Q3 Update: You’re Up 125% On This Long Play

While reading through the survey responses many of you have sent in, I’ve been happy to hear how many of you have made money on our “big shorts” this year, as well as on our metals plays. That reminded me: it’s time for a quick check-in on our recommendations from the beginning of the year.

Interestingly, my longs are actually doing better than my shorts right now! (And you thought I was a permabear.)

In fact, two of our long plays are up 124% and 125% respectively since December 2015.

If you’ve been following along for awhile, you’ll know right away which ones those are. Congratulations if you own them. Drop a line in the comments to let us know how much you made.

By the way, a couple of our favorite short plays have now dipped 43% and 49%.

Here’s the full rundown…

Here’s How We’re Doing

Both the U.S. and global economies are suffocating under the crushing weight of debt. The retarding effects of debt are further exacerbated by the growing regulatory burdens placed on businesses in the U.S. and Europe by voraciously expanding governments. Sluggish growth will continue until radical policy changes arrive or are forced on the system by another crisis (which hopefully won’t be squandered like the last one).

I remain deeply skeptical of the post-Brexit rally because it flies in the face of fundamentals. I still expect the S&P 500 to drop sharply by the end of the year and in 2017 and think it is dangerous to be heavily exposed to stocks in the current environment. Like much (but not all) of the market’s post-crisis rise, the current rally is fueled by blind faith in central bankers’ ability to prop up over-indebted and over-regulated economies around the world.

This means, naturally, that our shorts will continue to go down, and our longs (anchored by gold, which serves as Super Crash insurance) will continue to go up.

I’ve discussed all these recommendations in detail in earlier updates, so I will only observe here that our gold miners continue to outperform the market by leaps and bounds. GLDX and GDXJ owners should be very happy. Buy gold and save yourselves.

Note: Thanks to the sharp-eyed reader who pointed out the June stock split for SH. The adjusted figures are below.

Going Up (Long) Symbol Price 12/29/2015 Price 8/25/2016  
Alcoa Inc. AA $10.13 $10.07 – Down 0.6%
Annaly Capital Management Inc. NLY $9.40 $ 10.89 – Up 15.9%
Central Fund of Canada Ltd. CEF $10.04 $13.62 – Up 35.7%
Chimera Investment Corp. CIM $13.88 $16.40 – Up 18.2%
CBOE Market Volatility Index VIX $16.10 $13.87 – Down 13.9%
Global X Gold Explorers ETF GLDX $16.79 $37.74 – Up 124.8%
Market Vectors Junior Gold Miners ETF GDXJ $19.64 $44.30 – Up 125.6%
Navient Corp. NAVI $11.49 $14.35 – Up 24.9%
ProShares Short S&P ETF SH $41.08 $38.13 – Down 7.2%
Sprott Physical Gold Trust PHYS $8.76 $10.92 – Up 24.7%

And here are our shorts. AMZN and FB still stubbornly refuse to drop, but I hold fast to my conviction that they are overvalued and eventually, their sins will find them out. However, the crumbling DB and the faddish FIT are already receiving their just deserts.

Going Down (Short) Symbol Price 12/29/2015 Price 8/25/2016  
Alphabet Inc. GOOG $776.60 $768.25 – Down 1.1%
Amazon.com Inc. AMZN $693.97 $756.50 – Up 9%
Chipotle Mexican Grill Inc. CMG $489.94 $406.62- Down 17%
Deutsche Bank DB $24.87 $14.16 – Down 43.1%
Facebook Inc. FB $107.26 $123.59 – Up 15.2%
Fitbit Inc. FIT $29.35 $14.88 – Down 49.3%
iShares Nasdaq Biotechnology ETF IBB $343.00 $287.45 – Down 16.2%
Netflix Inc. NFLX $119.12 $97.32 – Down 18.3%
SPDR S&P 500 ETF SPY $207.40 $217.44 – Up 4.8%
Standard Chartered plc STAN.L 581p 616.70p – Up 6.1%
Starbucks Corp. SBUX $61.13 $57.24 – Down 6.4%
Tesla Motors Inc. TSLA $237.19 $222.56 – Down 6.2%

The best is yet to come, and babe, won’t it be fine.

Sincerely,

Michael

12 Responses to “Q3 Update: You’re Up 125% On This Long Play”

  1. Laurens van den Steenhoven

    I came upon you much to late; wished to have partied as of per end december.
    Would I still join the above list after due inspection of the relating charts and trends?
    ABX is now bottoming in my opinion, but GLDX is containing the best miners as I learned from you and so ABX as well. So stick to GLDX and GDXJ?
    My focus is totaly on you; thanks for attention and care.
    Best regards,
    Laurens Doede

  2. Hi,
    You have GOOG short, but Tom Gentile has […]. It’s the new idea economy not the old industrial economy. Maybe you two should get on the same page at Money Map Press and not send opposing opinions which confuse me as well as others.

    • Hi John — I had to edit your comment because it discussed a specific recommendation from another MMP service. But your main point – which is that yes, different writers at MMP do have different takes on the market – is worth addressing. My ideas and market strategy are my own and on occasion, they will be different from other editors’. In this case, though, we are simply looking at GOOG on different timelines. Tom expects a short-term (30-day) bullish pattern; I expect a long-term bearish pattern. It’s up to you to use your best judgment how to proceed.

  3. Interestingly, John Paulson was the biggest shareholder in GLD and sold bigtime at Templeton’s point of MAX pessimism last Dec…i read that he still is big position there, but don’t know if he added back?? I am too risk adversive to be a good investor but was happy to sell all the way up to almost $2000 in gold and do some cautious buys on the way down–refused to sell out the sizeable residuals on the way down for over 3 years. I kept telling people that the miners were priced where they were when gold was at $300 after falling 75% so i big rally was imminent –tho none of us knows when. Gradually took $ out in partial sales in almost all gold stocks and ETF’s esp on the 7/5/16 high. After a 15-25% correction on FED bluster this past Wed. (when gold had only fallen 1%) i thought it time to place some limit orders for between 4-10% below Wed 8/24 close for a few gold miners. They are up at least 2% thru Fri am pending Yellen blather.

  4. I have been reading your column for several months, but I have yet to act on any of your recommendations. If I want to start investing now, do you have any ongoing recommendations that apply to making investments today?

  5. Editor Reply to John Chaves. John your reply says volumes of the lack of experience you have in the Financial Markets. Tom Gentile is a High-Risk Options Trader, Where Michael in more a Macro Economist and Money Manager. Michael is the Turtle wins the Race, where Tom is a Formula One car headed toward the finish line. Fast Money….NOW MY COMMENT IS THIS: Michael is Correct on where the Market is headed eventually especially based on these Facts: The trailing 12-month share buybacks of S&P 500 companies are now equal to 54.24% of their free cash flow. Historically, the US stock market has become a bubble when share buybacks of S&P 500 companies surpass 43.65% of their free cash flow. US stocks become extremely undervalued when share buybacks of S&P 500 companies drop to below 2.5% of their free cash flow. The Market is Definitely a Bubble and all Bubbles will eventually Pop no matter how much Financial Engineering is done. Because of the Huge Gold to Silver divergence, I’ve also jumped on the Silver bandwagon temporarily until we get to a decent Gold to Silver Ratio. Has to be much less than 70 to 1, where it is currently. I personally like a diversified Silver Miner ETF called SILJ up YTD Return is 256.02 %. Gold & Silver and the Miners is where the money will continue to be made for years to come. This set up has the Potential to be the Biggest Precious Metals Bull Market in History. Happy Trails..TC or Top Cat

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