Q: some of this might be of interest to you

http://www.fpafunds.com/docs/special-commentaries/cfa-society-of-chicago-june-2015-final1.pdf?sfvrsn=2

J: Enjoyed that. A perspective you rarely see in the investment world these days.

Q: When will the miners explode? Saw your tweet on outside reversal day on gdxj.

J: This could be the start. The smaller miners are acting very well, all things considered.

Q: My question is this… given your bearish sediment toward the US market and your recent blog post about being a “pig”… both of which I enjoyed and agree with, would a leveraged bear ETF be a descent investment for a very small portion of my portfolio? Something like SQQQ…

J: We are currently trading a couple of leveraged inverse ETFs (see the Trade Ideas) but they have to be traded. You can’t really buy them and forget about them because you can lose a lot over short period if you’re wrong.

Q: Hey Jesse,

CNN article I read today:

http://money.cnn.com/2015/07/14/retirement/worst-state-pensions/index.html

One thing stood out to me:

“There are two big reasons states have fallen behind. First, a lot of the funds are held in stocks, and returns on those investments fell during the Great Recession.”

Seems reasonable to think that O (being from Chicago himself and with Rahm & Co. there as well) that they will do everything they can to get the market up enough to fix this problem.

According to the CNN piece only 39% is funded in Illinois.

100 – 39 = 61

Today’s SPX close x 1.61 = 3395.28 approx.

AAPL’s Price to Book ratio divided by ROE = .15
*Value investors would generally want to see any # below .50 so .15 is a solid # for better or worse.

.50 – .15 = .35 which means superficially there is 35% of potential upside in the stock.

MSFT = .18 (or 32% upside) > plausible w/ buzz around HoloLens
XOM = .12 (38% etc) > could reach higher levels on a rebound in oil

Even though I am a long term bear re student loan bubble (and as a strict value investor who would prefer to buy stocks with a significant margin of safety) I am currently viewing the market from this perspective short to medium term: As long as AAPL doesn’t drop 20% over a 21 day time period the market trend is + for Bulls.
*252/12 etc.

And SPY’s short interest ratio is still quite high above 1.75 leading one to believe that the majority of the street is bullish not bearish.

https://books.google.com/books?id=iC4EAAAAMBAJ&pg=PA20&lpg=PA20&dq=short+interest+ratio+1.75&source=bl&ots=2GtOWflZSJ&sig=pngDZgR6gY8sAJfHH2eQ-kZ5mno&hl=en&sa=X&ved=0CCMQ6AEwAmoVChMIypeGzLnbxgIVQ6keCh3jpAnM#v=onepage&q=short%20interest%20ratio%201.75&f=false

Just looking at the market as it is not how I want it to be.

J: This assumes that they are capable of forcing the market higher. If even the communist government in China is showing us that’s just not possible, how can a government like ours, that can hardly get anything at all accomplished, manage to do so?

Q: I just saw Gundlach on tv and he said he bought NLY couple of weeks ago. He doesn’t think fed will raise rates and even said with growth they maybe should cut. He is on cnbc which I hate but saw him on right now. NGD is acting well today but I am so frustrated with gold and gdx. I am tempted to sell all my paper gold and silver for 5 yrs of losses hurts. Seems like the washout could get way worse.

J: NLY could be a super trade right now if long bonds rally. 5 years of losses must be very painful. If you are over-exposed you may want to take some off. I will say, however, that the gold miners are looking ready to explode right now. I’m seeing lots of bullish signals line up here. See my latest chart book for more.

Q: Hi Jesse,

What do you think of Barry’s theory on gold miners regarding the breakdown in the price of miners to the price of gold due to the GLD ETF (link below). It’s interesting, but I can’t imagine it’s worth as much as he is suggesting. It also obviously sounds like an “it’s different this time” argument. Your thoughts would be much appreciated.

www.bloombergview.com/articles/2015-07-16/are-shares-of-gold-mining-companies-a-buy-

J: He doesn’t really say much in the article except, “I don’t know,” which seems to be his answer for everything these days. He’s pursuing the sort of passive approach these days which abstains from thinking. I generally don’t value his opinions much anymore for that very reason.

Q: Why Jeremy Grantham Believes We’re Not In A Bubble… Yet:

http://www.gurufocus.com/news/346659/why-jeremy-grantham-believes-were-not-in-a-bubbleyet

Note that VIX still hasn’t filled the gap at 10.32 from the July 3rd 2014 close. That’s positive for Bulls for now.
http://finance.yahoo.com/q/hp?s=%5EVIX&a=0&b=2&c=1990&d=6&e=16&f=2015&g=d&z=66&y=198

And that VXX’s short interest ratio is quite low at 1 vs SPY’s above 1.75 at 2.5
http://shortsqueeze.com/?symbol=VXX&submit=Short+Quote%99

http://shortsqueeze.com/?symbol=Spy&submit=Short+Quote%99

Pay close attention to SLM. NOT Carl Icahn (as amusing as his comments may have been re Blackrock). The student loan issue is the biggest crisis facing our country long term. And as long as everyone on the street is bearish it’s tough to imagine the S&P filling the 676.53 gap anytime soon.
http://shortsqueeze.com/?symbol=Slm&submit=Short+Quote%99

Note that SLM’s short interest ratio is way above 1.75 at 8.1

As hard as it may be to believe those who are bearish right now are more in line with crowd than they are taking a contrarian view on the markets.

Dig your posts. Just think it’s early.

J: Yet his firm is holding 50% cash in their portfolios, most since the financial crisis: http://www.valuewalk.com/2015/07/gmos-james-montier-is-holding-50-cash-three-hellish-situations/

Do as I say not as I do?