Counting Down The Best Calls of The Last Six Months
Happy Holidays! The last six months have been turbulent for investors. From the unprecedented downgrade of U.S. debt by S&P to the collapse of Jon Corzine's MF Global, traders have witnessed some of the most incredible financial developments since the fall of Lehman Brothers, all set against the execrable backdrop of a protracted, unabating european debt crisis. Many investors likely lost a bit of money (and a bit of sanity) over these last six volatile months of 2011, and to those folks I express my deepest condolences. I however, had the good fortune of staying in the black throughout the commotion, as several of my market prognostications did indeed come to pass. At the risk of sounding narcissistic, I count down a few of my most prescient market calls of the past six months...
#1: The Bank of Japan Intervenes
Easily my best call of the year and likely the most prescient call I've ever made was my October 30 prediction that a Japanese intervention in the currency market to arrest the rise of the flaming-hot yen was imminent. At 9:29 A.M. on Sunday October 30, I published the following article on SeekingAlpha.com: "Intervention Could Arrest Yen's Rise: Good Time To Take Profits." In the article I noted that the Bank Of Japan's recent efforts to stop the rapid appreciation of the yen by purchasing government bonds and holding down interest rates were unlikely to keep the yen subdued in the face of massive safe-haven buying by investors seeking shelter from the European situation. Just hours later, the Bank of Japan sold 8 trillion yen sending the dollar soaring 3.5% against the Japanese currency.
Articles I've written regarding the yen:
"Bank of Japan's Stealth Interventions Amount To Secret Yen Peg"--SeekingAlpha
"Intervention Could Arrest Yen's Rise: Good Time To Take Profits"--SeekingAlpha
#2: Green Mountain Coffee Roasters Gets Burned
On September 9, I published an article entitled "Green Mountain Coffee Roasters Is Absurdly Overvalued." In the article I noted, among other things, that Green Mountain's Keurig cups were nothing more than a fad and that the company's well-documented accounting discrepancies would likely come home to roost at some point, causing GMCR's shares to come crashing down from their sky-high valuation above 100 times earnings. At the time I published the article, shares of Green Mountain were trading at $106 per share. I recommended investors buy puts to take advantage of a precipitous decline--GMCR now trades at $45.41, a decline of nearly 60%.
#3: Groupon Investors Get A Bad Deal
After reviewing Groupon's S-1 filing in November, I decided to express my deepest concerns regarding the viability of the company's business plan in an article entitled "Groupon Sells Investors Bad Accounting, Working Capital Deficits, And Rising Losses." In the article I detailed a number of reasons why investors should steer clear of Groupon's stock and advised traders to purchase put options (which coincidentally had just become available) to bet on a decline in the shares. When the article was published on November 15, GRPN was trading around $24 per share. Within 8 trading days, the stock hit an intraday low of $14.85, a 40% decline in a week and a half.
#4: LinkedIn Lock-Up Period Expires, Losses Ensue
On November 17 I published the following article: "LinkedIn Lock-Up Period Expires Monday, Buy Puts." I advised investors in LinkedIn to sell a portion of their holdings before the 180-day post IPO lock-up period expired. Many of LinkedIn's largest investors had already announced plans to sell their shares and it seemed like a forgone conclusion that the stock was in for a rough week. The shares closed at $74.92 the day the article was published and fell to an intraday low of $55.98 seven trading days later, a decline of more than 25%.