Today I am opening my first 2 trades of the year As you can imagine, it will be nice to start from scratch following a not great year of long & short trading in 2016!! As is always the case, you can see past 2016 (and previous years) trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers:

And the usual chart that I like to bring up:

Long Alphabet (GOOG) & Short eBay (EBAY)

I think it’s fair to say that times have changed at Google.. uhm.. I mean Alphabet. The company has doubled down on getting its spending under control and I think that was a smart and necessary move. Moonshots make sense and will remain part of Google’s core. I don’t think there are any doubts that some of them, including AI, self-driving, etc will end up having significant commercial applications and I am a believer in those segments of the company. But having no restrictions on the spending makes very little sense in my opinion and the cost-cutting that is happening will bring important benefits to the company. On the other side, I remain highly skeptical of ebay’s place in the online shopping marketplace in a world where Amazon’s dominance continues to increase month after month in almost every measurable way.

Long Facebook (FB) & Short Paypal (PYPL)

Facebook and Paypal are two clearly different companies and while you probably know that I have a deep level of admiration for Facebook’s execution, I also think Paypal is very well positioned and much more difficult to displace than believed by most. That being said, I do think PYPL’s valuation is very difficult to justify when I compare to how much growth Facebook is able to achieve. Yes, both are likely in declining growth periods but I do remain optimistic about Facebook’s position.