Michael Arold, based in Germany, aims to exploit market inefficiencies using a momentum-based trading strategy. He has a strong engineering background and currently works in the software industry. Here’s how Michael’s Covestor model, Technical Swing, works:
Using multiple technical indicators, this model surveys movements in the market and the sectors and stocks that are leading the way. Once interesting sectors or companies are identified, the manager takes a discretionary view, based on fundamentals, of likely moves in the opposite direction (i.e. have these been oversold or overbought). Short term model looking to capture profits in short term price swings.
On Monday (3/28), Arold shorted General Electric (NYSE: GE) stock. A couple big stories have come out about GE recently. Today (3/29) the company announced it bought 90% of French electrical equipment developer Converteam for no less than $3.2 billion, significantly beefing up its energy unit. AP reports:
GE Energy CEO John Krenicki said the Fairfield, Conn., industrial giant wants to take advantage of a rebound in petroleum drilling and natural gas exploration. Demand for natural gas, which emits less carbon dioxide than other fossil fuels, is expected to climb in coming years.
The Energy Information Administration said natural gas consumption should grow by 44 percent from 2007 to 2035 to 156 trillion cubic feet. Oil consumption is expected to rise by 28 percent in that same period to 111 million barrels per day.
“People are going to use gas,” Krenicki said. “We anticipate that. We want to be positioned on that.”
Meanwhile, the New York Times’ David Kocieniewski had a tough piece on GE Friday (3/24), claiming its lobbying and accounting strategies let it avoid taxes altogether for 2010:
The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States. Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.
That may be hard to fathom for the millions of American business owners and households now preparing their own returns, but low taxes are nothing new for G.E. The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies.
But Henry Blodget says the NYT is wrong to aim the blame GE for this – aim your wrath at Washington instead:
Companies have a duty to their shareholders to run their businesses as efficiently as possible, and taking full advantage of loopholes and laws that reduce one’s tax bill is an important part of that efficiency.
So who (or what) can you blame? Our absurdly complicated tax laws (and the folks who wrote them). The fact that companies (and people) that can afford to hire the best tax experts pay vastly lower taxes than companies and people that can’t is deeply frustrating. And it’s a direct result of the tax code being so complicated that you need to hire highly compensated experts to figure it out.
Sources:
“GE to buy most of Converteam in $3.2B deal” Associated Press, 3/29/11
“G.E.’s Strategies Let It Avoid Taxes Altogether” David Kocieniewski, New York Times, 3/24/11
“GE Paid Less Taxes Than You Last Year, Says The New York Times”, Henry Blodget, Yahoo Finance 3/29/11
https://finance.yahoo.com/blogs/daily-ticker/ge-paid-less-taxes-last-says-york-times-20110329-073651-206.html
