?When the fools are dancing, the greater fools are watching,? according to an old Japanese proverb.
I have just finished leisurely reading Tom Standage?s book The Victorian Internet: The Remarkable Story of the Telegraph and the Nineteenth Century On-Line Pioneers.
Standage discusses the creation and development of the telegraph system and how it revolutionized communication in the nineteenth century. The book claims that Modern Internet users are in many ways the heirs of the telegraphic tradition, meaning that how people used the telegraph during the nineteenth century parallels how people use the Internet today.
Standage goes on to suggest that by studying how the telegraph developed and created certain trends in society, we can learn a lot about the challenges, opportunities, and pitfalls of the Internet today. From discussing the social impact of both systems with the development of online social interactions to the way that business and work was revolutionized, the book has it all!
You can laugh about how Victorians flirted and developed romantic connections over Morse code and you can marvel at the way getting more rapid information, particularly with the invention of the stock ticker, allowed financial markets to emerge and grow. If you Bloomberg slaves are looking for an educational and entertaining read, click here.
My friend, Ian Bremmer of the Eurasia Group, a global risk analyst who I regularly follow, will soon publish another book entitled The End of the Free Markets: Who Wins the War Between States and Corporations. I find this highly depressing, as it takes me as long to read one of Ian?s books as it takes him to write another one. To read a review of his highly insightful tome published in 2008, The Fat Tail: The Power of Political Knowledge for Strategic Investing, please click here. The world is reaching a tipping point. For the past 40 years, global multinationals with unfettered access to capital, consumer, and labor markets have driven the world economy. There is now a new competitor on the scene, the ?state capitalist,? where political considerations trump economic ones in the allocation of resources. Of course, China is the main player, joined by several other emerging nations. The middle kingdom has posted double digit annual growth for the past 30 years without freedom of speech, economic rules of the road, and independent judiciary, and credible property rights. China?s leadership is clearly worried that Western style freedoms will enable wealth to be generated outside their control and be used to orchestrate their overthrow. Private Western companies can only engage in transactions, which stand on their own economically and deliver the short-term profits, which their shareholders demand. In China, long term political goals enable them to pay through the nose to obtain stable supplies of oil, gas, minerals, and materials. That keeps the country?s massive work force employed, off the streets, and politically neutered. The bottom line is that there are now two competing forms of capitalism. The recent financial crisis has accelerated their entrance to the global stage, moving us from a G7 to a G20 dominated world. Globalization is not ending, but it is definitely entering a new chapter. For those of us who read tea leaves to ascertain long term economic trends, this will be a must read. ? 
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Sometimes we stare so long at a door that is closing that we see too late the one that is open,? said Alexander Graham Bell, inventor of the telephone.
Come join me for the Mad Hedge Fund Trader?s Global Strategy Seminar, which I will be conducting in New York, NY on Thursday, July 5, 2012. Coffee, tea, and soft drinks will be provided, but no food. A PowerPoint presentation will be followed by an extended question and answer period.
I?ll be giving you my up to date view on stocks, bonds, foreign currencies, commodities, precious metals, and real estate. And to keep you in suspense, I?ll be throwing a few surprises out there too. Enough charts, tables, graphs, and statistics will be thrown at you to keep your ears ringing for a week. Tickets are available for $250.
The seminar should run from 2:00 PM to 5:00 PM. I?ll be arriving an hour early and leaving late in case anyone wants to have a one on one discussion, or just sit around and chew the fat about the financial markets.
The seminar will be held at a prestigious private club near Central Park, the details of which will be emailed to you with your purchase confirmation.
I look forward to meeting you, and thank you for supporting my research. To purchase tickets for the luncheons, please go to my online store at http://madhedgefundradio.com/, click on ?LUNCHEONS?, and scroll down to the New York seminar.
?The art of taxation consists of so plucking the goose as to obtain the largest amount of feathers with the smallest amount of hissing,? said Jean-Baptist Colbert, a 17th century French minister of Finance.
I spent the weekend attending a graduation in Washington state, a stone?s throw from where the 2010 Winter Olympics were held last year. While sitting through the tedious reading of 550 names, and listening to the wailing bagpipes, I did several calculations on the back of the commencement program. I came to some startling conclusions.
Higher education has grown into a gigantic industry, with a massively positive impact on America?s balance of payments, generating an impact on the world far beyond the dollar amounts involved. There are 671,616 foreign students in the US (90,000 from China alone) paying an average out-of-state tuition of $25,000 each, creating a staggering $16.8 billion of payments a year.
On a pro rata basis, that amounts to a serious part of our total receipts in services in Q4 2009 of $131.6 billion, not far behind financial services (click here for the Bureau of Economic Analysis site ) . A fortunate few, backed by endowed chairs and buildings built by wealthy and eager parents, land places at prestigious Universities like Harvard, Princeton, Yale, and UC Berkeley. The overwhelming majority, however, enroll in the provinces in a thousand rural state universities and junior colleges that most of us have never heard of.
The windfall has enabled once sleepy little schools to build themselves into world class institutions of higher learning with 30,000 or more students, boasting state of the art facilities, much to the joy of local residents and state education officials. Furthermore, this dominance of education industry is steadily Americanizing the global establishment.
I can?t tell you how many times over the decades I have run into the Persian Gulf sovereign fund manager who went to Florida State, the Asian CEO who attended Cal State Hayward, or the African finance minister who fondly recalled rooting for the Kansas State Wildcats. Those who constantly bemoan the impending fall of the Great American Empire can take heart by merely looking inland at these impressive degree factories. It also might give them an explanation of why the dollar is so strong in the face of absolute gigantic and perennial trade deficits.
I enjoy issuing Berkshire stock as much as I relish preparing for a colonoscopy,? said Oracle of Omaha Warren Buffet of Berkshire Hathaway (BRK/A).
Come join me for lunch at the Mad Hedge Fund Trader?s Global Strategy lunches and seminars, which I will be conducting in Europe during July, 2012. A PowerPoint presentation will be followed by an open discussion on the crucial issues facing investors today.
I?ll be giving you my up to date view on stocks, bonds, foreign currencies, commodities, precious metals, and real estate. And to keep you in suspense, I?ll be tossing a few surprises out there too. Enough charts, tables, graphs, and statistics will be thrown at you to keep your ears ringing for a week.
I?ll be arriving early and leaving late in case anyone wants to have a one on one chat, or just sit around and discuss in depth the financial markets. Here are the dates and prices:
July 16 - London lunch - $299
July 17 - Paris lunch - $259
July 18 - Frankfurt - $279
July 27 - Zermatt seminar - $219
I look forward to meeting you, and thank you for supporting my research. To purchase tickets for the luncheons, please go to my online store at http://madhedgefundradio.com/category/luncheons/ .
My tuxes are packed, the hotels are booked, and the limo is waiting outside. The Lear jet is fully fueled up and waiting for me at nearby Buchanan Field, the flight plan already filed. I am taking off for Europe today for a mix of business and pleasure.
Along the way I will be meeting with other hedge fund managers, senior government officials, CEO?s at major banks and Fortune 500 companies, large institutional investors, and a Nobel Prize winner or two. Getting out into the real world and soaking up new data and opinions is invaluable in shaping my own global view, and your performance benefits from it. I don?t find these people walking across my living room, so go out into the world and seek them I must.
I?ll kick off my trip with a strategy luncheon in Chicago on June 29, which is always well attended. Pit traders from the CME should note that tank tops and flip flops are not permitted by the club. With any luck, you will later find me that evening at the Windy City?s Union Station waiting for the overnight train to New York, the famed Lake Shore Limited. I always get a ton of writing done on these long train rides.
The Fourth of July will find me on a reader?s mega yacht watching the fireworks near the Brooklyn Bridge. I hope to reconnect with many old friends at my New York strategy seminar on July 5. The next day I will enjoy the view from my penthouse suite on Cunard?s Queen Mary II as we pass the Statue of Liberty outbound for Southampton, England. Hopefully, those who signed up for my Seminar at Sea are well stocked with motion sickness pills.
In London I?ll catch William Shakespeare?s The Tempest at the Globe Theater, spend an evening at the Royal Ballet, and visit the Royal Academy of Arts Summer Exhibition. At least one morning you will find me catching an old fashioned straight razor shave at the Jermyn Street Barbers, and topping up my supply of business shirts at Turnbull & Asser. The cheese trolley at the Michelin restaurant is to die for.
For accommodations, I?ll be staying at the ever reliable, if not spartan, British Navy Officers Club. You know, the place where Horatio Nelson used to hang out with his pals? After my July 16 London strategy luncheon it will be a race to St. Pancreas Station to catch the Eurostar under the English Channel to Paris.
I will spend the night at the French Army Officers Club. You know, the place where Napoleon killed time with his buddies? Last time I had dinner there, the table on my right saw a group packed with French Air Force officers planning the next NATO air strike on Libya, while the one on my left saw a group negotiating to sell an aircraft carrier to some Chinese admirals. My ears were ringing for a week.
Frankfurt is next on the agenda where I?ll be hosting a strategy lunch on July 18, intermixed with meetings with the CEO?s of major German industrial companies seeking how to navigate the global economy in the ?new normal.? After that, I am counting on my winter of polka instructions to pay off big time.
In the lead up to my July 27 strategy seminar in Zermatt, I?ll be consulting with the representatives of some Middle Eastern royal families while they vacation in the Alps. One afternoon will be devoted to taking the paddle wheel steamer on Lake Geneva to the Chateau de Chillon in Montreux where Lord Byron used to live, sipping fine Swiss white wines along the way.
The high point of my trip, both literally and figuratively, will be my annual assault on the Matterhorn, which at 14,692 feet is higher than anything we have in the continental US. With another year of arduous training under my belt, it?s now or never. I?ll spend my evenings at public steam rooms where, afterwards, I roll around in the snow with the local fr?uleins and beat myself with birch branches. It is invigorating, to say the least. Those Europeans are so open-minded.
The chalet that I have reserved has a granite boulder foundation, an outhouse, and high-speed broadband. I will be ducking out from my mountain hideout only to fly to London for the day from the nearby Swiss Air Force base at Sion on a client?s private jet to attend the opening ceremony for the Olympics.
Next, it?s on to Milan.? If a new Brioni suit and pair of Gucci shoes throw themselves upon me while I stroll through the Galleria I may be unable to resist.
I will be traveling with my laptop and keeping touch with the markets. While 17th and 18th century Internet service is passable, it is unreliable. So unless I see something extraordinary, I will be issuing few new trade alerts. The remaining positions in the model portfolio are best left to ferment over a slow summer and profit from the time decay.
After grinding out more quality content than anyone else on the Internet and maintaining an average annualized 30% return, I deserve a break. The month of May alone saw me shoot out 28 trade alerts, 20 letters, 5 live webinars, and countless radio and TV interviews. I?m basically writing the equivalent of ?War and Peace? every six months. It took Tolstoy ten years to pen his, but then he didn?t have Microsoft Office. I need to spend some time alone on a mountain top, communing with the spirits, attempting to focus on long term financial trends through the smoke and dust.
While on the road, I will be re-running some of my favorite research pieces from the past, interspersed with some new pieces that I will write on the road. This is to expose my thousands of new subscribers to the golden oldies, and to remind the legacy readers who have since forgotten them. I?ll return to my desk in San Francisco full time on August 8.
In the meantime, I shall be raising a glass of vintage Champagne to all of you at dinner as we pass over the Titanic on the 100th anniversary of its sinking, the loyal readers of the Diary of a Mad Hedge Fund Trader. Salut! Prost! And Cheers! I couldn?t do all of this without you. Thank you for my great life!
I?ll Meet You on Top
