Enrique's Emergency Briefing last night; Muddy Waters' Carson Block Takes on 'Short and Distort' Author Josh Mitts; Stock Market Got You Worried? Write a D-Day Note; Amazon's amazing logistics; Paul Farmer, Pioneer of Global Health, Dies at 62
1) If you missed my colleague Enrique Abeyta's Emergency Briefing last night, you're in luck...
During the big event, Enrique shared the strategy that he calls "the best moneymaking weapon in the stock market today." With all the volatility that we've seen recently, Enrique says the timing is even better for this approach – it's one that he has been honing for the past 25 years.
For a limited time, you can still catch a replay of the briefing right here.
2) A major impetus for the misguided investigation into activist short sellers (which I've covered here, here, and here) was a 2018 paper written by Columbia Law professor Joshua Mitts, "Short and Distort," in which he claimed that anonymous short sellers were engaged in "manipulative stock options trading."
Yesterday, one of the primary targets of the investigators' wild goose chase, my friend Carson Block of Muddy Waters, released a report, "Distorting the Shorts," that decimates Mitts and his conflicted, wrongheaded "research."
Here's the abstract:
This white paper details material misrepresentations, omissions of fact, lack of academic integrity, and consistently incorrect statements by Joshua Mitts in his research paper "Short and Distort." We explain why Mitts' conclusion that pseudonymous short sellers are manipulating stocks through untruthful articles and manipulative options trading on a widespread basis is without basis. Moreover, we show that Mitts' own data actually evidences pseudonymous activist short sellers' articles are largely perceived as correct, despite Mitts' claim to the contrary, and that their trading does not drive price declines.
And here's Michelle Celarier's Institutional Investor article about it: Muddy Waters' Carson Block Takes on 'Short and Distort' Author Josh Mitts. Excerpt:
Famed short seller Carson Block, the founder of Muddy Waters Capital, has a new report out – but it's not about a public company that he believes is a fraud.
In this instance, Block argues that an individual – Columbia associate professor Josh Mitts – might rise to that level.
Mitts is the author of well-known research about short sellers titled "Short and Distort," which argues that some short activism is market manipulation. But the work is "greatly flawed, possibly to the point of being fraudulent," Block wrote in a 22-page white paper, titled "Distorting the Shorts."
Block said he has sent his report to the Securities and Exchange Commission, various academics, and online research publisher SSRN. Institutional Investor has also received a copy.
In the white paper, Block "debunked" Mitts' research, calling it "a non-empirical, conflict-laden polemic based on misrepresentation, selective presentation of data, and lack of academic integrity."
"If Mitts had written a short report on a company with comparable lack of rigor and misrepresentation, he would likely have significant legal exposure," Block added.
3) Jason Zweig of the Wall Street Journal has some good advice in these turbulent times: Stock Market Got You Worried? Write a D-Day Note. Excerpt:
Don't look at me.
That's just about every investor's motto when something goes wrong. In the old days, you could blame your stockbroker or fund manager for losing your money. Now that your stockbroker is your phone and your fund manager is an index, it's a lot harder to point your finger at somebody else.
If you're left with no one to blame but yourself, the obvious way out is denial – especially at times like this, with stocks down about 8% so far in 2022.
Individual investors specialize in denial. So do professionals.
That's because of cognitive dissonance, the tension that arises when beliefs and reality collide. You believe you were right to buy that stock; now it's down 75%, suggesting you might have been mistaken.
What will you do? As the economist John Kenneth Galbraith liked to say, "Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof"...
Instead of hiding your mistakes, put them on the board.
Were you so sure you were right about an investment that you believed no evidence or events could ever prove you wrong?
Force yourself, instead, to estimate the probability that you are mistaken – and 0% isn't an acceptable answer.
Finally, prepare for the pang of being proved wrong by pretending it's already happened. On the eve of the successful D-Day invasion in 1944, Gen. Dwight D. Eisenhower wrote a terse press release in case the Allied troops were defeated. It ended: "If any blame or fault attaches to the attempt, it is mine alone."
Before you make a big trade, consider writing a note like this: "My investment has been a failure, and I am selling. I based the decision on information I believed to be valid, but I was wrong because . It was a bad investment, but that doesn't make me a bad investor."
That won't stop you from making the trade. But if your great idea turns out to be a mistake, your D-Day note will prompt you to fill in that blank – and make it easier to admit that you were wrong without feeling foolish or incompetent.
4) Here's NYU marketing professor Scott Galloway on Amazon's (AMZN) amazing logistics:
45 minutes.
That's how much time passes between the moment you click "Place your order" and the moment your package gets loaded on the truck.
That includes processing, locating, packing, scanning, and labelling your package before it hits the road.
Amazon now receives 10 million orders per day (115 orders per second), and 1 out of every 153 American workers is an Amazon employee.
I saw this personally yesterday when I ordered a cordless phone. It was delivered in 24 hours, which would have been amazing had it been shipped to my apartment in New York City, but it was delivered to my extended family's house in rural New Hampshire!
5) The world lost a giant on Monday when Dr. Paul Farmer died suddenly of a heart attack at age 62.
After reading Tracy Kidder's book about him, Mountains Beyond Mountains: The Quest of Dr. Paul Farmer, a Man Who Would Cure the World, I had the pleasure of meeting Paul on a few occasions and even hosted an event for him at the Harvard Club of New York roughly 15 years ago.
Here's his obituary in the New York Times: Paul Farmer, Pioneer of Global Health, Dies at 62. Excerpt:
He was a practitioner of "social medicine," arguing there was no point in treating patients for diseases only to send them back into the desperate circumstances that contributed to them in the first place. Illness, he said, has social roots and must be addressed through social structures.
His work with Partners in Health significantly influenced public health strategies for responding to tuberculosis, H.I.V. and Ebola. During the AIDS crisis in Haiti, he went door to door to deliver antiviral medication, confounding many in the medical field who believed it would be impossible for poor rural people to survive the disease.
Though he worked in the world of development, he often took a critical view of international aid, preferring to work with local providers and leaders. And he often lived among the people he was treating, moving his family to Rwanda and Haiti for extended periods.
Best regards,
Whitney
P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.