Tuesday, January 19, 2016

Morning Rant

1. Really? How the heck do they know? I recall sitting atop 1 Wall St. explaining to a Journal reporter that when interest rates go down, bond prices go up. I guess they've move beyond basic bond math to calling corrections.

2. Would ya' short this weekly chart? Hope not. Lookin' to buy more calls today.

3. Carbo Ceramics (CRR): Net debt is zero. Half the float is short.

Monday, January 18, 2016


De clutter, get all extraneous shit off of your screens. 

1. Oil: To the point where you have to look at it. Blood in streets. Iran deal peaks my interest because any sign of deal souring will send oil higher.

  • Last week highest weekly volume ever for USO going back 15 years. 3 push pattern dates back to 9/29/14 so almost 15 months old.  First push down peak to trough 51%, 2nd push down 21%, and 3rd down 29%. If 3rd push did down 51% like first USO would go to $6.04. Would not be surprised to see this. Will be using a big target here looking for $11 around 50 day MA. I'll give myself option to go in in 1/3s. Massive gap lower tomorrow would be great entry. Have to buy big gap up tomorrow, means market knows what I originally thought. Since target so big buying gap up much less risky. This deal won't work. ETF could return 25% easily, figure risk 6% MAX. Trade could take 2-4 weeks. Options could return 400%. Risk 2% of account MAX.
Chinese GDP will drive oil tomorrow as well. Reuters article here Oil Slumps Below $28

An Exit

"Why should I ask the wise men: Whence is my beginning? I am busy with the thought: Where will be my end?"

Muhammad Iqbal 


The past is an interesting place. From whence we came. We are crafted for one thing in our youth, and often end up pursuing something else. This was indeed the case with Robert Pfeffermann. 

Robert was a Chemical Engineering major at Lehigh University in the late 1970's, then received his PhD from M.I.T. in 1983. His passion was research science, and he lived to solve unsolvable problems.

Don Abram's son graduated from M.I.T.'s undergraduate program in 1983, the same year Robert received his PhD in Computer Science. The school's graduation ceremony was all inclusive, both undergraduate students and Doctoral candidates participated in the same ceremony.

Don was head of the largest mortgage trading desk on Wall Street, and was responsible for the detour that Robert's life took. He was an x-Marine Captain who led 100  men into the Battle of Khe Son in 1968, and came out with 95 of them. Don's colleagues and subordinates called him Colonel Bill Kilgore ("Apocalypse Now") behind his back. 

1983 was a bad year for Don, his mortgage desk lost $100 million that year. Trading is a young' man's business, and at 50 he was starting to feel old. "Ambitious young assholes", as he called them, were starting to nibble around the edges of his kingdom and he wasn't sure he'd be able to stop them. Math had arrived on Wall St.

The rest is history, Don and Robert met at Cheers Bar in Boston, and had gone there for the same reason graduate weekend in June, 1983. They both loved the now famous sitcom, "Cheers" with Ted Danson and talked about Cliffy and Norm for an hour when they first met.

Robert laughed uncontrollably at the insanity of Don, and Don quietly picked Robert's math inclined brain. Lou Ranieri had invented Mortgage Backed Securities in 1977, and six years later the mortgage business was booming.

September 1986, New York City

"I'm not doing it Don, I mean, why does the position have to be so large?". After 3 years of 24/7 Don and Merrill Lynch, Robert was tired. "Lately all you keep telling me is bigger, bigger, bigger! Is Kelly not sucking your dick on Sunday nights anymore?" Everyone on the trading desk looked up in awe at Robert after he questioned Don so carelessly. Nobody could do that, but Robert had made Don very rich in a short period of time.

Don used to brag to the trading desk about how his wife would blow him every Sunday night on the white shag rug in his entertainment room. He would emphasize the part where he sat on the base of the fireplace with his Scotch while she "stood" on all fours blowing him on the shag rug. Don claimed the rug was made from real Polar Bear fur, and talked about his wife like she was a whore. Robert thought it was hilarious.

It didn't matter, Don loved Robert and Robert loved Don. "Robert, you are the smartest Jew I know, but you'd be working on a cure for ball-lice at some large Pharmaceutical company in fucking New Jersey if it wasn't for me". Robert couldn't necessarily argue with that, and quietly responded "O.K. big Don, but you're the stupidest fucking Irishman I ever met". 

Before Robert could say another word, he heard a now louder Don walking towards him. Don's temper heated up quickly when people hesitated on his orders. "So Jew boy, call your cunt of a customer over at MetLife and FUCKING TELL THE BITCH WE WANT TO BUY MORE OF WHATEVER THEY OWN".  Don's voice was now booming beyond the Mortgage desk. He smacked Robert in the back of his head as he walked by his turret, and Robert knew it was time to get to work.

Robert built the models that told everyone in real time what was cheap and what was over-valued across the entire mortgage market. He was surrounded buy Bloomberg terminals and computers with open spreadsheets that were updated in real time. A former classmate from MIT who was now at Bell Labs in New Jersey consulted with him about the math, assumptions, and coding behind the models.

Among other things, his models measured liquidity, which had been deteriorating for weeks. The world was heating up at the time, oil was crashing, and Saddam Hussein kept lobbing missiles into Iran. The markets were jittery. He had spoken to Don just last week about how liquidity was starting to dry up, but you never knew if Don was listening when you spoke. 

As Robert was scanning his spreadsheets, without looking up, he shouted facetiously across the desk, "Hey Don, you keepin' an eye on those liquidity measures," Robert's tone was now louder and exaggerated, and he and Don were starting one of their know famous across the desk shouting matches.

The first lesson Don taught him was about liquidity. Whenever somebody regurgitated some theory on the economy or markets Don would respond, "fuck earnings, interest rates, asset values, and all the other bullshit. Liquidity and the Fed are all that matters". So Robert built a liquidity model, and Don never looked at it.

"Don's crazy, this is so fucking stupid," Robert murmured 3 times beneath his breadth, "He's gonna' fuck all of us". An assistant trader overheard him, stared into space for a moment, and then spoke hesitantly. "Will this effect our bonus Robert"? Robert turned red, and then unloaded. "Are you fucking kidding me? Don't be such a pussy and do your job"? When Robert used off-color, trading desk lingo the pitch of his voice went up. "Pick up the phone and buy as many IOs as you can. Now!".

Interest Only Strips ("IOs") were the coupon component of a bond that had been "stripped" away from the original bond. "And don't fuck around dude. Call 3 banks and get offers on 1/3 of everything you need, buy it all simultaneously, and don't fucking tell any of them you are buying elsewhere". The IOs were a hedge and would protect them if the market sold off, which was Robert's first priority. 

His second priority was to ensure that "NOBODY outside the firm knew how big their inventory was getting. While yelling at the junior trader, Robert sent a Bloomberg private message to their senior trader. "If anybody finds out about this, and I mean anyone in this firm besides us, I will fire the douche bag responsible for the leak. You know what can happen." Robert believed nature was responsible for weather hurricanes, and financial hurricanes were caused by humans.

Now Robert was addressing everyone. "If Z scores across any of our negatively-convex positions deteriorate, make sure you tell me. When durations start to shrink too fast and you have mis-matched cash flows across the curve, just buy on the run treasurys immediately". He was referring to US treasury notes.

Don finally spoke. "I'm glad i'm not smart enough to understand what the fuck you just said Robert. Did you buy any fucking bonds yet, or are you just giving math lessons to the interns?" 

Robert never fucked around, and Don knew it. He just liked to bust Robert's balls and hear himself talk. Without looking up Robert responded, "we did about $2 billion Don, is that enough tough guy? When they fire us I'll be sure to tell them whose idea this was." "Fantastic", Don responded with his big, happy, obnoxious smile. 

Late October, Westchester Country Club

The following Saturday Don showed up at Westchester Country Club for a round of golf. It was a gorgeous fall day and the course was in perfect condition. He had invited Robert primarily because he liked to tell stories on the trading desk about how bad Robert was at golf.

Don met Robert in the club locker room before their round of golf. Robert felt like a Jew in Palestine at Westchester Country Club, and was edgy from the time he got out of the car. The plaid rug, mahogany lockers, and smell of talcum powder just added to his discomfort. It smells like Nazis in here, he thought to himself.

Don, we are up $100 million on this trade, why don't we take some off the table?" Don looked up in quasi-disgust, which Robert knew would be followed by verbal humiliation.

"Why don't we go to the stream room after golf and you can blow me Robert. Taking any of that trade off now would be like spending the night talking to the hooker you just hired. Now let's go play golf Herman Barron". 

"Who the fuck is Herman Barron Don?" Don looked up, proud of his sport's knowledge, "he was the first Jew to win a PGA title numb-nuts. You should know more about the sports side of your heritage, Henry Kissinger wasn't the only famous Jew". Robert silently wished Don knew more about the bond market and less about sports and pussy.

An hour later they tee'd off  with the Smith brothers, Tad and Lawson, who were close associates with the Bush family of Texas. Many oil men, most notably George Bush Sr., held memberships at the club. It offered them a nice respite from the Texas summer heat, and enabled them to meet with their financiers from Wall Street.

Most of the Texas members had single digit handicaps, and Tad and Lawson were both scratch golfers. When they arrived at the first tee, and Robert realized who they were playing with he looked at Don and mouthed "you mother-fucker." The men shook hands, and Don suggested Robert tee off first.

Just as soon as Robert gets his tee in the ground and stance set, Don looks at Tad and in his most exaggerated Irish, New York accent blurts out, "tell Robert how $100 million isn't that much money. He's a bundle of nerves on the trading desk because we made a few bucks. And tell him how oil is gonna' stabilize and go back up, because he's worried about that too."

Robert was pissed-off now, in addition to his first tee jitters he had to prepare for a lecture from some oil nut-job who played golf 365 days a year. He braced himself for a half-assed line of Texas bullshit, as Tad seemed more interested in adjusting his golf glove.

"Don't you worry Robert," Tad spoke without looking at Robert, "Saddam's in our pocket and we've been accumulating oil for months," he offered. "We play with George every so often, and he's given us his word that things would settle down in the Middle East." 

Robert felt a surge of guilt flow from his head to his toes. He often wondered if he was wasting his intellect and education, and it was crap like this that made him feel certain that he did. My ancestors are spinning in their graves, he thought to himself, as I stand here in the middle of WASP kingdom.

Robert proceeded to tee-off, shaking with anger at this point, and missed the ball on his first swing. Don started laughing like a Hyena, bent over clutching his belly. Tad and Lawson let out a small chuckle, and were visibly regretting the foursome already. Don lived for uncomfortable situations.

At this point an audience had formed, some to witness Don's antics and others to watch Tad and Lawson hit 300 yard drives. Don had developed a consistent, respectable game over the years and hit a nice fade right down the middle of the fairway, out about 240 yards. Robert hit a worm-burner that barely reached the fairway. The Lawson's went to their balls which had flown well beyond Don, and Don walked with Robert to his ball.

"You are a fucking Irish, degenerate asshole Don. I had to sit there and listen to some cock-eyed lecture on markets from those Texas fuck-tards. Jesus, no wonder the world is fucked-up with idiots like that running it." Don was still laughing from Robert's whiff. 

"REE-LAXXXXX DUDE, Jesus, I was just having some fun with you. Don't be so uptight Robert, it's bad for trading and sex. Oh wait you haven't had sex." Don knew Robert hadn't been laid in months. His ribbing never ended.

Tad and Lawson took off after 9 holes, saying they had to get home to the wives. Don called them on it. "Don't lie to me Lawson, just tell the goddamn truth if you want to leave." He had a couple of drinks during the first nine holes and had snorted a little cocaine for good measure, and now wanted to argue with two guys from Texas. 

"Awww heck Don, don't be angry, the girl's been sayin' we spend too much time on the course is all." Don turned red and started marching toward Tad, he had a thing about people lying to him. "I hope oil goes to fucking zero you fucking hicks." At this point Robert just stood there, holding the top of his forehead with his right hand.

Don grabbed Robert by the shoulder blade and almost lifted him off the ground. "Let's go finish what we started Robert, like real men do," and they both proceed to the 10th tee. Tad and Lawson walked back to the clubhouse like scolded children. Truth be told, most people at the club were scared of Don and wanted him kicked out.

"Like real men Don? What are we in Vietnam now, Jesus Christ are you that out of your mind?" Robert often worried to himself that he had sacrificed a career in science to work for a sociopath. "And what's with the cocaine, when did you pick that up? Really great to know Don that I work for a fucking drug-addict."

"Robert, you mention Vietnam again and I'll disembowel you with my wedge. Furthermore, what I do outside of work is none of your fucking business you liberal cunt. You wanna' run the trading desk dickhead? Now let's go play the back nine, LIKE REAL MEN!" Don was shouting at this point, hoping somebody from the pro shop would come out and challenge him.

Robert was sufficiently motivated at this point, which was Don's original intent. This is what Don did best, and the skill was probably born somewhere in the Jungles of Vietnam where motivation was required to survive.

Robert placed the tee in the 10th tee-box, stood up to the ball foregoing a practice swing, and hit a laser beam of a drive right down the middle of the fairway, about 250 yards. Don watched the ball, from the moment it left Robert's club until it laid to rest right in the middle of the fairway on one of Westchester's toughest holes.

Don's anger turned to joy, and at this point he was beaming like a proud father. "You fuckin' Jew I knew you could do it. I LOVE YOU!!!" Robert went on to shoot a 45 on the back nine, an all time 9 hole best for him.

"I'm recommending you for membership Robert". They were now sitting at the bar in the clubhouse having a drink.  "Yeah right Don I know they are dying to wave in a bunch of new Jewish members." Don responded with his eyes laser focused on Roberts, "I'll get you in dude, fuck these people." That was the thing with Don, behind all the verbal bigotry was a guy who rooted for the minority.

Don had settled down at this point, and began to give Robert his serious talk look. He chugged the last of his scotch while Robert quietly braced for whatever was coming next.

"Look dude, you're the smartest person I've ever met in my life but you don't know shit about the grey area of trading." The tension peeled off Robert a bit, as he realized they were finally going to talk markets.

"You know what traders mostly are Robert?" Robert looked up smiling and said, "no Don I don't, so please tell me." Don shot him a shut the fuck up look, spun around in his bar stool towards Robert, and grabbed his left shoulder with his right hand.

"They are mostly fucking wrong Robert. Dead wrong. I've watched for a decade now all the smart fucks like yourself trying to figure out the markets. There's no such thing man, nobody ever figures out the markets. But you know what I figured out Robert? I learned to identify the exact moment in a given trade where and why I am wrong."

Robert had perked up at this point, listening intently to Don. "If you had walked into that locker room this morning and told me we were down $100 million on this trade, I would have cancelled golf with those two idiots and started to discuss how to get out of the trade. That's it, it would be over in a week and I would move on. I wouldn't cry, bitch, or question anything about the trade. And I sure as fuck wouldn't doubt why I did the trade in the first place because I know about the graveyard that's home to all the traders who doubted themselves."

Don ordered another drink for both of them, and asked the bartender for dinner menus. "The second thing traders mostly do Robert, is fuck themselves out of their payday when they are right. Which is exactly what you suggested doing this morning you idiot. Don't fucking do that to yourself, you are better than that. Victories are rare in life and rarer in trading. Leave it alone, let it grow, and do whatever you have to do not to take a profit until the market SCREAMS at you to do so."

"That's it man", Don had started looking at the menu already. "And I sure as fuck will NEVER cut a good trade off, because that leads to a more dangerous place than doubt. Regret will eat you alive Robert, day by day, as you watch the trade you cut off go to the moon. You might as well quit the day you do it, because your trading career is over."

Robert was dumbfounded at this point. Two hours ago he thought Don was the biggest moron to walk the planet, now he was finally comprehending the wisdom of Don. He was in awe.

"You think I built models in Vietnam? I made a plan, executed it, and learned from my mistakes." Robert started smiling, conceding defeat, and simply said, "please Don no more Vietnam stories, let's eat. I get it."

Late December 1986, Firm Christmas Party at Tavern on the Green

Don was beaming, floating through the restaurant, finding all his enemies and doubters at the firm. They were all hiding from him because at this point everyone knew what he had accomplished that year. 

He had a wise-crack for all of them, which he of course relayed to them five inches in front of their faces. Before he moved onto his next holiday victim, he would say "Happy Hanukkah Brother!" Classic Don.

They had spent the last 2 weeks unwinding their mortgage trade, which netted $500 million for the firm. They were the most profitable desk on the Street that year. Ten percent went to Don, and who he paid next on the desk was up to him.

In his final act of the evening, he walked over to Robert and said "Let's get out of here dude, I hate these fucking people." Robert was having a math debate with someone from risk management. Don barked at both of them, "You guys are real party animals, huh?" The risk management guy let out a nervous laugh, while Don grabbed Robert and they exited the restaurant.

As they walked out onto Central Park West, Don turned to Robert and said he was quitting. "Oh and your fired Robert. You are better than all this, smarter than all these people." Don was pointing back at the restaurant. "You are free Robert to do whatever you want in your life. Go do what you originally set out to do."

For some reason, Robert started to get teary eyed and finally said "Don, I have to earn a living, I don't know if I can ever go back to research science at this point. I wouldn't even know where to start. Not to mention which I have bills to pay, my student loans are massive Don." Don started to laugh a bit at this point.

"You'll figure it out Robert. All this shit we do will be over sooner than you think. You will get bored my friend, this is monkey business for you. All the talent-less douche bags in that restaurant will eventually kill the golden goose because they are the greediest mother-fuckers I have ever met. Trust me dude, they will ruin it and it will be over."

Robert was spiraling lower at this point, confusion had overtaken his emotion. "Ah, I mean, can I get a loan Don? I might need a year or two to figure things out, but I promise I'll pay you back." Don quickly responded, "I'm not giving you a loan Robert, because I KNOW you will be fine."

"FUCK YOU DON! Maybe you are the greedy one. You are all taken care of, and I'm just beginning my career that apparently just ended. Jesus, my family was right, I should have never started this nonsense." 

Don started to walk uptown, away from Robert. He stopped about twenty yards from Robert, turned back, and said "Call me in the morning." Robert yelled back, "FOR WHAT DON, SO YOU CAN GIVE ME CAREER ADVICE!!!" Don hesitated for a moment, looked up and said, "I just want to make sure the check clears."

At this point Robert was an emotional puddle, so he looked back up after his anger abated, and responded, "what check Don?"

Don let his shoulders down, smiled broadly, and said "the one for $19 million that I had the firm write to you dumb-dumb." Robert looked like he just had received a right hook from a prize fighter, blinking multiple times, staring at Don in disbelief. 

Before Robert could say a word, Don quipped "Oh, I made $20 million, I hope you are O.K. with that." Don turned back around, and started walking uptown again. Robert sat down on a Central Park Bench and stayed their for another hour, trying hard to comprehend the amount of money he had just made. Eventually it all sunk in, and Robert became excited as he contemplated his second chance at what he truly loved in life. Science.

Monday, January 11, 2016

Speaking of Bulls

"Colors" with Robert Duvall and Sean Penn was released in 1988. It was a police drama set on the gang ridden streets of Los Angeles. I'll let Detective Hodges played by Robert Duvall talk about good trading practices.

I'm at the point in my trading career where I've realized that less is more. This has been a huge step for me, and quite honestly it's a step that very few people take.

The incessant upgrading and downgrading of stocks, the finance media personalities and their nonsene, and worst of all Twitter. The woman on Bloomberg this morning looked like she was gonna' slip out of her chair talking about Steve Cohen's return. He's a cheater,;is this really the type of guy we want to praise in the world of finance?

For what it's worth Twitter might be a zero, at best it's an app for schilling whatever it is you are schilling. At worst it's an email program. So you tell me, what's that worth? I will begin to collect the facts on Twitter and present them to you when time permits.

I complain, but I shouldn't. It's all a gift. Just wake up, pay attention, be open to what's in front of you, and accept the outcome.

WebMD was downgraded today by Suntrust. Last week the stock hit a new 52 week high on the highest weekly volume total since February 2014. Would you sell a stock with a weekly base that looked like this? I bought some early today on the morning puke.

To top it off another gift arrived in an HCA 4.5 point gap higher this morning. So I went to work with one of the themes I published on January 3rd this year. I've attached it below along with a weekly chart of HCA.

Sunday, January 10, 2016

Yahoo, a Secular Short

Yahoo will release earnings on January 26th, after the market close. Currently, this company is being surrounded by activists Jeffrey Smith from Starboard and Eric Jackson of some small hedge fund I've never heard of. Mr. Smith is an accomplished Hedge Fund veteran, while Mr. Jackson is a clever upstart whose 99 page Yahoo presentation is more about self-promotion than anything else. Both of these men will likely lose money in their Yahoo investments.

My core assumptions in considering a Yahoo short are as follows.
  • Marissa Mayer will get into legal trouble this year which will increase the likelihood of a dramatic decline in Yahoo's stock. She has spent 3 years treating Yahoo shareholders like red headed step-children. From company parties to hires of Google employees whom she worked with in the past, she apparently did not read "Theory of the Firm: Managerial behavior, agency costs, and ownership structure" while at Stanford (Sorry, MBA inside joke). Jensen/Meckling paper for those interested.
  • I believe activist investors, by and large, are wasting their time. Like in any other business, scale is everything, and most activists do not have the scale of Icahn, Ackman, and Einhorn. Entrenched company executives have far more power than activists in dealing with shareholders, capital allocation decisions, and Investment Banks. While I appreciate a good David vs. Goliath tale, this fable rarely, if ever, plays out on Wall Street. Starboard's frustration is already starting to show according to this Forbe's article Starboard Fed Up .
  • Starboard, Jackson, et al are missing the point. Yahoo's core business is, I believe, appropriately "under-valued" by investors for the time being. The company has been mis-managed so badly for over a decade, that effectively competing with the likes of Google is impossible. It is time to pay the piper for shareholders who have held on too long. This de-valuation of Yahoo's equity will only accelerate, contrary to popular opinion.
I expect to short any big gap up or rally in Yahoo and will use Put options to build my position. The following puts are under consideration.

Yahoo Weekly Chart:

Yahoo Daily Chart:

Saturday, January 9, 2016

Dead Men on the Internet

Porn and stock quotes, George Costanza was right. I left Twitter and the world of "stock tweeting" for a reason. Humans like to think they are working when they are really playing. Twitter and Me, guilty as charged, so I extricated myself from my own illusion. 

Let's skip the pleasantries, the internet will cause you to lose money, that's what it's there for. I miss Seinfeld, watch it again and you will learn life's most important lessons.


Like anyone else I have a well-worn area on my couch, where at night I plop down with a laptop and surf away. It's a wonderful entertainment medium where consumers can shop for everything from underwear to cars. In general it makes me lazy, and I would think it does the same for most people.

Naturally, stretched valuations cause any speculator to ponder the true value of a company or industry. I feel strongly that internet companies are over-valued and will fall drastically short of the expectations that investors are currently placing on them.

We are infatuated with information technology. We have assigned it God like properties by searching on Google for everything from "the meaning of life" to "will I meet someone this year". Part of that fascination is highly misguided, as we could easily obtain better information from books, other humans,  or our own personal observations and experiences.

But us homo-sapiens suffer from the existence of absence. This fundamental human trait, drives consumerism and religious worship. We believe there must be something better out there for us. Most often there is not, this is life. My friends who have married multiple times all love their first wives the most. 

The internet puts our need to fill the existential vacuum into overdrive, and profit-seeking internet concerns exploit it. Eventually people realize that the "deal" they got (Expedia, Priceline), new lover they met (Match.com), and network they built (LinkedIn) is worth considerably less to them than originally thought. Hence my bearish internet thesis.

Robert Shiller recently published "Phishing for Fools", and the following quote on markets is from the book's Amazon description. "As long as there is profit to be made, sellers will systematically exploit our psychological weaknesses and our ignorance through manipulation and deception". The book's Introduction is titled "Expect to be Manipulated: Phishing Equilibrium".

The internet is the red carpet upon which we enter varying markets. It is not a market in and of itself, but a tool for profit-oriented individuals/institutions seeking market expansion. Like Casinos, the internet softens you up for the sale with lots of free goodies. And much like casinos, the odds are stacked against you on the web.

Oh no you say, the internet is changing the world for the better. Information is shared freely on the web, and freedom is spread across the globe like magic pixie dust. A 2015 report from Freedom House on internet freedom suggests otherwise.

Let's talk brass tacks. Money, moula, the green stuff. Below are thoughts on 10 really big internet companies everyone loves to love. Silicon Valley is exhibiting all the symptoms of bubble-economics. Hubris, false claims, and the big one...buying your own bullshit. Below 5 year returns are from January 2011 to 2015 peak. QQQ returned 101% from January 2011 to its 2015 peak

1. GOOGL: $500 billion market capitalization,  7 times sales, 4 times book. In the course of my lifetime I have given GOOGL $35 and it was for my Chromecast device. Started with the IPO that said "do no evil", What the heck does that mean? 5 year return 153%.

2. BABA: $174 billion market capitalization, 13 times sales, 6 times book. Did not exist in 2011. 

3. FB: $275 billion market capitalization, 17 times sales, 6 times book. Oyyyy. Return since IPO week close in May 2012 181%.

4. AMZN: $284 billion market capitalization, 3 times sales, 23 times book. This stock is beyond over-valued. 5 year return 270%.

5. BIDU: Why is GOOGL worth 10 times BIDU? $59 billion market cap, 6 times sales, 7 times book. Worth looking at. Peak occurred in 2014.  Return to that peak from January 2011 was 134%.

6. EBAY: Maybe it was PayPal dragging down EBAY? Who could forget all the hope and promise EBAY gave us in the beginning? Sell stuff from home in your pajamas and become rich. $31 billion market cap, 2 times sales, 5 times book. I like it. 5 year return 141%.

7. PCLN: William Shatner should get a big bonus. $56 billion market cap, 6 times sales, 7 times book. It was only up over 15x since 2009. Seems normal. 5 year return 237%

8. EXPE: Also up over 15x since 2009. Oh boy. $17 billion market cap, 2.5 times sales, 6 times book. PCLN alrady cracked, EXPE next. 5 year return 460%. Yes you read that right.

9. YHOO: The poster-child of how to lose a lot of money in the internet business. $30 billion market cap, 6 times sales, 1 times book. Isn't the BABA stake worth $30 billion? Peak occurred in 2014. Return to that peak from January 2011 was 211%.

10. CRM: CEO best sales guy ever, he should work at Goldman. His personality adds 2x to any financial multiple. $48 billion market cap, 8 times sales, 10 times book. 5 year return 124%.

In following blog posts I will try and explore the risk/reward of any trade I consider in the stocks above. I predominantly favor pursuing shorts in some of the companies listed above.