Need advice: shorting and securies lending

[SuitedPair]

Never short a stock based only on valuation. I have not looked at the stock in about 5-6 years. At that time it had a complicated corporate structure that would cloud simple valuation analysis. Sorry, cannot offer anymore insight than that. Oh yeah, everyone is excited on the rollout of digital billboards. It will allow them to increase the number of advertisers per board. If that fails to catch on with advertisers, then it could be very interesting since expectations have been built up (my assumption).

[thehun69]

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On a technical basis, I'm not a huge fan of shorting it here. There is support here at the 62.50ish to 63.50ish level and it will probably be bouncing from there to 65 or so. Not a great play. Once it gets down to 60 and goes below that, now you are off to the races. I only trade on a technical basis.

THE HUN.

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would you mind posting your returns for the time that you have traded on a purely technical basis?

thanks,
Barron

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Regardless of what I say, I just think it will end up being some sort of pissing contest as to which analysis works better. If I tell you a number that you interpret as too high, then clearly I must be full of it and making up some bogus number. On the flipside, if I tell you a number that you interpret as too low, then the conclusion is that technical analysis clearly doesn't work too well.

The OP and subsequent poster wanted an opinion, and I gave them an opinion from a technical perspective to give a bit of a different point of view, which, in all honesty, this forum can use.

THE HUN.

[DesertCat]

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Recently I was looking at the billboard company Lamar Advertising (LAMR) and noticed that it was way overvalued (128x earnings) with debt-to-equity of 2.23.

Would these be good reasons to go short on this stock, or buy puts?

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Take another look. It's raw cash flow is way higher than reported earnings. Actual free cash flow is unclear, I'm not sure what they need for maintenance capx and what is invested in new billboards.

I'm not saying it's not overpriced, but it's an odd duck. They apparently seem to want to run it with as little equity as possible and max out the debt, they just payed a big one time dividend. It's possible the divi has confused some investors about it's yield. But it's not unreasonable for a consistent cash flow business like billboards to carry lots of debt, but you have to do some analysis to determine if the valuation and debt/equity ratios are truely out of whack.

good luck,
dc

[DcifrThs]

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On a technical basis, I'm not a huge fan of shorting it here. There is support here at the 62.50ish to 63.50ish level and it will probably be bouncing from there to 65 or so. Not a great play. Once it gets down to 60 and goes below that, now you are off to the races. I only trade on a technical basis.

THE HUN.

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would you mind posting your returns for the time that you have traded on a purely technical basis?

thanks,
Barron

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Regardless of what I say, I just think it will end up being some sort of pissing contest as to which analysis works better. If I tell you a number that you interpret as too high, then clearly I must be full of it and making up some bogus number. On the flipside, if I tell you a number that you interpret as too low, then the conclusion is that technical analysis clearly doesn't work too well.

The OP and subsequent poster wanted an opinion, and I gave them an opinion from a technical perspective to give a bit of a different point of view, which, in all honesty, this forum can use.

THE HUN.

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no pissing contest. i'll take whatever #s you post as true and analyze them objectively. i'm doing something similar for Kimchi.

you have a different methodology that i'd like to dig into. in order to do that i need monthly returns.

research is my field and i love to dig into sh*t. Kimchi posted his monthly returns so i'd greatly appreciate it if you'd do the same.

i am trustworthy and objective when doing analysis. i have admitted when i'm wrong and will always do so.

Barron

[pig4bill]

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Recently I was looking at the billboard company Lamar Advertising (LAMR) and noticed that it was way overvalued (128x earnings) with debt-to-equity of 2.23.

Would these be good reasons to go short on this stock, or buy puts?

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This is the kind of play that is really hard to make consistent profits on a short. The stock is more or less flat. You want to either short ones that are overbought or in a clear downtrend.

[thehun69]

While I do appreciate your candor and objectivity, I am going to decline. I will be posting here more frequently and on that basis my analysis can be assessed.

THE HUN.

[eastbay]

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On a technical basis, I'm not a huge fan of shorting it here. There is support here at the 62.50ish to 63.50ish level and it will probably be bouncing from there to 65 or so. Not a great play. Once it gets down to 60 and goes below that, now you are off to the races. I only trade on a technical basis.

THE HUN.

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would you mind posting your returns for the time that you have traded on a purely technical basis?

thanks,
Barron

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Regardless of what I say, I just think it will end up being some sort of pissing contest as to which analysis works better. If I tell you a number that you interpret as too high, then clearly I must be full of it and making up some bogus number. On the flipside, if I tell you a number that you interpret as too low, then the conclusion is that technical analysis clearly doesn't work too well.

The OP and subsequent poster wanted an opinion, and I gave them an opinion from a technical perspective to give a bit of a different point of view, which, in all honesty, this forum can use.

THE HUN.

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no pissing contest. i'll take whatever #s you post as true and analyze them objectively.

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What exactly would you be able to "analyze" from his monthly returns?

eastbay

[DcifrThs]

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On a technical basis, I'm not a huge fan of shorting it here. There is support here at the 62.50ish to 63.50ish level and it will probably be bouncing from there to 65 or so. Not a great play. Once it gets down to 60 and goes below that, now you are off to the races. I only trade on a technical basis.

THE HUN.

[/ QUOTE ]

would you mind posting your returns for the time that you have traded on a purely technical basis?

thanks,
Barron

[/ QUOTE ]

Regardless of what I say, I just think it will end up being some sort of pissing contest as to which analysis works better. If I tell you a number that you interpret as too high, then clearly I must be full of it and making up some bogus number. On the flipside, if I tell you a number that you interpret as too low, then the conclusion is that technical analysis clearly doesn't work too well.

The OP and subsequent poster wanted an opinion, and I gave them an opinion from a technical perspective to give a bit of a different point of view, which, in all honesty, this forum can use.

THE HUN.

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no pissing contest. i'll take whatever #s you post as true and analyze them objectively.

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What exactly would you be able to "analyze" from his monthly returns?

eastbay

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- to what degree it correlates to other index funds' return streams.

- how the excess returns compare to the amount of volatility realized to generate those excess returns.

- how much of the monthly/rolling annual/3year excess returns can be explained by a combination of strategies (i.e. how much beta is being delivered by his active choices)

for the most part, i am unfamiliar w/ "technical" trading strategies. from first glance, it seems that they would have a high degree of correlation with the securities off which they are based.

i.e. how much actual value do you get from a technical trading strategy vs. simple index investing?

all i need to get an idea of that is the monthly return stream. thus, it is not a pissing contest in that i'm just trying to see what his returns look like and how they relate to other available strategies that involve no active decision making.

further, by plotting the cumulative total returns of his strategy over the cum tot rets of the other available strategies, i can get a sense for how his strategy performs during times of crisis assuming he's been trading & can report returns for a long enough period of time to cover those crises/different environments. or how it performs during the great times in the recent months/years.

how does it perform when rates are rising? (late 90's & currently) or when rates are falling (after the bubble's burst)?

you can see this by objectively looking at those monthly returns.

i'm doing something similar for Kimchi but need to get to the library's bloomberg terminal to get the FTSE100 monthly returns back to 1994 denominated in GBPs (i didn't realize he was UK based).

finally, i won't get an idea of what the "support" analysis brings to the table from the strategy...just what the results provide.

my GUESS (i.e. i don't know but would venture the guess) is that, similar to my old employer's, technical analysis has major flaws in that its conclusions are literally based off of non-skeptical historical trends. that's probably where the "support" figures come from (i.e. looking at the previous instances when a price hits a "barrier" and looking at how that would relate.). this kind of strategy works great until it doesn't work anymore.

look at what just happened in the 10yr bond market. nobody knows EXACTLY how rates jumped almost half a percent in a short time. looking at the "trendlines" one see's a perfect narrowing of volatility of cycles from 1990-2007 down to the 5% nominal rate. but lo and behold, here we are after touching 5.3%. the line breaks through a 17 year trendline. two possible causes include the relatively low (& likely now expected to fall) % of recent treasury auctions picked up by asian countries, the final realization of the likelihood of no rate cuts (and possible rate hikes) in the near future.

these are the types of events that are disasterous for trendfollowers.

the Japanese govt & exporters LOVE the fact that carry traders are piling out of JPY based assets & into USD/NZD/AUD/&EUR based ones. that is fantastic for leveraged funds that try to take a small possible gain and turn it into a bigger one, not thinking about the end result of a tumble in the other currencies vs. JPY that could wipe their returns out completely (and then some). eventually those non economic/speculative carry trade following flows will be completely overwhelmed by fundamental ones and the profile will likely follow that of previous carry trade unwinding regimes.

sorry for the tangent, but the point is salient. historical based trend analysis is fundamentally flawed. it is very attractive only until it is no longer attractive.

my goal is to see to what degree THE HUN's technical trading strategy looks like the returns of the trendfollowers outlined above. what kinds of risks does it look like THE HUN has taken to get where he is? this is what i love to look into so i hope he obliges.

Barron

PS- unfortunately, by answering your question, i provide a large dis-incentive for the THE HUN to post his monthly returns, especially if he fears my guess may be "right"/confirmed and doesn't want to appear to be "wrong". but i htink the thought process behind the analysis will be more valuable to readers than the who's right/who's wrong BS that THE HUN was fearing and i try not to subscribe to. if i'm proven wrong i will obviously post exactly where and how as i've done in the past. i hope THE HUN feels that my reputation for objectivity in analyzing/posting results still warrants his posting his monthly returns for the analysis outlined above.

[pig4bill]

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how does it perform when rates are rising? (late 90's & currently) or when rates are falling (after the bubble's burst)?
<snip buncha market-related junk>


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Most of that crap doesn't matter to a technician. That's why a lot of them trade that way, because it doesn't matter. Generally speaking, technicians trade breakouts or reversals. They don't much care why it's breaking out or reversing, just that it is. Therefore, interest rates, blah, blah are irrelevant. Any correlations you find will probably be coincidental.

[DcifrThs]

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how does it perform when rates are rising? (late 90's & currently) or when rates are falling (after the bubble's burst)?
<snip buncha market-related junk>


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Most of that crap doesn't matter to a technician. That's why a lot of them trade that way, because it doesn't matter. Generally speaking, technicians trade breakouts or reversals. They don't much care why it's breaking out or reversing, just that it is. Therefore, interest rates, blah, blah are irrelevant. Any correlations you find will probably be coincidental.

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can you expand on this?

do you mean that technitians are market neutral? or that the trends they trade off of are such that general economic conditions don't apply? if so, how would that work? (i.e. if you are systematically long the market, you'd underperform when rates are rising vs. when they are falling)

thanks,
Barron