Keep On Dancing Till The World Ends?

Via Pension Pulse.

It
was a rainy and cold weekend in Montreal so I spent most of it doing
the one thing I hate the most, shopping. I bought a new mattress, a new
television, some clothes and re-tailored my suits, jackets and pants
because the first tailor did a terrible job (losing weight is healthy
but expensive).

Tonight, I had dinner at my brother's house,
saw my nephews and sister-in-law and enjoyed some BBQ burgers and
hotdogs (once in a while, it's good to indulge!). My brother's neighbor
was over with his two young girls and we talked shop a little.
Montreal's investment community is small. Turns out he works at Stanton Asset Management, which is the portfolio advisor to O'Leary Funds, private clients and institutional clients.

According
to their website, the investment team at Stanton is responsible for
over $1 billion of assets under management, invested in Canadian and
global markets, including investment grade bonds, high yield bonds,
convertible bonds and equities. I know Connor O'Brien, Stanton's
Chief Investment Officer, as he used to run a small fund of funds
focusing on delivering high risk-adjusted returns.

My brother's neighbor told me the O'Leary Funds have performed extremely well with low beta, helping assets grow. It also helps to have Kevin O'Leary, who everyone knows as Canada's unrepentant dragon,
to market the funds. I told him I'd be more than happy to plug
Stanton on my blog and have other ideas that I'd like to discuss with
Connor and Kevin O'Leary.

Speaking of marketing, before I get to my latest comment, I want to
clarify something. Pension Pulse is a blog I created to share my
perspective on markets and pensions. I don't care if you agree or
disagree with my views, but take the time to read them carefully. I do
not have a monopoly on wisdom but I try to offer a fresh perspective
that most analysts do not bring.

I am not a
permabull or a permabear. In fact, I was extremely bearish back in 2006
and it ended up costing me my job (they claimed I was too negative).
It's all in the past for me but I recently started asking for donations
on my blog and would appreciate your financial support, especially from
the large institutions that read me on a daily basis. But there are
others too, brokers, bankers, unions, federal and provincial MPs,
government agencies, non-profit groups, etc.

You can click on the donate button at the top of my blog and give
whatever amount you can. If your organization can't donate, then donate
as an individual. PayPal calls them donations but they're not really
donations. I'm not a charity; I'm the most underpaid pension and market analyst in the world and would appreciate your financial support.
If I do not get support, I will start charging a flat annual
subscription fee for my blog and close it off to only a few
institutional clients. I prefer to keep my blog open to everyone but a
free blog which provides a fresh perspective isn't compensating me for
the time and effort I put into it (just the links on the right-hand side
took me forever to put up and I keep adding more).

Back to business. Two years after I wrote my Outlook 2009 on post-deleveraging blues,
I am still bullish on stocks for the simple reason that there is plenty
of global liquidity to drive risk assets much higher. Liquidity is
primarily coming from the Fed pumping billions into the financial
system, but it's also coming from global pensions, sovereign wealth
funds, endowment funds, mutual funds and insurance companies.
Importantly, hedge funds are back with a vengeance, growing larger as
assets set to surpass the 2008 all-time high. This too is a driving force behind stocks, bonds, commodities and currencies.

But
the bears only see doom and gloom. Some of them act like religious
zealots. Just check out the nasty comments I got on Zero Hedge following
my last post on my lunch with a bear.
There are a lot of smart people over there but they're so many idiots
who just like to insult me because I do not share their views. I got
thick skin and can take whatever they got to dish out but sometimes I
engage them and then end up regretting it.

Most of the bears on
Zero Hedge accuse me of being a "permabull" who only sees through rose
colored glasses. Can't I see that the US dollar has tanked as stocks and
commodities rise? Can't I see it's only the Fed's quantitative easing
propelling risk assets higher? Of course I can but it doesn't change the
fact that I've been right in telling people to keep buying the dips
over the last two years as the liquidity tsunami will wash over whatever
negative macro events come our way.

And my detractors love
throwing my calls on Greek bonds and National Bank of Greece in my face.
Both are priced for default (good contrarian plays). The reality is
that Greece is hurting but last time I checked, it's still part of
eurozone. My buddy tells me 40% of Greeks want to go back to the
drachma. Ah yes, the good old drachma years where you have a worthless
currency and you're stuck engaging in competitive devaluation hoping you
can export your way out of your economic woes. These are short-term fixes, Greece needs structural changes.

But Nobel Prize winning economist Joseph Stiglitz is right, austerity measures “don’t work”
and prevent countries from creating jobs needed to generate economic
growth. Too much austerity can kill an economy, which is what is going
on right now in Greece and what risks happening in the periphery
economies and even the UK. At one point, people will just stop consuming
because they can't get a loan and they're scared to death they'll lose
their job.

One last thing on macro events. Lots of pundits are
fixated on the US debt ceiling. Gurus like bond king Bill Gross and
hedge fund legend Stanley Druckenmiller are warning of a catastrophe. I
think you should all watch ABC's This Week's roundtable discussion on the economy
and listen to what another Nobel Prize winning economist, Paul Krugman
says about that (love him or hate him, Krugman is 100% dead right on the
debt bogeyman).

Now, onto my latest topic. I called it "Keep on Dancing Till the World Ends" because after turning 40 recently, I'm listening a lot more to pop music. I got the radio on Virgin Radio 96 FM
all day and listening to Britney Spears, Jennifer Lopez, Rihanna, Lady
Gaga, and a bunch of other pop stars. It gets annoying after a while
because they keep playing the same music over and over, but it's a
perfect title for this post.

Those of you who haven't read it, should go back to read my comment about Leo de Bever on when the music stops.
At one point, the music will stop, but for now, I agree with Britney
Spears, you got to keep on dancing till the world ends. And despite what
those bears on Zero Hedge think, the world isn't ending anytime soon.

I
know, "sell in May and go away", the summer doldrums are just
beginning. China will collapse, commodities and energy will tank, Greece
will default and the world is a hair away from total calamity, but I
remain bullish and ignore all this noise. It's more of a distraction
that scares retail money away while elite funds load up on more shares.

Last week, I wrote an introduction on how I track activity from elite funds.
I even gave an example of Greenlight Capital buying up Internet-giant
Yahoo (YHOO) and electronics retailer Best Buy (BBY). If you read that
comment carefully, I specifically stated that I use this information to
build a portfolio of stocks I track across many industries but I'm
careful not to buy any stock blindly, even if elite funds are buying it.

Picking
your spots of when to buy or when to sell a stock isn't easy. It takes
traders years to built up this skill and even then, they're extremely
lucky if they're right 60% of the time. That's why I focus on a few
stocks across 10 industries I track regularly, and try to pick my spots
carefully, going in when a stock is tanking on high volume for no
apparent reason (noticed it's best to buy towards the end of the day on
such days).

Those of you who have tracked my stock comments know
I love solar stocks. But I don't just track solars. I like medical
device companies, healthcare, energy, software, networking, storage, and
many other sectors. Solars are fun (for me) because they move strongly
in both directions and offer good trading opportunities. But solars are
not for most most investors because they're too volatile and a lot of
people get scared away.

There are plenty of stocks out there. For
example, one of the top performers this year is Green Mountain Coffee
Roasters (GMCR, click on image to enlarge).

Now, have a look at their top institutional holders (click on image to enlarge):

Data
is lagged but among the top holders, you have Fidelity (FMR),
Blackrock, Wellington and some hedge funds like Coatue Management and
Winslow Capital Management.

You might be thinking, who cares? I
care more about what top funds are actually buying and selling then what
some analyst is touting or what George Soros, Bill Gross and Stanley
Druckenmiller are saying on the television. Show me your actual book,
not what you're recommending on TV.

Next week, I'll get into
specifics on which top funds I'm tracking and what are their top
holdings. I want people to do their own research and due diligence as I
don't believe in spoonfeeding anyone, but I'm going to give you the
tools to be able to dissect the portfolios of these elite funds.

Finally,
please be kind enough to donate whatever you can to my blog efforts.
You can do so by clicking on the donate button under the pig at the top of my blog.
And remember, these markets are a lot like Britney Spears, up, down and
very volatile. But don't let those permabears scare you away. Have no
fear, keep buying the dips and keep on dancing till the world ends. :)

Comments

[DeadFred]

Markets up, markets down, who cares just keep dancing. Why else have a dead dancer as an avatar? Dance but don't bet your house that the market keeps defying gravity. It likely won't. Of course I though the same last October and November and...

[Spirit Of Truth]

Dance with the devil and...