Sunday, September 26, 2010

An example of coordinated deception

David Tepper runs Appaloosa Management launched in 1993. He is described as reclusive, a jackel, the master - a titan, a "How do you do it?" type of guy. If there is any example of Joe Kernan eclipsing, even just a little bit, his previous career peddling the stocks of ready to implode Biotech securities - this is it. Kernan talks to this Tepper guy like he's god. Moreover, CNBC produces graphics deliberately designed to deceive. They trump up his performance like a pot-roast attracting a meal. The result is pure deceit - and whats more they end up using this guy as a shill to pump up bullish stock scenarios. So, its a double whammy. This is an example of regulated and deliberate fraud and why I do not watch TV.

Clearly, Tepper is not trying to run money well, though he supposedly did get paid 2.5 billion apparently last year - which I do not believe BTW. He, however, clearly is trying to raise assets well and charge his management fee. So lets review:

Below is  a chart of Tepper's AUM as presented by CNBS (kinda looks like they may have been making money right?):
Below is a chart of some undefined method of computing annualized performance (Again as presented by CNBS, it really looks like this guy is on to something now doesn't it):

Below is a chart of what Tepper's performance numbers represented in the charts above actually look like (Now we know why the fund has a ridiculous name like Appaloosa and we can clearly understand why this chart only flashes on the screen without fanfare as opposed to the others):

The guy took nearly a 50% loss on principle in 98 and several drawdowns that were much bigger. Also, keep in mind that if you were unlucky enough to invest in this mismanaged fee generation machine at one of those peaks you lost anywhere from 75% to 95% of your principle on more than a few occasions. The fact that he can sell this piece of crap fund at all is a miracle. Apparently, the guy does not use leverage, yet generates the beautiful PL picture shown above. Just imagine if he really traded or invested actively, or better yet, used a little bit of leverage.

What I would like to understand is: What difference it makes for me to see Assets Under Management (AUM) in a nice smooth curve and annualized performance, again, in a nice smooth curve. These are derivative values without an explanation of methodology and additionally misleading in reference to quantifying returns. Kernan talks about his annualized performance as if its legendary when apparently, these guys have to be using the peak high watermark performance shown in mid 2010 on the PL chart above to generate those false and deceptive numbers. The reality is that Tepper has no idea what he is talking about, runs a crappy fund and is pumping stocks...get ready to see another 100% swing in PL volatility on this chart.

The reason I am posting this is because people are getting all bullish again given Friday's action, especially shills and amateurs like Tepper. My systems covered their shorts on Thursday afternoon and we closed a respectable week. Personally, I was favoring a consolidation up day on friday though the potential for a larger move would not have been surprising. The fact is that this was a much bigger move than I and most people were expecting simply squeezes the shorts further to the wall and pumps idiots like Tepper so that they can raise assets for trash heaps called Titan's of Hedgefunds. The media is obviously in full regalia pumping the Bernake and Obama re-inflation wealth transfer agenda.

I do not change my view that we stand a the precipice of a substantial decline. My trading activity does not use opinion to make decisions but does use it to make allocation decisions. i.e.: how many percent of assets are we allocating long or short. Right now that view is imparting a bias towards assets allocated biased short if the models choose to go short. I believe that this will be another example of a false breakout, despite the deformed bullish inverse head and shoulders breakout that we have on our hands. One of the other reasons that I believe that is the downright parabolic topping behavior in momentum names that have been highly shorted like NFLX, BIDU, AAPL, AMZN, PCLN. The charts of these securities can not match any optimistic expectation of reality no matter how generous and positive a scenario can be painted. Shorts are being taken down in bodybags - these are the signs of a bubble and a top. What's more the shorts will not be there to buy the market when it actually begins its now obligatory implosion.

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