Doug Kass shares his views every day on RealMoneyPro. Click here for a real-time look at his insights and musings.
Adding to Amazon Short
Originally published at 2:46 p.m. EST on February 25, 2016
Position: Short AMZN small
Here's Why I Like Best Buy
Originally published at 3:02 p.m. EST on February 25, 2016
Here is a link to the case to buy Best Buy a few months ago.
More tomorrow on this Best Ideas List long.
Position: Long BBY
I'm Now Bearish Both Short- and Intermediate-Term
Originally published at 8:14 a.m. EST on February 24, 2016
"When the facts change, I change my mind. What do you do, sir?"
-- John Maynard Keynes
I began to turn short-term bearish in the heat of the market's rally Monday when the S&P 500 was up 130 points from its February lows (see my column Fire and Ice).
I fear that "ice"-- a spiraling of deflationary influences -- is now ahead for us. The signposts are everywhere. Yesterday, we saw them in:
- the Japanese yen's strength;
- the rise in U.S. car-payment delinquencies;
- diminished U.S. consumer expectations;
- more global easing, and a possible retreat from Federal Reserve rate increases this year;
- a precipitous drop in agricultural prices;
- the many fixed-income markets around the world where negative interest rates prevail.
So, I've now become bearish in both the short and intermediate term.
Reflecting this, I made the ProShares UltraShort S&P 500 ETF (SDS) -- an inverse play on the S&P 500 -- my Long Trade of the Week at $21.50 at midday Monday during the teeth of the rally. And I made Amazon my Short Trade of the Week at $554 yesterday afternoon.
Nonetheless, I sold half of my SDS long for a profit yesterday afternoon, as I base my market views on fundamentals. I simply establish a fair-market value for individual stocks and the S&P 500 and make investment and trading decisions accordingly.
I try to be consistent. I don't frequently change my market views based simply on price action, but always try to ground my analysis and investment management on fundamentals.
Moreover, I believe the disruptive impact of quant strategies has discredited stock charts and the ability to interpret them. So, I prefer to be anticipatory rather than reactive, opportunistically capitalizing on the random and exaggerated intraweek swings that we're seeing in the market.
At times I might be wrong (and will admit it), but I strenuously stick to the game plan that I outline in my daily diary.
In my view, the S&P 500 is going to spend most of 2016 in a broad trading range of 1,800 to about 2,000 -- with slight overshoots and undershoots to my fair-market-value calculation of 1,860.
And if I've erred in that FMV calculation, I believe there's more risk to the downside than to the upside, as I anticipate the market's main averages will drop by low double digits for 2016 as a whole.
But my view isn't fixed; it's a function of the developing global economic and profit-growth picture. So ... stay tuned!
Position: Long SDS, Short SPY, AMZN
At the time of publication, Kass and/or his funds were long SDS and BBY, and short SPY and AMZN, although holdings can change at any time.
Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.