Friday, September 2, 2016

A SPECIAL MESSAGE FROM DINESH

Dinesh D'Souza recorded this live message on Facebook just moments ago. Watch now.




The Anatomy of the GIII Apparel Short

Economy and Markets


ECONOMY & MARKETS | September 02, 2016

Why We Won 30% Short-Selling GIII Apparel

By John Del Vecchio, Editor, Forensic Investor

I'm very superstitious. It's almost to the point of being a bit off the wall.

When it comes to the markets, I rarely trade the same stock twice, especially if I made a big profit the first time around. When the Market Gods give you a nice winner, take it and move on. I fear that if I touch the stove too many times I might burn a finger.

But back in April I re-entered a short position that I made a big profit on previously in Forensic Investor.

The stock ranked among the worst of my earnings quality model. It was too hard to ignore.

That stock was GIII Apparel Group, Inc. (Nasdaq: GIII).

GIII was creamed this week as the company missed sales and earnings estimates badly. And, the forward guidance was even worse. The stock has gone from about $45 to $30 during our short trade.

Initially the trade went against us, which it seems like almost all of them do! But eventually the fundamentals play out.

The anatomy of the GIII short trade was very straightforward. Here are the six factors that piqued my interest in re-entering the trade…


Stern Warning to ALL Investors

If you have any investments... or plan on investing money in the market in the near future, I strongly encourage you to watch this video.

Fair warning: It may upset you. But it could also help you protect your wealth, your business, and even your family over the next six to nine months.

Details here


#1: Insiders are huge sellers.
Last fall, there were a bunch of stock sales from insiders. The stock wasn't much higher then than it is today. A net of over 320,000 shares have been sold over the last 12 months and outpaced purchases by about three to one.

#2: The stock chart looks vulnerable.
If you printed out the stock chart, taped it to the wall, and looked at it from about five feet away, you'd see that the uptrend is clearly broken.

Upon closer inspections, you can see that, in 2016, the rally off the lows was pretty weak. Not a single time was the weekly volume above the 20-week average. Yet, when the stock sells off, it sells on higher volume. Over the last 50 days, down volume has been about 1.5-times higher than up volume. So, sellers are in control.

And, the stock has no momentum. Its relative strength rating is just 16, meaning it's significantly lagging the broader market.

#3: Revenue growth has imploded.
GIII was a key growth stock for a lot of money managers. But growth is starting to fade. In January, its revenue grew just 3% year-over-year. But a year ago the company was growing at 9%. Slowing growth weakens the rationale for growth managers to hold the stock.

There are still over 450 funds that own shares of GIII. But, while the stock has been pounded, it's not a value idea either. Shares still trade at a premium to the S&P 500.

#4: Inventory levels are increasing.
Whenever I see slowing growth and building inventory levels, I get concerned. Inventory is up on an absolute basis and on a days-basis is at 127 days. That's up seven days year-over-year. It means that stock is sitting in the warehouse for seven days longer than it did last year… and last year it was taking about four months to move. My concern is that the company will have to heavily discount merchandise to sell it. As a result, profit margins get crushed.

#5: It's taking the company longer to convert the sales process to cash.
The build-up of inventory doesn't help because inventory eats up cash flow until it's liquidated. But, GIII's whole cash flow picture is poor when accounting for all of the working capital. The cash conversion cycle is up 16 days year-over-year to 120 days in January. The cash conversion cycle is the number of days it takes to convert the sales cycle into cash. So, the longer it takes, the more risk there is. It's also up year-over-year in each of the past four quarters. This increases the risk of earnings pressure in the future. It's a big red flag.

#6: Short interest is building.
The bears are closing in and have ramped up their short positions in recent months. In 2015, short interest was about 2.7-3.1 million shares. In 2016, it increased to 3.2 million… then 3.3 million. Just recently it hit 4.1 million shares! The bears must smell blood in the water.

The combination of slowing growth, rich valuations, a lot of funds owning the stock and short sellers circling the wagon gave me comfort that the odds favored a new leg down.

So, I instructed my Forensic Investor subscribers to short the stock. Yesterday, I followed up with instructions to cover their shorts. We banked a healthy 30% profit on this play!

By watching earnings quality and cash flow, you can identify plenty of opportunities to short stocks. The environment may be even more ripe considering stretched valuations and optimistic investor sentiment.

If you don't want to do it alone, consider joining us at Forensic Investor. Our most actionable idea right now is still a live trade – meaning you still have time to get in and make some money – and if it plays out like I think it will, it could lead to a bumper crop of a year on the short side!


John Del Vecchio
Editor, Forensic Investor




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This work is based on SEC filings, current events, interviews, corporate press releases and what we've learned as financial journalists. It may contain errors and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation.

Low-Wage Hires Dominate in August

Boom & Bust

FOR IMMEDIATE RELEASE 

Low-Wage Hires Dominate in August

Dear  Subscriber,

The Bureau of Labor Statistics reported that the U.S. economy hired 151,000 nonfarm workers in August, disappointing analyst expectations of 180,000 jobs. The private sector added 126,000 jobs. The national unemployment rate is a steady 4.9%.

Dent Research's analysis of 84 major industries found that the majority of jobs added in August (54%) fell below the measured median wage. More striking, we found that 28% of new hires fell into the lowest-paying of our 12 wage "buckets."

Restaurants and bars led all industries, adding 34,000 workers. This industry has hired 312,000 workers in 2016. Unfortunately, it's the second-lowest paying industry we measure. Workers earn an average of just $13.47 per hour. Social assistance businesses came in second with 21,700 workers. These jobs pay just $15.93 per hour, on average.

Rodney Johnson, Dent Research President and Index creator said: "The employment report was very disappointing, but not because of the headline number. Instead, it was the concentration of jobs in the lowest wage tier that made the month a disaster. This is exactly why we calculate the index – to show what's not evident in the initial government release." 

Each month Dent Research produces detailed charts depicting where the job additions fall along the wage scale:

See larger image

The Dent Research Employment Index digs beneath the BLS' headline numbers to measure the quality of jobs added each month. It provides a more complete picture of the job market by tracking where jobs are being created along the wage scale. For a more detailed explanation of our methodology, please click here to view our employment white paper.


About Dent Research

Dent Research is an economic forecasting and investment research firm and publisher that works diligently to provide you with the proprietary economic knowledge you need to accurately forecast what lies ahead in our economy so you can take the necessary and appropriate action to ensure prosperity in your business, investment and financial affairs.

The core of our work is what we call the Dent Method, which our founder and economic expert, Harry S. Dent Jr., developed in the late 1980s. It has the only documented record of success at forecasting long-term economic trends based on the study of and changes in demographic trends and their impact on our economy and the markets. It works by showing how predictable consumer-spending patterns, when combined with demographic trends, allow us to forecast the economy years or even decades in advance.

For more than two decades, readers and experts have trusted our independent economic think tank and research team to provide specialized and proprietary economic and investment research, analysis tools, and forecast information.

With Dent Research, investors and businessmen alike can learn how to recognize and potentially profit from economic and demographic cycles. They can also use our research to pinpoint the best growth industries, the best places to live, the hottest investment sectors, and the key technologies that will change everyday lives.



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Protected by copyright laws of the United States and international treaties. This Newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the worldwide web), in whole or in part, is strictly prohibited without the express written permission of Delray Publishing.

This work is based on SEC filings, current events, interviews, corporate press releases and what we̢۪ve learned as financial journalists. It may contain errors and you shouldn̢۪t make any investment decision based solely on what you read here. It̢۪s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation.

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"Hillary's America" Special Engagement Begins TONIGHT

Back by popular demand, "Hillary's America" will re-open in hundreds of theaters across the country tonight!




Thursday, September 1, 2016

'Hillary's America' Hits Screens Again As Campaign Rhetoric Heats Up

As the rhetoric in the race for the White House reaches a boiling point, "Hillary's America" will re-open this weekend in major cities all across the United States.




Don’t Trust Your Gut

Economy and Markets

Just Released: Harry Dent's Brand New E-Book is Available For IMMEDIATE Download...

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ECONOMY & MARKETS | September 01, 2016

Don't Trust Your Gut.
Trust the System

By Charles Sizemore, Portfolio Manager, Boom & Bust

In August of 1971, Ray Dalio – now one of the most respected hedge fund billionaires on Wall Street – was a lowly clerk working on the Street. By coincidence, Dalio was starting his career during one of history's critical turning points. President Nixon had just taken the dollar off of the gold standard.

Dalio's gut told him the market would crash the next day. Instead, it rallied. Hard! The Dow finished the day almost 4% higher.

It's not much of a stretch to compare then to now... Back then – as now – you had central banks meddling in the markets. And back then – as now – you had unexpected results.

Dalio learned a lesson from his experience. He realized that the market has a knack for doing what you least expect it to do… and he reached the conclusion that, rather than trying to guess what happens next, the better course was to simply build a portfolio that would perform well in any environment… no matter what happened. So he launched his All Weather portfolio, and the rest is history.

I'm not necessarily recommending you run out and invest with Dalio. Even if you wanted to, you wouldn't meet the minimums. You'd need $5 billion in investable assets to get in the door.

But I do recommend that you take a few plays out of his playbook…


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First, ask yourself the same question he did: what kinds of strategies can I implement that will work in any market, bull or bear?

With stock prices at all-time highs – and with the Fed's next move anyone's guess – you need to be confident that your strategy will handle the unexpected.

And as you look for answers, be systematic.

Set your trading rules in advance and follow them – verbatim. If you've done proper back-testing, then you should have faith in your system to do its job once a storm hits. If you don't have faith in your system, then you have no business investing with it.

And perhaps most importantly, do not let your emotions cloud your judgment and push you to override your model.

Your emotions will betray you every time!

The most successful traders are those that either have a super-human ability to control their emotions (which is exceptionally rare) or they simply take their emotions out of the equation altogether.

That's how my friend and colleague Adam O'Dell invests with Cycle 9 Alert. I have never – as in not once – heard Adam tell me how he feels about the market or about what he thinks will happen next. He removes himself from the equation entirely. He builds systems and his systems tell him what is probable based on past experience.

Adam's Cycle 9 Alert system is designed to work in any market because, unlike a traditional buy-and-hold strategy, he isn't always invested. He only buys when the sector he's eyeing is in a pronounced uptrend and starting to show momentum. And he also has the ability to bet the other way… actually shorting sectors that are in a downtrend.

Cycle 9 Alert's system works because, as Sir Isaac Newton himself put it, an object in motion stays in motion.

Adam's research has shown that outperforming sectors tend to continue outperforming over the following two to three months, so he structures his investments to fit within that timeframe.

Whether the longer-term trend is bullish or bearish, Cycle 9 readers stand to profit from the intermediate-term moves.

I have no way of knowing precisely when the next market crash will be. But I can say with a lot of confidence that when it hits, most investors will respond the wrong way. They'll hold on too long and then end up selling at the bottom, right before it starts to rally again.

They will do this because they will let their emotions get the better of them.

Don't do that.

Learn from Ray Dalio… and from my friend Adam.

Stick to a mechanical system and follow your rules.

Charles Sizemore
Portfolio Manager, Boom & Bust

P.S. For the next couple of days only, you can get a free one-year's subscription to Adam's Cycle 9 Alert. Why not put it through its paces and see the results for yourself? Details here.




Subscribe to Our Premium Monthly Newsletter

Will you be one of the millions of Americans devastated by the coming safe asset slaughter? As a subscriber to Boom & Bust, Harry Dent, Rodney Johnson and Adam O'Dell will make sure you're not. In fact, they'll help you profit from the chaos that lies ahead.


STAY CONNECTED

facebook YouTube Google Plus Twitter

Economy & Markets: You are receiving this e-mail as a part of your free subscription to the Economy & Markets E-Letter.

As an Economy & Markets Daily subscriber, you're eligible for the full details on Harry Dent's most disturbing prediction in years. To uncover which one of the market's safest and most popular investments is about to get slaughtered, click here now to view his presentation.

Remove your email from this list: click here

To cancel by mail or for any other subscription issues, write us at:
Delray Publishing | Attn: Member Services | 55 NE 5th Avenue, Suite 200 | Delray Beach, 33483 | Phone: 888-211-2215 | Fax: 410-223-2682
Website: www.dentresearch.com | Privacy Policy: www.dentresearch.com/Privacy-Policy

LEGAL NOTICE: Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the worldwide web), in whole or in part, is strictly prohibited without the express written permission of Delray Publishing.

This work is based on SEC filings, current events, interviews, corporate press releases and what we've learned as financial journalists. It may contain errors and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation.