15 Comments

thanks Mr B. Just subscribed and look forward to more great info.

Any thoughts on USDJPY here? looks tempting as it can move either direction quickly. Thx

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Thank you.

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Thanks Mr B, lovely stuff as always.

One question regarding BTAL position you've flagged previously. From reading through prospective BTAL operates on a trailing 12 month vol. I.e, I understand this to mean high volatility stocks in the last 12 months will be at the top of the short side and ditto low vol on the buy side.

Might this thesis be at risk as higher for longer rates from our current point has less room to run? I.e ARKK type high beta stocks are down 70% ytd. Of course they can always go lower but I get a sense some of the big boys are now participating to the downside which perhaps may have been in the low beta basket, i.e google, Microsoft etc. The final nail in the coffin perhaps?

Clearly much more downside ahead of us it would seem but when does the market start pricing in a FED pause and growth stocks might perhaps outperform relative to value.

I realise I sound like a FED fanboy, buy the dip etc. I'm really not. Just questioning best hiding spots and it's difficult!

Best, Phil

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its a fair question and i can look into what specifically is on the long/short side to be sure that is not a significant risk. but keep in mind that BTAL is a 'sector neutral' construction so tech is a smaller portion of the portfolio risk (i.e. 1 of 11 sectors) than its market cap would suggest.

also, if you look at QQQ/ARKK over the last 3mos QQQ has outperformed even in the face of very large corrections in the mega tech stocks you mentioned. so i think you would have to assume that type of performance continues and or is more significant than it has been recently for your concern to play out.

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Cheers Mr B, you're an encyclopedia of all things investment! Sector neutral neutral factor was the missing piece of my jigsaw that was nagging at me. That reduces the risk significantly. No need to look at composition, but thank you for the offer.

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Great analysis. Very insightful. In reference to the closing point, are you implying that earnings estimates are likely to be revised lower for retailing, capital goods, consumer services, autos, transportation, and tech hardware (i.e. putting these sectors at greater risk); while upward revisions are likely for energy and pharma? Thanks again.

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thanks, glad to hear your appreciation.

yes, that is my bias/judgment when evaluating current trends vs expectations.

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Thank you, great comprehensive coverage, kudos! Have a great week!

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I really enjoy your work and hope you get plenty of subscribers to keep it going. Thank you.

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Are there any data sources that show S&P 500 earnings contributions by company? Meta, Amazon, and Google year-over-year earnings declines for Q3 were significant (likely to continue in Q4) and I'm curious if the estimates have already been updated to reflect them. They still have significant weighting as well

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FAAMG= meta, apple, amazon, microsoft, googl. FAAMG accounts for 14% of S&P 500 LTM net income, down from 19% in mid 2021. the largest contributors to the decline are META and AMZN where y/y trailing net income has fallen 43% and 77%, respectively. GOOGL is -3%. the others are up over the last year.

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complementary to the great takes & question:

1) Q3 key remark: %YoY change in operating margin:

$META -14.0% $GOOGL -7.5% $AAPL -0.9% $AMZN -2.4% $MSFT -1.7%

2) naturally, drag/return attribution on SPY/QQQ is huge (cannot attach chart, see link)

3) lower results & rising cost of capital, double whammy

https://twitter.com/Maverick_Equity/status/1587034411719184385

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I really appreciate this detailed & clear-eyed assessment. I'm a new subscriber -- thank you. Really looking forward to the follow up to the "Bear Bounce" article.

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substantially slower pace that past (small typo I think) *than

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good catch, thanks nick.

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