Traders and investors think in terms of quarterly reports and stock momo, or at least I did in the panic of 2008-9. I made good money with BA options when the stock declined on 787 woes and macro headwinds. The last few years have been benign with the exception of Petrobras (PBR), which I advised ADR holders to sell at a high of 72. It’s exasperating that analysts can’t trade on publicly announced ratings, but it was good for reputation.
I’m gambling that reputation again with a slightly difference perspective today. I’m no longer active as a sector analyst. Art Berman and I warned as loudly as possible (and got ridiculed) saying that shale drillers were skating on thin ice, bulking up with HY debt and silly reserves valuation. Oil under $40 crippled two vital sectors, the oil patch from Alberta to Texas, plus the industrial suppliers and engineering firms who build rigs and pads, drill and frack wells. We warned that bankruptcies were inevitable. Sad that Aubrey McClendon ended his career in a fiery crash, symbolic of the industrial collapse that’s ravaging the American heartland.
Rear view mirrors are nice, but the real deal is to make accurate assessments of the future. The problem at Deutsche Bank (DB) got my attention recently as a red flag. But I acted on a wider view of world debt, growing entitlement burdens, and something we refer to as Hell. It’s a city of four million active and prosperous professionals, technicians, small business owners and service workers. Unemployment is low. The freeway system is arguably the world’s best, most logical, almost luxurious. But it’s hell living and working there. So we left Hell about a year ago. Hell is great for making money, but it comes at a price. Deadbolts, security guards, private schools, 24/7 helicopter parenting, insane local politics and high cost of living. Never free to speak your mind at the office. Spend your entire day in front of a computer or in the car, competing with millions of people for a freeway lane or packed turn lane at a stoplight. The only news is bad news in Hell. Death, injury, lawsuits, crime.
