I was happy to look back at my original post. I can't believe I had the foresight to predict a crash haha. I have bought a lot of puts over the last year and a half but due to limited trading ability from being in an investment bank to not being able to sell my Media & Telco positions put me roughly net net down a TON. Haha, eventually when I can trade long / short I'd like to think I'd do a much better job in terms of my personal P&L.
As I look to the end of my second year, I'd like to report some sad news, a first year analyst in Barclays Tech Investment Banking group committed suicide this past week. It was one of the saddest things I've heard in a while and it really upsets me that these banks think it is okay to burn people out like they do. The amount of pain they inflict is truly insane and this result is something I am suprised doesn't happen more often. Although it won't, I wish it would reverberate into a change across the industry.
Rather than bring in some really smart analysts, absolutely destroy them for two years, kick them out, and then bring in some really stupid MBAs who couldn't get into banking when they were in undergrad to be the future VPs, MDs, etc. In my firm, the head of the investment bank hates analysts. He thinks investing in them is a waste of time because most will leave as soon as possible. And that's true, because they burn them out! Why not treat the analysts better, keep them longer, and have smart people run the bank? Not some shmuck MBA who is a great networker. I guess that's why we don't really provide good advice but the top MDs know a lot of people and have little financial knowledge.
Anyway, the original reason why I wanted to write today was in regards to the current market. We are up 30% in the last 3 months. Seems a little crazy to me, know? When you see these economic indicators and such come up why should the market be up? People are continuing to get laid off, saving money wherever they can. The base of the economy is going to be driven by consumers and that is not changing. I do not see a change in that sentiment. I agree that the debt markets have opened selectively and the bankruptcy option that was on the table for many a company, but that is really the only thing that I have seen look better. I'd really like to see a sign of a turn around of any kind before investing. I have started buying puts again especially after a run up a couple weeks ago that was completely insane. The market is so irrational at the moment it is absolutely hilarious. I wish I was smart enough to make money in this market, but I know there are a ton of people obliterating the market right now.
I am extremely bearish on the market like I said. People refuse to spend as they continue to be laid off and have limited job security. I love McDonalds (MCD) down 1% over the past year. I'm a vegeterian but these guys are amazing. Always coming up with new ideas, this McCafe thing is just the bomb. LOL, I don't drink coffee but if I did, why not get it from MCD for 99c rather than pay like 6 bucks at a Starbucks? I absolutely hate Starbucks.
This kind of moves onto one of my new theories. If it smells like sh*, looks like sh*, it's probably sh* (I don't curse btw, but love euphamisms). You know when everyone was like wow Starbucks is so smart, a Starbucks at every corner this is such a genius idea...I think we all were a little confused as to the need for that many locations? I don't think it takes a genius to say that a Starbucks next door to another one isn't really going to do that well. Overexpansion is pretty easy to see. It is hard to always remember from an investing perspective, but if I see something that looks really stupid, I neeeeeed to short. And on the flip side, if I see something really smart I'm going to buy. I think it was the Chuck Schwab way of investing but I think that is the best way to do it. I'm not going to be able to tell you about Northern Chinese Oil Fields (as I was recommended by a recruiter to pitch in interviews, wtf seriously), but I can tell you which cell phones are the best or which retail shop is looking good or people are excited about.
From this line of thinking I'm actually pretty excited about Target. This stock has just been hammered and due to some poor management I think the stock is getting hurt unnecessarily. They have a great brand and clothes in their stores. I know a lot of people have moved down to Wal-Mart however I think there are a large number of people who will refuse to shop at Wal-Mart. There are tons of middle class people who would rather die than buy clothes at Wal-Mart and will continue to buy at Target. I just don't see this falling off a cliff like the analysts predicted. I look at Guess? similarly. I call Guess middle class luxury and a real stop-gap among people that will not drop below that level of luxury. Stock is up 36% over past 3 months so I don't know if it is necessarily a buying opportunity but try to use that same logic around Target.
So in summary, don't burn out your analyst (or associate for that matter), continue shorting the market especially when it's up without fundamentals, and eat at McDonald's!
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