Experts are nothing but EX Spurts; in other words, a spurt that never was. The so-called experts of Wall Street would make no money were it not for the gullible masses they can milk. Overall hedge funds have been having a very hard time playing this market. They cannot deal with the extreme volatility as they try to outguess the market; they seem to get whacked on both ends of the trade. Look at how many funds jumped into Valeant Pharmaceuticals assuming that it was safe to follow other experts; the blind lead the mute. In the land of the blind, the one-eyed Jackass reigns supreme
Pershing Square (Bill Ackman): 21,591,122 shares, 6.33% (added 5 million shares on February 5)
ValueAct Holdings (Jeff Ubben): 14,994,261 shares, 4.39%
Paulson and Co. (John Paulson): 13,265,900 million shares, 3.89% (added 4.375 million shares in Q4)
Brahman Capital: 8,117,753, 2.38% (added 4.1 million shares in Q4)
Viking Global (Andreas Halvorsen): 7,793,397, 2.28% (added 2.8 million shares in Q4)
Lone Pine Capital (Steven Mandel): 5,829,079 shares, 1.71% (sold 1.63 million shares in Q4)
Hound Partners (Jonathan Auerbach): 4,881,835, 1.43% (added 983,187 in Q4)
Iridian Asset Management: 4,324,602, 1.27% (added 1.6 million shares in Q4)
Okumus Fund Management (Ahmet Okumus): 1,875,600, 0.55% (bought position in Q4)
Coatue Management (Philippe Laffont): 1,673,007, 0.49% (bought position in Q4)
If they haven’t changed their positions, as a group, then they’ve seen more than $1.25 billion on paper wiped out since Friday’s close. Bill Ackman, the founder of Pershing Square, has lost more than $321 million in his position since Friday’s close. To date, he’s suffered losses estimated at north of $2 billion on his Valeant investment. Others are likely feeling the pain, too. http://www.businessinsider.com/hedge-funds-in-valeant-2016-2/
Ackerman is taking it to the Chin. He is getting hammered on his short position on Herbal life and now in his long position on Valeant. His overall take on of both stocks is correct, but this once again proves that the stock market is not ruled by logic but by emotion. You need to sit down and gauge how the masses will react, and not on what you deem is the right course of action. Emotions, not Logic drive the market. The same line of thinking can be applied to the markets; the experts assume that the markets should tank based on the data being released, and that is probably why they will not tank. Right now a correction is being falsely marketed as the beginning of a new bear; however, the only new bear market that has started is a bear on common sense.
When people claiming to be experts tell you what to do, take that advice with a barrel of salt. You should first check what the masses are doing, how they are reacting to that sector or market. Remember most experts are part of the Mass Mindset, so it pays to take a position that is not in line with theirs. Ackerman has taken a beating on two of his touted positions. To make the story interesting, one is a long position Valeant and the other a short position (Herbal Life) and he has lost on both ends. He forgot the golden rule; it’s not what you know that matters; it’s what the masses are willing to accept as the truth that matter.