Forex, Stocks, ETFs & Options Trading | IQ Option

TALLAHASSEE EVENTS 4/9 – 4/17

Spring festival season is upon us, folks. Time to get down with all the worm gruntin’, blues playing, and mule scratching you can stand. I’ll try to put together a list of everything big in the next month or two, but in the meantime I’ll at least put stuff on here.
There’s another list of all the regular stuff that happens every week, so don’t forget to check for all your karaokes, trivias, and so on. There are also links to all of Tally’s theater options, both stage and independent cinema (from fancy to cult).
And great news! Cap City Video Lounge is back! They're all set up in Railroad Square and open for business! They rent movies, show films on their big screen, and host parties and events in their awesome space. Check them out!
HAPPENING THIS WEEK: Word of South Festival. Here is the main website for schedules and times and performers. “Word of South a festival of literature and music which held its inaugural event April 11-12, 2015, is a unique blend of writers and musicians and an exploration of the relationship between the two disciplines. The festival features authors who write about music, musicians who also are authors, authors and musicians appearing together, and everything in between.” 12th-14th
HAPPENING THIS WEEK: 4th Annual All Venue Trivia Brainblast. “People ask, “Hank,” they say, “Which of your venues is truly home to the most kickass and trivial competitors?” Well, I love all (most) of my players, so I just can’t answer that. Instead, I’ll let y’all do it yourselves. Once again, it’s time to play hard and win big at the 4TH ANNUAL ALL VENUE TRIVIA BRAINBLAST! On April 13th, witness the best trivia teams from Midtown Pies, Proof Brewing, and Warhorse go head to head in a no-holds-barred, no-phones-allowed showdown! Join in on the fun with Hoarder's Delight giveaways, karaoke, and plenty of trivia! (Not to mention that amazing Crum Box grub!)” 4/13, 3:30pm, @ Crum Box Gastgarden
TUESDAY, 4/9
WEDNESDAY, 4/10
THURSDAY, 4/11
FRIDAY, 4/12
SATURDAY, 4/13
SUNDAY, 4/14
MONDAY, 4/15
TUESDAY, 4/16
WEDNESDAY, 4/17
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Perpetual Option: Och-Ziff Capital Management Group (OZM)

In his book, You Can Be a Stock Market Genius, Greenblatt talks about using LEAPs to make leveraged bets. The book included his trade in Wells Fargo (WFC, another topic for a future post, I suppose).
But sometimes, stocks get down so cheap that they become priced like options. In the Genius book, the WFC LEAPs were priced at $14 while the stock was at around $77.
Here, we have a hedge fund manager trading less than $3.00/share, which is a typical price for regular options, not even LEAPs. Of course, all stocks are options on the residual value of businesses. But sometimes things are priced for either a large gain or zero, just like an option.
I call this a perpetual option, but that reminds me of those lifetime warranties. Like, who's lifetime? The manufacturer's? The store's? Yours? Nothing is forever, so I guess there really is no such thing as a perpetual option. But anyway...
Och-Ziff IPO'ed in 2007 at $32/share and traded in the mid $20's right before the crisis, then down to below $5.00 during the crisis and back up to the mid-teens. I've been watching this since the IPO and looked at it again when it was trading around $10/share. It's down quite a bit since then. I didn't own it back then but I did take a small bite down at $5.00/share.
I have mentioned other private equity and hedge fund managers here in the past but haven't owned most of them because of the amount of money that seemed to be going into alternatives. I was just worried that the AUM's of all of these alternative managers were going up so quickly that I couldn't imagine them earning the high returns that made everyone rush to them in the first place. Look at the presentation of any of these alternative managers and their AUM growth is just staggering.
Extremely Contrarian We investors walk around and think about all sorts of things; look at store traffic, taste new foods/restaurant concepts, count how many Apple watches people are wearing (I recently biked around the city with my kid (Brooklyn to Central Park, around the park (around the big loop) and all the way downtown back to Brooklyn (30+ miles) and I think I counted two Apple watches that I saw compared to countless iPhones. And this was in the summer so no coats or long sleeves to hide wrists).
And a couple of the things that we tend to think about are, What does everybody absolutely love, and what are they 100% sure of (other than that Hillary will win the election and that the market will crash if Trump wins), and What do people absolutely, 100% hate and don't even want to talk about? In the investing world right now, it seems like the one thing that everybody seems to agree with is that active investing is dead (OK, not completely true because we active investors never really lose faith in it). The data points to it (active managers underperforming for many years, legendary stock pickers too not performing all too well, star hedge funds not doing well etc...). The money flows point to it (cash flowing out of active managers and into passive funds, boom in index funds / ETFs; this reminds me of the 1990's when there were more mutual funds than listed companies. There are probably more ETFs now than listed companies). Sentiment points to it (stars and heroes now are ETF managers, quants etc.).
By the Way Oh, and by the way, in case people say that it is no longer possible due to this or that reason for humans to outperform indices or robots, I would just say that we have seen this before. Things in finance are cyclical and we've seen this movie before.
From the 1985 Berkshire Hathaway Letter, Most institutional investors in the early 1970s, on the other hand, regarded business value as of only minor relevance when they were deciding the prices at which they would buy or sell. This now seems hard to believe. However, these institutions were then under the spell of academics at prestigious business schools who were preaching newly-fashioned theory: the stock market was totally efficient, and therefore calculations of business value -- and even thought, itself -- were of no importance in investment activities. (We are enormously indebted to those academics: what could be more advantageous in an intellectual contest -- whether it be bridge, chess or stock selection than to have opponents who have been taught that thinking is a waste of energy?)
What Do People Hate? So, back to what people absolutely hate. People hate active managers. It's not even stocks that they are not interested in. They hate active managers. Nobody outperforms and their fees are not worth it. What else do they hate? They hate hedge funds. I don't need to write a list here, but you just keep reading one institution after another reducing their exposure to hedge funds. There is a massive shakeout going on now with money leaving hedge funds. Others like Blackstone argues that this is not true; assets are just moving out of mediocre hedge funds and moving into theirs.
This is a theme I will be going back to in later posts, but for now I am just going to look at OZM.
OZM OZM is a well-known hedge fund firm so I won't go into much detail here. To me, it's sort of a conventional equity-oriented hedge fund that runs strategies very typical of pre-Volcker rule Wall Street investment banks; equity long/short, merger arb, convertible arb etc. They have been expanding into credit and real estate with decent results. But a lot of their AUM is still in the conventional equity strategies.
What makes OZM interesting now is that chart from the Pzena Investment report (see here). These charts make it obvious why active managers have had such a hard time. The value spread has just continued to widen since 2004/2005 through now. Cheap stocks get cheaper and expensive stocks get more so. You can see how this sort of environment could be the worst for long/short strategies (and value-oriented long strategies, and even naked short strategies for that matter). Things have just been going the wrong way with no mean reversion.
But if you look at where those charts are now, you can see that it is probably exactly the wrong time to give up on value strategies or value-based long/short strategies; in fact it looks like the best time ever to be looking at these strategies.
Seeing that, does it surprise me that many pension funds are running the other way? Not at all. Many large institutions chase performance and not future potential.
Conceptually speaking, they would rather buy a stock at 80x P/E that has gone up 30%/year in the past five years that is about to tank rather than buy an 8x P/E stock that has gone nowhere in the past five years but is about to take off; they are driven by historic (or recent historic) performance.
OZM Performance Anyway, let's look at the long term performance of OZM. This excludes their credit and real estate funds which are doing much better and are growing AUM.
This is their performance since 1994 through the end of 2015:
OZM fund S&P500 1994 28.50% 5.30% 1995 23.50% 27.40% 1996 27.40% 23.00% 1997 26.70% 33.40% 1998 11.10% 28.60% 1999 18.80% 21.00% 2000 20.60% -9.10% 2001 6.30% -11.90% 2002 -1.60% -22.10% 2003 24.00% 28.70% 2004 11.10% 10.90% 2005 8.80% 4.90% 2006 14.80% 15.80% 2007 11.50% 5.50% 2008 -15.90% -37.00% 2009 23.10% 26.50% 2010 8.50% 15.10% 2011 -0.50% 2.10% 2012 11.60% 16.00% 2013 13.90% 32.40% 2014 5.50% 13.70% 2015 -0.40% 1.40% 5 year avg 5.85% 12.57% 10 year avg 6.69% 7.32% Since 1994 12.05% 8.87% Since 2000 7.59% 5.01% Since 2007 5.14% 6.53%
So they have not been doing too well, but it's really only the last couple of years that don't look too good. Their ten-year return through 2013 was +8.2%/year versus +7.4%/year for the S&P 500 index. It's pretty obvious that their alpha has been declining over time.
For those who want more up-to-date figures, I redid the above table to include figures through September-end 2016. And instead of 5 year and 10 year returns, I use 4.75-year and 9.75-year returns; I thought that would be more comparable than saying 5.75-year and 10.75-year, and I didn't want to dig into quarterly figures to get actual 5 and 10s.
OZM fund S&P500 1994 28.50% 5.30% 1995 23.50% 27.40% 1996 27.40% 23.00% 1997 26.70% 33.40% 1998 11.10% 28.60% 1999 18.80% 21.00% 2000 20.60% -9.10% 2001 6.30% -11.90% 2002 -1.60% -22.10% 2003 24.00% 28.70% 2004 11.10% 10.90% 2005 8.80% 4.90% 2006 14.80% 15.80% 2007 11.50% 5.50% 2008 -15.90% -37.00% 2009 23.10% 26.50% 2010 8.50% 15.10% 2011 -0.50% 2.10% 2012 11.60% 16.00% 2013 13.90% 32.40% 2014 5.50% 13.70% 2015 -0.40% 1.40% 2016* 1.10% 7.80% 4.75 year 6.53% 14.58% 9.75 year 5.48% 6.72% Since 1994 11.68% 8.92% Since 2000 7.29% 5.27% Since 2007 4.82% 6.86%
So over time, they have good outperformance, but much of that is from the early years. As they get bigger, it's not hard to see why their spread would shrink.
They are seriously underperforming in the 4.75 year, but that's because the S&P 500 index was coming off of a big bear market low and OZM didn't lose that much money, so I think that is irrelevant, especially for a long/short fund.
More relevant would be figures from recent market peaks which sort of shows a through-the-cycle performance. Since the market peak in 2000, OZM has outperformed with a gain of +7.3%/year versus +5.3%/year for the S&P, but they have underperformed since the 2007 peak. A lot of this probably has to do with the previous charts about how value spreads have widened throughout this period.
I would actually want to be increasing exposure to this area that hasn't worked well since 2007. Some of this, of course, is due to lower interest rates. Merger arb, for example, is highly dependent on interest rates as are other arbitrage type trades. (The less risk there is, the closer to the short term interest rate the return is going to be.)
One thing that makes me scratch my head, though, in the 3Q 2016 10-Q is the following: OZ Master Fund’s merger arbitrage, convertible and derivative arbitrage, corporate credit and structured credit strategies have each generated strong year-to-date gains through September 30, 2016. In merger arbitrage, certain transactions in which OZ Master Fund participated closed during the third quarter, contributing to the strategy’s year-to-date gross return of +1.3%. Convertible and derivative arbitrage generated a gross return of +0.5% during the third quarter, driven by gains in convertible arbitrage positions, commodity-related volatility, commodity spreads and index volatility spread trades. Year-to-date, convertible and derivative arbitrage has generated a gross return of +1.3%. In OZ Master Fund’s credit-related strategies, widening credit spreads and certain event-driven situations added +0.4% to the gross return within corporate credit during the third quarter, while in structured credit, a +0.9% gross return during the quarter was attributable to the realization of recoveries in certain of our idiosyncratic situations. Year-to-date, the corporate credit and structured credit strategies are each up +1.2% on a gross basis. Gross returns of less than 2% are described as "strong". Hmm... I may be missing something here. Maybe it is 'strong' versus comparable strategies. I don't know. Anyway, moving on...
Greenblatt Genius Strategies Oh yeah, and by the way, OZM is one of the funds that are heavily into the yellow book strategies. Here's a description of their equity long/short strategy: Long/short equity special situations, which consists of fundamental long/short and event-driven investing. Fundamental long/short investing involves analyzing companies and assets to profit where we believe mispricing or undervaluation exists. Event-driven investing attempts to realize gain from corporate events such as spin-offs, recapitalizations and other corporate restructurings, whether company specific or due to industry or economic conditions.
This is still a large part of their book, which is a good thing if you believe that the valuation spreads will mean revert and that Greenblatt's yellow book strategies are still valid.
One thing that may temper returns over time, though, is the AUM level. What you can do with $1 billion in AUM is not the same as when you have $10 billion or $30 billion. I don't think Greenblatt would have had such high returns if he let AUM grow too much.
This seems to be an issue with a lot of hedge funds. Many of the old stars who were able to make insane returns with AUM under $1 billion seem to have much lower returns above that level.
Here is OZM's AUM trend in the past ten years. Some of the lower return may correlate to the higher AUM, not to mention higher AUM at other hedge funds too reducing spreads (and potential profits).
Just to refresh my memory, I grabbed the AUM chart from the OZM prospectus in 2007. Their AUM was under $6 billion until the end of 2003 and then really grew to over $30 billion by 2007.
Their 10-year return through 2003 was 18%/year vs. 10.6%/year for the S&P 500 index.
From the end of 2003 through the end of 2015, OZM's funds returned +7.2%/year versus +7.4%/year for the S&P 500 index. So their alpha basically went from 7.4%/year outperformance to flat.
This is actually not so bad as these types of funds often offered 'equity-like' returns with lower volatility and drawdowns. The long/short nature of OZM funds means that investors achieved the same returns as the S&P 500 index without the full downside exposure. This is exactly what many institutions want, actually.
But still, did their growth in AUM dampen returns? I think there is no doubt about that. These charts showing tremendous AUM growth is the reason why I never owned much of these alternative managers in the past few years I've been watching them.
The question is how much of the lower returns are due to the higher AUM. Of course, some of this AUM growth is in other strategies so not all new AUM is squeezed into the same strategies.
Will OZM ever go back to the returns of the 1990's? I doubt that. First of all, that was a tremendous bull market. Plus, OZM's AUM was much smaller so they had more opportunities to take advantage of yellow book ideas and other strategies.
Boom/Bubble Doesn't Mean It's a Bad Idea By the way, another sort of tangent. Just because there is a big boom or bubble in something doesn't necessarily make that 'something' a bad idea. We had a stock market bubble in the late 1920's that ended badly, but owning parts of businesses never suddenly became a bad idea or anything. It's just that you didn't want to overpay, or buy stocks for the wrong reasons.
We had a boom in the late 1990's in stocks that focused on picking stocks and owning them for the long term as exemplified by the Beardstown Ladies. Of course, the Beardstown Ladies didn't end well (basically a fraud), but owning good stocks for the long haul, I don't think, ever became a bad idea necessarily.
We had a tremendous housing bubble and various real estate bubbles in recent years. But again, owning good, solid assets at reasonable prices for the long haul never became a bad idea despite the occasional bubbles and collapses.
Similarly, hedge funds and alternative assets go through cycles too. I know many value investors are not with me here and will always hate hedge funds (like Buffett), but that's OK.
We've had alternative cycles in the past. Usually the pattern is that there is a bull market in stocks and people rush into stocks. The bull market inevitably ends and people lose money. Institutions not wanting to lose money rush into 'alternative' assets. Eventually, the market turns and they rush back into equities.
I think something similar is happening now, but the cycle seems a bit elongated and, and the low interest rates is having an effect as alternatives are now attracting capital formerly allocated to fixed income. In the past, alternatives seemed more like an equity substitution, risk asset.
Valuation OK, so what is OZM worth?
Well, a simple way of looking at it is that OZM has paid an average of $1.10/year in dividends in the last five years. During the past five years, the funds returned around 6%/year, so it's not an upside outlier in terms of fund performance.
Put a 10x multiple on it and the stock is worth $11/share.
Another way to look at it is that the market is telling you that it is unlikely that OZM will enjoy the success even of the past five years over the next few years. Assuming a scenario of failure (stock price = 0) or back to sort of past five years performance ($11), a $3.00 stock price reflects the odds of failure at 73% and only a 27% chance that OZM gets back to it's past five year average-like performance. Of course, OZM can just sort of keep doing what it's doing and stay at $3.00 for a long time too.
There is a problem with this, though, as the dividends don't reflect equity-based compensation expense; OZM gives out a bunch of RSU's every year.
To adjust for this, let's look at the economic earnings of the past five years including the costs of equity-based compensation.
Equity-based compensation expense not included in economic income is listed below ($000):
2008 102,025 2009 122,461 2010 128,737 2011 128,916 2012 86,006 2013 120,125 2014 104,344 2015 106,565
It's odd that this doesn't seem to correlate to revenues, income or AUM; it's just basically flat all the way through.
If we include this, economic income at OZM averaged around $520 million/year. With fully diluted 520 million shares outstanding, that's around $1.00/share in economic earnings per share that OZM earned on average over the past five years. So that's not too far off from the $1.10/share dividends we used above.
One of the interesting things about investing is when you find alternative ways to value something instead of just the usual price-to-book values, P/E ratios etc.
So how would you value this?
What about adjusting the implied odds from the above. What if we said there's a 50/50 chance of recovery or failure. Let's say recovery is getting back to what it has done over the past five years on average, and failure is a zero on the stock.
50% x $0.00 + 50% x $10.00 = $5.00/share
In that case, OZM is worth $5.00/share, or 70% higher than the current price. You are looking at a 60 cent dollar in that case.
Let's say there is a 70% chance of recovery.
70% x $10.00 + 30% x $0.00 = $7.00/share.
That's 130% higher, or a 40 cent dollar.
By the way, the AUM averaged around $37 billion over the past five years, and remember, their return was around 5.9%/year so these figures aren't based on huge, abnormal returns or anything.
As of the end of September 2016, AUM was $39.3 billion, and this went down to $37 billion as of November 1, 2016. OZM expects continued redemptions towards year-end both due to their Justice Department/SEC settlement and overall industry redemption trends.
The above ignored balance sheet items, but you can deduct $0.60/share, maybe, of negative equity, or more if you think they need more cash on the balance sheet to run their business.
Preferred Shares As for the $400 million settlement amount and preferred shares, the settlement amount is already on the balance sheet as a liability (which was paid out after the September quarter-end). The preferred shares were sold after the quarter ended. They have zero interest for three years so I don't think it impacts the above analysis. You would just add cash on the balance sheet and the preferreds on the liability side.
If you want to deduct the full amount of the settlement of $400 million, you can knock off $0.77/share off the above valuation instead of the $0.60/share.
Earnings Model The problem with these companies is that it's impossible, really, to predict what their AUM is going to be in the future or their performance. Of course, we can guess that if they do well, AUM will increase and vice-versa.
But still, as a sanity check, we should see how things look with various assumptions in terms of valuation.
First of all, let's look at 2015. In the full year to 2015, a year that the OZM funds were down (master fund), they paid a dividend of $0.87. Adjusted economic income was $240 million (economic income reported by OZM less equity-based comp expense) and using the current fully diluted shares outstanding of 520 million, that comes to $0.46/share. OK, it's funny to use current shares outstanding against last year's economic income, but I am trying to use last years' earnings as sort of a 'normalized' figure.
Using these figures from a bad year, OZM is current trading at a 29% dividend yield (using $3.00/share price) and 6.5x adjusted economic income. This would be 8.3x if you added the $0.77/share from the settlement above.
OK, so average AUM was $44 billion in 2015, so even in a bad year, they made tons in management fees. Fine. We'll get to that in a second. AUM is $37 billion as of November 2016, and is probably headed down towards year-end.
2016 Year-to-Date So let's look at how they are doing this year so far. Fund performance-wise, it hasn't been too good, but they do remain profitable. These fund businesses are designed so that their fixed expenses are covered by their management fees. Big bonuses are paid out only when the funds make money.
Anyway, let's look at 2016 so far in terms of economic income.
In the 3Q of 2016, economic income was $57.4 million. Equity-based compensation expense was $18.3 million so adjusted economic income was $39.1 million. Annualize that and you get $156 million. Using 520 million fully diluted shares (share amount used to calculate distributable earnings in the earnings press release), that comes to $0.30/share adjusted economic income. So at $3.00/share, OZM is trading at 10x arguably depressed earnings. (This excludes the FCPA settlement amount). If you include $400 million of the FCPA preferreds (total to be offered eventually), then the P/E would actually be closer to 12.6x.
For the year to date, economic income was $195 million, and equity-based comp expense was $56 million so adjusted economic income was $139 million. Again using 520 million shares, that comes to $0.25/share in adjusted economic earnings per share. Annualize that and you get $0.33/share. So at $3.00/share, OZM is trading at 9x depressed earnings, or 11x including the FCPA preferred.
OK, so maybe this is not really 'depressed'. With still a lot of AUM, it is possible that AUM keeps going down.
AUM was $37 billion in November, but let's say it goes down to $30 billion. That's actually a big dip. But let's say AUM goes down there. And then let's assume 1% management fees, 20% incentive fees, and economic income margin of 50% (averaged 56% in past five years) and the OZM master fund return of 5%.
In this case, economic income would be $300 million. Equity-based comp costs seems steady at around $100 million, so we deduct that to get adjusted economic income. This comes to $200 million.
That comes to around $0.40/share. At $3.00/share, that's 7.5x adjusted economic earnings, or a 13% yield, or 9.4x and 10.6% yield including the FCPA preferreds.
So that's not bad. We are assuming AUM dips to $30 billion and OZM funds only earn 5%/year, and with that assumption the stock is trading at this cheap level.
Things, of course, can get much worse. If performance doesn't improve, AUM will keep going down. You can't really stress test these things as you can just say their returns will never recover and that's that.
On the other hand, any improvement can get you considerable upside.
If assets return to $40 billion and returns average 6% over time, economic income margin goes to 56% (average of past five years), adjust economic income per share is $0.76/share and the stock could be worth $7.60/share for more than a double.
Here's a matrix of possibilities. Skeptics will say, where are the returns below 5% and AUM below $30 billion?!
Well, OK. If returns persist at lower than 5%, it's safe to assume that AUM will go down and this may well end up a zero. That is certainly a possibility. It wouldn't shock many for another hedge fund to shut down.
On the other hand, if things do stabilize, normalize and OZM recovers and does well, there is a lot of upside here. What is interesting to me is that the market is discounting a lot of bad and not pricing in much good. This is when opportunities occur, right?
5% 6% 7% 8% 9% 10% 30,000 $0.45 $0.52 $0.58 $0.65 $0.71 $0.78 35,000 $0.56 $0.64 $0.71 $0.79 $0.86 $0.94 40,000 $0.67 $0.76 $0.84 $0.93 $1.01 $1.10 45,000 $0.78 $0.87 $0.97 $1.07 $1.16 $1.26 50,000 $0.88 $0.99 $1.10 $1.21 $1.32 $1.42 55,000 $0.99 $1.11 $1.23 $1.35 $1.47 $1.58 60,000 $1.10 $1.23 $1.36 $1.49 $1.62 $1.75
The row above is the assumed return of the OZM funds. The left column is the AUM. Assumptions are 1% management fee, 20% incentive fee, 56% economic income margin (excluding equity-based comp expense) and $100 million/year in equity-based comp expense.
It shows you that it doesn't take much for adjusted economic income per share to get back up to closer to $1.00, and can maintain $0.45/share even in a $30 billion AUM and 5% return scenario making the current stock price cheap even under that scenario.
Conclusion Having said all that, there is still a lot of risk here. Low returns and low bonuses can easily make it hard for OZM to keep their best people. But if their best people perform, I assume they do get paid directly for their performance so that shouldn't be too much of an issue.
A lot of the lower returns in recent years is no doubt due to their higher AUM. But it is also probably due to crowding of the hedge fund world and low interest rates leading to an overall lower return environment for all.
If you think these things are highly cyclical, then you can expect interest rates to normalize at some point. Money flowing out of hedge funds should also be good for future returns in these strategies. The part of lower returns at OZM due to higher AUM may not reverse itself, though, if OZM succeeds in maintaining and increasing AUM over time.
But even without the blowout, high returns of the 1990's, OZM can make decent returns over time as seen in the above table.
In any case, unlike a few years ago, the stock prices of many alternative managers are cheap (and I demonstrated how cheap OZM might be here) and institutional money seems to be flowing out of these strategies.
So: OZM is cheap and is in a seemingly universally hated industry Money is flowing out of these strategies, particularly performance chasing institutions (that you would often want to fade) there is a bear market in active managers and bubble in indexing (which may actually increase opportunities for active managers) value spreads are wide and has been widening for years making mean reversion overdue etc. These things make OZM a compelling play on these various themes.
I would treat this more like an option, though. Buy it like you would buy an option, not like you would invest in, say, a Berkshire Hathaway.
There are a lot of paths here to make good money, but there are also plenty of ways to lose. If you look at this like a binary option, it can be pretty interesting!
Posted by kk at 8:11 PM No comments: Links to this post Email This BlogThis! Share to Twitter Share to Facebook Share to Pinterest
Labels: OZM
Saturday, October 29, 2016 Gotham's New Fund Joel Greenblatt was in Barron's recently. He is one of my favorite investors so maybe it's a good time for another post.
Anyway, this new fund is kind of interesting as I am sort of a tinkerer; this is like the product of some financial tinkering. I don't know if it's the right product for many, but we'll take a look.
But first, let's see what he has to say about the stock market in general.
The Market Greenblatt says that the market is "expensive". The market is in the 21st percentile of expensive in the past 25 years. Either a typo or he misspoke, he is quoted as saying that the market has been more expensive 79% of the time in the past 25 years. Of course, he means the market has been cheaper 79% of the time.
The year forward expected return from this price level is between 2% to 7%, so he figures it averages out to 4% to 6% per year. In the past 25 years, the market has returned 9% to 10%/year so he figures the market is 12% to 13% more expensive than it used to be.
He says: Well, one scenario could be that it drops 12% to 13% tomorrow and future returns would go back to 9% to 10%. Or you could underearn for three years at 4% to 6%. We're still expecting positive returns, just more muted. The intelligent strategy is to buy the cheapest things you can find and short the most expensive.
But... Immediately, bears will say that this 25 year history is based during a period when interest rates went down. The 10 year bond rate was around 8% back in 1991, and is now 1.8%. In terms of valuation, this would have pushed up asset values by 6.2%/year ($1.00 discounted at 8%/year then and $1.00 discounted by 1.8% now).
Declining rates were certainly a factor in stock returns over the past 25 years. Of course, the stock market didn't keep going up as rates kept going down. The P/E ratio of the S&P 500 index at the end of 1990 was around 15x, and now it's 25x according to Shiller's database (raw P/E, not CAPE). So the valuation gain over the 25 years accounted for around 2%/year of the 9-10% return Greenblatt states.
Here are the EPS estimates for the S&P 500 index according to Goldman Sachs:
 EPS P/E 
2016 $105 20.4x 2017 $116 18.5x 2018 $122 17.6x
Earnings estimates are not all that reliable (estimates have been coming down consistently in the past year or so). But since most of 2016 is done, I suppose the $105 figure should be OK to use.
I don't know if it's apples to apples (reported versus operating etc.), but if we assume the 'current' P/E of the market is 20x, then the valuation tailwind accounted for 1.2%/year of the 9-10%. But then of course, even if this was a fair comparison, there is still the aspect of lower interest rates boosting the economy by borrowing future demand (and therefore overstating historical earnings).
In any case, one of the main bearish arguments is that this interest rate tailwind in the past will become a headwind going forward. Just about everyone agrees with that.
But as I have mentioned before, calling turns in interest rates is very hard, Japan being a great example. If you look at interest rates over the past 100 years or more, you see that major turns in trend don't happen all that often; it's been a single trend of declining rates since the 1980/81 peak, basically. What are the chances that you are going to call the next big turn correctly? I would bet against anyone trying. OK, that didn't come out right. I wouldn't necessarily be long the bond market either.
Gotham Index Plus So, back to the topic of Gotham's new fund. It is a fascinating idea. The fund will go long the S&P 500 index, 100% long, and then overlay a 90%/90% long/short portfolio of the S&P 500 stocks based on their valuations.
The built-in leverage alone makes this sort of interesting. Many institutions may have an allocation to the S&P 500 index, and then some allocation to long/short equity hedge funds. The return of the Gotham Index plus would be much higher (when things go well).
I think this sort of thing was popular at some point in the pension world; index plus alpha etc. Except I think a lot of those were institutions replacing their S&P 500 index portfolios with futures positions, and then using the cash raised to buy mortgage securities. Of course, when things turned bad, oops; they took big hits in S&P 500 futures, tried to post cash for the margin call and realized that their mortgage funds weren't liquid (and was worth a lot less than they thought).
Or something like that.
There is risk here too, of course. You are overlaying two risk positions on top of each other. When things turn bad, things can certainly get ugly.
I think Greenblatt's calculation is that when things turn bad, the long/short usually does well. I haven't seen any backtests or anything, so I don't know what the odds of a blowup are.
Expensive stocks tend to be high-beta stocks and cheaper stocks may be lower beta, so in a market correction, the high-beta, expensive names may go down a lot harder.
To some extent, lower valuations may reflect more cyclicality, lower credit risk / lower balance sheet quality too so you have to be a little careful. In a financial crisis-like situation, lower valuation (lower credit quality) can tank and some higher valuation names may hold up (like the FANG-like stocks).
But Greenblatt's screen is not just raw P/E or P/B, but is tied to return on capital, so maybe this is not as much of an issue compared to a pure P/B model.
The argument for this structure is that people can't stay with a strategy if it can't keep up with the market. Here, the market return is built in from the beginning and you just hope for the "Plus" part to kick in. In a long/short portfolio, the beta is netted out to a large extent so can lower potential returns. This fixes that. But there is a cost to that.
In any case, I do think it's a really interesting product, but keep in mind that it is a little riskier than Gotham's other offerings.
Oh, and go read the article on why this new fund is a good idea. Greenblatt is always a great read.
Chipotle (CMG) Well, Chipotle earnings came out and it was predictably horrible. The stock is not cheap so it hasn't been recommendable in a while, but I really like the company. There was a really long article on them recently which was a great read. It didn't really change my view of them all that much. I think they will get a lot of business back, eventually.
The earnings call was OK, but what was depressing about it was that they decided to ditch Shophouse. I don't think any analysts asked about it so it was a given, I guess. I had it a couple of times in DC and liked it and was looking forward to it in NY, but I guess that's not going to happen. As an investor, that was not baked into the cake, I don't think, even though there was probably some hope that the CMG brand can be extended into other categories.
This puts a lot of doubt into that idea. Someone said that brand extensions in restaurants/retail never work, and that has proven to be the case here. I wouldn't get too excited about pizza and burgers either. Burgers are really crowded now and will only get more so.
If CMG has to look to Europe for growth, that is not so great either as the record of U.S. companies expanding into Europe is not good. I would not count on Europe growth.
Anyway, this doesn't mean it's all over for CMG. I think they will come back, but there are some serious headwinds now other than their food poisoning problem; more competition etc. They were the only game in town for a while, but now everyone seemingly wants to become the next Chipotle, so there are a lot of options out there now.
As for Ackman's interest in CMG, I have no idea what his plan is. There is no real estate here as CMG rents all their restaurants, and their restaurants had high 20's operating margins at their peak. I don't know if they will ever get back up there, but it's not like these guys don't know how to run an efficient operation. Maybe Ackman sees SGA opportunities, but pre-crisis, SGA was less than 7%, so there wouldn't be that much of a boost from cutting SGA. Or maybe he thinks it's time for CMG to do what everyone else is doing and go for the franchise model. Who knows? I look forward to seeing what his thoughts are; hopefully some 500 page presentation pops up somewhere...
McDonalds I don't want to turn this into a food blog, but I can't resist mentioning this. I have been a lifelong MCD customer; I have no problem with it. OK, it may not be my first choice of a meal in most cases, but it's fine. And when you have a kid, you tend to go more often that you'd like. But still, it's OK. It is what it is, right?
I like the remodelling that they are doing, and the fact that they have free wifi is great too. But here's a big clustermuck they had with their recent custom burger and kiosk idea. I walked into a MCD without knowing anything about any of this recently. A lady said I can order at the kiosk and I said, no, I'll just go to the counter, thank you.
And I waited 10 minutes or so in line, looking up at the tasty looking special hamburgers on the HD, LCD menu board. It was finally my turn at the cash register and I said I want that tasty looking hamburger up there on the screen. And the lady said, oh, you can only order that at the kiosk. I was like, huh? That was really annoying. So I wait all this time and I can't get what I want; I have to walk all the way back and get in another line again? Come on! At that point, I didn't want any other burger so I just ordered a salad (and the usual for my kid).
OK, so it's my fault, probably. User error. But as a service company, as far as I'm concerned, that was a massive fail on the part of MCD.
OK, Now That I started... And by the way, since I got myself started, let me get these two out too. Yes, I spend too much time at fast food joints. Guilty. But still, here are my two peeves related to two of my favorite fast casual places:
Shake Shack: Being dragged there all the time, I have learned to love the Shack-cago hot dog. Chicken Shack is awesome too, in case you don't want to eat hamburgers all the time. But I can't tell you how often they get take-out and stay wrong. I had a long run where they didn't get it right at all and had to ask for things to be packed to go. It is really annoying and wastes everyone's time.
Chipotle: This hasn't happened to me the last couple of times, but this is the usual conversation that happens to me just about every time I go to Chipotle.
CMG: "Hi, what can we get you today?" (or some such) Me: "Um, I'll have a burrito..." CMG: putting the tortilla in the tortilla warmecooker, "and would you like white rice or brown rice? Me: "White rice is fine" CMG: with tortilla still in the cooker, "and black beans or pinto beans?" Me: "black beans". CMG: laying a sheet of aluminum foil on the counter and placing the tortilla on it, moving over to the rice area, "Was that white rice or brown rice?" Me: "white rice" CMG: sliding over to the beans, "and black beans or pinto beans?". Me: "black".
I can't tell you how many times this exact thing happened to me. If you can't remember what I say, don't ask beforehand! Just ask when we get to whatever you are going to ask me about! This is not rocket science, lol... Incredibly annoying.
Anyway, I still love CMG and will keep eating there.
Oh, and to make things interesting, I decided to post a contact email address in the "about" section of the blog. I will try to respond to every email, but keep in mind I may not look in that email box all the time.
I will try to post more, though.
http://brooklyninvestor.blogspot.com/2016/11/perpetual-option-och-ziff-capital.html (read original with tables)
submitted by BobFine to stocks [link] [comments]

Ads for 2017-04-23 (1 / 2)

Subreddit Title Brand
television ‘Wheel of Time’ TV Series Lands at Sony Epic Fantasy could be next GoT Sony
gaming I heard that Microsoft made a console called the Game 300. It it true? Microsoft
IAmA I've been helping businesses get ranked #1 on Google a long time, and LOVE to teach people. Can we do an AMA? Google
mildlyinteresting I took my Gatorade out of the refrigerator and it got frozen solid Gatorade
funny A Galactic First! This McDonald's franchise has just been approved to open on The Death Star McDonald's
pics Google’s artificial neural networks processes Google images. This is the result. Google
television Farm Food by Chris Ballew, a parody of "Peaches" by The Presidents of the United States of America, from the Farming episode of Bill Nye the Science Guy United
AskReddit Serious Just got my first Costco card as an adult. What do you get at Costco, Reddit? Costco
videos Confrontation between American Airlines Employee and Passengers American Airlines
AskReddit Options are getting thin: American screwed up, United screwed up. Reddit, who can we fly with anymore? United
pics Taken from inside the Rogers Center. CN Tower in all it's glory. Rogers
pics Taken from inside the Rogers Center. CN Tower in all it's glory. CN
funny Replying to not finished Facebook conversations from 6 years ago Facebook
news Why Rome sends trains filled with rubbish to Austria - BBC News BBC
mildlyinteresting This Dove bottle had two labels Dove
AskReddit SERIOUS People who have been on the MTV show Catfish, what was it like? MTV
OldSchoolCool My grandmother working the switchboard at Southern Bell in 1951 Bell
gaming Best Xbox games to play alone Xbox
Jokes The Orange Cashier Long Orange
mildlyinteresting The "M" in these MTV stickers is upside down. MTV
mildlyinteresting This McDonald's on Cozumel island off the coast of Mexico only serves desserts McDonald's
Music Cardiacs - Bell Clinks Prog/punk Bell
Showerthoughts If a company used stereotypes of other ethnicities in their ads like Subway does to promote their Italian sub, people would lose their shit. Subway
funny Goddammit, which one of you made this happen when you Google Sarah Jessica Parker!? Google
Music Hands - Volvo indie Close your eyes, forget the commercial, listen to the tune... Volvo
Showerthoughts Some Google Dev that was working on Google Earth was specifically assigned to make a 3-D model of your house/apartment building. Google
todayilearned TIL that during World War II, a former member of the bonnie and clyde gang by the name of W.D. Jones attempted to join the United States Army. But was rejected after doctors discovered that he still had bullets embedded in his body from multiple police shootouts from more than a decade earlier. United
AskReddit Serious What does a perfect United States look like/entail to you? United
todayilearned TIL that during World War II, a former member of the bonnie and clyde gang named W.D. Jones attempted to join the United States Army after being let out of prison. He was rejected after doctors found "four buckshot and a bullet" in his chest, and that part of his lung had been blown away. United
todayilearned TIL in the United States, people who turn 100 years old receive a letter from the President, congratulating them on their longevity. United
food Chocolate Orange Cheesecake homemade Orange
Showerthoughts I can't wait for Apple to start making contact lenses. Then I could put a filter on to make the world not look so shitty. Apple
Showerthoughts If I put translate something using Google Translate and it makes sense I know whoever wrote it probably isn't a speaker of the language. Google
movies Ghost in the Shell Cyberpunk Derelict City: VFX Breakdown Shell
Music Sylvan Esso -Just Dancing pop Esso
news Vietnamese villagers free police hostages - BBC News BBC
mildlyinteresting An Xbox One controller's infrared sensors made visible through picture flash Xbox
pics Anyone else outside of the US wonder why ESPN still geoblocks their videos as if they're exclusive footage? ESPN
todayilearned TIL that Steve Jobs thought pairing a stylus with a tablet would render it a failure in design. In 2015 Apple announced the Pencil, a stylus for iPads Apple
gaming New hopeful gamer with a few questions regarding Xbox one and PS4 Xbox
videos Michael Jackson MTV 10th anniversary MTV
todayilearned TIL someone anonymously sent St. Jude Children's Research Hospital a $1 million-winning McDonald's Monopoly piece. Although McDonald's does not allow the transfer of prizes, they had waived the rule. McDonald's
AskReddit You wake up and it is 2100. What is your first Google Search? Google
AskReddit Why was there massive public outcry that caused united to lose billions because they gave a guy a bloody lip. But almost no mention of the American Airlines lady that beat the crap out of somebody for trying to bring a stroller on board? Was it just because of the way the company handled it? American Airlines
funny You never go maximum… from Toyota engine manual Toyota
science Cuba's Cancer Revolution and Biotech: Lung Vaccine for EGF. 10's of 1000s have had lifespan extended. Power of science when socially organized. BBC Radio Podcast BBC
Music Are you a paid SoundCloud or Spotify or Google Pay user? Why did you choose that? Google
funny Looks like this Starbucks had enough Starbucks
AskReddit What is exactly 5,555 miles away from where you currently are in any direction, on Google Maps? Google
food Today I drank Redd's Apple Ale + Fireball Apple
tifu TIFU by discussing with the family about why Uber is better than taxi, whilst being driven in a taxi. Uber
videos Nikki Bella and John Cena goes Nude on Youtube Catch the video right here Youtube
gaming Looking for rhythm/music games for Playstation systems. Playstation
Showerthoughts Interesting fact: Walmart is a supermarket, not a zoo Walmart
pics First art project ever. Answers to extraneous questions: yes I was under the influence. Yes my initials are BG and yes it's my fucking birthday. art wouldn't accept my post so this post is in spite of those artsyfuckinfartsyduecheholes. BG
todayilearned TIL Sebastian Vettel named his 2009 F1 Red Bull RB5 "Kate's Dirty Sister." Red Bull
news Rupert Murdoch buying Sky News is the real reason why Bill O'Rilley was let go Sky
Jokes Why did the Facebook killer kill himself? Facebook
Jokes My answer when someone asks how I feel about United Airlines... United
Jokes Why are all the airlines in the United States so... United
aww POTUS. Puppy of the United States United
gadgets Nike and Apple are about to drop this collaboration on the public Apple
explainlikeimfive ELI5: What is it about Microsoft updates that they happen so often, instead of waiting a longer period of time to update alot in one sitting? Microsoft
Showerthoughts Toonami Tom has just been playing No Man's Sky this whole time. Sky
AskReddit serious Those of you who have deactivated Facebook accounts; Why did you and has it made you feel better? Facebook
mildlyinteresting Opened a Sprint , the whole cap came together Sprint
todayilearned TIL that 3 people attempted to sell Coca Cola's secret ingredient to Pepsi for $1.5m. But Pepsi reported them to Coca Cola and the FBI. Pepsi
news North Korea 'detains American citizen' - BBC News BBC
philosophy Atomic Intel Brief - What's Really Going On Intel
AskReddit Just like PC vs Xbox vs PS, what are the opposing sides in YOUR favourite hobby? Xbox
gaming Discussion Xbox One or other console? Xbox
todayilearned TIL Sony sold CDs that silently installed malware on PCs, in an attempt to protect their business. Sony
Showerthoughts I had a dream about Sprite last night, but even worse than that... I couldn't find any kind of function that would allow me to skip that dream. Sprite
videos My little brother has been working on this Lego Star Wars animation for what seems like forever! He finally finished it and is very proud of it and wants to see what you think! Lego
AskReddit SeriousWhat type of tweets and/or posts are most likely going to help you make your favorite celebrity follow you in Twitter and/or Instagram? Twitter
AskReddit What type of tweets or posts will most likely make your favorite celebrity follow you on Twitter and/or Instagram? Twitter
Music Roman Sky - Lost Voices Chill Trap edm 2017 Sky
listentothis TNJX - Sky Pirate Fairycore 2013 Sky
history I just found out I am related to someone who died in the Halifax Explosion. Anyone else? Halifax
videos Download Youtube Videos Without Any Software or Extension Youtube
worldnews Pope Francis: Europe migrant centres 'concentration camps' - BBC News BBC
mildlyinteresting These rows of apples at Target came in like this. Target
pics Crater Lake, Oregon, United States of America United
worldnews How might Donald Trump do a deal with North Korea? - BBC News BBC
explainlikeimfive ELI5: Why does Charter skip certain episodes of shows on demand? Charter
photoshopbattles PsBattle: Crater Lake, Oregon, United States of America United
worldnews Spammers Populate Google Maps With Pirate Links. Copyright holders are not happy with this unintended use and are targeting the pages with various takedown notices Google
Showerthoughts I wonder if in the afterlife, your success is binary - you're successful if you have a Google doodle, and not if you don't! Google
worldnews IMF meeting drops anti-protectionism pledge - BBC News BBC
worldnews Combiflam, D Cold Total and others found to be 'substandard' by drug regulator: All you need to know Total
todayilearned TIL Every year, the Delta Dental Plans Association polls Chicago area children about the amount of money they receive for a lost tooth and compiles it into a mock financial report called the "Tooth Fairy Index." Delta
gaming What games are Must-Play games for Xbox One? Xbox
gaming I'd like to create an Xbox 1 Ghost Recon Wild lands team. Xbox
OldSchoolCool My Papa Chiquito 1969 at the Boston Subway Station. Subway
mildlyinteresting This shop has a massive Coca-Cola bottle collection. Coca-Cola
Documentaries Japan: A Story of Love and Hate 2008 - BBC doc about Naoki, a part time postal worker who used to be a high powered executive before the bubble burst in the 90's. Now lives in poverty with his younger girlfriend Yoshie in a dysfunctional relationship. BBC
listentothis Treehouse Casino -- Silver Tongue Indie/Garage Rock 2017 Casino
pics Found this old-school Coca-Cola metal cooler at an estate sale for $5. Pretty neat! Coca-Cola
Showerthoughts There should be an Uber for toilets. It could run on methane gas. Uber
AskReddit How many images are there on Google Images ? Google
gaming QUESTION Should I keep my launch PS4 and Xbox One S or trade them for a PS4 Pro? Xbox
todayilearned TIL that there was once a black market for pre-recall Blue Bell ice cream. Bell
funny Today's Google doodle looks more like a handlebar mustache rather tham what's supposed to be. Google
worldnews Holograms, mistrust and 'fake news' in France's election - BBC News BBC
OldSchoolCool Special Effects master Stan Winston and his animatronic T-Rex on the set of ‘Jurassic Park.’ circa 1993 Winston
videos Man gets high of "Air-Duster" in a McDonald's Parking Lot McDonald's
Art Illuminated T, Apple pencil, 3"x3" Apple
funny Added my SO of over a year on Facebook this morning. Facebook
Showerthoughts What if Bill Nye and Neil deGrasse Tyson are just the world's best googles? Tyson
aww A Dog Playing A Sky Rocket. Sky
todayilearned TIL that the only reason that the United States has the same Stop Sign design as the rest of the world is because the UN adopted the USA standard. The US never signed the UN convention that made it standard. United
mildlyinteresting Samsung and Apple stores next to each other in Barcelona. Apple
mildlyinteresting These IKEA interlocking chair packages IKEA
videos I made a Lego Animation for a school contest. X-Post /Lego and /Mountandblade Lego
worldnews US Accuses TCS, Infosys Of Violating H-1B Visa Norms Infosys
worldnews Film points finger at South Korean government for Sewol disaster - BBC News BBC
AskReddit Train/ Airplane / Ship / Subway operators of Reddit , what's the most unforgettable thing that happened to you during work ? Subway
AskReddit What is worse than stepping on Lego barefoot? Lego
gaming My dad plugged in my Xbox to the car now I. Can play IN THE CAR! Xbox
pics The Sheraton in Doha, Qatar looks like Camp Big Falcon Sheraton
todayilearned TIL Mike Tyson Races Pigeons And Made A show "Taking on Tyson" That Focuses On The Ancient Sport Of Pigeon Racing. Tyson
food Homemade Lego Batman cake Lego
AskReddit What's the single most horrible hotel you can find based on Google Maps' user-submitted photos? Google
AskReddit Serious Malaysian claims on Facebook that a certain stranger is releasing a sort of dizziness/fainting-inducing scent when a document is opened close to their face. Is this possible? Facebook
gaming It'll Take 2 Years to Fully Utilize Xbox Scorpio's Power; 12GB RAM Means "No Real Technical Limits", Says Stardock CEO Xbox
todayilearned TIL Cosplayers @ DragonCon made camouflage of the Marriott Hotel's carpet- and received a cease and desist for doing so! Marriott
funny Then never before seen BMW echo. BMW
Music Electric Paws - Crying Sky electronic Sky
EarthPorn OC 1080x1920 A field in spring time. Wirral, England, United Kingdom United
AskReddit SeriousWhy are Google Apps missing from upper right corner when I open Chrome? Google
dataisbeautiful Eight "nations" of the United States United
Showerthoughts It would be fantastic if there was a credit card where the rewards, instead of being airline miles, were paid out in AirBnB or Uber credit Uber
worldnews Macron-Le Pen 'in French run-off' - BBC News BBC
AskReddit Redditors in the United States; what was the last 1-900 number you called, when and why? United
funny This dude's face at the Apple Store Apple
worldnews France elections: Macron-Le Pen though to run-off, projections say - BBC News BBC
AskReddit If Facebook was a face, what part would Reddit be? Facebook
news Cherokee Nation files lawsuit targeting CVS and other pharmacies in opioid crisis CVS
news Tim Cook reportedly threatened to remove Uber from the App Store in CEO meeting Uber
gaming Anyone know what the deal is with Volkswagen vehicles being absent from pretty much every racing game made in the last 10 years? Volkswagen
todayilearned TIL that Starbucks has a secret menu Starbucks
worldnews French election 2017: Who are the candidates? - BBC News BBC
AskReddit What is the most interesting place to explore in Google maps? Google
mildlyinteresting Rust spot resembles the United States. United
news Onetime Mrs. Orange County pleads guilty to child pornography Orange
pics "Three F-86 Sabres and an F-22 Raptor stealth fighter jet fly in formation during the 2016 Heritage Flight Training and Certification Course at Davis-Monthan Air Force Base" on 6 March 2016 in Arizona, USA. Photographer: United States Air Force Senior Airman Chris Massey United
videos [MY HANDS ARE TRAPPED! Statik #1 - Playstation VR Gameplay](https://www.reddit.com/videos/comments/673zh5/my_hands_are_trapped_statik_1_playstation_v)
pics "An Air Combat Command F-22 Raptor Demonstration Team aircraft flies during the AirPower over Hampton Roads Open House" on 24 April 2016 at Langley Air Force Base, Virginia, USA. Photographer: United States Air Force Senior Airman Kayla Newman United
mildlyinteresting Condom section in Walmart is called "Family Planning" Walmart
funny A wild Canadian Goose storming out of Target after realizing they only accept U.S. currency Target
Showerthoughts With the choice between LePen and Macron, France will be choosing between Goldman Sachs and Vladimir Putin. Goldman Sachs
worldnews Aurora photographers find new night sky lights and call them Steve - BBC News BBC
food Homemade Breakfast: Eggs, Sausage, Potato Veggie Hash; Crepes with a Mixed Berry Compote and Mascarpone; Orange Juice Orange
funny When you're dragged to Starbucks against your will... Starbucks
AskReddit What memories has Facebook reminded you of that made you cringe? Facebook
explainlikeimfive ELI5: What is happening when your Xbox and other electronics are "updating"? Xbox
food I ate/made - Glam'd up some McDonald's pancakes with strawberries, whip cream, and veggie sausages McDonald's
AskReddit Why does the United States not use our own excess trash/waste to make energy like some European countries do? United
Showerthoughts New movies about Steve Jobs are going to keep coming out because everyone knows Apple fans are dumb enough to pay for the same thing every couple years Apple
gaming Any good baseball games for Xbox One? Xbox
Jokes I'm so sick of United Airlines jokes. United
pics Last Nite I received my BP Fellow diploma and pin from HM King Carl XVI Gustaf of Sweden . BP
videos What will happen if you boil a Starbucks Unicorn Frappuccino? Starbucks
gifs 120mph Ford Focus crash test Ford
personalfinance CAN Pay off OSAP or Scotiabank student line of credit first? Scotiabank
todayilearned TIL That a man once tried to sue Pepsi because he found a mouse in his can of Mountain Dew, Pepsi defended the case by proving that Mountain Dew can dissolve a mouse in a few months. Pepsi
worldnews ISIS threaten to behead a hacker after he takes over 250 jihadi Twitter accounts and fills them with porn Twitter
mildlyinteresting Bought a couple sealed DVD's at Kroger today for $5 and this was on the inside of one of them Kroger
todayilearned TIL: there are more marijuana Dispensaries in Colorado Than McDonald's & Starbucks, Combined. McDonald's
funny When you're Asian and flying United Airlines United
AskReddit If Smell-O-Vision worked like a Google search, what would you look up first? Google
gaming Replaying Dawnguard and falling in love with the sexy vampire Serana again, I decided to Google who did her voice. Google
Showerthoughts There should be a Minecraft-style Lego video game Lego
pics Spotted the Notorious B.I.G. at Starbucks today. Starbucks
Showerthoughts I sometimes try to shop at Whole Foods just to remind myself how poor I'm Whole Foods
funny Because no UPS man is an island... UPS
funny My local Facebook "free and for sale" page. Tried to come up with a good caption...decided to just leave it here and let reddit do what reddit does Facebook
videos The New York Subway in 1986 Subway
mildlyinteresting This Xbox 1 fits into this shelving slot perfectly Xbox
OldSchoolCool My grandfather interviewing Albert Einstein for CBS news in the 1950's. CBS
LifeProTips LPT: Scheduling an Uber ride a day in advance cuts the price almost 40%. Great for rides to the airport. Uber
OldSchoolCool Prince Rogers Nelson circa 1978 Rogers
AskReddit What are some cool/weird/funny/creepy things you can see on Google Earth? Google
pics Today a Mazda blew past me in the opposing lane, while we were in a schoolzone. There were kids around and I want to report it. I focused in on the plate as much as I could, but would appreciate another set of eyes on what the plate could be. Mazda
submitted by HailCorporateRobot to PotentialHailCorp [link] [comments]

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