TradeSmith Daily

December 2019

Best of: Why WeWork Summed Up the Unicorn Bubble

December 27, 2019TradeSmith Research Team

Editor’s Note: In August, before the IPO was canceled, we said that WeWork sums up “everything that is wrong” with the unicorn bubble. Then the storyline went gonzo, with a series of founder fiascos so nutty they’ll be remembered for a generation. Here’s a look back on our early call pegging the craziest startup of 2019. Generally, you want to avoid cash-burning companies when they go public. The initial public offerings (IPOs) for Lyft and Uber were an example of

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A New Year, a New Decade, and It’s Time to Get Back to the Basics

December 30, 2019TradeSmith Research Team

Quick question, and answer honestly: Do you have an exit strategy in place for each of your stocks? Hold that answer for a moment. In just a few hours, the calendar will turn over, and we’ll be in a new year and a new decade. One year ago, we were coming off the worst Christmas Eve performance in history and today, we’re sitting at the end of the year with a powerful rally that nobody saw coming. Bull markets and

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Best Of: It’s the Beginning of an Era for Amazon

December 30, 2019TradeSmith Research Team

Editor’s note: In February 2019, we said it was “the beginning of an era” for Amazon. As 2019 comes to a close, Amazon’s stock price gains are in the neighborhood of 23%, despite a lot of tough publicity over the course of the year. In a bigger picture sense, Amazon is the dominant example of the “disrupters versus the disrupted” phenomenon — and for that reason, the dominance may have only just begun. Apple became the world’s first company to

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Best Of: The Kraft Heinz Debacle Shows How Value Investing Has Changed

December 31, 2019TradeSmith Research Team

Editor’s Note: In our final “Best Of” installment for 2019, we look back at the Kraft Heinz share price meltdown and the way it illustrates how value investing has changed. If Amazon is the poster child for dominance in the “disrupters versus disrupted” thesis, Kraft Heinz is the cautionary tale — and value investing in general has entered a world forever changed. The Kraft Heinz share price meltdown in February 2019 showed how a popular version of value investing —

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January 2020

The Babe Ruth and Joe DiMaggio of Money Managers is Constructively Bullish

January 2, 2020TradeSmith Research Team

There are very few money managers (let alone retired ones) who are always worth listening to. Stanley Druckenmiller is one of them. Because of his track record — 30% average compound returns over 30-plus years, with no losing years — Druckenmiller is like Babe Ruth and Joe DiMaggio combined. What’s more, Druckenmiller earned his incredible track record managing many billions of dollars rather than small sums. (It is normally much harder to book stellar returns on a large asset base.)

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A World War I Reminder: Nobody Knows Where the U.S.-Iran Conflict Will Go

January 3, 2020TradeSmith Research Team

Given recent events in the Middle East, there are two points worth remembering about World War I, which lasted from July 28, 1914 to Nov. 11, 1918. The first point: World War I was started by an assassination. On June 28, 1914, the Archduke Franz Ferdinand of Austria and his wife were shot after taking a wrong turn into a side street. A month later, the War was on. The second point: All parties expected World War I to be

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Mystery Drone Swarms are Not OK

January 7, 2020TradeSmith Research Team

There is something genuinely weird going on in Colorado and Nebraska. The phenomenon is a calling card of the new information age, and the intense challenges soon to come. To step back for a moment and provide context, our assigned name for the 2020s is “The Deadly Decade.” The basic premise is that the 2020s are likely to be a 21st century version of the 1930s and 1920s combined. Huge danger, destabilizing financial upheaval, and explosive technological change — for

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Investors Fear Missing Out More than the Prospect of War

January 8, 2020TradeSmith Research Team

There is an old trader’s saying: “It’s not the news — it’s the reaction to the news.” The point of the saying is this: What matters more than a headline, or the substance of a news story or data point or event, is the way investors choose to interpret the information. That interpretation depends on how investors feel, which is why emotion dominates markets. When investor sentiment is bullish — more driven by greed than fear — good news is

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Going, Going, Ghosn: The ex-Nissan CEO’s Wild Escape from Japan

January 9, 2020TradeSmith Research Team

If you liked Ocean’s Eleven, you are really going to like the movie they make about Carlos Ghosn. There isn’t any official word — yet — but there is no way a movie doesn’t happen. The true-life story of how Carlos Ghosn escaped house arrest in Japan, and the events that played out to make it happen, read like a Steven Soderbergh script. In some ways, the tale makes Ocean’s Eleven look tame. And the story isn’t over yet, because

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The “Bunker Mentality” is Big for the Wealthy in 2020

January 13, 2020TradeSmith Research Team

For the wealthy in 2020, it’s all about the bunker. “World’s super rich are hoarding physical gold in secret bunkers,” a Russia Today headline declares. New research from Goldman Sachs indicates that stores of physical gold — that is to say, actual gold bars in vaults — are accumulating faster than visible purchases of gold ETFs (exchange traded funds). When it comes to gold, there is “paper” ownership — where you purchase an ETF, or a futures contract, or some

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What if the FANG stocks dominate for the next eighty years?

January 14, 2020TradeSmith Research Team

What if the FANG stocks dominate for another eighty years? What if Facebook, Apple, Amazon, and Google are still dominant in the year 2100? It’s an intriguing question for at least two reasons. First, if the FANGS are institutions that will last for generations, they should be seen in a different light. Second, the idea of the FANGS dominating for the rest of the twenty-first century counters the conventional wisdom — which says giants eventually fall — and the way

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Man Who Oversees $160 Billion Forecasts 30% Upside for Gold, Disaster for the Dollar

January 16, 2020TradeSmith Research Team

Bridgewater Associates is the world’s biggest hedge fund. It has assets under management of more than $160 billion. Bridgewater is also the most successful hedge fund of all time by the metric of absolute dollars earned. By that meaning, if you looked at how many swimming pools Bridgewater could fill with the dollars it has earned for clients, they would fill more pools than any other rival. Over the course of four-plus decades, their sheer volume of profits is unmatched.

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