Featured Trades: (UPGRADE SUGGESTIONS),
(TREASURY BONDS), (TBT), (TMV),
(CHINESE SOLAR INDUSTRY), (STP), (YGE), (FSLR)

1) I’d love to get your feedback on the Diary of a Mad Hedge Fund Trader.

I’m working on the launch of a new trading service that will include, among other things:

• More trade alerts and specific recommendations.

• Weekly webinars with Q & A sessions so we can have more direct conversations on a regular basis.

• A complete model portfolio for you, including my watch list and actual trades I’m placing.

• Plus a lot more.

As part of this expansion, I’d like to ask you a favor. In return, I’ll give you my new service for free.

Remember, they call me “Mad” for a reason.

Here’s the deal…

I’m looking for specific feedback from you about your experience with my site and current newsletter that you’re willing to let me share with potential new readers.

If you have anything to say about the Diary, the accuracy of my recommendations, how you’ve benefited or profited from them or the returns or profits they’ve made you, I would greatly appreciate it if you’d share it.

1. Get 3 Months Free.  Simply by providing a written review of the Diary of a Mad Hedge Fund Trader.
2. Get 1 Year Free. If you’ve made money from my recommendations and are also willing to provide a testimonial to that effect, I’ll happily comp you my new service for a full year. One caveat: Due to of my commitment to “truth in advertising”, I ask that you provide a screenshot of your account or copy your broker’s statements of any returns you’ve made.
3. Get 2 Years Free. If you’re thinking about option #2, why not let me send a videographer to your home or office to interview you for 20-30 minutes about your experience with the Diary of a Mad Hedge Fund Trader?

Sound like a plan?

Great! Simply e-mail me at madhedgefundtrader@yahoo.com and include your name and phone number, and someone from my office will contact you directly about getting your review, testimonial, or video together so we can put your name on the “comp” list for my new premium service when it comes out.

Many thanks for your support.

John Thomas
The Mad Hedge Fund Trader

Additional Pieces And Charts For Premium Subscribers

2) Have Treasury Bonds Had It?

Is the Fat Lady Singing in the Treasury Bond Market?

3) China’s Long and Winding Road.

Imported from the West

4) Darwinian Downsizing in the Solar Industry.

“After revolutions, they don’t demolish prisons, they expand them,” said Alexis de Tocqueville, an early 19^th century Frenchman who wrote extensively about the new United States.

 The Mad Hedge Fund Trader Interviews Lee ODwyer [40:00m]: Play Now | Play in Popup | Download

Featured Trades: (DBA), (CORN), (PHO), (GLD), (SLV), (FXC), (FXA), (IDX), (TUR), (ECH), (EPOL), (TBT), (YCS),
(AFRICA), (EZW), (AFK), (GAF),
(COPPER), (ECH), (DBB), (FCX), (JJC)
iPath Dow Jones-UBS Copper Sub Index Total Return ETN
PowerShares DB Multi Sector Commodity Trust Metals
iShares MSCI Chile Index ETF


1) Lee O’Dwyer of 5T Wealth Management.  My guest on Hedge Fund Radio this week is Lee O’Dwyer, a portfolio manager at 5T Wealth Management in the sunny climes of Napa, California. Lee is at the vanguard of a new wave of financial advisors sweeping the nation that is leading the way for individual investors during these difficult times, when everyone is seeking the “new normal”. O’Dwyer is cherry picking for his clients the best money management techniques that have evolved over the last 30 years, and discarding the dross.

5T Wealth Management is offering sophisticated hedge fund management trading and risk control techniques, that until now, have only been available to the big boys, and making them available to the retail investor. Their goal is to achieve absolute returns at all times and strive for every trade to be profitable. Relative performance benchmarked to an arbitrary index, such as the S&P 500, has been consigned to the dustbin of history. We are all traders now, whether we realize it or not. Buy and hold is dead. Unlike your past broker, Lee does not expect you to pay him a big bonus and take him out to lunch because he lost only 10% when an index dropped 20%.

To avail yourself of O’Dwyer’s considerable talents you need only open a custody account at a major house like Fidelity, Goldman Sachs, or Morgan Stanley. You then sign a third person limited power of attorney that enables 5T to execute trades on your behalf, but not withdraw any funds. As you can log into your account online at anytime, transparency is total and complete. The positions are there in all their glory for you to view and analyze at any time, for better or for worse. There are no black boxes, homemade account statements, or a “need to know” basis. The arrangement gives many individual investors all the security they deserve in the wake of the ugliness thrown up by the unfortunate Madoff affair.

For all of this, Lee charges the 1% management fee and the 20% performance bonus that is standard in the hedge fund community. A “high watermark” means that bonuses are only paid out on new net increases in asset values. This makes double dipping in a volatile market impossible. SEC rules limit 5T to accepting only accounts with a minimum size of $750,000 from investors with $1.5 million in liquid assets. The new financial reform act will stair step annual income requirements from $200,000 a year now, to $300,000 and $400,000 down the road.

Lee employs a global long/short macro strategy that scours the world for only the cream of investment opportunities. Long term, he likes commodities (CU), food (DBA), (CORN), water (PHO), other resource plays, and precious metals (GLD), (SLV). He is enamored with the currencies of the commodity producing countries like Canada (FXC) and Australia (FXA). He is very bullish on emerging markets, like the BRIC’s, as well as other new entrants such as Indonesia (IDX), Turkey (TUR), Chile (ECH), and Poland (EPOL).

On the short side, he is adamant that the 30 year Treasury bond (TBT) is reaching the end of an epochal bubble. Lee also thinks that rapidly deteriorating fundamentals and a coming demographic nightmare demand that the Japanese yen (YCS) is headed for a generational fall. In the US O’Dwyer likes technology, energy, and commodity plays, but doesn’t expect much from the main indexes for the coming decade.

Lee hales from England where he obtained a degrees from the University of Wales, focusing on international relations, economics, and accounting. He immigrated to the US in 1993 where he joined a major US hedge fund, learning every corner of the alternative investment business from the ground up. In 2007, he moved on to 5T Wealth Management, an SEC registered investment advisor based just outside San Francisco. During the 2008 financial crisis, Lee limited his maximum draw down to 15% when the S&P 500 crashed 58%. He quickly earned back losses during the rebound that followed, much to the delight of his investors.

As a result, 5T Wealth Management is rapidly attracting new investors, and today boasts $110 million in assets under management. You can learn more about Lee O’Dwyer and 5T Wealth Management by visiting his website at http://www.5twealth.com/ . To listen to my interview with Lee O’Dwyer in full on Hedge Fund Radio, and to gain a glimpse into the future of retail asset management, please click on the play arrow above.

Additional Pieces And Charts For Premium Subscribers

2) Some Feedback on South Africa.

Is Africa a Sleeping Giant?

3) Is Copper the New Red Gold?

Copper Mines Are Running on Empty

The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.
- Winston Churchill

Featured Trades: (ZHOU XIAOCHUAN), (FXI), ($SSEC),
(TUR), (EPOL), (EWY),
(CORN), (WHEAT), (SOYBEANS),
(SPX)
Teucrium Commodity Trust Corn ETF
iShares FTSE/Xhinhua China 25 ETF
iShares MSCI Turkey Investable Market Index ETF
iShares MSCI Poland Investable Market Index ETF
South Korea iShares ETF
S&P 500 Large Cap Index ETF

1) China’s Central Bank Governor Defects to the US. The fiber optic cable that makes up the Chinese Internet is absolutely burning up today with rumors that the governor of the People’s Bank of China, Zhou Xiaochuan, the Middle Kingdom’s equivalent to Federal Reserve governor Ben Bernanke, has defected to the US. The Chinese authorities’ efforts to censor the story has only succeeded in pouring fuel on the flames. Even if the rumors turn out to be untrue, this could mark the end of three decades of political stability in China.

The report was relayed to the US by Asia Pacific analyst Matt Gertken at STRATFOR, a Texas based boutique private intelligence and geopolitical forecasting firm. It is believed that Chuan was forced to leave the country because of an anti corruption scandal, or worse, a dramatic shakeup of China’s macroeconomic and monetary policies. Chuan has not been seen in public since August 26.

China is facing a generational change in leadership in 2012, and the maneuvering has already begun over whether the country’s breakneck economic reform policies will continue to move ahead, stagnate, or reverse. Many in the 2.25 million People’s Liberation Army, where an underpaid rural underclass is well represented, have not been happy with the overemphasis on development of the coastal population centers. Even prime minister Web Jiabao has felt the heat. The brouhaha may explain why the main Shanghai index has sold off 5% in the past week, and the ETF (FXI) has clocked even bigger losses.

The story was just one of a daily outpouring of intelligence nuggets which I have been able to glean from STRATFOR’s premium subscription service. The combined output of an impressive 70 man research team steeped in credentials and fluent in local languages has a global reach stretching from Vietnam to the Sudan and Latin America. They include coverage of several emerging markets now moving into prime time, which I have written on extensively, like Turkey (TUR), Poland (EPOL), and South Korea (EWY).

STRATFOR is one of a handful of private intelligence firms that hedge funds increasingly rely on, especially when considering a position in frontier markets where hard data is scarce. Readers of the Diary of the Mad Hedge Fund Trader can claim a $50 discount off STRATFOR’s $349 annual fee by clicking here.

China’s Central Bank Governor Zhou Xiaochuen:
Soon to Open a Liquor Store in Los Angeles?

Additional Pieces And Charts For Premium Subscribers

2) Time to Add some Corn to Your Diet.

3) My Equity Scenario for the Rest of 2010.

Thanks Goodness I Avoided Equities This Year

4) Another Admiring E-Mail. I get about 500 emails a day, but occasionally, I get one so choice that I have to pass it on to you. To the thousands of students, job seekers, and soon to be cashiered veterans who read this letter every day online, take heart!

“Dear Mad Hedge Fund Trader,”

“I’d like to purchase a subscription.  I have learnt a lot from your website, and used some of the insights I got in getting a job (first job actually), 4 weeks ago. The job is at XXXX in Sydney, Australia. I’d like to pay you back by getting a 2 year subscription, but $849 is about a quarter of my monthly salary at this point (I’m way down the corporate ladder). If you could send me the details to put in for a subscription, that would be awesome. I will check this mailbox in the morning before I leave for work. Thank you very much, XXXX”

You can’t make this stuff up.

“The farther backward you can look, the farther forward you can see,” said Britain’s combative WWII prime minister, Winston Churchill.

Those of you who have been sitting on the fence, hemming and hawing as to whether you subscribe to The Diary of the Mad Hedge Fund Trader, now is your time to move. On September 1, subscription prices to the letter will be increased to the following:

Three months-rises $20 to $199
One year- jumps $50 to $599
Two years-increases $50 to $899

I still think you’re getting a bargain, since I produce as much content in a day that lesser newsletters generate in a month, for the same price. You know that one good trade idea will cover your cost, which regular readers know can be found in abundance in these pages.

The old prices will remain good until the morning of September 1. I’ll be using the extra revenues to pay for enhanced functionality of the website, an expanded Hedge Fund Radio program, and increased research coverage of emerging markets, which is never cheap.

In a few months I’ll be introducing some new premium products which will include more trade alerts, weekly video updates with Q & A sessions, and a model portfolio. Remember, they call me “Mad” for a reason.

Many thanks for your support.

Featured Trades: (TAKEOVER WARS),
(BHP), (POT), (SNY), (GENZ), (IFX), (HPQ), (DELL), (BP), (INTC),
(SOUTH AFRICA), (EZW),
(BILL CLINTON)
South Africa iShares ETF

1) The Coming Takeover Wars. The spate of takeover bids we have witnessed in recent weeks, the BHP Billiton (BHP)-Potash (POT) deal, the Sanofi Aventis (SNY)-Genzyme (GENZ) deal, Intel’s (INTC) acquisition of Infineon Technologies (IFX), and the ongoing bidding war by Hewlett Packard (HPQ) and Dell (DELL) to swallow 3Par (PAR), is telling the rest of us reams about the broader market.

Virtually all of the recent bids have been made for cash. That means that the acquiring companies believe that both their own and their target’s share prices are historically cheap. That may be debatable, depending on whether you think the long term US GDP growth rate is 2%, or is going back to the torrid 3.9% we saw in the last decade.

The real education here is the outing of the industries that are attracting the premium bids. Those include agriculture, energy, commodities, biotechnology, and  technology, especially in cloud computing and mobile applications. BP (BP), an oil major, is said to be attracting covetous eyes while its stock is in the basement. Also notice the foreign origins of many of the targets, which underlies my theme that 90% of global earnings for the next ten years are coming from outside the US.

Regular readers of this letter will recognize these industries as part of a handful of major growth leaders for the next decade. By watching the M & A action, you are letting the giants with deep pockets needed to fund massive research efforts do your sector selection for you. Direct investment always leads activity in listed share markets, often by years. Ride on their coat tails for free.

It all reminds me of the “Pacman” takeovers of the early eighties, when Boone Pickens said that it was cheaper to prospect on the floor of the New York Stock Exchange than in the oil patch. The 2010 iteration of that statement has to be that it is cheaper to hire people through takeovers than to hire them outright. The hard truth is the net effect of these mergers is almost always a reduction of the labor force. This is why the jobs picture has not, and will not improve. To boost your investment performance, keep close tabs on newly announced takeovers, or easier still, keep reading this letter.

Get Your Free Education Here

Additional Pieces And Charts For Premium Subscribers

2) On Safari in South Africa.

Are You a Bull or a Bear?

3) Lunch With Bill Clinton.

“In a screwed up way it’s the best thing that could have happened to you. Stop going for the easy buck and produce something with your life. Create, instead of living off the buying and selling of others,” said Carl Fox in response to his son Bud is going to jail for insider trading in the 1987 film Classic, Wall Street.