Apollo's Leon Black: The Smart Money Is "Selling Everything That Is Not Nailed Down"

Tyler Durden's picture




 

When a sell-side strategist says 'buying opportunity of a lifetime', we know there will be another right around the corner even if we rally 10%; when one of the largest buy-side firms believes "this is an almost biblical opportunity to reap gains and sell," we tend to listen. In this brief clip from last week's Milken Institute, Apollo Group's Leon Black says his firm has been a net seller for the last 15 months, and that they "are selling everything that is not nailed down." Critically lost in the mainstream media's diatribe is his point that as the markets push higher, juiced by the Fed's policies, his firm will be selling more and more into that and harvesting gains (realizing profits) as opposed to watching unrealized gains (and the mirage of a wealth effect). Apollo has had $13bn of 'realizations' in the last 15 months - the most ever - as he sees "the market is pricey... in our view, priced for perfection." We suspect perfection is far from what we achieve.

Buy Low... Sell High?

Leon Black begins at around 15:45...

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Mon, 05/06/2013 - 11:22 | 3534250 firstdivision
firstdivision's picture

Buy-side firms want you to sell to them just as much as sell-side firms want you to buy from them.

Mon, 05/06/2013 - 11:26 | 3534257 Precious
Precious's picture

Physical fiat, Bitchez !

Mon, 05/06/2013 - 11:28 | 3534264 SafelyGraze
SafelyGraze's picture

"everything that is not nailed down"

or welded

http://www.youtube.com/watch?v=5uxsFglz2ig

 

Mon, 05/06/2013 - 11:38 | 3534285 alphamentalist
alphamentalist's picture

hearing this sell, sell, sell mantra everytime i wander into the orbit of a PE type. can't agree more, but I also can't remember a time when these guys were more inclined to take profits. their attitude is like "we'd be crazy not to take these prices".

when the most balls-out levered players start fading a liquidity rally what does that mean? QE5 at $200b/month anyone? 

Mon, 05/06/2013 - 11:48 | 3534307 Manthong
Manthong's picture

but benny boy be buying big

Mon, 05/06/2013 - 12:06 | 3534348 MillionDollarBonus_
MillionDollarBonus_'s picture

The smart money follows the chart. To make a sell recommendation on the S&P is to deny the validity of centuries of technical chart analysis. With the exception of silly pessimistic "over-bought" and "reversal" indicators, the S&P 500 is set to soar according to virtually every technical indicator. But ZHers prefer to ignore this powerful fact in favor of the "fundamentals" which historically have had absolutely no predictive value. The S&P 500 chart is a text-book bull market. There is a clear uptrend, all the momentum indicators are screaming buy, and the series of higher highs and higher lows is simply amazing. In all my life, this is hands down the best chart I have ever seen, yet silly ZH masochists continue to forego spectacular profits in order to further their delusions of impending Armageddon.

Mon, 05/06/2013 - 12:13 | 3534361 markettime
markettime's picture

Laugh it up MDB. Enjoy it while you can! I am sure you were all pissed off when I was watching silver wheaton rise all of those years while the S&P was doing squat! We will have our time again. I wonder how much we will hear from you when metals run another leg up. 

Mon, 05/06/2013 - 14:15 | 3534781 goBackToSleep
goBackToSleep's picture

Real simple. Last I checked buy low and sell high still holds right. No one can predict that perfectly, but this chart may provide some insight.

http://finviz.com/fut_image.ashx?relative_ytd.png&rev=634660477839218750

Mon, 05/06/2013 - 12:14 | 3534367 viahj
viahj's picture

not funny anymore, need a new schtick

Mon, 05/06/2013 - 12:31 | 3534393 Floodmaster
Floodmaster's picture

They are buying gold and and are eagerly waiting for an Economic Collapse/depression. You can't be more masochist than ZHr's.

Mon, 05/06/2013 - 16:26 | 3535308 TWSceptic
TWSceptic's picture

Learn the difference between a masochist and a realist...

Mon, 05/06/2013 - 12:24 | 3534406 ejmoosa
ejmoosa's picture

When you are inside the bubble, your perception of reality is distorted.  And you certainly cannot have a clear view of what is happening on the outside.

 

The "growth in profit" cycle has come to an end after a three year run.

Were we in the midst of ever improving rate of profit growth, then the S&P  500 might indeed be set to soar.

But an expanding P/E because prices are rising and earnings are declining is a surefire sign that the top has been reached.

 

Mon, 05/06/2013 - 12:34 | 3534441 LawsofPhysics
LawsofPhysics's picture

"To make a sell recommendation on the S&P is to deny the monetization of 85 billion per month" - Fixed it for you.  To infinity and beyond, because the "recovery is so good".  

Mon, 05/06/2013 - 12:36 | 3534453 ross81
ross81's picture

the market was also screaming buy in mid-2007 before the Dow lost 7000 points.

Mon, 05/06/2013 - 12:48 | 3534496 hapless
hapless's picture

Well, somebody, had to down-arrow you.

Mon, 05/06/2013 - 13:31 | 3534628 ToNYC
ToNYC's picture

I am long value and short artifice in bull, bear, and nowhere markets, and collect your fear premiums albeit foregoing leverage; worse case i own a unit more at premium's discount better than on-going buy point. You win or lose; I just play.

Mon, 05/06/2013 - 15:55 | 3535184 Kirk2NCC1701
Kirk2NCC1701's picture

Actually, MDB, the Smart Money owns the HFT -- and then monetizes a good chunk of the profits into real assets and quality stocks.  The Fed's "wealth effect" ---> "wealth transfer effect":  Big Fish eat little fish.

You probably also know and will perhaps admit, is that in classic Market Segmentation Theory, even the "Doom, Gloom & Boom" market segment exists.  It is (1) Real, (2) Substantial, and (3) Has identifiable and unique traits.  This means that they can be and indeed are being targeted by purveyors of goods & services "Doom, Gloom & Boom".  Like you, these purveyors are also getting the wealth-transfer effect, even if their clients/cards aren't.  Why, even the smart and nice Tylers are making a very nice living from the ads on this site -- a site, which has been forecasting The End is Near for a long, long time.

Now... you nice "Doom, Gloom & Boom" folks who don't see yourselves as targets of "Doom, Gloom & Boom" marketeers, and take exception to me saying so, you just down-arrow away now, you hear?

/s

Mon, 05/06/2013 - 16:12 | 3535262 TheCanadianAustrian
TheCanadianAustrian's picture

Even when MDB makes comments like these, people STILL assume he's not joking. The stupidity makes my head hurt.

Mon, 05/06/2013 - 16:21 | 3535284 TWSceptic
TWSceptic's picture

And yet corrected for inflation you would still have gained zero this decade.

Mon, 05/06/2013 - 20:27 | 3536044 WhiteNight123129
WhiteNight123129's picture

MDB is not wrong, negative duration stocks are doing great. As for positive duration stocks they can do like Argentina.

Stock market up 750% in peso since 2002. Internal debt has been inflated away from 140% debt to GDP to 42%. Now inflation is a bit high and interest rates are high too (yet still negative). But this is force all the evil scrooge McDuck of Argentina to dishoard from their greedy palm their pesos and spend.This has been a beautiful deleveraging.

 

 

 

Mon, 05/06/2013 - 12:03 | 3534341 flacon
flacon's picture

Nice! Thermite reminds me of 911. 

Mon, 05/06/2013 - 11:58 | 3534326 freewolf7
freewolf7's picture

The new Nike-like ad:
Just get out.

Mon, 05/06/2013 - 11:54 | 3534256 Cognitive Dissonance
Cognitive Dissonance's picture

"Apollo has had $13bn of 'realizations' in the last 15 months - the most ever - as he sees "the market is pricey... in our view, priced for perfection."

I have always loved that phrase.....priced to/for perfection. As if the markets were based upon some kind of reason, logic or mathematical formula. Why is it that all that reason and logic is used to explain irrational behavior? Because they are selling to the suckers, that's why. Thus the snake oil must be presented as perfection incarnate. 

Priced to/for perfect idiots perhaps.

Mon, 05/06/2013 - 13:03 | 3534536 YHC-FTSE
YHC-FTSE's picture

Flipping houses, flipping junkers (after a hillbilly tuneup), flipping "everything that is not nailed down". Flipping crap to suckers seems to be the business du jour.

 

If this is "civilisation", "progress" and "industry", they can keep it. The horrible predictability of this whole thing is that they are waiting for the crunch so they can pick it up cheap to do this all over again until that "infinite" supply of liquidity from the Fed has a head-on collision with reality. Can't be soon enough for me.

Mon, 05/06/2013 - 13:56 | 3534698 dontgoforit
dontgoforit's picture

The Bernank & obumma seem to like it, ha!  Watch what happens when the paper train stops....whoops, there it is!

Mon, 05/06/2013 - 11:26 | 3534258 LawsofPhysics
LawsofPhysics's picture

85 billion per month from the Fed alone, soon to be 120 billion, then 300 billion, sell paper, buy physical assets, especially those that benefit in a rentier society?  Why yes, thank you sir may I have another.

Mon, 05/06/2013 - 11:26 | 3534259 francis_sawyer
francis_sawyer's picture

Turn those machines back on Mortimer!

Mon, 05/06/2013 - 11:31 | 3534271 Cognitive Dissonance
Cognitive Dissonance's picture

Get back in there and sell, sell, sell.......

Mon, 05/06/2013 - 11:27 | 3534260 Zen Bernanke
Zen Bernanke's picture

I'm calling Bullshit......again!

Mon, 05/06/2013 - 11:34 | 3534279 dracos_ghost
dracos_ghost's picture

Hey, at least it's from the reputable MILKEN Institute. What a joke.

Mon, 05/06/2013 - 11:32 | 3534272 goBackToSleep
goBackToSleep's picture

So lets put Becky quick in a short skirt and have her pitch some softballs to Buffet and Gates. Sucks to be that rich in my opinion, you are land locked with no way out. You have to join team tyranny because you can't sell a dimes worth without alerting some algo as to your trade. You have to pimp the long position. I know bieng short is counterintuitive to everything you are taught in business school; however, it's a hedge.

Long PM's/Food/Water/Lead and Lead dispensers. Sell the rest at height. Suck it buffet. You're an old hack pimping someone elses agenda and you have no experience in the "NEW" economy. Yeah you made a lot from staying in long, but that's not saying much now is it. Even a broken clock is right twice a day. You've seen quite a few days since DOW 100.

Mon, 05/06/2013 - 12:23 | 3534402 resurger
resurger's picture

He grew more hostile against gold these days, he wont buy at :

$1,000

$800

$500

$200

lol, imagine the throng on gold when it hits $1,000

 

Mon, 05/06/2013 - 12:59 | 3534527 Quinvarius
Quinvarius's picture

Buffet was already angry when gold hit $1000.  I'd like to see his face at $10,000.  But I suspect he will die of a heart attack around $7500 or so.  Most likely his death will be due to Obamacare death panels telling him all those cheeseburgers he ate are the reason he will be denied heart medication.

Mon, 05/06/2013 - 19:18 | 3535833 Not Too Important
Not Too Important's picture

A short list of the reasons no one was allowed to read the bill before Obamacare was passed:

http://www.youtube.com/watch_popup?v=HcBaSP31Be8&vg=medium

This one is worth passing around.

Mon, 05/06/2013 - 11:33 | 3534275 SheepDog-One
SheepDog-One's picture

'Biblical' opportunity....so he's sayin it's all bullshit then?

Mon, 05/06/2013 - 11:34 | 3534276 DirkDiggler11
DirkDiggler11's picture

Anyone not trimming their equity positions and using the proceeds to buy physical gold, silver, and ammo is crazy.

Mon, 05/06/2013 - 11:57 | 3534319 Balanced Integer
Balanced Integer's picture

Amen to this. I started divesting from the stock market many years ago. Now I have stacks of silver, a half-acre garden plot, and boxes of ammo for my "lead dispensers."

Feels pretty good, if I do say so myself.

Mon, 05/06/2013 - 11:39 | 3534284 kito
kito's picture

By the looks of Manhattan condo prices and the number of art galleries in Chelsea id say the smart money is buying everything that is nailed and not nailed down....desperate to park their money outside the reach of the global wealth police......

Mon, 05/06/2013 - 11:43 | 3534292 ParkAveFlasher
ParkAveFlasher's picture

You can't eat a Picasso, you can't eat a poured concrete countertop with custom etching.

Mon, 05/06/2013 - 12:05 | 3534343 Meremortal
Meremortal's picture

And as Midas found out, you can't eat gold either.

Mon, 05/06/2013 - 12:14 | 3534365 Balanced Integer
Balanced Integer's picture

True this. But I feel certain that one will always be able to find someone who is willing to trade food for shiny .999 PM coins. That is how it was done for most of human civilization, anyway. That, or barter, str8 up.

Mon, 05/06/2013 - 12:25 | 3534405 ParkAveFlasher
ParkAveFlasher's picture

I'm sorry I forgot "/s". 

Mon, 05/06/2013 - 12:06 | 3534345 Abraxas
Abraxas's picture

You can eat pussy. Long pussies!

Mon, 05/06/2013 - 12:22 | 3534394 Balanced Integer
Balanced Integer's picture

Or if one is a male of homosexual persuasion, long cocks! Males of a homosexual persuasion have to eat, too.

Mon, 05/06/2013 - 14:16 | 3534787 Kirk2NCC1701
Kirk2NCC1701's picture

What's the line?  "Let them eat Rand".

Mon, 05/06/2013 - 12:42 | 3534476 Tulpa
Tulpa's picture

Have you learned nothing from the talking sheepdog in "A Boy And His Dog"?  You don't want to own something everyone else wants and doesn't have.

Mon, 05/06/2013 - 12:11 | 3534356 Precious
Precious's picture

"smart money"  LMAO

Mon, 05/06/2013 - 12:29 | 3534416 Jena
Jena's picture

The number of galleries in Chelsea will drop but it may take the end of ZIRP before it does.  Galleries are expensive to run even though you get the merchandise for free and the percentage is 50% --even higher in NYC.  The fixed costs can be killer.

There are only three reasons why people are buying art right now:

1) The bluechip stuff always sells, generally at auction.  Most bluechip artists are dead.  Galleries that deal in bluechip are generally dealing in prints, not unique pieces.

2) If they have a high-end home that requires a certain decor that includes quality art.

3) If they've been watching an artist's career for awhile and they know they can go directly to him/her and negotiate a direct deal at a cheaper price (see the gallery percentage above).  Direct sales are still happening but the work has to be quality and readily apparent.  Nothing esoteric or bullshit.

This is another industry that is going to change dramatically and there won't be room for galleries that have 80 to 120 artists required to give a gallery exclusive dealings for a geographical area in exchange for a show every two years, if they're lucky (and a portfolio on the shelf in they're not).

Mon, 05/06/2013 - 12:43 | 3534479 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

Now there is an interesting comment on a class of hard assets, Jena.

Nor did I know how art galleries are run (so, + 2).

***

I just picked up a catalog of Patek Philippe watches yesterday.  American Hard Assets (a new & interesting magazine) recently wrote an article on certain high-end watches as being a good investment. The last part of your first comment would be parallel with this notion.

Ahh, I think I'll stick with gold.

Mon, 05/06/2013 - 12:44 | 3534481 kito
kito's picture

Hence the rush to buy now and protect thy abundant wealth from being "skanked" (h/t fonz) .......when qe runs its course and its on to the pension fund 401k grab......artwork will be quite tradeable among those who saw the train wreck coming.....

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