Business is Booming at Ruff Times

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Following Howard Ruff for the last 35 years has always been eye opening, if not entertaining. The irascible Mormon is the publisher of Ruff Times ( http://www.rufftimes.com  ), one of the oldest investment letters in the business, and one of the original worshipers of hard assets. The great thing about the end of the world crowd is that all of their trades are going … [Read more...]

A Snapshot of America’s Native Indian Economy

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When I was remodeling my 160-year-old London house, the chimney was in desperate need of attention. After the bricklayer crawled up the fireplace, he found a yellowed and somewhat singed envelope addressed to Santa Claus. Thinking it was placed there by my kids, he handed it over to me. In it was a letter dated Christmas, 1910 asking for a Red Indian suit. Europeans have … [Read more...]

Testimonial

over

I wouldn’t say that I’ve made a great deal of money from using your recommendations, as I’ve got caught by bad timing on silver, SDS, TBT and EUO. I’ve also done very well out of your other recommendations. Your views on the market are invaluable, and you’ve helped a lot in learning how to manage an investment account and to hedge. However, your latest bulletin about the … [Read more...]

Is “RISK ON”/”RISK OFF” Broken?

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Here’s a chart that you don’t see very often, the one for iron ore priced in U.S. dollars. I’m sure that every miner working at BHP’s pits in the Australian outback goes to sleep with a print out of this chart clutched close to his chest. You can’t blame him, as his livelihood depends on it, and it has had a definite southerly tilt for the last two years, losing some 50% from … [Read more...]

Don’t Miss the August 29 Global Strategy Webinar.

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My next global strategy webinar will be held on Wednesday, August 29 at 12:00 noon EST. This webinar will be broadcast from back home in San Francisco, so everything should work. I’ll be giving you my updated outlook on stocks, bonds, commodities, currencies, precious metals, and real estate. The goal is to find the cheapest assets in the world to buy, the most expensive to … [Read more...]

Closing Trade Alert on the (TLT)

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Buy to Cover the Short position in the (TLT) September $116-$111 put spread at $0.07 or best Closing Trade 8-28-2012 – 11:30 AM EST expiration date: 9-21-2012 Portfolio weighting: 5%on a delta basis ($5,000/100/$0.07) = 25 Contracts Eight days ago, I was dead-on correct in predicting that a risk reversal in the markets was imminent, and the Treasury bond … [Read more...]

Case Shiller Data Points to Real Estate Bottom.

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Cheers went up from the real estate industry this morning when the Standard & Poor’s/Case Shiller data was released. It showed the first year-on-year increases in prices since 2006. Calls went out from real estate agents around the country announcing that the bottom was in and that you better buy now before prices shoot up. Not so fast. Let’s look at the data first. … [Read more...]

Lunch With the Army Chief of Staff

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I can’t tell you how many times I have received a call from the Joint Chiefs of Staff asking “if country “A” attacks country “B” what is the effect on country “Q” and “Z”? After all, there is a pretty short list of those monitoring the global macro economy for 40 years with direct experience in the Middle East since 1968. So when I saw the 703 area code for the Pentagon light … [Read more...]

Gold is Just Getting Started

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One of my best calls of the year was to plead with readers to avoid gold like the plague, periodically dipping in on the short side only. The barbarous relic has been in a bear market since it peaked at $1,922 an ounce at the end of August last year. Gold shares have fared much worse, with lead stock Barrack Gold (ABX) dropping 36% since then and the gold miners ETF (GDX) … [Read more...]

How U.S. Job Losses Will End

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I was researching comparative Asian wage data the other day and was astounded with what I found. Textile workers earn $2.99 an hour in India (PIN), $1.84 in China (FXI), and $0.49 in Vietnam (VNM). This is an 18-fold increase in labor costs from $0.10 an-hour since Chinese industrialization launched in 1978. This compares to the $8 an hour our much abused illegals get at … [Read more...]

Options for the Beginner

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I strongly urge readers of this letter to log on to Amazon and buy a copy of Options for the Beginner and Beyond by W. Edward Olmstead. Options contracts offer investors a wonderful instrument for minimizing risk, while maximizing the upside, and I am going to recommend many more such strategies in the future. So, if you want to have the slightest idea of what I am talking … [Read more...]

Don’t Miss the August 29 Global Strategy Webinar

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My next global strategy webinar will be held on Wednesday, August 29 at 12:00 noon EST. This webinar will be broadcast from back home in San Francisco, so everything should work. I’ll be giving you my updated outlook on stocks, bonds, commodities, currencies, precious metal, and real estate. The goal is to find the cheapest assets in the world to buy, the most expensive to sell … [Read more...]

The “Safe” Trade Beats All

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I certainly hope you took my advice to load your portfolio with corn and gold and to dump your equities five years ago. What? You didn’t? Then you have almost certainly suffered on the performance front. According to data compiled by my former employer, the Financial Times, corn was the top performing asset class since 2007, bringing in a stunning 146% return. Who knew that … [Read more...]

BHP Cut Bodes Ill for the Global Economy

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The decision by BHP Billiton, one of the world’s largest producers of copper, to postpone its planned $20 billion expansion of its Olympic Dam mine is sounding alarms about the near term state of the global economy. It is telling us that China is slowing faster than we thought, that demand for base metals is shriveling, and that we are anything but close to exiting out current … [Read more...]

August 24, 2012 – Quote of the Day

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“Right now, our politics are holding us back. It’s like being the children of permanently divorcing parents. The political environment is a real downer for a lot of people, and their holding back,” said New York Times columnist, Tom Friedman, author of the book, That Used To Be US. … [Read more...]

Reach for Yield With Sovereign Debt

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During my recent meeting with the senior portfolio managers of the big Swiss banks, I kept hearing the same word over and over: yield, yield, yield! The search for yield by end investors has become so overwhelming that it now trumps all other considerations. So I am starting a series of major pieces on the world’s best yield plays. Those include emerging market debt, REIT’s, … [Read more...]

Why I Love/Hate the Oil Companies

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With oil (USO) getting ready to take a run at $100 a barrel once again, the first thing I do when I get up every morning is to curse the oil companies as the blood sucking scourges of modern civilization. I then fall down on my knees and thank goodness that we have the oil companies. You’ve got to love ExxonMobile (XOM). The world’s largest company announced an unbelievable … [Read more...]

Gold Surge Pushes Trade Alert Service to New All Time High

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Global Trading Dispatch’s Trade Alert Service posted a new all-time high yesterday, clocking a 52.8% return since inception. The 2012 YTD return is now at 12.62%. That takes the average annualized return up to 30.2%, ranking it among the top performing hedge funds in the world. Those happy subscribers who bought my service on May 23 have seen 19 out of 20 trade recommendations … [Read more...]

Hedge Funds: The New Dumb Money

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Much of the fury in this morning’s nearly 60 point “melt up” opening 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 opening, and for the umpteenth time, were forced to cover at a loss. … [Read more...]

Watch Out for the Coming Risk Reversal

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It is a fact of life that markets get overstretched. Think of pulling on a rubber band too hard, or loading too many paddlers at one end of a canoe. Whatever the metaphor, the outcome is always unpleasant and sometimes disastrous. Take a look at the charts below and you can see how extended markets have become. Stocks (DIA), (QQQ), (IWM) have reached the top of decade and a … [Read more...]

Meet My Health Care Plan

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While in Zermatt, Switzerland recently, I took the opportunity to undergo my annual physical. Over the years, I have discovered that American doctors are so paranoid about getting sued that I can never get a straight answer about anything, so I do all of my physicals abroad. I like visiting Dr. Christian because he is cut from the same cloth as I. He is a small wiry guy … [Read more...]

The Volatility Death Spiral Continues

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Mr. Market sometimes speaks in mysterious tongues, and you really have to wonder what he is struggling to tell us by taking the Volatility Index (VIX) down to a subterranean $13 handle on Friday, a new five year low. A number of advisors have been recommending that investors load up on the (VIX) in recent months to give them downside protection from an imminent market crash. … [Read more...]

The Mystery of the Brasher Doubloon

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I’ll never forgot when my friend, Don Kagin, one of the world’s top dealers in rare coins, walked into the gym one day and announced that he made $1 million that morning.  I inquired “How is that, pray tell?” He told me that he was an investor and technical consultant to a venture hoping to discover the long lost USS Central America, which sunk in a storm off the Atlantic … [Read more...]

The Fat Lady is Singing for the Japanese Yen

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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 been chopped off by … [Read more...]

Get Ready to Buy the Bond Market

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The Treasury bond market has just suffered one of the most horrific selloffs in recent memory, taking the yield on ten year paper up from 1.38% to an eye popping 1.83% in weeks, a three month high. Yields have just risen by an amazing 38%. This has dragged the principal Treasury bond ETF (TLT) down from $132 to $120. Those who were pining to get into this safe haven at a … [Read more...]

Testimonial

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I have had an incredibly amazing first year with you John. The return you made for us is outstanding. After receiving one year of your education I got that feeling of being ahead of the market and especially of the Private Banking guys. What a nice feeling it is. I hope you will keep your Trade Alert program open at least the next five years. Thanks! P. … [Read more...]

The Election is Over: Obama Won

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For the second time in four years, the Republican Party has blown a presidential election through the choice of a running mate. What little chance the GOP had in winning the election has gone up in smoke with the selection of Wisconsin congressman Paul Ryan to join the ticket. Think of him as a Sarah Palin with pants. Of course, there was great celebration by the Tea Party … [Read more...]

Time to Pick Up Some Gold

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Gold has clearly evolved into a call option on global quantitative easing. Don’t think of it just as the stuff your dentist puts in your teeth or the thing your girlfriends gets you to wrap around her finger anymore. I don’t think that the Federal Reserve will implement QE3 at its September 16-17 meeting, or even next year. This shocking realization will be bad for gold … [Read more...]

The Slippery Slope for Oil

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If volatility and lack of direction in the equity market are driving you nuts these days, thank your lucky stars you’re not in the oil market. Only last night, a Japanese supertanker plowed into a US Navy destroyer, causing prices to spike. That’s assuming that you had time to notice while sifting through numerous, contradictory leaks from Israeli intelligence about whether … [Read more...]

How to Get a Free Trip to Europe

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During my recent trip to Europe, I made another startling discovery about the woeful state of America’s 19th century health care system. I needed to get refills on my prescription drugs when I was in Zermatt, so I stopped by the local pharmacy and placed an order. This was for three different a typical guy my age takes for blood pressure, cholesterol, and arthritis. Since my … [Read more...]

Double Up or Bail on Your JC Penny Short?

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The stock of the day last Friday was, no doubt, JC Penny (JCP), one of the most heavily shorted stocks in the market, which announced Q2, 2012 earnings. Despite a huge miss, the stock soared by 20% because the losses were not as bad as many expected. This leads to the question of whether traders should double up or bail on the existing short positions. As the dispassionate … [Read more...]

Testimonial

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I am a UH-1Y Huey helicopter pilot in the US Marine Corps. I am currently deployed aboard the USS Boxer as a Forward Air Controller with Battalion Landing Team 1/1, 13th Marine Expeditionary Unit. Our area of responsibility is the Middle East, which is where I’m writing this from now. I have been a follower of madhedgefundtrader.com for over a year now. A friend of mine from … [Read more...]

Don’t Miss the August 15 Global Strategy Webinar

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My next global strategy webinar will be held on Wednesday, August 15 at 12:00 noon EST. This webinar will be broadcast from back home in San Francisco, so everything should work. I’ll be giving you my updated outlook on stocks, bonds, commodities, currencies, precious metal, and real estate. The goal is to find the cheapest assets in the world to buy, the most expensive to sell … [Read more...]

When Bad Becomes Good and Worse is Even Better

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Welcome to the “Heads I win, tails you lose” market. The prospect of imminent quantitative easing by the US, Europe, China, and even Japan is supporting asset prices globally. The worse the economic data reports, the greater the likelihood of such action, and the higher prices can rise. In this topsy turvey world, bad becomes good, and worse is even better. The only reason … [Read more...]

Bring Back the Uptick Rule!

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When the Dow crashed 514 points on August 8, 2010, the market lost a staggering $850 billion in market capitalization. High frequency traders were possibly responsible for half of this move, but generated a mere $65 million in profits, some 7/1,000’s of a percent of the total loss. Are market authorities and regulators being penny wise, but pound foolish? The carnage the HF … [Read more...]

August 10, 2012 – Quote of the Day

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“My feeling is that the bond market is grossly overvalued. We’re going to have 2%, 3%, 4% inflation. That’s what Bernanke is really saying. If we are going to have interest rates at zero for two years, that is actually going to push inflation up higher,” said professor Jeremy Siegel of the Wharton School of Business. … [Read more...]

Europe’s Big Problem

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Europe has a big problem. No, it is not the continuing sovereign debt crisis, the lack of leadership, or the possible departure of up to a quarter of its membership, although these are all major worries.  Nor is it the Euro, the currency that everyone loves that has been declining for the last two years. No, the problem I am talking about is much worse than that. It is in fact … [Read more...]

Musings of a Dinosaur

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I often get accused by readers of being a dinosaur, of being insensitive to the feelings of others, and of living as a relic from a previous age. Well, you all may be right. So it is with some amusement I run a piece that I have lifted from my friend, Dennis Gartman’s, The Gartman Letter, on the difference between going to school in 1957 and 2010: Scenario 1: Jack goes … [Read more...]

The One Bright Spot in Real Estate

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After my weekly dump on residential real estate, I feel obliged to reveal one corner of this beleaguered market that might actually make sense. By 2050 the population of California will soar from 37 million to 50 million, and that of the US from 300 million to 400 million, according to data released by the US Census Bureau and the CIA fact Book (check out the population … [Read more...]

The Muni Bond Myth

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Some 18 months ago, bank research analyst Meredith Whitney is predicted that the dire straits of state and local finances would trigger a collapse of the municipal bond market that would resemble the Sack of Rome. She believed that total defaults could hit 2,000 issues and reach $100 billion in value. Those sharp edged comments caused the main muni bond ETF (MUB) to plunge from … [Read more...]

Report From Milan

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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 allied bombing during WWII, the building is as imposing as the day it was built. You Think It’s … [Read more...]

Is Food the New Distressed Asset?

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After my entertaining repast with the head of our nation’s intelligence service, I had to ask myself this question. During the sixties, new dwarf varieties, irrigation, fertilizer, and heavy duty pesticides tripled crop yields, unleashing a green revolution. But guess what? The world population has doubled from 3.5 to 7 billion since then, eating up surpluses, and is … [Read more...]

Please Use My Free Data Base Search

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The original purpose of this letter was to build a database of ideas to draw on in the management of my hedge fund. When a certain trade comes into play, I merely type in the symbol, name, currency, or commodity into the search box, and the entire fundamental argument in favor of that position pops up. With a link chain to older stories. You can do the same. Just type … [Read more...]

The One Economic Indicator You Can Rely On

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There is no end to which I am willing to go to understand the future direction of the world economy. So when I learned that the price of Brazilian bikini waxes was going through the roof, I had to sit up and take note. Last month, the price of the popular beauty treatment soared by 16.6% to 35 Reals, about $22. This is no joke. The Brazilian government includes the removal … [Read more...]

Your Portfolio and the Population Boom

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Long time readers of this letter know that demographic issues will be one of the most important drivers of all asset prices for the rest of our lives (click here). Researchers expect that the global population will reach 9 billion by 2045, the earliest date that I have seen so far. Can the planet take the strain? Early religious leaders often cast Armageddon and Revelations in … [Read more...]

The World’s Worst Investor

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My grandfather was an immigrant from Sicily who joined the army during WWI to attain US citizenship, lost an eye when he was mustard gassed on the Western Front, and settled down in the Bay Ridge section of Brooklyn after the war. He bought a three bedroom brick home on 76th street for $3,000, eventually raising four kids. Back then, there was a dairy farm across the street, … [Read more...]

Postscript

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One day in New York a few years ago, I had a few hours to spare waiting to board Cunard’s Queen Mary 2 to sail for Southampton. So I decided to check out the Bay Ridge address near the Verrazano Bridge where my father grew up that I had heard so much about during my childhood. I took a limo over to Brooklyn and knocked on the front door. I told the owner about my family history … [Read more...]

How the US is Getting Screwed on Its China Trade

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One of the great things about running a website with a truly global reach is that readers send me material which is nothing less than outrageous. So I had to laugh when I found in my inbox an animation of two bears discussing the hopelessly idiotic approach the US government has taken towards its trade with China over the past two decades. America gave away 25 million jobs, … [Read more...]

Trade Alert Service Punches Through to New All Time High

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Global Trading Dispatch’s Trade Alert Service posted a new all-time high yesterday, clocking a 50.9% return since inception. The 2012 YTD return is now at 10.71%. That takes the average annualized return up to 30.1%, ranking it among the top five performing hedge funds in the world. Those happy subscribers who bought my service on May 23 have seen every one of my 11 trade … [Read more...]

Report From Zermatt

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My first morning in the Swiss mountain hamlet of Zermatt, home to the Matterhorn, I was awoken by an army platoon outside my door, fully armed with fixed bayonets. No, I was not being arrested for past indiscretions in the idyllic Alpine paradise. My often-inflammatory opinions had not even triggered an international incident worthy of military action. It was in fact, the … [Read more...]

Technology Glitches Fell the Mad Hedge Fund Trader

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Many apologies to the hundreds of listeners who were cut short during the broadcast of my biweekly strategy webinar on Wednesday, August 1. Despite the Herculean efforts of the staff, sometimes the technology doesn’t deliver as promised. This was one of those days. For a start, getting the GoToMeeting software to work on an iMac is a bit like trying to shove a round peg in a … [Read more...]

The Fed Says No QE3

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As I expected, the wildly optimistic expectations for further quantitative easing by the Federal Reserve at yesterday’s Open Market Committee meeting were not matched with substance. All we got was a continuation of existing modest programs and some minor tweaking of language. Bernanke only managed to say that, “further stimulus will be provided as needed.” The Fed left … [Read more...]

August 2, 2012 – Quote of the Day

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“The rule of thumb is to do your homework, do your analysis, and don’t give up prudent risk management for the sake of certain fads. Look for real valuations, and stay true to your time frames,” said Marc Chandler, the global head of currency strategy at Brown Brothers Harriman. … [Read more...]