The stunning and unprecedented move by the Bank of Japan last week boosted the Trade Alert Service of the Mad Hedge Fund Trader to a new all time high.
It was an incredible week, with me punching out 14 Trade Alerts to readers, burning up the fiber optic cable of the global broadband network. And I did all of this, sitting in front of the fire at my Lake Tahoe beachfront estate, drinking coffee nonstop. Some retirement!
I bet that the new governor of Japan’s central bank, my friend, Haruhiko Kuroda, would engineer a monetary easing that was so aggressive that it would collapse the country’s beleaguered currency. All those nights playing Scrabble with him have finally paid off. As a result, the 2013 profit for the Trade Alert Service soared to an incredible 35%.
The 28-month total return has punched through to a breathtaking 90%, compared to a modest 18.5% return for the Dow average during the same period. That raises the average annualized return for the Trade Alert Service to 38.6%, elevating it to the pinnacle of the hedge fund ranks.
My careful calculation that the stock markets would continue to grind up to new all time highs in the face of complete disbelief and multiple international shocks paid off big time, as I continued to run long positions in the S&P during January to March.
My substantial short volatility positions are contributing to profits daily, with the closely watched (VIX) Index plummeting at one point to a new five year low at 11%. I booked nice profits from holdings in American International Group (AIG) and copper producer, Freeport McMoRan (FCX), and the Russell 2000 (IWM).
Sensing that the stock market was getting overbought for the short term, I switched from a long only to a balanced long/short trading book at the beginning of April. That really allowed me to coin in on short positions in the S&P 500 (SPY), Bank of America (BAC), and United Continental Group (UAL).
It hasn’t entirely been a rose garden. The rapid market swoon cost me some money on my (UAL) and (BAC) call options. Apple (AAPL) has taken another bite out of me, although I will only lose money on the position if it trades and stays below $420 over the next 9 trading days. But as they taught me at my karate dojo in Tokyo during the early 1970’s, you can’t win a tournament without taking a few hits.
Trade Alerts that I wrote up, but never sent, worked too. That’s because I have been 100% invested for the entire year in long stock/short yen positions. However, followers of my biweekly strategy webinars caught my drift and benefited from the thinking, and many did these trades on their own. These included shorts in the Treasury bond market, (TLT), the Euro (FXE), (EUO), and the British pound (FXB).
Sometimes the best trades are the ones you don’t do. I have been able to dodge the bullets that have been killing off other hedge funds, including those in gold (GLD), silver, (SLV), oil (USO), and commodities (CORN), (DBA), (CU). Oh, and I didn’t have a single penny in a Cyprus bank.
All told, the last 27 out of the last 28 closing recommendations of the Trade Alert Service have been profitable, and I have another six moneymakers still on the books.
Global Trading Dispatch, my highly innovative and successful trade-mentoring program, earned a net return for readers of 40.17% in 2011 and 14.87% in 2012. The service includes my Trade Alert Service, daily newsletter, real-time trading portfolio, an enormous trading idea database, and live biweekly strategy webinars. To subscribe, please go to my website at www.madhedgefundtrader.com, find the “Global Trading Dispatch” box on the right, and click on the lime green “SUBSCRIBE NOW” button.