July 28, 2011 – Welcome to the Funny Farm

Featured Trades: (WELCOME TO THE FUNNY FARM), (SPX) 1) Welcome to the Funny Farm. I promised you a roller coaster for the financial markets this week, and that is exactly what we are getting. The on again/off again talks and the finger pointing that follows seems to be generating round lot moves of 30 points in the S&P 500. The high frequency trading algorithms are … [Read more...]

July 28, 2011 – Home Prices Still Dead in the Water

Featured Trades: (HOME PRICES STILL DEAD IN THE WATER) 2) Home Prices Still Dead in the Water. Case Shiller released their national home price index for May yesterday, allowing beleaguered real estate agents to let out some feeble, halfhearted cheers. The data showed that prices did not go down last month and are even rising modestly in a few markets, bouncing along some … [Read more...]

July 27, 2011 – The September 23 Las Vegas Strategy Luncheon

Featured Trades: (LAS VEGAS STRATEGY LUNCHEON) 1) The September 23 Las Vegas Strategy Luncheon. Come join me for lunch for the Mad Hedge Fund Trader's Global Strategy Update, which I will be conducting in Las Vegas at 12:00 noon on Friday, September 23, 2011. A three course lunch will be followed by a 30 minute PowerPoint presentation and a one hour question and answer … [Read more...]

July 27, 2011 – Report From Europe, Part IV

Featured Trades: (REPORT FROM EUROPE, PART IV)   3) Report From Europe, Part IV. Milan, Italy appears to be a city entirely populated by fashion models riding bicycles on the city's frenetic streets. That is one's first impression coming out of the monolithic Milano Centrale train station, built by Mussolini to reaffirm faith in his state. Despite years of … [Read more...]

July 26, 2011 – Time to Scoop Up Some (CAT)

Featured Trades: (TIME TO SCOOP UP SOME (CAT)), (CAT)   2) Time to Scoop Up Some (CAT). I love it when a world beating, best of breed company temporarily stumbles and gives me a great entry point for a new long position. That was certainly the case on Friday, when Caterpillar, the icon for manufacturing bulldozers and other heavy construction and mining equipment, … [Read more...]

July 25, 2011 – Bring Back the Smoke Filled Rooms

Featured Trades: (BRING BACK THE SMOKE FILLED ROOMS), (SPX), (TBT) 2) Bring Back the Smoke Filled Rooms. I write this from poolside at the historic Claremont Hotel in Berkeley, California. The weather couldn't be more perfect, and the local beauties, many coeds on summer break from the university, are strutting their wares, or the lack thereof. It is shocking what … [Read more...]

July 22, 2011 – Los Angeles Strategy Luncheon Review

Featured Trades: (LOS ANGELES STRATEGY LUNCH REVIEW) 1) Los Angeles Strategy Luncheon Review. I am writing this letter at a table at Zeppy's Pizza Shack in Hermosa Beach, just across the street from Yer Cheat'n Heart Tattoo. The flotsam and jetsam of humanity are gliding past me on bicycles, roller blades, and skateboards, clad in tank tops and bikinis. A homeless man, … [Read more...]

July 22, 2011 – So What is Your ‘Influencer’ Score?

Featured Trades: (SO WHAT IS YOUR INFLUENCER SCORE?)   3) So What is Your 'Influencer' Score? First there was your grade point average, then your SAT score, followed by GMAT and LSAT scores, and finally your FICO. Now there is a new metric with which you will be judged, your 'Influencer' score. A new breed of marketing research firms are using data from social … [Read more...]

July 21, 2011 – Apple Surprises Again

Featured Trades: (APPLE SURPRISES AGAIN) 1) Apple Surprises Again. Wow, and double wow! That's all I can say about Apple's (AAPL) ballistic earnings. Talk about firing on all cylinders and the turbocharger and the supercharger at the same time! Apple is now the world's second largest company and is boasting a positively mind boggling $76 billion in cash, one of the … [Read more...]

July 21, 2011 – Apple’s Next Stop: $1,000

Featured Trades: (NEXT STOP FOR APPLE: $1,000) 2) Apple's Next Stop: $1,000. When I took a young, cocky, long haired, Levis wearing Steve Jobs around to meet Morgan Stanley's institutional investors to pitch an Apple share offering 28 years ago, I vowed never to buy anything from the man. He was such a great salesman, and possessed such a messianic devotion to his … [Read more...]

July 21, 2011 – Time to Get on the (SPX) Roller Coaster

Featured Trades: (TIME TO GET ON THE (SPX) ROLLER COASTER), (SPY), (SPX) 3) Time to Get on the (SPX) Roller Coaster. I think yesterday's reaction to a rumored settlement on the debt ceiling was a great 'tell' on the short term direction of the financial markets. The S&P 500 popped 20 points, bonds roared by two points, and it was off to the races for … [Read more...]

July 20, 2011 – The Real Estate Market in 2030

SPECIAL BABY BUST ISSUE Featured Trades: (THE REAL ESTATE MARKET IN 2030) 1) The Real Estate Market in 2030. A number of analysts, and even some of those in the real estate industry, are finally coming around to the depressing conclusion that there will never be a recovery in residential real estate. Long time readers of this letter know too well that I have been hugely … [Read more...]

July 20, 2011 – The Long View of the US Economy

SPECIAL BABY BUST ISSUE Featured Trades: (THE LONG VIEW OF THE US ECONOMY) 2) The Long View of the US Economy. The retirement of the baby boomers, and the reduced numbers and frugal spending patterns of Generation X, are not only bad news for the real estate market for the next 20 years, they are going to be a huge drag on the economy as a whole. The distinguished … [Read more...]

July 19, 2011 – India is Catching Up With China

Featured Trades: (INDIA VS CHINA), (FXI), (PIN), (INP), (TTM) iPath MSCI India ETN PowerShares India Portfolio ETF Wisdom Tree India Earnings Fund ETF   1) India is Catching Up With China. When I first visited Calcutta in 1976, 800,000 people were sleeping on the sidewalks, I was hauled everywhere by a very lean, barefoot rickshaw driver, and drinking the water … [Read more...]

July 19, 2011 – Integrating America's Power Grid

Featured Trades: (INTEGRATING AMERICA'S POWER GRID)   2) Integrating America's Power Grid. Until now, America's power grid has been divided into three unconnected chunks, making transnational transmission impossible, leading to huge regional mispricing. While California and New York suffered from brown outs and sky high prices, electricity was given away … [Read more...]

July 19, 2011 – Think Again Before Buying That Vacation Home

Featured Trades: (THINK AGAIN BEFORE BUYING THAT VACATION HOME) 3)Think Again Before Buying That Vacation Home.If you're entertaining buying a vacation home any time soon, I'd think again. In my annual review of the residential real estate market in the High Sierra mountain hamlet of Incline Village, Nevada, and I am sad to report that antidepressant addiction among … [Read more...]

July 18, 2011 – Is the Fat Lady About to Sing Again for the Treasury Bond Market?

Featured Trades: (IS THE FAT LADY SINGING AGAIN FOR THE TREASURY MARKET?)   1) Is the Fat Lady About to Sing Again for the Treasury Bond Market? One of my best calls of the year was to pick the bottom of the Treasury bond market in February and pile readers into synthetic long positions by shorting puts in March. That handy little trade brought in a nice 4.51% … [Read more...]

July 18, 2011 – The World’s Largest Solar Plant

Featured Trades: (THE WORLD'S LARGEST SOLAR PLANT) 2) The World's Largest Solar Plant. Unfortunately, I know Blythe, California too well. This natural blast furnace is in a God forsaken corner of the state where I hunted jack rabbits as a kid, the Indians survived on Gila monsters for protein, and it regularly reaches 130 degrees in the shade. It is also where Peter Fonda … [Read more...]

July 18, 2011 – Dinner With Joseph Stiglitz

Featured Trades: (AN EVENING WITH JOSEPH STIGLITZ) 3)Dinner With Joseph Stiglitz. The great thing about interviewing Joseph Stiglitz over dinner is that you don't have to ask any questions. You just turn him on and he spits out one zinger after another. And he does this in a kibitzing, wizened, grandfatherly manner like one would expect from a character that just walked … [Read more...]

July 15, 2011 – Last Chance to Attend The Mad Hedge Fund Trader’s July 18 Chicago Strategy Luncheon

Last Chance to Attend The Mad Hedge Fund Trader's July 18 Chicago Strategy Luncheon. Come join me for lunch for the Mad Hedge Fund Trader's Global Strategy Update, which I will be conducting in Chicago on Thursday, July 18, 2010. A three course lunch will be followed by a 30 minute PowerPoint presentation and a one hour question and answer period. I'll be giving you my … [Read more...]

July 15, 2011 – There will be no QE3!

Featured Trades: (THERE WILL BE NO QE3!) 1) There will be no QE3! Twice in the last week, rumors surfaced that Ben Bernanke was considering a third round of quantitative easing, first in the Fed minutes, and then in Wednesday's congressional testimony. The risk markets rallied furiously, and then quickly gave it all back. If I have been asked one question more … [Read more...]

July 15, 2011 – Report From Europe Part III

If you ever need someone to owe you a big favor, make sure it is the world's best hotel. That is what I discovered when I checked into the legendary Cipriani Hotel in Venice, Italy. I had booked their cheapest room at $1,500 a day. Due to a screw up on the reservations, I learned to my great distress, that I could stay only one night. The good news was that they graciously … [Read more...]

July 15, 2011 – China’s Long and Winding Road

Featured Trades: (CHINA'S LONG AND WINDING ROAD), (STP), (YGE), (FSLR) 3)China's Long and Winding Road. I spent an evening speaking to Gao Jie, a Beijing civil judge who left the bench to join China's growing environmental movement when her kids came home from school one day coughing and wheezing. You only have to inhale in the capitol city these days to understand … [Read more...]

July 14, 2011 – The Gold Bulls Are Vindicated

(SPECIAL GOLD ISSUE) Featured Trades: (GLD), (RGLD), (AEM), (GBG) 1) The Gold Bulls Are Vindicated. For the faithful who have successfully crossed the desert and suffered the slings and arrows of critics and the ridicule of non-believers, gold's move today to an all-time high of $1,586 delivers the greatest of all vindications. All it took was some comments by Ben … [Read more...]

July 14, 2011 – China’s Insatiable Appetite for Gold

(SPECIAL GOLD ISSUE) Featured Trades: (GLD)   2)China's Insatiable Appetite for Gold. Gold bugs and naysayers alike take note. When the world's second largest and fastest growing economy liberalizes gold ownership by individuals, who happened to be the planet's most fastidious savers at a 17% rate, you better pay attention. Among other reforms, the Middle Kingdom has … [Read more...]

July 14, 2011 – The Ultra Bull Argument for Gold

(SPECIAL GOLD ISSUE) Featured Trades: (GLD)   3) The Ultra Bull Argument for Gold. I am constantly barraged with emails from gold bugs who passionately argue that their beloved metal is trading at a tiny fraction of its true value, and that the barbaric relic is really worth $5,000, $10,000, or even $50,000 an ounce (GLD). They claim the move in the yellow metal we … [Read more...]

July 13, 2011 – Markets Get a Stiff Dose of Reality

Featured Trades: (MARKETS GET A STIFF DOSE OF REALITY), (GLD), (SLV), (TLT), (SPX)   1) Markets Get a Stiff Dose of Reality. The global 'RISK ON' TRADE was administered with a stiff dose of smelling salts on Friday with the horrific nonfarm payroll report. The stock market was really leading with its chin. It expected 150,000-200,000 in job gains but got … [Read more...]

July 13, 2011 – China’s Great Grain Robbery

Featured Trades: (CHINA'S GREAT GRAIN ROBBERY), (CORN), (JJG) 2) China's Great Grain Robbery. The Chinese are nothing if not opportunistic. You may recall that a shocking increase in this year's corn crop predicted by the US Department of Agriculture triggered a series of limit down moves in the grain markets only 12 days ago (click here for 'The Great Grain Massacre'). … [Read more...]

July 13, 2011 – An Evening with Jack Welch

Featured Trades: (A NIGHT WITH JACK WELCH), (GE)   3) An Evening with Jack Welch. I met Jack Welch recently, the legendary retired CEO of General Electric (GE). 'Neutron' Jack gets the credit for boosting the market cap of GE from $13 billion to $400 billion in 20 years, turning it into a Wall Street darling in the process. The 'hedge fund that makes light bulbs' … [Read more...]

July 12, 2011 – The Cooling Market for Hedge Fund Traders

Featured Trades: (THE COOLING MARKET FOR HEDGE FUND TRADERS) 1) The Cooling Market for Hedge Fund Traders. The tide is suddenly heading out to sea for aspiring hedge fund traders. Ilana Weinstein of the IDW Group, which specializes in hedge fund recruitment, says that the new financial regulation bill has fundamentally changed the supply and demand balance for hedge fund … [Read more...]

July 12, 2011 – The Skinny on Lithium

Featured Trades: (THE SKINNY ON LITHIUM)   2) The Skinny on Lithium. Long time readers of this letter know that I have been a bull on lithium plays, my pick in the sector, Chile's Sociedad Quimica Y Minera (SQM), bringing in a handy 440% pop off the lows in 2009. You couldn't lose, because if the car battery boom faded, they always had a great fertilizer business to … [Read more...]

July 12, 2011 – A Conversation With the Boots on the Ground

Featured Trades: (A CONVERSATION WITH THE BOOTS ON THE GROUND) 3) A Conversation With the Boots on the Ground. I have spent many hours speaking at length with the generals who are running our wars in the Middle East, like David Petraeus (click here for 'The Spotlight Moves to Petraeus'), and James E. Cartwright (click here for 'My Briefing with the Joint Chiefs of … [Read more...]

July 11, 2011 – Don’t Hold Your Breath for Residential Real Estate

Featured Trades: (DON'T HOLD YOUR BREATH FOR RESIDENTIAL REAL ESTATE) 1) Don't Hold Your Breath for Residential Real Estate. Every few weeks I get a warm and fuzzy feeling when I see my old house for sale in the Wall Street Journal. I'm sure you've seen it. It's the 8,500 square foot, four bedroom, seven bathroom white elephant perched on a mountain peak, with a dramatic … [Read more...]

July 11, 2011 – Buy Russia, But You May Want to Take a Shower

Featured Trades: (BUY RUSSIA, BUT YOU MAY WANT TO TAKE A SHOWER), (RSX)   2)Buy Russia, But You May Want to Take a Shower.  If you wonder why I recommend a shower after investing in Russia, Bill Browder will give you the reasons at length on his YouTube video (click here for the link). Bill is the founder and CEO of Hermitage Capital Management, one of the firms that … [Read more...]

July 8, 2011 – Industries You Will Never Hear From Me About

Featured Trades: (INDUSTRIES YOU WILL NEVER HEAR FROM ME ABOUT) 2) Industries You Will Never Hear From Me About. The focus of this letter is to show people how to make money through investing in fast growing, highly profitable companies which have stiff, long term macroeconomic winds at their backs. That means I ignore a large part of the US economy whose time has … [Read more...]

July 7, 2011 – Bonds-Where Do We Go From Here?

Featured Trades: (BONDS-WHERE DO WE GO FROM HERE?), (TLT), (TBT) 1) Bonds-Where Do We Go From Here? There is nothing like coming back from vacation and seeing all your shorts go to zero. Well, they almost did. My bet that bond prices would fall going into the end of QE2 paid off big time, with the (TLT) September $103 calls that I sold at 74 cents now trading at a lowly, … [Read more...]

July 7, 2011 – The Long View on Emerging Markets

Featured Trades: (THE LONG VIEW ON EMERGING MARKETS), (EWZ), (RSX), (PIN), (FXI)   2) The Long View on Emerging Markets. I managed to catch Jim O'Neil, the fabled analyst who invented the 'BRIC' term, and who has been kicked upstairs to the chairman's seat at Goldman Sachs International (GS) in London. Jim thinks that it is still the early days for the space, and … [Read more...]

July 7, 2011 – The ‘Friday-Monday Effect’ Exposed

Featured Trades: (THE FRIDAY-MONDAY EFFECT EXPOSED) 3)The 'Friday-Monday Effect' Exposed. If you bought every Friday close in 2010 and sold the Monday close, your return would have been 14.20%, versus a 7% return on the S&P 500. Virtually all the gains would accrue at the Monday morning gap opening. If you did the reverse, bought the Monday close and sold the … [Read more...]

July 6, 2011 – Hedge Fund Annus Horriblus

Featured Trades: (HEDGE FUND ANNUS HORRIBLUS) 1) Hedge Fund Annus Horriblus. Making the rounds in Europe, I managed to hook up with hedge fund friends in London, Milan, and Geneva, and what I saw was not a pretty picture. Most hedge funds are having a terrible year. According to HSBC's private bank, of 300 hedge funds they track, only nine are up double digits, and … [Read more...]

July 5, 2011 – The Stock Melt Up That Was

Featured Trades: (THE STOCK MELT UP THAT WAS), (SPX)   2) The Stock Melt Up That Was. The first half of 2011 went out with a bang last week. The S&P 500 delivered an awesome 72 point run, its best performance in two years. After threatening the 200 day moving average three times, the index predictably bounced hard. What really left traders with jaws dropped was … [Read more...]

July 5, 2011 – Time for Platinum to Play Catch Up

Featured Trades: (PLATINUM), (PPLT), (GOLD)   3) Time for Platinum to Play Catch Up. For those of you who have been romancing gold, you should check out platinum (PPLT), her younger, racier, and better looking sister who wears the low riders. The white metal usually outperforms gold in bull markets for precious metals, but this year has fallen 3.4%, compared to a … [Read more...]

July 1, 2011 – The Great Grain Market Massacre

Featured Trades: (THE GREAT GRAIN MASSACRE), (CORN), (WHEAT), (JJG), (DBA)   2) The Great Grain Market Massacre. Grain prices were slaughtered today in the wake of a bombshell of a report from the US Department of Agricultural showing that plantings were much larger than expected. Corn and wheat were limit down, and the associated fertilizer and equipment stocks were … [Read more...]

July 1, 2011 – Equities-Watch Out for the Chop

Featured Trades: (EQUITIES-WATCH OUT FOR THE CHOP), (SPX), (VIX)   3) Equities-Watch Out for the Chop. One day back from vacation and I am faced with the mother of all window dressing efforts. Not only is it month end, but quarter end and half end as well. That was enough to cause a 58 point melt up, recovering half the loss since the 'RISK OFF' trade started … [Read more...]