November 25


What I’m Looking At Today

Iran – Oil is down this morning on the heels of the announced deal with Iran that rolls back some sanctions, while talks go on for the next 6 months. Some analysts like Barclays Helima Croft say this will be just a knee jerk reaction. I disagree. I don’t expect a big bounce back after the dust settles. The real story on oil is what’s happening here in the states as we march our way to energy independence.

Airlines – The drop in oil is obviously good news for airlines and I suspect most of them will have a bid this morning. The exception will be (JBLU) which was downgraded to an underperform at Raymond James. Delta (DAL) is my favorite and a current long.

Boeing (BA) – Boeing is in the news with reports of icing in their General Electric (GE) GEN X engines at high altitudes under certain conditions. To the best of my knowledge this isn’t completely new and I am certain BA and GE are already working on fixes. We’ve seen this play before and BA will be under pressure this morning. I’m still working on this one but more than likely my advice will be to use it as an opportunity to get long if you aren’t yet involved. (I am still long BA)

Shorts – The WSJ is running a story on how bad short sellers are doing this year. Short only funds should be measured against a benchmark like the S&P 500. If a short only hedge fund is down 15% this year they are doing a good job given the markets return year to date.

The bigger news is how many large hedge funds are launching long only products. I find this laughable. I get that hedge funds should be paid more than long only because of the extra work involved. Significantly more research and trading go into the product. However, why would anyone pay the high fees hedge funds command for just another long only fund? Forgetaboutit.


Every week investors are confronted with a wave of talking heads predicting a market meltdown all looking for their Elaine Gazzarelli moment. We spend far too much time looking at the market and not enough time focused on individual stocks. If there is a bubble out there it is in Bonds not Stocks.

A big part of the market run this year has been multiple expansion. That has probably run its course and returns next year will be in line with earnings growth.