to square one. Taliban controls more territory and is more powerful than ever thanks to all the military gear Americans are leaving behind. It was a mistake by all 4 presidents to stay beyond initial few years. So I do agree with President Biden that another 10-20 years would not have changed anything so let's get out.  Biden did not change Trump deal with Taliban (even though he did reverse almost all other Trump policies). The issue was execution of exit despite planning for last few years. Biden had 8 months to plan this properly and have well executed exit fo...

We managed to see latest "Fast and Furious" series movie - F9 in theaters (and couple of other movies like  "In the Heights" and "Quiet Place 2"). F9 was way over the top even for the series with rockets blasting car in space and so on...but that's the fun part of enjoying complete non-sense action movie or musicals on big screen. Last week we enjoyed the natural wonders at Yellowstone and Grand Teton National Parks. The planes, hotels, restaurants and even parks were full. Despite the crowds, it felt good to see life returning to normalcy. Economic recovery as well as stock market recovery since reaching bottom 15-16 months back has been Fast and Furious. Government and central banks acted fast to support the economy and citizens who were unemployed for no fault of theirs. With nearly $10T support with stimulus and Fed bond buying, employment situation is improving drastically along with economy. This has resulted in spectacular recovery in stock  mar...

Congratulate Yash for graduating with Bachelors and Master's in Computer Science from Stanford. We are so proud of you! And congratulations to all the graduates! Many of my friends kids are also graduating or already graduated and started their careers at exciting companies (and most of them want to stay in Cities - San Francisco is popular choice of course) This blog is focused on various steps they should take to save for securing their financial future. Their parents learned this hard way....I am not financial advisor so use this writeup just as reference for you to consider. My usual caveat applies - do your own research before taking action. This would be beneficial to  many folks who are already working few years but may not know about these. Here you go... Education: Education is best investment one can make and beats any other alternative. Even if you have graduated, don't stop learning..you can do it on the job, enroll in new courses/graduate program, learn by reading/...

This year's memorial day would be a stark contrast to 2020's gloomy and uncertain memorial day. Thanks to extraordinary success of vaccination drive, America is back in action celebrating Memorial Day remembering ones who lost their lives protecting Americans, travel, barbecues and start of summer season (including summer movies). This memorial day weekend has special meaning as it can also be marked as start of post-covid America. Nearly 2 million Americans would be flying this weekend. Couple of much awaited movies (A Quiet Place Part II and Cruella) would revive theatre going experience and cinema theatre companies like AMC (more on this later).  This weekend also marks centenary of one of the most unfortunate events in American History which not many people know. 100 years back White supremacists massacred and destroyed Geenwood neighborhood in Tulsa, Oklahoma which was also called Black Wall Street (I came to know about this when I was watching "Watchmen" series ...

I have written about various bubbles in my previous posts and invariably I give example of first known financial bubble called " Tulipmania " which happened in 17th century in Netherlands. Since then every few years we have seen such mania - after all humans do not change. Every generation have their own bubble. During Tulipmania, price of one Tulip bulb exceeded price of average home. In 90's we saw valuation of dot.com companies based on how many "eyeballs" these companies have on their web-sites. As soon as people realized that eyeballs cannot be valued as real assets, the bubble burst. In today's generation, we have "dogecoin". This was created as "joke" crypto-currency in 2013. In 2021, it has gone up by 120,000% despite having no real value. In yesterday's SNL hosted by Elon Musk, Elon's mother hoped that her mother's day gift is not a "dogecoin" which Elon replied "Yes it is". Why do people chase bub...

This week world celebrated Earth Day on Apr 22. Fifteen years after Al Gore's " An Inconvenient Truth "  documentary which won 2 Oscars, I am glad that policymakers across large nations (US, China, India and EU) as well as corporates which used to be part of of the problem (Automakers and Energy companies) are paying attention to real dangers of Global Warming and becoming part of the solution. Many leaders committed to significant reductions in emission goals by 2030 to 2050. Even companies like Exxon and GM are taking concrete steps in helping solve the problem. After all they are looking at valuation premiums offered to their "green" counterparts like Tesla and solar companies and realizing that " green is good " (on lines of famous Gordon Gekko dialogue from original Wall Street movie "greed is good"). Hope that these actions and commitments will help make Earth "cool" again! After two month delay, Oscars would be held today eve...

In 2017, I wrote about " Crypto-currencies: Fad, Fraud or Frontier ". In 4 years all three aspects of crypto came true in some form or shape. At that time Bitcoin was going around $4200 and Ethernum was less than $300. The crypto market reached another key milestone this week with biggest IPO of Coinbase as proxy for how real is this new frontier of asset class. On first day, Coinbase at $85B was worth more than 3 times of Nasdaq valuation where it started trading. What an irony! Shouldn't Coinbase "company" should have its own "coin" to trade on Coinbase "exchange"? I am sure someone will come up with "token" which tracks Coinbase stock price to trade on Coinbase or FTX exchange. Complicated? Yes and that's why normal investors should stay away from these. Having said that, one cannot ignore that market cap of all cryptos together exceed most valuable company (Apple) market cap and Bitcoin itself is worth more than trillion $ a...