The Ultra Bull Argument for Gold

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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 are seeing is only the beginning of a 30 fold rise in prices similar to what we saw from 1972 … [Read more...]

Lunch With the Treasury Secretary

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When I wake up at 4:30 am each morning to check the overnight markets and review the opening salvo of incoming emails, I often have trouble focusing in my groggy state. So I had to blink twice when the first message in my inbox politely inquired if I had time to meet the Secretary of the Treasury in Palo Alto for lunch that day, apologizing for the short notice. Tim Geithner … [Read more...]

The Collapse of the Yen: When is This Party Getting Started?

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“Oh, how I despise the yen, let me count the ways.” I’m sure Shakespeare would have come up with a line of iambic pentameter similar to this if he were a foreign exchange trader. I firmly believe that a short position in the yen should be at the core of any hedged portfolio for the next decade, but so far every time I have dipped my toe in the water, it has gotten chewed off by … [Read more...]

Take a Look at Occidental Petroleum (OXY)

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There are a lot of belles at the ball, but you can’t dance with all of them. While a student at UCLA in the early seventies, I took a World Politics course which required me to pick a country, analyze its economy, and make recommendations for its economic development. I chose Algeria, a country where I had spent the summer of 1968 caravanning among the Bedouins, crawling out … [Read more...]

Why Natural Gas is Setting Up for a Big Short

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I always thought that a great strategy for a new hedge fund would be to only buy positions from existing hedge funds that were blowing up. That fund would buy securities subject to margin calls and distressed liquidations, which are by definition at six standard deviation extremes. It would not trade very often, but few it executed on would be humdingers. If I were running … [Read more...]

The True Cost of Oil

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I received some questions last week on my recent solar pieces as to whether I minded paying more money for “green” power. My answer is “hell no,” and I’ll tell you why. My annual electric bill comes to $1,500 a year. Since the California power authorities have set a goal of 33% alternative energy sources by 2020, PG&E (PGE) has the most aggressive green energy program in … [Read more...]

December 27, 2011 – Quote of the Day

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We have been pretending that we’re too big to fail. We’re not too big to fail, You can jump off of a 90 story building and feel fine for the first 89 stories. It’s the sudden stop at the end that tells you you’re not.” said Tom Friedman, New York Times columnist and author of Hot, Flat and Crowded. … [Read more...]

An Evening With the Chinese Intelligence Service

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I normally avoid the diplomatic circuit, as the few non committal comments and soggy appetizers I get aren’t worth the investment of time. But I jumped at the chance to celebrate the 61st anniversary of the founding of the People’s Republic of China with San Francisco consul general Gao Zhansheng.   Happy Birthday China! When I casually mention that I survived the … [Read more...]

SOLD OUT! December 27 Chicago Strategy Luncheon

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This is the last chance to  join me for lunch for the Mad Hedge Fund Trader’s Global Strategy Update, which I will be conducting in Chicago on Tuesday, December 27, 2011. A three course lunch will be followed by a PowerPoint presentation and an extended question-and-answer period. I’ll be giving you my up-to-date view on stocks, bonds, currencies, commodities, precious … [Read more...]

A Christmas Story

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When I was growing up in Los Angles during the fifties, the most exciting day of the year was when my dad took me to buy a Christmas tree. With its semi desert climate, Southern California offered pine trees that were scraggly at best. So the Southern Pacific Railroad made a big deal out of bringing trees down from much better endowed Oregon to supply holiday revelers. You … [Read more...]

Notice to Military Subscribers

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To the dozens of subscribers in Iraq, Afghanistan, and the surrounding ships at sea, thank you for your service! I think it is very wise to use your free time to read my letter and learn about financial markets in preparation for an entry into the financial services when you cash out. Nobody is going to call you a baby killer and shun you, as they did when I returned from … [Read more...]

December 21, 2011 – Quote of the Day

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“Unless developed economies learn to compete the old fashioned way – by making more goods and making them better, the smart money will continue to move offshore to Asia, Brazil, and other developing economies both in the asset and the currency space. The United States, in short, needs to make things, and not paper,” said Bill Gross, the managing director and co- chief … [Read more...]

Kiss That Union Job Goodbye

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Those of you counting on getting your old union assembly line job back in Detroit can forget it. The recent eight year forecast published by the Bureau of Labor Statistics shows that 4.19 million jobs will be gained in the US in professional and business services, followed by 4 million health care and social assistance jobs, while 1.2 million will be lost in manufacturing. … [Read more...]

Why Don’t we try Chinese Style Securities Regulation?

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Former stock trader, Yang Yanming, was recently executed by lethal injection for embezzling $9.52 million from Galaxy Securities during 1997 to 2003. The move was part of a broader effort by the Mandarins in Beijing to crack down on rampant corruption in the securities industry. Yanming never revealed where the money went, according to the Beijing Evenings News, one of my … [Read more...]

The Bull Market in Mustangs

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The Western US has found a new wrinkle in the housing collapse, where homeowners are desperately struggling to cut living costs to meet the next doubling of their adjustable rate mortgage payments on their underwater houses. Raising horses can cost more than children, so Nevadans are turning them loose to join herds of wild mustangs, to dodge the $30,000/year it costs to … [Read more...]

A Thank You From The Mad Hedge Fund Trader.

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I am calling it quits for the year. And what a year it has been. Over 26 trips and 40 speaking engagements in 20 countries, I managed to log 75,000 flight miles, a distance of roughly three times around the world. Some 250,000 frequent flier miles were posted to my various accounts. Whenever I board Virgin Airlines, the crew lines up at attention and snaps off a brisk salute. … [Read more...]

Throwing in the Towel on the (TBT)

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I am throwing in the towel on the (TBT) ETF, my 200% leveraged bet that Treasury bonds will fall. I am doing this partly to clear out the dogs from my portfolio so I can start the New Year with a 100% cash position. But I am also bailing because the short term fundamentals point to continued weakness in the economy, a flight to safety, deflation, and falling interest rates for … [Read more...]

Where’s the Money?

Corzine testifies about the MF Global bankruptcy during a hearing before the U.S. House Agriculture Committee on Capitol Hill in Washington

That is the question that was asked repeatedly by members of congress to the former senior management of the late MF Global. The response was a few feeble shrugs and I don’t knows. CNBC has been running ridiculous contests like “Where is John Corzine?”, and “What does John Corzine want for Christmas?” The reporting on this by the media has been exaggerated and wildly … [Read more...]

Angela Merkel Torpedoes the Euro

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The Euro hit my yearend target today after a two cent plunge sent it down to the $1.29 handle. You can thank German Chancellor, Angela Merkel, who in the strongest possible terms, said there was no way she would consent to an increase in the size of the European bailout package. It didn’t help that in the Federal Reserve comments today they basically ran up the white flag … [Read more...]

Cross Market Correlations Are Breaking Down

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Today was a real head scratcher for long time market observers, including myself. Cross market correlations that have served me so well this year are breaking down, and their predictive power has suddenly gone blind. I blame this on the liquidity drought that has plagued the market since the beginning of the month that has confined markets to frustratingly narrow … [Read more...]

Testimonial

Overworked2-8

I’m only 45 days into “Macro Millionaire” and I wanted to drop a note to say thank you. As a relatively novice trader, your perspective, analysis and trade alerts have given me the tools to show a 96% return so far. They've been a result of my taking additional risk with your ideas. You have a great product and deliver incredible value. Don't let anyone tell you otherwise. I … [Read more...]

Silver Turns to Lead

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I have to tell you that I am not feeling the love from my silver position. I hung on faithfully for a month while the (SLV) churned around the 50 day moving average, building a base for a possible upside breakout. It was not to be. With another “RISK OFF” day on our plate this morning it is clearly time to pull the ripcord on this unloved metal. Let me tell you what I … [Read more...]

California’s War Against Millionaires

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With the onset of the 2012 elections in a few weeks, the class warfare against the millionaires is about to start in earnest. In California, the issue has already been decided, and the millionaires have definitely lost. On the November ballot will be no less than five measures to raise taxes on high income earners, primarily to fund the state’s increasingly impoverished … [Read more...]

December 13, 2011 – Quote of the Day

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“Isn’t it funny when you walk into an investment firm, and you see all of the financial advisors watching CNBC—that gives me the same feeling of confidence I would have if I walked into the Mayo Clinic or Sloan Kettering and all of the doctors were watching the TV soap opera General Hospital,” said a bond manager friend. … [Read more...]

Trade Alert Update – (SLV) December 12, 2011

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Trade Alerts are a premium subscription service, you must login to read the details. As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. … [Read more...]

Jobless Claims Give More Fodder to the Bulls

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No, the important economic event of the week was not the snail like progress towards solution of the European debt debacle. It was the weekly jobless claims announced on Thursday that plunged 23,000 to 381,000, a six month low. That puts it well below the 400,000 level where the economy is generally thought to be expanding. Yes, you can argue that there are all kinds of … [Read more...]

Market Gives Thumbs Up on European Plan

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Having the flu during the holidays is the pits. This weekend, I blew my nose at the Cirque du Soliel so loudly that is perilously distracted some of the high wire acrobats. I coughed and hacked my way through the San Francisco Ballet’s Nutcracker Suite. Even the eggnog is utterly tasteless, no matter how much Myers Rum I pour in it. I am writing this piece with a fever and … [Read more...]

Trimming Down the Book for Year-end

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Given the failure of the “RISK OFF” trade to develop any serious downside momentum this week, I am using the dip this morning to take a small profit on my S&P 500 ETF (SPY) puts. We had every reason to go down, given the Standard and Poor’s threatened European debt downgrade on Monday night. If this despised and deeply flawed ratings agency had made this announcement in … [Read more...]

Trade Alert – (SPY) December 7, 2011

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Trade Alerts are a premium subscription service, you must login to read the details. As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. … [Read more...]

Hedge Funds Circling Over the European Wreckage

FatLady2-2

Have you ever wanted to spend your summers basking in the sunlight at your mountain top Tuscan villa, surveying the manicured vineyards which produce your own estate bottled wine? Are you drawn by the cachet of claiming George Clooney as a celebrity neighbor on the model strewn shores of Lake Como? How about a luxury apartment that is walking distance from the Vatican? Hedge … [Read more...]

Why I’m Pulling the Plug On My Euro Shorts

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I am pulling the plug on my short position in the Euro here, selling my Euro ETF (FXE) January, 2012 $134 puts at cost. It’s not that I have suddenly fallen in love with the beer drinkers and the garlic eaters. This is an option driven decision. With market volatility falling across all asset classes, the short dated options are eroding away faster than the underlying is … [Read more...]

Trade Alert Update – (FXE) December 6, 2011

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As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ‘look over’ John Thomas’ shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen. … [Read more...]

Trade Alert – (FXE) December 6, 2011

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As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ‘look over’ John Thomas’ shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen. … [Read more...]

There is a Method to My Madness

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Take a look at the charts below, and you will see what prompted me to knock out some shorts on the S&P 500 (SPY) on Friday. The longer the current trading range in the index works, the more traders pile into it, confining it to an ever narrowing range. I am even hearing that fundamental managers who normally shun charts and technical analysis as a pagan religion are … [Read more...]

Europe Whispers the Magic Words

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I heard the magic words today from German chancellor Angela Merkel and French president Nicolas Sarkozy: “treaty changes”. That will be the gist of their joint proposal at the European summit this coming Friday to deal with the sovereign debt crisis. To me, this means that the two besieged leaders are finally biting the bullet and laying the groundwork for the sweeping … [Read more...]

Testimonial

Overworked2-8

Dear John, I'm extremely passionate about markets and am already building a hedge fund at the age of 31. Please continue to be yourself and inform. I want to learn from you all I can to successfully understand the next likely moves based on your insights and reasoning. I just wish you were my uncle and could give me years of one on time to teach me how to fish. Thanks for the … [Read more...]

Trade Alert Service Posts a Blistering One Year 42% Return

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Last week marked the one year anniversary of my Trade Alert Service, and subscribers could not be happier with the results. The first year return came in at 42.2%, putting us in the top one tenth of one percent of all hedge fund managers. By comparison, the S&P 500 Index came in wheezing with a moribund 1.3% gain during the same time period, which is hardly worth getting … [Read more...]

November Unemployment Plunges to 8.6%

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The November nonfarm payroll came in at 120,000, better than the consensus. The unemployment rate plunged an eye popping 0.5% to 8.6%, the lowest level in 32 months and one of the sharpest contractions on record. Some 140,000 private jobs were added, bringing the 32 month total to an even 3 million, an impressive feat given the arthritic pace of the growth in the US economy. … [Read more...]

December 5, 2011 – Quote of the Day

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“If you measure the stock market not in dollars, but in gold, it is down 80% since 1999. I no longer regard the US dollar as a valid unit of account. People shouldn't value their wealth in dollars because one day, everyone will be billionaires,” said ultra-bear, Marc Faber, of the Gloom, Boom, and Doom Report. … [Read more...]

Trade Alert Update – (SPY) December 2, 2011

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As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ‘look over’ John Thomas’ shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen. … [Read more...]

Trade Alert – (SPY) December 2, 2011

slider-05-trader-alert

As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ‘look over’ John Thomas’ shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen. … [Read more...]

Hedge Funds: The New Dumb Money

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Much of the fury in yesterday’s nearly 500 point “melt up” in the Dow was generated by hedge funds panicking to cover shorts. Convinced of the imminent collapse of Europe, the impotence of governments, and the death spiral in sovereign bonds, many managers were running a maximum short position at the Monday opening, and for the umpteenth time, were forced to cover at a loss. … [Read more...]