On March 27th, when Wall Street consensus was still goo-goo-ga-ga about all things Social Media (Twitter, Yelp, Facebook, etc) and the bubble was hitting hew highs, Hedgeye CEO Keith McCullough wrote the following in his Morning Newsletter.
I know no one wants to call it a bubble. There’s career risk in calling something what it is...Boom! Crush. This stuff gets real in a hurry doesn’t it?"
Indeed.
(Click here to read the full "Morning Newsletter" from March 27.)
Despite being shrugged off by many a bubble-blinded pundit, he continued to question consensus' conviction that "It's different this time." He's been doing it on television, Twitter, and most importantly, with our customers.
Here he is on Fox Business with Maria Bartiromo advising investors to tread carefully in the market, particularly the Nasdaq.
Here he is again with Bartiromo, questioning an analyst's bullishness on Amazon and saying that AMZN was more likely to have a 2-handle on it than a 4-handle.
Shares of Amazon are down 11% since McCullough made his call.
In another Morning Newsletter entitled, "Accepting Little Bubbles," McCullough had this to say:
Accepting that little bubbles are going to start to pop bigger ones (like, say, the US stock market’s all-time high price) is a process, not a point.
...Having survived (made $ at a hedge fund in down tapes - 2000, 2001, 2002) the Tech Bubble, The LBO and Oil Bubbles (2008), and The Gold and Bond Bubbles (2011-2012), what I have learned about risk managing these suckers is quite simple:
First, they start to make lower-highs. Then the volume on down days eclipses the volume on the bounces (up days to lower-highs)… then bearish catalysts start to pile up… then what was happening slowly starts to happen more than a little – it happens all at once.
Finally, take a look at this brief HedgeyeTV video below from April 4th, where McCullough spells out his concerns about the bubble. Pay close attention to his bearish comments on YELP and note the date the video was shot. (Hat tip to Hedgeye Internet & Media analyst Hesham Shaaban.)
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