Dan AmossDan Amoss

Dan Amoss, CFA, tracks aggressive accounting and other red flags that markets miss. He’s a student of the Austrian School of economics and Daily Reckoning fan since 2000. Agora Financial relies on Dan for macro market commentary as well as profitable plays like his 2008 call to readers to buy Lehman Bros. puts, which gained 462% as the stock fell from $45 to $12. And he called American Airlines’ bankruptcy long before the Chapter 11 filing, telling readers to short the stock, which tanked from $6 to just 26 cents.

Formerly, he was investment adviser to one of the top small-cap mutual funds in the country. He grew up on a semi-working small farm that his great-grandfather bought in 1907, learning thrift and the value of hard work through generations. 

This informs his drive to seek truth and expose frauds and promotions that suck in investors. He cut his teeth in finance interviewing management teams in “roadshows” and so knows the kind of BS they sell.

His bottom-up investing style focuses on management strategy, return on capital and the truth (and lies) buried in financial statements.

Investors Can’t Ignore Balance Sheets Forever

As economies reopen, revenues bounce and jobs return, many deferred payments will become due as well. Investors will soon recognize the risks of owning shares in companies that have borrowed heavily to tide themselves over. The debt burdens at companies with weak earnings fundamentals tend to squash shareholders over time. So investors should be wary of any uptick in risk aversion that could cause a stock to crash very quickly.

Strategic Intelligence June Portfolio Update

The current economic environment warrants lower-than-normal valuations in the stock market. But instead, bull market sentiment is as euphoric as ever, and valuations have ramped up to near all-time highs just as the earnings stream that supports the market has collapsed. With so many insolvent companies in many sectors, the corporate default rate will remain very high in the months ahead. This bodes well for gold and gold mining stocks. For now, Dan gives guidance on all our open positions in the portfolio, including one recent position moving from a buy to a hold.

Project Prophesy Portfolio June Update

Many investors spent another month ignoring the worst economic and earnings data since 2008. They piled into risky assets on the hope that conditions will be back to normal soon, but they are ignoring the fact that corporate defaults have just begun. We expect further upside in gold prices and gold stocks and difficult conditions for most popular stocks, which are tied to the health of corporate balance sheets. For now, Dan reviews all the open positions in the portfolio, including two positions still recommended as buys.

Consequences of the Skyrocketing U.S. National Debt

In response to an abrupt March 2020 move into recession and a bear market in stocks, we’re seeing an unprecedented injection of newly printed cash into the U.S. economy in a brief period of time. With consumer spending down along with tax revenues, the end result will be persistently high federal deficits, steady supplies of new cash entering the economy and a U.S. economy that more closely resembles the 1970s than the economy that most Americans have become accustomed to. The result will be favorable to gold prices.

Mounting Risks in Used Car Financing Will Hit CarMax

Changing consumer habits have hit the used car industry hard. Inventory turnover has slowed along with easy financing. Management has had to take extreme measures in response to a collapse in retail sales. With the increase in customer loan defaults and increased competition from auto manufacturers as a result of a lower customer base, CarMax’s stock price will start feeling the pressure.

Take 312% Gains on BJ’s Wholesale Calls

BJ’s Wholesale had a blockbuster quarter and from its earnings call this week we concluded that Wall Street earnings estimates would rise sharply. There’s still more upside to this estimate, but it’s likely to occur closer to BJ’s next quarterly result in three months. Considering the remarkably strong rally in two days, let’s take gains on this position now and look for another potential entry point in the future.

Markets Sleepwalk Into a U.S.-China Decoupling

An economic decoupling between the U.S. and China seems more evident each passing day. Trade wars along with tensions between the two countries due to the pandemic are rapidly dissolving the relationship. This spells trouble for companies that are deeply embedded in Chinese companies’ supply chains. U.S. companies that have bet it all on the relationship returning to the status quo are at risk of permanent value impairment.

How Bubble Logic Drives Wayfair Stock

Wayfair stock has skyrocketed in the past few months as consumers increase their internet buying during the pandemic. However, negative cash flow and ballooning debt will spell trouble for Wayfair when it can’t keep up its frantic growth pace after brick-and-mortar competition reopen and pop its stock bubble.