The New PE Ratio: Price to Ego

I’ve been in the markets a decade and a half and I don’t know what the fuck kind of Wild West dick-measuring contest this thing has turned into…

David Einhorn’s latest 13D filing shows that he loaded up on shares of Apple – raising his stake by 50% –  just before bringing a lawsuit demanding some kind of convoluted preferred dividend scheme. I must have had the abridged version of Graham and Dodd because I can’t remember the chapter in ‘Security Analysis’ that teaches Lawyer Selection in value investing.

In the Price to Ego market, with deep enough pockets your trade can never be wrong, you just need the courts to prove it.

And with the amended 13D filed last night, we now know that Carl Icahn is officially out to destroy Bill Ackman’s career and sink his Pershing Square fund. Icahn is now a 13% stakeholder in Herbalife – a stock which Pershing Square has turned into the World’s Fair of Short Positions. The old lion’s got a host of quasi-related entities lined up to take a parasitic pyramid scheme private, at god knows what price, just to rip the overconfident short-seller’s throat out. Ackman told CNBC this morning that he’s basically unfazed by the potential squeeze Carl has put on him and, oh, by the way, (yawn), what’s for breakfast?  Only mighty Zeus, explaining away his ongoing paternity of human children with earth-bound maidens under Hera’s glare, could possibly be quite this blasé.

In the meantime, JC Penney, Ackman’s other big tentpole position, may now be traded as a proxy for Pershing’s solvency.

If you think any of this shit is trading based on fundamentals or technicals, you’re basically like a clown in the zoo.

The 2013 Wall Street maxim is: Buy on the lawsuit, sell on the CNBC appearance.

Price to Ego is a very difficult metric with which to invest.




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