Market complexity and simplistic press narratives

One of the most complex / dense writers that I read regularly and usually read more than 1x, the Heisenberg Report, posted on SA today an article that reflects a point I was making earlier this week about the simplistic press narratives and marketing spin used to keep individual investors putting our capital in play.

This is a dense post and has at least two key themes, but the one that I am focused on is how simplistic narratives drive both human and headline algos to make investment decisions that may / may not be completely factual, or grounded on solid financial data. As marketing departments do what they are designed to do – drive more business, they will continue to get better and better and influencing consumers (amateur investors) to generate revenue for the professionals. The marketers / spinners are not evil or malicious; they are doing exactly what they were designed to do: drive revenue growth.

The key take away for me, which is the same point I made earlier here, is that we individual investors need to really spend the time and diligence behind our strategies and investment decisions – check, cross-check and corroborate all inferences and recommendations with our own data analysis. Our jobs are getting harder.

Stock analyst observation

I follow stock analysts’ daily picks on a site that i find useful

My observation (no data collected) over the last couple of months of daily monitoring the top analyst picks (only 4 and 5 star analysts) is that their picks between buy and hold are sentiment driven more than fundamental business driven. When sentiment is low, the ‘holds’ out pace the ‘buys’ and the inverse when sentiment seems positive.

Key observation and suggestion: don’t trust the recommendation poke and dig thru the data to understand exactly WHY they made that recommendation. It takes hard work to be a good stock picker and even more work to be a good portfolio manager.

5G – is the investment risk increasing?

Over the weekend, I saw a poster at one of the local healthfood markets about this organization and upcoming protests about 5G.

This organization seems focused on delaying or preventing the installation of smart electricity meters and 5G infrastructure. They also posted a large resource list

Eugene, OR has groups that protest against just about every issue one can identify, so it is not surprising that a local effort against 5G roll out exists. For potential investors using 5G as a major investment narrative, these local push-back efforts will both slow the deployment and increase the costs of those roll outs.

The risk requires monitoring imho.

5G Upate Early April 2019

One of my followed authors on Seeking Alpha – Dividend Sleuth – published an article on telecom industry and through the comments he posted some links to my question about health risks.

Dividend Sleuth shared the following and i pass along without deep review – so some may / may not be helpful. – Below copied directly from our comments:

Simon Rockman’s September 2018 Forbes article, “Is 5G A CIA Plot?” (…)

Here’s a good November, 2018 Vox article by Julia Belluz about the mechanics of radiation on the electromagnetic spectrum: “A comprehensive guide to the messy, frustrating science of cellphones and health.” (…)

A website about radiation health risks has an interesting article about 5G and home routers: “Why 5G Cell Towers are More Dangerous,” (…).

Finally, here’s an article by Michael Luciano at ECN: “Will 5G Affect Your Health? Maybe…But Probably Not.” (…)

Executing a strategy I don’t understand = pain

This is probably obvious to most, but like many things, I had to bang my head against the wall to learn it. My lesson is not investment domain specific though that was my classroom.

I am always receiving promos for different investment or trading platforms, most of which are subscription cloud services. Sometimes i see one that is worth giving it a spin. My first lesson awhile back was a ‘paper exercise’ is not a sufficient test; i always make exceptions or rationalizations of insufficiencies of the platform or my required responses to it. I have to put skin in the game, i.e., money, to learn.

I saw one that seemed like worth a try; I followed their daily recommendation but failied to exercise the stop/loss due to my inability to monitor every minute of trading hours. – i did not understand the behavioral requirements of the strategy. I lost all $200 of my test.

Looking back, I would do one of or both of deeply understanding the strategy and my required behaviors and / or follow a poorly undertood strategy to the letter of the prescribed behaviors. The risk of the second action is that I would not be able to innovate within the strategy when conditions change, yet conditions always change.

This then is the pain of a poorly understood strategy … failures of execution both due to mistakes and the inability to innovate within changing conditions. The remedy is simple – execute only strategies I know sufficiently to innovate; and ideally, constantly increase my strategy portfolio.

5G Portfolio Risk links this week

Reminder that this information is focused on helping understand and quantify the risk of public perception and scientific support for health issues impacting the investment thesis in the 5G infrastructure and user (machine too) experiences. Periodically, I will crawl thru a 7 day search to see what surfaces – I AM NOT advocating that there are or are not validated issues – simple risk management, and i cannot manage what i do not understand.

From Australia

Texas too

CBS News —

And then there are the perception gasoline fires & – then there are others sources trying to fact check this noise

All this suggests that the noise level is starting to pick up … the comms industry would benefit us all be sponsoring an independent – completely – study, or if we had a functional federal government, they could help us all understand both for our health and our wallets.

5G Horizon

Cisco published a whitepaper on mobile network traffic and of course had to include their view of 5G horizon. I found it telling on a couple of fronts … the timeline, the device types that will really benefit (think BIG), and how M2M deployments play.

All the data volume projections are familar and in the same vein that Mary Meeker has used for years. My enthusiasm for the investment opportunity has not changed, but I will start refining my timelines and risk (as posted earlier).

Full disclosure – CSCO is one of my largest stock positions and i have owned for 10+ years … the position grows and shrinks as opportunities arise, but CSCO will remain a core holding for my equity / income growth sub-portfolio.

Intergenerational Theft

A recent post caught my attention, both on the question posed for portfolio management risks and a key phrase used “Intergenerational Theft”.

Quote: “The undisciplined use of debt almost always comes back to haunt the debtor, or, the debtor’s relatives. That is, the major impact of this “haunting” almost always lands harder on the next generation. As Mr. Rattner concludes, “my principal fear is that all this irresponsible borrowing amounts to intergenerational theft.” Basically, this means that there will be no room from future spending programs, like for infrastructure, or lower taxes, say to help the middle class. And, this will be the case even if we avoid a financial collapse resulting from market disruptions.”

The US and global debt will be force to be reckoned with sooner or later and how that reckoning plays out will be most likely incredibly disruptive … where did all the fiscal conservatives go? I never agreed completely with them, but their tension in the system was necessary to maintain balance … are we titling off the map and leaving the mess for our children and grand children to clean up?

5G – What is the risk?

This post starts a thread to be continued for 12-18 months along two vectors around the roll-out of 5G networks, technology and devices. I have moved my thinking from, “Is there a risk?” to “What is the risk?”

As with all posts, this is fully my opinions and not investment recommendations.

5G is a core theme of my investment portfolio looking out the next 5-10 years as the Internet of Things (IOT) and Machine Learning (ML) lead the next technology profit cycle. As deployment pilots start showing results and new products surface enabling innovative machine and human experiences, this area will be one vector to follow. Key will be how to better anticipate 5G investable companies beyond the infrastructure and base component segment already in my portfolio.

The second vector connects to the first as a systematic risk management thread around 5G safety. There is a strengthing risk element to 5G – the technology perhaps, but surely the public perception of that technology. I am seeing an increase in publications and posts focusing on the potential health risks of wide 5G infrastructure deployments. History is full of examples of technology assumed safe (or presented as safe) that later turned out to be deadly for both humans and the companies behind the technology (and their investors). What is the risk associated with 5G deployments for portfolio success, humanity and social justic, and how should it best be managed?

A noteable US Senator is pushing a FCC review and  seems like one important area to watch for additional clues. From a portfolio management risk perspective, either a factual support of or a public perception of dangerous technology creates material impact to portofolio assumptions and the probability of the latter risk seems to be increasing – a systematic review is required.

A couple of recent posts I found interesting

You can expect more on 5G as I keep digging for more clues

Uh Oh?

There was a brief post this morning on several platforms about Samsung’s profit decline in the current quarter … i saw it here first:

I predict that the press will continue to connect this to the device declines (e.g., Apple) and the memory folks, (e.g., Micron) … but what really got my attention was this: “That’s following about 24 months of very, very aggressive growth,” he said. “So, suddenly, what’s happened is data center companies such as Amazon, Microsoft, Google … these companies suddenly have enough memory, and they stopped ordering. And that has really been one of the major stumbling blocks for these memory companies.”

So … does this mean that those same Cloud Service Providers (CPS) are slowing their purchases of CPU, Connectivity, Floor Space, etc? That would be HUGE and based on my experience, CPS don’t buy quantities of memory without someplace to install it … for me the key question is this

a) Did the CPS folks build out capacity sufficiently and are now consolidating operations?

b) or the worst case, has demand for data and CPS cloud services actually slowed down – if that is the scenario, “UH OH!”

Idiocy in Contridictions

Today there were two big news items that impacted both the stock and bond markets, and to me, they are condictory and show how lemming-like investors are.

First, jobs data came out with top-line print very positive and the news assessment was – no recession in sight.

Second, FED chair Powell spoke and stated that FED will be patient with rate increases (not said, because markets are spooked that recession / slowdown is nearer than originally thought).

How can both of those prompt one to invest more into stock market? Either growth is or is not slowing – can’t have it both ways.

Just in case you want to ask … I am selling into the rally and buying 3month T-Bills. I remain in trading / capital preservation mode and new investments are valuation driven (no more FOMO!)

Later comment – MarketWatch posted something very similar to what i said

Extended Hours Poaching

A recent experience and additional observations have created a very jaundiced view of a group of traders who take advantage of less experienced folks.  They are poachers with all the negative connotations of that term.  Let me explain with an example

I had a short position in RUTH.  I stupidly placed a stop lost / limit order to protect my capital from a price increase above my limits.  I absent-mindedly left that stop loss order open over night … it was snapped up first thing when market opened at about $0.25 above the next trade.  I looked at RUTH trading history and there are several of these very odd very early trades way above the market … Poachers taking advantage of stupid people like me.

Not to self:  Never leave stop loss orders open overnight and especially in thinly traded stocks like RUTH.

Trading Tides Have Turned

After a very difficult trading month so far in October and a couple of interesting SA posts (Jeff Miller’s weekly trading post) and a new author for me posted I have finally figured out a way to describe the change:  the tides have turned and the winds have shifted.  Mary Poppins like …

Previously, the trading tides were pushing upward so trades were easily identified with consolidation at support points and falls from strong resistance.  The winds were blowing upward so lower values on dips made sense … and consolidation support points held – they were the floor. 

It seems that the tides have turned now after watching support levels break down consistently … the dips are now hard to stop (supports are like false bottoms).  The trading tactic now looks to be waiting for consolidation bottoms and upward lifts with volume and strength through weak resistance points.   This may reduce potential gains on the upside (longs) … shorts are also complicated as there are no support levels below (what can i logically expect for exit and profit)?

While I fully admit that i am not an expert technician and use fundamental DCF valuations as the filter for my trades, for me at least, the tides have turned.

An End to US$ as Global Currency?

I have been talking about this for several months, maybe even a year or so, but not to the technical depth that these two people are this past week.  I think this is worth considering and baking into your long-term risk management variables.   My pontifications have been more cultural evolution derived but these guys are helping me understand the investment implications.  

JP Morgan analyst is quoted within the below

Heisenberg on Seeking Alpha

3 must reads for the week

Rather than comment on different articles this Sunday, i will point them out and make a point

i do not think there’s a needed order to read – but read the comments

Point – risks continue to grow globally across mutliple asset types.  there are short term plays but they contain complex variables and winning hands are beyond average investors (myself included).  i am comfortable with my recent moves taking more and more capital out of equities and placing in short-term treasuries (<6 months).  Might i miss out another 5% of S&P upward melt?  sure … but as somebody posted last week (can’t remember who):  i want a return OF my capital, not just a return ON my capital.

Reminder:  i’m semi-retired with short runway to acquire additional capital