Fraud is a buy
There are plenty of companies that make money fraudulently.
Most of these companies will not be around in twenty years.
But this doesn’t mean to say that anyone can make money shorting them.
I’m not saying that Slack was a fraud, but it was not likely ever to make money, but shorting it would have been a grave mistake now it’s been bought out by $CRM.
Kuppy has written about this.
I used to think that leaving well alone was the best thing to do.
Now, I’m not so sure.
With the relentless money printing that is washing away real liabilities, these over-leveraged insolvent wrecks are likely to rise like a cork from the bottom of the ocean.
I really want to start an ETF that invests only in companies with implausibly high accounts receivables, laughably inadequate provisions, insane EV to revenue numbers and massive short interest. In an investing environment awash with free money, these are likely to go up.
Defence is a buy
The king is dead, long live the king!. Nothing much will change in US defence procurement.
Raytheon, Boeing, General Dynamics are likely to benefit.
Wrap
I didn’t write one, so I’ll quote Alex Manzara’s summary from chartpoint.com (his personal blog, but an excellent source, especially of fixed income markets).
–Another stimulus proposal, another day of new highs for stocks. There was some pressure on the front end of the market as three years were auctioned yesterday. Also a buyer of EDH1 9975p for 1 with the contract at 9979.5. The two year yield edged up slightly, everything further back on the curve drifted lower in yield. Tens auctioned today. Volume was again light. There is continued interest in Feb TY puts, with buying yesterday of 134 and 135 strikes in size of 10k, settled 3 and 9 ref 137-26. The 137p has the most open interest at 79k as long Jan puts are rolled.
–The rent moratorium decreed by the CDC is set to expire at year’s end with warnings of mass evictions while Congress dithers on providing aid. From Reuters: “The day after Christmas the extended unemployment benefits that have kept 12 million people and their families afloat are scheduled to expire. Then, mere days after that cliff on New Year’s Day, a national ban on renter evictions from the CDC is also set to lapse. Overnight, an unprecedented bill of $70 billion in unpaid back rent and utilities will come due, according to estimates by Moody’s Mark Zandi.” This, while Door Dash is valued at $38 billion, coincidentally the same size as today’s 10y auction.
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